U.S. SECURITIES AND
EXCHANGE COMMISSION






WASHINGTON,
D.C. 20549













FORM
10-K/A


(Amendment No.
2)






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, 2009






[   
] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES






EXCHANGE
ACT OF 1934




For the transition period from
      ______ to _______
              
              COMMISSION
      FILE NO. 333-138332
              
              TRILLIANT
      EXPLORATION CORPORATION
              ________________________________________________________________________________
              (Name
      of small business issuer in its charter)
              
              NEVADA                                                                    20-0936313
              ______                                                                        __________
              (State
      or other jurisdiction of
      incorporation                            (I.R.S.
      Employer
              or
      organization)                                                         Identification
      No.)





18851 NE 29th
AVENUE


SUITE
306


AVENTURA,
FLORIDA 33180





(786)
      323-1652
              ______________
              (Issuer's
      telephone number)
              
              Securities
      registered pursuant to Section    Name of each
      exchange on which
              12(b)
      of the
      Act:                         registered:
              NONE





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


COMMON STOCK,
$0.001


(Title of
Class)






1




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






Indicate
by check mark if the registration is a well-known seasoned issuer as defined in
Rule 403 of the Securities Act.  [   ]
Yes   [ X ] No






Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.  [ X ]
Yes   [   ] No






Indicate
by check mark whether the registrant has (i) 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 (ii) has been subject to such filing requirements for the past 90 days. Yes
[X] No [   ]




Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Website, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files).  [   ] Yes   [
X]  No




Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of Regulation S-K is not contained in
this form, and will not 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-K/A or any amendment to this Form 10-K/A. [X]






Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated file, or a smaller reporting company. See
the definitions of “large accelerated filer”, “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.






Large
accelerated filed
[   ]                                                                                  Accelerated
filer [    ]






Non-accelerated
filer
[   ]                                                                                     Smaller
reporting company [X]






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






State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
sold, or the average bid and asked price of such common equity, as of the last
business of the registrant’s most recently completed second fiscal quarter: June
30, 2009 $74,370,537.








2






ISSUERS
INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS






N/A






Check
whether the issuer has filed all documents and reports required to be filed by
Section 12, 13 and 15(d) of the Securities Exchange Act of 1934 after the
distribution of securities under a plan confirmed by a court. Yes[ ] No[
]






APPLICABLE
ONLY TO CORPORATE REGISTRANTS






State the
number of shares outstanding of each of the issuer's classes of common equity,
as of the latest practicable date.






Class
Outstanding as of April 5, 2010 Common Stock, $0.001






DOCUMENTS
INCORPORATED BY REFERENCE






If the
following documents are incorporated by reference, briefly describe them and
identify the part of the Form 10-K/A (e.g., Part I, Part II, etc.) into which
the document is incorporated: (i) any annual report to security holders; (ii)
any proxy or information statement; and (iii) any prospectus filed pursuant to
Rule 424(b) or (c) of the Securities Act of 1933 (the "Securities Act"). The
listed documents should be clearly described for identification purposes (e.g.
annual reports to security holders for fiscal year ended December 24,
1990).






N/A






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


























































3








TRILLIANT
EXPLORATION CORPORATION






Form
10-K/A






INDEX




PageItem      1.
      Business
              6Item      1A.
      Risk FactorsItem      1B.
      Unresolved Staff Comments
              23Item      2.
      Properties
              23Item      3.
      Legal Proceedings
              24Item      4.
      Removed and Reserved
              24Item      5.
      Market for Registrant's Common Equity,  Related
              24Stockholder
      Matters and Issuer Purchases of Equity SecuritiesItem      6.
      Selected Financial Data
              29Item      7.
      Management's Discussion and Analysis of Financial
Condition
              30and
      Results of OperationItem      7A.
      Quantity and Qualitative Disclosure About Market RisksItem      8.
      Financial Statements and Supplemental Data
              36Item      9.
      Changes in and Disagreements With Accountants on
Accounting
              65and
      Financial DisclosureItem      9A.
      Controls and Procedures
              65Item      9B.
      Other Information
              66Item      10.
      Directors, Executive Officers and Corporate Governance
              66Item      11.
      Executive Compensation
              68Item      12.
      Security Ownership of Certain Beneficial Owners and
              71Management
      and Related Stockholder MattersItem      13.
      Certain Relationships and Related Transactions and
              72Director
      IndependenceItem      14.
      Principal Accountant Fees and Services
              76Item      15.
      Exhibits and Financial Statement Schedules
              77
 4





Except
for statements of historical fact, certain information contained herein
constitutes “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements are usually
identified by our use of certain terminology, including “will,” “believes,”
“may,” “expects,” “should,” “seeks,” “anticipates,” or “intends,” or by
discussions of strategy or intentions. Such forward-looking statements involve
known and unknown risks, uncertainties and other factors which may cause our
actual results or achievements to be materially different from any future
results or achievements expressed or implied by such forward-looking statements.
Such factors include, among others, our history of operating losses and
uncertainty of future profitability; our lack of working capital and uncertainty
regarding our ability to continue as a going concern; uncertainty of access to
additional capital; risks inherent in mineral exploration; environmental
liability claims and insurance; dependence on consultants and third parties as
well as those factors discussed in the sections entitled “Risk Factors,” “Business,” and “Management’s Discussion and
Analysis of Financial Condition and Results of Operations.”  If
one or more of these risks or uncertainties materializes, or if underlying
assumptions prove incorrect, our actual results may vary materially from those
expected, estimated, or projected. Forward-looking statements in this document
are not a prediction of future events or circumstances, and those future events
or circumstances may not occur. Given these uncertainties, users of the
information included herein, including investors and prospective investors are
cautioned not to place undue reliance on such forward-looking statements. We do
not assume responsibility for the accuracy and completeness of these
statements.





The
United States Securities and Exchange Commission permits U.S. mining companies,
in their filings with the SEC, to disclose only those mineral deposits that a
company can economically and legally extract or produce. The Company is an
exploration stage company and its properties have no known body of ore. U.S.
investors are cautioned not to assume that the Company has any mineralization
that is economically or legally mineable.





All
references in this Annual Report on Form 10-K/A to the terms “we,” “our,” “us,”
“TTXP,” and the “Company” refer to Trilliant Exploration
Corporation.




AVAILABLE
INFORMATION






Trilliant
Exploration Corporation files annual, quarterly, current reports, proxy
statements, and other information with the Securities and Exchange Commission
(the "Commission"). You may read and copy documents referred to in this Annual
Report on Form 10-K/A that have been filed with the Commission at the
Commission's Public Reference Room, 450 Fifth Street, N.W., Washington, D.C. You
may obtain information on the operation of the Public Reference Room by calling
the Commission at 1-800-SEC-0330. You can also obtain copies of our Commission
filings by going to the Commission's website at http://www.sec.gov.








5


PART I






ITEM 1. BUSINESS






BUSINESS
DEVELOPMENT




Trilliant Exploration Corporation was
incorporated under the laws of the State of Nevada on December 29, 2003 under
the name Project Development Pacific Inc. We were previously engaged in the
business of assisting Canadian citizens to access health care services from
private providers. On November 26, 2007, we changed our name to Trialliant
Exploration Corporation with a business purpose to acquire and develop mineral
properties. During 2007, we began acquiring interests in mining
properties.  As of the date of this Annual Report, we are engaged in
the evaluation, acquisition, exploration, and advancement of mining
projects.





On
October 15, 2008, we entered into an asset purchase agreement (the “Asset
Purchase Agreement”) with Compania Minera Del Pacifico S.A., an Ecuadorian
corporation (“Del Pacifico”) for the purchase of the Muluncay Project.
Subsequently, on March 30, 2009, we entered into a share transfer agreement (the
“Share Transfer Agreement”) with Del Pacifico and its wholly owned subsidiary,
Compania Muluncaygold Corp. S.A. (“Muluncay”).  The Share Transfer
Agreement superseded in its entirety the terms of the Asset Purchase
Agreement.





In
accordance with the terms and provisions of the Share Transfer Agreement, we
acquired 100% of the total issued and outstanding shares of common stock of
Muluncay and its assets, which includes certain customer receivables, foreign
tax credit, equipment, fixtures, improvements, all contracts, operations and
mining rights and interests in certain mining properties located in Muluncay,
Ecuador (the “Controlling Assets”). The total purchase price for the shares of
common stock and Controlling Assets was a $3,600,000 contingent note payable,
which was to be paid in installments and in accordance with a promissory note in
the principal amount of $3,600,000 between us and Muluncay (the “Muluncay
Promissory Note”), which bears interest at 4.5% per annum. Repayment of the
Muluncay Promissory Note was to begin only upon Muluncay reaching production of
400 tons per day in their operation using 26 day average in a 30-day calendar
month (the “Minimum Operations”). Beginning thirty days from the date of first
reaching Minimum Operations, we were to make four quarterly payments to Pacifico
of $200,000 each. After making the first four quarterly payments, we were to
continue to make quarterly payments in the minimum amount of $300,000 until all
principal and interest in fully paid. As additional consideration for the
purchase of Muluncay, we released Del Pacifico from a debt due and owing to us
in the principal amount of $1,195,000 plus interest.





In
further accordance with the terms and provisions of the Share Transfer
Agreement, we also agreed to transfer to Muluncay an aggregate of $1,800,000 as
follows: (i) an initial payment of $800,000 within ninety day of March 30, 2009;
and (ii) the balance of $1,000,000 within 180 days of March 30,
2009.





Effective
December 31, 2009, Del Pacifico terminated the agreement due to our inability to
provide the $1,800,000 investment pursuant to the contract
terms.  Thus, we determined to discontinue operations through our
Muluncay subsidiary. We were released from all obligations and released all
claims on the Controlling Assets primarily because we had incurred significant
operating losses since acquisition and we could not attract operating capital to
meet contractual obligations since the acquisition of Muluncay. See “ – Current
Business Operations.”







6


Subsidiaries





Muluncaygold





Muluncaygold
was originally incorporated in Machala, Ecuador in February of 2007 as Compania
Minera Ecuadorgold Corp S.A.  In August of 2008, it changed its name
to Compania Minera Muluncaygold Corp S.A.   In accordance with
the terms and provisions of the Share Transfer Agreement, we acquired 100% of
the total issued and outstanding shares of common stock of Muluncay, including
the Controlling Assets, for an aggregate purchase price of
$3,600,000.  As a result of the Share Transfer Agreement, Muluncay
became our wholly-owned subsidiary. During fiscal year we conducted all of our
mining operations through Muluncay.  However, effective December 31,
2009, Muluncay is no longer our subsidiary, as the Share Transfer Agreement was
terminated due to our inability to meet contractual obligations.





Trilliant Diamonds Limited





On July 1, 2009, we obtained a one hundred
percent (100%) undivided interest in Trilliant Diamonds Limited (“Trilliant
Diamonds”), a company formed under the laws of England and
Wales.  Trilliant Diamonds was formed on June 30, 2009 for the purpose
of conducting our diamond exploration projects. On July 1, 2009, Trilliant
Diamonds entered into a subscription agreement (the “Global Diamond Subscription
Agreement”) with Global Diamond Resources PLC “Global Diamond”). In accordance
with the terms and provisions of the Global Diamond Subscription Agreement,
Trilliant Diamonds purchased 10,000,000 common shares of the capital stock of
Global Diamond in consideration for payment of £0.15 per share for an aggregate
purchase price of £1,500,000 Great Britain Pounds (GBP). After the acquisition
by Trilliant Diamonds of the 10,000,000 shares of stock of Global Diamond,
Triliiant Diamond held ten percent (10%) of the total outstanding capital shares
of Global Diamond. Simultaneously, on July 1, 2009, we entered into a
convertible debenture and loan note certificate (the “Benbrack Convertible
Note”) with Benbrack Charkit Limited (“Benbrack”), pursuant to which we borrowed
from Benbrack the principal amount of £1,500,000 GBP at an annual interest rate
of 12%. The proceeds from the Benbrack Convertible Note were used for the
acquisition by Trilliant Diamonds of the 10,000,000 common shares of Global
Diamond.  See “Material Commitment”).





Compania Minera Ayapambagold
S.A.





On July
1, 2009, we entered into a stock purchase agreement (the “Ayapambagold Stock
Purchase Agreement”) with William Magers (“Magers”). In accordance with the
terms and provisions of the Ayapambagold Stock Purchase Agreement, we purchased
799 of the 800 shares of outstanding capital stock of Compania Minera
Ayapambagold S.A. (“Ayapambagold”) from Magers at a purchase price of $799.
Ayapambagold is a company organized and existing under the laws of Ecuador and
has no assets or operations. We acquired Ayapambagold to use as a holding
company in Ecuador to facilitate future potential acquisitions.





7


Bozel
S.A.




On
September 8, 2009, we entered into a purchase agreement (the “Wellgate
Agreement”) with Wellgate International Limited, a company registered under the
laws of the British Virgin Islands (“Wellgate”), regarding acquisition by us of
all of the shares of stock held of record by Wellgate of Bozel S.A.
(“Bozel”).  Bozel is a company organized under the laws of Luxembourg.
In accordance with the terms and provisions of the Wellgate Agreement, we were
to purchase up to 100% of the outstanding capital stock of Bozel in
consideration for payment of $80,000,000 of our common stock. It was disclosed
in the Wellgate Agreement that Wellgate was the subject of a judgment in the
amount of $8,572,995 (the “Wellgate Judgment”). In further accordance with the
terms and provisions of the Wellgate Agreement, we were to advance to Bozel
$20,000,000 for a term of one year at an interest rate not to exceed 14% per
annum. Consummation of the Wellgate Agreement was subject to us acquiring not
less than 66% of the issued capital stock of Bozel after the exercise of
outstanding warrants for Bozel’s common stock and completion of due diligence,
including the status of the Wellgate Judgment.




On
September 24, 2009, the Eastern Caribbean Supreme Court in the Virgin Islands,
acting in the case of Crastvell Trading Limited v.
Wellgate International Limited issued an ex parte order temporarily
enjoining Wellgate from transferring to us its shares of Bozel. Subsequently,
Wellgate filed a response to the injunction with the Eastern Caribbean Supreme
Court seeking dissolution of the injunction based upon false and misleading
information provided to the Eastern Caribbean Supreme Court and a $65,000,000
counterclaim as well as other substantive and procedural
objections.





On
December 5, 2009, we terminated the Wellgate Agreement entirely based upon the
inability of Wellgate to perform its obligations under the Wellgate Agreement
due to the injunction. We did not incur any penalties with regard to termination
of the Wellgate Agreement.





Compania Minera Santafemining
S.A.





On July
23, 2009, our wholly-owned subsidiary, Ayapambagold, entered into a share
purchase agreement (the “Santafemining Share Purchase Agreement”) to acquire the
assets and liabilities of Compania Minera Santafemining S.A. (“Santafemining”)
for payment of $1,631,844. An initial payment of $600,000 was required at
execution of the Santafemining Share Purchase Agreement, which could be used to
satisfy any and all claims, liens or encumbrances to title of any shares of
assets to be acquired by Ayapambagold. The remainder of the purchase price was
payable in three installments of $343,948 due on or before each of the six
months, twelve months and eighteen months following the execution date. As of
the date of this Annual Report, the transaction has not yet been completed and
there is no indication that we will be able to secure the necessary financing
and complete the acquisition.  Avapambagold has paid an aggregate of
$0 to Santafemining.








Santafemining processes rock and sand
tailings and has been operating at 80 tons per day since inception in
2007.   Its processing facilities are currently being retrofitted
to add an additional 70 tons of operating capacity.  Santafemining is
located approximately one kilometer from our Muluncay operation.




RECENT
DEVELOPMENTS






Amendment
to Articles of Incorporation





On June
30, 2009, we filed a Certificate of Designation with the Secretary of State of
Nevada, whereby 10,200,000 shares of the 200,000,000 authorized shares of
preferred stock, $0.001 par value per share, were designated as Series I
Preferred Stock, $0.001 par value and having the powers, designations,
preferences, limitations, restrictions and relative rights as set forth in the
Certificate of Designation of Series I Preferred Stock. The Certificate of
Designation was approved by our Board of Directors on June 30,
2009.





On July
1, 2009, pursuant to a unanimous decision of the shareholders of the Series I
Preferred Shares, the designation of the preferred shares were amended as
follows: “Each share of Series I Preferred Stock will be convertible, at the
option of the holder thereof, at any time and from time to time, and without the
payment of additional consideration by the holder thereof, into such number of
fully paid and nonassessable shares of the Corporation’s  Common Stock as
is determined by dividing (i) the Base Amount by (ii) the lowest volume weighted
average price of the securities on the OTCBB, NASDAQ or other exchange or market
on which such Common Stock trades in the five preceding days prior to the
closing of such transaction (the "Series I Conversion
Price").”   The amendment to the Designation of Series I
Preferred Stock was approved by our Board of Directors on July 1, 2009. See
“Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities.”




TRANSFER
AGENT




Our
transfer agent is Island Stock Transfer, 100 Second Avenue South, Suite 705S,
St. Petersburg, Florida 33701.




CURRENT
BUSINESS OPERATIONS




We are
engaged in the evaluation, acquisition, exploration and advancement of mining
projects.  Although we were considered to have exited the
pre-exploration stage with the Muluncay acquisition, the disposal of Muluncay
necessitates that we re-enter the pre-exploration stage effective December 31,
2009.   As of the date of this Annual Report, we are devoting
substantially all of our efforts to the execution of our business operations.
Through fiscal 2009, funding to acquire and explore gold properties and for
operational purposes was acquired through private financings.







8


Muluncay
Project





On March
30, 2009, we entered into the Share Transfer Agreement with Del Pacifico and its
wholly owned subsidiary, Companda Muluncaygold Corp. S.A.
(“Muluncay”).  In accordance with the terms and provisions of the
Share Transfer Agreement, we acquired 100% of the total issued and outstanding
shares of common stock of Muluncay and its Controlling Assets. The total
purchase price for the shares of common stock and Controlling Assets was
$3,600,000, which was to be paid in installments and in accordance with a
promissory note in the principal amount of $3,600,000 between us and Muluncay
(the “Muluncay Promissory Note”). Repayment of the Muluncay Promissory Note
shall begin only upon Muluncay reaching production of 400 tons per day in their
operation using 26 day average in a 30-day calendar month (the “Minimum
Operations”). As additional consideration for the purchase of Muluncay, we
released Del Pacifico from a debt due and owing to us in the principal amount of
$1,195,000 plus interest.





In
further accordance with the terms and provisions of the Share Transfer
Agreement, we also agreed to transfer to Muluncay an aggregate of $1,800,000 as
follows: (i) an initial payment of $800,000 within ninety day of March 30, 2009;
and (ii) the balance of $1,000,000 within 180 days of March 30,
2009.  On December 4, 2009, we were notified by Del Pacifico that we
had been in default of our obligation to provide the $1,800,000 to Muluncay. The
Share Transfer Agreement, which transferred control of Muluncay from Del
Pacifico to us, required that we invest $1,800,000 in Muluncay within 180 days
of the March 30, 2009 effective date of the Share Purchase
Agreement.  As of the date of this Annual Report, we have transferred
approximately $735,000 under the terms and provisions of the Share Purchase
Agreement.





As of
December 11, 2009, we were in default for the purchase of Muluncay. We received
a letter on February 11, 2010 in which Del Pacifico informed us of its intent to
enforce its rights under the Share Transfer Agreement and terminated all
contractual agreements between us and Del Pacifico effective December 31, 2009.
In the interest of our shareholders and lacking financial funds to further
pursue contractual agreements with Del Pacifico, we acknowledged the letter from
Del Pacifico and released all claims on the Controlling Assets and rights under
the terms of the Share Purchase Agreement.





Effective
December 31, 2009, we determined to discontinue operations through our Muluncay
subsidiary. We were released from all obligations and released all claims on the
Controlling Assets primarily because we had incurred significant operating
losses since acquisition and we could not attract operating capital to meet
contractual obligations since the acquisition of Muluncay. On December 31, 2009,
we completed the loss recognition for a total loss of $1,964,636. See “Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of
Operation.”





Operations





Mining
operations at the Muluncay Project produced 28-30 tons per day. The ore was
transported from the mine through one ton rail cars, and was fed into three
Chilean Mills, which feed into a cyanidation process and on to an activated
carbon system.  The ore was then processed into gold granules and
melted, netting approximately 95-96% pure gold. The Chilean Mills are cleaned
once a week and go through an amalgamation process using Mercury netting on
average 150 -180 grams of pure gold weekly.  The Muluncay Project had
been averaging approximately 4 kilos of gold per month total.





9


On
October 2, 2009, we were notified that an extrajudicial complaint was executed
regarding foreclosure of the mortgage on the property comprising our Ecuadorian
operations, including the Muluncay gold mine.  The letter, which was
served Del Pacifico on October 8, 2009, stated that if the over due installments
due March 10, 2009, June 10, 2009 and September 11, 2009 were not remitted
within 72 hours, the necessary documents to reverse the sale should be
executed.





On
October 12, 2009, we secured a $210,000 loan by entering into a securities
purchase agreement and redeemable debenture (the “$210,000 Loan”) with one of
our major stockholders, Trafalgar Capital Specialized Investment Fund
(“Trafalgar”).  Proceeds of the $210,000 Loan were used to pay the
past due mortgage payments. See “Item 7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations.”





Description and Location





The
Muluncaygold concession lies in the centre of the Portovelo-Zaruma mining camp,
which is found in the cantons of Ayapamba and Paccha, Province of El Oro,
southern Ecuador. It is centered at Latitude 03o 36’ 30” South and Longitude
79o40’ west. It covers an area of 374 hectares.  Muluncaygold assets
include all contracts, mining equipment, and operations as follows:





Asociacion
de Mineros Autonomos Muluncay area, Code 338, along with an ore reduction and
processing plant together with seven mines:





1.           MARI
JANE (BUENA ESPERANZA)


2.           JACETH
ETHAN (EL AGUACATE)


3.           LA
CHONTA Y LOS QUINDE


4.           NARANJITO


5.           SEÑOR
DE LA DIVINA JUSTICIA


6.           LAS
CAÑAS


7.           LOS
OSOS





Table 1 – Muluncay Boundary
Coordinates





Easting
      – m
            
            Northing
      – m652000
            
            9599400653100
            
            95994007653100
            
            9596800651600
            
            9596800651600
            
            9599000652000
            
            9599000652000
            
            9599400





The
project is situated about 175 kilometers southeast and 60 kilometers east of the
major Pacific port cities of Guayaquil and Machala, respectively. It lies on the
western slope of the Andes Mountains, part of the Western Cordillera which runs
the length of the west coast of North and South
America.





10


Country Dynamics





Although
gold has been mined in Ecuador for hundreds of years it is one of the least
explored and least mineralogical mapped countries.  Ecuador is the
only Latin American country without industrial mining operations.  In
2008 Ecuador underwent far-reaching mining industry changes wherein 75% of the
country’s mining concessions were cancelled, and mining licenses were suspended
through January of 2009. The industry changes enable for-profit companies with
access to outside capital to consolidate the industry.  The newly
enacted Ecuador mining law, which is attached to this Current Report on Form 8-K
as Exhibit 10.6, include a requirement to process 100 tons/day of material and
to increase tailing plant coverage to improve environmental
conditions.





