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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-KSB

(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2006

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

For the transition period from [   ] to [   ]

Commission file number 333-138502

SANFORD EXPLORATION INC.(Name of small business issuer in its charter)

|Nevada                                                               | N/A                                 
|-------------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of incorporation or
      organization) | (I.R.S. Employer Identification No.)
|                                                                     |                                     
|1303-1323 Homer Street, Vancouver, British Columbia,                 |                                     
|Canada                                                               | V6B 5T                              
|(Address of principal executive offices)                             | (Zip Code)                          

Issuer's telephone number (778) 855-9681

Securities registered pursuant to Section 12(b) of the Act:

|Title of each class | Name of each exchange on which registered
|------------------- | -----------------------------------------
|Nil                 | Nil                                      

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, par value $0.001(Title of class)

Check whether the issuer is not required to file reports
pursuant to Section 13 or 15(d) of the Exchange Act. (Check one): Yes
[   ] No [X]

Note:Checking the box above will not relieve any
registrant required to file reports pursuant to Section 13 or 15(d) of the
Exchange act from their obligations under those Sections.

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

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

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Check if there is no disclosure of delinquent filers in response
to Item 405 of Regulation S-B 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. [X]

State issuer's revenues for its most recent fiscal year.
$Nil

Aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the price at which
the common equity was sold, or the average bid and asked prices of such common
equity, as of 
  March 30, 2007: 5,001,000 common shares = $100,001(1)(1)By reference to the
price at which the common equity was sold.

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

State the number of shares outstanding of each of the issuer's
classes of equity stock, as of March 30, 2007.

6,976,000 common shares.

Transitional Small Business Disclosure Format (Check one): Yes
[   ] No [X].

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PART I

Item
1.           Description of
Business.

This annual report contains forward-looking statements as that
term is defined in Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. In some cases,
you can identify forward-looking statements by terminology such as "may",
"should", "expects", "plans", "anticipates", "believes", "estimates",
"predicts", "potential" or "continue" or the negative of these terms or other
comparable terminology. These statements are only predictions and involve known
and unknown risks, uncertainties and other factors, including the risks in the
section entitled "Risk Factors", that may cause our company's or our industry's
actual results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. Except as required by
applicable law, including the securities laws of the United States, we do not
intend to update any of the forward-looking statements to conform these
statements to actual results.

Our financial statements are stated in United States Dollars
(US$) and are prepared in accordance with United States Generally Accepted
Accounting Principles.

In this annual report, unless otherwise specified, all dollar
amounts are expressed in United States dollars and all references to "common
shares" refer to the common shares in our capital stock.

As used in this annual report, the terms "we", "us", "our", and
"Sanford" mean Sanford Exploration Inc. and Sanford Exploration (Canada) Inc.,
our wholly owned subsidiary, unless otherwise indicated.

General Overview

We were incorporated in the State of Nevada on February 24,
2005. We are an exploration stage corporation. We own an option to earn a 100%
interest in 11 mining claims subject to a 3% net smelter royalty payments and
obligations to conduct assessment work to maintain the claims in good standing
with the government of Ontario, Canada. We call the 11 claims the Whitney Lake
claims. We are engaged in the exploration for commercially exploitable mineral
resources, including resources of gold, silver, copper, nickel, cobalt, platinum
and palladium on the Whitney Lake claims.

Our administrative office address and our mailing address is
1303-1323 Homer Street, Vancouver, British Columbia, Canada V6B 5T1 and our
telephone number is (778) 855-9681.

Corporate History

We were incorporated in the State of Nevada on February 24,
2005.

On August 15, 2005, we obtained our right to earn an interest
in the Whitney Lake claims through an assignment of an option agreement. Through
this assignment, we became obligated to pay an option payment of CDN$50,000
within three months of our becoming a public company. Once we have made the
CDN$50,000 payment, we will have fulfilled the requirements, flowing from our
assignment of the agreement with the original optionors, to have the claims
recorded in our name with the government of the Province of Ontario. We intend
to become a public company that is quoted on the Over-the-Counter Bulletin Board
during the next twelve months. If we are able to become listed on the
Over-the-Counter Bulletin Board, we will have three months to pay the CDN$50,000
to the original optioners of the Whitney Lake claims in order to earn 100%
interest in the claims, subject to the 3% net smelter royalty payments and the
annual maintenance costs.

We have not been involved in any bankruptcy, receivership or
similar proceeding.

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Our Current Business

We are an exploration stage corporation. We own an option to
earn a 100% interest in 11 mining claims subject to a 3% net smelter royalty
payments and obligations to conduct assessment work to maintain the claims in
good standing with the government of Ontario, Canada. The 11 claims cover a
total of 1800 acres (2.81 square miles) located in the south end of Gillies
Limit Township in the Larder Lake Mining Division of the Province of Ontario,
Canada. We call the 11 claims the Whitney Lake claims. We are engaged in the
exploration of commercially exploitable mineral resources, including resources
of gold, silver, copper, nickel, cobalt, platinum and palladium on the Whitney
Lake claims.

To maintain the Whitney Lake claims in good standing with the
government of Ontario, we must either pay a fee of CDN$400 every two years or
spend at least CDN$400 in exploring each claim every two years. To earn the 100%
interest in the 11 claims, we must pay CDN$50,000 to the original parties who
staked the mining claims.

Our initial phase of exploration, or our 2006 summer work
program, on the White Lake claims was performed from August 1 to September 21,
2006. We are currently considering the report rendered by Gino Chitaroni, B.Sc.,
Geologist and Mining Technologist, rendered to us on September 21, 2006. The
report rendered by Mr. Chitaroni discusses our 2006 work program, analyses the
results and makes recommendations for further exploration on the property. The
results of our 2006 work program showed no commercially viable quantities of
Copper and Nickel and no traces of Gold. However, traces of copper and nickel
were found in the sample.

The conclusion of Mr. Chitaronis report is that the results of
the analysis of the sample warrant further exploration work and that subsequent
drilling work might be considered. We have not yet determined whether we will
conduct additional drilling and geophysical surveys in a second phase
exploration program.

If we do determine that we will conduct the second phase of our
exploration program and we are able to obtain enough money, we expect that we
will conduct further drilling work and analysis of the resulting samples at an
estimated cost of $250,000, which may be spread over the course of several
years. If we are unable to complete exploration because we do not have enough
money, we may be required to cease activities until we raise more money. If we
cannot or do not raise additional funds, we may be required to permanently cease
activities. To raise any additional money that is needed, we intend to rely on
the issuance of securities through private placements or from shareholder loans
or loans from third parties.

Currently, we do not intend to acquire other interests in any
other mineral properties. Our business plan is solely to explore the Whitney
Lake claims. If we are successful in our initial endeavours, we may look at the
possibility of becoming involved in other mineral exploration projects.

Competition

The mining industry is competitive. We compete with numerous
companies, including many major mining companies, which have substantially
greater technical, financial and operational resources and staff. Accordingly,
there is a high degree of competition for access to funds. There are other
competitors that have operations in Northern Ontario and the presence of these
competitors could adversely affect our ability to compete for financing and to
obtain the service providers, staff or equipment necessary for the exploration
of the Whitney Lake claims.

Governmental Regulations

Permits were not necessary for the undertaking of our initial
exploration program on the Whitney Lake claims, however, the Canadian government
departments responsible for labor, northern development and mines, and natural
resources must be informed of our exploration activities. We provided such
information to these government departments before conducting our initial phase
of exploration.

In the future, if we abandon the claims we will be legally
required to return the surface to its previous condition. Costs for reclamation
vary depending on the progress made during the exploration program.

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Environmental Laws

If we do find mineral resources on the claims and are able to
move past the exploration stage into the development stage, then we will be
subject to many environmental regulations. The Canadian Environmental Assessment
Act (CEAA) would apply to any mining operations that we conduct. This law
requires that we prove to the government of Canada that the potential
environmental effects of work programs will not cause significant adverse
environmental effects. We would also be required to comply with laws dealing
with environmental matters relating to the exploration and development of
mineral properties in order to protect the environment through a series of
regulations affecting:

|1. | Health and Safety;           
|-- | -----------------------------
|2. | Archaeological Sites;        
|3. | Environmental Protection; and
|4. | Exploration Access.          

We are responsible to provide a safe working environment, not
disrupt archaeological sites, and conduct our activities to prevent unnecessary
damage to the Whitney Lake claims.

We will secure all necessary permits for exploration and, if
development is warranted on the claims, will file final plans of operation
before we start any mineral development activities. We anticipate no discharge
of water into active streams, creeks, rivers, lakes or any other body of water
regulated by environmental law or regulation. No endangered species will be
disturbed. We intend to restore any land we disturb according to the legal
requirements. All holes, pits and shafts will be sealed upon abandonment of the
claims. It is difficult to estimate the cost of compliance with the
environmental law since the full nature and extent of our proposed activities
cannot be determined until we start our activities and know what will be
involved from an environmental standpoint.

Research and Development

In our 2006 work program, we spent $23,632 on exploration.We have not yet decided whether we will conduct additional drilling and
geophysical surveys in a second phase exploration program. If we do conduct the
second phase of our exploration program, we estimate that we will spend
approximately $250,000, which may be spread over the course of several
years.

If we are unable to complete exploration because we do not have
enough money, we may be required to cease activities until we raise more money.
If we cannot or do not raise additional funds, we may be required to permanently
cease activities. To raise any additional money that is needed, we intend to
rely on the issuance of securities through private placements or from
shareholder or other loans.

Employees

We currently do not have any employees other than our directors
and officers. We intend to use the services of contractors for manual labour
exploration work on our properties.

RISK FACTORS

Much of the information included in this annual report includes
or is based upon estimates, projections or other "forward looking statements".
Such forward looking statements include any projections or estimates made by us
and our management in connection with our business operations. While these
forward-looking statements, and any assumptions upon which they are based, are
made in good faith and reflect our current judgment regarding the direction of
our business, actual results will almost always vary, sometimes materially, from
any estimates, predictions, projections, assumptions or other future performance
suggested herein.

Such estimates, projections or other "forward looking
statements" involve various risks and uncertainties as outlined below. We
caution the reader that important factors in some cases have affected and, in
the future, could materially

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affect actual results and cause actual results to differ
materially from the results expressed in any such estimates, projections or
other "forward looking statements".

Our common shares are considered speculative during the
development of our new business operations. Prospective investors should
consider carefully the risk factors set out below.

Risks Related to our Company

Because our auditors have issued a going concern opinion,
there is substantial uncertainty we will continue activities in which case you
could lose your investment.

Our auditors have issued a going concern opinion. This means
that there is substantial doubt that we can continue as an ongoing business for
the next twelve months. We have no assurance that future financing will be
available to us on terms that will be acceptable to us. If financing is not
available on satisfactory terms, we may be unable to continue our exploration
activities. If this happens, we may have to cease activities and you could lose
your investment.

Our sole officer, our President, has no technical training
and experience in mineral activities and consequently our activities, earnings
and ultimate financial success could be irreparably harmed.

Our sole officer, Fiore Aliperti, our President has no
technical training and experience with exploring for minerals or starting and
operating a mine. With no direct training or experience in these areas, our
President may not be fully aware of many of the specific requirements related to
working within the industry. Our President's decisions and choices may not take
into account standard engineering or managerial approaches that mineral
exploration companies commonly use. Consequently, our activities, earnings and
ultimate financial success could suffer irreparable harm due to our Presidents
lack of training and experience in the industry.

Our directors, Mr. Poloni and Mr. Aliperti have other
outside business activities and each will only be devoting approximately 10% of
their time, approximately four hours per week, to our activities, which may
result in delays in the completion of their duties and delays in the operation
of our business, which could cause our business to suffer.

Because Mr. Aliperti, our officer and a director, and Mr.
Poloni, a director, have other outside business activities and each will be only
be devoting 10% of their time, or four hours per week, to our activities. Their
work for our company may be sporadic and occur at times which are convenient to
them. As a result, they may not always complete their duties for the company in
a timely manner, which could result in delays in the operation of our business
and losses of time or money by the company.

We lack an operating history and have losses which we expect
to continue into the future. As a result, we may have to suspend or cease
activities and you could lose your investment.

We were incorporated in February, 2005 and we have not realized
any revenues. We have no operating history upon which an evaluation of our
future success or failure can be made. Our net loss from inception (February 24,
2005) to December 31, 2006 was $177,777. The loss was primarily the result of
the payment of $47,110 we spent on mineral property payments, the $41,127 we
spent in exploration expenses $59,334 to acquire the right to earn an interest
in the Whitney Lake claims, incorporation expenses and legal and accounting
fees. Our ability to achieve and maintain profitability and positive cash flow
is dependent upon

- our ability to locate a commercially viable mineral resource;
- our ability to generate revenues; and
- our ability to reduce exploration costs.

Based upon current plans, we expect to incur operating losses
in future periods. This will happen because there are expenses associated with
the research and exploration of the Whitney Lake claims. As a result, we may not
generate revenues in the future. Failure to generate revenues will cause us to
suspend or cease activities.

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Because we will have to spend additional funds to determine
whether the Whitney Lake claims contain a mineral reserve, if we can't raise the
money, we will have to cease operations and you could lose your
investment.

Even if we complete our current exploration program, we will
have to spend substantial funds on further drilling and engineering studies
before we will know if the Whitney Lake claims contain a commercially viable
mineral deposit. Therefore, we will have to incur greater operating expenses and
greater losses before we can ever hope to earn revenues and we may never earn
revenues. If we cannot pay our expenses or we never earn revenue, our business
operations will likely stop and you could lose your entire investment in our
company.

Because we are small and do no have much capital, we have to
limit our exploration activity which may result in a loss of your
investment.

Because we are small and do not have much capital, we must
limit our exploration activity. As such we may not be able to complete an
exploration program that is as thorough as we would like. Our failure to
discover an existing reserve could cause us to never earn money and go out of
business and you to lose all of your investment in our company.

Because all of our assets, Mr. Aliperti, our only officer
and a director, and Mr. Poloni, a director of our company, are located outside
the United States of America, it may be difficult for an investor to enforce
within the United States any judgments obtained against us, our officer or our
directors.

