**UNITED
      STATES**


**Securities
      and Exchange Commission**


**Washington,
      D.C. 20549**




**FORM
      10-KSB**




x
                ANNUAL
                    REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                    OF
                    1934





For
      the
      fiscal year ended June 30, 2007





o
            TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934





For
      the
      transition period from _________________ to __________________




Commission
      File No. 000-15260




**Element
      21 Golf Company**


(Name
      of
      Small Business Issuer in its Charter)





Delaware
            
            88-0218411(State or Other Jurisdiction of incorporation or organization)
            
            (I.R.S.
                Employer I.D. No.)





**200
      Queens Quay East, Unit #1, Toronto, Ontario, Canada, M5A
      4K9**


(Address
      of Principal Executive Offices)





Registrant’s
      Telephone Number: **416-362-2121**





Not
      Applicable


(Former
      name and former address, if changed since last Report)





Securities
      Registered under Section 12(b) of the Exchange Act: None.





Securities
      Registered under Section 12(g) of the Exchange Act: Common Stock, one-cent
      ($0.01) Par Value





Check
      whether the issuer is not required to give reports pursuant to Section 13 or
      15(d) of the Exchange Act. o





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
o





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





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





Issuer’s
      revenues for its most recent fiscal year: June 30, 2007 = $228,599





As
      of
      October 4, 2007 there were approximately 110,553,554 shares of our common voting
      stock held by non-affiliates having a market value of approximately **** $24,300,000
      on such date. Without asserting that any director or executive officer of the
      issuer, or the beneficial owner of more than five percent of the issuer’s common
      stock, is an affiliate, the shares of which they are the beneficial owners
      have
      been deemed to be owned by affiliates solely for this calculation.





As
      of
      October 4, 2007, there were 121,354,792 shares of common stock of the Issuer
      outstanding.





**Element
      21 Golf Company**




**10-KSB
      for the Year Ended June 30, 2007**





**Table
      of Contents**





**PART
                I**
            
            1ITEM
                1.
            DESCRIPTION
                OF BUSINESS
            1ITEM
                2.
            DESCRIPTION
                OF PROPERTY
            19ITEM
                3.
            LEGAL
                PROCEEDINGS
            19ITEM
                4.
            SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY HOLDERS
            19**PART
                II**
            
            20ITEM
                5.
            MARKET
                FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
            20ITEM
                6.
            MANAGEMENT’S
                DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
            24ITEM
                7.
            FINANCIAL
                STATEMENTS
            30ITEM
                8.
            CHANGES
                IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                DISCLOSURE
            30ITEM
                8A
            CONTROLS
                AND PROCEDURES
            30ITEM
                8B
            OTHER
                INFORMATION
            30**PART
                III**
            
            31ITEM
                9.
            DIRECTORS,
                EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
                SECTION
                16(a) OF THE EXCHANGE ACT
            31ITEM
                10.
            EXECUTIVE
                COMPENSATION
            33ITEM
                11.
            SECURITY
                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
            35ITEM
                12.
            CERTAIN
                RELATIONSHIPS AND RELATED TRANSACTIONS
            38ITEM
                14.
            PRINCIPAL
                ACCOUNTANT FEES AND SERVICES
            41Signatures
            42Financial
                Statements
            F-1







**PART
      I**




**CAUTIONARY
      STATEMENT REGARDING**


**FORWARD-LOOKING
      INFORMATION**




Under
      the
      Private Securities Litigation Reform Act of 1995, companies are provided with
      a
“safe harbor” for making forward-looking statements about the potential risks
      and rewards of their strategies. Forward-looking statements often include the
      words “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate” or similar
      expressions. In this Form 10-KSB, forward-looking statements also
      include:




·
            statements
                about our business plans;




·
            statements
                about the potential for the development and public acceptance of
                new
                products;




·
            estimates
                of future financial performance;




·
            predictions
                of national or international economic, political or market conditions;




·
            statements
                regarding other factors that could affect our future operations or
                financial position; and




·
            other
                statements that are not matters of historical
                fact.




These
      statements may be found under “Management’s Discussion and Analysis or Plan of
      Operations” and “Description of Business” as well as in this Form 10-KSB
      generally. Our ability to achieve our goals depends on many known and unknown
      risks and uncertainties, including changes in general economic and business
      conditions. These factors could cause our actual performance and results to
      differ materially from those described or implied in forward-looking
      statements.




These
      forward-looking statements speak only as of the date of this Form 10-KSB. We
      believe it is in the best interest of our investors to use forward-looking
      statements in discussing future events. However, we are not required to, and
      you
      should not rely on us to, revise or update these statements or any factors
      that
      may affect actual results, whether as a result of new information, future events
      or otherwise. You should carefully review the risk factors described in other
      documents we file from time to time with the Securities and Exchange Commission,
      and also review our Quarterly Reports on Form 10-QSB.




**ITEM
              1.**
            **DESCRIPTION
                OF BUSINESS**




**Business
      Development.**




Element
      21 Golf Company (the “Company,” “Element 21,” “we,” “us” or terms of similar
      meaning) was originally formed as OIA, Inc., a Delaware corporation, in 1986.
      In
      1992, the Company changed its name to Biorelease Corp., and was engaged in
      the
      business of biotechnology from 1992 through 1995. From mid-1995 through
      September, 2001, the Company sponsored a number of early-stage
      ventures .
      I n
      June
      2001, the Company changed its name from Biorelease Corp. to BRL Holdings,
      Inc.




In
      September, 2002, **** we
      acquired 100% of the outstanding common stock of Element 21 Golf Company, a
      Delaware corporation (“Element 21”), in exchange
      for 42,472,420 restricted shares of our common stock (“the
      Acquisition”). We also converted options
      to acquire 6,432,000 shares of Element 21 common stock into options to acquire
      6,432,000 shares of our common stock. This Acquisition has been accounted for
      as
      a “reverse” acquisition using the purchase method of accounting, as the
      shareholders of Element 21 owned
      a
      majority of the outstanding stock of our
      Company immediately following the Acquisition. Following the Acquisition, we
      changed our name to Element 21 Golf Company.




1


During
      the fiscal year of 2007, the Company issued an aggregate of 14,210,326 shares
      of
      common stock to consultants as payment for services rendered.




**Recent
      Events**




Between
      June 5, 2007 and June 10, 2007, the Company entered into Subscription Agreements
      with four individuals, each of whom is an accredited investor, pursuant to
      which
      the Company agreed to sell an aggregate of 2,356,471 shares of the Company’s
      common stock, par value $0.01 per share. The price per share under the
      Subscription Agreements is $0.17. Each Investor also received a warrant to
      purchase shares
      of
      the Company’s common stock in an amount up to the number of shares purchased.
      The exercise price of each warrant is $0.19 and expires on May 31, 2008.





The
      Company has granted the Investors piggyback registration rights (subject to
      certain limitations).





On
      June
      15, 2007, the Company consummated a $2,000,000 equity financing by entering
      into
      two Series B Preferred Stock Subscription Agreements (each a “Series B
      Subscription Agreement” and collectively the “Series B Subscription Agreements”)
      with each of Vladamir Goryunov and Clearline Capital, LLC (each a “Purchaser”
and collectively, the “Purchasers”). Each Series B Subscription Agreement
      provides for the sale by the Company to the applicable Purchaser of 58,824
      shares of the Company’s Series B Convertible Preferred Stock, par value $0.10
      per share (the “Series B Preferred Stock”), and warrants to purchase an
      aggregate of 5,882,400 shares of the Company’s Common Stock, $.01 par value per
      share, in exchange for and in consideration of an aggregate investment by each
      of the Purchasers of $1 million in cash.





**Business
      of the Issuer:**





Element
      21 was formed on September 18, 2002 to acquire partially-developed golf
      technology and to design, develop and bring to market golf club shafts and
      golf
      heads made from a patented scandium alloy exclusively licensed to the Company
      (the “E21 Alloy”). The active ingredient in the E21 Alloy is Scandium, which is
      element No. 21 in the Periodic Table of Elements. E21 Alloy shafts are believed
      to exhibit properties that out-perform titanium with a higher strength-to-weight
      ratio of up to 25% and a specific density advantage of 55%. The E21 Alloy is
      lighter, stronger and more cost effective than titanium. This advanced metal
      technology was originally developed in the 1970’s in the former Soviet Union for
      military applications. Scandium alloys have been used in intercontinental
      ballistic missiles, jet aircraft, the Mir space station and most recently,
      in
      the International Space Station.





In
      September, 2002, Element 21 acquired from Dr. Nataliya Hearn, our current Chief
      Executive Officer, and David Sindalovsky, a consultant to the Company (the
      “Assignors”), the exclusive right to use, produce and sell the E21 Alloy for
      golf club shafts and golf heads. Although these rights do not cover all mixes
      of
      scandium alloy, the Company believes that any scandium alloy outside the range
      of its patent-protected rights cannot be used to produce golf club shafts or
      heads in an economically feasible manner. Upon completion of the Acquisition,
      the previous officers and directors of the Company resigned and Dr. Hearn became
      the Company’s President/ CEO and a Director and Jim Morin and Gerald Enloe also
      became Directors. Mr. Morin also served as Vice President and Chief Financial
      Officer of the Company prior to his resignation from the Board on July 31,
      2006.




2


The
      Company is attempting to commercialize scandium’s use in the golf industry with
      a line of golf shafts and clubs. During the past year, the Company has developed
      an updated and improved product line using proprietary materials and production
      techniques, including drivers, irons, hybrids, shafts and golf
      bags.





In
      addition, the Company has also developed a technologically advanced line of
      fishing rods to serve the recreational and professional trophy fishing markets
      this past year, incorporating advanced nano technology and scandium metal
      alloy.





Key
      areas
      of management focus for the past year have included:





**A.
      Corporate Finance:**





The
      Company successfully raised $6.4 million in equity financing during the latest
      fiscal year.





The
      Company consummated three separate $2 million Series B Convertible Preferred
      Stock equity financings on July 31, 2006, November 30, 2006 and June 15, 2007
      by
      entering into separate 3 separate Subscription Agreements with each of Clearline
      Capital, LLC and Vladimir Goryunov of $1,000,000 each for a total of $6 million.
      In June 2007 the Company sold 2,356,471 shares of unregistered common stock
      to 4
      individuals for $400,600. In addition, as of June 30, 2007, 8 individuals have
      converted their Convertible Notes and accrued interest of $375,000 and $37,500
      into 2,685,294 common shares. Each of these transactions is described in more
      detail below.




**B.
      Retail Distribution and Sales:**





As
      the
      Company continues to move forward, we solidified our sales and marketing team
      to
      support sales in key distribution channels.





Industry
      veteran Bill Dey was appointed as Chief Operating Officer and Executive Vice
      President of the Company. Mr. Dey is an accomplished golf industry executive.
      His most recent success was as Senior Vice President & General Manager
      Global for Tommy Armour Golf. Under his stewardship Tommy Armour Golf
      experienced sales growth from $400,000 to $48 million in a three-year
      period.





Keith
      Kiendel was appointed Vice President of International Sales. Mr. Kiendel, ex-VP
      of global sales of Callaway, is bringing to the Company his name and contacts
      developed through his distinguished career in the golf industry.





Michael
      McDevitt was appointed Vice President of Sales - North America. Mr. McDevitt
      has
      over 18 years of sales, marketing, operations and customer
      service experience in the golf industry.





The
      management team has put together a network of 12 regional sales representatives,
      responsible for retail sales development. The Company is now positioned to
      accelerate development of retail sales, with the introduction of its
      EMC 2 Driver
      in the Fall of 2007. Drivers are vital to the success of a brand, being one
      of
      the most frequently shopped items and act as a halo product for the rest of
      a
      manufacturer’s product line.





The
      sales
      team has started to make significant inroads to retail sales distribution,
      with
      smaller boutiques and ‘green grass’ pro-shops (on course PGA pro shops) now
      beginning to carry Element 21 golf clubs across the U.S. and Canada.
      Participating retailers now number over 250 accounts and continue growing.
      This
      builds on the historical success of the Company working with club fitting
      professionals who have adopted the use of Element 21’s advanced Scandium metal
      alloy shafts for component club building.


3





Key
      retailers include:


·
            PGA
                Tour Super Stores - Georgia, Texas, Arizona and South
                Carolina


·
            Golfers'
                Warehouse - Connecticut, Massachusetts and Rhode
                Island


·
            Edwin
                Watts - Florida


·
            Golfsmith
                - Texas





The
      Company’s line of award-winning EMC2 irons and hybrid clubs is now available
      online from Golfsmith (www.golfsmith.com) one the world's largest and most
      respected retailers of golf equipment.





Additionally,
      the Company signed a distribution agreement with Premium Golf Management Co.
      ("PGMC") to exclusively sell Element 21 shafts through the PGMC's extensive
      network of specialty dealers. This agreement builds Element 21's most extensive
      ground distribution channel to date by accessing PGMC's shaft specialty network
      of over 200 dealers throughout North America. PGMC currently distributes the
      renowned ACCRA brand of shafts.




**C.
      Product Development:**




The
      Company has developed its second generation of golf clubs that further refines
      the application of Scandium metal alloy to the sport combining an elusive
      combination of high performance with a soft feel and very forgiving behavior
      for
      off-center hits. Advances have been made in various aspects of the club head
      design and manufacturing processes, further improving on their significant
      performance capabilities.




The
      product line available for sale now includes shafts, drivers, irons and hybrid
      clubs as well as golf bags. All clubs have been approved by the USGA as
      conforming to the rules of golf. This is a vital step, as manufacturers push
      the
      boundaries of what can be achieved with current technologies. The USGA has
      ruled
      that several high profile drivers do not conform, including Nike Golf's Sumo
      Squared, Callaway's Bertha 460, and specific models from Cleveland Golf and
      Cobra Golf.




Because
      of Element 21’s advanced scandium metal alloy, the Company can deliver higher
      performance well within the specifications required by the USGA. Scandium metal
      alloy represents a significant leap forward in materials technology, one which
      the industry hasn’t seen since the introduction of Titanium in 1995, fully 12
      years ago.




With
      the
      introduction of its long-awaited EMC 2 Driver,
      the Company now believes it has a sufficient broad line of products to enter
      mainstream competition at the retail level. The Company pioneered advanced
      new
      manufacturing techniques with one of the world’s leading golf manufacturers in
      order to create this revolutionary new driver.




The
      EMC 2 Driver
      has been tested by independent laboratories, and found to significantly
      outperform the most popular drivers by a significant margin. In fact, in recent
      robotic testing, Element
      21 's
      EMC2
Scandium driver outperformed the top three selling Titanium drivers in the
      market place in both distance and accuracy. In off-center heel and toe hits,
      EMC2 recorded an average carry dispersion of 8 feet, beating the competition by
      an unprecedented 263%, 288% and 338%. During distance testing the longest drive
      of the day was 274 yards recorded by EMC2, 29 yards longer than one of its
      competitors' longest drives.




4




The
      Company ‘s innovations have also been rewarded with awards and recognition from
      the industry, including significant editorial coverage in leading publications
      such as Golf Digest Magazine, Golf Today, Florida Golf Central and Golf
      Illustrated among others.




**D.
      Promotional Support:**




The
      Company has created promotional support to increase brand awareness and
      reinforce the unique nature of its proprietary Scandium Metal Alloy clubs and
      shafts. Lacking the resources to spend millions of dollars in traditional
      magazine and TV advertising, the Company executed a number of targeted
      promotions and leveraged creativity rather than flooding the market with ads
      and
      spending excessively to build product awareness and consumer trial.




**Golf
      Shot Around the World:** The
      most
      successful endeavor was the launch of an Element
      21 golf
      ball into orbit by Russian cosmonaut Mikhail Tyurin. On the eve of Thanksgiving,
      November 22nd, 2006 at approximately 7:57 pm EST, Mikhail Tyurin successfully
      hit a golf ball off of the orbiting International Space Station, 220 miles
      above
      the earth, using an Element
      21 gold-plated 5 iron. Billed as the world’s longest drive, the golf ball continues
      to orbit earth, and has traveled over 130,532,303 miles as of September 19,
      2007.




The
      publicity stunt garnered incredible attention around the world, generating
      millions of website hits worldwide, widespread television coverage and editorial
      coverage in over 100 major newspapers and magazines. Interest was particularly
      high within the golf industry, and was extremely successful in raising the
      Company’s profile.




The
      Company received the received the prestigious ING (International Network of
      Golf
      Writers Association) Industry Honors Award for the Best PR/Campaign Event in
      2006 in recognition of the Element
      21 sponsored Golf Shot Around The World. The ING awards are generally considered
      to
      be the “Oscars” of the golf industry. ING is a non-profit, media-based
      networking organization whose mission is to bring golf media together with
      representatives from all walks of the golf industry to discuss issues, exchange
      information and improve communication.




**PGA
      Incentive Program:** PGA
      Magazine (www.PGAmagazine.com), with a circulation of over 45,000 top PGA
      Professionals in North America, featured a double page spread and Interactive
      CD-ROM insert in the June 2007 edition, which gave PGA professionals the
      opportunity to take part in the multi-level Stock Incentive Program, as part
      of
      the introduction of Element
      21 Scandium
      golf equipment to the golf industry.




Subscribers
      were given the opportunity to learn about Element
      21 Golf
      Company, and the advantages Scandium has over Titanium, Steel and Graphite,
      through an interactive CD-ROM. Becoming an Element
      21 dealer
      entitled pro shops to receive $200 worth of stock. The program required the
      purchase of an Element
      21 Demo
      Pack; including 8 Irons, 4 Hybrids, and 1 stand bag for $540 (50% off
      wholesale).




In
      addition, qualified PGA pro shops could earn up to 3% of their net Element
      21 product
      sales in Company stock by the end of 2007.




**Retail
      Seeding Program:** In the
      Spring season of this past year, Element
      21 selectively place its line of EMC2 Scandium golf equipment in over
      500 off course golf retail specialty stores and green grass pro shops. The
      program was designed to create trial and awareness of its new EMC 2 product
      line. The 500 Trial Equipment Sets consisted of 3 - PW EMC 2 Irons,
      20
      and 23 Degree EMC 2 Hybrids,
      and an Element
      21 self
      standing bag.




5




Consumers
      were able to demo the full line of Element
      21 clubs,
      and experience the properties and advantages that the Scandium metal alloy
      technology has to offer




**Demo
      Days:** The
      Company participated in roughly 3 dozen demo days in the early part of the
      2007
      season. These demo days were held at large retail outlets such as Nevada Bob’s
      and PGA Tour Superstores, and important green grass (on course PGA shops)
      locations across the nation, as well as very successful participation at the
      Orlando PGA show, the premier PGA golf equipment event of the year.




**Consumer
      Product Test promotion:** This
      past season, consumers were given the opportunity to test the performance of
      Element 21’s scandium metal alloy clubs by purchasing an Element 21 6 iron at an
      introductory price of only $49.95 plus shipping and handling. The $49.95 price
      tag came with a money back guarantee, or could be used towards a purchase of
      the
      complete EMC 2 set
      of
      irons.





**PGA
      Tour Presence:** The
      PGA
      tour represents the pinnacle of achievement in golf. Equipment manufacturers
      spend tens of millions of dollars in endorsements to have the top ‘names’ use
      their equipment. On the other hand, the tour pros need equipment they have
      complete confidence in to perform at their peak.





The
      Company recognized this fact, and, took the bold move to invite touring pros
      to
      try scandium metal alloy clubs. The Company sponsors a tour van and has a
      Company representative available at many of the PGA tour events.





The
      result is that Element 21 shafted clubs are now being played on all three men's
      Professional Golf Tours. Several players on the Nationwide, PGA and Champions
      Tours have requested that their clubs be fitted with Element 21 Eagle One
      Scandium Alloy shafts since the beginning of the 2007 season. Included in this
      mix are a 3-time US Ryder Cup Team Member and former US Ryder Cup Team Captain,
      and an 11-time winner on the PGA Tour, with 97 career Top 10 Finishes to his
      credit.




One
      of
      the top ten ranked players in the world has also switched to Element
      21 's
      Eagle
      One Scandium shafts. The player ranked high up on the PGA money list, and one
      of
      the most recognizable names in golf. As of August 2007, he had a total of 31
      PGA
      tour wins, including two PGA Championships. He also has amassed 21 international
      wins and over $53 million in PGA Tour winnings during his illustrious career.




**E.
      Launch of Fishing Equipment Line**




In
      June
      of this year, the Company began an expansion into recreational fishing
      equipment. On June 21, 2007, the Company entered into a non-exclusive,
      world-wide Patent License with Advanced Light Alloys Corporation aka ALA
      Corporation by which Element 21 licensed Advanced to make, use, and sell fishing
      equipment utilizing certain of Element 21’s patents.