Principal Products





In the
event we are successful in mining and producing gold, we will generally sell our
gold at the prevailing market price during the month in which the gold is
delivered to the customer. We will recognize revenue from a sale when the price
is determinable, the gold has been delivered, the title has been transferred to
the customer and collection of the sales price is reasonably
assured.





Gold Uses. Gold has two main
categories of use: fabrication and investment. Fabricated gold has a variety of
end uses, including jewelry, electronics, dentistry, industrial and decorative
uses, medals, medallions and official coins. Gold investors buy gold bullion,
official coins and jewelry.





Gold Supply. The supply of
gold consists of a combination of current production from mining and the
draw-down of existing stocks of gold held by governments, financial
institutions, industrial organizations and private individuals.





Gold Price. The following
table presents the annual high, low and average afternoon fixing prices for gold
over the past ten years, expressed in US dollars per ounce, on the London
Bullion Market.





Gold Price (USD) on the
              London Bullion MarketYear
            
            High
            
            
            Low
            
            
            Average1999
            
            $
            326
            
            
            $
            253
            
            
            $
            2792000
            
            
            313
            
            
            
            264
            
            
            
            2792001
            
            
            293
            
            
            
            256
            
            
            
            2712002
            
            
            349
            
            
            
            278
            
            
            
            3102003
            
            
            416
            
            
            
            320
            
            
            
            3632004
            
            
            454
            
            
            
            375
            
            
            
            4102005
            
            
            536
            
            
            
            411
            
            
            
            4442006
            
            
            725
            
            
            
            525
            
            
            
            6042007
            
            
            841
            
            
            
            608
            
            
            
            6952008
            
            
            1,011
            
            
            
            713
            
            
            
            8722009
      (Through March 10, 2009)
            
            
            990
            
            
            
            810
            
            
            
            902





Source:
London Metal Exchange





.


11





Employees





As of the
date of this Annual Report, we employ five full time equivalents (FTEs) in the
United States, and approximately one hundred in Ecuador.





Government
Regulation





Mining
operations and exploration activities are subject to various national, state,
provincial and local laws and regulations which govern prospecting, development,
mining, production, exports, taxes, labor standards, occupational health, waste
disposal, protection of the environment, mine safety, hazardous substances and
other matters.  Upon acquisition of Muluncaygold, we will have
obtained or have pending applications for those licenses, permits or other
authorizations required to conduct our exploration and other programs. We
believe that we will be in compliance in all material respects with applicable
mining, health, safety and environmental statutes and the regulations passed
thereunder in the jurisdictions in which we will operate.  See “Item
1A. Risk Factors”.





Environmental
Regulation





Our gold
projects are subject to various federal, state and local laws and regulations
governing protection of the environment. These laws are continually changing
and, in general, are becoming more restrictive. Our policy is to conduct
business in a way that safeguards public health and the environment. We believe
that our operations are in material compliance with applicable laws and
regulations.





Changes
to current local, state or federal laws and regulations in the jurisdictions
where we operate could require additional capital expenditures and increased
operating and/or reclamation costs. Although we are unable to predict what
additional legislation, if any, might be proposed or enacted, additional
regulatory requirements could impact the economics of our planned projects.
We estimate that we will not incur material capital expenditures for
environmental control facilities during the current fiscal year.





Competition





We
compete with other mining companies in connection with the acquisition,
exploration, financing and development of gold properties. There is competition
for the limited number of gold acquisition and exploration opportunities, some
of which is with other companies having substantially greater financial
resources than we have. As a result, we may have difficulty acquiring attractive
gold projects at reasonable prices. We also compete with other mining companies
for mining engineers, geologists and other skilled personnel in the mining
industry and for exploration and development equipment.





We
believe no single company has sufficient market power to affect the price or
supply of gold in the world market.




12


ITEM 1A. RISK FACTORS






An
investment in our common stock involves a number of very significant risks. You
should carefully consider the following risks and uncertainties in addition to
other information in evaluating our company and its business before purchasing
shares of our common stock. Our business, operating results and financial
condition could be seriously harmed due to any of the following risks. The risks
described below are all of the material risks that we are currently aware of
that are facing our company. Additional risks not presently known to us may also
impair our business operations. You could lose all or part of your investment
due to any of these risks.






RISKS
RELATED TO OUR BUSINESS




We
may need additional financing to expand our business plan.





Our
business plan calls for substantial investment and cost in connection with the
exploration of our mineral properties.  While we believe we have
sufficient funds to carry out our current plans, unforeseen expenses, an
expanded exploration plan or establishing future mining operations could require
additional operating capital.  We do not currently have any
arrangements for additional financing and we can provide no assurance to
investors that we will be able to find additional financing if
required.  Obtaining additional financing would be subject to a number
of factors, including market prices for minerals, investor acceptance of our
properties, and investor sentiment.   These factors may make the
timing, amount, terms or conditions of additional financing unfavorable to
us.  The most likely source of future funds would be through the sale
of additional equity capital and loans.  Any sale of additional shares
will result in dilution to existing stockholders while incurring additional debt
will result in encumbrances on our property and future cash flows.





Because
there is no assurance when we will generate revenues, we may deplete our cash
reserves and not have sufficient outside sources of capital to complete our
exploration or mining programs.





To date
we have been involved primarily in financing activities, acquisition activities,
and limited exploration activities.  Before discontinuation of
operations, our only anticipated revenue producing properties comprised the
Muluncay Project.  These revenue producing properties have been
virtually exhausted of high grade ore to a depth of 200 meters, and there has
been no drilling to test the depth potential of the mining system. Our inability
to generate revenues could eventually inhibit our ability to continue in
business or achieve our business objectives.





Exploration
for natural resources is a speculative venture involving substantial
risk.  Hazards such as unusual or unexpected geological formations and
other conditions often result in unsuccessful exploration
efforts.  Success in exploration is dependent upon a number of factors
including, but not limited to, quality of management, quality and availability
of geological expertise and availability of exploration capital.  Due
to these and other factors, no assurance can be given that our exploration
programs will result in the discovery of new mineral reserves or
resources.





13


Gold
prices are volatile and there can be no assurance that a profitable market for
gold will exist.





The gold
mining industry is intensely competitive, and there is no assurance that, even
if we discover commercial quantities of gold mineral resources, a profitable
market will exist for the sale of those resources.  There can be no
assurance that gold prices will remain at such levels or be such that we can
mine at a profit.  Factors beyond our control may affect the
marketability of any minerals discovered.  Gold prices are subject to
volatile changes resulting from a variety of factors including international
economic and political trends, expectations of inflation, global and regional
supply and demand and consumption patterns, metal stock levels maintained by
producers and others, the availability and cost of metal substitutes, currency
exchange fluctuations, inflation rates, interest rates, speculative activities
and increased production due to improved mining and production
methods.





Uncertainty
involved in mining.





Mining
involves various types of risks and hazards, including environmental hazards,
unusual or unexpected geological operating conditions such as rock bursts,
structural cave-ins or slides, flooding, earthquakes and fires, labor
disruptions, industrial accidents, metallurgical and other processing problems,
metal losses, and periodic interruptions due to inclement or hazardous weather
conditions.  These risks could result in damage to, or destruction of,
mineral properties, production facilities or other properties, personal injury,
environmental damage, delays in mining, increased production costs, monetary
losses, and possible legal liability.





We may
not be able to obtain insurance to cover these risks at economically feasible
premiums.  Insurance against certain environmental risks, including
potential liability for pollution or other hazards as a result of the disposal
of waste products occurring from production, is not generally available to us or
to other companies within the mining industry.  We may suffer a
material adverse effect on our business if we incur losses related to any
significant events that are not covered by our insurance policies.





Calculation
of mineral resources and metal recovery is only an estimate, and there can be no
assurance about the quantity and grade of minerals until resources are actually
mined.





The
calculation of reserves, resources and corresponding grades being mined or
dedicated to future production are imprecise and depend on geological
interpretation and statistical inferences or assumptions drawn from drilling and
sampling analysis, which might prove to be unpredictable.  Mineral
resources that are not mineral reserves do not have demonstrated economic
viability.  Until reserves or resources are actually mined and
processed, the quantity of reserves or resources and grades must be considered
as estimates only.  Any material change in the quantity of reserves,
resources, grade or stripping ratio may affect the economic viability of our
properties.  In addition, there can be no assurance that metal
recoveries in small-scale laboratory tests will be duplicated in larger scale
tests under on-site conditions or during production.





Ouroperations involve
exploration and development and there is no guarantee that any such activity
will result in commercial production of mineral deposits.





14


Gold
deposits have been nearly exhausted within 200 meters of the surface on the
properties we originally intended to mine before discontinuation of
operations.  There has been no drilling to test the depth potential of
commercial ore on these properties, and proposed programs on such properties are
exploratory in nature.  Development of these mineral properties is
contingent upon obtaining satisfactory exploration results.  Mineral
exploration and development involve substantial expenses and a high degree of
risk, which even a combination of experience, knowledge and careful evaluation
may not be able to adequately mitigate.  There is no assurance that
additional commercial quantities of ore will be discovered on our exploration
properties.  There is also no assurance that, even if commercial
quantities of ore are discovered, a mineral property will be brought into
commercial production, or if brought into production, that it will be
profitable.  The discovery of mineral deposits is dependent upon a
number of factors including the technical skill of the exploration personnel
involved. The commercial viability of a mineral deposit is also dependent upon,
among a number of other factors, its size, grade and proximity to
infrastructure, current metal prices, and government regulations, including
regulations relating to royalties, allowable production, importing and exporting
of minerals, and environmental protection.   Most of the above factors
are beyond our control.





Competition
for new mining properties may prevent us from acquiring interests in additional
properties or mining operations.





Significant and increasing competition
exists for mineral acquisition opportunities throughout the
world.  Some of the competitors are large, more established mining
companies with substantial capabilities and greater financial resources,
operational experience and technical capabilities than us. As a result of the
competition, we may be unable to acquire rights to exploit additional attractive
mining properties on terms we consider acceptable.  Increased
competition could adversely affect our ability to attract necessary capital
funding or acquire any interest in additional operations that would yield
reserves or result in commercial mining operations.





Recent
high metal prices have encouraged increased mining exploration, development and
construction activity, which has increased demand for, and cost of, exploration,
development and construction services and equipment.





Recent
increases in gold prices have led to increases in mining exploration,
development and construction activities, which have resulted in higher demand
for, and costs of, exploration, development and construction services and
equipment.  Increased demand for services and equipment could cause
project costs to increase materially, resulting in delays if services or
equipment cannot be obtained in a timely manner due to inadequate availability,
and increase potential scheduling difficulties and cost increases due to the
need to coordinate the availability of services or equipment, any of which could
materially increase project exploration, development and construction costs
and/or result in project delays.





Actual
capital costs, operating costs, production and economic returns may differ
significantly from those we have anticipated and there can be no assurance that
any future development activities will result in profitable mining
operations.





Capital
and operating costs, production and economic returns, and other estimates
contained in the feasibility studies for our projects may differ significantly
from those anticipated by our current studies and estimates, and there can be no
assurance that our actual capital and operating costs will not be higher than
currently anticipated.  In addition, delays to construction schedules
may negatively impact the net present value and internal rates of return of our
mineral properties as set forth in the applicable feasibility
studies.





15


Recently
enacted Ecuadorian mining law requires the mining concession to produce 100 tons
per day





Recent
Ecuadorian mining law requires mining output in excess of what our mine
currently produces.  While we expect to be fully compliant with
Ecuador law within the window of time provided by such law, there is no
guarantee that we will become compliant.  Our failure to become
compliant with Ecuador mining law within the prescribed time will be detrimental
to us.





There
can be no assurance that the interests held by us in our properties is free from
defects.





We
investigated the rights to explore and exploit the Muluncay properties, and, to
the best of our knowledge, believed those rights were in good standing. As of
the date of this Annual Report, operations have been discontinued through
Muluncay. In the event we acquire subsequent interests and rights, no guarantee
can be given that such rights will not be revoked or significantly altered to
our detriment. There can also be no guarantee that our rights will not be
challenged or impugned by third parties.  The properties may be
subject to prior recorded and unrecorded agreements, transfers or claims, and
title may be affected by, among other things, undetected defects.  A
successful challenge to the precise area and location of these claims could
result in our inability to operate on these properties as permitted or being
unable to enforce any rights with respect to our properties.





We
are exposed to risks of changing political stability and government regulation
in the country in which it intends to operate.





Any
potential mining rights in Ecuador that we acquire may be affected in varying
degrees by political instability, government regulations relating to the mining
industry and foreign investment therein, and the policies of other nations in
respect of Ecuador.  Any changes in regulations or shifts in political
conditions are beyond our control and may adversely affect its
business.  Our operations may be affected in varying degrees by
government regulations, including those with respect to restrictions on
production, price controls, export controls, income taxes, expropriation of
property, employment, land use, water use, environmental legislation and mine
safety.  The regulatory environment is in a state of continuing
change, and new laws, regulations and requirements may be retroactive in their
effect and implementation.  Our operations may also be affected in
varying degrees by political and economic instability, economic or other
sanctions imposed by other nations, terrorism, military repression, crime,
extreme fluctuations in currency exchange rates and high inflation.





We
are subject to substantial environmental and other regulatory requirements and
such regulations are becoming more stringent. Non-compliance with such
regulations, either through current or future operations or a pre-existing
condition could materially adversely affect us.





16


All
phases of our operations are subject to environmental regulations in the
jurisdiction in which it operates.  Environmental legislation is
evolving in a manner that will require stricter standards and enforcement,
increased fines and penalties for non-compliance, more stringent environmental
assessments of proposed projects and a heightened degree of responsibility for
companies and their officers, directors, and employees.  There can be
no assurance that future changes in environmental regulation, if any, will not
be materially adverse to our operations.





The
mining properties may contain environmental hazards, which are presently unknown
to us and which have been caused by previous or existing owners or operators of
the properties.  If these properties do contain such hazards, this
could lead to our inability to use the properties or may cause us to incur costs
to clean up such hazards.  In addition, we could find ourselves
subject to litigation should such hazards result in injury to any
persons.





Government
approvals and permits are sometimes required in connection with mining
operations.  Although we believe we will obtain all of the material
approvals and permits to carry on its operations, we may require additional
approvals or permits or may be required to renew existing approvals or permits
from time to time.  Obtaining or renewing approvals or permits can be
a complex and time-consuming process.  There can be no assurance that
we will be able to obtain or renew the necessary approvals and permits on
acceptable terms, in a timely manner, or at all.  To the extent such
approvals are required and not obtained; we may be delayed or prohibited from
proceeding with planned exploration, development or mining of mineral
properties.





Failure
to comply with applicable laws, regulations and permitting requirements may
result in enforcement actions thereunder, including orders issued by regulatory
or judicial authorities, which may require operations to cease or be curtailed,
or corrective measures requiring capital expenditures, installation of
additional equipment, or remedial actions.  Parties engaged in mining
operations may be required to compensate those suffering loss or damage by
reason of the mining activities and may have civil or criminal fines or
penalties imposed for violations of applicable laws or regulations.





Amendments
to current laws, regulations and permits governing operations and activities of
mining companies, or more stringent implementation of such requirements could
have a material adverse impact on us and cause increases in capital expenditures
or production costs or reductions in levels of production at producing
properties or require abandonment or delays in development of new mining
properties.





We
Are a New Entrant Into the Gold Mining and Development Industry Without
Profitable Operating History.





Since
inception, our activities have been limited to organizational efforts, obtaining
working capital, acquiring and subsequently terminating the Muluncay Project,
and consummating the acquisition of various agreements. As a result, there is
limited information regarding property related production potential or revenue
generation potential.





The
business of gold exploration and development and mining is subject to many risks
and if gold is found in economic production quantities, the potential
profitability of future possible gold ventures depends upon factors beyond our
control. The potential profitability of gold properties if economic quantities
are found is dependent upon many factors and risks beyond our control,
including, but not limited to: (i) unanticipated ground conditions; (ii)
geological problems; (iii) mining and other processing problems; (iv) the
occurrence of unusual weather or operating conditions and other force majeure
events; (v) lower than expected gold finds; (vi) accidents; (vii) delays in the
receipt of or failure to receive necessary government permits; (viii) delays in
transportation; (ix) labor disputes; (x) government permit restrictions and
regulation restrictions; (xi) unavailability of materials and equipment; and
(xii) the failure of equipment to operate in accordance with specifications or
expectations.





17


We
have a limited operating history and have not generated a profit since
inception; consequently our long term viability cannot be assured.





Our
prospects for financial success are difficult to forecast because we have a
limited operating history. Our prospects for financial success must be
considered in light of the risks, expenses and difficulties frequently
encountered by mining companies initiating exploration of unproven
properties.  Our business could be subject to any or all of the
problems, expenses, delays and risks inherent in the establishment of a gold and
silver exploration enterprise, including limited capital resources, possible
delays in mining explorations and development, failure to identify commercially
viable gold or silver deposits, possible cost overruns due to price and cost
increases in exploration and ore processing, uncertain gold and silver market
prices, inability to accurately predict mining results and attract and retain
qualified employees.  Therefore, there can be no assurance that our
exploration or mining will be successful, that we will be able to achieve or
maintain profitable operations or that we will not encounter unforeseen
difficulties that may deplete our capital resources more rapidly than
anticipated.





We
Have a History of Operating Losses and There Can Be No Assurance We Will Be
Profitable in the Future.





We have a
history of operating losses, expect to continue to incur losses, and may never
be profitable; thus, we must re-enter the pre-exploration stage effective
December 31, 2009. Further, we have been dependent on sales of our equity
securities and debt financing to meet our cash requirements. We have incurred
losses totaling $3,557,566 from December 29, 2003 (inception) to December 31,
2009. During the year ended December 31, 2009, we incurred losses of $3,361,445.
Further, we do not expect positive cash flow from operations in the near term.
There is no assurance that actual cash requirements will not exceed our
estimates. In particular, additional capital may be required in the event that:
(i) the costs to acquire additional properties are more than we currently
anticipate; (ii) mining and completion costs for additional properties increase
beyond our expectations; or (iii) we encounter greater costs associated with
general and administrative expenses or offering costs.





Our
development of and participation in what could evolve into an increasing number
of gold prospects may require substantial capital expenditures. The uncertainty
and factors described throughout this section may impede our ability to
economically find, develop, produce, and acquire gold properties. As a result,
we may not be able to achieve or sustain profitability or positive cash flows
from operating activities in the future.





18


We
Have Received a Going Concern Opinion From Our Independent Registered Public
Auditors’ Report Accompanying Our December 31, 2009 and December 31, 2008
Financial Statements.





The
independent registered public auditor's report accompanying our December 31,
2009 and 2008 audited financial statements contains an explanatory paragraph
expressing substantial doubt about our ability to continue as a
going  concern. The financial statements have been prepared "assuming
that the Company will continue as a going concern." Our ability to continue as a
going concern is dependent on raising additional capital to fund our operations
and ultimately on generating future profitable operations. There can be no
assurance that we will be able to raise sufficient additional capital or
eventually have positive cash flow from operations to address all of our cash
flow needs. If we are not able to find alternative sources of cash or generate
positive cash flow from operations, our business and shareholders will be
materially and adversely affected





We may need additional capital to
accomplish our exploration and development plans, and there can be no assurance
that financing will be available on terms acceptable to us or at all.





The
exploration and development of mining properties, including the continued
exploration and development of any proposed projects and the construction of
mining facilities and operations may require substantial additional
financing.  Failure to obtain sufficient financing, or financing on
terms acceptable to us, may result in a delay or indefinite postponement of
exploration, development or production on any or all properties we may obtain,
or even a loss of an interest in a property.  The only source of funds
now available to us is through the sale of debt or equity capital, properties,
royalty interests or the entering into of joint ventures or other strategic
alliances in which the funding sources could become entitled to an interest in
properties or projects we may obtain.  Additional financing may not be
available when needed or if available, the terms of such financing might not be
favorable to us and might involve substantial dilution to existing
shareholders.  If financing involves the issuance of debt, the terms
of the agreement governing such debt could impose restrictions on our operation
of our business.  Failure to raise capital when needed would have a
material adverse effect on our business, financial condition and results of
operations.





We are exposed to risks of changing
labor and employment regulations.





Production
at its mining operations is dependent upon the efforts of mining
employees.  In addition, employee relations may be affected by changes
in the scheme of labor relations that may be introduced by the relevant
governmental authorities in whose jurisdictions we carry on
business.  Changes in such legislation or in the relationship between
us and our employees may have a material adverse effect on our business, results
of operations and financial condition.





Our
operations are subject to the laws of Ecuador.





Our
Muluncay Project operates through a foreign company, and substantially all of
our assets are held through such foreign entity.  Accordingly, any
governmental limitation on the transfer of cash or other assets between us and a
foreign subsidiary could restrict our ability to fund our operations
efficiently.  Any such limitations or the perception that such
limitations may exist now or in the future could have an adverse impact on our
prospects, financial condition and results of operations.





19


We
rely on our management and key personnel, and there is no assurance that such
persons will remain with us or that we will be able to recruit skilled
individuals.





We rely
heavily on our existing management. We do not maintain "key man" insurance.
Recruiting and retaining qualified personnel is critical to our
success.  The number of persons skilled in the acquisition,
exploration and development of mining properties is limited and competition for
the services of such persons is intense.  As our business activity
grows, it may require additional key financial, administrative, technical and
mining personnel.  Although we believe that we will be successful in
attracting and retaining qualified personnel, there can be no assurance of such
success.  The failure to attract such personnel to manage growth
effectively could have a material adverse effect on our business, prospects,
financial conditions and results of operations.





Our
Officers and Directors May be Subject to Conflicts of Interest.





Certain
of our officers and directors at times may only part time and can become subject
to conflicts of interest. Some devote part of their working time to other
business endeavors, including consulting relationships with other entities, and
has responsibilities to these other entities. Such conflicts include deciding
how much time to devote to our affairs, as well as what business opportunities
should be presented to us. Because of these relationships, our officers and
directors could be subject to conflicts of interest. Currently, we have no
policy in place to address such conflicts of interest.





Nevada
Law and Our Articles of Incorporation May Protect our Directors From Certain
Types of Lawsuits.





Nevada
law provides that our officers and directors will not be liable to us or our
stockholders for monetary damages for all but certain types of conduct as
officers and directors. Our Bylaws permit us broad indemnification powers to all
persons against all damages incurred in connection with our business to the
fullest extent provided or allowed by law. The exculpation provisions may have
the effect of preventing stockholders from recovering damages against our
officers and directors caused by their negligence, poor judgment or other
circumstances. The indemnification provisions may require us to use our limited
assets to defend our officers and directors against claims, including claims
arising out of their negligence, poor judgment, or other
circumstances.





RISKS
RELATED TO OUR COMMON STOCK





Sales
of a Substantial Number of Shares of Our Common Stock Into the Public Market by
Certain Stockholders May Result in Significant Downward Pressure on the Price of
Our Common Stock and Could Affect Your Ability to Realize the Current Trading
Price of Our Common Stock.





Sales of
a substantial number of shares of our common stock in the public market by
certain stockholders could cause a reduction in the market price of our common
stock.  As of the date of this Annual Report, we have 93,131,500
shares of common stock issued and outstanding.





20


As of the
date of this Annual Report, there are 41,564,000 outstanding shares of our
common stock that are restricted securities as that term is defined in Rule 144
under the Securities Act of 1933, as amended (the “Securities Act”). Although
the Securities Act and Rule 144 place certain prohibitions on the sale of
restricted securities, restricted securities may be sold into the public market
under certain conditions. Further, as of the date of this Annual Report, there
are an aggregate of 10,150,000 whole warrants outstanding. See “Item 5. Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities.”