All of our assets are located outside of the United States and
our directors and our officer are nationals and residents of Canada, and all or
a substantial portion of their assets are located outside the United States. As
a result, it may be difficult for an investor to effect service of process or
enforce within the United States any judgments obtained against us or our
officer or our directors, including judgments predicated upon the civil
liability provisions of the securities laws of the United States or any state
thereof. In addition, there is uncertainty as to whether the courts of Canada
and other jurisdictions would recognize or enforce judgments of United States
courts obtained against us or our directors and our officer predicated upon the
civil liability provisions of the securities laws of the United States or any
state thereof, or be competent to hear original actions brought in Canada or
other jurisdictions against us or our directors and our officer predicated upon
the securities laws of the United States or any state thereof.

Because we have only one officer and two directors who are
responsible for our managerial and organizational structure, in the future,
there may not be effective disclosure and accounting controls to comply with
applicable laws and regulations which could result in fines, penalties and
assessments against us.

We have only one officer and two directors. They are
responsible for our managerial and organizational structure which will include
preparation of disclosure and accounting controls under the Sarbanes Oxley Act
of 2002. When theses controls are implemented, our officer and directors will be
responsible for the administration of the controls. Should they not have
sufficient experience, they may be incapable of creating and implementing the
controls which may cause us to be subject to sanctions and fines by the
Securities Exchange Commission, which ultimately could cause us to lose money
and possibly to go out of business.

Risks Related to our Business

Because the probability of an individual prospect ever
having reserves is extremely remote, any funds spent on exploration will
probably be lost.

The probability of an individual prospect ever having reserves
is extremely remote. In all probability, the Whitney Lake claims do not contain
any reserves. As such, any funds spent on exploration will probably be lost,
which will likely result in a loss of your investment.

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Because of the unique difficulties and uncertainties
inherent in mineral exploration ventures, we face a high risk of business
failure.

Potential investors should be aware of the difficulties
normally encountered by new mineral exploration companies and the high rate of
failure of such enterprises. The likelihood of success must be considered in
light of the problems, expenses, difficulties, complications and delays
encountered in connection with the exploration of the mineral properties that we
plan to undertake. These potential problems include, but are not limited to,
unanticipated problems relating to exploration, and additional costs and
expenses that may exceed current estimates. The expenditures to be made by us in
the exploration of the Whitney Lake claims may not result in the discovery of
mineral deposits. Problems such as unusual or unexpected geological formations
and other conditions are involved in mineral exploration and often result in
unsuccessful exploration efforts. If the results of our exploration do not
reveal viable commercial mineralization, we may decide to abandon the Whitney
Lake claims. If this happens, our business will likely fail.

Because the Whitney Lake claims are without known mineral
reserves and because we have never made a profit from our operations, our
securities are highly speculative and investors may lose all of their investment
in our company.

Our securities must be considered highly speculative, generally
because of the nature of our business and our early stage of exploration. The
Whitney Lake claims are in the exploration stage only and are without known
deposits of minerals. Accordingly, we have not generated material revenues nor
have we realized a profit from our operations to date and there is little
likelihood that we will generate any revenues or realize any profits in the
short term. Any profitability in the future from our business will be dependent
upon locating and exploiting mineral reserves or selling the rights to exploit
those mineral reserves. The likelihood that the Whitney Lake claims contain
valuable and commercially exploitable minerals is extremely remote. In all
probability, the Whitney Lake claims do not contain any reserves and any funds
that we spend on exploration will be lost. We may never discover mineral
resources in the Whitney Lake claims or any other area, or we may do so and
still not be commercially successful if we are unable to exploit those resources
profitably or earn revenues from selling the rights to exploit any mineral
resources we discover. We may not be able to operate profitably and may have to
cease operations, the price of our securities may decline and investors may lose
all of their investment in our company.

Because of the inherent dangers involved in mineral
exploration, there is a risk that we may incur liability or damages as we
conduct our business.

The search for valuable minerals involves numerous hazards. As
a result, we may become subject to liability for such hazards, including
pollution, cave-ins and other hazards against which we cannot insure or against
which we may elect not to insure. At the present time we have no coverage to
insure against these hazards. The payment of such liabilities may have a
material adverse effect on our financial position.

The potential profitability of mineral ventures depends in
part upon factors beyond the control of our company and even if we discover and
exploit mineral deposits, we may never become commercially viable and we may be
forced to cease operations.

The commercial feasibility of mineral properties is dependent
upon many factors beyond our control, including the existence and size of
mineral deposits in the properties we explore, the proximity and capacity of
processing equipment, market fluctuations of prices, taxes, royalties, land
tenure, allowable production and environmental regulation. These factors cannot
be accurately predicted and any one or a combination of these factors may result
in our company not receiving an adequate return on invested capital. These
factors may have material and negative effects on our financial performance and
our ability to continue operations.

As we face intense competition in the mineral exploration
industry, we will have to compete with our competitors for financing and for
qualified managerial and technical employees.

The Whitney Lake claims are in Ontario, Canada, and our
competition there includes large established mining companies with substantial
capabilities and with greater financial and technical resources than we have. As
a result

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of this competition, we may have to compete for financing and
be unable to acquire financing on terms we consider acceptable. We may also have
to compete with the other mining companies in Ontario in the recruitment and
retention of qualified managerial and technical employees. If we are unable to
successfully compete for financing or for qualified employees, our exploration
programs may be slowed down or suspended, which may cause us to cease operations
as a company.

Risks Related to Our Common Stock

Because there is no public trading market for our common
stock, you may not be able to resell your stock.

There is currently no public trading market for our common
stock. Our common stock is not now, nor has ever been, traded on any market or
securities exchange, and we have not applied for listing or quotation on any
public market.

Therefore there is no central place, such as stock exchange or
  electronic trading system to resell your shares. If you do want to resell your
  shares, you will have to locate a buyer and negotiate your own sale.

Because we may issue additional shares of common stock, your
investment could be subject to substantial dilution.

We anticipate that any additional funding will be in the form
of equity financing from the sale of our common stock. In the future, if we do
sell more common stock, your investment could be subject to dilution. Dilution
is the difference between what you pay for your stock and the net tangible book
value per share immediately after the additional shares are sold by us.

Because of the early stage of development and the nature of
our business, our securities are considered highly speculative.

Our securities must be considered highly speculative, generally
because of the nature of our business and the early stage of its development. We
are engaged in the business of mining. Our properties are in the exploration
stage only and are without known gold reserves. Accordingly, we have not
generated any revenues nor have we realized a profit from our operations to date
and there is little likelihood that we will generate any revenues or realize any
profits in the short term. Any profitability in the future from our business
will be dependent upon locating and developing gold, which itself is subject to
numerous risk factors as set forth herein. Since we have not generated any
revenues, we will have to raise additional monies through the sale of our equity
securities or debt in order to continue our business operations.

Because our securities are subject to penny stock rules, you
may have difficulty reselling your shares.

Our shares are penny stocks and are covered by section 15(g) of
the Securities Exchange Act, 1934, which imposes additional sales
practice requirements on broker/dealers who sell the Company's securities
including the delivery of a standardized disclosure document; disclosure and
confirmation of quotation prices; disclosure of compensation the broker/dealer
receives; and, furnishing monthly account statements. For sales of our
securities, the broker/dealer must make a special suitability determination and
receive from its customer a written agreement prior to making a sale. The
imposition of the foregoing additional sales practices could adversely affect a
shareholder's ability to dispose of his stock.

NASD sales practice requirements may also limit a
stockholders ability to buy and sell our stock.

In addition to the penny stock rules covered by section 15(g)
of the Securities Exchange Act, 1934 described above, the NASD has
adopted rules that require that in recommending an investment to a customer, a
broker-dealer must have reasonable grounds for believing that the investment is
suitable for that customer. Prior to recommending speculative low-priced
securities to their non-institutional customers, broker-dealers must make
reasonable efforts to obtain information about the customers financial status,
tax status, investment objectives, and other information. Under interpretations
of these rules, the NASD believes that there is a high probability that
speculative low-priced securities will not be suitable for at least some
customers. The NASD requirements make it more difficult for

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broker-dealers to recommend that their customers buy our common
stock, which may limit your ability to buy and sell our stock and have an
adverse effect on the market for our shares.

Item
2.           Description
of Property.

Our administrative office address and our mailing address is
1303-1323 Homer Street, Vancouver, British Columbia, Canada V6B 5T1 and our
telephone number is (778) 855-9681. Management does not believe that our office
space will need to be expanded beyond this during 2007.

The Whitney Lake Claims

Location and Access

The Whitney Lake claims consist of 11 adjacent mining claims
that cover 1800 acres (2.81 square miles) in the south end of Gillies Limit
Township in the Larder Lake Mining Division of Ontario, Canada.

The Whitney Lake claims are accessible from Highway #11, at
seventeen kilometres north of the Town of Temagami, Ontario and by secondary
roads originating from the highway. The Whitney Lake claims can also be reached
by rail. A railway passes through the claims east of Highway #11 between the
highway and Rib Lake.

Description of the Claims

Canadian jurisdictions allow a mineral explorer to claim a
portion of available Crown lands as its exclusive area for exploration by
depositing posts or other visible markers to indicate a claimed area. The
process of posting the area is known as staking.

The Whitney Lake claims were staked 50% by Mr. Gino Chitaroni
and 50% by Raven Resources Inc. Sanford Exploration (Canada) Inc., our wholly
owned subsidiary, is the assignee of the rights in the claims held by Mr.
Chitaroni and Raven Resources. Mr. Gino Chitaroni and Raven Resources Inc. are
the original recorded holders of the claims. The claims are currently still
recorded under the names Gino Chitaroni and Raven Resources Inc. Through Sanford
Exploration (Canada) Inc., our wholly owned subsidiary, we have an option to
earn a 100% mining interest in these claims by paying CDN$50,000. Once we pay
the CDN$50,000, we will be entitled to have the claims listed in our own name,
Sanford Exploration, Inc. Out interest is subject to a 3% royalty fee on net
smelter returns.

All Canadian lands and minerals which have not been granted to
private persons are owned by either the federal or provincial governments in the
name of Her Majesty. Ungranted minerals are commonly known as Crown minerals.
Ownership rights to Crown minerals are vested by the Canadian Constitution in
the province where the minerals are located. In the case of the Company's
property, that is the province of Ontario.

In the nineteenth century, the practice of reserving the
minerals from fee simple Crown grants was established. Legislation now ensures
that minerals are reserved from Crown land dispositions. The result is that the
Crown is the largest mineral owner in Canada, both as the fee simple owner of
Crown lands and through mineral reservations in Crown grants. Most privately
held mineral titles are acquired directly from the Crown, as the Whitney Lake
claims are. Accordingly, fee simple title to the Whitney Lake claims resides
with the Crown. That means that the Crown owns the surface and minerals.

The Whitney Lake claims are mineral leases issued pursuant to
the Ontario Mineral Act. We have exclusive rights to mine and recover all of the
minerals contained within the surface boundaries of the claims continued
vertically downward.

In the Province of Ontario, there are two types of mineral
claims: patented and unpatented. Patented claims do not require exploration to
be conducted on them to keep them in good standing.

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Our mineral claims are unpatended. Unpatented mineral claims
have a life of two years and to extend the life of the claim, certified
exploration assessment work must be performed on at least part of the claim and
be filed with the Ontario Provincial Mining Recorder before the expiry date of
the mineral claim. If more work is conducted than required, the extra assessment
value may be banked as credits and the claim holder is allowed to use these
credits on contiguous claims or the same claim in lieu of new work. Once five
years of total assessment work has been completed and the claim holder plans to
enter into mineral extractive development and production, the claim holder may
bring the claim up to leasehold or patented status at which time a legal survey
is conducted and submitted along with the appropriate leasehold fees,
eliminating the need to perform and submit assessment work.

An unpatented mineral claim is a grant of the exclusive right
to explore for the metal or mineral on the land staked or covered by the claim.
The land and mineral rights are owned by the Ontario provincial government until
such time the claim holder or its assigns bring the claim to leasehold or patent
status to exploit the production of a metal or mineral from the claim. If we
conduct five years of assessment work on the Whitney Lake claims and decide to
enter into mineral extractive development and production program, we may bring
the claim up to leasehold or patented status. A legal survey would then be
conducted and submitted along with the appropriate leasehold fees. From that
point forward, we would no longer be required to perform and submit assessment
work to maintain the claims.

The Whitney Lake claims are unencumbered, that is there are no
claims, liens, charges or liabilities against the claims, other than our right
to earn the 100% interest in them, and there are no competitive conditions, that
is the action of some unaffiliated third party, that could affect our claims.
Further, there is no insurance covering the claims and we believe that no
insurance is necessary since the claims are unimproved and contain no buildings
or improvements.

There is no assurance that a commercially viable mineral
deposit, a reserve, exists in the claims, in fact the likelihood that a
commercially viable mineral deposit exists is remote.

There are no native land claims that affect title to the
claims. We have no current plans to obtain interest from other companies in the
claims if mineralization is found. If mineralization is found, we will try to
develop the claims ourselves.

Claims

The following is a list of claim numbers and expiration date of
the claims:

Claim No.
    ExpirationL1219926
    Oct. 24, 2007L1219933
    Oct. 24, 2007L1221578
    Sept. 24, 2007L1231136
    Oct. 08, 2008L1231137
    Oct. 08, 2008L1231138
    Oct. 08, 2008L1231139
    Oct. 08, 2008L1249728
    Sept. 24, 2007L1249729
    Sept. 24, 2007L3000410
    Dec. 17, 2007L3000411
    Dec. 17, 2007


The 11 unpatented Whitney Lake claims consist of 45 contiguous
units comprising of a total of 1800 acres (2.81 square miles). In order to
maintain this claim, we must pay a fee of CDN$400 every two years per claim or
we must perform work on the claim. As long as the fee is paid, no work has to be
performed to maintain the claim. We can renew the claim indefinitely by paying
the fee; the amount of the renewal did not increase for the period from
inception (February 24, 2005) to December 31, 2006. We are aware if the fee to
renew the claim will increase. There is no grace period if there is a default on
the work or if we miss renewing the claim. If we fail to pay the fee or spend
enough on exploration work as required, we will lose the claims. In the event
that we do not find mineralized

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- 12 -

material following the completion of our exploration program,
we intend to allow the claims to expire and we will cease activities.

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- 13 -

The red star on the following map shows the location of the
claims:



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- 14 -

The bold black lines in the following map illustrate the
borders of the claims:



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- 15 -

History of the Claims

Early History (1880-1941)

The geological history of the area dates from the initial
governmental mapping in 1887 to a detailed report by G. Bennett in 1978,
interspersed from 1951 to 1974 with exploratory surveys by various owners and
optioners on claims including those presently held by the issuer. During the
period 1978 to 1996 a land caution was imposed by the government on certain
townships in the area: Temagami  Matachewan areas (including the Whitney Lake
claims) and Larder Lake Mining Division, restricting mineral development and
retaining the land as a possible settlement for First Nation land claims. The
caution was lifted in 1996 and the Whitney Lake claims were staked.