The
      Company hired top fishing rod designer, Ken Whiting to bring his revolutionary
      fishing rod designs to market. Ken Whiting has been named Senior Vice President
      of Product Development and Vice President of newly formed Element
      21 tackle
      division, called Element
      21 Fishing.




Whiting
      is responsible for the creation of several new rod lines to be marketed under
      the Element
      21 Fishing
      brand as well as running the day to day operations of the new tackle division.
      Whiting, who is widely known and respected in the tackle industry for his
      innovation and technology, brings to Element
      21 over 27
      years of successful product design and development experience. Ken has now
      won
      five ICAST Best of Show's in the rod category out of the six years he has been
      in the tackle industry. ICAST is the world's largest sport fishing trade show.




6




This
      year
      ICAST celebrated 50 years of uniting the world's largest showcase of innovation
      in sport fishing gear and accessories under one roof. Employing advanced nano
      technology and Computer Generated simulation techniques, Element
      21 introduced its newest product line at the 2007 ICAST show in July. The Company
      was rewarded with three first place equipment awards in the following
      categories:




1.
            Best
                salt water rod award




2.
            Best
                fly rod award




3.
            Overall
                best product award




The
      Company has signed a deal with 2007 Bassmaster Classic Champion Boyd Duckett
      to
      endorse Element
      21 Fishing
      equipment. Boyd will be heavily involved in field testing all of Element
      21 's
      new
      rod lines, as well as providing technical assistance with other forms of
      advertising that Element
      21 will be
      pursuing throughout the coming year.




In
      addition, Boyd will act as pro staff manager and will be actively involved
      in
      the selection of Element
      21 's
      Pro
      Staff. The Company is presently in the processing of ramping up production
      of
      the new line of rods.




**F.
      Operations and Management**




To
      date,
      the Company has operated solely through strategic consultants and without
      full-time employees.




Consultant
      Nataliya Hearn, PhD, who is our CEO and President, is based in Toronto, Canada,
      and oversees the Company’s financing, operations, and engineering.




John
      Grippo, a consultant to the Company who was appointed as the Company’s Chief
      Financial Officer in March, 2006, has over 15 years experience as a CFO for
      public and private companies ranging in size up to $250 million in annual
      revenues.




Consultant
      David Sindalovsky is responsible for material sourcing, manufacturing and
      production path developments, and supervising the engineering and design of
      the
      golf club components.




Mark
      Myrhum, Senior Designer, has been providing club design solutions to the golf
      industry for more than 15 years. After an 8-year career as the Principal
      Engineer and Chief Designer for Wilson Golf, Mark Myrhum started MCM Golf,
      Inc.
      in 1996. His clients have included Wilson Sporting Goods, McHenry Metals,
      Carbite Golf, MasterGrip, Tour Edge and others.




As
      previously noted, the Sales team includes experienced industry veterans Bill
      Dey, Michael McDevitt, Vice President of Sales - North America and Keith
      Kiendel, Vice President of International Sales.





The
      Company believes that this structure is advantageous because it allows the
      Company to avoid having large marketing, administrative and development
      organizations in order to be responsive to fluctuations in the marketplace
      that
      have plagued other start-up golf companies.




7


Through
      strategic relationships the Company has been able to create vertical
      integration, which includes material sourcing, alloying, and proprietary
      manufacturing paths for production of semi-finished and finished golf
      components, engineering, design, and sales. A strategic supply agreement is
      in
      place with an affiliate of Kamensk-Uralsky Metallurgical Works Joint Stock
      Company, located in a number of locations in Russia, also known as OAO KUMZ.
      Under this agreement, concentrated scandium will be produced to the
      specification of the Company by the KUMZ affiliate. KUMZ will also provide
      ongoing technology transfer for the latest innovations in scandium alloys to
      the
      Company as they become available. KUMZ is a well-established, diversified
      producer of aluminum, aluminum alloys and products for aerospace, shipbuilding,
      automotive, and other industries. KUMZ is also the world’s largest facility
      specializing in scandium alloy products **.** Work in
      scandium initially began 20-25 years ago with the development of scandium
      aerospace alloys for fighter aircraft.




The
      licensed manufacturing partners of the Company include:




-
            Yunan
                Aluminum, which is in the business of manufacturing precision tubing
                for
                outdoor recreation and sporting markets;




-
            OT-A
                Golf, which is one of the largest golf club manufacturers in the
                world,
                specializing in high end golf clubs, manufacturer for the top end
                OEMs
                such as Nike; and




-
            Pan
                Osprey, manufacturer of OEM golf equipment specializing in golf clubs
                manufactured under license for some of the leading brand names in
                golf.
                Pursuant to the Company’s exclusive manufacturing agreement with its
                manufacturing partners, the Company provides the raw materials from
                which
                the manufacturers are trained and educated to produce the scandium
                line of
                clubs under the Element 21 brand name.




**The
      Golf Industry**





The
      golf
      industry is a $60 billion dollar market. Approximately $5.5 billion each year
      is
      spent on golf equipment, with roughly half of that coming from the key U.S.
      market. Metal woods alone account for $1 billion in sales.





The
      explosion of oversized clubs in 1992, titanium clubs in 1995, and multi-metal
      undersized clubs has proven that innovative designs and new materials promising
      improved performance are quickly embraced by the consumer and offer tremendous
      marketing advantages for the innovating companies. Companies such as Adams
      (with
      its patented ‘Tight Lies ® ’
fairway
      woods grew from $2 million in sales to over $100 million between 1995 and
      1997.





However,
      since the introduction of titanium, there have been no significant introductions
      of new materials into the golf equipment market. Advances in shaft
      design/composition have been refinements of existing technology. It is common
      knowledge within the community of golf professionals that the most important
      part of the performance of any club is the shaft, and the easiest way to improve
      performance is with a better shaft quality.





From
      a
      retail perspective, there are 2,000 golf-only stores a s
      listed
      by The National Golf Foundation’s Directory of Golf Retailers: Off-Course Golf
      Retail Stores in the U.S. This does not include on-course stores for which
      The
      NGF has over 16,000 listed golf courses in the U.S. Additionally, there is
      a
      significant number of multi-line Sporting Goods Stores such as Dick’s and Sport
      Authority that carry golf equipment. Total industry sales of equipment continue
      to be healthy.




8


**Benefits
      of Scandium Metal Alloy**




Element
      21 ’s
      proprietary Scandium metal alloy golf products have outstanding potential in
      the
      industry based on the following factors:




·
            The
                results of player and robotic testing indicate Scandium’s improved
                performance over leading titanium, steel and graphite clubs and shafts,
                providing increased distance and less dispersion. In essence, this
                allows
                longer more accurate results, which are impossible to achieve with
                current
                metals and manufacturing techniques.


·
            Unique
                features of Scandium metal alloy that can be engineered to provideElement
                21’s
                trademarked ShokBlok benefits, reduced vibration and a softer, more
                forgiving feel upon impact. This can translate into real world benefits
                in
                terms of reduced strain on the musculoskeletal system - a real concern
                of
                professional and avid amateur
                players.


·
            55%
                reduced density and 25% specific strength advantage over titanium
                alloys;


·
            Scandium
                is softer than titanium providing superior feel and workability for
                the
                player;


·
            Scandium
                is lower in cost and easier to fabricate than
                titanium;


·
            75%
                reduced density compared to stainless
                steel


·
            Significant
                cost and performance advantages over composite materials such as
                graphite;


·
            Excellent
                Fatigue Resistance


·
            Weldable


·
            Extremely
                high consistency of manufacture to extremely tight tolerances. This
                feature, particularly in golf shafts, is of utmost importance in
                providing
                a set of clubs that play consistently, one to the
                other.


·
            Historically,
                many popular golf brands have achieved success based on new performance
                related features introduced to the game, such as Callaway’s introduction
                of Titanium. The superior performance of Scandium metal alloy provides
                just such a performance improvement, which can easily be translated
                into
                benefits that are meaningful to
                consumers.




Element 21 Golf Company




9


Element
      21Scandium
      Metal Alloy Shafts





The
      market for golf shafts was estimated by Golfdatatech to be close to 30 million
      units in the US and 60 million units worldwide. Golfdatatech estimates that
      the
      size of the market for high performance premium shafts that the Company’s
      Scandium shafts will initially be targeting represents approximately 27 million
      units worldwide.




Eagle
      One TM scandium
      metal alloy shafts are superior to the graphite and stainless steel shafts
      currently on the market. With its superior strength to weight ratio versus
      graphite and steel, and its unique metallurgical properties, Element 21's
      patented scandium technology simply outperforms other current golf materials.
      These shafts hit longer, more accurately and have better ‘feel’ at impact than
      any of the traditional materials. The shafts really deliver a ‘true contact
      signature’ at impact.




Scandium's
      inherent metallurgical properties combined with a proprietary 25 step seamless
      production process results in a shaft that is nearly perfectly symmetrical,
      unlike graphite and stainless steel shafts. Unknown to many, steel shafts are
      welded creating a seam or spine not visible to the eye. The difference in the
      tube wall thickness at the point of welding creates an imbalance, which affects
      the consistency of shots. Similarly, the production process for graphite shafts
      also results in inconsistencies through the shaft with similar associated
      problems. Element 21's advanced homogenous grain alignment process for scandium
      provides greater accuracy and improved consistency from club to club.




This
      introduces the prospect of using Scandium metal alloy shafts in place of the
      traditional steel shafts utilized by Tour professionals for their iron play,
      providing the consistency they require coupled with the benefits of improved
      performance over both Steel and Graphite shafted clubs.




Element
      21's Eagle One Scandium Alloy shafts were tested against True Temper's Project
      X
      and Black Gold, Nippon's NS Pro 950, and Matrix Studio 64, which cover top
      steel
      and graphite shaft categories. Element 21 Scandium shafts outperformed every
      one
      of them in both distance and accuracy.





On
      average, the Element 21 Scandium Alloy shaft registered substantially longer
      distance than any other shaft it tested against, in some cases by as much as
      16
      yards at identical swing speeds, using identical 6 iron heads for the test.




Element 21 Golf Company




10


While
      the
      added distance of the Element 21 Scandium Alloy shafts was impressive the
      dispersion/accuracy ratings it achieved were even more overwhelming. The
      Scandium Alloy shafts recorded dispersion/accuracy ratings as low as +/-1.33
      feet from the target zone on center hits. This low dispersion rating showed
      that
      the Element 21 Scandium Alloy shafts are nearly 5 TIMES more accurate than
      their
      nearest competitor.





Less
      than
      2 feet from the target zone on center hits means that the average golfer, with
      a
      less than perfect swing, can now afford to be just that -- less than perfect
      --
      because the forgiveness of the Eagle One Scandium Alloy Shafts from Element
      21
      will keep them in more fairways and allow them to reach more greens in
      regulation than any other shaft on the market.





**ShockBlok** **TM** **:** Concurrent
      with the development of the overall shaft design, the Company has developed
      a
      shock absorbing system under the trademark ShockBlok which redirects shaft
      vibration back into the club head, generating an added energy kick for extra
      distance and reducing the amount of vibration transfer to the player's hands.
      Golfing has a negative effect on the body. High shock energy transferred by
      the
      steel shafts to the player’s hands during a round of golf creates fatigue. For
      frequent golfers, this can lead to stress injuries to a player’s hands, wrist,
      elbows or shoulders, much like ‘tennis elbow’. According to an analysis
      commissioned by a consultant to the Company, Dr. Howard Butler, along with
      two
      orthopaedic physicians, during a typical round of golf, the extra energy
      transmitted to the hands of a golfer using steel shafts is 300% higher than
      Scandium shafts. Over the last 5 years of consumer and Tour player testing,
      the
      Company experience has shown that most users of its shafts would immediately
      notice the superior shock absorption and that Scandium also contributes to
      a
      measurably superior feel as compared with steel and graphite clubs.




**Element
      21** **** **Scandium
      Metal Alloy Club Head Development Program**




The
      Company has completed the design and engineering process for a full line of
      clubs, from drivers to putters. Under the guidance of Mark **** Myrhum,
      David Sindalovsky, and the foremost golf club manufacturers, design improvements
      are being made to streamline mass production of the various golf components.
      Production models of these various clubs have now undergone testing and
      production tooling has been completed, and the products are currently in
      inventory.




All
      Element 21 scandium clubs have a shared feature; Element
      21’s trademarked True Contact SignatureTM. The club
      heads and shafts have been optimized to work as a fully
      “harmonized” golf club, with
      the
      heads and shafts designed to
      pass
      energy from the club head to the shaft at the same frequency, providing the
      golfer with a consistent feel, both “off the centerline” and “along the
      centerline”. This gives the golfer a very tight, concise landing pattern
      resulting in a high level of control and repeatability.




**Element
      21** **** **Scandium
      Metal Alloy Drivers**





Perhaps
      the most significant achievement in terms of business milestones is the
      Company’s recent introduction of its Scandium metal alloy Driver. Most
      recreational golfers spend more time and expense shopping for drivers than
      any
      other club. Company’s reputations rest on the performance of their drivers.
      Element 21’s driver, which literally outperforms the direct competition,
      provides a terrific platform to prove the benefits of the Company’s innovative
      product line.




11


The
      new
      EMC 2 driver
      utilizes a proprietary Multi-Material, Scandium Cup Face (MMSCF) technology,
      which capitalizes on the unique properties of Element
      21 's
      Scandium Alloy and maximizes the drivers Moment of Inertia (MOI). The driver
      proved to be easier to manufacture, and corrected designs of the 2006 limited
      edition driver. At the center of the driver is a forged, Scandium Cup Face,
      designed to maximize energy transfer with the largest sweet spot and extreme
      low
      angle of dispersion, maximizes distance on drives from all areas of the driver
      face. In addition, the Scandium Cup Face has by design "softer" hitting surface,
      resulting in unprecedented, industry-low spin rates on center and off center
      drives. The result is what Element
      21 believes
      to be the most accurate driver in golf by far.




The
      crown
      of the driver is a carbon composite and in turn, the light-weight aspect of
      this
      material allows Element
      21 designers to strategically place more perimeter weight in order to increase
      club
      head stability. This has resulted in not only added distance but straighter
      drives. The sole of the multi-material driver is stainless steel, which adds
      weight where it is needed and provides exceptional wear resistance.




Additionally,
      the patent-pending louvered crown feature of the EMC2 driver complements
      Scandium Face technology by stiffening the crown and focusing energy transfer
      along the centre line. The scandium face and louvered crown in the EMC2 driver
      has created the most efficient energy transfer in the industry.




Element 21 Golf Company




In
      robotic testing, the EMC 2 Scandium
      driver has outperformed both non-conforming and conforming drivers in distance
      and accuracy. The attached bar charts provide a summary of the independent
      test
      result on Scandium vs. Titanium. The EMC 2 Scandium
      Driver has outperformed Titanium drivers by as much as 29 yards in distance
      and
      338% in accuracy.




In
      June
      of this year, the USGA added the Element
      21 Scandium
      driver to its list of the drivers that conform to the rules of golf, a critical
      component for success of the club.




Element 21 Golf Company




12


**Element
      21 Scandium Metal Alloy Irons**




In
      2007,
      the Company introduced a new line of game improvement irons named
      EMC 2 .
      The
      irons were featured in major golf publications, including Golf Digest Magazine
      naming Element 21 EMC 2 Scandium
      Irons as “revolutionary”.




The
      EMC 2 two-piece construction irons (2-LW) are progressively offset to maximize
      trajectory and are considered the most accurate irons in golf.




The
      wide
      sole makes it easy to get proper launch angles from all lies and the
      thermoplastic elastomer backing provides an increased Moment of Inertia (MOI)
      for greater accuracy on off-center hits. EMC 2 iron
      heads are made with an ultra high strength steel face plate for increased ball
      speed while saving weight for optimizing Center of Gravity (CG).




The
      irons
      feature Element
      21 's
      Eagle
      One Scandium alloy shafts. Variable wall thickness and the alloy's high tensile
      strength results in improved accuracy and distance and a vibration dampening
      system called ShockBlok(TM) with 270% better shock attenuation than steel shafts
      that protects golfers' bodies, bones and joints.




**Element
      21** **** **Scandium
      Metal Alloy Hybrids**





The
      EMC 2 hybrids
      are instantly recognizable much like their big brother Driver, due to their
      unique design features that include a louvered effect on the crown plate of
      the
      club. This creates a corrugated effect providing additional strength to the
      club
      head design and allows more freedom to move weight to strategic points within
      the sole of the club head to improve distance and accuracy.





Progressive
      offset of the club head facilitates a maximum trajectory to accommodate a wide
      range of players. The club head is designed with a low center of gravity, making
      it easier to hit balls in less than ideal lies.





As
      in
      other EMC 2 clubs,
      these feature the trademarked Contact Signature Tuned matching of scandium
      shafts with the club head.





These
      clubs are easier to hit off-center, and provide maximum consistency in
      play.




**Sales
      and Marketing**





This
      product development effort has provided the Company with several sales and
      marketing options. These options include the sale of shafts and components
      to
      other original equipment manufacturers (OEMs) and to custom club fitters, in
      addition to the sale of Drivers, irons and hybrids via traditional retail
      distribution channels. Technology
      Licensing -- limited licenses to off-shore golf component manufacturers, is
      another viable sales development strategy.




Currently,
      Scandium shafts are available to club makers and fabricators through the PGMC
      distribution channels and several catalogues and web sites, including high
      profile participants such as Golfsmith.




13


The
      retail sales team is making good progress in developing traditional retail
      channels in North America, and the Company anticipates that these efforts will
      accelerate with the addition of the EMC 2 Driver
      to
      the product line, including high profile retail chains such as PGA
      Tour
      Super Stores, Golfers' Warehouse, Nevada Bob’s, and Edwin Watts.




The
      international distribution is now managed by Keith Kiendel, ex-VP of global
      sales of Callaway. Mr. Kiendel is bringing to the Company his name and contacts
      developed through his distinguished carrier. Currently, the Company has signed
      a
      three year distribution agreement in South Korea and is in discussions with
      19
      other world regions.




As
      part
      of its sales initiative, the Company established a new call-in and customer
      service center, full assembly facilities, warehousing, and shipping and
      receiving capabilities. All business data generated can be integrated into
      a
      comprehensive computerized tracking / database management solution. This
      integrated system provides access to key information specific to running
      large-scale operations tailored to our needs as a golf company. The Company
      has
      created a very cost-effective solution that will be highly scalable in order
      to
      manage future growth.




**Scandium
      Raw Material Supply**





The
      raw
      material that goes into the production of Scandium comes from scandium oxide,
      which has about 60% scandium metal content. Scandium oxide is used in the
      production of “master alloy,” which is then added to nine other metals and other
      alloy ingredients to create a concentration of approximately 0.001% - 10.00
      %
      scandium in the final alloy used in products. This is known as Scandium, which
      has the technical advantages needed for production of high performance equipment
      for sports, transportation, military and aerospace applications and is the
      subject of the Assignors’ patents.




**Status
      of Any Publicly Announced New Product or Service**




The
      Company’s web site, at *www.e21golf.com* *,* c ontains
      its most recent press releases and financial reports as well as independent
      test
      results of the Company’s shafts against the leading high-performance golf shafts
      in the world. For additional information or earlier press releases go to any
      website’s financial bulletin board for Element 21 Golf Company (formerly BRL
      Holdings, Inc. (OTCBB EGLF).




**Competitive
      Business Conditions**




All
      major
      manufacturers of golf clubs, shafts and related equipment will be major
      competitors of our planned business operations, and all have greater resources,
      marketing capabilities and name recognition than we do. However, the Company
      believes that it would be impossible for a competitor to use scandium alloys
      in
      golf club production without infringing on the two US patents exclusively
      licensed to Element 21. The marketing and branding of Scandium has also received
      a high volume of world-wide media coverage, due to the upcoming golf shot from
      the International Space Station.




14


**Patents,
      Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or Labor
      Contracts**





The
      Company does not hold direct title to any patents. However, when it acquired
      Element 21, it acquired the exclusive right to use, produce and sell a specified
      range of scandium alloy for golf club shafts and golf heads. Although these
      rights do not cover all mixes of scandium alloy, the Company believes that
      any
      scandium alloy outside the range of its patent protected rights cannot be used
      to produce golf club shafts or heads in an economically feasible manner. The
      golf applications under these patent rights acquired by us in the Element 21
      Acquisition are U. S. Patent Nos. 5,597,529 issued on January 28, 1997, and
      5,620,662, issued on April 15, 1997, initially filed by Ashurst Technologies,
      Inc. and acquired on January 7, 2001 by Nataliya Hearn and David Sindalovsky.




The
      Company has also signed a new license agreement with David Sindalovsky allowing
      it to enter the sport fishing equipment category.