Any
significant downward pressure on the price of our common stock as the selling
stockholders sell their shares of our common stock could encourage short sales
by the selling stockholders or others. Any such short sales could place further
downward pressure on the price of our common stock.





The
Trading Price of Our Common Stock on the OTC Bulletin Board Will Fluctuate
Significantly and Stockholders May Have Difficulty Reselling Their
Shares.





As of the
date of this Annual Report, our common stock trades on the Over-the-Counter
Bulletin Board. There is a volatility associated with Bulletin Board securities
in general and the value of your investment could decline due to the impact of
any of the following factors upon the market price of our common stock: (i)
disappointing results from our exploration or development efforts; (ii) failure
to meet our revenue or profit goals or operating budget; (iii) decline in demand
for our common stock; (iv) downward revisions in securities analysts' estimates
or changes in general market conditions; (v) technological innovations by
competitors or in competing technologies; (vi) lack of funding generated for
operations; (vii) investor perception of our industry or our prospects; and
(viii) general economic trends; and (ix) commodity price
fluctuation





In
addition, stock markets have experienced price and volume fluctuations and the
market prices of securities have been highly volatile. These fluctuations are
often unrelated to operating performance and may adversely affect the market
price of our common stock. As a result, investors may be unable to sell their
shares at a fair price and you may lose all or part of your
investment.





Additional
Issuance of Equity Securities May Result in Dilution to Our Existing
Stockholders.





Our
Articles of Incorporation, as amended, authorize the issuance of 1,000,000,000
shares of common stock and 200,000,000 shares of preferred stock. The Board of
Directors has the authority to issue additional shares of our capital stock to
provide additional financing in the future and the issuance of any such shares
may result in a reduction of the book value or market price of the outstanding
shares of our common stock. If we do issue any such additional shares, such
issuance also will cause a reduction in the proportionate ownership and voting
power of all other stockholders. As a result of such dilution, your
proportionate ownership interest and voting power will be decreased accordingly.
Further, any such issuance could result in a change of control.


.


As at
December 31, 2008, there were $1,300,000 of debentures outstanding, which
debentures are convertible into common shares at a conversion price equal to the
lesser of: (a) an amount equal to one hundred  percent (100%) of the
Volume Weighted Average Price (“VWAP”) as quoted by Bloomberg L.P. on October
15, 2008, or (b) an amount equal to eighty-five percent (85%)  of the
lowest daily closing VWAP as quoted by Bloomberg L.P. during the five (5)
trading days immediately preceding the conversion date.  During the
life of the debentures, the holders of such securities are given an opportunity
to profit from a rise in the market price of common shares with a resulting
dilution in the interest of the other shareholders.





21


As at
December 31, 2010, there were 10,200,000 shares of Series A Preferred Shares
issued and outstanding.





Our
ability to obtain additional financing during the period in which such rights
are outstanding may be adversely affected and the existence of the rights may
have an adverse effect on the market price of its common shares.  The
holders of the debentures may exercise such securities at a time when we would
be able to obtain needed capital by a new offering of securities on terms more
favorable than those provided by the outstanding rights.  The increase
in the number of our common shares in the market resulting from the exercise of
such rights and the possibility of sales of such shares may have a depressive
effect on the price of our common shares.  In addition, as a result of
such additional common shares, the voting power of our existing shareholders
will be substantially diluted.





We may,
in the future, grant to some or all of its directors, key employees and
consultants options to purchase its common shares at exercise prices equal to
market prices at times when the public market is depressed. To the extent that
significant numbers of such options are granted and exercised, the interests of
our then existing shareholders will be subject to additional
dilution.





We
may be subject to "penny stock" regulations.





The
Securities and Exchange Commission, or SEC, has adopted rules that regulate
broker-dealer practices in connection with transactions in "penny stocks." Penny
stocks generally are equity securities with a price of less than $5.00 (other
than securities registered on certain national securities exchanges or quoted on
the NASDAQ system, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
system). Penny stock rules require a broker-dealer, prior to a transaction in a
penny stock not otherwise exempt from those rules, to deliver a standardized
risk disclosure document prepared by the SEC, which specifies information about
penny stocks and the nature and significance of risks of the penny stock market.
A broker-dealer must also provide the customer with bid and offer quotations for
the penny stock, the compensation of the broker-dealer, and our sales person in
the transaction, and monthly account statements indicating the market value of
each penny stock held in the customer's account. In addition, the penny stock
rules require that, prior to a transaction in a penny stock not otherwise exempt
from those rules; the broker-dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction. These disclosure requirements
may have the effect of reducing the trading activity in the secondary market for
stock that becomes subject to those penny stock rules. These additional sales
practice and disclosure requirements could impede the sale of our securities.
Whenever any of our securities become subject to the penny stock rules, holders
of those securities may have difficulty in selling those
securities.





The
trading price for our common shares is volatile.





22


Securities
of micro- and small-cap companies have experienced substantial volatility in the
past, often based on factors unrelated to the financial performance or prospects
of the companies involved. These factors include macroeconomic developments in
North America and globally and market perceptions of the attractiveness of
particular industries. Our share price is also likely to be significantly
affected by short-term changes in gold prices or in its financial condition or
results of operations as reflected in its quarterly earnings reports. Other
factors unrelated to our performance that may have an effect on the price of its
common shares include the following: the extent of analytical coverage available
to investors concerning our business may be limited if investment banks with
research capabilities do not follow our securities; the lessening in trading
volume and general market interest in our securities may affect an investor's
ability to trade significant numbers of common shares; the size of our public
float may limit the ability of some institutions to invest in our securities;
and a substantial decline in the price of its common shares that persists for a
significant period of time could cause our securities to be delisted from the
OTCBB, further reducing market liquidity.  As a result of any of these
factors, the market price of our common shares at any given point in time may
not accurately reflect our long-term value.





We
have no record of paying dividends.





We have
no dividend record.  We have not paid any dividends on the common
shares since incorporation and do not anticipate doing so in the foreseeable
future.  Payment of any future dividends will be at the discretion of
our board of directors after taking into account many factors, including
operating results, financial condition, capital requirements, business
opportunities and restrictions contained in any financing
agreements.




ITEM 1B. UNRESOLVED
STAFF COMMENTS






No report
is required.




ITEM 2. PROPERTY





Upon consummation of
Muluncay on March 30, 2009, we obtained an undivided 100% interest in the
following mining concession. The Muluncay concession lies in the center of the
Portovelo-Zaruma mining camp, which is found in the cantons of Ayapamba and
Paccha, Province of El Oro, southern Ecuador. On January 2, 2008,
Muluncaygoldcorp S.A. formalized with Minera del Pacifico Noroeste S.A. a
leasing contract of seven mines:





1.
            MARI
      JANE (BUENA ESPERANZA)2.
            JACETH
      ETHAN (EL AGUACATE)





3.
            LA
      CHONTA Y LOS QUINDE4.
            NARANJITO





5.
            SEÑOR
      DE LA DIVINA JUSTICIA6.
            LAS
      CAÑAS





7.
            LOS
      OSOS





The
leasing contract includes the mining / processing plant.  The seven
properties are recorded by the “Asociación de Mineros Autónomos Sociedades
Muluncay.” Through the leasing contract, Muluncaygoldcorp S.A. has the right to
use and exploit the minerals that are extracted from the leased
mines.  Beginning April 2007, Muluncaygold began exploration of the
“Jayce Ethan” mine, and in October 2007 initiated the exploitation of the “Mary
Jane” mine.





23


As of
December 31, 2009, we have discontinued operations through Muluncay and been
terminated our rights to the mining concessions above.





Our
principal office space is located at 545 Eighth Avenue, Suite 401, New York, New
York 10018. The office space is for corporate identification, mailing, and
courier purposes only and is provided to us at no cost. The office and services
related thereto may be cancelled at any time.





ITEM
3. LEGAL PROCEEDINGS





Management
is not aware of any legal proceedings contemplated by any governmental authority
or any other party involving us or our properties. As of the date of this Annual
Report, no director, officer or affiliate is (i) a party adverse to us in any
legal proceeding, or (ii) has an adverse interest to us in any legal
proceedings. Management is not aware of any other legal proceedings pending or
that have been threatened against us or our properties.





ITEM
4. REMOVED AND RESERVED








PART
II





ITEM
5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES





MARKET
FOR COMMON EQUITY





Shares of
our common stock commenced trading on the OTC Bulletin Board under the symbol
“TTXP:OB.” The market for our common stock is limited, and can be volatile. The
following table sets forth the high and low bid prices relating to our common
stock on a quarterly basis for the periods indicated as quoted by the NASDAQ
stock market. These quotations reflect inter-dealer prices without retail
mark-up, mark-down, or commissions, and may not reflect actual
transactions.




Fiscal
      Quarter
              High Bid
              Low
  Bid2009Fourth
      Quarter 10-01-09 to 12-31-09
              $0.0095
              $0.014Third
      Quarter 07-01-09 to 09-30-09
              $0.60
              $0.092Second
      Quarter 04-01-09 to 06-30-09
              $2.34
              $0.55First
      Quarter 01-01-09 to 03-31-09
              $2.50
              $2.25Fiscal
      Quarter
              High Bid
              Low
  Bid2008Fourth
      Quarter 10-01-08 to 12-31-08
              $0.75
              $0.75Third
      Quarter 07-01-08 to 09-30-08
              $0.75
              $0.75Second
      Quarter 04-01-08 to 06-30-08
              $0.00
              $0.00First
      Quarter 01-01-08 to 03-31-08
              $0.00
              $0.00




24





As of December 31, 2009, we had 46
shareholders of record of our common stock, including shares held by brokerage
clearing houses, depositories, or otherwise in unregistered form. We have
10,150,000 in outstanding warrants, do have $2,057,032 in outstanding
convertible debentures that are convertible into common equity, as well as
$2,389,200 in convertible notes payable and $665,000 in convertible notes
payable – related party.





DIVIDEND
POLICY





No
dividends have ever been declared by the Board of Directors on our common stock.
Our losses do not currently indicate the ability to pay any cash dividends, and
we do not indicate the intention of paying cash dividends either on our common
stock in the foreseeable future.





SECTION
15(g) OF THE SECURITIES EXCHANGE ACT OF 1934





Our
shares are covered by section 15(g) of the Securities Exchange Act of 1934, as
amended that imposes additional sales practice requirements on broker/dealers
who sell such securities to persons other than established customers and
accredited investors (generally institutions with assets in excess of $5,000,000
or individuals with net worth in excess of $1,000,000 or annual income exceeding
$200,000 or $300,000 jointly with their spouses). For transactions covered by
the Rule, the broker/dealer must make a special suitability determination for
the purchase and have received the purchaser's written agreement to the
transaction prior to the sale. Consequently, the Rule may affect the ability of
broker/dealers to sell our securities and also may affect your ability to sell
your shares in the secondary market.





Section
15(g) also imposes additional sales practice requirements on broker/dealers who
sell penny securities. These rules require a one page summary of certain
essential items. The items include the risk of investing in penny stocks in both
public offerings and secondary marketing; terms important to in understanding of
the function of the penny stock market, such as “bid” and “offer” quotes, a
dealers “spread” and broker/dealer compensation; the broker/dealer compensation,
the broker/dealers duties to its customers, including the disclosures required
by any other penny stock disclosure rules; the customers rights and remedies in
causes of fraud in penny stock transactions; and, the FINRA's toll free
telephone number and the central number of the North American Administrators
Association, for information on the disciplinary history of broker/dealers and
their associated persons.





SECURITIES
AUTHORIZED FOR ISSUANCE UNDER COMPENSATION PLANS





We do not
have an equity compensation plan. The table set forth below presents information
relating to outstanding warrants.





25


Plan
      Category
            Number
      of Securities to be Issued Upon Exercise of Outstanding Options, Warrants
      and Rights
                (a)
            Weighted-Average
      Exercise Price of Outstanding Options, Warrants and Rights
                (b)
            Number
      of Securities Remaining Available for Future Issuance Under Equity
      Compensation Plans (excluding column (a))Equity
      Compensation Plans Approved by Security Holders
            -0-
            -0-
            -0-Equity
      Compensation   Plans Not Approved by Security
      Holders
              
              Warrants
            10,000,000
              150,000
            $0.003
              0.25
            -0-
              -0-Total





RECENT
SALES OF UNREGISTERED SECURITIES





As of the
date of this Annual Report and during fiscal year ended December 31, 2009, to
provide capital, we sold stock in private placement offerings, issued stock in
exchange for our debts or pursuant to contractual agreements as set forth
below.




2009
PRIVATE PLACEMENTS






May/June/July/August
2009 Private Placement




During
May, June, July and August 2009, we completed a private placement offering (the
“2009 Private Placement Offering”), whereby we issued an aggregate of 264,000
shares of our restricted common stock at a price of $0.25 per share for
aggregate consideration of $66,000. The Private Placement Offering was completed
in reliance on Regulation D, Rule 506, and/or Regulation S of the Securities Act
of 1933, as amended (the “Securities Act”). Sales were made to certain U.S.
residents. The Private Placement Offering was not registered under the
Securities Act or under any state securities laws and may not be offered or sold
without registration with the Securities and Exchange Commission or an
applicable exemption from the registration requirements. The per share price of
the Private Placement Offering was arbitrarily determined by our Board of
Directors based upon analysis of certain factors including, but not limited to,
stage of development, industry status, investment climate, perceived investment
risks, our assets and net estimated worth.





During
May 2009, we issued an additional 25,000 shares of restricted common stock to an
investor at $0.25 per share in consideration of execution of a letter of intent
for funding. As of December 31, 2009, the letter of intent had not yet been
finalized and consideration for the stock had not yet been
received.





26


During
July 2009, we issued an additional 500,000 shares of restricted common stock to
an investor at $0.25 per share in consideration of execution of a letter of
intent for funding. As of December 31, 2009, the letter of intent had not yet
been finalized and uncertainly exists in the ability of the investor to complete
the transaction. Therefore, as of the date of this Annual Report, we consider
the deposit of $125,000 impaired and unlikely to be received and thus have
expensed it as consulting fees. We have requested that the investor return the
restricted stock certificate.




CONSULTANTS






On July
20, 2009, we issued to a consultant 2,500 shares of our restricted common stock
at $0.40 per share for services totaling $1,000. The shares of common stock were
issued in reliance on Section 4(2) of the Securities Act. The per share price of
the shares was arbitrarily determined by our Board of Directors based upon
analysis of certain factors including, but not limited to, stage of development
and exploration of properties, industry status, investment climate, perceived
investment risks, our assets and net estimated worth.






On August
26, 2009, we issued to three consultants an aggregate of 100,000 shares of our
restricted common stock at $0.18 per share for services totaling $18,000. We
also issued 150,000 warrants at $017 per share for services totaling $25,500.
The warrants are exercisable for a period of three years at $.25 per
share.  The per share price of the shares was arbitrarily determined
by our Board of Directors based upon analysis of certain factors including, but
not limited to, stage of development and exploration of properties, industry
status, investment climate, perceived investment risks, our assets and net
estimated worth.






On
September 9, 2009, we issued to a consultant 200,000 shares of our restricted
common stock at $0.15 per share for services totaling $30,000. The shares of
common stock were issued in reliance on Section 4(2) of the Securities Act. The
per share price of the shares was arbitrarily determined by our Board of
Directors based upon analysis of certain factors including, but not limited to,
stage of development and exploration of properties, industry status, investment
climate, perceived investment risks, our assets and net estimated
worth.






PREFERRED
SHARES




On June
30, 2009, we issued 10,200,000 shares of our Series I Preferred Stock, $0.001
par value, to Trafalgar Capital Specialized Investment Funds FIS (“Trafalgar”)
in exchange for Trafalgar’s 5,900,000 shares of our common stock. The 5,900,000
shares of our common stock shall be retired into treasury and no longer
outstanding on our books. The issuance of Series I Preferred Stock to Trafalgar
and retirement of Trafalgar’s common stock into treasury was approved by a
majority of the holders of our common stock and approved by the Company’s Board
of Directors on June 30, 2009. The shares of common stock were issued in
reliance on Section 4(2) of the Securities Act.





SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS





During
fiscal year ended December 31, 2009, certain shareholders voted approval as
follows:





27


On July
1, 2009, pursuant to a unanimous decision of the shareholders of the Series I
Preferred Shares, the designation of the preferred shares were amended as
follows: “Each share of Series I Preferred Stock will be convertible, at the
option of the holder thereof, at any time and from time to time, and without the
payment of additional consideration by the holder thereof, into such number of
fully paid and nonassessable shares of the Corporation’s  Common Stock as
is determined by dividing (i) the Base Amount by (ii) the lowest volume weighted
average price of the securities on the OTCBB, NASDAQ or other exchange or market
on which such Common Stock trades in the five preceding days prior to the
closing of such transaction (the "Series I Conversion Price").”  The
amendment to the Designation of Series I Preferred Stock was approved by our
Board of Directors on July 1, 2009.





On
September 4, 2009, at a Special Meeting of our stockholders, the following
matters were voted on and approved by greater than 50% of our voting capital
stock. Representing 63.9% of the total issued and outstanding voting capital
stock, 62,089,199 votes were cast in favor of the following matters: (i) the
acquisition of 100% of the outstanding capital stock of Bozel for $20,000,000
cash and $80,000,000 of our common stock; (ii) election of Michel Marengere as
one of our directors upon completion of the Bozel transaction; and (iii)
financing of the $20,000,000 cash payment through the issuance of our
convertible debentures or by such other means as our directors deem advisable.
The Bozel transaction was never completed.





ITEM
6. SELECTED FINANCIAL DATA





The
following selected financial information is qualified by reference to, and
should be read in conjunction with our consolidated financial statements and the
notes thereto, and “Management’s Discussion and Analysis of Financial Condition
and Results of Operation” contained elsewhere herein. The selected consolidated
income statement data for fiscal years ended December 31, 2009 and 2008 and the
selected consolidated balance sheet data as of December 31, 2009 and 2008 are
derived from our audited consolidated financial statements which are included
elsewhere herein.





28


STATEMENT
      OF OPERATIONS
            
            Years
      Ended December 31
                2009
      and 2008
            
            
            For
      the Period from December 29, 2003 (inception) to December 31,
      2009Revenue
            
            
            -0-
            
            
            
            -0-
            
            
            
            -0-Operating
      ExpensesOrganizational
      expenses
            
            
            -0-
            
            
            
            -0-
            
            
            
            1,200Professional
      fees
            
            
            555,654
            
            
            
            80,332
            
            
            
            635,986Salaries
      and wages
            
            
            150,060
            
            
            
            20,125
            
            
            
            170,185Advertising
      and promotion
            
            
            68,750
            
            
            
            -0-
            
            
            
            68,750Insurance
            
            
            11,672
            
            
            
            -0-
            
            
            
            11,672Other
      general and administrative expenses
            
            
            263,020
            
            
            
            14,748
            
            
            
            340,187Total
      Operating Expenses
            
            
            1,049,156
            
            
            
            115,205
            
            
            
            1,227,980Operating
      Loss
            
            
            (1,049,156
            )
            
            
            (115,205
            )
            
            
            (1,227,980
            )Other
      Income (Expense)Interest
      expense
            
            
            22,683
            
            
            
            14,904
            
            
            
            37,587Currency
      exchange loss
            
            
            -0-
            
            
            
            (9
            )
            
            
            (9
            )Interest
      income
            
            
            (370,336
            )
            
            
            (32,192
            )
            
            
            (402,528
            )Total
      Other Income (Expense)
            
            
            (347,653
            )
            
            
            (17,297
            )
            
            
            (364,950
            )Loss
      from Continuing Operations
            
            
            (1,396,809
            )
            
            
            (132,502
            )
            
            
            (1,592,930
            )Net
      Loss From Discontinued Operations
            
            
            (1,964,636
            )
            
            
            -0-
            
            
            
            (1,964,636
            )Net
      Loss Applicable to Common Shares
            
            
            (3,361,445
            )
            
            
            (132,502
            )
            
            
            (3,557,566
            )BALANCE
      SHEET DATATotal
      Assets
            
            
            2,509,864
            
            
            
            1,305,781Total
      Liabilities
            
            
            5,451,790
            
            
            
            1,433,152Total
      Stockholders’ Equity
            
            
            (2,941,926
            )
            
            
            (127,371
            )





29





ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF
OPERATION





The
summarized financial data set forth in the table below is derived from and
should be read in conjunction with our audited financial statements for the
period from inception (December 29, 2003) through December 31, 2009, including
the notes to those financial statements which are included in this Annual
Report. The following discussion should be read in conjunction with our 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 Annual Report, particularly in the
section entitled "Risk Factors." Our audited financial statements are stated in
United States Dollars and are prepared in accordance with United States
Generally Accepted Accounting Principles.





We are a
pre-exploration stage company and have not generated any revenue to date. The
following table sets forth selected financial information for the periods
indicated. We have incurred recurring losses to date. Our financial statements
have been prepared assuming that we will continue as a going concern and,
accordingly, do not include adjustments relating to the recoverability and
realization of assets and classification of liabilities that might be necessary
should we be unable to continue in operation.




We expect
we will require additional capital to meet our long term operating requirements.
We expect to raise additional capital through, among other things, the sale of
equity or debt securities.





RESULTS
OF OPERATION





Fiscal
Year Ended December 31, 2009 Compared to Fiscal Year Ended December 31,
2008.





Our net
loss for fiscal year ended December 31, 2009 was ($3,361,445) compared to a net
loss of ($132,502) during fiscal year ended December 31, 2008, an increase of
$3,228,943. During fiscal years ended December 31, 2009 and 2008, we did not
generate any revenue from continuing operations.





During
fiscal year ended December 31, 2009, we incurred operating expenses of
$1,049,156 compared to $115,205 incurred during fiscal year ended December 31,
2008, an increase of $933,951. The increase in operating expenses was primarily
attributable to the following items: (i) professional fees of $555,654 (2008:
$80,332); (ii) salaries and wages of $150,060 (2008: $20,125); (iii) advertising
and promotion of $68,750 (2008: $0); (iv) insurance of $11,672 (2008: $-0-); and
(v) other general and administrative of $263,020 (2008:
$14,748).  Operating expenses increased due to the increased scope and
scale of our business operations. General and administrative expenses generally
include corporate overhead, financial and administrative contracted services,
marketing, and consulting costs.





Other
income (expense) was incurred during fiscal year ended December 31, 2009 of
$22,683 (2008: $14,904) and interest expense of $370,336 (2008: $32,192), which
resulted in a loss before discontinued operations during fiscal year ended
December 31, 2009 of ($1,396,809) compared to a less before discontinued
operations during fiscal year ended December 31, 2008 of
($132,502).





30


During
fiscal year ended December 31, 2009, we incurred a net loss from discontinued
operations of ($1,964,636) as compared to a net loss from discontinued
operations of $-0- during fiscal year ended December 31, 2008. We determined to
discontinue operations with our Muluncay subsidiary, a mining operation in
Ecuador effective December 31, 2009. This resulted in a net loss applicable to
common shares during fiscal year ended December 31, 2009 of ($3,361,445) as
compared to a net loss applicable to common shares during fiscal year ended
December 31, 2008 of ($132,502).  The basic weighted average number of
shares outstanding was 92,447,750 for fiscal year ended December 31, 2009
compared to 93,296,164 for fiscal year ended December 31, 2008.