The Lake Nipissing and Lake Temagami area was geologically
mapped by A.E. Barlow between 1887 and 1895 with a final report and map being
published in 1907. The northeast Temagami area was included.

Further examinations of the area were completed by E.W. Todd in
1925, and W.S. Savage in 1934. During 1941, W.W. Moorhouse completed mapping of
Strathcona and Briggs Townships and several surrounding townships.

The early history of exploration work is poorly documented
prior to 1960 with prospecting and limited diamond drilling being undertaken by
Rib Lake Copper Mines Ltd. (1952) and Coniagas Mines Ltd. (1956) with
nickel-copper mineralization being identified on what is now our Whitney Lake
property of the issuer. We do not have copies of the resulting reports.

In 1998 Blackstone Development Inc. prepared a summary of the
previous exploration history of the area that includes the Whitney Lake claims,
in particular diamond drill hole historical data for AgArmeno Mines and
Minerals.

During autumn of 2001, Emporio Explorations Corp. undertook
various surveys to explore the known zones of mineralization in the area around
the Whitney Lake claims. They looked for evidence of mineralization on our
claims and for extensions on the known resources in the area. The results
pointed to seventeen diamond drill hole targets, with five as first priority,
six as second priority and six as third priority.

During 2001 Emporio Explorations Corp. optioned our claims and
completed additional claim staking, survey grid establishment, a magnetometer
survey, a HLEM survey and a Gradient Realsection TDIP/Resistivity Survey as a
further evaluation of the mineral occurrences.

In December 2004, two claims 1221576 and 1221577 were restaked
as claims 3000410 and 3000411.

Quantec Geoscience Inc. completed a Surface Transient EM survey
in September 2005 as part of assessment requirements, which was reported on by
S.T. Coulson, Senior Geophysist.

Physiography

Climatic conditions are hot and humid in the summer, with
temperatures typically between 5°C and 30°C (86 °F) and with ample rainfall. The
winters are cold with temperatures typically between 0°C and -30°C ( 32°F to 22
°F) with moderate snowfall. Exploration activities can generally be undertaken
year around.

Lake Temagami and most of the other lakes and streams within
the area form part of the drainage basin of Lake Nipissing to the south. To the
north and east, Kanichee Lake, Net Lake and other lakes east of Highway #11
drain eastward into Lake Temiskaming. The elevation at Temagami is 962 feet
(293m) above sea level.

The Temagami area generally has only a thin veneer of soil
cover influenced in part by products of glaciation. Drainage patterns are
largely controlled by pronounced bedrock structural features. Maximum
topographic relief in the area is about 90 meters with slopes being gentle.
Steeper slopes or scarps are locally developed in areas underlain by Nipissing
diabase.

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- 16 -

The Whitney Lake claims have been logged and are presently
covered with a variety of small trees consisting of Fir, Spruce, Cedar, Birch
and Willow. There is ample water for drilling requirements.

Present Condition of the Whitney Lake Claims

The drill holes were capped following our initial exploration
phase. Other than that, there is currently no equipment, plants or improvements
on the claims. The property is without known reserves and the proposed program
is exploratory in nature.

Infrastructure

Good access is available to the hydro electric power grid and
the Northern Ontario natural gas line which supply the Town of Temagami and
Northern Ontario. The Ontario Northern rail line crosses the easterly claims,
along Rib Lake, and has facilities in Temagami and Cobalt to the north. At one
time the area was the centre of an active mining environment but presently
little exists, which necessitates that all exploration and mining supplies and
equipment must be obtained from Cobalt, Kirkland Lake, Timmins, and Sudbury.
There are adequate sites on the claims for potential tailings storage, waste
disposal, heap leach pads, and plant sites.

Mineralization

In 1968, Robert Thomson, O.D.M. Resident Geologist completed an
Open File Report No. 5016, Ontario Department of Mines and noted copper-nickel
occurrences in the area as well as platinum deposits found in copper-nickel
deposits. He also noted that a chalcopyrite occurrence was discovered near
Dieter Lake in the 1940s.

In 1998, Doug Robinson, P. Eng reported that the claims showed
traces of gold, silver cobalt, copper, nickel and palladium.

The results of our 2006 work program showed no commercially
viable quantities of Copper and Nickel and no traces of Gold. However, traces of
copper and nickel were found in the sample.

There are presently no known mineral resources or reserves on
the claims.

We intend to explore for any mineralized material. Mineralized
material is a mineralized body which has been delineated by appropriate spaced
drilling or underground sampling to support sufficient tonnage and average grade
of metals to justify removal. If we do not find mineralized material or we
cannot remove mineralized material, either because we do not have the money to
do it or because it is not economically feasible to do it, we likely will cease
activities and you will lose your entire investment.

We may not have enough money to complete our exploration of the
claims. If it turns out that we have not raised enough money to complete our
exploration program, we will try to raise additional funds from the issuance of
securities through private placement or loans. At the present time, we have not
made any plans to raise additional money and there is no assurance that we would
be able to raise additional money in the future. If we need additional money and
cannot raise it, we will have to suspend or cease activities.

We must conduct exploration to determine what amount of
minerals, if any, exist on the claims and if any minerals which are found can be
economically extracted and profitably processed.

The first phase of our exploration program was comprised of our
2006 summer work program and the study of the samples obtained during the work
program. Our 2006 summer work program was conducted between August 1 to
September 21, 2006, at a cost of approximately $23,632. This exploration phase
consisted of diamond drilling, core splitting and an assay of drill core
samples.

More specifically, we have conducted the following exploration
program on the claims:



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- 17 -

Diamond Drilling
    $
    17,029.11Project/Field Supervision, Report, Core Logging etc.
    
    5,300.00Assays (Polymet Labs)
    
    728.25Core Splitting
    
    309.68Mileage/Transportation
    
    265.0023,632.04


Our Proposed Exploration Program

We are currently considering the report rendered by Gino
Chitaroni, B.Sc., Geologist and Mining Technologist, rendered to us on September
21, 2006. The report rendered by Mr. Chitaroni discusses our 2006 work program,
analyses the results and makes recommendations for further exploration on the
property. The costs of our exploration, study, maps and report resulting from
our initial phase of exploration was $23,632.

Our 2006 work program consisted of the removal and analysis of
a sample of earth from the Whitney Lake claims. The location was determined by
the results of the exploration program that was conducted by Emporio
Explorations Corporation in December 2001. We had the sample of earth removed by
a diamond drill and studied at a laboratory.

The results of our 2006 work program showed no commercially
viable quantities of Copper and Nickel and no traces of Gold. However, traces of
copper and nickel were found in the sample.

The conclusion of Mr. Chitaroni is that the results of the
analysis of the sample warrant further exploration work and that subsequent
drilling work might be considered. We have not yet determined whether we will
conduct additional drilling and geophysical surveys in a second phase
exploration program. If we do determine that we will conduct the second phase of
our exploration program and we are able to obtain enough money, we expect that
we will conduct further drilling work and analysis of the resulting samples at
an estimated cost of $250,000, which may be spread over the course of several
years.

If we are unable to complete exploration because we do not have
enough money, we may be required to cease activities until we raise more money.
If we cannot or do not raise additional funds, we may be required to permanently
cease activities. To raise any additional money that is needed, we intend to
rely on the issuance of securities through private placements or from
shareholder loans or loans from third parties.

Item
3.           Legal
Proceedings.

We know of no material, existing or pending legal proceedings
against our company, nor are we involved as a plaintiff in any material
proceeding or pending litigation. There are no proceedings in which any of our
directors, officers or affiliates, or any registered or beneficial shareholder,
is an adverse party or has a material interest adverse to our interest.

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

There were no matters submitted to a vote of our security
holders either through solicitation of proxies or otherwise in the fourth
quarter of the fiscal year ended December 31, 2006.

PART II

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

Our common stock is not now, nor has ever been, traded on any
exchange. There is currently no public trading market for our common stock. We
plan to seek listing on the OTC Bulletin Board, once our registration statement
has been declared effective by the SEC. We cannot guarantee that we will obtain
a listing. There can be no assurance that a regular trading market for our
common stock will ever be developed.

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Our stock transfer agent for our securities is Pacific
Corporate Trust Company Suite 200 - 510 Burrard Street Vancouver, BC V6C 3B9,
telephone (604) 689-9853 fax: (604) 689-8144. On March 30, 2007, the
shareholders' list of our common shares showed 31 registered shareholders and
6,976,000 shares outstanding.

Recent Sales of Unregistered Securities

From April to November 2005, we issued 5,000,000 shares of our
common stock through private placement transactions pursuant to section
Regulation S of the Securities Act of 1933 to 20 shareholders and raised
$100,000. The shares were sold to non-U.S. persons and all transactions closed
outside the United States of America. This was accounted for as a purchase of
shares of common stock.

In December 2005, we issued 1,000 shares of our common stock
through private placement transactions pursuant to section Regulation S of the
Securities Act of 1933 to 10 shareholders and raised $1. The shares were sold to
non-U.S. persons and all transactions closed outside the United States of
America. This was accounted for as a purchase of shares of common stock.

In March 2006, we issued 1,975,000 shares of our common stock
through private placement transactions pursuant to section Regulation S of the
Securities Act of 1933 to 1 shareholder and raised $3,950. The shares were sold
to non-U.S. persons and all transactions closed outside the United States of
America. This was accounted for as a purchase of shares of common stock.

Equity Compensation Plan Information

As at December 31, 2006 we do not have any compensation plans
in place.

Purchases of Equity Securities by the Issuer and Affiliated
Purchasers

We did not purchase any of our shares of common stock or other
securities during the year ended December 31, 2006.

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

The following discussion should be read in conjunction with our
consolidated audited financial statements and the related notes that appear
elsewhere in this annual report. The following discussion contains
forward-looking statements that reflect our plans, estimates and beliefs. Our
actual results could differ materially from those discussed in the forward
looking statements. Factors that could cause or contribute to such differences
include, but are not limited to, those discussed below and elsewhere in this
registration statement, particularly in the section entitled "Risk Factors"
beginning on page 5 of this annual report.

Our consolidated audited financial statements are stated in
United States Dollars and are prepared in accordance with United States
Generally Accepted Accounting Principles.

Overview

We were incorporated in the State of Nevada on February 24,
2005. We are an exploration stage corporation. We own an option to earn a 100%
interest in 11 mining claims subject to a 3% net smelter royalty payments and
obligations to conduct assessment work to maintain the claims in good standing
with the government of Ontario, Canada. We call the 11 claims the Whitney Lake
claims. We are engaged in the exploration of commercially exploitable mineral
resources, including resources of gold, silver, copper, nickel, cobalt, platinum
and palladium on the Whitney Lake claims.

PLAN OF OPERATIONS AND CASH REQUIREMENTS

For the next twelve months we intend to maintain the Whitney
Lake claims in good standing with the government of Ontario, Canada, pay our
obligations under the option agreement for the Whitney Lake claims, determine
whether

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and how to proceed with our exploration program and become and
maintain ourselves as a public company quoted on the Over-the-Counter Bulletin
Board.

We expect that these endeavors will cost approximately
$181,500. As of December 31, 2006, we had working capital deficit of
$73,593.

We have no income from operations. We will require additional
funds to implement our plans. These funds may be raised through equity
financing, debt financing, or other sources, which may result in the dilution in
the equity ownership of our shares. We will also need more funds if the costs of
the exploration of the Whitney Lake claims are greater than we have anticipated.
We will also require additional financing to sustain our business operations if
we are not successful in earning revenues. We currently do not have any
arrangements for further financing and we may not be able to obtain financing
when required. Our future is dependent upon our ability to obtain financing.

We are an exploration stage corporation and have not yet
generated or realized any revenues from our business activities.

Our auditors have issued a going concern opinion. This means
that there is substantial doubt that we can continue as an on-going business for
the next twelve months unless we obtain additional capital to pay our bills.
This is because we have not generated any revenues and no revenues are
anticipated until we begin removing and selling minerals. Accordingly, we must
raise cash. Since inception of the company, we have raised funds through the
sale of equity securities in private placement transactions.

If we find mineralized material and it is economically feasible
to remove it, we will attempt to raise additional money, likely through loans
from shareholders but possibly in a further private placement, a public offering
or through borrowing money from non-shareholders.

None of our officers, directors or shareholders have made any
commitment to loan us any money at this time. At the present time, we have not
made any arrangements to raise additional money.

Even if we complete our current exploration program and are
successful in identifying a mineral deposit, we will have to spend substantial
funds on further drilling and engineering studies before we know whether it
would be commercially viable to extract the minerals from the Whitney Lake
claims.

We have conducted research in the form of exploration of the
property. We do not expect to buy or sell any plant or significant equipment
during the next twelve months. We do not intend to buy any equipment until we
have located a reserve and have determined it is economical to extract the
minerals from the land.

If we are unable to complete any phase of exploration because
we do not have enough money, we will cease activities until additional funds are
raised. If we need additional cash and cannot raise it or raise it on terms that
our board of directors finds commercially acceptable, we will either have to
suspend activities until we do raise the cash, or cease activities entirely.

We do not intend to hire additional employees at this time. All
of the work on the property and in studying the earth samples and preparing maps
and reports has been and will continue to be conduct by unaffiliated independent
contractors until the board of directors determines that it is in the best
interests of the company to engage more employees. The independent contractors
are responsible for surveying, geology, engineering, exploration, and
excavation. Geologist contractors will evaluate the information derived from
exploration and the engineer contractors will advise us on the economic
feasibility of removing any mineralized material that may be found.

Maintenance of Claims

To maintain the Whitney Lake claims, we must spend at least CDN$400
  per claim, every two years, on exploration activities or pay a fee of CDN$400
  per claim, every two years, to the government of Ontario, Canada. Since we have
  11 claims, that means that we must spend at least CDN$4,400 every two years
  to maintain our clams. During our 2006 summer work program, we spent CDN$21,529,
  this amount will maintain the Whitney Lake claims for us during 2007.

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Operating as a public Company

We intend to qualify our shares for quotation on the National
Association of Securities Dealers Inc.s Over-the-Counter Bulletin Board
following the declaration of effectiveness of this prospectus but have not yet
done so. We cannot provide our investors with any assurance that our common
stock will be quoted on the Over-the-Counter Bulletin Board or, if quoted, that
a public market will materialize.