**Element
      21 Fishing**





On
      June
      21, 2007, Element 21 Golf Company entered into a non-exclusive, world-wide
      Patent License with Advanced Light Alloys Corporation aka ALA Corporation by
      which Element 21 licensed Advanced to make, use, and sell a line of fishing
      equipment utilizing certain of Element 21’s patents.




The
      Company hired top fishing rod designer, Ken Whiting to bring his revolutionary
      fishing rod designs to market. Whiting is responsible for the creation of
      several new rod lines to be marketed under the Element 21 Fishing brand as
      well
      as running the day to day operations of the new tackle division.




Mr.
      Whiting’s initial designs comprise the ‘carrot stick’ design in both casting and
      spinning rod variations. The CARROT STIX LTX Casting Rod measures 6’ 9" with a
      parabolic action, is excellent for crankbaits, top water, and spinner baits
      and
      jerk baits.




The
      CARROT STIX LTX is a 6' 7" medium action spinning rod. Ideal for tubes, worms,
      grubs, and small crankbaits, etc. This rod is Excellent for
      walleye.




Element
      21’s “CARROT STIX” represents the latest in cutting edge technology. Nano level
      Cellulose Bio-Fibers are extracted from carrots, processed into a super high
      strength epoxy matrix and then this matrix is molded around a thin walled ultra
      high modulus graphite skeleton. When the two materials bond they create what
      we
      believe to be the finest rod blank ever made.





Another
      first for “CARROT STIX” is that a Finite Element Analysis (FEA) program was used
      to design the blank. By using FEA, we have been able to identify and remove
“Hot
      Spots”, or areas in the blanks that show a high propensity for breakage. This
      allows for the creation of a blank that is evenly stressed when loaded, thereby
      reducing its potential for failure. The blank is bonded to a fully exposed
      grip,
      for full contact with the rod. This set up is found on both spinning and casting
      models.




15


Consider
      the features of a molded “CARROT STIX” blank:


·
            Ultra
                light yet super strong


·
            Increased
                damping and reduced rod vibration for longer smoother
                casts


·
            Reduced
                blank ovalization


·
            Effortless
                casting and pinpoint accuracy


·
            Full
                blank loading for increased power


·
            Computer
                assisted blank design utilizing
“Finite


·
            Element
                Analysis”





Each
      “CARROT STIX” is hand made using the highest quality components and meticulous
      attention to detail. “CARROT STIX’s” are special order only with a standard
      delivery time of 6 to 8 weeks dependent on model and demand. Each rod comes
      with
      a rod bag and Cordura over rod case.





The
      butts
      on each are also finished off with the same removable anodized aluminum butt
      cap, providing easy access to the rod’s weight port and allowing for
      personalized balancing to your own individual specs. Add new Caxin Lite guides
      with TiCH inserts, frames and our “Maximum Exposure” split reel seats and you
      will have one of the finest competition rods ever built.





The
      exceptional feel and performance was rewarded with the unprecedented capture
      of
      awards at this summer’s ICAST show, where the Company won a trifecta of
      awards;


·
            Best
                freshwater rod;


·
            Best
                salt water rod;


·
            Overall
                best product in show award.





In
      addition to the Carrot Stix, the Company has developed the Boyd Duckett Classic
      Gold rod. Co-designed by Boyd Duckett, 37th Bassmaster Classic World Champion
      and our own Ken Whiting the “Wizard of Rods”, our new Classic Gold series is a
      striking combination of versatility and performance.





From
      its
      high tech Multi-Modulus and filament wound Carbon Fiber NANO tube blank to
      its
      anodized aluminum weight port butt cap, the Classic Gold series is one fine
      piece of fishing equipment. Meticulous attention to detail is paid to the
      construction of each and every Classic Gold rod as noted by many inherent
      features which would typically, only be found on custom rods. For example,
      locking wraps on each single foot guide, guides with no ceramics to crack or
      fall out, our easy access weight port for personal balancing and our own in
      house “Maximum Exposure II” split reel seat for the ultimate in blank / hand
      contact and sensitivity. In terms of performance the Classic Gold series
      exhibits an extremely well balanced combination of lure presentation,
      castability and overall rod control.





The
      Boyd
      Duckett Edge Series features


·
            Super
                Set Filament Wound Butt Section and Ultra Responsive Multi-Modulus
                Tip
                Section


·
            Lite
                Weight Caxin guides with Double Swaged TiCH Inserts and black stainless
                frames


·
            Ultra
                Lite Graphite Filled Split Reel Seats on both Casting and Spinning
                Models


·
            Thermalon
                Velvet Touch Split Grip for Extra Grip and
                Comfort


·
            ll
                New TiCH Non-Obtrusive hook keeper


·
            Direct
                Access Butt Grip Weight Port for Easy Balancing to Personal
                Specifications.





In
      the
      Edge Series, Element 21 brings you a series of rods with that custom touch
      you’ve always wanted at over the counter pricing. The blank incorporates the
      latest advances in filament winding and pairs it up with a highly responsive
      Multi- Modulus tip that provides for a superior combination of hook set, lure
      presentation and sensitivity.




16


The
      Edge
      features today’s popular split grip fashioned from our new “Velvet Touch”
Thermalon for extra grip, comfort and thermal protection in cold weather.
      Ultimate sensitivity at the reel is provided by our “Maximum Exposure” split
      reel seat which exposes more blank when palming than any other reel seat on
      the
      market. Add to this a set of Caxin’s new double swaged TiCH inserted lite
      guides, a hook keeper that allows you to hook up without removing your soft
      baits and a blank direct weight port which enables you to balance your rod
      to
      your own personal specifications without the addition of an external weight
      system.





The
      Company is currently developing relationships with OEM manufacturers to produce
      this exceptional line-up of innovative products. Ken Whiting has solid
      relationships with high end fishing rod manufacturers, to ensure a high level
      of
      quality control to maintain the highest standard in the final
      products.





With
      the
      incredibly high profile of our products introduction at ICAST, coupled with
      the
      product endorsement by famous angler Boyd Duckett, we anticipate that setting
      up
      retail distribution will proceed relatively smoothly.




**Effects
      of Existing or Probable Governmental Regulations**




***Penny
      Stock***




Our
      common stock is “penny stock” as defined in Rule 3a51-1 of the Securities and
      Exchange Commission (“SEC”). Penny stocks are stocks:




·
            with
                a price of less than five dollars per share;




·
            that
                are not traded on a “recognized” national exchange;




·
            whose
                prices are not quoted on the NASDAQ automated quotation system; or




·
            in
                issuers with net tangible assets less than $2,000,000, if the issuer
                has
                been in continuous operation for at least three years, or $5,000,000,
                if
                in continuous operation for less than three years, or with average
                revenues of less than $6,000,000 for the last three years.




Section
      15(g) of the Exchange Act and Rule 15g-2 of the Securities and Exchange
      Commission require broker/dealers dealing in penny stocks to provide potential
      investors with a document disclosing the risks of penny stocks and to obtain
      a
      manually signed and dated written receipt of the document before making any
      transaction in a penny stock for the investor’s account. You are urged to obtain
      and read this disclosure carefully before purchasing any of our shares.




Rule
      15g-9 of the Securities and Exchange Commission requires broker/dealers in
      penny
      stocks to approve the account of any investor for transactions in these stocks
      before selling any penny stock to that investor. This procedure requires the
      broker/dealer to:




·
            get
                information about the investor’s financial situation, investment
                experience and investment goals;




17


·
            reasonably
                determine, based on that information, that transactions in penny
                stocks
                are suitable for the investor and that the investor can evaluate
                the risks
                of penny stock transactions;




·
            provide
                the investor with a written statement setting forth the basis on
                which the
                broker/dealer made his or her determination; and




·
            receive
                a signed and dated copy of the statement from the investor, confirming
                that it accurately reflects the investors’ financial situation, investment
                experience and investment goals.




Compliance
      with these requirements may make it harder for our stockholders to resell their
      shares.




You
      may
      read and copy any materials filed with the SEC at the SEC’s Public Reference
      Room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain
      information on the operation of the Public Reference Room by calling the SEC
      at
      1-800-SEC-0330. The SEC maintains an internet site that contains reports, proxy
      and information statements, and other information regarding issuers that file
      electronically with the SEC at *www.sec.gov* ** .




**Small
      Business Issuer**




The
      integrated disclosure system for small business issuers adopted by the SEC
      in
      Release No. 34-30968 and effective as of August 13, 1992, substantially modified
      the information and financial requirements of a “Small Business Issuer,” defined
      to be an issuer that has revenues of less than $25,000,000; is a U.S. or
      Canadian issuer; is not an investment company; and if a majority-owned
      subsidiary, the parent is also a small business issuer; provided, however,
      an
      entity is not a small business issuer if it has a public float (the aggregate
      market value of the issuer’s outstanding securities held by non-affiliates) of
      $25,000,000 or more. We are deemed to be a “small business issuer.”




**Research
      and Development Expenses during Past Two Fiscal Years**




During
      the fiscal years ended 2007 and 2006 there were no research and development
      costs incurred by the Company. To date, the Company has relied on its
      consultants and their existing infrastructure to develop its initial products
      and has reflected these costs as operating costs. We anticipate incurring
      spending related to research and development during fiscal year 2008 when such
      costs will be expensed as incurred.




**Number
      of Employees**




As of
      October 4, 2007 we h ave
      no
      employees with all individuals instead engaged as consultants to the Company.
      The key individuals include:




·
            Nataliya
                Hearn, PhD, our CEO and President, is based in Toronto, Canada and
                oversees day to day operations of the Company including financing,
                administration and engineering.




·
            John
                Grippo, CPA, our CFO, is based in Scarsdale, New York, and oversees
                the
                financial aspects of the Company.




18


·
            Bill
                Dey, COO and Executive Vice President, is based in Toronto, Canada,
                and
                operates as the Company’s General Manager and is responsible for all
                aspects of the Company’s sales and marketing
                strategy.




·
            Keith
                Kiendel, VP of International Sales, is based in Toronto, Canada and
                is
                responsible forsetting
                up of international distribution accounts for Element
                21.




·
            Michael
                McDevitt, VP of North American Sales, is based in Chicago and is
                responsible for
                managing commission sales reps, setting up and managing retail accounts
                across North America.




·
            David
                Sindalovsky, based in Toronto, Canada, is responsible for material
                sourcing, manufacturing, engineering and the Company’s relationship with
                strategic partners in Asia and
                Russia.




·
            Mark
                Myrhum operates as the company’s Senior Designer and is the main liaison
                with manufacturers located in China.




·
            Andy
                Harris is responsible for PGA tour presence and PGA player relations.




This
      consultant structure allows the Company to avoid having large fixed-cost
      marketing, administrative and development organizations in order to be
      responsive to fluctuations in the marketplace that have plagued other start-up
      golf companies.




**ITEM
              2.**
            **DESCRIPTION
                OF PROPERTY**




The
      Company’s offices are located at 200 Queens Quay East, Unit #1, Toronto, Canada.
      The space is leased from Queens Quay Investments, Inc. pursuant to a three
      year
      lease ending April, 2009. The lease calls for monthly payments of $1,927 plus
      GST for finished offices measuring a total of approximately 1,927 square feet.




In
      order
      to have a presence in the US, the Company also shares office space in Jersey
      City, New Jersey for which it pays $250 per month in rent under a month to
      month
      agreement.




The
      Company’s inventory is currently managed by Horton’s and Sons, located in
      Markham, Canada. Horton’s manages Element 21’s call-in and customer service
      center (including credit checks), and also provides complete assembly
      facilities, warehousing, and shipping and receiving capabilities.




**ITEM
                3.**
            **LEGAL
                PROCEEDINGS**




We
      are
      not a party to any pending legal proceedings, our property is not the subject
      of
      a pending legal proceeding and to the knowledge of our management, no
      proceedings are presently contemplated against us by any federal, state or
      local
      governmental agency.




Further,
      to the knowledge of our management, no director or executive officer is party
      to
      any action in which any has an interest adverse to us.




**ITEM
                4.**
            **SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY
                HOLDERS**




**None**




19


**PART
      II**




**ITEM
                5.**
            **MARKET
                FOR COMMON EQUITY AND RELATED STOCKHOLDER
                MATTERS**




**Market
      Information**




There
      has
      never been any established trading market for our shares of common stock and
      there is no assurance that a trading market will develop. Our common stock
      is
      presently quoted on the Over-the-Counter Bulletin Board (“OTCBB”) of the
      National Association of Securities Dealers under the symbol “EGLF” as reflected
      below. No assurance can be given that any market for our common stock will
      develop in the future or be maintained. If an established trading market ever
      develops in the future, the sale of our common stock pursuant to Rule 144 of
      the
      Securities and Exchange Commission, or otherwise, by members of our management
      or others may have a substantial adverse impact on any such market.




The
      range
      of high and low bid quotations for our common stock during each of the last
      two
      fiscal years and the most recent interim quarter is shown below. Prices shown
      in
      the table represent inter-dealer quotations, without adjustment for retail
      markup, markdown, or commission, and do not necessarily represent actual
      transactions.




**High**
            
            **Low****Fiscal
                Year Ended June 30, 2006**First
                Quarter
            
            $
            0.14
            
            $
            0.04Second
                Quarter
            
            $
            0.11
            
            $
            0.06Third
                Quarter
            
            $
            0.43
            
            $
            0.08Fourth
                Quarter
            
            $
            0.24
            
            $
            0.14**Fiscal
                Year Ended June 30, 2007**First
                Quarter
            
            $
            0.20
            
            $
            0.16Second
                Quarter
            
            $
            0.25
            
            $
            0.17Third
                Quarter
            
            $
            0.20
            
            $
            0.16Fourth
                Quarter
            
            $
            0.19
            
            $
            0.14**Interim
                Period Ended October 4, 2007**
            
            $
            0.22
            
            $
            0.12




**Holders**




The
      number of record holders of our common stock as of October 4, 2007 was
      approximately 1,918. ****




**Dividends**




We
      effected a two-for-one stock split in the form of a stock dividend on all our
      outstanding shares of common stock (including shares issued in connection with
      the Acquisition) on the record date of October 4, 2002, which also resulted
      in
      similar adjustments to all of our shares of common stock underlying our
      outstanding options. Except as otherwise indicated herein, all share and per
      share data reflected in this Annual Report has been retroactively restated
      to
      reflect this dividend.




20




We
      also
      resolved to effect, by exemption from registration under the Securities Act
      of
      1933, as amended (the “Securities Act”) or by registration under the Securities
      Act, a spin-off of our interests in AssureTec Holdings, Inc. to our shareholders
      of record as of October 4, 2002 (excluding shareholders who received shares
      of
      the Company’s common stock in connection with the acquisition of Element 21).
      The Company currently is preparing the documentation necessary to implement
      this
      distribution.




At
      a
      Special Meeting of the Company’s stockholders on May 8, 2006, the stockholders
      approved a resolution unanimously adopted by the Board of Directors to authorize
      a series of 19 separate amendments to the Company's Certificate of Incorporation
      in order to effect a reverse stock split of the outstanding shares of the
      Company's common stock at each ratio of a minimum of 1 for 2, a maximum of
      1 for
      20, and at a ratio equal to 1 for each whole number between 2 and 20. The Board
      of Directors was thereby given the discretion to unilaterally determine an
      appropriate stock split ratio within a range of 1 for 2 and 1 for 20 and to
      give
      effect to the corresponding amendment of the Company's Certificate of
      Incorporation which effects such stock split and to abandon each other amendment
      adopted relating to the reverse stock split. No reverse split has been
      implemented as of the filing date. Because the aggregate number of shares of
      common stock would be reduced as a result of the reverse stock split, if and
      when effected, the monetary per share value of each remaining share of common
      stock would increase and we anticipate that the number of holders of the
      Company’s common stock would decrease as a result of fractional shares created
      by the reverse stock split. Consequently, any cash dividends that were to be
      paid per share would increase proportionately on a per share basis as compared
      to the cash dividend paid prior to the reverse stock split.




We
      have
      not paid any cash dividends on our common stock, and it is not anticipated
      that
      any cash dividends will be paid in the foreseeable future. The Board of
      Directors intends to follow a policy of using retained earnings, if any, to
      finance our growth. The declaration and payment of dividends in the future
      will
      be determined by the Board of Directors in light of conditions then existing,
      including our earnings, if any, financial condition, capital requirements and
      other factors.




**Recent
      Sales of Unregistered Securities**




During
      the three months ended September 30, 2005, the Company issued an aggregate
      of
      11,281,265 shares of common stock to twenty-four consultants in consideration
      for services rendered in the aggregate amount of $779,539. The Company also
      sold
      warrants to purchase 1,000,000 shares of its common stock at a price of $0.08
      per warrant, realizing proceeds of $80,000. The exercise price for shares
      purchased under this warrant is $0.15 per share. The shares and warrants were
      issued in reliance on exemptions from registration pursuant to Section 4(2)
      of
      the Securities Act of 1933, as amended.




In
      February 2006, the Company issued a warrant to purchase 1,000,000 shares of
      the
      Company's common stock at a price of $0.01 as part of the Company's repayment
      of
      outstanding indebtedness to a creditor of the company. The warrants vested
      immediately and are exercisable for a three year period from the date of
      issuance.




Between
      January 17 and March 6, 2006, the Company issued 10% Convertible Promissory
      Notes in the aggregate principal face amount of $540,000 to 15 individual
      investors. Each such investor also received three separate warrants (a warrant
      exercisable for one year, a warrant exercisable for two years, and a warrant
      exercisable for three years) to purchase shares of the Company's common stock
      entitling the investor to invest an amount equal to the investor’s investment in
      the Notes in additional shares of the Company's common stock subject to certain
      price adjustments. The Notes mature one year after issuance and accrue interest
      at an annual interest rate equal to 10% per annum, payable at maturity. During
      the year ended June 30, 2007, notes totaling $75,000 plus accrued interest
      of
      $7,500 were converted into 485,294 shares of common stock and two $20,000 notes
      and all related warrants were cancelled and the proceeds returned to the
      investors. $225,000 of the notes matured and were paid, along with the requisite
      accrued interest of 10% per annum and the original one year warrants expired
      without being exercised. The remaining $200,000 of notes were extended to July
      15, 2007, including the rights to convert the note and the one year warrant.
      Shortly before June 30, 2007, the holder of the note gave up all his warrants
      in
      return for early repayment of the note.




21




Between
      May 5 and June 29th, 2006, the Company issued 10% Convertible Promissory Notes
      in the aggregate principal face amount of $623,000 to 16 individual investors
      (the “623,000 Notes”). Each such investor also received warrants, exercisable
      for one year, to purchase shares of the Company's common stock entitling the
      investor to invest an amount equal to 150% of the investor’s investment in the
      Notes in additional shares of the Company's common stock subject to certain
      price adjustments. The Notes mature one year after issuance and accrue interest
      at an annual interest rate equal to 10% per annum, payable at maturity. During
      the year ended June 30, 2007, notes totaling $300,000 in principal plus $30,000
      in accrued interest were converted into 2,200,000 shares of common stock. During
      the month of July, 2006, the Company issued additional 10% Convertible
      Promissory Notes in the aggregate principal face amount of $180,000 to 6
      additional investors. The terms of the notes and warrants are identical to
      the
      $623,000 Notes.




In
      February 2006 the Company issued an aggregate of 2,113,556 shares of newly
      designated Series A Convertible Preferred Stock in order to settle outstanding
      debts owed to officers and consultants of the Company (a portion of which were
      unpaid consulting fees) in the aggregate amount of $2,113,556. The shares of
      Series A Convertible Preferred Stock are convertible at the option of the holder
      at any time after issuance. Each share of Series A Convertible Preferred Stock
      is convertible into that number of shares of common stock of the Company as
      is
      equal to the original issue price of shares of Series A Convertible Preferred
      Stock, or $1.00, divided by the conversion price which is initially equal to
      $0.255 and is subject to adjustment in certain cases. Each share of Series
      A
      Convertible Preferred Stock carries with it the right to fifty
      votes.




On
      July
      31, 2006, the Company sold an aggregate of 117,648 shares of Series B
      Convertible Preferred Stock (the “Series B Preferred Stock”) and issued warrants
      to purchase an aggregate of 17,647,060 shares of common stock for an aggregate
      purchase price of $2,000,000. The Company paid 15% commissions to Futon
      Investment Ltd. in connection with its issuance of shares of Series B Preferred
      Stock and the accompanying warrants. The shares of Series B Preferred Stock
      are
      convertible into shares of Common Stock at the election of the Purchasers.
      Each
      share of Series B Preferred Stock is initially convertible into 100 shares
      of
      Common Stock, with such conversion ratio subject to adjustment in the event
      of
      dilutive issuances, stock splits, combinations, certain dividends and
      distributions, and mergers, reorganizations or other similar recapitalization
      events. The warrants may be exercised in whole or in part for shares of Common
      Stock by payment by the Purchasers of the applicable exercise price in cash
      prior to the expiration of the warrants on January 31, 2009. On November 30,
      2007 the Company sold an aggregate of 117,648 shares of Series B Convertible
      Preferred Stock (the “Series B Preferred Stock”) and issued warrants to purchase
      an aggregate of 17,647,060 shares of common stock for an aggregate purchase
      price of $2,000,000. The terms of the Series B Preferred Stock and the warrants
      were identical to the sale on July 31, 2006.