LIQUIDITY
AND CAPITAL RESOURCES





Fiscal
Year Ended December 31, 2009





As at
December 31, 2009, our current assets were $22,433 and our current liabilities
were $5,451,790, which resulted in a working capital deficit of $3,429,357. As
of December 31, 2009, current assets were comprised of $22,433 in prepaid
expenses. As of December 31, 2009, current liabilities were comprised of: (i)
$56,269 in accounts payable; (ii) $24,589 in accounts payable – related party;
(iii) $2,389,200 in convertible notes payable, current; (iv) $665,000 in
convertible notes payable – related party, current; (v) $2,057,032 in bonds
payable, convertible and secured – related party; (vi) $47,983 in accrued
interest, convertible bonds payable – related party; (vii) $179,222 in accrued
interest, convertible notes payable – related party; and (viii) $32,495 in short
term notes payable. See “ – Material Commitments.”





As of
December 31, 2009, our total assets were $2,509,864 comprised of: (i) $22,433 in
current assets; (ii) $2,389,200 in investments, which represents Trilliant
Diamonds’ interest in Global Diamond Resources; (iii) $92,585 in bond issue
costs, net – related party; and (iv) $5,646 in deposits. . The increase in total
assets during fiscal year ended December 31, 2009 from fiscal year ended
December 31, 2008 was primarily due to our investment in GDR.





As at
December 31, 2009, our total liabilities were $5,451,790 comprised entirely of
current liabilities. The increase in liabilities during fiscal year ended
December 31, 2009 from fiscal year ended December 31, 2008 was primarily due to
the issuance of convertible notes payable, and  bonds payable,
convertible and secured – related party.





Stockholders’
deficit increased from ($127,371) for fiscal year ended December 31, 2008 to
($2,941,926) for fiscal year ended December 31, 2009.





Cash
Flows from Operating Activities





We have
not generated positive cash flows from operating activities. For fiscal year
ended December 31, 2009, net cash flows used in operating activities was
($1,499,079) consisting primarily of a net loss of $3,361,445 adjusted by the
Company’s forgiveness of notes receivable ($990,000), ($42,805) in amortization
of bond issue costs – related party, common stock issued for services
($255,250), and vesting of warrants issued for services ($219,853). Net cash
flows used in operating activities was further affected by changes of $228,117
in interest payable, $53,612 in accounts payable and $39,567 in prepaid
expenses.





31


Cash
Flows from Investing Activities





We did
not engage in any investing activities during the year ended December 31,
2009.





Cash
Flows from Financing Activities





We have
financed our operations primarily from debt or the issuance of equity
instruments. For the fiscal year ended December 31, 2009, net cash flows
provided from financing activities was $1,319,856 compared to $1,336,250 for
fiscal year ended December 31, 2008. Cash flows from financing activities for
fiscal year ended December 31, 2009 consisted of  $678,856 in proceeds
from convertible bonds payable – related party; $575,000 in net proceeds from
convertible notes payable – related party, and $66,000 from the issuance of
common stock.





PLAN
OF OPERATION AND FUNDING




A
substantial portion of fiscal year ended December 31, 2009 was dedicated to the
Muluncay mining project and financing. As at December 31, 2009, our cash and
cash equivalents were $-0-. For fiscal year ended December 31, 2009, we incurred
a net loss from continuing operations of $1,396,809 and a net loss from
continuing and discontinued operations of $3,361,445. Net cash provided by
financing activities for fiscal year ended December 31, 2009 of $1,319,856,
which was attributed to the issuance of convertible bonds and notes payable. The
accumulated deficit increased by $3,361,445 as at December 31, 2009 due to
losses incurred on the disposal of Muluncay and increases in general &
administrative costs, salaries and wages, note and bond interest, and
professional fees.   The orchestration and execution of our
business acquisitions resulted in increased professional fees and the need for
funding.  As such, during fiscal year ended December 31, 2009, we
entered into various note and bond payable agreements to finance our
acquisitions and Muluncay operations, which increased our interest
expense.  In addition, we entered into management and consulting
agreements with our officers and directors, which contributed to the increased
salaries and wages.




We will
need additional further advances and issuance of debt instruments to fund our
operations over the next six months. In connection with our future business
plan, management anticipates additional increases in operating expenses and
capital expenditures relating to acquisition of further interests in gold mining
concessions. We would finance these expenses with further issuances of
securities and debt issuances. We expect we would need to raise additional
capital and generate revenues to meet long-term operating requirements.
Additional issuances of equity or convertible debt securities would result in
dilution to our current shareholders. Further, such securities may have rights,
preferences or privileges senior to our common stock. Additional financing may
not be available upon acceptable terms, or at all.





MATERIAL
COMMITMENTS





32


As of the
date of this Annual Report, we have the following material commitments as
described below.





Contractual
      Obligations
            
            Total
            
            
            Less
      than one year
            
            
            1 –
      3 Years
            
            
            3 –
      5 Years
            
            
            More
      than 5 YearsConvertible
      Bonds (1A-D)
            
            $
            2,057,032
            
            
            $
            2,057,032
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -Convertible
      Notes Payable (2A-E)
            
            
            3,054,200
            
            
            
            3,054,200Total
            
            $
            5,111,232
            
            
            $
            5,111,232
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -





(1A). On October 15, 2009, weentered into a convertible secured bond debenture in the principal amount
of $1,300,000.  Interest accrues monthly at the rate of 9% APR and is
payable monthly. Unless converted, principal is payable in full on October
15, 2010. Upon default, the interest rate is increased to 18%. Interest payments
are made mid-month resulting in bond interest payable of $14,990 at December 31,
2009. Bond interest expense was $106,140 (including $18,390 in bond issuance
cost amortization) for the year ended December 31, 2009. The bond has an
optional conversion feature whereby the bond holder is entitled to convert the
bond and accrued interest at any time based on the lesser of the stock price on
the bonds’ inception (the “Fixed Price”), which was determined to be $0.61 per
share) or the lowest daily closing volume weighted average price during the five
days preceding conversion. If the common stock price drops below the Fixed
Price, we have the option to redeem the bond provided we pay a 16% redemption
premium on the amount redeemed. If the bond is not converted, we are required to
make interest only payments for a period of one year following the bonds’
inception. Thereafter, we shall continue making month interest payments, in
addition to quarterly principal payments of $325,000 and quarterly 16%
redemption premium payments that amount to $52,000 per quarter ($208,000
total).





(1B). On
April 30, 2009, we entered into a convertible secured bond debenture in the
principal amount of $300,000. Interest accrues monthly at the rate of 9% APR and
is payable monthly.  Unless converted, principal is payable in full on
October 31, 2010. Upon default, the interest rate is increased to 18%. Interest
payments are made at month end resulting in bond interest payable or $2,464 at
December 31, 2009. Bond interest expense was $22,679 (including $11,429 in bond
issuance cost amortization) for the fiscal year ended December 31, 2009. The
bond has an optional conversion feature whereby the bond holder is entitled to
convert the bond and accrued interest at any time based on the lesser of the
stock price on the bonds’ inception (the “Fixed Price”), which was determined to
be $0.61 per share) or the lowest daily closing volume weighted average price
during the five days preceding conversion. If the common stock price drops below
the Fixed Price, we have the option to redeem the bond provided we pay a 16%
redemption premium on the amount redeemed. If the bond is not converted, we are
required to make interest only payments for a period of one year following the
bonds’ inception. Thereafter, we shall continue making month interest payments,
in addition to quarterly principal payments of $75,000 and quarterly 16%
redemption premium payments that amount to $12,000 per quarter ($48,000
total).





33


(1C). On
October 12, 2009, we entered into a convertible secured bond debenture in the
principal amount of $210,000. Interest accrues monthly at the rate of 9% APR and
is payable monthly.  Unless converted, principal is payable in full on
January 12, 2010 or upon completion of any new investments in us exceeding
$1,500,000. Upon default, the interest rate is increased to 18% and we may
convert all bonds held by the bond holder without restriction. The Company incurred bond
issuance costs of $42,000, which are being accrued to bonds payable on a
straight-line basis over the term of the bond.  The carrying amount of
the bond issuance costs at December 31, 2009 was $23,062.Interest
payments are made at month end resulting in bond interest payable or $4,115 at
December 31, 2009. Bond interest expense was $4,115 for the fiscal year ended
December 31, 2009. The bond has an optional conversion feature whereby the bond
holder is entitled to convert the bond and accrued interest at any time based on
the lesser of the stock price on the bonds’ inception (the “Fixed Price”), which
was determined to be $0.07 per share) or the lowest daily closing volume
weighted average price during the five days preceding conversion. If the common
stock price drops below the Fixed Price, we have the option to redeem the bond
provided we pay a 16% redemption premium on the amount redeemed. Limitations on
conversion prevent the number of shares issued from exceeding 9.99%. The bonds
carry a currency rate conversion clause wherein if the Euro to US dollar
exchange rate is lower than the rate of October 12, 2009, then the number of
shares to be issued shall be increased by an equal percentage of the decline in
the exchange rate.





(1D). On
November 3, 2009, we entered into a convertible secured bond debenture in the
principal amount of $210,000. Interest accrues monthly at the rate of 9% APR and
is payable monthly.  Unless converted, principal is payable in full on
January 12, 2010 or upon completion of any new investments in us exceeding
$1,500,000. Upon default, the interest rate is increased to 18% and we may
convert all bonds held by the bond holder without restriction. Interest payments
are made at month end resulting in bond interest payable or $2,993 at December
31, 2009. Bond interest expense was $2,993 for the fiscal year ended December
31, 2009. The bond has an optional conversion feature whereby the bond holder is
entitled to convert the bond and accrued interest at any time based on the
lesser of the stock price on the bonds’ inception (the “Fixed Price”), which was
determined to be $0.07 per share) or the lowest daily closing volume weighted
average price during the five days preceding conversion. If the common stock
price drops below the Fixed Price, we have the option to redeem the bond
provided we pay a 16% redemption premium on the amount redeemed. Limitations on
conversion prevent the number of shares issued from exceeding 9.99%. The bonds
carry a currency rate conversion clause wherein if the Euro to US dollar
exchange rate is lower than the rate of October 12, 2009, then the number of
shares to be issued shall be increased by an equal percentage of the decline in
the exchange rate.





2(A) We
entered into an arrangement with Charms Investments to obtain $275,000 of
financing payable on or before January 5, 2010.  The note accrues
interest at the rate of 8%.  On April 29, 2009 the agreement was
amended to increase amounts loaned to $350,000.  All amounts are
payable on or before June 23, 2010.





2(B) On
July 1, 2009, we entered into an arrangement with Charms investments to obtain
$100,000 of financing payable on or before July 1, 2010.  The note
accrues interest at the rate of 8%.





2(C) On
July 6, 2009, we entered into an arrangement with Charms Investments to obtain
$20,000 of financing payable on or before July 6, 2010.  The note
accrues interest at the rate of 8%.





2(D) We
entered into an arrangement with Charms Investments to obtain $500,000 of
financing payable on or before August 30, 2010.  The loan is issued in
installments with $195,000 issued as of September 30, 2009.  The note
accrues interest at the rate of 8%.





2(E) We
entered into an arrangement with Benbrack Charkit Limited (a foreign investor)
to obtain a note for $2,485,200 (1,500,000 British pounds).  The note
accrues interest at a rate of 12%.  All amounts are payable on or
before June 24, 2010.  The note is convertible at $.45 per share of
common stock.  Proceeds of the loan were used to acquire 10,000,000
shares of Global Diamond Resources held through Trilliant Diamonds, our
subsidiary.  A foreign currency translation adjustment of $96,000
decreased the loan amount to $2,389,200 at December 31, 2009.





34







PURCHASE
OF SIGNIFICANT EQUIPMENT





We do not
intend to purchase any significant equipment during the next twelve
months.





OFF-BALANCE
SHEET ARRANGEMENTS





As of the
date of this Annual Report, we do not have any off-balance sheet arrangements
that have or are reasonably likely to have a current or future effect on our
financial condition, changes in financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital resources that
are material to investors.





GOING
CONCERN





The
independent auditors' report accompanying our December 31, 2009 and December 31,
2008 financial statements contains an explanatory paragraph expressing
substantial doubt about our ability to continue as a going concern. The
financial statements have been prepared "assuming that we will continue as a
going concern," which contemplates that we will realize our assets and satisfy
our liabilities and commitments in the ordinary course of business.




RECENT
ACCOUNTING PRONOUNCEMENTS




In June
2009 the FASB established the Accounting Standards Codification ("Codification"
or "ASC") as the source of authoritative accounting principles recognized by the
FASB to be applied by nongovernmental entities in the preparation of financial
statements in accordance with generally accepted accounting principles in the
United States ("GAAP"). Rules and interpretive releases of the Securities and
Exchange Commission ("SEC") issued under authority of federal securities laws
are also sources of GAAP for SEC registrants. Existing GAAP was not intended to
be changed as a result of the Codification, and accordingly the change did not
impact our financial statements. The ASC does change the way the guidance is
organized and presented.





Statement
of Financial Accounting Standards ("SFAS") SFAS No. 165 (ASC Topic No. 855),
"Subsequent Events,"
SFAS No. 166 (ASC Topic No. 810), "Accounting for Transfers of
Financial Assets-an Amendment of FASB Statement No. 140,"SFAS No. 167
(ASC Topic No. 810), "Amendments to FASB Interpretation
No. 46(R)," and SFAS No. 168 (ASC Topic No. 105), "The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles-a
replacement of FASB Statement No. 162," were recently issued. SFAS No.
165, 166, 167, and 168 have no current applicability to the Company or their
effect on the financial statements would not have been significant.





Accounting
Standards Update ("ASU") ASU No. 2009-05 (ASC Topic No. 820), which amends Fair Value Measurements and
Disclosures - Overall, ASU No. 2009-13 (ASC Topic No. 605), Multiple-Deliverable Revenue
Arrangements, ASU No. 2009-14 (ASC Topic No. 985), Certain Revenue Arrangements that
include Software Elements, and various other ASU's No. 2009-2 through ASU
No. 2009-15 which contain technical corrections to existing  guidance or
affect guidance to specialized industries or entities were recently issued.
These updates have no current applicability to the Company or their effect on
the financial statements would not have been significant.




Currency Risk and Foreign
Currency Translations






The
functional currency of the Company is the United States Dollar
(USD).  In accordance with ASC Topic No. 830, realized gains or losses
on expenses incurred in denominations other than USD are recognized in earnings
on the transaction date.  At such time as there are any foreign
denominated assets or liabilities, the Company will report changes in valuation
in a Statement of Other Comprehensive Income or (Loss) due to the changes in
cumulative adjustments from foreign currency translation.   The
company holds an investment and a note payable denominated in the Great Britain
Pound (GBP).  The Company reported changes in the value of the
investment due to a foreign currency adjustment of $96,000 as of December 31,
2009, which is offset by the same adjustment to the note payable.  The
Company is required to pay interest in GBP on the note payable.  As of
December 31, 2009 the Company accrued net interest of $143,325 after an
adjustment of $5,787 in currency translation recorded in Accumulated Other
Comprehensive Income.


















35




ITEM 8. FINANCIAL
STATEMENTS AND SUPPLEMENTAL DATA



















TRILLIANT
EXPLORATION CORPORATION


(A
PRE-EXPLORATION STAGE COMPANY)





AUDITED
CONSOLIDATED FINANCIAL STATEMENTS





Years
Ended December 31, 2009 and 2008,


and
the Period of December 29, 2003 (Inception)


to
December 31, 2009





36








TRILLIANT
EXPLORATION CORPORATION


(A
PRE-EXPLORATION STAGE COMPANY)





AUDITED
CONSOLIDATED FINANCIAL STATEMENTS





Years
Ended December 31, 2009 and 2008,


and
the Period of December 29, 2003 (Inception)


to
December 31, 2009





TABLE
OF CONTENTS








Report of
Independent Registered Public Accounting
Firm





Consolidated
Balance
Sheets





Consolidated
Statements of
Operations





Consolidated
Statements of Other Comprehensive
Loss





Consolidated
Statement of Changes in Stockholders’ Equity
(Deficit)





Consolidated
Statements of Cash
Flows





Notes to
the Audited Consolidated Financial
Statements





37


CHILD
VAN WAGONER & BRADSHAW, PLLC


CERTIFIED PUBLIC
ACCOUNTANTS



















































REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 To The
Board of Directors and Stockholders
 Trilliant
Exploration Corporation
 Las
Vegas, NV
 
 We have
audited the accompanying balance sheets of Trilliant Exploration Corporation (a
pre-exploration stage company) (the “Company”) as of December 31, 2009 and 2008,
and the related statements of operations, other comprehensive loss, changes in
stockholders' equity (deficit), and cash flows for the years then ended and for
the period of December 29, 2003 (inception) through December 31, 2009. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
 
 We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States of America). Those standards require
that we plan and perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
 
 In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of the Company as of December 31, 2009
and 2008, and the results of its operations and cash flows for the years then
ended and for the period of December 29, 2003 (inception) through December 31,
2009, in conformity with accounting principles generally accepted in the United
States of America.
 
 The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 8 to the financial
statements, the Company has generated minimal revenues from operations and has
incurred net losses since inception. This raises substantial doubt about the
Company's ability to meet its obligations and to continue as a going concern.
Management's plans in regard to this matter are described in Note 8. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
 
 /s/ Child, Van Wagoner &
Bradshaw, PLLC
 
 Child,
Van Wagoner & Bradshaw, PLLC
 Salt Lake
City, UT
 April 15,
2010




38


Trilliant
Exploration Corporation




(A
Pre-Exploration Stage Company)




Consolidated
Balance Sheets




As
      of December 31,2009
            
            
            2008ASSETSCURRENT
      ASSETSCash
      and cash equivalents
            
            $
            -
            
            
            $
            179,223Accounts
      receivable
            
            
            -
            
            
            
            40Prepaid
      expenses (Note 7)
            
            
            22,433
            
            
            
            62,000Total
      Current Assets
            
            
            22,433
            
            
            
            241,263OTHER
      ASSETSInvestments
      (Note 11)
            
            
            2,389,200
            
            
            
            -Notes
      receivable - related party (Note 6C)
            
            
            -
            
            
            
            990,000Interest
      receivable, notes receivable - related party (Note 6C)
            
            
            -
            
            
            
            14,904Bond
      issue costs, net - related party (Note 6E)
            
            
            92,585
            
            
            
            57,214Deposits
            
            
            5,646
            
            
            
            2,400Total
      Other Assets
            
            
            2,487,431
            
            
            
            1,064,518TOTAL
    ASSETS
            
            $
            2,509,864
            
            
            $
            1,305,781LIABILITIES
      AND STOCKHOLDERS' DEFICITLIABILITIESCURRENT
      LIABILITIESAccounts
      payable
            
            $
            56,269
            
            
            $
            2,657Accounts
      payable - related party (Note 6B)
            
            
            24,589
            
            
            
            -Convertible
      notes payable, current (Note 11)
            
            
            2,389,200
            
            
            
            -Convertible
      notes payable–related party, current  (Note 6A)
            
            
            665,000
            
            
            
            -Bonds
      payable, convertible and secured–related party (Note 6E)
            
            
            2,057,032
            
            
            
            -Accrued
      interest, convertible bonds payable–related party (Note
6E)
            
            
            47,983
            
            
            
            4,875Accrued
      interest, convertible notes payable (Note 11)
            
            
            143,325
            
            
            
            -Accrued
      interest, convertible notes payable–related party (Note
6A)
            
            
            35,897
            
            
            
            -Short-term
      notes payable–related party (Note 6B)
            
            
            32,495
            
            
            
            32,495Accrued
      officer compensation (Note 6D)
            
            
            -
            
            
            
            3,125Total
      Current Liabilities
            
            
            5,451,790
            
            
            
            43,152LONG-TERM
      LIABILITIESLong-term
      notes payable - related party ( Note 6B)
            
            
            -
            
            
            
            90,000Bonds
      payable, convertible and secured - related party (Note 6E)
            
            
            -
            
            
            
            1,300,000Total
      Long-Term Liabilities
            
            
            -
            
            
            
            1,390,000Total
      Liabilities
            
            
            5,451,790
            
            
            
            1,433,152









(continued)









39




Trilliant
Exploration Corporation




(A
Pre-Exploration Stage Company)




Consolidated
Balance Sheets (cont’d)




As
      of December 31,2009
            
            
            2008STOCKHOLDERS'
      DEFICITPreferred
      stock, par value $.001, 200,000,000 shares authorized,
            
            
            10,200
            
            
            
            -10,200,000
      issued and 10,200,000 outstanding (Note 4)
            
            
            -
            
            
            
            -Common
      stock, par value $.001, 1,000,000,000 shares authorized,93,131,500
      issued, 87,231,500 outstanding, Dec 31, 2009;91,940,000
      shares issued and outstanding Dec. 31, 2008 (Note 4)
            
            
            93,132
            
            
            
            91,940Additional
      paid-in capital
            
            
            10,706,521
            
            
            
            (23,190
            )Accumulated
      other comprehensive income (Note 11)
            
            
            5,787
            
            
            
            -Deficit
      accumulated prior to re-entering the pre-exploration stage
            
            
            (3,557,566
            )
            
            
            (196,121
            )Total
      stockholder's deficit (before treasury stock)
            
            
            7,258,074
            
            
            
            (127,371
            )Treasury
      Stock (5,900,000 shares at $1.73 per share) (Note 4)
            
            
            (10,200,000
            )
            
            
            -Total
      Stockholders' Deficit
            
            
            (2,941,926
            )
            
            
            (127,371
            )TOTAL
      LIABILITIES AND STOCKHOLDERS’ DEFICIT
            
            $
            2,509,864
            
            
            $
            1,305,781








See
Accompanying Notes to Audited Consolidated Financial Statements














40










Trilliant
Exploration Corporation




(A
Pre-Exploration Stage Company)




Consolidated
Statements of Operations




Cumulative
      Totalsfrom
      December 29,2003
      (Inception)Year
      Ended December 31,
            
            
            to
      December 31,2009
            
            
            2008
            
            
            2009Revenues
            
            $
            -
            
            
            $
            -
            
            
            $
            -Operating
      Expenses
            
            
            
            
            
            
            
            
            
            
            -Organizational
      expenses
            
            
            -
            
            
            
            -
            
            
            
            1,200Professional
      fees
            
            
            555,654
            
            
            
            80,332
            
            
            
            635,986Salaries
      and wages
            
            
            150,060
            
            
            
            20,125
            
            
            
            170,185Advertising
      and promotion
            
            
            68,750
            
            
            
            -
            
            
            
            68,750Insurance
            
            
            11,672
            
            
            
            -
            
            
            
            11,672Other
      general and administrative
            
            
            263,020
            
            
            
            14,748
            
            
            
            340,187Total
      Operating Expenses
            
            
            1,049,156
            
            
            
            115,205
            
            
            
            1,227,980Operating
      Loss
            
            
            (1,049,156
            )
            
            
            (115,205
            )
            
            
            (1,227,980
            )Other
      Income (Expense)Interest
      income
            
            
            22,683
            
            
            
            14,904
            
            
            
            37,587Currency
      exchange loss
            
            
            -
            
            
            
            (9
            )
            
            
            (9
            )Interest
      expense
            
            
            (370,336
            )
            
            
            (32,192
            )
            
            
            (402,528
            )Total
      Other Income (Expenses)
            
            
            (347,653
            )
            
            
            (17,297
            )
            
            
            (364,950
            )LOSS
      BEFORE INCOME TAXES
            
            
            (1,396,809
            )
            
            
            (132,502
            )
            
            
            (1,592,930
            )Provision
      for income taxes
            
            
            -
            
            
            
            -
            
            
            
            -NET
      LOSS FROM CONTINUING OPERATIONS
            
            
            (1,396,809
            )
            
            
            (132,502
            )
            
            
            (1,592,930
            )Loss
      from discontinued operations
            
            
            191,495
            
            
            
            -
            
            
            
            191,495Loss
      on disposal of subsidiary
            
            
            1,773,141
            
            
            
            -
            
            
            
            1,773,141NET
      LOSS FROM DISCONTINUED OPERATIONS
            
            
            (1,964,636
            )
            
            
            -
            
            
            
            (1,964,636
            )Net
      Loss applicable to Common Shares
            
            $
            (3,361,445
            )
            
            $
            (132,502
            )
            
            $
            (3,557,566
            )BASIC
      AND DILUTED LOSS PER COMMON SHARE:Net
      loss per share, continuing operations
            
            $
            (0.015
            )
            
            $
            (0.001
            )Net
      loss per share, discontinued operations
            
            
            (0.021
            )
            
            
            -Total
      net loss per share
            
            $
            (0.036
            )
            
            $
            (0.001
            )Weighted
      Average Number ofCommon
      Shares Outstanding (Basic)
            
            
            92,447,750
            
            
            
            93,296,164Weighted
      Average Number ofCommon
      Shares Outstanding (Diluted)
            
            
            902,162,411
            
            
            
            93,661,826


See
Accompanying Notes to Audited Financial Statements






41


Trilliant
Exploration Corporation


(A
Pre-Exploration Stage Company)


Consolidated
Statements of Other Comprehensive Loss





Year
      Ended December 31,
            
            
            Cumulative
      Totals from December 29, 2003 (Inception) to December 31,2009
            
            
            2008
            
            
            2009Net
      loss
            
            $
            (3,361,445
            )
            
            $
            (132,502
            )
            
            $
            (3,557,566
            )Other
      comprehensive income, net of taxForeign
      currency translation adjustment
            
            
            5,787
            
            
            
            -
            
            
            
            5,787Comprehensive
      loss
            
            $
            (3,355,658
            )
            
            
            (132,502
            )
            
            $
            (3,551,779
            )See
      Accompanying Notes to Audited Consolidated Financial
      Statements





42










Trilliant
Exploration Corporation


(A
Pre-Exploration Stage Company)


Consolidated
Statement of Changes in Stockholders’ Equity (Deficit)


December
29, 2003 (Inception) to December 31, 2009





Deficit
            
            
            Accum.Additional
            
            
            Accum.
            