We are subject to the reporting requirements of Section 15(d)
of the Securities Exchange Act, 1934, as amended, and will be required to file
disclosure documents with the SEC. These disclosure documents will involve legal
and accounting fees totalling approximately $100,000 per year.

Earning 100% Interest in the Whitney Lake Claims

We obtained our right to ear an interest in the Whitney Lake
claims through an assignment of an option agreement, dated December 10, 2004.
Through this assignment, we became obligated to pay an option payment of $50,000
CDN within three months of our becoming a public company. Once we have made the
$50,000 CDN payment, we will have fulfilled the requirements, flowing from our
assignment of the agreement with the original optionors, to have the claims
recorded in our name with the government of the Province of Ontario. As stated
above, we intend to become a public company that is quoted on the
Over-the-Counter Bulletin Board during the next twelve months. If we are able to
become listed on the Over-the-Counter Bulletin Board, we will have three months
to pay the $50,000 CDN to the original optioners of the Whitney Lake claims in
order to earn 100% interest in the claims, subject to the 3% net smelter royalty
payments and the annual maintenance costs.

Estimated Funding Required During the Next Twelve
Months

|General and Administrative Expenses | $ | 30,000  | 
|----------------------------------- | - | ------- | 
|Report and Maps                     |   | 1,500   | 
|Legal Fees                          |   | 50,000  | 
|Accounting and Auditors Fees       |   | 50,000  | 
|Option payment                      |   | 50,000  | 
|                                    |   |         | 
|Total                               | $ | 181,500 | 

As at December 31, 2006, we had $48,420 in current liabilities.
Our financial statements report a net loss of $177,777 for the period from
February 24, 2005 (date of inception) to December 31, 2006. Our net loss is
primarily due to accounting, legal and management fees and mineral property
payments. On December 31, 2006, we had a working capital deficit of $73,593.

From February 24, 2005 (date of inception) to December 31, 2006
we spent $47,110 on the acquisition and maintenance of the Whitney Lake claims
and as of December 31, 2006 have spent an additional $41,127 on our exploration
program on the Whitney Lake claims.

Limited Operating History; Need for Additional Capital

We have suffered recurring losses from operations. The
continuation of our company will be dependent upon our company raising
additional capital through the sale of equity securities or by borrowing money.
Although we may do so, we do intend, as of March 30, 2007, to seek equity
financing over the next twelve months to provide for the capital required to
implement our research and exploration phases. We plan instead to seek loans
from shareholders or other sources. We have raised some capital through private
placements but we will still require additional funds to continue our operations
and plans.

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- 21 -

The continuation of our business is dependent upon obtaining
further financing, a successful program of exploration, and, further in the
future, achieving a profitable level of operations. The issuance of additional
equity securities by us could result in a significant dilution in the equity
interests of our current shareholders. Obtaining commercial loans, assuming
those loans would be available, will increase our liabilities and future cash
commitments. There are no assurances that we will be able to obtain further
funds required for our continued operations. We will pursue various financing
alternatives to meet our immediate and long-term financial requirements. There
can be no assurance that additional financing will be available to us when
needed or, if available, that it can be obtained on commercially reasonable
terms. If we are not able to obtain the additional financing on a timely basis,
we will be unable to conduct our operations as planned, and we will not be able
to meet our other obligations as they become due. In such event, we will be
forced to scale down or perhaps even cease our operations.

There is no historical financial information about us upon
which to base an evaluation of our performance. We are an exploration stage
corporation and have not generated any revenues from activities. We cannot
guarantee we will be successful in our business activities. Our business is
subject to risks inherent in the establishment of a new business enterprise,
including limited capital resources, possible delays in the exploration of our
properties, and possible cost overruns due to price and cost increases in
services.

We have no assurance that future financing will be available to
us on acceptable terms. If financing is not available on satisfactory terms, we
may be unable to continue, develop or expand our activities. Equity financing
could result in additional dilution to existing shareholders.

Liquidity and Capital Resources

As of the date of this annual report, we have yet to generate
any revenues from our business activities.

As of December 31, 2006 our total assets were $11,769 as
compared to total assets of $18,501 as at December 31, 2005.

As of December 31, 2006 our total liabilities were $85,362 as
compared to total liabilities of $14,852 as at December 31, 2005.

As of December 31, 2006, we had cash in the amount of $6,769
compared to cash in the amount of $13,501 as at December 31, 2005.

We anticipate that we will require $181,500 for our operating
requirements over the next twelve months. We do not have sufficient cash on hand
to meet our operating capital requirements for the next twelve months. We will
require additional funds to meet our requirements. These funds may be raised
through equity financing, debt financing, or other sources, which may result in
further dilution in the equity ownership of our shares.

We are required to spend $400 per claim on the exploration of
the Whitney Lake claims for every twelve month period, which our 2006 summer
work program satisfied.

Our initial phase of exploration, or our 2006 summer work
program, on the White Lake claims was performed from August 1 to September 21,
2006. We are currently evaluating the samples gathered during our initial phase
of exploration. Further exploration programs will be based on the results of our
initial findings. If the results warrant, we will conduct additional drilling
and geophysical surveys in the second phase of our exploration program.

We have suffered recurring losses. The continuation of our
company as a going concern is dependent upon us attaining and maintaining
profitable operations in the long term but raising additional capital in the
short middle-term. Management's plans in this regard is to raise additional
capital through obtaining loans from shareholders or other sources. The
financial statements do not include any adjustment relating to the recovery and
classification of recorded asset amounts or the amount and classification of
liabilities that might be necessary should our company discontinue operations.

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- 22 -

There are no assurances that we will be able to obtain further
funds required for our continued operations. We intend to pursue loans from
shareholders or others to meet our immediate and middle-term financial
requirements. There can be no assurance that additional financing will be
available to us when needed or, if available, that it can be obtained on
commercially reasonable terms. If we are not able to obtain additional financing
on a timely basis, we will not be able to conduct our operations as planned, and
we will not be able to meet our other obligations as they become due. In such
event, we will be forced to scale down or perhaps even cease our operations.

Our business plan is now focused on a strategy for maximizing
the exploration of the Whitney Lake claims. To date, execution of our business
plan has largely focused on acquiring the option to earn 100% interest in the
Whitney Lake claims and conducting the first summer work program on the claims.

We have no employees other than our directors. We do not expect
any significant changes in the number of our permanent employees throughout our
exploration phase. We intend to hire geologists, engineers and excavation
subcontractors as contractors on an as needed basis.

Results of Operation

We did not earn any revenues from inception through the
reporting period ended December 31, 2006.

Our financial statements are stated in United States dollars
and are prepared in conformity with generally accepted accounting principles of
Canada, with a reconciliation to generally accepted accounting principles of the
United States of America.

We incurred operating expenses in the amount of $77,679 for the
year ended December 31, 2006 compared to operating expenses of $100,098 for the
year ended December 31, 2005. We incurred $177,777 in operating expenses for the
period from inception on February 24, 2005 to December 31, 2006. Our operating
expenses for the year ended December 31, 2006 included: (a) exploration
expenditures in the amount of $24,881, (b) $43,976 in professional fees, (c) Nil
in consulting expenses, (d) $471 in bank charges and interest (e) $5,500 in
Management fees and (f) $2,851 in regulatory fees. We anticipate our operating
expenses will increase as we carry out our planned exploration program.

Purchase of Significant Equipment

We do not intend to purchase any significant equipment over the
twelve months ending December 31, 2007.

Employees

We have no employees other than our directors. We do not expect
any significant changes in the number of our permanent employees throughout our
exploration phase. We intend to hire geologists, engineers and excavation
subcontractors as contractors on an as needed basis.

Going Concern

We have suffered recurring losses from operations. The
continuation of our company as a going concern is dependent upon our company
attaining and maintaining profitable operations and raising additional capital.
The financial statements do not include any adjustment relating to the recovery
and classification of recorded asset amounts or the amount and classification of
liabilities that might be necessary should our company discontinue operations.

Due to the uncertainty of our ability to meet our current
operating expenses and the capital expenses noted above, in their report on the
annual financial statements for the period ended December 31, 2006, our
independent auditors included an explanatory paragraph regarding concerns about
our ability to continue as a going concern. Our financial statements contain
additional note disclosures describing the circumstances that lead to this
disclosure by our independent auditors.

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- 23 -

The continuation of our business is dependent upon us raising
additional financial support. The issuance of additional equity securities by us
could result in a significant dilution in the equity interests of our current
stockholders. Obtaining commercial loans, assuming those loans would be
available, will increase our liabilities and future cash commitments.

There are no assurances that we will be able to obtain further
funds required for our continued operations. As noted herein, we are pursuing
various financing alternatives to meet our immediate and long-term financial
requirements. There can be no assurance that additional financing will be
available to us when needed or, if available, that it can be obtained on
commercially reasonable terms. If we are not able to obtain the additional
financing on a timely basis, we will be unable to conduct our operations as
planned, and we will not be able to meet our other obligations as they become
due. In such event, we will be forced to scale down or perhaps even cease our
operations.

Recently Issued Accounting Standards

In April 2006, FASB issued Staff Position No. FIN No. 46R6,
(FSP 46R-6), Determining the Variability to Be Considered in Applying FASB
Interpretation No. 46R. This FSP addresses how a reporting enterprise should
determine the variability to be considered in applying FIN No. 46R,
Consolidation of Variable Interest Entities. FIN No. 46R provides guidance on
when to consolidate an entity based on exposure to risks and rewards, rather
than voting control. It describes the characteristics of a variable interest
entity (VIE) and how an entity that is involved with a VIE should determine
whether its shares in the VIEs risks and rewards extensively enough to be the
VIEs primary beneficiary and therefore consolidate it. The guidance in this FSP
applied prospectively to all entities with which the Company first became
involved with and to all entities previously analyzed under FIN No. 46R when a
reconsideration event occurred beginning July 1, 2006. Retrospective application
of FIN No. 46R was permitted but not required. The Company adopted this FSP
prospectively. Application of this FSP has not had a material impact on the 2006
consolidated financial statements. The impact of this FSP on the Companys
financial statements beyond 2006 is dependent upon the specifics of future
arrangements.

Application of Critical Accounting Policies

Our audited financial statements and accompanying notes are
prepared in accordance with generally accepted accounting principles used in the
United States. Preparing financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenue, and expenses. These estimates and assumptions are affected
by management's application of accounting policies. We believe that
understanding the basis and nature of the estimates and assumptions involved
with the following aspects of our consolidated financial statements is critical
to an understanding of our financials.

Principles of Consolidation

The consolidated financial statements include the accounts and
operations of Sanford Exploration, Inc. and its wholly owned subsidiary Sanford
Exploration (Canada), Inc. All inter-company accounts and transactions have been
eliminated in consolidation.

Exploration Stage Enterprise

The Companys consolidated financial statements are prepared
using the accrual method of accounting and according to the provisions of
Statement of Financial Accounting Standards No. 7 (SFAS 7), Accounting and
Reporting for Development Stage Enterprises, as it devotes substantially all of
its efforts to acquiring and exploring mineral properties. Until such properties
are acquired and developed, the Company will continue to prepare its
consolidated financial statements and related disclosures in accordance with
entities in the exploration stage.

---

- 24 -

Going Concern

Our annual financial statements have been prepared on the going
concern basis, which assumes the realization of assets and liquidation of
liabilities in the normal course of operations. The financial statements have
been prepared assuming we will continue as a going concern. However, certain
conditions exist which raise doubt about our ability to continue as a going
concern. We have suffered recurring losses from operations and have accumulated
losses of $177,777 since inception through December 31, 2006.

Item
7.           Financial
Statements.

Our consolidated audited financial statements are stated in
United States dollars (US$) and are prepared in accordance with United States
Generally Accepted Accounting Principles.

The following consolidated audited financial statements are
filed as part of this annual report:

| | Report
      of Independent Registered Public Accounting Firm                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                               
| | Consolidated
      Balance Sheets as at December 31, 2006 and December 31, 2005                                               
| |                                                                                                                               
| | Consolidated
      Statements of Operations from February 24, 2005 (inception) to December
      31, 2006                     
| |                                                                                                                               
| | Consolidated
      Statements of Cash Flows from February 24, 2005 (inception) to December
      31, 2006                     
| |                                                                                                                               
| | Consolidated
      Statements of Stockholders Equity for period from February 24, 2005
      (inception) to December 31, 2006
| |                                                                                                                               
| | Notes
      to the Consolidated Financial Statements                                                                          

---

SANFORD EXPLORATION, INC.(An Exploration Stage Company)

CONSOLIDATED FINANCIAL STATEMENTS (Stated in U.S.
Dollars)

December 31, 2006 and December 31, 2005

---

|Index to Consolidated Financial Statements                                                                | Page
|--------------------------------------------------------------------------------------------------------- | ----
|                                                                                                          |     
|Audited consolidated financial statements as of December
      31, 2006 and December 31, 2005, including: |     

|1. | Report of Independent Registered Public Accounting Firm;                                                                                                                                                                            | 1
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -
|   |                                                                                                                                                                                                                                     |  
|2. | Consolidated Balance Sheets as of December 31, 2006 and
      December 31, 2005;                                                                                                                                                    | 2
|   |                                                                                                                                                                                                                                     |  
|3. | Consolidated Statements of Operations for the year ended
      December 31, 2006, February 24, 2005 (inception) to December 31, 2005 and
      the cumulative period from February 24, 2005 (inception) to December 31,
      2006; | 3
|   |                                                                                                                                                                                                                                     |  
|4. | Consolidated Statements of Cash Flows for the year ended
      December 31, 2006, February 24, 2005 (inception) to December 31, 2005 and
      the cumulative period from February 24, 2005 (inception) to December 31,
      2006; | 4
|   |                                                                                                                                                                                                                                     |  
|5. | Consolidated Statement of Stockholders Equity
      (Deficiency) for the period from February 24, 2005 (inception) to December
      31, 2006; and                                                                                 | 5
|   |                                                                                                                                                                                                                                     |  
|6. | Notes to the Consolidated Financial Statements.                                                                                                                                                                                     | 6

---

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Sanford
Exploration, Inc. (An Exploration Stage Company)