Between
      June 5, 2007 and June 10, 2007, the Company entered into Subscription Agreements
      with four individuals, each of whom is an accredited investor, pursuant to
      which
      the Company agreed to sell an aggregate of 2,356,471 shares of the Company’s
      common stock, par value $0.01 per share. The price per share under the
      Subscription Agreements is $0.17. Each Investor also received a warrant to
      purchase shares of the Company’s common stock in an amount up to the number of
      shares purchased. The exercise price of each warrant is $0.19 and expires on
      May
      31, 2008. The Company has granted the investors piggyback registration rights
      (subject to certain limitations).




22


On
      June
      15, 2007, the Company consummated a $2,000,000 equity financing by entering
      into
      two Series B Preferred Stock Subscription Agreements (each a “Series B
      Subscription Agreement” and collectively the “Series B Subscription Agreements”)
      with each of Vladamir Goryunov and Clearline Capital, LLC (each a “Purchaser”
and collectively, the “Purchasers”). Each Series B Subscription Agreement
      provides for the sale by the Company to the applicable Purchaser 58,824 shares
      of the Company’s Series B Convertible Preferred Stock, par value $0.10 per share
      (the “Series B Preferred Stock”), and warrants to purchase an aggregate of
      5,882,400 shares of the Company’s Common Stock, $.01 par value per share, in
      exchange for and in consideration of an aggregate investment by each of the
      Purchasers of $1 million in cash.




All
      of
      the above securities issuances were made upon reliance on the exemption from the
      Securities Act registration requirements contained in Section 4(2) of the
      Securities Act of 1933 and pursuant to Regulation D promulgated
      thereunder.




**Securities
      Authorized for Issuance Under Equity Compensation Plans**




Equity
                Compensation Plan InformationPlan Category
            
            Number of Securities to
              be Issued Upon
              Exercise of Outstanding
              Options, Warrants and
              Rights
            
            Weighted-Average
              Exercise Price of
              Outstanding Options,
              Warrants and Rights
            
            Number of Securities
              Remaining Available
              for Future Issuance
              under Equity
              Compensation Plans
              (Excluding Securities
              Reflected in Column )*Equity
                compensation plans approved by security holders
            
            
            0
            
            
            N/A
            
            
            6,063,135Equity
                compensation plans not approved by security holders
            
            
            14,752,313
            
            $
            0.072
            
            
            N/ATotal
            
            
            14,752,313
            
            
            
            
            
            6,063,135







*
      At June
      30, 2007




23




**ITEM
                6.**
            **MANAGEMENT’S
                DISCUSSION AND ANALYSIS OR PLAN OF OPERATION -**




**Overview**




Fiscal
      2007 has continued to be one of transition for the Company - from development
      stage status to a meaningful level of sales of actual products. As of the
      beginning of fiscal 2006, the Company required financing in order to produce
      inventory necessary to supply retail channels in North America. Through July
      2007, the Company was able to secure funding from several sources in the
      aggregate amount of approximately $7 million. These financings allowed the
      Company to continue its efforts to develop distribution channels for its
      upcoming products. The Company has established a sales structure with internal
      and field sales representatives, who manage current sales and have been actively
      building the foundation of sales and distribution systems for the Company’s
      products. To date, the Company has introduced its products through retailers,
      green grass (on course PGA shops) sales, golf shows, catalogue sales, web-sales,
      and PGMC and their shaft distribution sale channels The Company needs to
      increase consumer awareness of the scandium advantages in golf, in order to
      increase the demand for its sales. Subject to raising necessary additional
      funds
      (of which there can be no assurance), the Company intends to launch an
      infomercial on the Golf Channel in order to explain the advantages of scandium
      over titanium, steel and graphite.




**Fiscal
      2007 Compared to Fiscal 2006**




During
      fiscal year 2007, we had $228,599 in revenues as compared to $51,569 in revenues
      during fiscal year 2006. During fiscal year 2007, our costs of sales
      were **** $191,628
      compared to $25,722 for the prior year. During fiscal year 2007, our general
      and
      administrative costs were **** $7,127,430.
      These general and administrative costs primarily consist of marketing costs,
      including trade shows, legal and accounting expenses necessary to maintain
      the
      Company’s reporting requirements to be a publicly traded entity, and consulting
      fees which was satisfied primarily through the issuance of our common stock.
      During fiscal 2006, general and administrative expenses aggregated $3,737,896
      and consisted primarily of marketing costs, including trade shows, legal and
      accounting expenses necessary to maintain the Company’s reporting requirements
      to be a publicly traded entity, and consulting fees which was satisfied
      primarily through the issuance of our common stock. The increase in general
      and
      administrative expenses in fiscal 2007 over 2006 is due to the addition of
      personnel, the payment of compensation for a full year to existing personnel,
      the increase in the stock price for consultants paid in common shares and an
      increase in consultants in 2007. Net loss for fiscal 2007 was $4,002,650 ($0.04
      per share) as compared to a net loss of $4,496,095 ($0.05 per share) for fiscal
      2006. The decrease in the net loss is largely attributable to the recognition
      of
      income of approximately $4.3 million in fiscal 2007 as compared to expense
      of
      approximately $392,000 in fiscal 2006 as a result of fair value adjustments
      of
      common stock warrants (derivatives) issued by the company. Additionally, the
      marketing costs associated with the launch of the golf ball into the Earth’s
      orbit in November 2006, and print media advertising in various golf magazines
      significantly increased the Company’s marketing expenses in fiscal 2007.




**Liquidity
      and Capital Resources**




From
      our
      inception through the end of fiscal year 2007, our primary source of funds
      has
      been the proceeds from private offerings of our common stock and advances from
      Dr. Hearn, other consultants, related parties and loans from
      stockholders.  The
      Company’s need to obtain capital from outside investors is
      expected to continue until we are able to achieve profitable operations, if ever. There is no assurance that management will
      be
      successful in fulfilling all or any elements of its plans. The failure to
      achieve these plans will have a material adverse effect on our Company’s
      financial position, results of operations and ability to continue as a going
      concern. As noted in our auditor’s report dated October 3, 2007, there is
      substantial doubt about our Company’s ability to continue as a going
      concern.




During
      fiscal 2007, we utilized **** $ 3,994,796 for our
      operations compared to having generated $48,445 from operations in fiscal 2006.
      The increase was due primarily to spending on sales and marketing. For fiscal
      2007, funds generated from financing sources aggregated $5,556,519 **** compared
      to $883,148 generated in fiscal 2006. During fiscal 2007, the Company received
      $6,000,000 and $400,600 and $180,000 from the issuance of preferred stock,
      common stock and convertible notes and repaid $493,000 in convertible notes,
      versus receiving$1,163,000 in fiscal 2006 from the issuance of convertible notes. The
      Company reduced fixed asset purchases from $669,522 in fiscal 2006 to
      $73,764 in fiscal 2007 as the need for tooling reduced.




24




**Recent
      Accounting Pronouncements affecting the Company**




In
      June
      2006, the FASB issued FASB Interpretation No. 48, *Accounting
      for Uncertainty in Income Taxes* (FIN
      48), which, among other things, requires applying a "more likely than not"
      threshold to the recognition and de-recognition of tax positions. The provisions
      of FIN 48 are effective for years beginning after December 31, 2006. We are
      currently evaluating the impact of adopting FIN 48 on the financial statements,
      but we do not expect its adoption to have a significant transition
      effect.





In
      October 2006, the SEC staff published SAB No. 108, *“Considering
      the Effects of Prior Year Misstatements when Quantifying Misstatements in
      Current Year Financial Statements”* .
      SAB 108 addresses quantifying the financial statement effects of
      misstatements and considering the effects of prior year uncorrected errors
      on
      the statements of operations as well as the balance sheets.
      SAB No. 108 does not change the requirements under
      SAB No. 99 regarding qualitative considerations in assessing the
      materiality of misstatements. The Company adopted SAB No. 108 during
      the fourth quarter of fiscal year 2007, and the adoption had no impact on its
      results of operations or financial condition as of and for the fiscal year
      ended
      June 30, 2007.




In
      October 2006, the FASB issued SFAS No. 157, *“Fair
      Value Measurements”* ,
      which
      provides guidance for using fair value to measure assets and liabilities. The
      pronouncement clarifies (1) the extent to which companies measure assets
      and liabilities at fair value; (2) the information used to measure fair
      value; and (3) the effect that fair value measurements have on earnings.
      SFAS No. 157 will apply whenever another standard requires (or
      permits) assets or liabilities to be measured at fair value.
      SFAS No. 157 is effective for the Company as of July 1, 2008. Our
      adoption of SFAS 159 is not expected to have a material impact on our results
      of
      operations or financial position.





In
      February 2007, the FASB issued SFAS No. 159, *“The
      Fair Value Option for Financial Assets and Financial Liabilities Including
      an
      Amendment of FASB Statement No. 115”* .
      SFAS No. 159 permits entities to choose to measure many financial
      instruments and certain other items at fair value that are not currently
      required to be measured at fair value. This statement also establishes
      presentation and disclosure requirements designed to facilitate comparisons
      between entities that choose different measurement attributes for similar types
      of assets and liabilities. SFAS No. 159 is effective for fiscal years
      beginning after November 15, 2007. Our
      adoption of SFAS 159 is not expected to have a material impact on our results
      of
      operations or financial position.





25




**Critical
      Accounting Policies and Estimates**




The
      following estimates were used in the preparation of our Company’s Consolidated
      Financial Statements had a significant effect on those statements.




Our
      Company has established a 100% reserve against our deferred tax asset reducing
      the carrying value to $0 at June 30, 2007 and 2006.




Our
      Company has estimated that the depreciable lives of our fixed assets range
      from
      two to five years and the residual value to be zero.




Our
      Company provides an allowance for doubtful accounts equal to the estimated
      uncollectible amounts. The Company’s estimate is based on a review of the
      current status of trade receivables. It is reasonably possible that the
      Company’s estimate of the allowance for doubtful accounts will
      change.




Our
      Company has permanently written down its inventory to the lower of cost or
      net
      realizable value. As a result, a portion of the inventory has been valued at
      zero and another portion has been valued at an amount that management believes
      approximates the sales value less an ordinary profit. The write down has been
      included in cost of sales.




**Risk** **Factors**




***We
      have a limited operating history and a history of substantial operating losses
      and we may not be able to continue our business.***




We
      have a
      history of substantial operating losses and an accumulated deficit of
      $21,215,226 as of June 30, 2007, of which $3,261,401 represents development
      stage losses and $ 17,953,825  represents
      accumulated losses. For the year ended June 30, 2007, our net loss was
      $4,002,650 **.** We have
      historically experienced cash flow difficulties primarily because our expenses
      have exceeded our revenues. We expect to incur additional operating losses
      for
      the immediate near future. These factors, among others, raise significant doubt
      about our ability to continue as a going concern. If we are unable to generate
      sufficient revenue from our operations to pay expenses or we are unable to
      obtain additional financing on commercially reasonable terms, our business,
      financial condition and results of operations will be materially and adversely
      affected.




***We
      will need additional financing in order to continue our operations which we
      may
      not be able to raise.***




We
      will
      require additional capital to finance our future operations.  We can
      provide no assurance that we will obtain additional financing sufficient to
      meet
      our future needs on commercially reasonable terms or otherwise.  If we
      are unable to obtain the necessary financing, our business, operating results
      and financial condition will be materially and adversely affected.




***We
      have no employees and our success is dependent on our ability to retain and
      attract consultants to operate our business and there is no assurance that
      we
      can do so.***




As
      discussed above, as of June 30, 2007, we have no employees and utilize the
      services of consultants.  Our consultants are bound by non-compete
      provisions; however, they are not otherwise prohibited from terminating their
      consulting relationship with the Company. The loss of the knowledge and
      management and industry expertise of any of these key consultants could have
      a
      material adverse impact on our future prospects, in particular Dr. Hearn and
      David Sindalovsky, who have played a key role in developing scandium technology
      for golf applications. Once we are sufficiently capitalized, we will need to
      recruit new executive managers and hire employees to help us execute our
      business strategy and help manage the growth of our business. Our business
      could
      suffer if we were unable to attract and retain additional highly skilled
      personnel or if we were to lose any key personnel and not be able to find
      appropriate replacements in a timely manner.




26




***Our
      performance depends on market acceptance of our products and we cannot be sure
      that our products are commercially viable.***




We
      expect
      to derive a substantial portion of our future revenues from the sales of Element
      21 alloy
      golf shafts that are only now entering the initial marketing phase. Although
      we
      believe our products and technologies will be commercially viable, these are
      new
      and untested products.  If markets for our products fail to develop
      further, develop more slowly than expected or are subject to substantial
      competition, our business, financial condition and results of operations will
      be
      materially and adversely affected.




***We
      depend on strategic marketing relationships and if we fail to maintain or
      establish them, our business plan may not succeed.***




We
      expect
      our future marketing efforts will focus in part on developing business
      relationships with distributors that will market our products to their
      customers. The success of our business depends on selling our products and
      technologies to a large number of distributors and retail
      customers.




***Competition
      from traditional golf equipment providers may increase and we may not be able
      to
      adequately compete.***




The
      market for golf shafts is highly competitive.  There are a number of
      other established providers that have greater resources, including more
      extensive research and development, marketing and capital than we do and also
      have greater name recognition and market presence.  These competitors
      could reduce their prices and thereby decrease the demand for our products
      and
      technologies.  We expect competition to intensify in the future, which
      could also result in price reductions, fewer customer and lower gross
      margins.




***Rapidly
      changing technology and substantial competition may adversely affect our
      business.***




Our
      business is subject to rapid changes in technology.  We can provide no
      assurances that research and development by competitors will not render our
      technology obsolete or uncompetitive.  We compete with a number of
      companies that have technologies and products similar to those offered by us
      and
      have greater resources, including more extensive research and development,
      marketing and capital than we do.  If our technology is rendered
      obsolete or we are unable to compete effectively, our business, operating
      results and financial condition will be materially and adversely
      affected.




***Litigation
      concerning intellectual property could adversely affect our
      business.***




We
      rely
      on a combination of trade secrets, trademark law, contractual provisions,
      confidentiality agreements and certain technology and security measures to
      protect our trademarks, license, proprietary technology and
      know-how.  However, we can provide no assurance that competitors will
      not infringe upon our rights in our intellectual property or that competitors
      will not similarly make claims against us for infringement.  If we are
      required to be involved in litigation involving intellectual property rights,
      our business, operating results and financial condition will be materially
      and
      adversely affected.




27




It
      is
      possible that third parties might claim infringement by us with respect to
      past,
      current or future technologies.  We expect that participants in our
      markets will increasingly be subject to infringement claims as the number of
      services and competitors in our industry grows.  Any claims, whether
      meritorious or not, could be time-consuming, result in costly litigation and
      could cause service upgrade delays or require us to enter into royalty or
      licensing agreements.  These royalty or licensing agreements might not
      be available on commercially reasonable terms or at all.




***Defects
      in our products may adversely affect our business.***




Complex
      technologies such as the technologies developed by us may contain defects when
      introduced and also when updates and new products are released. Our introduction
      of technology with defects or quality problems may result in adverse publicity,
      product returns, reduced orders, uncollectible or delayed accounts receivable,
      product redevelopment costs, loss of or delay in market acceptance of our
      products or claims by customers or others against us. Such problems or claims
      may have a material and adverse effect on our business, financial condition
      and
      results of operations.




***The
      inability to obtain a sufficient amount of scandium or of scandium alloy would
      adversely affect our business.***




Although
      we currently believe that we will continue to be able to have access to
      sufficient amounts of scandium or scandium alloy at feasible prices, there
      is no
      assurance of this, and any failure to be able to obtain a sufficient supply
      of
      scandium at reasonable prices would have a material adverse affect on our
      business.




***The
      large number of shares eligible for public sale could cause our stock price
      to
      decline.***




The
      market price of our common stock could decline as a result of the resale of
      the
      shares of common stock issuable upon conversion of our Series A Preferred Stock,
      Series B Preferred Stock and outstanding convertible promissory
      notes  and
      the
      exercise of outstanding warrants or the perception that these sales could occur.
      These sales also might make it more difficult for us to sell equity securities
      in the future at a time and price that we deem appropriate. The
      conversion of these securities into common stock will also result in substantial
      dilution of the interests of our current stockholders.




***Our
      stock price can be extremely volatile.***




Our
      common stock is traded on the OTC Bulletin Board. There can be no assurance
      that
      an active public market will continue for the common stock, or that the market
      price for the common stock will not decline below its current price. Such price
      may be influenced by many factors, including, but not limited to, investor
      perception of us and our industry and general economic and market conditions.
      The trading price of the common stock could be subject to wide fluctuations
      in
      response to announcements of our business developments or our competitors,
      quarterly variations in operating results, and other events or factors. In
      addition, stock markets have experienced extreme price volatility in recent
      years. This volatility has had a substantial effect on the market prices of
      companies, at times for reasons unrelated to their operating performance. Such
      broad market fluctuations may adversely affect the price of our common
      stock.




28




***Trading
      on the OTC Bulletin Board may be sporadic because it is not a stock exchange,
      and stockholders may have difficulty reselling their
      shares*** **.**




Our
      common stock is quoted on the OTC Bulletin Board. Trading in stock quoted on
      the
      OTC Bulletin Board is often thin and characterized by wide fluctuations in
      trading prices, due to many factors that may have little to do with our
      operations or business prospects. Moreover, the OTC Bulletin Board is not a
      stock exchange, and trading of securities on the OTC Bulletin Board is often
      more sporadic than the trading of securities listed on the Nasdaq SmallCap.




***If
      we fail to remain current on our reporting requirements, we could be removed
      from the OTC Bulletin Board which would limit the ability of broker-dealers
      to
      sell our securities and the ability of stockholders to sell their securities
      in
      the secondary market.***




Companies
      trading on the OTC Bulletin Board, such as us, must be reporting issuers under
      Section 12 of the Securities Exchange Act of 1934, as amended, and must be
      current in their reports under Section 13, in order to maintain price quotation
      privileges on the OTC Bulletin Board. If we fail to remain current on our
      reporting requirements, shares of our common stock could be removed from the
      OTC
      Bulletin Board. As a result, the market liquidity for our securities could
      be
      severely adversely affected by limiting the ability of broker-dealers to sell
      our securities and the ability of stockholders to sell their securities in
      the
      secondary market.




***Our
      common stock is subject to the “penny stock” rules of the SEC and the trading
      market in our securities is limited, which makes transactions in our stock
      cumbersome and may reduce the value of an investment in our
      stock.***




The
      Securities and Exchange Commission has adopted Rule 15g-9 which establishes
      the
      definition of a “penny stock,” for the purposes relevant to us, as any equity
      security that has a market price of less than $5.00 per share or with an
      exercise price of less than $5.00 per share, subject to certain exceptions.
      For
      any transaction involving a penny stock, unless exempt, the rules require that
      a
      broker or dealer approve a person's account for transactions in penny stocks
      and
      the broker or dealer receive from the investor a written agreement to the
      transaction, setting forth the identity and quantity of the penny stock to
      be
      purchased.




In
      order
      to approve a person's account for transactions in penny stocks, the broker
      or
      dealer must obtain financial information and investment experience objectives
      of
      the person and make a reasonable determination that the transactions in penny
      stocks are suitable for that person and the person has sufficient knowledge
      and
      experience in financial matters to be capable of evaluating the risks of
      transactions in penny stocks.




The
      broker or dealer must also deliver, prior to any transaction in a penny stock,
      a
      disclosure schedule prescribed by the Commission relating to the penny stock
      market, which, in highlight form sets forth the basis on which the broker or
      dealer made the suitability determination and that the broker or dealer received
      a signed, written agreement from the investor prior to the
      transaction.




Generally,
      brokers may be less willing to execute transactions in securities subject to
      the
“penny stock” rules. This may make it more difficult for investors to dispose of
      our common stock and cause a decline in the market value of our
      stock.




29




Disclosure
      also has to be made about the risks of investing in penny stocks in both public
      offerings and in secondary trading and about the commissions payable to both
      the
      broker-dealer and the registered representative, current quotations for the
      securities and the rights and remedies available to an investor in cases of
      fraud in penny stock transactions. Finally, monthly statements have to be sent
      disclosing recent price information for the penny stock held in the account
      and
      information on the limited market in penny stocks.