            
            Other
            
            
            
            
            
            TotalCommon
      Stock
            
            
            Preferred
      Stock
            
            
            Paid-in
            
            
            during
      Pre-
            
            
            Comp.
            
            
            Treasury
            
            
            Stockholders’Shares
            
            
            Amount
            
            
            Shares
            
            
            Amount
            
            
            Capital
            
            
            Explor.
      Stage
            
            
            Income
            
            
            Stock
            
            
            Equity
      (Deficit)December
      29, 2003 (Inception)
            
            
            -
            
            
            $
            -
            
            
            
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            
            
            
            $
            -Issuance
      of common stockDecember
      29, 2003
            
            
            8,000,000
            
            
            
            8,000
            
            
            
            -
            
            
            
            -
            
            
            
            (6,000
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            2,000Net
      loss
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Balance,
      December 31, 2003
            
            
            8,000,000
            
            
            
            8,000
            
            
            
            -
            
            
            
            -
            
            
            
            (6,000
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            2,000Net
      loss
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (1,805
            )
            
            
            -
            
            
            
            -
            
            
            
            (1,805
            )Balance,
      December 31, 2004
            
            
            8,000,000
            
            
            
            8,000
            
            
            
            -
            
            
            
            -
            
            
            
            (6,000
            )
            
            
            (1,805
            )
            
            
            -
            
            
            
            -
            
            
            
            195Issuance
      of common stockDecember
      15, 2005
            
            
            72,000,000
            
            
            
            72,000
            
            
            
            -
            
            
            
            -
            
            
            
            (54,000
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            18,000Net
      loss
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (795
            )
            
            
            -
            
            
            
            -
            
            
            
            (795
            )Balance,
      December 31, 2005
            
            
            80,000,000
            
            
            
            80,000
            
            
            
            -
            
            
            
            -
            
            
            
            (60,000
            )
            
            
            (2,600
            )
            
            
            -
            
            
            
            -
            
            
            
            17,400-Issuance
      of common stock for cash, March 15, 2006
            
            
            10,000,000
            
            
            
            10,000
            
            
            
            -
            
            
            
            -
            
            
            
            (7,500
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            2,500Net
      loss
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (12,785
            )
            
            
            -
            
            
            
            -
            
            
            
            (12,785
            )Balance,
      December 31, 2006
            
            
            90,000,000
            
            
            
            90,000
            
            
            
            -
            
            
            
            -
            
            
            
            (67,500
            )
            
            
            (15,385
            )
            
            
            -
            
            
            
            -
            
            
            
            7,115Issuance
      of common stock for cash, March 31, 2007
            
            
            1,300,000
            
            
            
            1,300
            
            
            
            -
            
            
            
            -
            
            
            
            31,200
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            32,500Issuance
      of common stock for cash, June 4, 2007
            
            
            140,000
            
            
            
            140
            
            
            
            -
            
            
            
            -
            
            
            
            3,360
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            3,500Issuance
      of common stock November 6, 2007
            
            
            5,000,000
            
            
            
            5,000
            
            
            
            -
            
            
            
            -
            
            
            
            (3,750
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            1,250Issuance
      of common stock for payment of debt, November 6, 2007
            
            
            1,000,000
            
            
            
            1,000
            
            
            
            -
            
            
            
            -
            
            
            
            (750
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            250Net
      loss
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (48,234
            )
            
            
            -
            
            
            
            -
            
            
            
            (48,234
            )Balance,
      December 31, 2007
            
            
            97,440,000
            
            
            
            97,440
            
            
            
            -
            
            
            
            -
            
            
            
            (37,440
            )
            
            
            (63,619
            )
            
            
            -
            
            
            
            -
            
            
            
            (3,619
            )Cancellation
      of shares, February through May 2008
            
            
            (5,500,000
            )
            
            
            (5,500
            )
            
            
            -
            
            
            
            -
            
            
            
            4,250
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (1,250
            )Forgiveness
      of related party debt
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            10,000
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            10,000Net
      loss
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (132,502
            )
            
            
            -
            
            
            
            -
            
            
            
            (132,502
            )Balance,
      December 31, 2008
            
            
            91,940,000
            
            
            $
            91,940
            
            
            
            -
            
            
            
            -
            
            
            
            (23,190
            )
            
            $
            (196,121
            )
            
            
            -
            
            
            
            -
            
            
            
            (127,371
            )Issuance
      of common stock for services, May 2009
            
            
            25,000
            
            
            
            25
            
            
            
            
            
            
            
            
            
            
            
            6,225
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            6,250Issuance
      of common stock for cash, June 2009
            
            
            184,000
            
            
            
            184
            
            
            
            
            
            
            
            
            
            
            
            45,816
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            46,000Issuance
      of preferred stock, June 30, 2009
            
            
            -
            
            
            
            
            
            
            
            10,200,000
            
            
            
            10,200
            
            
            
            10,189,800
            
            
            
            
            
            
            
            
            
            
            
            (10,200,000
            )
            
            
            -Issuance
      of common stock for services, July 7, 2009
            
            
            500,000
            
            
            
            500
            
            
            
            
            
            
            
            
            
            
            
            124,500
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            125,000Issuance
      of common stock for cash, July 20, 2009
            
            
            40,000
            
            
            
            40
            
            
            
            
            
            
            
            
            
            
            
            9,960
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            10,000Issuance
      of common stock for services, July 20, 2009
            
            
            2,500
            
            
            
            3
            
            
            
            
            
            
            
            
            
            
            
            997
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            1,000Issuance
      of common stock for cash, August 5, 2009
            
            
            40,000
            
            
            
            40
            
            
            
            
            
            
            
            
            
            
            
            9,960
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            10,000Issuance
      of common stock and warrants for services August 26, 2009
            
            
            100,000
            
            
            
            100
            
            
            
            
            
            
            
            
            
            
            
            43,400
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            43,500Issuance
      of common stock for services, Sept 9, 2009
            
            
            200,000
            
            
            
            200
            
            
            
            
            
            
            
            
            
            
            
            29,800
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            30,000Issuance
      of warrants for services December 23, 2009
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            194,353
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            194,353Issuance
      of Stock for compensation to officers, December 15, 2009
            
            
            100,000
            
            
            
            100
            
            
            
            
            
            
            
            
            
            
            
            74,900
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            75,000Foreign
      currency translation adjustments
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            5,787
            
            
            
            
            
            
            
            5,787Net
      loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (3,361,445
            )
            
            
            
            
            
            
            
            
            
            
            (3,361,445
            )Balance,
      December 31, 2009
            
            
            93,131,500
            
            
            $
            93,132
            
            
            
            10,200,000
            
            
            $
            10,200
            
            
            $
            10,706,521
            
            
            $
            (3,557,566
            )
            
            $
            5,787
            
            
            $
            (10,200,000
            )
            
            $
            (2,941,926
            )






































See
Accompanying Notes to Audited Consolidated Financial Statements





43










Trilliant
Exploration Corporation




(A
Pre-Exploration Stage Company)




Consolidated
Statements of Cash Flows




Cumulative
      Totalsfrom
      December 29,2003
      (Inception)Year
      Ended December 31,
            
            
            to
      December 31,2008
            
            
            2008
            
            
            2009CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      Loss
            
            $
            (3,361,445
            )
            
            $
            (132,502
            )
            
            $
            (3,557,566
            )Adjustments
      to reconcile net loss to net cashused
      in operations:Forgiveness
      of notes receivable
            
            
            990,000
            
            
            
            -
            
            
            
            990,000Amortization
      of bond issue costs - related party
            
            
            42,805
            
            
            
            7,430
            
            
            
            50,235Common
      stock issued for services
            
            
            255,250
            
            
            
            -
            
            
            
            255,250Vesting
      of warrants issued for services
            
            
            219,853
            
            
            
            -
            
            
            
            219,853Changes
      in operating assets and liabilities:(Increase)
      Decrease in:Accounts
      receivable
            
            
            40
            
            
            
            (40
            )
            
            
            -Interest
      receivable, notes receivable - related party
            
            
            14,904
            
            
            
            (14,904
            )
            
            
            -Prepaid
      expenses
            
            
            39,567
            
            
            
            (62,000
            )
            
            
            (22,433
            )Deposits
            
            
            (3,246
            )
            
            
            (2,400
            )
            
            
            (5,646
            )Increase
      (Decrease) in:Accounts
      payable
            
            
            53,612
            
            
            
            (2,942
            )
            
            
            56,269Accounts
      payable – related parties
            
            
            24,589
            
            
            
            -
            
            
            
            24,589Accrued
      interest, convertible bonds payable–rel. party
            
            
            43,108
            
            
            
            4,875
            
            
            
            47,983Accrued
      interest, convertible notes payable
            
            
            149,112
            
            
            
            -
            
            
            
            149,112Accrued
      interest, convertible notes payable–rel. party
            
            
            35,897
            
            
            
            -
            
            
            
            35,897Accrued
      officer compensation
            
            
            (3,125
            )
            
            
            3,125
            
            
            
            -Net
      Cash Used In Operating Activities
            
            
            (1,499,079
            )
            
            
            (199,358
            )
            
            
            (1,756,457
            )CASH
      FLOWS FROM INVESTING ACTIVITIESIssuance
      of notes receivable - related party
            
            
            -
            
            
            
            (990,000
            )
            
            
            (990,000
            )Net
      Cash Used In Investing Activities
            
            
            -
            
            
            
            (990,000
            )
            
            
            (990,000
            )





(continued)





See
Accompanying Notes to Audited Consolidated Financial Statements








44




Trilliant
Exploration Corporation




(A
Pre-Exploration Stage Company)




Consolidated
Statements of Cash Flows (cont’d)










Cumulative
      Totalsfrom
      December 29,2003
      (Inception)Year
      Ended December 31,
            
            
            to
      December 31,2008
            
            
            2008
            
            
            2009CASH
      FLOWS FROM FINANCING ACTIVITIESProceeds
      from convertible bonds payable- related party
            
            
            678,856
            
            
            
            1,235,356
            
            
            
            1,914,212Proceeds
      from convertible notes payable-related party
            
            
            650,000
            
            
            
            90,000
            
            
            
            740,000Payments
      made on convertible notes payable -related party
            
            
            (75,000
            )
            
            
            -
            
            
            
            (75,000
            )Proceeds
      from notes payable - related party
            
            
            -
            
            
            
            49,163
            
            
            
            49,764Payments
      on notes payable - related party
            
            
            -
            
            
            
            (7,019
            )
            
            
            (7,019
            )Refunds
      for rescission of common stock
            
            
            
            
            
            
            (1,250
            )
            
            
            (1,250
            )Net
      proceeds from sale of common stock
            
            
            66,000
            
            
            
            -
            
            
            
            125,750Net
      Cash Provided By Financing Activities
            
            
            1,319,856
            
            
            
            1,366,250
            
            
            
            2,746,457NET
      INCREASE (DECREASE) IN CASH
            
            
            (179,223
            )
            
            
            176,892
            
            
            
            -CASH
      AT BEGINNING OF PERIOD
            
            
            179,223
            
            
            
            2,331
            
            
            
            -CASH
      AT END OF PERIOD
            
            $
            -
            
            
            $
            179,223
            
            
            $
            -SUPPLEMENTAL
      CASH FLOW INFORMATION:Cash
      paid for interest
            
            $
            -
            
            
            $
            19,500
            
            
            $
            19,500Cash
      paid for income taxes
            
            $
            -
            
            
            $
            -
            
            
            $
            -SCHEDULE
      OF NON-CASH INVESTING AND FINANCING ACTIVITIESForgiveness
      of related party debt
            
            $
            -
            
            
            $
            10,000
            
            
            $
            10,000Purchase
      of investment with convertible note payable, net of $96,000 foreign
      currency translation adjustment
            
            $
            2,389,200
            
            
            $
            -
            
            
            $
            2,389,200Issuance
      of 10,200,000 shares of preferred stock at $1 per share in exchange for
      5,900, 000 shares of treasury stock at $1.73 per share
            
            $
            10,200,000
            
            
            $
            -
            
            
            $
            10,200,000








See
Accompanying Notes to Audited Consolidated Financial Statements








45










Trilliant
Exploration Corporation




(A
Pre-Exploration Stage Company)


Notes to
Audited Consolidated Financial Statements


Years
Ended December 31, 2009 and 2008, and the


Period of
December 29, 2003 (Inception) to December 31, 2009





NOTE 1 -
ORGANIZATION AND BASIS OF PRESENTATION




Trilliant
Exploration Corporation, (the “Company”) was incorporated as Project Development
Pacific, Inc. on December 29, 2003, under the laws of the State of
Nevada.  The business purpose of the Company was originally to assist
Canadian citizens to access health care services from private
providers.  On November 26, 2007, the Company changed its name to
Trilliant Exploration Corporation, with a purpose to acquire and develop mineral
properties.  The Company has elected a fiscal year end of December
31.






On March
30, 2009 (Date of Acquisition), Trilliant Exploration Corporation (the Parent)
acquired a 100% interest in MuluncayGoldCorp (a Subsidiary) (Muluncay), as
disclosed in Note 10.   The transaction was accounted for as a
purchase pursuant to ASC Topic No. 805.






On June
29, 2009 (Date of Formation), the Company established a wholly-owned Trilliant
Diamonds Limited (a Subsidiary) (Trilliant Diamonds), a private limited England
and Wales Company, to facilitate the Company’s diamond
exploration.  Trilliant Diamonds has been inactive since
formation.  The only asset of Trilliant Diamonds is an investment in
Global Diamond Resources (GDR), a Gibraltar, Spain entity. On July 1, 2009,
Trilliant Diamonds acquired 10,000,000 shares of GDR, representing 3.2% of the
outstanding shares of GDR stock, for $2,485,200.  The investment was
obtained via issuance of a note payable in the amount of $2,485,200, as further
disclosed in Note 11.  The investment and note payable are denominated
in British Pounds, as of December 31, 2009 the investment and note payable are
adjusted to $2,389,200 after currency translation adjustments of
$96,000.






On July
1, 2009 the Company acquired 799 of 800 shares of AyapampaGold S.A (AYA) (a
Subsidiary) at $1 per share for a purchase price of $799 AYA was formed in
mid-2007 as a shell and has been inactive since inception. The Company acquired
AYA to use as a holding company in Ecuador to facilitate future potential
acquisitions.






On
February 11, 2010, Minera Del Pacifico (the seller of MuluncayGoldCorp)
exercised its rights retroactive to December 31, 2009 to terminate the purchase
of MuluncayGoldCorp as described in Note 12.  The activity of
MuluncayGoldCorp from the Date of Acquisition through December 31, 2009 is
reported as discontinued operations pursuant to ASC Topic 205.






The
accompanying consolidated financial statements for the year ended December 31,
2009 include the operations of the Subsidiaries’ activity from the dates of
Acquisition and Formation through December 31, 2009.  All historical
financial statements are those of the Parent. Inter- company transactions have
been eliminated upon consolidation. The Parent and Subsidiaries are collectively
referred to as “the Company.”






The
audited financial statements of Trilliant Exploration Corporation were prepared
in accordance with accounting principles generally accepted in the United States
of America (“GAAP”) and reflect all adjustments (including normal recurring
accruals) which, in the opinion of management, are considered necessary for the
fair presentation of the results for the periods presented.


















46


















Trilliant
Exploration Corporation




(A
Pre-Exploration Stage Company)


Notes to
Audited Consolidated Financial Statements


Years
Ended December 31, 2009 and 2008, and the


Period of
December 29, 2003 (Inception) to December 31, 2009




NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES




Pre-Exploration
Stage Company


The
Company is considered to be in the pre-exploration stage as defined in ASC 915
(SFAS No. 7), “Accounting and
Reporting by Development Stage Enterprises” as interpreted by the
Securities and Exchange Commission for mining companies in Industry Guide
7.  The Company is devoting substantially all of its efforts to the
execution of its business plan.  In June 2009, management considered
requirements for exploration stage companies and determined that the Company had
exited development and pre-exploration stage and the associated filing
requirements. Company performance since June 2009 and the disposal of
MuluncayGoldCorp (Note 12) require management to re-enter the pre-exploration
stage effective December 31, 2009.




Use
of Estimates






The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes.  Actual results could differ from
those estimates.  Significant estimates that may change in the near
future include value of goodwill, impairment of long-lived assets acquired, and
value of investments.






Cash
and Cash Equivalents






Cash and
cash equivalents consists principally of currency on hand, demand deposits at
commercial banks, and liquid investment funds having a maturity of three months
or less at the time of purchase.  The Company had $0 and $179,223 in cash and cash equivalents as
of December 31, 2009 and December 31, 2008, respectively.   Of
these amounts, $0 and $179,223 was federally insured.  In December
2009, the Company closed both of its bank accounts.






Legal
Reserve






The
Company records the Ecuadorian required legal reserve in the Stockholders’
Equity (Deficit) section of the balance sheet.  Through acquisition,
the Company acquired $210 of reserves for employee benefits.  Firms
operating in Ecuador are required by law to set aside 10% of liquid profits in a
legal reserve for the benefit of employees.  Such reserve must be set
aside until the reserves reach 50% of cumulative liquid profits, which are
equivalent to distributable net income under US GAAP.  These reserves
were removed in recording discontinuing operations.  As of December
31, 2009, the Company held no legal reserves.






Comprehensive
Income






Comprehensive income consists
of net income and other gains and losses affecting shareholders’ equity that,
under generally accepted accounting principles, are excluded from net income.
For the Company, such items consist primarily of unrealized gains and losses on
marketable securities and foreign currency translation gains and
losses.






The
Company holds an investment and liability for Global Diamond Resources,
discussed in Note 11.  Both the investment and liability are
denominated in British Pounds and currency adjustments offset  The
liability accrues interest payable in British Pounds.  As of December
31, 2009, the Company had accrued interest of $143,325 after currency
adjustments, resulting in an unrealized gain of $5,787, which is recorded in
Accumulated Other Comprehensive Income.






47


Trilliant
Exploration Corporation




(A
Pre-Exploration Stage Company)


Notes to
Audited Consolidated Financial Statements


Years
Ended December 31, 2009 and 2008, and the


Period of
December 29, 2003 (Inception) to December 31, 2009




NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)






Revenue
Recognition






The
Company recognizes revenues when a sale agreement has been made, when there are
no restrictions or repurchase agreements on the transaction, when collection is
reasonably certain, and when the goods or services have been delivered to the
buyer.






Mineral
Acquisition and Exploration Costs






ASC
805-20-30-1.H defines mineral rights as the legal right to explore, extract, and
retain at least a portion of the benefits from mineral deposits. ASC
805-20-55-37 states that usage rights are contract based intangible assets to be
accounted for separately from goodwill.  The Company has not obtained
significant geological surveys to determine the amount of mineral rights
separate from the acquisition cost of Muluncay as described in Note 10
A.  Management estimates the undetermined value of the mineral rights
to be equal to or greater than the cost of acquisition of
Muluncay.  Until December 31, 2009, the Company had mineral rights of
$412,588. On December 31, 2009 the Company discontinued these operations as
discussed in Note 12, and disposed of the mineral rights.  As of
December 31, 2009, the Company held no mineral rights.






Mineral
property exploration costs are expensed as incurred.  When it has been
determined that a mineral property can be economically developed as a result of
establishing proven reserves, the costs incurred to develop such property are
capitalized.  Such costs will be amortized using the
units-of-production method.






Property,
Plant, and Equipment






Property
and equipment are stated at cost. The Company acquired certain property, plant,
and equipment in the acquisition of MuluncayGoldCorp. Depreciation and
amortization are determined using the straight-line method over estimated useful
lives of the assets. All property, plant, and equipment were disposed of and any
gains and losses on the disposal are included in discontinued operations as
disclosed in Note 12.  As of December 31, 2009, the Company held no
property, plant or equipment.






Goodwill
and Other Intangibles






The
Company acquired MuluncayGoldCorp. through a share purchase agreement (the
Acquisition) (Note 10) on March 30, 2009.  The Company also acquired
additional assets from Minera del Pacifico, including mines for which proven
reserves have not been established, but the value of which are estimated to be
the difference between the purchase price and the known assets
purchased.