We have audited the accompanying consolidated balance sheets of
Sanford Exploration, Inc. (the Company) (an Exploration Stage Company) as at
December 31, 2006 and 2005, the related consolidated statements of operations
and cash flows for the year ended December 31, 2006, for the ten months ended
December 31, 2005 and for the period from February 24, 2005 (inception) to
December 31, 2006. 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 an audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall consolidated 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 financial position of
Sanford Exploration, Inc. (an Exploration Stage Company) as at December 31, 2006
and 2005 and the results of its operations and its cash flows for the year ended
December 31, 2006, ten months ended December 31, 2005 and for the period
February 24, 2005 (inception) to December 31, 2006 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 to the consolidated financial statements, the Company has suffered
recurring losses and net cash outflows from operations since inception. These
factors raise substantial doubt about the Companys ability to continue as a
going concern. Managements plans in regard to these matters are also described
in Note 1. These consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

/s/ TELEFORD SADOVNICK, P.L.L.C

CERTIFIED PUBLIC ACCOUNTANTS

Bellingham, Washington March 15, 2007

1

---

SANFORD EXPLORATION,INC. (An Exploration Stage
Company)

CONSOLIDATED BALANCE SHEETS(Stated in U.S. dollars)

|                                                                       |   | December 31, |   |   | December 31, |  
|---------------------------------------------------------------------- | - | ------------ | - | - | ------------ | -
|                                                                       |   | 2006         |   |   | 2005         |  
|                                                                       |   |              |   |   |              |  
|ASSETS                                                                 |   |              |   |   |              |  
|                                                                       |   |              |   |   |              |  
|Current                                                                |   |              |   |   |              |  
|Cash                                                                   | $ | 6,769        |   | $ | 13,501       |  
|Prepaid expenses                                                       |   | 5,000        |   |   | 5,000        |  
|                                                                       |   |              |   |   |              |  
|                                                                       | $ | 11,769       |   | $ | 18,501       |  
|                                                                       |   |              |   |   |              |  
|LIABILITIES                                                            |   |              |   |   |              |  
|                                                                       |   |              |   |   |              |  
|Current                                                                |   |              |   |   |              |  
|Accounts payable and accrued liabilities                               | $ | 48,420       |   | $ | 14,498       |  
|                                                                       |   |              |   |   |              |  
|Due to related party                                                   |   | 36,942       |   |   | 354          |  
|Total Liabilities                                                      |   | 85,362       |   |   | 14,852       |  
|                                                                       |   |              |   |   |              |  
|Funds advanced for share
      subscriptions                           |   | -            |   |   | 104,950      |  
|                                                                       |   | 85,362       |   |   | 119,802      |  
|                                                                       |   |              |   |   |              |  
|STOCKHOLDERS EQUITY (DEFICIENCY)                                      |   |              |   |   |              |  
|                                                                       |   |              |   |   |              |  
|Share Capital                                                          |   |              |   |   |              |  
|Authorized:                                                            |   |              |   |   |              |  
|75,000,000 common stock with a par value of
      $0.001 per share     |   |              |   |   |              |  
|Issued:                                                                |   |              |   |   |              |  
|6,976,000 common stock (December 31, 2005 
      1,000 common shares) |   | 6,976        |   |   | 1            |  
|Additional paid-in capital                                             |   | 97,974       |   |   | -            |  
|Foreign currency translation adjustment                                |   | (766         | ) |   | (1,204       | )
|Deficit Accumulated During The
      Exploration Stage                 |   | (177,777     | ) |   | (100,098     | )
|                                                                       |   | (73,593      | ) |   | (101,301     | )
|                                                                       |   |              |   |   |              |  
|                                                                       | $ | 11,769       |   | $ | 18,501       |  

The accompanying notes are an integral part of these
consolidated financial statements.

2

---

SANFORD EXPLORATION, INC. (An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS(Stated in U.S.
dollars)

|                                       |   |              |   |   |              |   |   | Cumulative   |  
|-------------------------------------- | - | ------------ | - | - | ------------ | - | - | ------------ | -
|                                       |   |              |   |   | Period From  |   |   | Period From  |  
|                                       |   |              |   |   | February 24, |   |   | February 24, |  
|                                       |   |              |   |   | 2005         |   |   | 2005         |  
|                                       |   |              |   |   | (Inception)  |   |   | (Inception)  |  
|                                       |   | Year Ended   |   |   | To           |   |   | To           |  
|                                       |   | December 31, |   |   | December 31, |   |   | December 31, |  
|                                       |   | 2006         |   |   | 2005         |   |   | 2006         |  
|                                       |   |              |   |   |              |   |   |              |  
|Revenue                                | $ | -            |   | $ | -            |   | $ | -            |  
|                                       |   |              |   |   |              |   |   |              |  
|Expenses:                              |   |              |   |   |              |   |   |              |  
|Bank charges and interest              |   | 471          |   |   | 184          |   |   | 655          |  
|Consulting                             |   | -            |   |   | 7,000        |   |   | 7,000        |  
|Exploration expenses                   |   | 24,881       |   |   | 16,246       |   |   | 41,127       |  
|Management fees                        |   | 5,500        |   |   | 14,000       |   |   | 19,500       |  
|Mineral property payments              |   | -            |   |   | 47,110       |   |   | 47,110       |  
|Professional fees                      |   | 43,976       |   |   | 15,358       |   |   | 59,334       |  
|Regulatory fees                        |   | 2,851        |   |   | 200          |   |   | 3,051        |  
|                                       |   |              |   |   |              |   |   |              |  
|Net loss for
      the period          | $ | (77,679      | ) | $ | (100,098     | ) |   | (177,777     | )
|                                       |   |              |   |   |              |   |   |              |  
|Basic and
      diluted loss per share | $ | (0.01        | ) | $ | (100.10      | ) |   |              |  
|                                       |   |              |   |   |              |   |   |              |  
|Weighted average number of shares      |   |              |   |   |              |   |   |              |  
|outstanding                            |   | 5,314,227    |   |   | 1,000        |   |   |              |  

The accompanying notes are an integral part of these
consolidated financial statements.

3

---

SANFORD EXPLORATION, INC. (An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS(Stated in U.S.
dollars)

|                                                           |     |          |   |  |             |   |  | Cumulative  |  
|---------------------------------------------------------- | --- | -------- | - |  | ----------- | - |  | ----------- | -
|                                                           |     |          |   |  | Period      |   |  | Period      |  
|                                                           |     |          |   |  | From        |   |  | From        |  
|                                                           |     |          |   |  | February    |   |  | February    |  
|                                                           |     |          |   |  | 25,         |   |  | 25,         |  
|                                                           |     | Year     |   |  | 2005        |   |  | 2005        |  
|                                                           |     | Ended    |   |  | (Inception) |   |  | (Inception) |  
|                                                           |     | December |   |  | To          |   |  | To          |  
|                                                           |     | 31,      |   |  | December    |   |  | December    |  
|                                                           |     | 2006     |   |  | 31, 2005    |   |  | 31, 2006    |  
|                                                           |     |          |   |  |             |   |  |             |  
|                                                           |     |          |   |  |             |   |  |             |  
|Cash provided by (used
      in):                          |     |          |   |  |             |   |  |             |  
|Operating Activities                                       |     |          |   |  |             |   |  |             |  
|Net loss for the
      period                              | $   | (77,679  | ) |  | (100,098    | ) |  | (177,777    | )
|                                                           |     |          |   |  |             |   |  |             |  
|Changes in
      non-cash operating working capital items: |     |          |   |  |             |   |  |             |  
|Prepaid expenses                                           |     | -        |   |  | (5,000      | ) |  | (5,000      | )
|Mineral property and exploration costs                     |     | 24,881   |   |  | 63,356      |   |  | 88,237      |  
|Accounts payable and accrued
      liabilities             |     | 33,922   |   |  | 14,498      |   |  | 48,420      |  
|                                                           |     |          |   |  |             |   |  |             |  
|                                                           |     |          |   |  |             |   |  |             |  
|(a)    NET CASH FLOWS USED IN OPERATING
      ACTIVITIES   | (b) | (c)      |   |  | (d)         |   |  | (e)         |  
|                                                           |     |          |   |  |             |   |  |             |  
|                                                           |     |          |   |  |             |   |  |             |  
|Investing Activities                                       |     |          |   |  |             |   |  |             |  
|Mineral property and exploration costs                     |     | (24,881  | ) |  | (63,356     | ) |  | (88,237     | )
|                                                           |     |          |   |  |             |   |  |             |  
|NET CASH FLOWS USED IN INVESTING ACTIVITIES                | $   | (24,881  | ) |  | (63,356     | ) |  | (88,237     | )
|                                                           |     |          |   |  |             |   |  |             |  
|Financing Activities                                       |     |          |   |  |             |   |  |             |  
|Issuance of Common Stock                                   |     | 104,950  |   |  | 1           |   |  | 1           |  
|Cancellation of
      Common Stock                         |     | (1       | ) |  | -           |   |  | (1          | )
|Advances from related party                                |     | 36,588   |   |  | 354         |   |  | 36,942      |  
|Funds advanced for share subscriptions                     |     | (104,950 | ) |  | 104,950     |   |  | 104,950     |  
|                                                           |     |          |   |  |             |   |  |             |  
|NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES            | $   | 36,587   |   |  | 105,305     |   |  | 141,444     |  
|                                                           |     |          |   |  |             |   |  |             |  
|Effect of Exchange Rate Changes                            |     | 438      |   |  | (1,204      | ) |  | (766        | )
|                                                           |     |          |   |  |             |   |  |             |  
|Increase (Decrease) In
      Cash                          |     | (6,732   | ) |  | 13,501      |   |  | 6,769       |  
|                                                           |     |          |   |  |             |   |  |             |  
|Cash, Beginning of Period                                  |     | 13,501   |   |  | -           |   |  | -           |  
|                                                           |     |          |   |  |             |   |  |             |  
|Cash, End of Period                                        | $   | 6,769    |   |  | 13,501      |   |  | 6,769       |  
|                                                           |     |          |   |  |             |   |  |             |  
|Supplemental Disclosure of
      Cash Flow                 |     |          |   |  |             |   |  |             |  
|Information                                                |     |          |   |  |             |   |  |             |  
|Cash paid during the period
      for:                     |     |          |   |  |             |   |  |             |  
|Interest paid                                              | $   | -        |   |  | -           |   |  | -           |  
|Income taxes paid                                          | $   | -        |   |  | -           |   |  | -           |  

The accompanying notes are an integral part of these
consolidated financial statements.

4

---

SANFORD EXPLORATION, INC. (An Exploration Stage Company)

CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (DEFICIENCY)(Stated in U.S. Dollars)

PERIOD FROM FEBRUARY 25, 2005 (INCEPTION) TO DECEMBER 31,
2006

DeficitAccumulated
      
      
      AccumulatedCommon
        Stock
      
      
      During The
      
      
      OtherAdditional
      
      
      Exploration
      
      
      ComprehensiveShares
      
      
      Amount
      
      
      Paid-In Capital
      
      
      Stage
      
      
      Income (Loss)
      
      
      Total$
      
      
      $
      
      
      $
      
      
      $
      
      
      $Stock issued for cash at $0.001
      
      1,000
      
      
      1
      
      
      -
      
      
      -
      
      
      -
      
      
      1Foreign currency translation adjustment
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (1,204
      )
      
      (1,204
      )Net Loss
      
      -
      
      
      -
      
      
      -
      
      
      (100,098
      )
      
      -
      
      
      (100,098
      )Balance, December 31, 2005
      
      1,000
      
      
      1
      
      
      -
      
      
      (100,098
      )
      
      (1,204
      )
      
      (101,301
      )Stock issued for cash at $0.002
      
      1,975,000
      
      
      1,975
      
      
      1,975
      
      
      -
      
      
      -
      
      
      3,950Stock issued for cash at $0.02
      
      5,000,000
      
      
      5,000
      
      
      95,000
      
      
      -
      
      
      -
      
      
      100,000Stock issued for cash at $1.00
      
      1,000
      
      
      1
      
      
      999
      
      
      -
      
      
      -
      
      
      1,000Stock repurchased for cash at $0.001
      
      (1,000
      )
      
      (1
      )
      
      
      
      
      
      
      
      
      
      
      (1
      )Foreign currency translation adjustment
      
      
      
      
      
      
      
      
      
      
      
      
      
      438
      
      
      438Net loss
      
      
      
      
      
      
      
      
      
      
      (77,679
      )
      
      
      
      
      (77,679
      )Balance, December
        31, 2006
      
      6,976,000
      
      
      6,976
      
      
      97,974
      
      
      (177,777
      )
      
      (766
      )
      
      (73,593
      )


The accompanying notes are an integral part of these
consolidated financial statements.