***We
      do not expect to pay dividends on our common stock.***




We
      have
      not declared dividends on our common stock since our incorporation and we have
      no present intention of paying dividends on our common stock. The Company is
      prohibited from paying dividends on common stock as long as there are any unpaid
      accrued dividends due to the Series B Convertible Stock
      shareholders.




**MANY
      OF THESE RISKS AND UNCERTAINTIES ARE OUTSIDE OF OUR CONTROL AND ARE DIFFICULT
      FOR US TO FORECAST. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE EXPRESSED
      OR
      IMPLIED IN THE FORWARD-LOOKING STATEMENTS.**




**ITEM
                7.**
            **FINANCIAL
                STATEMENTS**




The
      Consolidated Financial Statements and schedules that constitute Item 7 are
      attached at the end of this Annual Report on Form 10-KSB.




**ITEM
                8.**
            **CHANGES
                IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                DISCLOSURE**




None




**ITEM
                8A**
            **CONTROLS
                AND PROCEDURES**




We
      maintain “disclosure controls and procedures” (as defined in the Securities
      Exchange Act of 1934 Rules 13a-15(e) and 15(d)-15(e)) designed to ensure that
      information required to be disclosed in reports filed under the Securities
      Exchange Act of 1934, as amended, is recorded, processed, summarized and
      reported within the specified time periods. Our chief executive officer and
      chief financial officer, with the participation of our management, have
      evaluated the effectiveness of the design and operation of our disclosure
      controls and procedures as of June 30, 2007. Based upon that evaluation, the
      chief executive officer and chief financial officer concluded that our
      disclosure controls and procedures are effective in timely alerting them to
      material information required to be included in our periodic filings with the
      Securities and Exchange Commission.




To
      date,
      and during the first quarter of fiscal year 2008, there have been no changes
      in
      our internal control over financial reporting that have materially affected
      or
      are reasonably likely to materially affect our internal control over financial
      reporting.




**ITEM
                8B**
            **OTHER
                INFORMATION**




None.




30




**PART
      III**




**ITEM
                9.**
            **DIRECTORS,
                EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
                SECTION
                16(a) OF THE EXCHANGE ACT**




**Identification
      of Directors and Executive Officers**




The
      following table sets forth the names and the nature of all positions and offices
      held by all directors and executive officers of our Company for the fiscal
      year
      ended June 30, 2007, all of whom are consultants to the Company and not
      employees, and the period or periods during which each such director or executive
      officer has served in his or her respective positions.




**Name**
            
            **Age**
            
            **Position
                with the Company**
            
            **Date
                of Election or Designation**Nataliya
                Hearn, Ph.D.
            
            40
            
            Chairman,
                President, CEO and Director
            
            October
                4, 2002John
                Grippo
            
            51
            
            CFO
            
            March
                1, 2006Gerald
                Enloe
            
            59
            
            Director,
                Chairman (RESIGNED JAN 07)
            
            October
                4, 2002Sergei
                Bedzouik,Ph.D
            
            50
            
            Director
            
            Jan
                20, 2007Mary
                Bryan
            
            55
            
            Director
            
            March
                15, 2007Benton
                Wilcoxon
            
            57
            
            Director
            
            June
                22, 2007





**Term
      of Office**




The
      term
      of office of the current Directors shall continue until the annual meeting
      of
      our stockholders, which is scheduled in accordance with the direction of the
      Board of Directors. The annual meeting of our Board of Directors immediately
      follows the annual meeting of our stockholders, at which officers for the coming
      year are elected.




**Business
      Experience**




Dr.
      Nataliya Hearn, Ph.D., P.Eng. — Chairman,
      President and CEO





Dr.
      Hearn
      has extensive experience in technology transfer, evaluation and acquisitions.
      Dr. Hearn has been responsible for the development, design and production of
      the
      Element 21 high performance golf products. Dr. Hearn has been able to attract
      the current team of experts to take the company to the next level of its growth.
      Dr. Hearn holds a Ph.D. in Civil Engineering from University of Cambridge and
      is
      a registered professional engineer.





Benton
      Wilcoxon –
      Director





Mr.
      Wilcoxon specializes in the business development, structuring and
      commercialization of advanced technologies, new materials and processes. He
      is
      Chairman and Chief Executive Officer of Composite Technology Corporation, an
      Irvine CA public company that develops, manufactures and sells high performance
      electrical transmission and renewable energy generation products. Mr. Wilcoxon
      is a Director and Chief Technology Consultant of Magnesium Alloy Corporation,
      a
      Canadian company, with cost-effective Russian and Ukrainian magnesium processing
      technologies. He was also one of the founders of Ashurst Technology Corporation
      in 1991, and was instrumental in bringing Scandium alloys to Western
      markets.




31




Mary
      Bryan – Director





Ms.
      Bryan
      brings to Element 21 a multi-faceted 30 year background in the golf industry.
      Her experience includes 25 years on the LPGA and Senior LPGA Tours, TV/radio
      golf announcing on major networks, and teaching and conducting golf clinics
      in
      the U.S. and around the world. She has served as a tour representative for
      various companies and has been involved in numerous charity golf fundraisers.
      Ms. Bryan also has experience with public speaking and working with the media.
      Ms. Bryan has performed over 300 golf telecasts for CBS, NBC and ESPN and was
      the first woman to cover a men’s major golf event. Ms. Bryan currently is a
      consultant for Links Magazine and Bob Betterton Sports Marketing, and is a
      representative for State Farm Insurance. Her teaching experience includes the
      position of Administrator and Teacher at Carol Mann Golf Schools for Golf
      Magazine and as Assistant Golf Professional at Paradise Hills Country Club
      in
      Albuquerque NM.





Dr.
      Sergei Bedziouk—Director





Dr.
      Beziouk has a long and distinguished scientific career, working within the
      Aerospace and advanced science arenas. Dr. Beziouk has 10 years international
      experience in marketing, business development, contract negotiations at senior
      governmental levels as a Commercial & External Relations Director of the
      Space Centre. Additionally, he has acted as the exclusive representative of
      major Russian corporations in North America and a number of Swedish and Finnish
      companies that operate in Russia. His background also includes over a decade
      of
      experience as a specialist in the Astronaut Office of the Rocket Space
      Corporation Energia.





John
      Grippo – Chief Financial Officer





John
      Grippo, CPA brings over 15 years experience as CFO for public and private
      companies focused on the manufacturing, distribution and financial services
      industries ranging in size up to $250 million in revenue. John is a financial
      consultant to several small to medium sized companies, including functioning
      as
      a part time chief financial officer. John graduated from the University of
      Florida, is certified by the state of Connecticut and is a member of the New
      York State Society of Certified Public Accountants.





Bill
      Dey
– Chief Operating Officer





Bill
      Dey
      brings his in-depth knowledge of the golf and sports industries through his
      success stories as a Forzani’s Group Senior VP of the wholesale division
      (www.forzanigroup.com), and Senior VP and General Manager of Tommy Armour/RAM
      golf company. Bill’s particular expertise is in the global sales, marketing,
      product development, commercialization, supply chain management, and licensing.
      During his management Tommy Armour’s sales increased from $400k to $48 million
      in a period of 32 months.





**Audit
      Committee**




The
      Board
      of Directors serves as the Company’s audit committee. Currently none of the
      Company’s directors qualifies as a “financial expert” pursuant to Item 401 of
      Regulation S-B. The Company has not sought to add a director to its board who
      qualifies as a “financial expert” because although the Company believes it would
      be desirable to have a financial expert on its audit committee, the costs of
      retaining such an expert would be prohibitive, given the Company’s resources at
      this time.




32




**Compliance
      with Section 16(a) of the Exchange Act**




Each
      of
      the executive officers and directors of the Company were delinquent in filing
      a
      form 3 and/or 4 during the fiscal year.




**Code
      of Ethics**




The
      Company has not yet adopted a code of ethics for its principal executive
      officer, principal financial officer, principal accounting officer or controller
      due to the small number of executive officers involved with the Company and
      due
      to the fact that the Company operates through strategic consultants with no
      employees. The Board of Directors will continue to evaluate, from time to time,
      whether a code of ethics should be developed and adopted.




**ITEM
                10.**
            **EXECUTIVE
                COMPENSATION**




**EXECUTIVE
      COMPENSATION**




The
      following table sets forth in summary form the compensation of the Company’s
      current Chief Executive Officer and each other executive officer that received
      total salary and bonus exceeding $100,000 since its inception (“Named Executive
      Officers”).




**Summary
      Compensation Table**




The
      following table sets forth the aggregate executive compensation paid by our
      Company for services rendered during the periods indicated (each person is
      referred to in this Item 10 as a “Named Executive Officer”).


**SUMMARY
                  COMPENSATION TABLE****Long-Term
                  Compensation****Annual
                  Compensation**
              
              **Awards**
              
              **Payouts****(a)**
              
              **(b)**
              
              **(c)**
              
              **(d)**
              
              **(e)**
              
              **(f)**
              
              **(g)**
              
              **(h)**
              
              **(i)****Name and Principal**
                **Position**
              
              **Years of**
                **Periods**
                **Ended**
              
              **$**
                **Salary**
              
              **$**
                **Bonus**
              
              **Other**
                **Annual**
                **Compensation**
              
              **Restricted**
                **Stock**
                **Awards $**
              
              **Option/**
                **SAR’s #**
              
              **LTIP**
                **Payouts**
                **$**
              
              **All Other**
                **Compensation**Nataliya
                  Hearn, PhD,
              
              
              06/30/07
              
              
              255,592
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0President,
                CEO and
              
              
              06/30/06
              
              
              122,945
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0Director
                (1)
              
              
              06/30/05
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0Jim
                  Morin, Treasurer and
              
              
              06/30/07
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0Secretary
                (2)
              
              
              06/30/06
              
              
              125,000
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              006/30/05
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0




33


**SUMMARY
                  COMPENSATION TABLE****Long-Term
                  Compensation****Annual
                  Compensation**
              
              **Awards**
              
              **Payouts****(a)**
              
              **(b)**
              
              **(c)**
              
              **(d)**
              
              **(e)**
              
              **(f)**
              
              **(g)**
              
              **(h)**
              
              **(i)****Name and Principal**
                **Position**
              
              **Years of**
                **Periods**
                **Ended**
              
              **$**
                **Salary**
              
              **$**
                **Bonus**
              
              **Other**
                **Annual**
                **Compensation**
              
              **Restricted**
                **Stock**
                **Awards $**
              
              **Option/**
                **SAR’s #**
              
              **LTIP**
                **Payouts $**
              
              **All Other**
                **Compensation**John
                  Grippo, Chief
              
              
              06/30/07
              
              
              141,250
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0Financial
                Officer (3)
              
              
              06/30/06
              
              
              61,875
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              006/30/05
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0Bill
                  Dey
              
              
              06/30/07
              
              
              165,400
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0VP
                  of Sales, General
              
              
              06/30/06
              
              
              35,000
              
              
              649,156
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0Manager(4)
              
              
              06/30/05
              
              
              0
              
              
              0
              
              
              0
              
              
              
              
              
              0
              
              
              0
              
              
              0David
                  Sindalovsky
              
              
              06/30/07
              
              
              730,110
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0Consultant
                  (5)
              
              
              06/30/06
              
              
              556,248
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              006/30/05
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0




(1)
            Nataliya
                Hearn serves as the CEO and President of the Company. The Company
                has
                agreed to grant Dr. Hearn options to purchase 1,500,000 common shares
                at a
                purchase price of $0.08 per share. These options have not yet been
                granted
                and are not included above. Ms. Hearn began serving as an executive
                officer of the Company on October 4, 2002. Beginning January 1, 2006,
                at
                Ms. Hearn’s election, she may opt to receive monthly either $15,000 cash
                compensation or $20,000 in warrants at a purchase price of $0.01
                per
                share. Ms. Hearn earned $0 and $45,000 cash compensation for the
                years
                ended June 30, 2006 and 2007, and was paid $15,000 in cash compensation.
                Ms Hearn received 616,446 and 1,124,667 warrants at a purchase price
                of
                $0.01 per share valued at $122,945 and $185,592 for the years ended
                June
                30, 2006 and 2007 respectively and warrants at a purchase price of
                $0.01
                per share valued at $20,000 earned between June 30, 2007 and the
                issue
                date of this Form 10KSB.




(2)
            Mr.
                Morin resigned as an officer of the Company on July 31, 2006. Mr.
                Morin
                received 125,000 shares Series A Convertible Preferred Stock of the
                Company valued at $1 per share in exchange for services rendered
                to the
                Company.




(3)
            Mr.
                Grippo was hired as an executive officer on March 1, 2006. Mr. Grippo
                earned $15,000 and $43,500 in cash and $46,875 and $97,750 in stock
                for
                the years ended June 30, 2006 and 2007. Mr. Grippo received $15,000
                and
                $39,000 in cash and $0 and $131,625 in stock for the years ended
                June 30,
                2006 and 2007.




(4)
            Mr.
                Dey was hired as Vice President of Sales and General Manager on January
                1,
                2006. Upon his hiring the company agreed to issue Mr. Dey 6,000,000,
                2,000,000 and 2,000,000 (total 10,000,000) warrants at purchase prices
                of
                $0.05, $0.05 and $0.08 per share vesting in 12, 24 and 36 months
                respectively, all of which expire March 31, 2009. The value of the
                options
                is included in the year ended June 30, 2006 in the chart
                above.




34




(5)
            Mr.
                Sindalovsky was hired as an outside consultant for material sourcing,
                manufacturing, engineering and the Company’s relationship with strategic
                partners in Asia and Russia. Mr. Sindalovsky was granted 2,000,000
                and
                4,000,000 shares of common stock for the years ended June 30, 2006
                and
                2007 and 2,000,000 warrants at a purchase price of $0.08 per share
                vesting
                immediately and expiring in four years during the year ended June
                30,
                2006.




Except
      as
      indicated above, no cash compensation, deferred compensation or long-term
      incentive plan awards were issued or granted to our Company’s management during
      the years ended June 30, 2007, or 2006 or 2005, or the period ending on the
      date
      of this Annual Report. Further, except as indicated above, no member of our
      Company’s management has been granted any option or stock appreciation right;
      accordingly, no tables relating to such items have been included within this
      Item.




**Compensation
      Committee**




The
      Board
      of Directors serves as the Company’s compensation committee. The Company does
      not have any employees. The Company expects to nominate a Compensation Committee
      in the near future.




**Compensation
      of Directors**




There
      are
      no standard arrangements pursuant to which our Company’s directors are
      compensated for any services provided as director. No additional amounts are
      payable to our Company’s directors for committee participation or special
      assignments.




**Termination
      of Employment and Change of Control Arrangement**




Except
      for the Company’s Agreement with Dr. Hearn, a copy of which is attached hereto
      as Exhibit 10.4, there are no compensatory plans or arrangements, including
      payments to be received from our Company, with respect to any person named
      in
      the Summary Compensation Table set out above which would in any way result
      in
      payments to any such person because of his or her resignation, retirement or
      other termination of such person’s consulting relationship with our Company or
      our subsidiaries, or any change in control of our Company, or a change in the
      person’s responsibilities following a change in control of our
      Company.




**ITEM
                11.**
            **SECURITY
                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                MANAGEMENT**




**(a)
      Security Ownership of Certain Beneficial Owners.**




All
      tables as of October 4, 2007.





**Title of Class**
            
            **Name and Address of**
              **Beneficial Owner**
            
            **Amount and Nature**
              **of Beneficial Owner**
            
            **Percent of Class(2)**Common
                Stock, par value $0.01 per share
            
            
            Clearline
                Capital LLC
              86
                Clearview Lane
              New
                Canaan, CT 06840
            
            
            44,117,766
            (1)
            
            21.0
            %Vladimir
                Goryunov
              Alderstasse
                31
              Zurich
                8008,Switzerland
            
            
            44,117,766
            (1)
            
            21.0
            %





35




(1)
            Includes
                26,470,660 shares of Common Stock upon the exercise of 26,470,660
                outstanding warrants held by the holder. Includes 17,647,106 shares
                of
                Common Stock issuable upon the conversion of the 176,472 shares of
                Series
                B Convertible Preferred Stock held by the
                holder,




(2)
            Calculated
                based on 121,354,792 of Common Stock outstanding as of October 4,
                2007
                plus an aggregate of 88,235,532 shares of Common Stock issuable to
                Clearline Capital LLC and Vladimir Goryunov as described
                above.




**Title of Class**
            
            **Name and Address of**
              **Beneficial Owner**
            
            **Amount and Nature**
              **of Beneficial Owner**
            
            **Percent of Class**Series
                A Convertible Preferred Stock, par value $0.10 per share
            
            
            Nataliya
                Hearn(1)
            
            
            1,221,910
            
            
            58
            %ASA
                Commerce
              1/2
                BOLSHAYA POLYANKA UNIT 12
              Moscow
            
            
            891,646
            
            
            42
            %





(1)
            Address
                is c/o Element 21 Golf Company, 200 Queens Quay East, Unit #1, Toronto,
                Ontario, Canada, M5A 4K9




**Title of Class**
            
            **Name and Address of**
              **Beneficial Owner**
            
            **Amount and Nature**
              **of Beneficial Owner**
            
            **Percent of Class**Series
                B Convertible Preferred Stock, par value $0.10 per share
            
            
            Clearline
                Capital LLC
              86
                Clearview Lane
              New
                Canaan, CT 06840
            
            
            176,472
            
            
            50
            %Vladimir
                Goryunov Alderstasse 31,
              Zurich
                8008,Switzerland
            
            
            176,472
            
            
            50
            %




36




**(b)
      Security Ownership of Management.** Except
      as
      indicated in the footnotes below, each person has sole voting and dispositive
      power over the shares indicated.




**Title of Class**
            
            **Name and Address of**
              **Beneficial Owner**
            
            **Amount and Nature**
              **of Beneficial Owner**
            
            **Percent of Class (5)**Common
                Stock, par value $0.01 per shareNataliya
                Hearn, Ph.D., President, Chief Executive Officer and Director (2)
            
            
            11,794,460
            (1)
            
            8.2
            %John
                Grippo
              Chief
                Financial Officer (2)
            
            
            801,238
            
            
            *
            %Bill
                Dey,
              Executive
                Vice President and General Manager (2)
            
            
            10,000,000
            (3)
            
            6.9
            %Mary
                Bryan
              Director
                (2)
            
            
            20,000
            
            
            *
            %Dr.
                Sergey Bedziouk
              Director
                (2)
            
            
            0
            
            
            0
            %Benton
                Wilcoxon
              Director
                (2)
            
            
            250,000
            (4)
            
            *
            %All
                Officers, Directors as a Group (6 Persons)
            
            
            
            
            
            22,865,698
            
            
            15.9
            %




(1)  Includes
      4,791,804 shares of Common Stock issuable upon the conversion of 1,221,910
      shares of Series A Convertible Preferred Stock held by the holder. Includes
      2,002,656 shares of Common Stock issuable upon the exercise of 2,002,656
      warrants granted. Includes 1,000,000 shares issuable upon exercise of 1,000,000
      warrants received in settlement of debt.




(2)  Address
      is c/o Element 21 Golf Company, 200 Queens Quay East, Unit #1, Toronto, Ontario,
      Canada, M5A 4K9




(3)
      Includes 10,000,000 shares of Common Stock issuable upon the exercise of
      10,000,000 warrants granted within 60 days of September 30, 2007.




(4)
      Includes 250,000 shares of Common Stock issuable upon the exercise of 250,000
      warrants granted within 60 days of September 30, 2007.




(5)
      Calculated based on 121,354,792 shares of Common Stock outstanding as of October
      4, 2007 plus an aggregate of 22,865,698 shares of Common Stock issuable upon
      the
      exercise of granted warrants and the conversion of outstanding shares of Series
      A Convertible Preferred Stock as described above.




*  Less
      than
      1%.




37




**Changes
      in Control**




Two
      stockholders, Clearline Capital LLC and Vladimir Goryunov ,
      as a
      group, beneficially own over 25% of our common stock. As a result, they may
      be
      able to control our company and direct our affairs, including the election
      of
      directors and approval of significant corporate transactions. This concentration
      of ownership may also delay, defer or prevent a change in control of our
      company, and make some transactions more difficult or impossible without their
      support. These transactions might include proxy contests, tender offers, open
      market purchase programs or other share purchases that could give our
      shareholders the opportunity to realize a premium over the then prevailing
      market price of our common stock. As a result, this concentration of ownership
      could depress our stock price. In addition, the holders of the Series B
      Convertible Preferred Stock have the right to approve certain transactions
      and
      certain issues of securities including but not limited to certain mergers,
      acquisitions, liquidations, sales of equity securities that are senior to the
      Series B convertible Preferred Stock or the issuance of debt instruments in
      excess of $1,000,000.