Upon
acquisition of MuluncayGoldCorp, the Company reported Goodwill of
$340,221.  In September 2009, the Company increased goodwill by
$72,366 after Ecuadorian tax authorities reviewed Muluncay for the period ending
2008 and informed Muluncay they did not owe $72,366 in taxes that had been
previously accrued.  Under terms of the purchase of Muluncay,
Trilliant Exploration assumed all of Muluncay’s liabilities; the absence of the
tax accrual would have increased Muluncay’s net assets thus resulting in the
increased goodwill upon purchase.  Due to the contingent and estimable
nature of the Ecuadorian tax liability, the change has been treated
prospectively in the financial statements and does not require restatement of
prior periods.  As of December 31, 2009, no impairment on goodwill had
been estimated









48






Trilliant
Exploration Corporation




(A
Pre-Exploration Stage Company)


Notes to
Audited Consolidated Financial Statements


Years
Ended December 31, 2009 and 2008, and the


Period of
December 29, 2003 (Inception) to December 31, 2009




NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)






In
November 2009, the Company estimated the value of the goodwill previously
recorded should be assigned to mineral rights and reclassified the estimate of
goodwill accordingly.  Due to the contingent and estimable nature of
the mineral rights, the change has been treated prospectively in the financial
statements and does not require restatement of prior periods.






As of
December 31, 2009, the Company held no Goodwill, and the reclassified mineral
rights were disposed of with gains or losses on disposal included in
Discontinued Operations (Note 12).  The Company possesses no other
intangible assets.






Net
Income or (Loss) Per Share of Common Stock






The
Company has adopted ASC Topic No. 260 concerning earnings per share (EPS), which
requires presentation of basic and diluted EPS on the face of the income
statement for all entities with complex capital structures and requires a
reconciliation of the numerator and denominator of the basic EPS computation to
the numerator and denominator of the diluted EPS computation.  The
reconciliation of unamortized convertible bond issuance costs and interest
expense on convertible bonds and convertible notes payable to net income, and
addition of shares assuming conversion of notes and bonds and exercise of
warrants, resulted in a nominal anti-dilutive effect on loss per
share.




Year
      Ended December 31,2009
            
            
            2008BASICNet
      loss
            
            $
            (3,361,445
            )
            
            $
            (132,502
            )Weighted
      average common shares outstanding
            
            
            92,447,750
            
            
            
            93,296,164Net
      loss per share (Basic)
            
            $
            (0.036
            )
            
            $
            (0.001
            )DILUTEDNet
      loss (Basic)
            
            $
            (3,361,445
            )
            
            $
            (132,502
            )Convertible
      bond and note interest
            
            
            364,096
            
            
            
            24,375Unamortized
      convertible bond issuance costs
            
            
            (92,585
            )
            
            
            -Net
      loss (Diluted)
            
            $
            (3,089,934
            )
            
            $
            (108,127
            )Weighted
      average common shares outstanding (Basic)
            
            
            92,447,750
            
            
            
            93,296,164Convertible
      preferred shares
            
            
            607,142,857
            
            
            
            365,662Convertible
      bonds and notes
            
            
            202,571,804
            
            
            
            -Options
            
            
            -
            
            
            
            -Warrants
            
            
            -
            
            
            
            -Weighted
      average common shares outstanding (Diluted)
            
            
            902,162,411
            
            
            
            93,661,826Net
      loss per share (Diluted)
            
            $
            (0.003
            )
            
            $
            (0.00
            )
















49







Trilliant
Exploration Corporation




(A
Pre-Exploration Stage Company)


Notes to
Audited Consolidated Financial Statements


Years
Ended December 31, 2009 and 2008, and the


Period of
December 29, 2003 (Inception) to December 31, 2009




NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)






Net
Income or (Loss) Per Share of Common Stock (cont’d)






On June
30, 2009, the Company exchanged 5,900,000 shares of common stock held by
Trafalgar Capital Specialized Investment Fund FIS (“Trafalgar”) (a significant
stockholder of the Company) for 10,200,000 of designated Series I preferred
stock, which is convertible to common stock based on the average closing price
of the five days preceding conversion.  The 5,900,000 common shares
were acquired at $1.73 per share and the preferred stock was issued at $1.00 per
share.  The transaction resulted in treasury stock of $10,200,000, and
an increase to Additional Paid in Capital of $10,189,800.  The effects
of this transaction have been included in the above dilution
computation.






Recently
Issued Accounting Pronouncements




In June 2009 the FASB
established the Accounting Standards Codification ("Codification" or "ASC") as
the source of authoritative accounting principles recognized by the FASB to be
applied by nongovernmental entities in the preparation of financial statements
in accordance with generally accepted accounting principles in the United States
("GAAP"). Rules and interpretive releases of the Securities and Exchange
Commission ("SEC") issued under authority of federal securities laws are also
sources of GAAP for SEC registrants. Existing GAAP was not intended to be
changed as a result of the Codification, and accordingly the change did not
impact our financial statements. The ASC does change the way the guidance is
organized and presented.





Statement
of Financial Accounting Standards ("SFAS") SFAS No. 165 (ASC Topic No.
855),"Subsequent
Events," SFAS No. 166 (ASC Topic No. 810), "Accounting for Transfers of
Financial Assets-an Amendment of FASB Statement No. 140,"SFAS No. 167
(ASC Topic No. 810), "Amendments to FASB Interpretation
No. 46(R)," and SFAS No. 168 (ASC Topic No. 105), "The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles-a
replacement of FASB Statement No. 162," were recently issued. SFAS No.
165, 166, 167, and 168 have no current applicability to the Company or their
effect on the financial statements would not have been significant.





Accounting
Standards Update ("ASU") ASU No. 2009-05 (ASC Topic No. 820), which amends Fair Value Measurements and
Disclosures - Overall, ASU No. 2009-13 (ASC Topic No. 605), Multiple-Deliverable Revenue
Arrangements, ASU No. 2009-14 (ASC Topic No. 985), Certain Revenue Arrangements that
include Software Elements, and various other ASU's No. 2009-2 through ASU
No. 2010-11 which contain technical corrections to existing  guidance or
affect guidance to specialized industries or entities were recently issued.
These updates have no current applicability to the Company or their effect on
the financial statements would not have been significant.




Currency Risk and Foreign
Currency Translations






The
functional currency of the Company is the United States Dollar
(USD).  In accordance with ASC Topic No. 830, realized gains or losses
on expenses incurred in denominations other than USD are recognized in earnings
on the transaction date.  At such time as there are any foreign
denominated assets or liabilities, the Company will report changes in valuation
in a Statement of Other Comprehensive Income or (Loss) due to the changes in
cumulative adjustments from foreign currency translation.









50






Trilliant
Exploration Corporation




(A
Pre-Exploration Stage Company)


Notes to
Audited Consolidated Financial Statements


Years
Ended December 31, 2009 and 2008, and the


Period of
December 29, 2003 (Inception) to December 31, 2009




NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)






Currency
Risk and Foreign Currency Translations






The
Company holds investments and notes payable denominated in the Great Britain
Pound (GBP).  The Company reported changes in the value of the asset
due to foreign currency adjustments of $96,000 as of December 31, 2009, which is
offset by the same adjustments to a related note payable.  The Company
is required to pay interest in GBP on the above note payable.  As of
December 31, 2009 the Company accrued net interest of $143,325 after an
adjustment of $5,787 in currency translation recorded in Accumulated Other
Comprehensive Income (see Note 11).






NOTE 3 -
PROVISION FOR INCOME TAXES






The
Company recognizes the tax effects of transactions in the year in which such
transactions enter into the determination of net income regardless of when
reported for tax purposes.  Deferred taxes provided for under ASC
Topic No. 740 give effect to the temporary differences which may arise from
differences in the bases of fixed assets, depreciation methods, and allowances
based on the income taxes expected to be payable in future
years.  Deferred tax assets arising as a result of net operating loss
carry-forwards and foreign tax credit carry-forwards have been offset completely
by a valuation allowance due to the uncertainty of their utilization in future
periods.






The
Company is expected to file consolidated US tax return to realize the benefits
of foreign tax loss carryforwards against possible future foreign taxable
income.  Operating loss carry-forwards of $3,557,566 generated since
inception through December 31, 2009 will begin to expire in
2023   Accordingly, deferred tax assets of approximately $889,391
were completely offset by the valuation allowance Following are the components
of the income tax benefit based on the Ecuadorian tax rate of 25%.











Cumulative
            
            
            For
      the Year Ended December 31,from
            
            
            2009
            
            
            2008InceptionNet
      operating income (loss)
            
            $
            (3,557,566
            )
            
            $
            (3,361,445
            )
            
            $
            (132,502
            )Current
      provisionDomesticFederal
            
            $
            -
            
            
            $
            -
            
            
            $
            -State
      & Local
            
            
            -
            
            
            
            -
            
            
            
            -Foreign
            
            
            -
            
            
            
            -
            
            
            
            -Deferred
      (benefit) provisionDomesticFederal
            
            
            -
            
            
            
            -
            
            
            
            -State
      & Local
            
            
            -Foreign
            
            
            (889,391
            )
            
            
            (840,361
            )
            
            
            (33,126
            )Total
      tax benefit
            
            
            (889,391
            )
            
            
            (840,361
            )
            
            
            (33,126
            )Valuation
      allowance
            
            
            889,391
            
            
            
            840,361
            
            
            
            33,126Net
      benefit (provision)
            
            $
            -
            
            
            $
            -
            
            
            $
            -




51


Trilliant
Exploration Corporation




(A
Pre-Exploration Stage Company)


Notes to
Audited Consolidated Financial Statements


Years
Ended December 31, 2009 and 2008, and the


Period of
December 29, 2003 (Inception) to December 31, 2009





NOTE 4 –
STOCKHOLDERS’ DEFICIT





Article
Amendment


Effective
December 1, 2008, the Company amended its Articles of Incorporation thereby
increasing its authorized common and preferred stock to 1,000,000,000 and
200,000,000 shares, respectively.  The par value for preferred and
common stock is $.001.  This change has been reflected in the
accompanying financial statements.





Stock
Splits


On
November 9, 2007, the Company affected a 2 for 1 forward split on its common
stock.  On November 14, 2008, the Company affected another 2 for 1
forward stock split.  Par value remained at $.001, and both splits
have been retroactively applied to the earliest period presented in the
accompanying financial statements.




Preferred
Stock and Treasury Stock






On June
30, 2009, the Company issued to Trafalgar Capital Specialized Investment Fund
FIS (“Trafalgar”) (a significant stockholder of the Company), 10,200,000 shares
of designated Series I Preferred Stock (par value $.001), in exchange for
5,900,000 shares of the Company’s own common stock previously held by
Trafalgar.  The 5,900,000 common shares were acquired at $1.73 per
share and the preferred stock was issued at $1.00 per share.  The
transaction was recorded using the Cost Method, resulting in treasury stock of
$10,200,000 and an increase to Additional Paid in Capital of
$10,189,800




Series I
preferred stockholders do not receive interest or dividends separately from
common stock shareholders.  Series I shall participate in dividends
when and if declared in the same proportion as common stock
shareholders.  Series I preferred stock is convertible into common
shares at the lowest volume weighted average price of the common shares in the
five days preceding conversion.





Common
Stock


The
Company had 93,131,500 and 91,940,000 shares of common stock issued and
outstanding at December 31, 2009 and 2008, respectively.  The
Company’s common stock is thinly traded with a limited market.  As of
December 31, 2009, the stock was trading at a market price of $.014 per
share.





Following
are the Company’s stock transactions on a post-2007 and 2008 stock split
basis:





On
December 29, 2003, the Company issued 16,000,000 shares of its common stock at
$.00025 for $4,000 subscriptions receivable.  Collection of $2,000 of
the subscriptions receivable was completed on 8,000,000 shares.  The
remaining $2,000 subscription receivable and the underlying 8,000,000 shares
were cancelled.  The proceeds were used for working
capital.





On
December 15, 2005, the Company issued 72,000,000 shares of its common stock at
$.00025 per share for $18,000.  The proceeds were used for working
capital and to execute the Company’s business plan.




52


Trilliant
Exploration Corporation




(A
Pre-Exploration Stage Company)


Notes to
Audited Consolidated Financial Statements


Years
Ended December 31, 2009 and 2008, and the


Period of
December 29, 2003 (Inception) to December 31, 2009





NOTE 4 –
STOCKHOLDERS’ DEFICIT (CONT’D)





On March
15, 2006, the Company sold 10,000,000 shares at $.00025 per share for $2,500
cash. The proceeds were used for working capital.





During
January through March of 2007, the Company sold 1,300,000 shares of its common
stock at $.025 per share for $32,500 cash.  The proceeds were used for
working capital and to fund its operations.





On June
4, 2007, the Company sold 140,000 shares of its common stock for $.025 per
share.  The $3,500 cash received was used for working
capital.





On
November 6, 2007, the Company sold 5,000,000 shares of its common stock at
$.00025 for $1,250 cash.  On the same date, 1,000,000 shares of common
stock were exchanged at $.00025 for a $250 reduction in loans from
stockholders.





On February 14, 2008, 1,500,000 shares
of common stock were rescinded and cancelled for repayment of $250
cash.





On April
15 and May 21, 2008, four Company officers resigned their positions and were
refunded their initial stock investments for a total of $1,000 for 4,000,000
shares which were then cancelled.





In May
2009, the Company issued 25,000 shares to an independent investor at $.25 per
share for signing a letter of intent for funding.  As of December 31,
2009, the letter of intent had not yet been finalized and consideration for the
stock had not yet been received, resulting in a stock subscription receivable of
$6,250 reported in the stockholders’ deficit section of the balance
sheet.  Management considers these funds unlikely to be received and
has expensed $6,250 as consulting fees as of December 31, 2009.




During
June 2009, the Company sold to four independent investors, 184,000 shares of
common stock at a price of $.25 per share for $46,000 cash.






On July
20, 2009, the Company sold to independent investors 40,000 shares of restricted
common stock at $.25 per share for $10,000 cash.






In July
2009, the Company issued an additional 500,000 shares of restricted stock to an
independent investor at $.25 per share for signing a letter of intent for
funding.  This established a deposit of $125,000 and additional paid
in capital of $124,500.  As of December 31, 2009 the letter of intent
had not been finalized and uncertainty exists in the ability of the investor to
complete the transaction.  Management considers the deposit of
$125,000 unlikely to be received, and issued orders to the transfer agent to
cancel the stock certificate.  The Company retains the right and
obligation of not lifting the restriction on the stock and has requested the
investor return the restricted stock certificate  The deposit of
$125,000 was expensed as consulting fees as of December 31, 2009.






On July
20, 2009, the Company issued to a consultant 2,500 shares at $.40 per share for
services totaling $1,000






53


Trilliant
Exploration Corporation




(A
Pre-Exploration Stage Company)


Notes to
Audited Consolidated Financial Statements


Years
Ended December 31, 2009 and 2008, and the


Period of
December 29, 2003 (Inception) to December 31, 2009





NOTE 4 –
STOCKHOLDERS’ DEFICIT (CONT’D)




On August
5, 2009, the Company sold to an independent investor, 40,000 shares of common
stock at a price of $.25 per share for $10,000.






On August
26, 2009, the Company issued to three consultants a total of 100,000 shares of
common stock at $.18 per share ($18,000 value) and 150,000 warrants at $.17 per
share ($25,500 value) for services totaling $43,500.  The
Black-Scholes Option  Pricing Model was used to determine the fair
value of the warrants using the following assumptions:  On August 26,
2009 the closing price was $.18 per share and the risk free rate on 3 year
treasuries was 1.57%, options expire in three years, immediate vesting, no
dividends, and stock volatility of 260%.






On
September 9, 2009, the Company issued to a consultant 200,000 shares of common
stock at $.15 per share for services totaling $30,000.  The contract
term is six months, resulting in $12,600 expensed as of December 31, 2009 and
$12,600 recorded as services prepaid with stock in the stockholders’ equity
(deficit) section of the balance sheet.






On
December 15, 2009, the Company issued 100,000 shares of common stock to an
officer at $.75 per share for total value of $75,000.  The issuance
was pursuant to an employment agreement whereby the officer would receive a
stock bonus should he serve out his term as specified in the agreement (see Note
6D).




On
December 21, 2009, the Company entered into an agreement with Questas Global Ltd
(Questas) by which the Company issued 10,000,000 warrants on common stock at
$.003 per share in exchange for office space and services  provided to
the Company president over the past year for a total of
$194,353.  Terms of the warrant allow for Questas to purchase up to
10,000,000 shares of common stock under a cashless purchase after six months at
..003 cents per share, and the warrants expire five years from the date of the
contract.  As a cashless exchange, if the fair market value of the
common stock is greater than the exercise price, Questas may elect to receive
shares equal to the value of the warrants.  The exercise of warrants
is restricted such that Questas may not obtain beneficial ownership of more the
4.99% of the outstanding shares of common stock (see Note 7).




The
Company had 93,131,500 and 87,131,500 shares of common stock issued and
outstanding, respectively (taking into consideration the 5,900,000 shares of
treasury stock) at December 31, 2009 and 91,940,000 shares of common stock
issued and outstanding at December 31, 2008.  The Company’s common
stock is thinly traded with a limited market.  As of December 31,
2009, the stock was trading at a market price of $.014 per share.






NOTE 5 -
PURCHASE OF MINING CLAIMS






On March
30, 2009, Trilliant Exploration Corp. acquired one mine held by MuluncayGoldCorp
(Muluncay) and six other mining properties from Minera del Pacifico (Pacifico)
(Note 10).     One claim identified as the Caspach
mining region, originally purchased by Muluncay on January 29, 2008 for $50,000,
was revoked on June 10, 2008 by the Ecuadorian government for failure to meet
100 ton per day production requirements. A legal appeal to reclaim the
concession has been made.   As of December 31, 2009 Management
discontinued all operations in Ecuador.











54











Trilliant
Exploration Corporation




(A
Pre-Exploration Stage Company)


Notes to
Audited Consolidated Financial Statements


Years
Ended December 31, 2009 and 2008, and the


Period of
December 29, 2003 (Inception) to December 31, 2009







NOTE 6-
RELATED PARTY TRANSACTIONS






A.1
– Convertible Notes Payable













The
Company has entered into multiple convertible notes payable agreements with an
investment firm that is also a minority stockholder of the
Company.  Each note carries a separately dated promissory note that
bears interest of 8% and is payable on or before August 31, 2010, with each
funding due one year from original date of receipt.  Principal and
interest are convertible at the option of the note-holder into shares of the
Company’s common stock at the rate of 80% of the average of the five daily
volume weighted average price preceding the conversion date.






Accrued
interest and interest expense on the convertible notes payable as of and for the
year ended December 31, 2009 totaled $35,897 Due to the contingent nature of the
conversion price, no beneficial conversion feature was noted.




The
convertible promissory notes with the investment firm are summarized as
follows:





Loan
      No.
            Amount
            Date
            Maturity
            Interest
      Rate1
            $  90,000
            12/31/2008
            1/5/2010
            8.00%2
            100,000
            1/16/2009
            1/5/2010
            8.00%3
            50,000
            1/23/2009
            1/5/2010
            8.00%4
            25,000
            2/2/2009
            1/5/2010
            8.00%5
            10,000
            3/9/2009
            1/5/2010
            8.00%6
            50,000
            4/8/2009
            4/8/2010
            8.00%7
            75,000
            4/27/2009
            4/27/2010
            8.00%7
            (75,000)
            5/29/2009
            payment8
            25,000
            6/23/2009
            6/23/2010
            8.00%9
            100,000
            7/1/2009
            7/1/2010
            8.00%10
            20,000
            7/6/2009
            7/6/2010
            8.00%11
      (A)
            195,000
            8/27/2009
            8/31/2010
            8.00%Balance,
      Dec. 31, 2009
            $
      665,000




(A)In August, the Company
      entered into a master borrowing agreement with the investment firm, which
      allows for notes payable of up to $500,000 to be paid in installments as
      needed.  Each note carries a separately dated promissory note
      that bears interest of 8% and is payable on or before August 31,
      2010.  As of December 31, 2009, six installments were made
      totaling $195,000.













B
– Short-Term Notes Payable






The
Company has borrowed funds from stockholders for working capital purposes from
time to time.  The loans are non-interest bearing, payable on demand
and, consequently, reported as current liabilities.  The Company has
received $39,514 in advances since inception and made repayments of $7,019 in
cash, resulting in a payable balance of $32,495 as of December 31, 2009 and
2008  The Company also owes its officers and directors $24,589 and $0
at December 31, 2009 and 2008, respectively, for reimbursable expenses incurred
in the normal course of business.






55


Trilliant
Exploration Corporation




(A
Pre-Exploration Stage Company)


Notes to
Audited Consolidated Financial Statements


Years
Ended December 31, 2009 and 2008, and the


Period of
December 29, 2003 (Inception) to December 31, 2009







NOTE 6-
RELATED PARTY TRANSACTIONS (CONT’D)






C
– Notes Receivable






On
October 16, 2008, the Company entered into a note receivable agreement with
Minera del Pacifico (Pacifico), a 17.36% stockholder of the Company, whereby the
Company was required to advance Pacifico up to $1,200,000 in anticipation of the
purchase of MuluncayGoldCorp from Pacifico (Note 10).  A total of
$1,195,000 was advanced to Pacifico as follows:




No.
            Amount
            Due1
            $   500,000
            10/16/20082
            400,000
            10/17/20083
            90,000
            12/30/20084
            100,000
            1/16/20095
            50,000
            1/23/20096
            25,000
            2/2/20097
            20,000
            2/18/20098
            10,000
            3/9/2009




The note
bore interest of 8% and was payable on or before January 5, 2010.  The
December 31, 2008 balance comprises the first, second, and third installments
totaling $990,000.  Interest earned on the note for the period of the
note’s inception through December 31, 2008 totaled $14,904, all of which was
receivable at December 31, 2008  Interest income of $22,633 was earned
during the three months ended March 31, 2009.  On March 30, 2009,
Pacifico was released from any repayment obligation pursuant to the Share
Transfer Agreement disclosed in Note 10.




D
– Accrued Officer Compensation




The
Company has executed service agreements with its Director and Officers, whereby
these individuals will perform management functions on the Company’s
behalf.  The Secretary was to receive $4,000 monthly compensation for
the 15-month period of October 2008 through December 2009.  On
December 22, 2009 the Secretary resigned his position. The President and sole
Director is to receive $3,000 monthly compensation for the 13-month period of
December 2008 to December 2009, with a 100,000 share stock bonus to be granted
at the end of the contract term if he performs his contracted duties for a
period of 6 months of more.   For duties less than 12 months, but
greater than 6 months, the stock bonus shall be prorated at 8,333 shares per
full calendar month.






Pursuant
to ASC Topic Nos. 505 and 718, the bonus was valued on the grant date using the
Black-Scholes Options Pricing model.   The risk-free interest
rate is based on the U.S. Treasury rates at the date of grant. Expected
volatility is based on the historical volatility of the Company’s stock. The
Black Scholes valuation was derived based on the bonus term of one year as
expected life, the stock price of $.75, assuming a risk-free interest rate
between 4% and 5% per annum, and zero volatility, dividend yield, and forfeiture
rate. The resulting total fair value of the bonus on the grant date was $75,000,
which the Company is recognizing as compensation expense ratably over the term
of the management agreement.  The Company has recognized $150,060 in
compensation expense with these individuals during the year ended December 31,
2009, including $75,000 in stock bonus compensation.