4

---

SANFORD EXPLORATION, INC. (An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2006 AND DECEMBER 31, 2005

|1. | OPERATIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Organization                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Sanford Exploration, Inc. (the Company) was
      incorporated in the state of Nevada, U.S.A., on February 24, 2005. The
      Companys mineral exploration operations are conducted through its
      wholly-owned subsidiary Sanford Exploration (Canada), Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Exploration Stage Activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The Company has been in the exploration stage since its
      formation and has not yet realized any revenues from its planned
      operations. It is primarily engaged in the acquisition and exploration of
      mining properties. Upon location of a commercial minable reserve, the
      Company expects to actively prepare the site for its extraction and enter
      the development stage.                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Going Concern                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The accompanying consolidated financial statements have
      been prepared assuming the Company will continue as a going
  concern.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | As shown in the accompanying consolidated financial
      statements, the Company has incurred a net loss of $177,777 for the period
      from February 24, 2005 (inception) to December 31, 2006 and has no
      revenue. The future of the Company is dependant upon its ability to obtain
      financing and upon future profitable operations from the development of
      its mineral properties. Management has plans to seek additional capital
      through a private placement and public offering of its common stock. The
      consolidated financial statements do not include any adjustments relating
      to the recoverability and classification of recorded assets, or the
      amounts of and classification of liabilities that might be necessary in
      the event the Company cannot continue in existence.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|2. | SUMMARY OF SIGNIFICANT ACCOUNTING
  POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The consolidated financial statements of the Company have
      been prepared in accordance with generally accepted accounting principles
      in the United States. Because a precise determination of many assets and
      liabilities is dependent upon future events, the preparation of
      consolidated financial statements for a period necessarily involves the
      use of estimates which have been made using careful judgment.                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The consolidated financial statements have, in
      managements opinion, been properly prepared within reasonable limits of
      materiality and within the framework of the significant accounting
      policies summarized below:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Principles of Consolidation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The consolidated financial statements include the
      accounts and operations of Sanford Exploration, Inc. and its wholly owned
      subsidiary Sanford Exploration (Canada), Inc. All inter-company accounts
      and transactions have been eliminated in consolidation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Exploration Stage Enterprise                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The Companys consolidated financial statements are
      prepared using the accrual method of accounting and according to the
      provisions of Statement of Financial Accounting Standards No. 7 (SFAS
      7), Accounting and Reporting for Development Stage Enterprises, as it
      devotes substantially all of its efforts to acquiring and exploring
      mineral properties. Until such properties are acquired and developed, the
      Company will continue to prepare its consolidated financial statements and
      related disclosures in accordance with entities in the exploration
      stage.                                                                                                                                                                                                                

6

---

SANFORD EXPLORATION, INC.
  (An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2006 AND DECEMBER 31, 2005

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Mineral Property Option Payments and Exploration
      Expenditures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The Company follows a policy of expensing exploration
      expenditures until a production decision is made in respect of the project
      and the Company is reasonably assured that it will receive regulatory
      approval to permit mining operations which may include the receipt of a
      legally binding project approval certificate. Such expenditures include
      exploration and administration expenditures. Mineral property acquisition
      costs are capitalized when incurred and are classified as tangible assets
      and are evaluated for impairment and written down as required.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Management periodically reviews the carrying value of its
      investments in mineral leases and claims with internal and external mining
      related professionals. A decision to abandon, reduce or expand a specific
      project is based upon many factors including general and specific
      assessments of mineral deposits, anticipated future mineral prices,
      anticipated future costs of exploring, developing and operating a
      production mine, the expiration term and ongoing expenses of maintaining
      mineral properties and the general likelihood that the Company will
      continue exploration on such project. The Company does not set a
      pre-determined holding period for properties with unproven deposits,
      however, properties which have not demonstrated suitable metal
      concentrations at the conclusion of each phase of an exploration program
      are re-evaluated to determine if future exploration is warranted, whether
      there has been any impairment in value and that their carrying values are
      appropriate.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | If an area of interest is abandoned or it is determined
      that its carrying value cannot be supported by future production or sale,
      the related costs are charged against operations in the year of
      abandonment or determination of value. The amounts recorded as mineral
      leases and claims represent costs to date and do not necessarily reflect
      present or future values.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The Companys exploration activities and proposed mine
      development are subject to various laws and regulations governing the
      protection of the environment. These laws are continually changing,
      generally becoming more restrictive. The Company has made, and expects to
      make in the future, expenditures to comply with such laws and
      regulations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The accumulated costs of properties that are developed on
      the stage of commercial production will be amortized to operations through
      unit-of-production depletion.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Regulatory Matters                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The Company and its mineral property interest is subject
      to a variety of Canadian federal and provincial regulations governing land
      use, health, safety and environmental matters. The Companys management
      believes it has been in substantial compliance with all such regulations,
      and is unaware of any pending action or proceeding relating to regulatory
      matters that would affect the financial position of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Impaired Asset Policy                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The Company periodically reviews its long-lived assets
      when applicable to determine if any events or changes in circumstances
      have transpired which indicate that the carrying value of its assets may
      not be recoverable, pursuant to guidance established in Statement of
      Financial Accounting Standards No. 144 (SFAS 144), Accounting for the
      Impairment or Disposal of Long-lived Assets. The Company determines
      impairment by comparing the undiscounted future cash flows estimated to be
      generated by its assets to their respective carrying amounts. If
      impairment is deemed to exist, the assets will be written down to fair
      value.                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Cash                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Cash consist of cash on deposit with high quality major
      financial institutions, and to date has not experienced losses on any of
      its balances. The carrying amounts approximated fair market value due to
      the liquidity of these deposits.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

7

---

SANFORD EXPLORATION, INC. (An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2006 AND DECEMBER 31, 2005

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Use of Estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | The preparation of consolidated financial statements in
      conformity with generally accepted accounting principles requires
      management to make estimates and assumptions that affect the reported
      amounts of assets and liabilities, and disclosures of contingent assets
      and liabilities at the date of the consolidated financial statements, and
      the reported amounts of revenues and expenses for the reporting period.
      Actual results could differ from these estimates.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Foreign Currency Translation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | The Companys functional currency is the U.S. dollar.
      Transactions in foreign currency are translated into U.S. dollars as
      follows:                                                                                                                                                                                                                                                                                                                                                                

| | i.   | monetary items at the rate prevailing at the balance
      sheet date;                           
| | ---- | -------------------------------------------------------------------------------------------------
| | ii.  | non-monetary items at the historical exchange
  rate;                                            
| | iii. | revenue and expenses at the average rate in effect during
      the applicable accounting period.

Income Taxes

The Company has adopted Statement of
Financial Accounting Standards No. 109 (SFAS 109), Accounting for Income
Taxes. This standard requires the use of an asset and liability approach for
financial accounting, and reporting on income taxes. If it is more likely than
not that some portion or all of a deferred tax asset will not be realized, a
valuation allowance is recognized.

Basic and Diluted Loss Per Share

In accordance with Financial Accounting
Share Board (FASB) Statement of Financial Accounting Standard No. 128 (SFAS
128), Earnings Per Share, the basic loss per common share is computed by
dividing net loss available to common stockholders by the weighted average
number of common shares outstanding. Diluted net loss per common share is
computed similar to basic loss per common share except that the denominator is
increased to include the number of additional common shares that would have been
outstanding if the potential common shares had been issued and if the additional
common shares were dilutive. At December 31, 2006 and December 31, 2005, the
Company has no stock equivalents that were anti-dilutive and excluded in the
earnings per share computation.

Revenue Recognition

Revenue from the sale of minerals is
  recognized when the risks and rewards of ownership pass to the purchaser, including
  delivery of the product the selling price is fixed or determinable and collectibility
  is reasonably assured. Settlement adjustments, if any, are reflected in revenue
  when the amounts are known.

Stock-based Compensation

The Company accounts for employee
stock-based compensation using the intrinsic value method prescribed in
Accounting Principles Board Opinion (APB) No. 25 (APB 25), Accounting for
Stock Issued to Employees, and related interpretations. Accordingly,
compensation cost for stock options is measured as the excess, if any, of the
fair value of the Companys common stock at the date of the grant over the
amount an employee must pay to acquire the common stock. Non-employee
stock-based compensation is accounted for using the fair value method in
accordance with Statement of Financial Accounting Standard No. 123 (SFAS 123),
Accounting for Stock-based Compensation.

8

---

SANFORD EXPLORATION, INC. (An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2006 AND DECEMBER 31, 2005

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Financial Instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The Companys financial instruments consist of cash and
      accounts payable and accrued liabilities and amounts due to related
      party.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Management of the Company does not believe that the
      Company is subject to significant interest, currency or credit risks
      arising from these financial instruments. The respective carrying values
      of financial instruments approximate their fair values. Fair values were
      assumed to approximate carrying values since they are short-term in nature
      or they are receivable or payable on demand.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Comprehensive Income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The Company has adopted Statement of Financial Accounting
      Standards No. 130 (SFAS 130), Reporting Comprehensive Income, which
      establishes standards for reporting and display of comprehensive income,
      its components and accumulated balances. When applicable, the Company
      would disclose this information on its Statement of Stockholders Equity.
      Comprehensive income comprises equity except those resulting from
      investments by owners and distributions to owners. The Company has not had
      any significant transactions that are required to be reported in other
      comprehensive income.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Asset Retirement Obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The Company has adopted Statement of Financial Accounting
      Standards No. 143 (SFAS 143), Accounting for Asset Retirement
      Obligations, which requires that an asset retirement obligation (ARO)
      associated with the retirement of a tangible long-lived asset to be
      recognized as a liability in the period in which it is incurred and
      becomes determinable, with an offsetting increase in the carrying amount
      of the associated asset. The cost of the tangible asset, including the
      initially recognized ARO, is depleted, such that the cost of the ARO is
      recognized over the useful life of the asset. The ARO is recorded at fair
      value, and accretion expense is recognized over time as the discounted
      liability is accreted to its expected settlement value. The fair value of
      the ARO is measured using expected future cash flow, discounted at the
      Companys credit-adjusted risk-free interest rate. To date, no significant
      asset retirement obligation exists due to the early stage of exploration.
      Accordingly, no liability has been recorded.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Environmental Protection and Reclamation
    Costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The operations of the Company have been, and may in the
      future be affected from time to time in varying degrees by changes in
      environmental regulations, including those for future removal and site
      restorations costs. Both the likelihood of new regulations and their
      overall effect upon the Company may vary from region to region and are not
      predictable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Environmental expenditures that relate to ongoing
      environmental and reclamation programs are charged against statements of
      operations as incurred or capitalized and amortized depending upon their
      future economic benefits. The Company does not currently anticipate any
      material capital expenditures for environmental control facilities because
      its property holding is at an early stage of exploration.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Intangible Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The Company has adopted Statement of Financial Accounting
      Standards No. 142 (SFAS 142), Goodwill and Other Intangible Assets,
      which requires that goodwill and intangible assets with indefinite life
      are not amortized but rather tested at least annually for impairment.
      Intangible assets with a definite life are required to be amortized over
      their useful life. The Company does not have any goodwill nor intangible
      assets with indefinite or definite life since
inception.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

10

---

SANFORD EXPLORATION, INC.
  (An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2006 AND DECEMBER 31, 2005

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)                                                                                                                                                                                                                         
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                               
|   | Advertising Costs                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                               
|   | Advertising costs are expensed as incurred. No
      advertising costs were incurred in period ended December 31, 2006 and
      December 31, 2005, respectively.                                                                                                             
|   |                                                                                                                                                                                                                                                                               
|   | Segmented Information                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                               
|   | The Company follows FAS No. 131 Disclosures about
      Segments of an Enterprise and Related Information about operating
      segments in financial statements, as well as additional disclosures about
      products and services, geographic areas and major customers.
|   |                                                                                                                                                                                                                                                                               
|   | The Company conducts substantially all of its operations
      in Canada in one business segment.                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                               
|3. | RECENT ACCOUNTING
PRONOUNCEMENTS                                                                                                                                                                                                                                              

| | a) | In February 2006, FASB issued SFAS No. 155, Accounting
      for Certain Hybrid Financial Instruments, an Amendment of FASB Standards
      No. 133 and 140. This Statement established the accounting for certain
      derivatives embedded in other instruments. It simplifies accounting for
      certain hybrid financial instruments by permitting fair value
      remeasurement for any hybrid instrument that contains an embedded
      derivative that otherwise would require bifurcation under SFAS No. 133 as
      well as eliminating a restriction on the passive derivative instruments
      that a qualifying special-purpose entity (SPE) may hold under SFAS No.
      140. This Statement allows a public entity to irrevocably elect to
      initially and subsequently measure a hybrid instrument that would be
      required to be separated into a host contract and derivative in its
      entirety at fair value (with changes in fair value recognized in earnings)
      so long as that instrument is not designated as a hedging instrument
      pursuant to the Statement. SFAS No. 140 previously prohibited a qualifying
      special-purpose entity from holding a derivative financial instrument that
      pertains to a beneficial interest other than another derivative financial
      instrument. This Statement is effective for fiscal years beginning after
      September 15, 2006, with early adoption permitted as of the beginning of
      an entitys fiscal year. The Company does not expect the adoption of SFAS
      No. 155 to have a material effect on its financial condition or results of
      operations.                                      
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | b) | In March 2006, FASB issued SFAS No. 156, Accounting for
      Servicing of Financial Assets - an Amendment of FASB Statement No. 140.
      This Statement requires an entity to recognize a servicing asset or
      servicing liability each time it undertakes an obligation to service a
      financial asset by entering into a servicing contract in any of the
      following situations: a transfer of the servicers financial assets that
      meets the requirements for sale accounting; a transfer of the servicers
      financial assets to a qualifying special-purpose entity in a guaranteed
      mortgage securitization in which the transferor retains all of the
      resulting securities and classifies them as either available-for-sale
      securities or trading securities in accordance with FASB Statement No.
      115; or an acquisition or assumption of an obligation to service a
      financial asset that does not relate to financial assets of the servicer
      or its consolidated affiliates. The Statement also requires all separately
      recognized servicing assets and servicing liabilities to be initially
      measured at fair value, if practicable and permits an entity to choose
      either the amortization or fair value method for subsequent measurement of
      each class of servicing assets and liabilities. This Statement is
      effective for fiscal years beginning after September 15, 2006, with early
      adoption permitted as of the beginning of an entitys fiscal year. The
      Company does not expect the adoption of SFAS No. 156 to have a material
      effect on its financial condition or results of operations.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | c) | In June 2006, FASB issued FASB Interpretation No. 48,
      Accounting for Uncertainty in Income Taxes - an interpretation of FASB
      Statement No. 109, which prescribes a recognition threshold and
      measurement attribute for the financial statement recognition and
      measurement of a tax position taken or expected to be taken in a tax
      return. FIN 48 also provides guidance on de-recognition, classification,
      interest and penalties, accounting in interim periods, disclosure and
      transition. FIN 48 is effective for fiscal years beginning after December
      15, 2006. The Company does not expect the adoption of FIN 48 to have a
      material effect on its financial condition or results of
  operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

11

---

SANFORD EXPLORATION, INC.
  (An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2006 AND DECEMBER 31, 2005

|3. | RECENT ACCOUNTING PRONOUNCEMENTS(Continued)
|-- | -------------------------------------------
|   |                                            
|   | d)                                         
|   |                                            
|   | e)                                         
|   |                                            
|   | f)                                         
|   |                                            
|   | g)                                         
|   |                                            
|   | h)                                         

11

---

SANFORD EXPLORATION, INC. (An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2006 AND DECEMBER 31, 2005

|3.     | RECENT ACCOUNTING PRONOUNCEMENTS(Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|       | i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|       | j)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|       | k)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|**4.** | MINERAL EXPLORATION PROPERTY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|       | By Assignment Agreement dated August 15, 2005, the
      Assignor assigned, transferred and set over to the Company all rights,
      title, interest and benefits held by or granted to the Assignor in and to
      a Purchase and Sale Agreement dated December 10, 2004 whereby the Assignor
      acquired an option to purchase a 100% interest in 11 unpatented mineral
      claims. The 11 mineral claims cover a total of 1,800 acres (728 hectares)
      located in the south end of Gillies Limit Township in the Larder Lake
      Mining Division of the Province of Ontario, Canada.
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|       | In consideration of the assignment the Company paid to
      the Assignor $47,110 ($56,500 CDN).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|       | The Company assumed and agreed to perform all obligations
      of the Assignor under the Purchase and Sale Agreement as
follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|       | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|       | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|       | c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