Currently,
      no known change of control is anticipated.




**ITEM
                12.**
            **CERTAIN
                RELATIONSHIPS AND RELATED
                TRANSACTIONS**




**Transactions
      with Management and Others**




There
      have been no material transactions, series of similar transactions or currently
      proposed transactions, to which the Company or any of our subsidiaries was
      or is
      to be a party, in which the amount involved exceeded $60,000 and in which any
      director or executive officer, promoter or founder or any security holder who
      is
      known to us to own of record or beneficially more than five percent of our
      common stock, or any member of the immediate family of any of the foregoing
      persons, or any promoter or founder had a material interest.




**ITEM
                13.**
            **EXHIBITS**




**Exhibit No.**
            
            **Exhibit
                Description**3(i)(1)
            
            Amended
                Certificate of Incorporation of the Company, incorporated
                herein by reference to the Company’sRegistration
                Statement on Form S-1, as amended, File No. 33-43976 filed on November
                14,
                1991.3(i)(2)
            
            Certificate
                of Amendment to Amended Certificate of Incorporation of the Company,
                incorporated herein by reference to Exhibit 3.1 to the Company’s Form 8-K
                dated May 12, 2006.3(i)(3)
            
            Certificate
                of the Powers, Designations, Preferences and Rights of the Series
                A
                Convertible Preferred Stock, $0.10 par value per share, incorporated
                herein by reference to Exhibit 4.1 to the Company’s Form 8-K dated
                February 24, 2006.3(i)(4)
            
            Certificate
                of the Powers, Designations, Preferences and Rights of the Series
                B
                Convertible Preferred Stock, $0.10 par value per share, incorporated
                herein by reference to Exhibit 3(i) to the Company’s Form 8-K dated August
                3, 2006.




38




3(i)(5)
            
            Certificate
                of the Powers, Designations, Preferences and Rights of the Series
                B
                Convertible Preferred Stock, $0.10 par value per share, incorporated
                herein by reference to Exhibit 3(i) to 3(iix9x1) to the Company’s Form 8-K
                dated June 18, 2007.3(ii)
            
            Amended
                and Restated Bylaws of the Company, incorporated
                herein by reference to the Company’sRegistration Statement
                on Form S-1, as amended, File No. 33-43976 filed on November 14,
                1991.4.1
            
            Form
                of Element 21 Golf Company 10% Convertible Promissory Note, incorporated
                herein by reference to Exhibit4.2to
                the Company’s Form 8-K datedFebruary
                24,2006.4.2
            
            Element
                21 Golf Company 10% Convertible Promissory Note issued to Oleg
                Muzyrya,
                incorporated herein by reference to Exhibit4.3to
                the Company’s Form 8-K datedFebruary
                24,2006.4.3
            
            Common
                Stock Purchase Warrant, incorporated herein by reference to Exhibit
                4.4 to
                the Company’s Form 8-K dated February 24, 2006.4.4
            
            Form
                of Element 21 Golf Company 10% Convertible Promissory Note, incorporated
                herein by reference to Exhibit 4.1 to the Company’s Form 8-K dated May 23,
                2006.4.5
            
            Common
                Stock Purchase Warrant, incorporated herein by reference to Exhibit
                4.2 to
                the Company’s Form 8-K dated May 23, 2006.4.6
            
            Form
                of Warrant for Purchase of 3,750,000 Shares of Common Stock dated
                July 31,
                2006, incorporated herein by reference to Exhibit 4.1 to the Company’s
                Form 8-K dated August 3, 2006.4.7
            
            Form
                of Warrant for Purchase of 5,073,530 Shares of Common Stock dated
                July 31,
                2006, incorporated herein by reference to Exhibit 4.2 to the Company’s
                Form 8-K dated August 3, 2006.4.8
            
            Form
                of Warrant for Purchase of 3,750,000 Shares of Common Stock dated
                July 31,
                2006, incorporated herein by reference to Exhibit 4.1 to the Company’s
                Form 8-K dated December 1, 2006.4.9
            
            Form
                of Warrant for Purchase of 5,073,530 Shares of Common Stock dated
                July 31,
                2006, incorporated herein by reference to Exhibit 4.2 to the Company’s
                Form 8-K dated December 1, 2006.4.10
            
            Common
                Stock Purchase Warrant, incorporated herein by reference to Exhibit
                4.1 to
                the Company’s Form 8-K dated June 18, 2006.4.11
            
            Form
                of Warrant for Purchase of 5,882,400 Shares of Common Stock dated
                June 15,
                2007, incorporated herein by reference to Exhibit 4.2 to the Company’s
                Form 8-K dated June 18, 2007.




39




10.1
            
            Series
                A Convertible Preferred Stock Exchange Agreement and Acknowledgement
                dated
                as of February 22, 2006, incorporated herein by reference to Exhibit
                10.1
                to the Company’s Form 8-K dated February 24, 2006.10.2
            
            Element
                21 Golf Company 2006 Equity Incentive Plan, incorporated herein by
                reference to Annex C to the Company’s Proxy Statement Pursuant to Section
                14(a) of the Securities Exchange Act of 1934 filed on April 7,
                2006.10.3
            
            Form
                of Subscription Agreement for Shares of Series B Convertible Preferred
                Stock dated as of July 31, 2006, incorporated herein by reference
                to
                Exhibit 10.1 to the Company’s Form 8-K dated August 3,
                2006.10.4
            
            Form
                of Subscription Agreement for Shares of Series B Convertible Preferred
                Stock dated as of November 30, 2006, incorporated herein by reference
                to
                Exhibit 10.1 to the Company’s Form 8-K dated August 3,
                2006.10.5
            
            Form
                of Subscription Agreement for Shares of Series B Convertible Preferred
                Stock dated as of June 15, 2007, incorporated herein by reference
                to
                Exhibit 10.2 to the Company’s Form 8-K dated June 18,
                2007.10.6
            
            Form
                of Subscription Agreement for Shares of Common Stock dated as of
                June,
                2007, incorporated herein by reference to Exhibit 10.1 to the Company’s
                Form 8-K dated June 18, 2007.10.7
            
            License
                Agreement with Advanced Light Alloys Corporation dated as of June
                21, 2007
                incorporated by reference to exhibit 10.1 to the Company’s Form 10KSB
                dated June 21, 200710.8
            
            Consulting
                Agreement with Nataliya Hearn dated as of January 4, 2006 incorporated
                by
                reference to exhibit 10.4 to the Company’s Form 10KSB dated October 13,
                200610.9
            
            Consulting
                Agreement with John Grippo dated as of November 10, 2005 incorporated
                by
                reference to exhibit 10.5 to the Company’s Form 10KSB dated October 13,
                200631
            
            Rule
                13a-14(a)/15a-14(a) Certifications of Chief Executive Officer and
                Chief
                Financial Officer.32
            
            Certification
                of Chief Executive Officer and Chief Financial Officer Pursuant to
                18
                U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002.





40




**ITEM
                14.**
            **PRINCIPAL
                ACCOUNTANT FEES AND
                SERVICES**




**Audit
      Fees**




Lazar
      Levine and Felix LLP (“LLF”) is the
      Company’s independent auditors. Audit and review fees for the years ended June
      30, 2007 and 2006 aggregated $83,010 and $59,560, respectively. LLF was hired
      effective October 27, 2004.




**Audit-Related
      Fees**




For
      the
      years ended June 30, 2007 and 2006, the Company was billed $0 and $1,500,
      respectively, for fees related to a registration statement.




**Tax
      Fees**




For
      the
      years ended June 30, 2007 and 2006, LLF did not provide any tax
      services.




**All
      Other Fees**




For
      the
      years ended June 30, 2007 and 2006, the Company was not billed for products
      and
      services other than those described above.




**Audit
      Committee Pre-Approval Policies**




The
      Board
      of Directors, which is performing the equivalent functions of an audit
      committee, has
      pre-approved all audit services provided by the independent auditors, and the
      compensation, fees and terms for such services. No permitted non-audit
      services were
      provided or approved by the Board of Directors.




41




**SIGNATURES**




Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
      1934, the Registrant has duly caused this Report to be signed on its behalf
      by
      the undersigned, hereunto duly authorized.







**ELEMENT
                21 GOLF COMPANY**Date:
                October 4, 2007
            By:
            /s/
                Nataliya HearnNataliya
                Hearn, Ph.D.President
                and Chairperson




Pursuant
      to the requirements of the Securities Exchange Act of 1934, as amended, this
      Report has been signed below by the following persons on behalf of the
      Registrant and in the capacities and on the dates indicated:




Date:
                October 4, 2007
            By:
            /s/Nataliya
                HearnNataliya
                Hearn, Ph.D.President,
                Chief Executive Officer and ChairpersonDate:
                October 4, 2007
            By:
            /s/
                Serguei BedzioukSerguei
                BedzioukDirectorDate:
                October 4, 2007
            By:
            /s/
                Mary BryanMary
                BryanDirectorDate:
                October 4, 2007
            By:
            /s/
                Benton WilcoxonBenton
                WilcoxonDirectorDate:
                October 4, 2007
            By
            /s/
                John GrippoJohn
                GrippoChief
                Financial Officer





42




**ELEMENT
      21 GOLF COMPANY AND SUBSIDIARY**





**INDEX**





PageReport
                of Registered Independent Public Accounting Firm
            F-2Consolidated
                Balance Sheets as of June 30, 2007 and 2006
            F-3Consolidated
                Statements of Operations For The Years Ended June 30, 2007 and
                2006
            F-4Consolidated
                Statement of Shareholders’ Deficit For The Years Ended June 30, 2007 and
                2006
            F-5Consolidated
                Statements of Cash Flows For The Years Ended June 30, 2007 and
                2006
            F-6Notes
                to Consolidated Financial Statements
            F-7




F
          -
          1





**REPORT
      OF REGISTERED INDEPENDENT PUBLIC ACCOUNTING FIRM**





To
      the
      Shareholders and Board of Directors


Element
      21 Golf Company


Toronto,
      Canada





We
      have
      audited the accompanying consolidated balance sheets of Element 21 Golf Company
      and subsidiary, (the “Company”) as of June 30, 2007 and 2006 and the
      consolidated statements of operations, shareholders’ deficit and cash flows for
      the two years in the period ended June 30, 2007. These consolidated financial
      statements are the responsibility of the Company’s management. Our
      responsibility is to express an opinion on these consolidated financial
      statements based on our audits.





We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. An audit includes consideration
      of
      internal control over financial reporting as a basis for designing audit
      procedures that are appropriate in the circumstances, but not for the purpose
      of
      expressing an opinion on the effectiveness of the Company’s internal control
      over financial reporting. Accordingly, we express no such opinion. An audit
      also
      includes examining, on a test basis, evidence supporting the amounts and
      disclosures in the financial statements, assessing the accounting principles
      used and significant estimates made by management, as well as evaluating the
      overall financial statement presentation. We believe that our audits provide
      a
      reasonable basis for our opinion.





In
      our
      opinion, the consolidated financial statements referred to above present
      fairly ,
      in all
      material respects, the consolidated financial position of Element 21 Golf
      Company and subsidiary as of June 30, 2007 and 2006 and the results of its
      operations and its cash flows for the years then ended, in conformity with
      accounting principles generally accepted in the United States of
      America.





The
      accompanying consolidated financial statements have been prepared assuming
      the
      Company will continue as a going concern. As discussed in Note 1(b), the
      Company’s recurring losses from operations and its dependency on future
      financing raise substantial doubt about its ability to continue as a going
      concern. Management’s plans concerning these matters are also discussed in Note
      1(b). The consolidated financial statements do not include any adjustments
      that
      might result from the outcome of these uncertainties.




**LAZAR LEVINE & FELIX
                LLP**




New
      York,
      New York


October
      3, 2007




F
          -
          2


**ELEMENT
      21 GOLF COMPANY AND SUBSIDIARY**


**CONSOLIDATED
      BALANCE SHEETS**


**JUNE
      30, 2007 AND 2006**





2007
            
            2006**-
                ASSETS -****CURRENT
              ASSETS:**Cash
            
            $
            1,751,178
            
            $
            263,219Accounts
                receivable - net of allowance for doubtful accounts of $15,000and
                $0 at June 30, 2007 and 2006, respectively
            
            
            123,155
            
            
            11,994Inventories
            
            
            921,820
            
            
            128,382Prepaid
                expenses and other current assets
            
            
            158,147
            
            
            17,907**TOTAL
                CURRENT ASSETS**
            
            
            2,954,300
            
            
            421,502**FIXED
                ASSETS –
                NET**
            
            
            244,234
            
            
            510,530**TOTAL
                ASSETS**
            
            $
            3,198,534
            
            $
            932,032**-
                LIABILITIES AND SHAREHOLDERS’ DEFICIT -****CURRENT
                LIABILITIES:**Accounts
                payable and accrued expenses
            
            $
            697,649
            
            $
            1,212,049Accrued
                interest
            
            
            46,750
            
            
            31,485Deferred
                revenue
            
            
            17,300
            
            
            -Convertible
                notes
            
            
            475,000
            
            
            348,581Derivative
                liability
            
            
            2,386,011
            
            
            1,491,945**TOTAL
                CURRENT LIABILITIES**
            
            
            3,622,710
            
            
            3,084,060**LONG-TERM
                LIABILITIES:**Loans
                and advances - officers/shareholders
            
            
            95,006
            
            
            104,162Accounts
                payable - related parties
            
            
            482,076
            
            
            504,001**TOTAL
                LONG-TERM LIABILITIES**
            
            
            577,082
            
            
            608,163**COMMITMENTS
                AND CONTINGENCIES****SHAREHOLDERS’
                DEFICIT:**Preferred
                stock, $.10 par value, authorized 2,447,000 shares, no shares issued
                and
                outstanding
            
            
            **-**
            
            
            -Series
                A Preferred stock, $.001 par value, authorized 2,200,000 shares,
                2,113,556
                shares issued and outstanding
            
            
            2,114
            
            
            2,114Series
                B Preferred stock, $.10 par value, authorized 353,000 shares, 352,946
                shares issued and outstanding
            
            
            35,295
            
            
            -Common
                stock, $.01 par value; 300,000,000 shares authorized, 118,882,645
                and
                99,630,554 shares issued and outstanding at June 30, 2007 and 2006,
                respectively
            
            
            1,188,826
            
            
            996,308Additional
                paid-in capital
            
            
            18,987,733
            
            
            13,453,963Accumulated
                deficit
            
            
            (21,215,226
            )
            
            (17,212,576
            )**TOTAL
                SHAREHOLDERS’ DEFICIT**
            
            
            (1,001,258
            )
            
            (2,760,191
            )**TOTAL
                LIABILITIES AND SHAREHOLDERS’ DEFICIT**
            
            $
            3,198,534
            
            $
            932,032





See
      notes
      to consolidated financial statements.


F
          -
          3


**ELEMENT
      21 GOLF COMPANY AND SUBSIDIARY**


**CONSOLIDATED
      STATEMENTS OF OPERATIONS**


**FOR
      THE YEARS ENDED JUNE 30, 2007 AND 2006**





Year
                Ended June 30,.2007
            
            2006**REVENUES**
            
            $
            228,599
            
            $
            51,569**COSTS
                AND EXPENSES:**Costs
                of sales
            
            
            191,628
            
            
            25,722General
                and administrative
            
            
            7,127,430
            
            
            3,737,896**TOTAL
                COSTS AND EXPENSES**
            
            
            7,319,058
            
            
            3,763,618**LOSS
                FROM OPERATIONS**
            
            
            (7,090,459
            )
            
            (3,712,049
            )**OTHER
                INCOME (EXPENSE):**Interest
                expense
            
            
            (1,299,290
            )
            
            (382,818
            )Derivative
                income (expense)
            
            
            4,250,442
            
            
            (392,179
            )Interest
                income and other income (expense), net
            
            
            136,657
            
            
            (9,049
            )3,087,809
            
            
            (784,046
            )**LOSS
                BEFORE PROVISION FOR INCOME TAXES**
            
            
            (4,002,650
            )
            
            (4,496,095
            )Provision
                for income taxes
            
            
            -
            
            
            -**NET
                LOSS**
            
            
            (4,002,650
            )
            
            (4,496,095
            )Accretion
                of preferred stock dividend
            
            
            (4,167,256
            )
            
            (543,512
            )**LOSS
                APPLICABLE TO COMMON STOCKHOLDERS**
            
            $
            (8,169,906
            )
            $
            (5,039,607
            )Basic
                and diluted weighted average shares
            
            
            110,294,858
            
            
            97,764,539Basic
                and diluted loss per share
            
            **$**
            (0.07
            )
            $
            (0.05
            )




See
      notes
      to consolidated financial statements.


F
          -
          4


**ELEMENT
      21 GOLF COMPANY AND SUBSIDIARY**


**CONSOLIDATED
      STATEMENT OF CHANGES IN SHAREHOLDERS' DEFICIT**


**FOR
      THE YEARS ENDED JUNE 30, 2007 AND 2006**





Series
                A Preferred Stock
            
            Series
                B Preferred Stock
            
            Shares
            
            Common Stock
            
            Additional
              Paid-In Capital
            
            Accumulated
                Deficit
            
            Total
                Shareholders’ Equity (Deficit)Balance,
                June 30, 2005
            
            $
            -
            
            $
            -
            
            
            87,487,241
            
            $
            874,872
            
            $
            10,141,767
            
            $
            (12,716,481
            )
            $
            (1,699,842
            )Issuance
                of Series A Preferred Stock
            
            
            2,114
            
            
            -
            
            
            -
            
            
            -
            
            
            2,111,442
            
            
            -
            
            
            2,113,556Beneficial
                conversion feature of convertible preferred stock
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            543,512
            
            
            -
            
            
            543,512Deemed
                dividend
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (543,512
            )
            
            -
            
            
            (543,512
            )Issuance
                of warrants for services
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            219,020
            
            
            -
            
            
            219,020Issuance
                of convertible notes
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            63,234
            
            
            -
            
            
            63,234Sale
                of warrants
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            80,000
            
            
            -
            
            
            80,000Issuance
                of common stock for services
            
            
            -
            
            
            -
            
            
            12,143,313
            
            
            121,436
            
            
            838,500
            
            
            -
            
            
            959,936Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (4,496,095
            )
            
            (4,496,095
            )Balance,
                June 30, 2006
            
            
            2,114
            
            
            -
            
            
            99,630,554
            
            
            996,308
            
            
            13,453,963
            
            
            (17,212,576
            )
            
            (2,760,191
            )Sale
                of Preferred shares
            
            
            -
            
            
            35,295
            
            
            -
            
            
            -
            
            
            5,964,705
            
            
            -
            
            
            6,000,000Deemed
                dividend
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (4,167,256
            )
            
            -
            
            
            (4,167,256
            )Expenses
                related to sale of Preferred shares
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (500,000
            )
            
            -
            
            
            (500,000
            )Issuance
                of common stock for converted Bridge loans including
                interest
            
            
            -
            
            
            -
            
            
            2,685,294
            
            
            26,853
            
            
            385,647
            
            
            -
            
            
            412,500Beneficial
                conversion feature of Bridge I loan
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            73,678
            
            
            -
            
            
            73,678Unamortized
                loan discount
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (290,625
            )
            
            -
            
            
            (290,625
            )Sale
                of unregistered shares
            
            
            -
            
            
            -
            
            
            2,356,471
            
            
            23,563
            
            
            377,037
            
            
            -
            
            
            400,600Issuance
                of common stock for services
            
            
            -
            
            
            -
            
            
            14,210,326
            
            
            142,102
            
            
            2,438,426
            
            
            -
            
            
            2,580,528Compensatory
                warrants
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            1,252,158
            
            
            -
            
            
            1,252,158Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (4,002,650
            )
            
            (4,002,650
            )Balance
                June 30, 2007
            
            $
            2,114
            
            $
            35,295
            
            
            118,882,645
            
            $
            1,188,826
            
            $
            18,987,733
            
            $
            (21,215,226
            )
            $
            (1,001,258
            )




See
      notes
      to consolidated financial statements.