56




Trilliant
Exploration Corporation




(A
Pre-Exploration Stage Company)


Notes to
Audited Consolidated Financial Statements


Years
Ended December 31, 2009 and 2008, and the


Period of
December 29, 2003 (Inception) to December 31, 2009







NOTE 6-
RELATED PARTY TRANSACTIONS (CONT’D)






E
– Bonds Payable, Convertible & Secured






October
15, 2008 Bonds






On
October 15, 2008, the Company issued $1,300,000 in convertible secured bonds to
a stockholder for net proceeds of $1,235,356 (including two months of prepaid
interest totaling $19,500 retained by the stockholder that was amortized to
interest expense by December 31, 2008).  The bonds bear interest of 9%
and mature (if not converted) on October 15, 2010.  Upon default, the
interest rate is increased to 18%.  The stockholder incurred bond
issuance costs of $64,644, which are being amortized to interest expense on a
straight-line basis over the term of the bond.  The carrying amount of
the bond issuance costs at December 31, 2009 and December 31, 2008 was
$92,585and $57,214, respectively, net of $42,805and $7,430, respectively, in
amortization.  Interest payments are made mid-month, resulting in bond
interest payable of $49,115 at December 31, 2009.  Bond interest
expense was $142,1545 (including $24,519 in bond issuance cost amortization) for
the year ended December 31, 2009.






The bonds
have an optional conversion feature whereby the stockholder is entitled to
convert the bonds and accrued interest at any time based on the lesser of the
stock price on the bonds’ inception (the ‘Fixed Price,’ which was determined to
be $.61 per share) or the lowest daily closing volume weighted average price
during the five days preceding conversion.  If the common stock price
drops below the Fixed Price, the Company has the option to redeem the bonds,
provided it pays a 16% redemption premium on the amount redeemed.  If
the bonds are not converted, the Company is required to make interest-only
payments for a period of one year following the bonds’
inception.  Thereafter, the Company shall continue making monthly
interest payments, in addition to quarterly principal payments of $325,000 and
quarterly 16% redemption premium payments that amount to $52,000 per quarter
($208,000 total).  Due to the contingent nature of the conversion
price, no beneficial conversion feature was recorded






April
30, 2009 Bonds






On April
30, 2009, the Company issued $300,000 in convertible secured bonds to a
stockholder for net proceeds of $258,856 (including two months of prepaid
interest totaling $4,500 retained by the stockholder that was amortized to
interest expense by December 31, 2009).  The bonds bear interest of 9%
and mature (if not converted) on October 31, 2010.  Upon default, the
interest rate is increased to 18%.  The stockholder incurred bond
issuance costs of $41,144, which are being amortized to interest expense on a
straight-line basis over the term of the bond.  The carrying amount of
the bond issuance costs at December 31, 2009 was $23,152, net of
$18,286  in amortization for the year ended December 31,
2009.  Interest payments are made at month-end, resulting in bond
interest payable of $6,750 at December 31, 2009.  Bond interest
expense was $31,786 (including $18,286 in bond issuance cost amortization) for
the year ended December 31, 2009.






The bonds
have an optional conversion feature whereby the stockholder is entitled to
convert the bonds and accrued interest at any time based on the lesser of the
stock price on the bonds’ inception (the ‘Fixed Price,’ which was determined to
be $.61 per share) or the lowest daily closing volume weighted average price
during the five days preceding conversion.  If the common stock price
drops below the Fixed Price, the Company has the option to redeem the bonds,
provided it pays a 16% redemption premium on the amount redeemed.









57






Trilliant
Exploration Corporation




(A
Pre-Exploration Stage Company)


Notes to
Audited Consolidated Financial Statements


Years
Ended December 31, 2009 and 2008, and the


Period of
December 29, 2003 (Inception) to December 31, 2009







NOTE 6-
RELATED PARTY TRANSACTIONS (CONT’D)






E
– Bonds Payable, Convertible & Secured (cont’d)






April
30, 2009 Bonds (cont’d)






If the
bonds are not converted, the Company is required to make interest-only payments
for a period of eighteen months following the bonds’
inception.  Thereafter, the Company shall continue making monthly
interest payments, in addition to quarterly principal payments of $75,000 and
quarterly 16% redemption premium payments that amount to $12,000 per quarter
($48,000 total).  Due to the contingent nature of the conversion
price, no beneficial conversion feature was noted.






October
12, 2009 Bonds






On
October 12, 2009, the Company issued $210,000 in convertible secured bonds to a
stockholder for net proceeds of $210,000 The bonds bear interest of 9% and
mature (if not converted) on January 12, 2010 or upon completion of any new
investments in the company exceeding $1,500,000.  Upon default, the
interest rate is increased to 18%, and the company may convert all bonds held by
lender without restriction  The Company incurred bond issuance costs
of $42,000, which are being accrued to bonds payable on a straight-line basis
over the term of the bond.  The carrying amount of the bond issuance
costs at December 31, 2009 was $23,062. Interest payments are made at month-end,
resulting in bond interest payable or $4,115 at December 31,
2009.  Bond interest expense was $4,115 for the year ended December
31, 2009.  Use of the funds was to provide services for new financing,
payment on mortgages, payment of past due bills, and to support
operations.






The bonds
have an optional conversion feature whereby the stockholder is entitled to
convert the bonds and accrued interest at any time based on the lesser of the
stock price on the bonds’ inception (the ‘Fixed Price,’ which was determined to
be $.07 per share) or the lowest daily closing volume weighted average price
during the five days preceding conversion.  If the common stock price
drops below the Fixed Price, the Company has the option to redeem the bonds,
provided it pays a 16% redemption premium on the amount redeemed.  Due
to the contingent nature of the conversion price, no beneficial conversion
feature was noted. Limitations on conversion prevent the number of shares issued
from exceeding 9.99%.  The bonds carry a currency rate conversion
clause wherein if the Euro to US dollar exchange rate is lower than the rate of
October 12, 2009 then the number of shares to be issued shall be increased by an
equal percentage of the decline in the exchange rate.






November
3, 2009 Bonds






On
November 3, 2009, the Company issued $210,000 in convertible secured bonds to a
stockholder for net proceeds of $210,000 The bonds bear interest of 9% and
mature (if not converted) on February 3, 2010 or upon completion of any new
investments in the Company exceeding $1,500,000.  Upon default, the
interest rate is increased to 18%.  Interest payments are made at
month-end, resulting in bond interest payable or $2,993 at December 31,
2009.  Bond interest expense was $2,993 for the year ended December
31, 2009.  Use of the funds was to provide payment on mortgages and
payment of past due bills.






The bonds
have an optional conversion feature whereby the stockholder is entitled to
convert the bonds and accrued interest at any time based on the lesser of the
stock price on the bonds’ inception (the ‘Fixed Price,’ which was determined to
be $.07 per share) or the lowest daily closing volume weighted average price
during the five days preceding conversion.






58


Trilliant
Exploration Corporation




(A
Pre-Exploration Stage Company)


Notes to
Audited Consolidated Financial Statements


Years
Ended December 31, 2009 and 2008, and the


Period of
December 29, 2003 (Inception) to December 31, 2009







NOTE 6-
RELATED PARTY TRANSACTIONS (CONT’D)






E
– Bonds Payable, Convertible & Secured (cont’d)






November
3, 2009 Bonds (cont’d)






If the
common stock price drops below the Fixed Price, the Company has the option to
redeem the bonds, provided it pays a 16% redemption premium on the amount
redeemed.   Due to the contingent nature of the conversion price,
no beneficial conversion feature was noted. Limitations on conversion prevent
the number of shares issued from exceeding 9.99%.  The bonds carry a
currency rate conversion clause wherein if the Euro to US dollar exchange rate
is lower than the rate of October 12, 2009 then the number of shares to be
issued shall be increased by an equal percentage of the decline in the exchange
rate.  The Company is required to place 100,000,000 shares of common
stock into escrow, which shall be released unconditionally in the event of
default.













NOTE 7 -
OTHER MATERIAL CONTRACTS






On
October 21, 2008, the Company entered into a consulting agreement, whereby the
consultant would assist the Company with various aspects of the Company's merger
and acquisition activities.  Upon the agreement’s inception, the
Company paid the consultant a non-refundable fee of $100,000 for services to be
rendered for the six-month period of October 21, 2008 through April 21, 2009,
resulting in consulting expense of $38,000 for 2008 and a prepaid expense of
$62,000 at December 31, 2009.  The prepaid expense was amortized
ratably during 2009 over the remainder of the agreement term.






In June
2009, the Company acquired a one year insurance policy with total premium of
$20,760.  As of December 31, 2009 total payments of $20,760 were made
and $11,591 of the total premium has been amortized, resulting in a balance of
$9,169 as of December 31, 2009




On June
22, 2009, the Company entered into a consulting agreement, whereby the
Consultant will promote the Company with brokers and potential
investors.  The contract term is six months at $25,000 per month for
total potential fees of $150,000.  Upon signing, the Company paid and
immediately expensed $25,000 for the first month of service.  The
Company may terminate the contract at any time without cause.The Company
terminated the contract after completion of the first month and is not obligated
to further payments.




On
October 12, 2009 the Company entered into an engagement agreement with a
registered Securities Broker-Dealer, whereby the Broker-Dealer will act as
placement agent in connection with a $30,000,000 private placement transaction
in two tranches dated December 15, 2009 and March 15, 2010. The initial fee is
$20,000.  Additional fees upon successful placement include 8.5% of
gross proceeds, 2% on all funds raised to Broker-Dealer and 2% of all funds
raised to another Broker-Dealer for co-management, 4.5% to the selling group
which may include the above listed Broker-Dealers, plus 1.5% on all funds raised
to be paid to Trafalgar Capital Advisors (an existing
shareholder).  The placement agent shall also receive upon successful
placement; warrants equal to 10% of the total value of all securities placed
with an exercise price of equal to the imputed equity placement price in the
offering, and have a cashless exercise price with an open option period of 5
years and an anti-dilution provision.  As of December 31, 2009 there
have been no further actions on this agreement and no securities placements have
occurred.






59


Trilliant
Exploration Corporation




(A
Pre-Exploration Stage Company)


Notes to
Audited Consolidated Financial Statements


Years
Ended December 31, 2009 and 2008, and the


Period of
December 29, 2003 (Inception) to December 31, 2009







NOTE 7 -
OTHER MATERIAL CONTRACTS (CONT’D)







On
December 21, 2009, the Company entered into an agreement with Questas Global Ltd
(Questas) by which the Company issued 10,000,000 warrants on common stock with
an exercise price of $.003 per share in exchange for office space and
services  provided to the Company president over the past
year.  The total value of warrants was $194,353, which is included in
general and administrative expenses for the year ended December 31,
2009.  Pursuant to ASC Topic Nos. 505 and 718, the warrants were
valued on the grant date using the Black-Scholes Options Pricing
model.   The risk-free interest rate is based on the U.S.
Treasury rates at the date of grant. Expected volatility was based on the
historical volatility of the Company’s stock. The Black Scholes valuation was
derived based on the exercise term of five years as expected life, the stock
price on the grant date of $.002, exercise price of $.003, assuming a risk-free
interest rate between 2% and 3% per annum, and 153% volatility, and 0% dividend
yield and forfeiture rate.  As a cashless exchange, if the fair market
value of the common stock is greater than the exercise price, Questas may elect
to receive shares equal to the value of the warrants.  The exercise of
warrants is restricted such that Questas may not obtain beneficial ownership of
more the 4.99% of the outstanding shares of common stock.





For the
year ending December 31, 2009 the Company paid $46,624 in prepaid expenses, and
amortized $24,191.  As of December 31, 2009 the unamortized balance is
$22,433 (including $9,169 in prepaid insurance described above).







NOTE 8 -
GOING CONCERN






The
accompanying financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America, which
contemplate continuation of the Company as a going concern.  The
Company has accumulated an operating deficit since its inception.  The
acquisition of MuluncayGoldCorp and properties from Minera del Pacifico
substantially increased the Company’s liabilities. Additionally, current
economic conditions in the United States and globally create significant
problems attaining sufficient funding.  Accordingly, management has
encountered significant difficulties in obtaining financing.  These
items raise substantial doubt about the Company’s ability to continue as a going
concern.  In view of these matters, realization of the assets of the
Company is dependent upon the Company’s ability to meet its financial
requirements through equity financing, borrowing, and the success of future
operations.  These financial statements do not include adjustments
relating to the recoverability and classification of recorded asset amounts and
classification of liabilities that might be necessary should the Company be
unable to continue in existence.






NOTE 9 -
SUBSEQUENT EVENTS




As
discussed in Note 12, the Company was notified on February 11, 2010 by Minera
Del Pacifico that the STA between the Company and MuluncayGoldCorp had been
terminated effective December 31, 2009.





The
Company has evaluated events from December 31, 2009, through the date whereupon
the financial statements were issued and has determined that there are no
additional items to disclose.





60




Trilliant
Exploration Corporation




(A
Pre-Exploration Stage Company)


Notes to
Audited Consolidated Financial Statements


Years
Ended December 31, 2009 and 2008, and the


Period of
December 29, 2003 (Inception) to December 31, 2009







NOTE 10 –
BUSINESS COMBINATIONS






A
– MuluncayGoldCorp S.A.






On March
30, 2009, Trilliant Exploration Corp. (Trilliant) acquired MuluncayGoldCorp S.A.
(an Ecuadorian Company) (Muluncay), and additional properties, from Minera del
Pacifico (Pacifico) pursuant to a Share Transfer Agreement
(STA).  Muluncay is engaged primarily in metallic mining operations,
such as the extraction and sale of gold and silver ores.  Muluncay
also extracts and sells rock, sand, and gravel.  Trilliant acquired
100% of the voting equity interest in Muluncay, as well as the assets and
liabilities. In addition, Trilliant acquired six properties from
Pacifico.  The purchase price for the net assets was a $3,600,000
contingent note payable to be paid in installments (discussed below) with
interest on the outstanding balance.  The Company was also required to
make an additional investment in Muluncay of $1,800,000 to further the
development of its existing and acquired properties.






The
primary reason for the acquisition was to provide cash-flow through Muluncay’s
mining operation, while upgrading the facilities to comply with the 100 ton/day
minimum operations required by Ecuador’s mining laws.  By exploiting
existing relationships of Muluncay’s existing management team, the Company was
hoping its presence would lead to acquisitions of other operating mining
companies which are unable to comply with the new 100 ton/day
requirements.






Expected
synergies from the acquisition of Muluncay were thought to have included
providing Trilliant the ability to acquire other mining operations in
Ecuador.  Many of the operating gold mines in Ecuador are not expected
to meet 100 tons/day minimum operations as required by Ecuador mining
law.






At the
time of purchase, goodwill included the mining potential of Mari Jane and Jaceth
Ethan mines.  ASC Topic No. 805 requires proven mineral rights to be
capitalized and recorded separately from goodwill.  Management was
unable to determine mineral rights separate from the purchase transaction for
lack of a comprehensive feasibility study.  As such, no mineral rights
were recorded.  In November 2009, the Company estimated the value of
the goodwill previously recorded should be assigned to mineral rights and
reclassified the estimate of goodwill accordingly.  Management
believes that while the Mari Jane and Jaceth Ethan mines are already producing
gold, they have the potential for greater production.






The
purchase of Muluncay lead to the acquisition of 7 properties which includes 6
mines and 1 plant for processing ore.  These are






1.
            Mari
      Jane Plant






2.
            Mari
      Jane Mine






3.
            Jaceth
      Ethan Mine, also known as Jacob Ethan or El
  Aguacate






4.
            La
      Chonta & Los Quiendes






5.
            Naranjito






6.
            Seňor
      de la Divina Justica






7.
            Las
      Cańas











61











Trilliant
Exploration Corporation




(A
Pre-Exploration Stage Company)


Notes to
Audited Consolidated Financial Statements


Years
Ended December 31, 2009 and 2008, and the


Period of
December 29, 2003 (Inception) to December 31, 2009







NOTE 10 –
BUSINESS COMBINATIONS






A
– MuluncayGoldCorp S.A. (CONT’D)






Of these
properties, only Las Canas is freely transferable at time of purchase and was
wholly owned by Muluncay.  All remaining properties were held by
Minera del Pacifico and were under mortgage.  Ecuadorian law allows
for the transfer of rights, but not ownership until existing mortgage balances
are paid in full. As such, mortgages totaling $604,161 were assumed by the
Company.  Since assumption of the mortgages, the Company has made
$200,541 in principal payments, resulting in a December 31, 2009 balance of
$403,620, all of which is payable by September 13, 2010.  The Company
has classified the entire amount as current.  Since the mortgages are
non-interest bearing, interest has been imputed on the notes and has recorded a
debt discount of $61,056.  Since assumption of the mortgages, $35,664
of the debt discount has been amortized to interest expense, resulting in an
unamortized debt discount of $25,392 and net present value of the mortgages of
$403,620 at December 31, 2009.






Payment
of the $3.6 Million purchase price was contingent upon Muluncay reaching
production of 400 tons/day.  If this threshold was not achieved, the
note and interest were not payable, and title to Muluncay’s net assets would
remain with Trilliant.  A value of $1,915,809 (net of interest imputed
on the mortgages) was assigned to the acquired plant, and $16,000 assigned to
the land where the plant is situated.  These items netted with the
other assets and liabilities acquired resulted in goodwill of $412,587
(including the Ecuadorian tax accrual reversal as described in Note 2 - Goodwill
and Other Intangibles). The transaction included various adjustments, such
as  the elimination of $1,195,000 notes receivable and $37,538 of
interest receivable from Minera del Pacifico (MDP) (Note 6C), which were
abolished pursuant to the terms of the STA.  All acquired assets and
liabilities were recorded at fair value.






Additional
assets acquired or liabilities assumed include, but are not limited to, the
following: $140,433 in customer receivables, foreign tax credits of $64,343, and
fixed assets of $97,382 (consisting primarily of machinery, computer,
electrical, and tooling equipment). In addition to the mortgages discussed
previously, the Company assumed supplier payables totaling $68,620, foreign tax
liabilities of $179,135, payroll liabilities of $8,090 (including related tax
obligation), and local and intangible tax obligations of $13,351.  The
Company assumed obligations payable to a principal stockholder of Pacifico in
the amount of $515,170, and unearned income of $38,000.  In addition,
Ecuadorian law requires that 10% of annual liquid profit be set aside in a legal
reserve fund, at the time of acquisition this amounted to $210 and was recorded
as such in the Stockholders’ Deficit section of the balance sheet.






The $3.6
Million contingent note payable to Pacifico bore interest of 4.5% per annum, and
was payable upon achievement of 400 tons per day (Minimum
Operations).  Beginning 30 days from the date of first reaching
Minimum Operations, the Company was to make four (4) quarterly payments to
Pacifico of $200,000 each.  After making the first four quarterly
payments, the Company was to continue to make quarterly payments in the minimum
amount of $300,000 until all principal and interest was fully paid.













Per Note
12, the Muluncay STA was terminated effective December 31, 2009.













62









Trilliant
Exploration Corporation




(A
Pre-Exploration Stage Company)


Notes to
Audited Consolidated Financial Statements


Years
Ended December 31, 2009 and 2008, and the


Period of
December 29, 2003 (Inception) to December 31, 2009







NOTE 10 –
BUSINESS COMBINATIONS (CONT’D)






B
– AyapambaGold S.A.






On July
1, 2009 the Company acquired 799 of 800 shares of AyapampaGold S.A (AYA) at $1
per share for a purchase price of $799. AYA was formed in mid-2007 as a shell
and has been inactive since inception. The Company acquired AYA to use as a
holding company in Ecuador to facilitate future potential
acquisitions.






On or
about July 23, 2009, AYA entered into a Share Purchase Agreement (SPA) to
acquire the assets and liabilities of Santa Fe Mining Corporation (SFM). SFM is
a gold processing company located in the El Oro Province of Ecuador. The total
purchase price is expected to be $1,631,844.  Initial payment of
$600,000 is required at execution of the purchase agreement.  Under
terms of the agreement, SFM is required to use initial payment to satisfy any
and all claims, liens, or encumbrances to title of any shares or assets to be
acquired by AYA.  The remainder of the purchase price is payable in
three installments of $343,948 due on or before each of the six months, twelve
months, and eighteen months following the signing date.  The
acquisition was expected to close in August 2009.  Management had not
completed the transaction as of December 31, 2009






NOTE 11 –
INVESTMENTS






On July
1, 2009, the Company entered into a convertible loan agreement under the laws of
England and Wales for the price of ₤1,500,000. Based on the July 1, 2009
Interbank exchange rate of 1.6568, the loan was initially valued and recorded at
$2,485,200.  The note bears interest of 12% and is payable on or
before June 24, 2010.  The loan and interest are convertible into the
Company’s common stock at $.45 per share.  Interest is accrued
quarterly but may be paid at maturity on June 24, 2010.  Early
payments must be in intervals of ₤100,000.  Accrued interest and
interest expense as of and for the period of July 1, 2009 through December 31,
2009 totaled $143,325 after currency translation adjustments of $5,787 recorded
to accumulated other comprehensive income.






On July
1, 2009, Trilliant Diamonds (a wholly-owned subsidiary of the Company) used the
funds to acquire 10,000,000 shares of Global Diamond Resources PLC (GDR) at ₤
..15 per share for total purchase price of ₤1,500,000, representing a 3.2%
ownership interest in GDR.  GDR is located in Gibraltar, Spain and
primarily engages in diamond mining.  The investment, likewise, was
recorded at $2,485,000, and is considered an available-for-sale security to be
adjusted to fair market value on reporting dates with holding gains and losses
tracked in other accumulated comprehensive income (loss) in accordance with ASC
Topic No. 320.  GDR is a private company, so the stock value is
difficult to determine.  Management has determined that there has been
no material change in the investment’s valuation since July 1, 2009, and has
therefore not recorded any holding gains or losses.






The
currency translation adjustment based on the Interbank exchange rate of 1.5928
as of December 31, 2009 is $96,000, resulting in the devaluation of the
investment and the note payable down to $2,389,200


















63


















Trilliant
Exploration Corporation




(A
Pre-Exploration Stage Company)


Notes to
Audited Consolidated Financial Statements


Years
Ended December 31, 2009 and 2008, and the


Period of
December 29, 2003 (Inception) to December 31, 2009







NOTE 12 –
DISCONTINUED OPERATIONS




As of
December 31, 2009, the Company was in default on credit arrangements for the
purchase of MuluncayGoldCorp.  The Company received a letter on
February 11, 2010 in which Minera Del Pacifico informed the Company of the
intent to enforce its rights under the agreements, and terminated all
contractual agreements between the two companies effective December 31,
2009.  Management, in the interest of the Company and lacking
financial means to further pursue contractual agreements, acknowledged the
letter from Minera Del Pacifico and released all claims on mining assets and
rights attached to previous agreements.





Effective
December 31, 2009, the Company disposed of its Muluncay Subsidiary and
recognized a Net Loss from Discontinued Operations of $1,964,636, consisting of
a $1,773,141 loss on disposal and $191,495 loss from operations for the period
of March 30, 2009 through December 31, 2009.  The Company was released
from all obligations and released all claims on assets primarily because it has
incurred significant operating losses since acquisition and the Company could
not attract operating capital to meet contractual obligations since the
acquisition of MuluncayGoldCorp.  The assets lost consisted primarily
of accounts receivable, inventories, property and equipment, and other assets.
Minera Del Pacifico also assumed certain accounts payable and accrued
liabilities.