12

---

SANFORD EXPLORATION, INC. (An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2006 AND DECEMBER 31, 2005

|4. | MINERAL EXPLORATION PROPERTY(Continued)                                                                                                                                                                                         
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                 
|   | d)                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                 
|   | The company has not determined whether the mineral claim
      contains mineralized material and has consequently written off all mineral
      rights acquisition costs to operations during the previous financial
      year.
|   |                                                                                                                                                                                                                                 
|5. | INCOME TAXES                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                 
|   | a)                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                 

| |                                             |   | 2006    |   |   | 2005    |  
| | ------------------------------------------- | - | ------- | - | - | ------- | -
| |                                             |   |         |   |   |         |  
| | Computed expected (benefit of) income taxes | $ | (17,951 | ) | $ | (12,492 | )
| |                                             |   |         |   |   |         |  
| | Increase in valuation allowance             |   | 17,951  |   |   | 12,492  |  
| |                                             |   |         |   |   |         |  
| |                                             | $ | -       |   | $ | -       |  

| | b) | Significant components of the Companys deferred income
      tax assets are as follows:
| | -- | ----------------------------------------------------------------------------------------

| |                              |   | 2006         |   |   | 2005    |  
| | ---------------------------- | - | ------------ | - | - | ------- | -
| |                              |   | (Cumulative) |   |   |         |  
| |                              |   |              |   |   |         |  
| | Operating loss carry forward | $ | 177,777      |   | $ | 100,098 |  
| | Mineral property expenses    |   | (47,110      | ) |   | (47,110 | )
| | Exploration expenses         |   | (41,127      | ) |   | (16,246 | )
| |                              |   |              |   |   |         |  
| |                              |   | 89,540       |   |   | 36,742  |  
| |                              |   |              |   |   |         |  
| | Statutory tax rate           |   | 34%          |   |   | 34%     |  
| |                              |   |              |   |   |         |  
| | Deferred income tax asset    |   | 30,443       |   |   | 12,492  |  
| |                              |   |              |   |   |         |  
| | Valuation allowance          |   | (30,443      | ) |   | (12,492 | )
| |                              |   |              |   |   |         |  
| |                              | $ | -            |   | $ | -       |  

13

---

SANFORD EXPLORATION, INC. (An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2006 AND DECEMBER 31, 2005

|5. | INCOME TAXES(Continued)
|-- | -----------------------
|   |                        
|   | c)                     

| |                                                     |   | Income Tax Operating Loss Carry Forward | 
| | --------------------------------------------------- | - | --------------------------------------- | 
| |                                                     |   | Amount                                  | 
| |                                                     |   |                                         | 
| | 2005                                                | $ | 36,742                                  | 
| | 2006                                                |   | 52,798                                  | 
| |                                                     |   |                                         | 
| | Total income tax
      operating loss carry forward | $ | 89,540                                  | 

|6. | COMMITMENTS AND CONTRACTUAL OBLIGATIONS
|-- | ---------------------------------------
|   |                                        
|   | a)                                     
|   |                                        
|   |                                        
|   |                                        
|   |                                        
|   |                                        
|   | b)                                     
|   |                                        
|   |                                        

14

---

SANFORD EXPLORATION, INC.
  (An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2006 AND DECEMBER 31, 2005

|7. | RELATED PARTY
TRANSACTIONS
|-- | --------------------------

| |                                                                          |   | As at        |  |   | As at        | 
| | ------------------------------------------------------------------------ | - | ------------ |  | - | ------------ | 
| |                                                                          |   | December 31, |  |   | December 31, | 
| |                                                                          |   | 2006         |  |   | 2005         | 
| |                                                                          |   |              |  |   |              | 
| | Advances payable to a related party, who is also a director
      of the |   |              |  |   |              | 
| | Company                                                                  | $ | 39,942       |  | $ | 354          | 

| |                                                         |   |              |  |   | February 24,   | 
| | ------------------------------------------------------- | - | ------------ |  | - | -------------- | 
| |                                                         |   |              |  |   | 2005           | 
| |                                                         |   | Year Ended   |  |   | (Inception) to | 
| |                                                         |   | December 31, |  |   | December 31,   | 
| |                                                         |   | 2006         |  |   | 2005           | 
| |                                                         |   |              |  |   |                | 
| | Consulting fees paid to a director of the
      Company | $ | -            |  | $ | -              | 
| | Management fees
      paid to a director of the Company | $ | 5,500        |  | $ | 14,000         | 

Amounts due to related parties for
advances to the Company are unsecured, without interest and are due on demand.
The value of transactions was based on exchange amounts, representing the
amounts established and agreed upon by the related parties.

---

- 42 -

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

None.

Item 8A. Controls and Procedures

As required by Rule 13a-15 under the Exchange Act, as of the
end of the period covered by this report, being December 31, 2006, we have
carried out an evaluation of the effectiveness of the design and operation of
our company's disclosure controls and procedures. This evaluation was carried
out under the supervision and with the participation of our management,
including our president. Based upon that evaluation, our president concluded
that our disclosure controls and procedures are effective as of the end of the
period covered by this report. There have been no changes in our internal
controls over financial reporting that occurred during the period covered by
this report that have materially affected, or are reasonably likely to
materially affect our internal controls over financial reporting.

Disclosure controls and procedures are controls and other
procedures that are designed to ensure that information required to be disclosed
in our company's reports filed or submitted under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the
Securities and Exchange Commission's rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed in our reports filed under the
Exchange Act is accumulated and communicated to management, including our
president as appropriate, to allow timely decisions regarding required
disclosure.

PART III

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

All directors of our company hold office until the next annual
general meeting of the shareholders or until their successors are elected and
qualified. The officers of our company are appointed by our Board of Directors
and hold office until their earlier death, retirement, resignation or removal.

Our directors, executive officers and other significant
employees, their ages, positions held and duration each person has held that
position, are as follows:

Name
      Position Held with the Company
      Age
      Date First Elected or
      AppointedFiore Aliperti
    President, Chief Executive
      Officer, Secretary, Treasurer and Director
    42
    February 24, 2005John R. Poloni  Director
    74
      December 1, 2005


Business Experience

The following is a brief account of the education and business
experience of each director, executive officer and key employee during at least
the past five years, indicating each persons principal occupation during the
period, and the name and principal business of the organization by which he or
she was employed.

Fiore Aliperti, President , Chief Executive Director,
Secretary, Treasurer and Director

Mr. Aliperti graduated from Windermere High School in 1982.
From 1982 to 1985 he was a student at Langara College. In 1985, Mr. Aliperti
attended the University of British Columbia where he took courses in Urban Land
Economics, Realty and Mortgages. Mr. Aliperti has worked in retail sales and
management since 1982 and has no public company experience.

---

- 43 -

John R. Poloni, Director

Mr. Poloni has a bachelor of Sciences from McGill University in
Montreal, Quebec and has been a Professional Engineer since 1971. He has more
than worked with several mineral resource projects in Canada, the United States,
Argentina, Brazil, Mexico and Saudi Arabia. Since 1972, he has offered his
expertise through his own company, John R. Poloni & Associates Ltd.

Mr. Poloni has previously been a director of Solaia Ventures, a
private company, from September 1998 to May 2000, Entourage Mining Ltd., an OTC
BB company with the symbol ETGMF, from April 2003 to September 2004 and Carmax
Explorations Ltd., a Toronto Stock Exchange Venture company with the symbol
CMX, from January 2004 to present.

Family Relationships

There are no family relationships among our directors or
officers.

Board and Committee Meetings

The Board of Directors of our company held no formal meetings
during the year ended December 31, 2006. All proceedings of the Board of
Directors were conducted by resolutions consented to in writing by all the
directors and filed with the minutes of the proceedings of the directors. Such
resolutions consented to in writing by the directors entitled to vote on that
resolution at a meeting of the directors are, according to the Nevada General
Corporate Law and the By-laws of our company, as valid and effective as if they
had been passed at a meeting of the directors duly called and held.

Our company currently does not have nominating, compensation or
audit committees or committees performing similar functions nor does our company
have a written nominating, compensation or audit committee charter. Our board of
directors does not believe that it is necessary to have such committees because
it believes that the functions of such committees can be adequately performed by
the board of directors.

Our company does not have any defined policy or procedural
requirements for shareholders to submit recommendations or nominations for
directors. The board of directors believes that, given the stage of our
development, a specific nominating policy would be premature and of little
assistance until our business operations develop to a more advanced level. Our
company does not currently have any specific or minimum criteria for the
election of nominees to the board of directors and we do not have any specific
process or procedure for evaluating such nominees. The board of directors will
assess all candidates, whether submitted by management or shareholders, and make
recommendations for election or appointment.

Audit Committee Financial Expert

Our board of directors has determined that it does not have a
member of its audit committee that qualifies as an "audit committee financial
expert" as defined in Item 401(e) of Regulation S-B, and is "independent" as the
term is used in Item 7(d)(3)(iv) of Schedule 14A under the Securities Exchange
Act of 1934, as amended.

We believe that the members of our Board of Directors are
collectively capable of analyzing and evaluating our financial statements and
understanding internal controls and procedures for financial reporting. In
addition, we believe that retaining an independent director who would qualify as
an "audit committee financial expert" would be overly costly and burdensome and
is not warranted in our circumstances given the early stages of our development
and the fact that we have not generated any material revenues to date.

Involvement in Certain Legal Proceedings

Our directors, executive officers and control persons have not
been involved in any of the following events during the past five years:

1.          
any bankruptcy petition filed by or against any business of which such person
was a general partner or executive officer either at the time of the bankruptcy
or within two years prior to that time;

---

- 44 -

2.          
any conviction in a criminal proceeding or being subject to a pending criminal
proceeding (excluding traffic violations and other minor offences);

3.          
being subject to any order, judgment, or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining, barring, suspending or otherwise limiting his involvement
in any type of business, securities or banking activities; or

4.          
being found by a court of competent jurisdiction (in a civil action), the
Commission or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law, and the judgment has not been
reversed, suspended, or vacated.

Section 16(a) Beneficial Ownership Compliance

Section 16(a) of the Securities Exchange Act requires our
executive officers and directors, and persons who own more than 10% of our
common stock, to file reports regarding ownership of, and transactions in, our
securities with the Securities and Exchange Commission and to provide us with
copies of those filings.

Based solely on our review of the copies of such forms received
by us, or written representations from certain reporting persons, we believe
that all filing requirements applicable to our officers, directors and greater
than ten percent beneficial owners were complied with, with the exception of the
following:

Name
    Number of Late
      Reports
    Number of
      Transactions Not Reported on a Timely
      Basis
    Failure to
      File Requested FormsFiore Aliperti,
    2(1)(2)
    2(1)(2)
    2(1)(2)


|(1) | The named officer, director or greater than 10%
      stockholder, as applicable, failed to file a Form 3 - Initial Statement of
      Beneficial Ownership of Securities.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                           
|(2) | The named person failed to file a Schedule
  13D.                                                                                                                         

Code of Ethics

As at December 31, 2006, we have not adopted a Code of Ethics.

Item 10. Executive Compensation.

The particulars of compensation paid to the following persons:

- our principal executive officer;
- each of our two most highly compensated executive officers who were serving
  as executive officers at the end of the year ended December 31, 2006; and
- up to two additional individuals for whom disclosure would have been
  provided under (b) but for the fact that the individual was not serving as our
  executive officer at the end of the most recently completed financial year,

who we will collectively refer to as the named executive
officers, of our years ended December 31, 2006 and 2005 are set out in the
following summary compensation table:

---

- 45 -

SUMMARY COMPENSATION
        TABLEName and
        Principal Position
      Year
      Salary
        ($)
      Bonus
        ($)
      Stock Awards ($)
      Option
        Awards ($)
      Non-Equity Incentive
        Plan Compensa- tion ($)
      Change in Pension Value and Nonqualified Deferred Compensation
        Earnings ($)
      All Other
        Compensa- tion ($)
      Total
        ($)Fiore Aliperti(1)(2)
        President, Chief 
        Executive Officer, 
        Secretary, 
        Treasurer and 
        Director
      2006 
        2005
      Nil 
        14,000
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        13,500


(1) Mr. Aliperti became our President, Chief Executive Officer,
Secretary, Treasurer and a director of our company on February 24, 2005.

We have an employment agreement with Mr. Aliperti, our
President and a director. The details of this agreement are as follows:

|1. | He will perform the following services for us:                                                                                                                                             
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                            
|   | a.                                                                                                                                                                                         
|   |                                                                                                                                                                                            
|   | b.                                                                                                                                                                                         
|   |                                                                                                                                                                                            
|2. | He will not be compensated for the performance of these
      services until such a time as the company begins to earn
revenue.                                                            
|   |                                                                                                                                                                                            
|3. | Either party may terminate the agreement with one months
      written notice.                                                                                                            
|   |                                                                                                                                                                                            
|4. | This contract will continue until terminated.                                                                                                                                              
|   |                                                                                                                                                                                            
|5. | There is no retirement, severance or other pay that will
      be owed to Mr. Aliperti upon termination of this agreement, other than any
      outstanding amounts of salary and expenses.

A more detailed written explanation of this agreement is
attached as an exhibit to our registration statement filed on Form SB-2 filed
with the SEC on November 8, 2006.

Our company has no plans or arrangements in respect of
remuneration received or that may be received by named executive officers of our
company in fiscal 2007 to compensate such officers in the event of termination
of employment (as a result of resignation, retirement, change of control) or a
change of responsibilities following a change of control.

Outstanding Equity Awards at Fiscal Year-End

The particulars of unexercised options, stock that has not
vested and equity incentive plan awards for our named executive officers are set
out in the following table:

---

- 46 -

Options Awards
      Stock AwardsName
      NumberofSecuritiesUnderlyingUnexercisedOptions(#)Exercisable
      NumberofSecuritiesUnderlyingUnexercisedOptions(#)Unexercisable
      EquityIncentivePlanAwards:NumberofSecuritiesUnderlyingUnexercisedUnearnedOptions(#)
      OptionExercisePrice($)
      OptionExpirationDate
      NumberofSharesorUnitsofStockThatHaveNotVested(#)
      MarketValueofSharesorUnitsofStockThatHave NotVested($)
      EquityIncentivePlanAwards:Number ofUnearnedShares,Units orOtherRights
        ThatHave NotVested(#)
      EquityIncentivePlanAwards:Market orPayoutValue ofUnearnedShares,Units
        orOtherRightsThat HaveNot Vested($)Fiore 
        Aliperti(1)
        President, 
        Chief 
        Executive 
        Officer, 
        Secretary, 
        Treasurer and 
        Director
      Nil
      Nil
      Nil
      Nil
      Nil
      Nil
      Nil
      Nil
      Nil


(1)          
Mr. Aliperti became our President, Chief Executive Officer, Secretary, Treasurer
and a director of our company on February 24, 2005.