F
          -
          5


**ELEMENT
      21 GOLF COMPANY AND SUBSIDIARY**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**FOR
      THE YEARS ENDED JUNE 30, 2007 AND 2006**





2007
            
            2006**CASH
                FLOWS FROM OPERATING ACTIVITIES:**Net
                loss
            
            $
            (4,002,650
            )
            $
            (4,496,095
            )Adjustments
                to reconcile net loss to net cash (used in) provided by operating
                activities:Compensatory
                common stock
            
            
            1,971,840
            
            
            959,936Compensatory
                warrants
            
            
            1,252,158
            
            
            -Compensatory
                preferred stock
            
            
            -
            
            
            777,397Beneficial
                conversion feature of convertible notes
            
            
            -
            
            
            63,234Interest
            
            
            1,050,930
            
            
            -Bad
                debt provision
            
            
            15,000
            
            
            -Depreciation
            
            
            340,060
            
            
            171,704Amortization
                of debt discount
            
            
            523,794
            
            
            348,581Excess
                derivative liability (income) expense
            
            
            (4,250,442
            )
            
            392,179Changes
                in:Accounts
                receivable
            
            
            (126,161
            )
            
            24,457Inventories
            
            
            (793,438
            )
            
            42,546Prepaid
                expenses and other current assets
            
            
            (140,240
            )
            
            (11,527
            )Accounts
                payable and accrued expenses
            
            
            94,288
            
            
            252,603Accrued
                interest
            
            
            52,765
            
            
            31,485Deferred
                revenue
            
            
            17,300
            
            
            -Derivative
                liability
            
            
            -
            
            
            1,491,945Net
                cash (used in) provided by operating activities
            
            
            (3,994,796
            )
            
            48,445**CASH
                FLOW FROM INVESTING ACTIVITIES:**Purchase
                of capital assets
            
            
            (73,764
            )
            
            (669,522
            )Net
                cash (used in) investing activities
            
            
            (73,764
            )
            
            (669,522
            )**CASH
                FLOWS FROM FINANCING ACTIVITIES:**Repayments
                to related parties
            
            
            (9,156
            )
            
            (379,602
            )Proceeds
                from sale of warrants
            
            
            -
            
            
            80,000Proceeds
                from convertible debt
            
            
            180,000
            
            
            1,163,000(Repayment)
                of convertible debt
            
            
            (493,000
            )
            
            -Expenses
                related to sale of preferred shares
            
            
            (500,000
            )
            
            -Proceeds
                from sale of common shares
            
            
            400,600
            
            
            -Proceeds
                from sale of preferred shares
            
            
            6,000,000
            
            
            -Loan
                proceeds from (repayments to) shareholders
            
            
            (21,925
            )
            
            19,750Net
                cash provided from financing activities
            
            
            5,556,519
            
            
            883,148**NET
                (DECREASE) INCREASE IN CASH**
            
            
            1,487,959
            
            
            262,071**CASH,
                BEGINNING OF YEAR**
            
            
            263,219
            
            
            1,148**CASH,
                END OF YEAR**
            
            $
            1,751,178
            
            $
            263,219**SUPPLEMENTAL
                CASH FLOW INFORMATION:**Interest
                paid
            
            $
            88,311
            
            $
            -Taxes
                paid
            
            $
            -
            
            $
            -Issuance
                of stock to settle accrued expenses
            
            $
            608,688
            
            $
            777,397Conversion
              of debt and accrued interest to common stock
            
            $
            412,500
            
            $
            -Compensatory
              stock and warrants
            
            $
            3,223,998
            
            $
            1,178,956Preferred
                stock dividend
            
            $
            4,167,256
            
            $
            543,512Beneficial
                conversion feature on converted notes
            
            $
            73,678
            
            $
            -Loan
                discount on converted notes
            
            $
            290,625
            
            $
            -




See
      notes
      to consolidated financial statements.





F
          -
          6




**ELEMENT
      21 GOLF COMPANY AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**YEARS
      ENDED JUNE 30, 2007 AND 2006**





**NOTE
      1 -** **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES:**





***(a)***
            ***Organization
                and Basis of
                Presentation:***





In
      September of 2002, BRL Holdings, Inc. (“BRL”) acquired Element 21 Technologies,
      Inc. (“Technologies”) under an Amended and Restated Agreement (the “Agreement”)
      wherein BRL issued 42,472,420 shares of its common stock to shareholders of
      Technologies and assumed Technologies’ obligations under option agreements
      allowing for the purchase of 6,432,000 additional shares of common stock.
      Technologies was a development stage company formed to design, develop and
      market Element 21 alloy golf clubs. This acquisition was accounted for as a
      reverse acquisition using the purchase method of accounting, as the shareholders
      of Technologies assumed control immediately following the
      acquisition.





In
      October 2003, BRL Holdings, Inc. changed its name to Element 21 Golf Company
      (the “Company”).





Upon
      the
      closing of the Technologies acquisition, as discussed above, the Company
      reported as a development stage enterprise effective September 17, 2002. During
      fiscal year 2005, the Company commenced active operations and began reporting
      revenues during the last quarter of the year. As such, the Company is no longer
      reporting as a development stage entity.





In
      May
      2007, the Board of Directors adopted resolutions approving an amendment and
      a
      majority of shareholders also approved amending the Company’s Certificate of
      Incorporation to increase the number of authorized shares of capital stock
      to
      300,000,000 shares of common stock and 5,000,000 shares of preferred
      stock.





***(b)*** ***Going
      Concern:***





These
      financial statements have been presented on the basis that the Company is a
      going concern, which contemplates the realization of assets and the satisfaction
      of liabilities in the normal course of business. The Company’s
      subsidiary is inactive and is not expected to produce revenues or generate
      cash. During the last quarter of fiscal year 2005, the Company commenced sales
      of its products and has begun generating revenues. However, as of June 30,
      2007,
      the Company continues to have negative working capital of $668,410, an
      accumulated deficit of $21,215,226 ($3,261,401 of which was realized during
      the
      development stage period from September 17, 2002 to June 30, 2004), a total
      shareholders’ deficit of $1,001,258 and for the year ended June 30, 2007
      incurred a net loss of $4,002,650, all of which raise substantial doubt about
      the Company’s ability to continue as a going concern.





Managements’
      plans for the Company include more aggressive marketing, raising additional
      capital and other strategies designed to optimize shareholder value. However,
      no
      assurance can be made that management will be successful in fulfilling all
      components of its plan. The failure to achieve these plans will have a material
      adverse effect on the Company’s financial position, results of operations and
      ability to continue as a going concern.





F-7




**ELEMENT
        21 GOLF COMPANY AND SUBSIDIARY**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **YEARS
        ENDED JUNE 30, 2007 AND 2006**


**NOTE
      1 -** **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES (Continued):**





***(c)***
            ***Principles
                of Consolidation:***





The
      accompanying consolidated financial statements include the accounts of the
      company and its wholly owned, inactive subsidiary (Element 21 Golf Company
      -
      Canada). All significant inter-company accounts and transactions have been
      eliminated.





***(d)***
            ***Use
                of Estimates:***





The
      preparation of financial statements in conformity with generally accepted
      accounting principles in the United States of America requires management to
      make estimates and assumptions that affect the reported amounts of assets and
      liabilities and disclosure of contingent assets and liabilities at the date
      of
      the financial statements and the reported amounts of revenues and expenses
      during the reporting period. Actual results could differ from those
      estimates.




***(e)***
            ***Fair
                Value of Financial
                Instruments:***





The
      Company’s financial instruments consist of cash, accounts receivable, accounts
      payable and accrued expenses notes payable and derivative instruments. The
      carrying value of all instruments approximates their fair value, due to their
      short-term nature.





***(f)***
            ***Cash
                and Cash Equivalents:***





For
      purposes of the statements of cash flows, the Company considers all highly
      liquid investments purchased with a remaining maturity of three months or less
      to be cash equivalents.





***(g)***
            ***Inventories:***





Inventories,
      which consist primarily of goods held for resale, are stated at the lower of
      cost (first-in, first-out method) or market and are comprised as
      follows:




2007
            
            2006Finished
                goods
            
            $
            681,387
            
            $
            -Components
            
            
            240,433
            
            
            128,382Total
            
            $
            921,820
            
            $
            128,382




***(h)***
            ***Accounts
                Receivable and Bad
                Debts:***





The
      Company provides an allowance for doubtful accounts equal to the estimated
      uncollectible amounts. The Company’s estimate is based on a review of the
      current status of trade receivables. It is reasonably possible that the
      Company’s estimate of the allowance for doubtful accounts will
      change.




F-8




**ELEMENT
        21 GOLF COMPANY AND SUBSIDIARY**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **YEARS
        ENDED JUNE 30, 2007 AND 2006**


**NOTE
      1 -** **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES (Continued):**





***(i)***
            ***Fixed
                Assets and
                Depreciation:***





Fixed
      assets are recorded at cost. Expenditures for major additions and improvements
      are capitalized and minor replacements, maintenance and repairs are expensed
      as
      incurred. Depreciation is provided over the estimated useful lives of the
      related assets using the straight-line method for financial statement purposes.
      Leasehold improvements are amortized over the term of the respective lease.
      The estimated useful lives are as follows:





Furniture
                and fixtures
            
            
            5
                yearsComputer
                equipment
            
            
            3
                yearsOffice
                equipment
            
            
            5
                yearsTools
                and dies
            
            
            2
                years





***(j)***
            ***Revenue
                Recognition:***





The
      Company recognizes revenue in accordance with the Securities and Exchange
      Commission Staff Accounting Bulletin No. 104, “Revenue Recognition” (“SAB 104”).
      Under SAB 104, revenue is recognized when there is persuasive evidence of an
      arrangement, delivery has occurred or services have been rendered, the sales
      price is determinable, and collectibility is reasonably assured. Revenues
      from product sales are recognized when title passes to customers, which is
      when
      goods are shipped. Revenues from product shipped to sales representatives where
      title has not passed to the customers is reflected as deferred
      revenue.





***(k)***
            ***Income
                Taxes:***





Deferred
      income taxes are recognized for the tax consequences in future years for
      differences between the tax bases of assets and liabilities and their financial
      reporting amounts at each year-end based on enacted tax laws and statutory
      tax
      rates applicable to the periods in which the differences are expected to affect
      taxable income. Valuation allowances are established when necessary to reduce
      deferred tax assets to the amount expected to be realized. Income tax expense
      is
      the tax incurred for the period and the change during the period of deferred
      tax
      assets and liabilities.





***(l)***
            ***Stock-Based
                Compensation:***





The
      Company accounts for equity instruments issued to non-employees in accordance
      with the provisions of SFAS No. 123R and Emerging Issues Task Force (“EITF”) No.
      96-18, “Accounting for Equity Instruments That Are Issued to Other Than
      Employees for Acquiring, or in Conjunction with Selling, Goods or Services.”





The
      Company does not maintain a formal incentive compensation plan covering its
      employees, directors and independent contractors. Options to purchase the
      Company’s common stock vest at varying intervals, but in general, typically vest
      over two to four year periods. An option’s maximum term is ten years. See Note 6
      for additional information regarding the Company’s stock options.





F-9




**ELEMENT
        21 GOLF COMPANY AND SUBSIDIARY**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **YEARS
        ENDED JUNE 30, 2007 AND 2006**


**NOTE
      1 -** **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES (Continued):**





***(m)***
            ***Net
                Loss Per Common
                Share:***





The
      following weighted average shares were used for the computation of basic and
      diluted earnings per share:


For the years ended June 30,2007
              
              2006Basic
              
              
              110,294,858
              
              
              97,764,539Diluted
              
              
              110,294,858
              
              
              97,764,539





Basic
      net
      loss per common share is computed by dividing the net loss applicable to common
      shareholders by the weighted average number of common shares outstanding during
      the period. Diluted net loss per common share reflects the potential from the
      exercise or conversion of other securities into Common Stock, but only if
      dilutive. Diluted loss per share for the years ended June 30, 2007 and 2006
      is
      the same as basic loss per share, since the effects of the calculation were
      anti-dilutive due to the fact that the Company incurred losses for all periods
      presented. The following securities, presented on a common share equivalent
      basis, have been excluded from the per share computation since their effect
      was
      anti-dilutive.




For the years ended June 30,2007
              
              2006Stock
                  options
              
              
              12,800
              
              
              3,200Warrants
              
              
              77,876,237
              
              
              5,489,203Preferred
                  stock
              
              
              43,582,667
              
              
              8,288,455Convertible
                  debt
              
              
              2,571,656
              
              
              -





***(n)***
            ***Recent
                Accounting Pronouncements Affecting the Company:***





In
      June
      2006, the FASB issued FASB Interpretation No. 48, *Accounting
      for Uncertainty in Income Taxes* (FIN
      48), which, among other things, requires applying a "more likely than not"
      threshold to the recognition and de-recognition of tax positions. The provisions
      of FIN 48 are effective for years beginning after December 15, 2006. We are
      currently evaluating the impact of adopting FIN 48 on the financial statements,
      but we do not expect its adoption to have a significant transition
      effect.





In
      September 2006, the SEC staff published SAB No. 108, *“Considering
      the Effects of Prior Year Misstatements when Quantifying Misstatements in
      Current Year Financial Statements”*. SAB 108 addresses quantifying the
      financial statement effects of misstatements and considering the effects of
      prior year uncorrected errors on the statements of operations as well as the
      balance sheets. SAB No. 108 does not change the requirements under
      SAB No. 99 regarding qualitative considerations in assessing the
      materiality of misstatements. The Company adopted SAB No. 108 during
      the fourth quarter of fiscal year 2007, and the adoption had no impact on its
      results of operations or financial condition as of and for the fiscal year
      ended
      June 30, 2007.





F-10




**ELEMENT
        21 GOLF COMPANY AND SUBSIDIARY**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **YEARS
        ENDED JUNE 30, 2007 AND 2006**


**NOTE
      1 -** **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES (Continued):**




In
      September 2006, the FASB issued SFAS No. 157, *“Fair
      Value Measurements”* ,
      which
      provides guidance for using fair value to measure assets and liabilities. The
      pronouncement clarifies (1) the extent to which companies measure assets
      and liabilities at fair value; (2) the information used to measure fair
      value; and (3) the effect that fair value measurements have on earnings.
      SFAS No. 157 will apply whenever another standard requires (or
      permits) assets or liabilities to be measured at fair value.
      SFAS No. 157 is effective for the Company as of July 1, 2008. Our
      adoption of SFAS 159 is not expected to have a material impact on our results
      of
      operations or financial position.





In
      February 2007, the FASB issued SFAS No. 159, *“The
      Fair Value Option for Financial Assets and Financial Liabilities Including
      an
      Amendment of FASB Statement No. 115”* .
      SFAS No. 159 permits entities to choose to measure many financial
      instruments and certain other items at fair value that are not currently
      required to be measured at fair value. This statement also establishes
      presentation and disclosure requirements designed to facilitate comparisons
      between entities that choose different measurement attributes for similar types
      of assets and liabilities. SFAS No. 159 is effective for fiscal years
      beginning after November 15, 2007. Our
      adoption of SFAS 159 is not expected to have a material impact on our results
      of
      operations or financial position.





**NOTE
      2 -** **FIXED
      ASSETS:**





Fixed
      assets consists of the following:




2007
            
            2006Furniture
                and fixtures
            
            $
            10,184
            
            $
            10,178Computer
                equipment
            
            
            18,720
            
            
            5,984Tools
                & dies
            
            
            694,113
            
            
            635,791Leasehold
                improvements
            
            
            27,128
            
            
            24,428Office
                equipment
            
            
            6,600
            
            
            6,600756,745
            
            
            682,981Less:
                accumulated depreciation and amortization
            
            
            512,511
            
            
            172,451$
            244,234
            
            $
            510,530





Depreciation
      expense for the fiscal 2007 and 2006 years aggregated $340,060 and $171,704,
      respectively.




F-11


**ELEMENT
        21 GOLF COMPANY AND SUBSIDIARY**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **YEARS
        ENDED JUNE 30, 2007 AND 2006**




**NOTE
      3 -** **RELATED
      PARTY TRANSACTIONS:**





***(a)***
            ***Accounts
                Payable -
                Non-Current:***





Since
      April of 1996 and until June 30, 2005, the Company had engaged R T Robertson
      Consultants, Inc. (“Robertson”) and Robertson Advisors, LLC (‘Advisors”),
      consulting firms controlled by family members of Dr. R. Bruce Reeves, to perform
      the executive duties of the Company without specific compensation. Mr. Reeves
      was a member of the Board of Directors, President, and Chief Executive Officer
      of the Company until October 4, 2002. In this capacity and as an employee of
      the
      consulting firm, Dr. Reeves managed ongoing business activities of the Company
      until the transaction in September 2002 see Note 1(a). At June 30, 2007,
      $117,468 was owed to Robertson, $132,329 was owed to Advisors, $1,876 was owed
      to Dr. Reeves and the balance of $230,403 was owed to other related parties.
      All
      parties have indicated that payment of these balances is not expected during
      the
      next fiscal year.





***(b)***
            ***Loans
                and Advances -
                Officers/Shareholders:***





All
      loans
      and advances from officers/shareholders are made on a non-interest bearing
      basis
      and the officer has agreed to not demand payment during the next fiscal
      year.





Included
      in accounts payable and accrued expenses as of June 30, 2007 and 2006 is
      approximately $383,000 and $1,035,000, respectively, of compensation accrued
      for
      our officers and directors. Substantially all of this liability is due to be
      paid in Company common stock.





**NOTE
      4 -** **CONVERTIBLE
      NOTES:**





*Bridge
      I Financing:*




Between
      January 17 and March 6, 2006, the Company issued 10% Convertible Promissory
      Notes in the aggregate principal face amount of $540,000 to 15 individual
      investors. With respect to notes totaling $340,000 (the “$340,000 Notes”), each
      such investor also received three separate warrants (a warrant exercisable
      for
      one year, a warrant exercisable for two years, and a warrant exercisable for
      three years) to purchase shares of the Company's common stock up to an amount
      equal to the initial investment in the Notes at an exercise price to be
      determined based on a twenty day trading average of shares of the Company’s
      Common Stock prior to the date of exercise or from and after the date of an
      equity financing of at least $5.0 million (the “Equity Financing”) completed
      within 12 months. With respect to one note for $200,000 (the “$200,000 Note”),
      the investor received 3,529,413 warrants (1/3 warrants exercisable for one
      year,
      1/3 warrants exercisable for two years, and the remaining 1/3 warrants
      exercisable for three years) with similar terms, except that the warrants are
      exercisable at an exercise price which is fixed at $0.17 per share. All of
      these
      warrants are subject to certain anti-dilution price adjustments. The $340,000
      Notes and the $200,000 Note mature one year after issuance and accrue interest
      at an annual interest rate equal to 10% per annum, payable at maturity. All
      the
      notes and interest are convertible, at the option of the investor, into shares
      of Company’s Common Stock under the same terms and conditions as the warrants.




F-12




**ELEMENT
        21 GOLF COMPANY AND SUBSIDIARY**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **YEARS
        ENDED JUNE 30, 2007 AND 2006**


**NOTE
      4 -** **CONVERTIBLE
      NOTES (Continued):**





During
      the year ended June 30, 2007, two notes totaling $75,000 and $7,500 in related
      accrued interest were converted into 485,294 shares of common stock. As a
      result, the Company charged the remaining balance of $40,625 of unamortized
      discount to the notes to additional paid-in capital **.** In order
      to induce the note holders to convert their notes into stock, the Company
      offered certain incentives, which included piggy back registration rights for
      the warrants, payment in full of all interest and an extension of the warrant
      expiration terms by approximately seven months. As a result of the extension
      of
      the warrant expiration date, the Company recorded an additional $122,215 in
      derivative expense. In addition, two $20,000 notes were cancelled during the
      year ended June 30, 2007 and the proceeds were returned to the investor and
      all
      entries related to the recording of the note were reversed, including $33,549
      of
      derivative liability and all accrued interest. During the year ended June 30,
      2007, the remaining $225,000 face value of the $340,000 Notes matured and was
      paid, along with the requisite accrued interest of 10% per annum, and the
      original one year warrants expired without being exercised. In January, 2007
      the
      $200,000 Note matured, however, the holder requested, and the Company granted
      a
      six month extension to exercise the conversion of the one year warrants and
      the
      note. The Company granted the extension of the maturity date on the note to
      July
      15, 2007 without interest. In June, 2007, the holder requested an early payment
      of the note and in return agreed to the cancellation of all the warrants, to
      which the Company agreed effective immediately. The Company terminated the
      related warrants in June, 2007 and recorded the termination as derivative
      income. In July 2007, subsequent to the balance sheet date the Company paid
      the
      $200,000 Note and accrued interest of $20,000.





As
      of
      June 30, 2007, all of the remaining unexpired warrants related to the $340,000
      Notes financing were revalued and the liability was adjusted to approximately
      $133,000. The terms of the warrants issued for the $340,000 Notes resulted
      in
      the Company losing control over the number of shares to be issued (the “tainting
      feature”). As such, all warrants and embedded derivatives, if any, related to
      convertible notes and preferred shares issued subsequently would be affected
      by
      this tainting feature and would default to being recorded as derivative
      liability and not equity. As of June 30, 2007 the Company revalued the warrants
      using the Black Scholes option-pricing model with the following assumptions:
      an
      expected life equal to the contractual term of the conversion option or
      warrants, as the case may be; no dividends; a risk free rate of return of 4.9%
      to 5.0% and volatility ranging from 37% to 115% (range in volatility is due
      to
      the term of the remaining warrants). Volatility is based upon the historical
      volatility of the Company’s stock price.