Director Compensation

The particulars of compensation paid to our directors for our
years ended December 31, 2006 and 2005, are set out in the following director
compensation table:

Name
    Year
    FeesEarnedorPaid inCash($)
    StockAwards($)
    OptionAwards($)
    Non-EquityIncentivePlanCompensation($)
    Change in PensionValue andNonqualified DeferredCompensationEarnings
    AllOtherCompensation($)
    Total($)John R. Poloni(1)
    2005 2006
    $5,500 $5,500
    Nil Nil
    Nil Nil
    Nil Nil
    Nil Nil
    Nil Nil
    $500 $6000


(1)          
Mr. Poloni was appointed a director of our company on December 1, 2005.

Other than directors fees, we did not pay other cash
compensation for services rendered as a director in the years ended December 31,
2005 or 2006. We may, however, determine to compensate our directors in the
future. Directors are entitled to reimbursement of expenses incurred in
attending meetings. In addition, our directors are entitled to participate in
our stock option plan.

Other than as set forth below, we have no formal plan for
compensating our directors for their service in their capacity as directors,
although such directors are expected in the future to receive stock options to
purchase common shares as awarded by our Board of Directors or (as to future
stock options) a compensation committee which may be established. Directors are
entitled to reimbursement for reasonable travel and other out-of-pocket expenses
incurred in connection with attendance at meetings of our board of directors.
Our board of directors may award special remuneration to any director
undertaking any special services on our behalf other than services ordinarily
required of a director. No director received and/or accrued any compensation for
their services as a director, including committee participation and/or special
assignments.

We have a verbal employment agreement with Mr. Poloni, a
director. The details of this agreement are as follows:

---

- 47 -

|1. | He will perform the following services for
  us:
|-- | ------------------------------------------------

| | a. | ensure that the geological reports are of good quality
      and professionally and properly done.
| | -- | --------------------------------------------------------------------------------------------------
| |    |                                                                                                   
| | b. | be a member of and fully participate in the board of
      directors.                             
| |    |                                                                                                   
| | c. | advise the company on his recommendations for the
      exploration program.                      

|2. | He will be paid $500 per month for the performance of
      these services.                                                                                                              
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                          
|3. | Either party may terminate the agreement with one months
      written notice.                                                                                                          
|   |                                                                                                                                                                                          
|4. | This contract will continue until terminated.                                                                                                                                            
|   |                                                                                                                                                                                          
|5. | There is no retirement, severance or other pay that will
      be owed to Mr. Poloni upon termination of this agreement, other than any
      outstanding amounts of salary and expenses.

A more detailed written explanation of this agreement is
attached as an exhibit to our registration statement filed on Form SB-2 filed
with the SEC on November 8, 2006.

We have no plans or arrangements in respect of remuneration
received or that may be received by our executive officers to compensate such
officers in the event of termination of employment (as a result of resignation,
retirement, change of control) or a change of responsibilities following a
change of control.

There are no arrangements or plans in which we provide pension,
retirement or similar benefits for directors or executive officers. We have no
material bonus or profit sharing plans pursuant to which cash or non-cash
compensation is or may be paid to our directors or executive officers, except
that stock options may be granted at the discretion of the board of directors or
a committee thereof.

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

The following table sets forth, as of March 30, 2007, certain
information with respect to the beneficial ownership of our common stock by each
security holder known by us to be the beneficial owner of more than 5% of our
common stock and by each of our current directors and executive officers. Each
person has sole voting and investment power with respect to the shares of common
stock, except as otherwise indicated. Beneficial ownership consists of a direct
interest in the shares of common stock, except as otherwise indicated.

Title of Class
      Name and Address of
      Beneficial Owner
      Amount and Nature of
      Beneficial Owner
      Percentage of Class(1)Common Shares
    John R. Poloni, Director 2110
       150 A Street Surrey, BC V4A 9J6
    265,000
    3.8%Common Shares
    Fiore Aliperti, President,
      CEO and Director 1323  1303 Homer Street, Vancouver, BC V6B 5T1
    1,975,000
    28.3%Common Shares
    Richard Eppich(2)358 East 14th Street North Vancouver, BC V7L 2N6
    250,000
    3.6%Common Shares
    Vincenza Eppich(2)358 East 14th Street North Vancouver, BC V7L 2N6
    275,000
    3.9%Common Shares
    Marie Cavak(3)5780 Bittern Court Richmond, BC V7E 3X1
    250,000
    3.6%


---

- 48 -

Common Shares
    Berge Chatoyan(3)5780 Bittern Court Richmond, BC V7E 3X1
    260,000
    3.7%Common Shares
    Lucy De Bortoli(4)20511 122 B Avenue Maple Ridge, BC V2X 2N6
    235,000
    3.4%Common Shares
    Venicio De Bortoli(4)20511 122B Avenue Maple Ridge, BC V2X 2N6
    215,000
    3.1%Common Shares
    Arminda Sorgentone(5)Suite 505, 1120 Finch Avenue Toronto, ON M3J 3H7
    270,000
    3.9%Common Shares
    Giuseppe Sorgentone(5)Suite 505, 1120 Finch Avenue Toronto, ON M3J 3H7
    280,000
    4%Common Shares
    Directors and Officers (as a
      group)
    2,240,000
    32.1%


(1) Based on 6,976,000 shares of common stock issued
and outstanding as of March 30, 2007. Except as otherwise indicated, we believe
that the beneficial owners of the common stock listed above, based on
information furnished by such owners, have sole investment and voting power with
respect to such shares, subject to community property laws where applicable.
Beneficial ownership is determined in accordance with the rules of the SEC and
generally includes voting or investment power with respect to securities. Shares
of common stock subject to options, warrants or right or through the conversion
of a security currently exercisable or convertible, or exercisable or
convertible within 60 days, are deemed outstanding for purposes of computing the
percentage ownership of the person holding such option or warrants, but are not
deemed outstanding for purposes of computing the percentage ownership of any
other person. (2) Richard and Vincenza Eppich are
spouses.(3)Marie Cavak and Berge Chatoyan are sister and
brother. (4)Lucy and Venicio De Bortoli are spouses.(5)Arminda and Giuseppe Sorgentone are spouses.

*Less than 1%.

Changes in Control

We are unaware of any contract or other arrangement the
operation of which may at a subsequent date result in a change in control of our
company.

**Item
12.**         
**Certain Relationships and Related Transactions, and Director
Independence.**

Except as disclosed herein, there have been no transactions or
proposed transactions in which the amount involved exceeds the lesser of
$120,000 or one percent of the average of our total assets at year-end for the
last three completed fiscal years in which any of our directors, executive
officers or beneficial holders of more than 5% of the outstanding shares of our
common stock, or any of their respective relatives, spouses, associates or
affiliates, has had or will have any direct or material indirect interest.

During the year ended December 31, 2006, our company paid Nil
to Fiore Aliperti, our President, Chief Executive Officer, Secretary, Treasurer
and director of our company for services he provided to our company.

During the year ended December 31, 2006, our company paid
$5,500 to John R. Poloni, a director of our company for services he provided to
our company.

Committees of the Board

All proceedings of the board of directors for the year from
inception (February 24, 2005) to December 31, 2005 and the six (6) months ending
June 30, 2006, were conducted by resolutions consented to in writing by the
board of

---

- 49 -

directors and filed with the minutes of the proceedings of the
director. Our company currently does not have nominating, compensation or audit
committees or committees performing similar functions nor does our company have
a written nominating, compensation or audit committee charter. Our board of
directors does not believe that it is necessary to have such committees because
it believes that the functions of such committees can be adequately performed by
the board of directors.

Our company does not have any defined policy or procedural
requirements for shareholders to submit recommendations or nominations for
directors. The board of directors believes that, given the stage of our
development, a specific nominating policy would be premature and of little
assistance until our business operations develop to a more advanced level. Our
company does not currently have any specific or minimum criteria for the
election of nominees to the board of directors and we do not have any specific
process or procedure for evaluating such nominees. The board of directors will
assess all candidates, whether submitted by management or shareholders, and make
recommendations for election or appointment.

A shareholder who wishes to communicate with our board of
directors may do so by directing a written request addressed to our president,
Fiore Aliperti, at the address appearing on the first page of this prospectus.

Audit Committee Financial Expert

Our board of directors has determined that we do not have a
board member that qualifies as an "audit committee financial expert" as defined
in Item 401(e) of Regulation S-B, nor do we have a board member that qualifies
as "independent" as the term is used in Item 7(d)(3)(iv)(B) of Schedule 14A
under the Securities Exchange Act of 1934, as amended, and as defined by Rule
4200(a)(14) of the NASD Rules.

We believe that our board of directors is capable of analyzing
and evaluating our financial statements and understanding internal controls and
procedures for financial reporting. The board of directors of our company does
not believe that it is necessary to have an audit committee because management
believes that the functions of an audit committee can be adequately performed by
the board of directors. In addition, we believe that retaining an independent
director who would qualify as an "audit committee financial expert" would be
overly costly and burdensome and is not warranted in our circumstances given the
stage of our development and the fact the we have not generated any positive
cash flows from operations to date.

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

Exhibits required by Item 601 of Regulation
S-B

|Exhibit |                                                                                                                                                                        
|------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description                                                                                                                                                            
|        |                                                                                                                                                                        
|(3)     | (i) Articles of Incorporation; and (ii) Bylaws                                                                                                                         
|        |                                                                                                                                                                        
|3.1     | Articles of Incorporation (incorporated by reference from
      our Form SB-2 filed on November 8, 2006)                                                               
|        |                                                                                                                                                                        
|3.2     | Bylaws (incorporated by reference from our Form SB-2
      filed on November 8, 2006)                                                                                  
|        |                                                                                                                                                                        
|(10)    | Material Contracts                                                                                                                                                     
|        |                                                                                                                                                                        
|10.1    | Employment Agreement with Mr. Poloni (incorporated by
      reference from our Form SB-2 filed on November 8, 2006)                                                    
|        |                                                                                                                                                                        
|10.2    | Employment Agreement with Mr. Aliperti (incorporated by
      reference from our Form SB-2 filed on November 8, 2006)                                                  
|        |                                                                                                                                                                        
|10.3    | Agreement between Raven Resources Inc. and Emporio
      Explorations Corp. (incorporated by reference from our Form SB-2 filed on
      November 8, 2006)             
|        |                                                                                                                                                                        
|10.4    | Agreement between Emporio Explorations Corp. and Sanford
      Exploration (Canada) Inc. (incorporated by reference from our Form SB-2
      filed on November 8, 2006)

---

- 50 -

|(21)  | Subsidiaries                                                                    
|----- | --------------------------------------------------------------------------------
|      |                                                                                 
|21.1  | Sanford Exploration (Canada) Inc.                                               
|      |                                                                                 
|(23)  | Consents                                                                        
|      |                                                                                 
|23.1* | Consent
      of Telford Sadovnick, P.L.L.C.                                    
|      |                                                                                 
|23.2* | Consent
      of Gino Chitaroni, B.Sc.                                          
|      |                                                                                 
|(31)  | Rule 13a-14(a)/15d-14(a) Certifications                                         
|      |                                                                                 
|31.1* | Section
      302 Certification under Sarbanes-Oxley Act of 2002 of Ian McKinnon
|      |                                                                                 
|(32)  | Section 1350 Certifications                                                     
|      |                                                                                 
|32.1* | Section
      906 Certification under Sarbanes-Oxley Act of 2002                

* Filed herewith.

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

Audit Fees

For the period ended December 31, 2006 and 2005, the aggregate
fees billed by Telford Sadovnick P.L.L.C. for professional services rendered for
the audit of our annual consolidated financial statements included in our annual
report on Form 10-KSB were $10,000 and $10,000 respectively.

Audit Related Fees

For the period ended December 31, 2006 and December 31, 2005,
the aggregate fees billed for assurance and related services by Telford
Sadovnick P.L.L.C. relating to the performance of the audit of our financial
statements which are not reported under the caption "Audit Fees" above, was Nil
and Nil, respectively.

Tax Fees

For the period ended December 31, 2006 and December 31, 2005,
the aggregate fees billed by Telford Sadovnick P.L.L.C. for other non-audit
professional services, other than those services listed above, totalled Nil and
Nil, respectively.

We do not use Telford Sadovnick P.L.L.C. for financial
information system design and implementation. These services, which include
designing or implementing a system that aggregates source data underlying the
financial statements or generates information that is significant to our
financial statements, are provided internally or by other service providers. We
do not engage Telford Sadovnick P.L.L.C. to provide compliance outsourcing
services.

Effective May 6, 2003, the Securities and Exchange Commission
adopted rules that require that before Telford Sadovnick P.L.L.C. is engaged by
us to render any auditing or permitted non-audit related service, the engagement
be:

- approved by our audit committee (which consists of our entire board of
  directors); or
- entered into pursuant to pre-approval policies and procedures established
  by the board of directors, provided the policies and procedures are detailed
  as to the particular service, the board of directors is informed of each
  service, and such policies and procedures do not include delegation of the
  board of directors' responsibilities to management.

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The board of directors pre-approves all services provided by
our independent auditors. All of the above services and fees were reviewed and
approved by the board of directors either before or after the respective
services were rendered.

The board of directors has considered the nature and amount of
fees billed by Telford Sadovnick P.L.L.C. and believes that the provision of
services for activities unrelated to the audit is compatible with maintaining
Telford Sadovnick P.L.L.C.s independence.

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SIGNATURES

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

SANFORD EXPLORATION INC.

By: /s/ Fiore Aliperti Fiore Aliperti President, Chief
Executive Officer, Secretary, Treasurer and Director (Principal Executive
Officer, Principal Financial Officer and Principal Accounting Officer) Date:
March 30, 2007

Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.

By: /s/ Fiore Aliperti Fiore Aliperti President, Chief
Executive Officer, Secretary, Treasurer and Director (Principal Executive
Officer, Principal Financial Officer and Principal Accounting Officer) Date:
March 30, 2007

By: /s/ John Poloni John Poloni Director Date:
March 30, 2007

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