*Bridge
      II Financing:*




Between
      May 5 and June 30, 2006, the Company issued additional 10% Convertible
      Promissory Notes in the aggregate principal face amount of $623,000 to 16
      individual investors (the “$623,000 Notes”). Each such investor also received
      warrants, exercisable for one year, to purchase shares of the Company's common
      stock up to 150% of the investor’s initial investment in the $623,000 Notes at
      an exercise price equal to the lesser of (i) $0.175, or (ii) the ten day trading
      average of shares of the Company’s Common Stock prior to the date of exercise.
      All of these warrants are subject to certain
      anti-****dilution price adjustments. The $623,000 Notes
      mature one year after issuance and accrue interest at an annual interest rate
      equal to 10% per annum, payable at maturity. The notes and interest are
      convertible, at the option of the investor, into shares of the Company’s Common
      Stock under the same terms and conditions as the warrants.




F-13


**ELEMENT
          21 GOLF COMPANY AND SUBSIDIARY**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **YEARS
          ENDED JUNE 30, 2007 AND 2006**


**NOTE
      4
      -** **CONVERTIBLE
      NOTES (Continued):**




In
      July,
      2006, the Company issued additional 10% Convertible Promissory Notes in the
      aggregate principal face amount of $180,000 to 6 additional investors (the
      “$180,000 Notes”). The terms of the notes and warrants are identical to the
      $623,000 Notes.





The
      Company has accounted for the above convertible notes and warrants as follows:
      under the provisions of Statement of Financial Accounting Standards No. 133,
      Accounting for Derivative Instruments and Hedging Activities, ("SFAS 133")
      an
      embedded conversion option should be bifurcated and accounted for separately
      as
      a derivative instrument, unless the specific requirements for equity
      classification of the embedded conversion option, as stated in EITF 00-19:
      Accounting for Derivative Financial Instruments Indexed to, and Potentially
      Settled in, a Company's Own Stock (“EITF 00-19”) are met. EITF 00-19 provides
      that an equity classification is appropriate if the settlement criteria set
      forth therein for such classification are met and that the additional conditions
      necessary for equity classification, set forth therein, are also met. Warrants
      are freestanding derivatives and need to be similarly analyzed under EITF 00-19
      to determine if equity classification is appropriate.





The
      Company determined that the conversion option of the notes was required to
      be
      bifurcated and accounted for as a derivative. The warrants were also required
      to
      be recorded and accounted for as a derivative due to the same tainting feature
      as the Bridge I Financing and as a result of this tainting feature, the terms
      of
      the Bridge II Financing also resulted in similar accounting
      treatment.




The
      conversion option and the warrants in respect of the Bridge II Financing
      ($623,000 Notes), were initially valued at approximately $559,800 and $373,200,
      respectively. The combined liability was restricted to the value of the proceeds
      of $623,000 and has been recorded as discount to the convertible notes with
      a
      corresponding credit to warrant liability, respectively, on a pro-rata basis.
      The discount of $623,000 is accreted on a straight-line basis over the maturity
      period of the notes. The
      liabilities for the conversion option and the warrants were adjusted to zero
      as
      of June 30, 2007 as the conversion option of the notes and the warrant stock
      purchase option expired.




The
      conversion option and the warrants with respect to the Bridge II Financing
      ($180,000 Notes) were initially valued at a combined approximate amount of
      $178,400, which has been recorded as a discount to the convertible notes with
      a
      corresponding credit to a derivative liability. The discount is being accreted
      on a straight-line basis over the maturity period of the notes. The
      liabilities for the conversion option on the notes and the warrants were
      adjusted to approximately $11,000 combined as of June 30,
      2007.




The
      Company valued the conversion option and the warrants under the Black Scholes
      option-pricing model with the following assumptions: an expected life equal
      to
      the contractual term of the conversion option or warrants, as the case may
      be;
      no dividends; a risk free rate of return of 4.9% and volatility of
      3%.





F-14


**ELEMENT
        21 GOLF COMPANY AND SUBSIDIARY**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **YEARS
        ENDED JUNE 30, 2007 AND 2006**


**NOTE
      4 -** **CONVERTIBLE
      NOTES (Continued):**




During
      the year ended June 30, 2007, notes totaling $300,000 (principal) plus $30,000
      in accrued interest of the Bridge II financing $623,000 Notes, were converted
      into 2,200,000 shares of common stock. As a result of the conversion, the
      Company charged additional paid-in capital for $250,000 as the remaining
      unamortized discount on the notes and reversed derivative expense of
      approximately $150,700 related to the conversion option. In order to induce
      the
      note holders to convert their notes into stock, the Company offered certain
      incentives, which included registration rights for the warrants, payment in
      full
      of all interest and an extension of the warrant expiration term by approximately
      three months. As a result of the extension of the warrant expiration date and
      setting of the conversion rate, the Company recorded an additional derivative
      expense of approximately $42,600.




As
      of
      June 30, 2007, all of the remaining Bridge II financing warrants issued and
      conversion option were revalued and the derivative liability was adjusted to
      approximately $10,000. As of June 30, 2007 the Company revalued the warrants
      under the Black Scholes option-pricing model with the following assumptions:
      an
      expected life equal to the contractual term of the conversion option or
      warrants, as the case may be; no dividends; a risk free rate of return of 4.9%
      and volatility of 3%.





**NOTE
      5
      -** **PREFERRED
      SHARES:**





*Series
      A Preferred Stock:*


In
      February 2006, the Company issued a total of 2,113,556 shares of newly
      designated Series A Convertible Preferred Stock in order to settle outstanding
      debts owed to officers and consultants of the Company (a portion of which were
      for unpaid consulting fees) in the aggregate amount of $2,113,556. The shares
      of
      Series A Convertible Preferred Stock are convertible at the option of the
      holder, at any time after issuance. Each share of Series A Convertible Preferred
      Stock is convertible into that number of shares of common stock of the Company
      as is equal to the Original Issue Price of shares of Series A Convertible
      Preferred Stock, or $1.00, by the Conversion Price which is initially equal
      to
      $0.255 and is subject to adjustment in certain cases. Each share of Series
      A
      Convertible Preferred Stock carries with it the right to fifty votes.





Also,
      in
      February 2006, the Company issued a warrant to purchase 1,000,000 shares of
      the
      Company’s common stock at a price of $0.01 as part of the Company’s repayment of
      outstanding indebtedness to a creditor of the company. The warrant vested
      immediately and is exercisable for a three year period from the date of
      issuance. As of June 30, 2007, the warrant was revalued and the derivative
      liability was adjusted to approximately $151,000. As of June 30, 2007 the
      Company revalued the warrant under the Black Scholes option-pricing model with
      the following assumptions: an expected life equal to the contractual term of
      the
      warrant, as the case may be; no dividends; a risk free rate of return of 4.9%
      and volatility of 116%.




F-15




**ELEMENT
        21 GOLF COMPANY AND SUBSIDIARY**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **YEARS
        ENDED JUNE 30, 2007 AND 2006**


**NOTE
      5 -** **PREFERRED
      SHARES (Continued):**





*Series
      B Preferred Stock:*





On
      July
      31, 2006 (the “Initial Closing Date”), the Company agreed to a $4 million equity
      financing by entering into two Series B Convertible Preferred Stock Subscription
      Agreements (each a “Subscription Agreement” and collectively the “Subscription
      Agreements”) with two investors (each a “Purchaser” and collectively, the
“Purchasers”). Each Subscription Agreement provides for the sale by the Company
      to the applicable Purchaser of 117,648 shares of the Company’s Series B
      Convertible Preferred Stock, par value $0.10 per share (the “Series B1 Preferred
      Stock”), and warrants to purchase an aggregate of 17,647,059 shares of the
      Company’s common stock, in exchange for and in consideration of an aggregate
      investment by each Purchaser of $2 million in cash (each Purchaser’s “Investment
      Amount”), which amount is to be invested by each Purchaser in two equal $1
      million installments, the first of which occurred on the Initial Closing Date
      and the second of which occurred on November 30, 2006 (the “Subsequent Closing
      Date”).





On
      the
      Initial Closing Date, each Purchaser invested $1 million in the Company in
      return for 58,824 shares of Series B Preferred Stock and two warrants (the
      terms
      of which are more fully described below) to purchase an aggregate of 8,823,530
      shares of common stock. The Subscription Agreements obligated each Purchaser
      to
      invest the remaining $1 million of its Investment Amount (the “Additional
      Investment Amount”) in the Company no later than November 30, 2006, subject only
      to the Company converting at least 80% of the aggregate outstanding principal
      amount evidenced by those certain convertible promissory notes issued by the
      Company between February 2006 and July 31, 2006 (collectively, the “Promissory
      Notes”) into shares of common stock prior to the Subsequent Closing Date. On
      October 31, 2006, both Purchasers had agreed to waive any conditions to the
      Subsequent Closing. On the Subsequent Closing Date, in exchange for each
      Purchaser’s Additional Investment Amount, the Company issued to each Purchaser
      an additional 58,824 shares of Series B Preferred Stock and two additional
      warrants (the terms of which are more fully described below) to purchase an
      aggregate of an additional 8,823,529 shares of common stock.





On
      the
      Initial Closing Date, the Company granted each Purchaser (i) one warrant to
      purchase 3,750,000 shares of common stock at an exercise price of $0.22 per
      share in the event the warrant is exercised on or prior to July 31, 2007, and
      $0.28 per share in the event the warrant is exercised on or after August 1,
      2007, and (ii) one warrant to purchase 5,073,530 shares of common stock at
      an
      exercise price of $0.28 per share (each an “Initial Warrant”, and collectively,
      the “Initial Warrants”). On the Subsequent Closing Date, the Company granted
      each Purchaser (i) one additional warrant to purchase 3,750,000 shares of common
      stock at an exercise price of $0.22 per share in the event the warrant is
      exercised on or prior to July 31, 2007, which increases to $0.28 per share
      in
      the event the warrant is exercised on or after August 1, 2007, and (ii) one
      additional warrant to purchase 5,073,530 shares of common stock at an exercise
      price of $0.28 per share (each a “Subsequent Warrant”, collectively, the
“Subsequent Warrants” and collectively with the Initial Warrants, the
“Warrants”). The Warrants expire on January 31, 2009. The exercise prices of the
      Warrants are subject to adjustment in the event of certain dilutive issuances,
      stock dividends, stock splits, share combinations or other similar
      recapitalization events. The Warrants may only be exercised by the payment
      of
      the applicable exercise price to the Company in cash, no cashless exercise
      is
      permitted. The terms of the Initial Warrants and the Subsequent Warrants are
      identical.




F-16




**ELEMENT
        21 GOLF COMPANY AND SUBSIDIARY**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **YEARS
        ENDED JUNE 30, 2007 AND 2006**


**NOTE
      5 -** **PREFERRED
      SHARES (Continued):**





On
      June
      15, 2007, the Company consummated a $2,000,000 equity financing by entering
      into
      two additional Series B Convertible Preferred Stock Subscription Agreements
      (each a “Series B Subscription Agreement” and collectively the “Series B
      Subscription Agreements”) with two purchasers (each a “Purchaser” and
      collectively, the “Purchasers”). Each Series B Subscription Agreement provides
      for the sale by the Company to the applicable Purchaser 58,824 shares of the
      Company’s Series B Convertible Preferred Stock, par value $0.10 per share (the
“Additional Series B Preferred Stock”), and warrants to purchase an aggregate of
      5,882,400 shares of the Company’s Common Stock, $.01 par value per share, in
      exchange for and in consideration of an aggregate investment by each of the
      Purchasers of $1 million in cash.





On
      the
      Closing Date, each Purchaser invested $1 million in the Company in return for
      58,824 shares of Additional Series B Preferred Stock and warrants (the terms
      of
      which are identical to the Series B Convertible Preferred Stock described above)
      to purchase an aggregate of 5,882,400 shares of Common Stock. T he
      Company granted each Purchaser one warrant to purchase 5,882,400 shares of
      common stock at an exercise price of $0.19 per share. The Warrants expire on
      May
      31, 2008. The exercise prices of the warrants are subject to adjustment in
      the
      event of certain dilutive issuances, stock dividends, stock splits, share
      combinations or other similar recapitalization events. The warrants may only
      be
      exercised by the payment of the applicable exercise price to the Company in
      cash, no cashless exercise is permitted.





The
      Company has evaluated the Series B Preferred Stock to determine if there are
      any
      embedded derivatives and determined that the Series B Preferred Stock is more
      akin to equity than debt as it is not redeemable and carries voting rights.
      As
      such the Series B Preferred Stock is considered perpetual and the option to
      convert into shares of Company’s Common Stock is clearly and closely related to
      the host contract i.e. Series B Preferred Stock and therefore need not be
      separated. The warrants associated with the issuance of the Series B Preferred
      Stock have been determined to be a liability due to the tainting feature of
      the
      warrants issued with Bridge I and Bridge II Financings. The warrant issuance
      has
      been valued at $167,250 using the Black Scholes method. The value of the
      warrants has been recorded as a dividend with a corresponding discount to the
      Series B Preferred The Series B Preferred Stock is evaluated further under
      EITF
      98-5: Accounting for Convertible Securities with Beneficial Conversion Features
      or Contingently Adjustable Conversion Ratios, (“EITF 98-5”) and EITF 00-27:
      Application of Issue No. 98-5 to Certain Convertible Instruments, (“EITF 00-27”)
      to determine if there is any beneficial conversion feature associated with
      the
      conversion. The Company calculated the beneficial conversion to be zero as
      the
      conversion price equaled or exceeded the stock price on the date of the
      agreement.




F-17


**ELEMENT
        21 GOLF COMPANY AND SUBSIDIARY**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **YEARS
        ENDED JUNE 30, 2007 AND 2006**




**NOTE
      5 -** **PREFERRED
      SHARES (Continued):**





The
      Series B Preferred Stock has a conditional 4% dividend attached. The Company
      has
      no obligation to pay a dividend except in certain circumstances. The conditional
      dividend obligation attaches on the anniversary of each issuance whether the
      Board of Directors declares a dividend payment or not. The Preferred Stock
      dividend has a priority over junior equity issuances upon the occurrence of
      a
      liquidating event. Additionally, no dividends may be paid to holders of common
      stock unless all Preferred Stock dividends have been paid. As of June 30, 2007,
      the anniversary date for accrual of dividends had not occurred, however, if
      dividends were earned on an accrual basis, then $83,333 in dividends would
      be
      entitled to the preference described above. In addition, the holders of the
      Series B Convertible Preferred Stock have the right to approve certain
      transactions and certain issues of securities including but not limited to
      certain mergers, acquisitions, liquidations, sales of equity securities that
      are
      senior to the Series B convertible Preferred Stock or the issuance of debt
      instruments in excess of $1,000,000





**NOTE
      6 -** **SHAREHOLDERS’
      EQUITY/STOCK OPTION PLANS:**





During
      fiscal 2006, the Company issued 12,143,313 shares of common stock for consulting
      and legal services and in settlement of liabilities. The value recorded was
      based on the market price at the time of issuance and aggregated
      $959,936.





During
      fiscal 2007, the Company issued 14,210,326 shares of its common stock to various
      consultants for marketing and investor relations services provided. Such shares
      were valued at the market price as of the date of issuance, aggregating
      $2,580,528.





As
      of
      June 30, 2007 there are two stock option plans in effect; the 1992 Directors'
      Stock Option Plan (Directors' Plan) and the 1992 Stock Option Plan (Option
      Plan). There are no stock options outstanding under the Option Plan. No stock
      options have been granted under either the Director’s Plan or the Option Plan
      since 2002. The Directors' Plan allows for the grant of options to purchase
      up
      to 250,000 shares of the Company’s common stock at an exercise price no less
      than the stock market price at the date of grant. Options granted under this
      Plan vest immediately and expire 10 years from the date of grant. The Option
      Plan allows for the grant of options to employees to purchase up to 10% of
      the
      issued and outstanding shares of the Company, not to exceed 1,000,000 shares,
      at
      an exercise price equal to the stock’s market price at the date of grant. The
      Board sets vesting and expiration dates. The Company has not granted any options
      under either of these plans during the two years ended June 30,
      2007.





The
      following table summarizes information about stock options outstanding, all
      of
      which were granted under the Directors’ Plan and are exercisable:





Outstanding
                as of June 30, 2005
            
            
            52,800Expired
            
            
            (40,000
            )Outstanding
                as of June 30, 2006
            
            
            12,800Expired
            
            
            (9,600
            )Outstanding
                as of June 30, 2007
            
            
            3,200




F-18




**ELEMENT
        21 GOLF COMPANY AND SUBSIDIARY**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **YEARS
        ENDED JUNE 30, 2007 AND 2006**


**NOTE
      6 -** **SHAREHOLDERS’
      EQUITY/STOCK OPTION PLANS (Continued):**





Exercise
      prices of the outstanding options are as follows:





Exercise
                Prices
            
            Number
                of Options$1.25
            
            
            1,600$0.63
            
            
            1,6003,200





In
      addition to the Director’s Plan options, during 1996 the Company issued
      8,000 non plan options with the exercise price of $1.13 that expire December
      31,
      2007.





**NOTE
      7 -** **INCOME
      TAXES:**





The
      Company has not filed any federal or state tax returns for any of the tax years
      subsequent to December 31, 1998. Management intends to cure this deficiency
      as
      soon as possible and expects there will be no federal tax liability (based
      on
      continued losses) for these delinquent years. Deferred tax assets and
      liabilities consist of the following as of June 30:





2007
            
            2006**Deferred
                tax assets:**Net
                operating loss carry forwards
            
            $
            3,453,705
            
            $
            2,136,300Less
                valuation allowance
            
            
            (3,453,705
            )
            
            (2,136,300
            )$
            -
            
            $
            -





Income
      taxes are computed using the asset and liability method of accounting. Under
      the
      asset and liability method, a deferred tax asset or liability is recognized
      for
      estimated future tax effects attributable to temporary differences and
      carryforwards. The measurement of deferred income tax assets is adjusted by
      a
      valuation allowance, if necessary, to recognize future tax benefits only to
      the
      extent, based on available evidence, that it is more likely than not such
      benefits will be realized.





A
      valuation allowance equivalent to 100% of the deferred tax asset has been
      established since, at the current time, it is more likely than not, that the
      Company will not be able to recognize a tax benefit for the asset. The net
      operating losses of approximately $9,850,000 expire at various dates through
      2024.





Effective
      July 1, 2007, the Company adopted the provisions of FASB Interpretation No.
      48
      (“FIN 48”), “Accounting for Uncertainty in Income Taxes — An Interpretation of
      FASB Statement No. 109.” FIN 48 provides detailed guidance for the financial
      statement recognition, measurement and disclosure of uncertain tax positions
      recognized in the financial statements in accordance with SFAS No. 109. Tax
      positions must meet a “more-likely-than-not” recognition threshold at the
      effective date to be recognized upon the adoption of FIN 48 and in subsequent
      periods. Upon the adoption of FIN 48, the Company had no unrecognized tax
      benefits. The Company recognizes interest and penalties, if any, related to
      uncertain tax positions in selling, general and administrative expenses. No
      interest and penalties related to uncertain tax positions were accrued at June
      30, 2007.





F-19




**ELEMENT
        21 GOLF COMPANY AND SUBSIDIARY**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **YEARS
        ENDED JUNE 30, 2007 AND 2006**


**NOTE
      8 -** **COMMITMENTS:**





In
      April
      2006, the Company entered into a three-year lease for office space in Toronto,
      Canada, for a monthly payment of $1,927 plus applicable taxes. The Company
      also
      negotiated a final settlement on its lease in Irvine, California for $1,992.
      Rent expense for the years ended June 30, 2007 and 2006 aggregated $39,461
      and
      $35,474, respectively. In addition, the Company rents office space on a month
      to
      month basis in New Jersey for which it pays $250 per month. The future annual
      minimum lease payments are as follows:





Fiscal
                2008
            
            $
            23,124Fiscal
                2009
            
            
            17,343$
            40,467




On
      June
      21, 2007, the Company signed a licensing agreement with Advanced Light Alloys
      Corporation for the licensing of scandium patents for fishing equipment
      applications. The Company has agreed to pay a 20% royalty on the net sales
      derived from fishing related products. The minimum annual royalty amount due
      under this agreement is $100,000. The agreement expires coterminous with the
      patent expirations. The patents expire June 2014. The agreement may be
      terminated by the Company in May of each year.




F-20