The
following is a summary of the significant net assets lost and discharge of
liabilities as determined at December 31, 2009:





ASSETS
            
            
            
            LIABILITIESCurrent
      Assets
            
            
            
            Current
      LiabilitiesChecking/Savings
            $
            4,501
            
            Accounts
      payable - trade
            $
            57,940Accounts
      receivable trade
            
            86,788
            
            Bank
      overdrafts
            
            14,323Employee
      loans
            
            3,957
            
            Loan
      payable - related party
            
            644,985Accounts
      receivable - rel. party
            
            472,598
            
            Unearned
      income
            
            3,500Accounts
      Receivable - Other
            
            186,920
            
            Loans
      payable
            
            11,000Foreign
      tax credits
            
            16,078
            
            Foreign
      taxes payable
            
            120,736Inventory
            
            91,949
            
            Payroll
      liabilities
            
            91,975Fixed
      Assets
            
            
            
            Mortgage
      liabilities, net
            
            403,620Land
            
            16,000
            
            Total
      Liabilities
            $
            1,348,079Plant
            
            1,915,809Machinery
      and equipment
            
            105,213
            
            Net
      assets/loss on disposal
            $
            1,773,141Computer
      equipment
            
            614
            
            Operating
      loss, 3/30-12/31/09
            
            191,495Electrical
      equipment
            
            10,476
            
            Net
      loss, discontinued operations
            $
            1,964,636Tools
            
            4,351Accumulated
      depreciation
            
            (206,622)Other
      AssetsMineral
      rights (formerly goodwill)
            
            412,588Total
      Assets
            $
            3,121,220














64







ITEM 9. CHANGES IN AND
DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE




Our
principal independent registered public accounting firm is Child, Van Wagoner
& Bradshaw PLLC (CVWB”), 5296 S. Commerce Drive, Suite 300, Salt Lake City,
Utah 84107. The report of CVWB on our financial statements for fiscal years
ended December 31, 2009 and December 31, 2008 (which include the balance sheets
as of December 31, 2009 and 2008, and the statements of operations, other
comprehensive loss, changes in stockholders’ deficit for the period from
December 29, 2003 (inception) through December 31, 2009), did not contain an
adverse opinion or disclaimer of opinion, nor was it modified as to uncertainty,
audit scope or accounting principles, other than to state that there is
substantial doubt as to our ability to continue as a going
concern.  During our fiscal year ended December 31, 2009 and December
31, 2008, there were no disagreements between us and CVWB, whether or not
resolved, on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which, if not resolved to
the satisfaction of CVWB, would have caused CVWB to make reference thereto in
its report on our audited financial statements.




ITEM 9A. CONTROLS AND
PROCEDURES






EVALUATION
OF DISCLOSURE CONTROLS AND PROCEDURES




We maintain “disclosure controls and
procedures,” as such term is defined in Rule 13a-15(e) under the Securities
Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that
information required to be disclosed in our Exchange Act reports is recorded,
processed, summarized, and reported within the time periods specified in the
Securities and Exchange Commission rules and forms, and that such information is
accumulated and communicated to our management, including our Chief Executive
Officer and Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure.  We conducted an evaluation (the
“Evaluation”), under the supervision and with the participation of our Chief
Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the
effectiveness of the design and operation of our disclosure controls and
procedures (“Disclosure Controls”) as of the end of the period covered by this
report pursuant to Rule 13a-15 of the Exchange Act.  Based on this
Evaluation, our CEO and CFO concluded that our Disclosure Controls were
effective as of the end of the period covered by this report.





Changes
in Internal Controls





We have
also evaluated our internal controls for financial reporting, and there have
been no significant changes in our internal controls or in other factors that
could significantly affect those controls subsequent to the date of their last
evaluation.





Limitations on the Effectiveness of
Controls





Our
management, including our CEO and CFO, does not expect that our Disclosure
Controls and internal controls will prevent all errors and all fraud. A control
system, no matter how well conceived and operated, can provide only reasonable,
not absolute, assurance that the objectives of the control system are met.
Further, the design of a control system must reflect the fact that there are
resource constraints, and the benefits of controls must be considered relative
to their costs. Because of the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, within the Company have been detected. These
inherent limitations include the realities that judgments in decision-making can
be faulty, and that breakdowns can occur because of a simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people, or by management or board override
of the control.





65


The
design of any system of controls also is based in part upon certain assumptions
about the likelihood of future events, and there can be no assurance that any
design will succeed in achieving its stated goals under all potential future
conditions; over time, controls may become inadequate because of changes in
conditions, or the degree of compliance with the policies or procedures may
deteriorate. Because of the inherent limitations in a cost-effective control
system, misstatements due to error or fraud may occur and not be
detected.





CEO
and CFO Certifications





Appearing
immediately following the Signatures section of this report there are
Certifications of the CEO and the CFO. The Certifications are required in
accordance with Section 302 of the Sarbanes-Oxley Act of 2002 (the Section 302
Certifications). This Item of this report, which you are currently reading is
the information concerning the Evaluation referred to in the Section 302
Certifications and this information should be read in conjunction with the
Section 302 Certifications for a more complete understanding of the topics
presented.




ITEM 9B. OTHER
INFORMATION






Not
applicable.






ITEM 10. DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE






IDENTIFICATION
OF DIRECTORS AND EXECUTIVE OFFICERS






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






Our
directors and executive officers, their ages and positions held are as
follows:




Name
            Age
            Position
      with the CompanyJeffrey
      Sternberg
            48
            President,
      Chief Executive Officer and Treasurer/Chief Financial Officer and a
      Director





66


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,
and including other directorships held in reporting companies.





Jeffrey
Sternberg.Mr. Sternberg has been the President/Chief
Executive Officer and the Treasurer/Chief Financial Officer and a member of the
Board of Directors of the Company since February 1, 2010. Since the year 2000,
Mr. Sternberg has been involved with investment advisory firms providing
portfolio management and financial planning services to private and public
companies. From approximately 2007 to current date, Mr. Sternberg has served as
an analyst for Trafalgar Capital Advisors, LLC, an institutional investor
(“Trafalgar”), where he is responsible for tracking and evaluating potential
transactions and monitoring Trafalgar’s expenditures. From approximately 2004 to
2006, Mr. Sternberg served as the president of Advantage Capital Development
Corporation, a small business development company (“Advantage Capital”), where
he was primarily responsible for eliminating debt of client companies and
managing Advantage Capital’s general operations.





AUDIT
COMMITTEE AND CHARTER





We
have a separately-designated audit committee of the board. Audit committee
functions are performed by our board of directors. Our director is not deemed
independent. All directors also hold positions as our officers. Our audit
committee is responsible for: (1) selection and oversight of our independent
accountant; (2) establishing procedures for the receipt, retention, and
treatment of complaints regarding accounting, internal controls, and auditing
matters; (3) establishing procedures for the confidential, anonymous submission
by our employees of concerns regarding accounting and auditing matters; (4)
engaging outside advisors; and, (5) funding for the outside auditory and any
outside advisors engagement by the audit committee. .





AUDIT
COMMITTEE FINANCIAL EXPERT





None of
our directors or officers has the qualifications or experience to be considered
a financial expert. We believe the cost related to retaining a financial expert
at this time is prohibitive. Further, because of our limited operations, we
believe the services of a financial expert are not warranted.





CODE
OF ETHICS





We have
adopted a corporate code of ethics. We believe our code of ethics is reasonably
designed to deter wrongdoing and promote honest and ethical conduct; provide
full, fair, accurate, timely, and understandable disclosure in public reports;
comply with applicable laws; ensure prompt internal reporting of code
violations; and provide accountability for adherence to the code.





DISCLOSURE
COMMITTEE AND CHARTER





67


We have a
disclosure committee and disclosure committee charter. Our disclosure committee
is comprised of all of our officers and directors. The purpose of the committee
is to provide assistance to the Chief Executive Officer and the Chief Financial
Officer in fulfilling their responsibilities regarding the identification and
disclosure of material information about us and the accuracy, completeness and
timeliness of our financial reports.





COMMITTEES
OF THE BOARD OF DIRECTORS





As of the
date of this Annual Report, we have not established a compensation committee nor
a nominating committee. We intend within the next fiscal quarter to establish
such committees and adopt and authorize certain corporate governance policies
and documentation.




FAMILY
RELATIONSHIPS






There are
no family relationships among our directors or officers.






INVOLVEMENT IN CERTAIN LEGAL
PROCEEDINGS






During
the past five years, none of our directors, executive officers or persons that
may be deemed promoters is or have been involved in any legal proceeding
concerning: (i) 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; (ii) any conviction in
a criminal proceeding or being subject to a pending criminal proceeding
(excluding traffic violations and other minor offenses); (iii) 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 involvement in any type of business,
securities or banking activity; or (iv) being found by a court, the Securities
and Exchange 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).






COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT






Section
16(a) of the Exchange Act requires our directors and officers, and the persons
who beneficially own more than ten percent of our common stock, to file reports
of ownership and changes in ownership with the Securities and Exchange
Commission. Copies of all filed reports are required to be furnished to us
pursuant to Rule 16a-3 promulgated under the Exchange Act. Based solely on the
reports received by us and on the representations of the reporting persons, we
believe that these persons have complied with all applicable filing requirements
during the fiscal year ended December 31, 2009. The exception to the compliance
is




ITEM 11. EXECUTIVE
COMPENSATION





The
following table sets forth the compensation paid to our Chief Executive Officer
and those executive officers that earned in excess of $100,000 during fiscal
years ended December 31, 2009 and 2008 (collectively, the “Named Executive
Officers”):





SUMMARY
COMPENSATION TABLE







68





Executive Officer Compensation
      TableName
      and
              Principal
      Position
            
            Year
              (US$)
            
            Salary
              (US$)
            
            
            Bonus
              (US$)
            
            
            Stock
      Awards
              (US$)
            
            
            Option
      Awards
              (US$)
            
            
            Non
      Equity Incentive Plan Compensation
              (US$)
            
            
            Nonqualified
      Deferred Compensation Earnings
              (US$)
            
            
            All
      Other Compensation
              (US$)
            
            
            Total
              (US$)William
      Lieberman, President
            
            2008
              2009
            
            $
            0
              36,000
            (1)
      (2)
            
            $
            0
              0
            
            
            
            0
              75,000
            
            
            
            0
              0
            
            
            
            0
              0
            
            
            
            0
              0
            
            
            
            0
              0
            
            
            $
            0
              111,000Andrew
      J Befumo, Secretary
            
            2008
              2009
            
            $
            10,000
              48,000
            (1)
      (2)
            
            
            0
              0
            
            
            
            0
              0
            
            
            
            0
              0
            
            
            
            0
              0
            
            
            
            0
              0
            
            
            
            0
              0
            
            
            $
            10,000
              48,000





(1)
            In
      order to retain cash flows and conserve expenses, we retain the
      specialized services of directors and officers.  As of December
      31, 2009 and December 31, 2008, we retained the services of William
      Lieberman – President, and Andrew Befumo – Secretary.  These
      individuals operate as consultants to the firm with the designated
      titles.  Mr. Lieberman receives $3000 per month base salary over
      a twelve-month period commencing December 31, 2008, with bonus eligibility
      of 100,000 shares of restricted stock payable upon the end of the contract
      term.  Mr. Befumo receives $4,000 per month (payable to Befumo
      & Schaeffer, PLLC), plus fees for additional services beyond the scope
      of his contract.


(2)
            Effective
      on December 20, 2009, we accepted the resignation of Andrew Befumo as our
      secretary. Effective on January 31, 2010, we accepted the resignation of
      William Lieberman as our President/Chief Executive Officer and
      Treasurer/Chief Financial Officer and a
  director.





The firm
employed use of Black-Scholes pricing methods.  Black-Scholes
methodology requires substantial calculation examining multiple inputs including
vesting, volatility, and stock price.  The resulting stock bonus
valuation on the December 15, 2008 grant date was determined to be $.75 per
share, or $75,000 total compensation to be recognized ratably over the requisite
service period (one-year contract period).  This resulted in a $3,125
bonus accrual for the period of December 15 through December 31, 2008 as noted
in the following table.





69


STOCK
OPTIONS/SAW GRANTS IN FISCAL YEAR ENDED DECEMBER 31, 2009





The
following table sets forth information as at December 31, 2009 relating to Stock
Options that have been granted to the Named Executive Officers:





Name
            
            Fees
      Earned or Paid in Cash
              ($)
            
            
            Stock
      Awards
              ($)
            
            
            Option
      Awards ($)
            
            
            Non
      Equity Incentive Plan Compensation
              ($)
            
            
            Change
      in Pension Value and Nonqualified Deferred Compensation
      Earnings
              ($)
            
            
            All
      Other Compensation
              ($)
            
            
            Total
              (US$)William
      Lieberman,
            
            $
            0
            
            
            $
            0
            
            
            
            0
            
            
            
            0
            
            
            
            0
            
            
            
            0
            
            
            $
            0





All
compensation received by our officers and directors has been
disclosed.  There are no stock option, retirement, pension, or profit
sharing plans for the benefit of our officers and directors.





Long-Term
Incentive Plan Awards





We do not have any long-term incentive
plans that provide compensation intended to serve as incentive for
performance.





EMPLOYMENT
AND CONSULTING AGREEMENTS





As of the
date of this Annual Report, we do not have any contractual relationships with
certain of our executive officers and directors as follows.





INDEMNIFICATION





Under our Bylaws, we may indemnify an
officer or director who is made a party to any proceeding, including a lawsuit,
because of his position, if he acted in good faith and in a manner he reasonably
believed to be in our best interest. We may advance expenses incurred in
defending a proceeding. To the extent that the officer or director is successful
on the merits in a proceeding as to which he is to be indemnified, we must
indemnify him against all expenses incurred, including attorney's fees. With
respect to a derivative action, indemnity may be made only for expenses actually
and reasonably incurred in defending the proceeding, and if the officer or
director is judged liable, only by a court order. The indemnification is
intended to be to the fullest extent permitted by the laws of the State of
Nevada.





Regarding
indemnification for liabilities arising under the Securities Act of 1933, which
may be permitted to directors or officers under Nevada law, we are informed
that, in the opinion of the Securities and Exchange Commission, indemnification
is against public policy, as expressed in the Act and is, therefore,
unenforceable.




ITEM 12. SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS




As of the
date of this Annual Report, the following table sets forth certain information
with respect to the beneficial ownership of our common stock by each stockholder
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. As of the date of
this Annual Report, there are 93,131,500 shares of common stock issued and
outstanding.





70


Name
      and address of Beneficial Owner
            Amount
      and Nature of Beneficial Ownership
            Position
            Percent
      of ClassJeffrey
      Sternberg
              Address
            -0-
            Current
      President/CEO/CFO/ Director
            -0-William
      Lieberman
              140
      West 4th St. Apartment 9
              New
      York, NY 10012
            300,000
            Prior
      President/Director
            0.32%Andrew
      Befumo
              PO
      Box 717
              Culpeper,
      VA 22701
            250,000
            Prior
      Secretary
            0.27%Compania
      Minera del Pacifico, S.A.
              Cir.
      Norte #511 Y 12 AVA
              Machala,
      El Oro, Ecuador
            16,500,000
            N/A
            17.72%Benstole
      Invest LTD
              24
      De Castro Street
              Wickhams
      Cay 1
              Road
      Town, Tortola
            10,000,000
            N/A
            10.74%Phillip
      C. Smith
              2877
      South Paradise Suite 2206
              Las
      Vegas, Nevada 89109
            10,000,000
            N/A
            10.74%







*
            Less
      than one percent.




Under
Rule 13d-3, a beneficial owner of a security includes any person who, directly
or indirectly, through any contract, arrangement, understanding, relationship,
or otherwise has or shares: (i) voting power, which includes the power to vote,
or to direct the voting of shares; and (ii) investment power, which includes the
power to dispose or direct the disposition of shares. Certain shares may be
deemed to be beneficially owned by more than one person (if, for example,
persons share the power to vote or the power to dispose of the shares). In
addition, shares are deemed to be beneficially owned by a person if the person
has the right to acquire the shares (for example, upon exercise of an option)
within 60 days of the date as of which the information is provided. In computing
the percentage ownership of any person, the amount of shares outstanding is
deemed to include the amount of shares beneficially owned by such person (and
only such person) by reason of these acquisition rights. As a result, the
percentage of outstanding shares of any person as shown in this table does not
necessarily reflect the person’s actual ownership or voting power with respect
to the number of shares of common stock actually outstanding as of the date of
this Annual Report. As of the date of this Annual Report, there are 93,131,500
shares issued and outstanding.









71


CHANGES
IN CONTROL





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





ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE





As of the
date of this Annual Report, other than as disclosed below, none of our
directors, officers or principal stockholders, nor any associate or affiliate of
the foregoing, have any interest, direct or indirect, in any transaction or in
any proposed transactions, which has materially affected or will materially
affect us during fiscal year ended December 31, 2009.





Short-term
Notes Payable – Related Parties







We have borrowed funds from
stockholders for working capital purposes from time to time.  The
loans are non-interest bearing.  They are payable on demand and,
consequently, reported as current liabilities.  We have received
$39,514 in advances since inception and made repayments of $7,019 in cash,
resulting in a payable balance of $32,495 as of December 31,
2009.  Interest has not been imputed due to its immaterial impact on
the financial statements. The Company also owes its officers and
directors $24,589 and $0 at December 31, 2009 and 2008, respectively, for
reimbursable expenses incurred in the normal course of business.










On
January 11, 2008, we received $10,000 from a stockholder pursuant to a note
dated January 19, 2008.  Terms were 8% interest with repayment due
upon receipt by us of $250,000 in equity financing.  Interest accrued
through May 21, 2008 was $287.  On May 21, 2008, the stockholder
forgave the note principal and accrued interest to compensate us for various
expenses incurred in reliance on the mineral purchase agreement which was
unfulfilled (Note 5).  The $10,000 forgiveness was recognized by us as
an increase in additional paid-in capital, while the interest of $287 was
reversed against expenses.





Long-term
Notes Payable







The
Company has entered into multiple convertible notes payable agreements with an
investment firm that is also a minority stockholder of the
Company.  Each note carries a separately dated promissory note that
bears interest of 8% and is payable on or before August 31, 2010, with each
funding due one year from original date of receipt.  Principal and
interest are convertible at the option of the note-holder into shares of the
Company’s common stock at the rate of 80% of the average of the five daily
volume weighted average price preceding the conversion date.






Accrued
interest and interest expense on the convertible notes payable as of and for the
year ended December 31, 2009 totaled $35,897. Due to the contingent nature of
the conversion price, no beneficial conversion feature was noted.




The
convertible promissory notes with the investment firm are summarized as
follows:








72





Loan
      No.
            Amount
            Date
            Maturity
            Interest
      Rate1
            $  90,000
            12/31/2008
            1/5/2010
            8.00%2
            100,000
            1/16/2009
            1/5/2010
            8.00%3
            50,000
            1/23/2009
            1/5/2010
            8.00%4
            25,000
            2/2/2009
            1/5/2010
            8.00%5
            10,000
            3/9/2009
            1/5/2010
            8.00%6
            50,000
            4/8/2009
            4/8/2010
            8.00%7
            75,000
            4/27/2009
            4/27/2010
            8.00%7
            (75,000)
            5/29/2009
            payment8
            25,000
            6/23/2009
            6/23/2010
            8.00%9
            100,000
            7/1/2009
            7/1/2010
            8.00%10
            20,000
            7/6/2009
            7/6/2010
            8.00%11
      (A)
            195,000
            8/27/2009
            8/31/2010
            8.00%Balance,
      Dec. 31, 2009
            $
      665,000




(A)In August, the Company
      entered into a master borrowing agreement with the investment firm, which
      allows for notes payable of up to $500,000 to be paid in installments as
      needed.  Each note carries a separately dated promissory note
      that bears interest of 8% and is payable on or before August 31,
      2010.  As of December 31, 2009, six installments were made
      totaling $195,000.







Notes
Receivable and Share Transfer Agreement





On
October 16, 2008, we entered into a note receivable agreement with Minera del
Pacifico (Pacifico) a significant stockholder, whereby we were required to
advance Pacifico up to $1,200,000.  A total of $1,195,000 was advanced
to Pacifico as follows





No.
            Amount
            Due1
            $   500,000
            10/16/20082
            400,000
            10/17/20083
            90,000
            12/30/20084
            100,000
            1/16/20095
            50,000
            1/23/20096
            25,000
            2/2/20097
            20,000
            2/18/20098
            10,000
            3/9/2009





The note
bears interest of 8% and was payable on or before January 5,
2010.  The December 31, 2008 balance was comprised of the first,
second, and third installments totaling $990,000.  Interest earned on
the note for the period of the note’s inception through December 31, 2008
totaled $14,904, all of which was receivable at year-end.  Proceeds
from this loan correspond with several of the payments for, and are being
partially funded by, the Long-term Notes Payable above.





73


On March
30, 2009, we executed the Share Transfer Agreement whereby we purchased 100%
ownership interest in Muluncay. In consideration of this acquisition, the
Company issued a $3,600,000 promissory note to Pacifico, which carries an annual
interest rate of 4.5% (compounded quarterly), and is payable in four $200,000
quarterly installments commencing 30 days following Muluncay’s reaching
production of 400 tons per day. We would then pay $300,000 in quarterly
installments until principal and interest is fully paid.   We
would also be required to pay an additional $1,800,000 investment to Muluncay
with $800,000 due within 90 days following the Agreements execution date, and
$1,000,000 due within 180 days of the execution date.





As of
December 11, 2009, we were in default for the purchase of Muluncay. We received
a letter on February 11, 2010 in which Del Pacifico informed us of its intent to
enforce its rights under the Share Transfer Agreement and terminated all
contractual agreements between us and Del Pacifico effective December 31, 2009.
In the interest of our shareholders and lacking financial funds to further
pursue contractual agreements with Del Pacifico, we acknowledged the letter from
Del Pacifico and released all claims on the Controlling Assets and rights under
the terms of the Share Purchase Agreement.





Effective
December 31, 2009, we determined to discontinue operations through our Muluncay
subsidiary. We were released from all obligations and released all claims on the
Controlling Assets primarily because we had incurred significant operating
losses since acquisition and we could not attract operating capital to meet
contractual obligations since the acquisition of Muluncay. On December 31, 2009,
we completed the loss recognition for a total loss of
$2,178,971.


Bonds Payable, Convertible &
Secured




October
15, 2008 Bonds




On
October 15, 2008, we issued $1,300,000 in convertible secured bonds to Trafalgar
Capital Specialized Investment Fund (Trafalgar), a significant stockholder of
the Company, for net proceeds of $1,235,356 (including two months of interest
totaling $19,500 retained by Trafalgar).  The bonds bear interest of
9% and mature (if not converted) on October 15, 2010.  Upon the event
of default, the interest rate is increased to 18%.  Trafalgar incurred
bond issuance costs of $64,644, which are being amortized to interest expense on
a straight-line basis over the term of the bond.  The
carrying amount of the bond issuance costs at December 31, 2008 was $57,214, net
of $7,430 in amortization for 2008.  Interest payments are made
mid-month, resulting in bond interest payable of $4,875 at December 31, 2008,
and bond interest expense of $24,375 for 2008.





The bonds
have an optional conversion feature whereby Trafalgar is entitled to convert the
bonds and accrued interest at any time based on the lesser of the stock price on
the bonds’ inception (the ‘Fixed Price,’ which was determined to be $.75 per
share) or the lowest daily closing volume weighted average price during the five
days preceding conversion.  If the common stock price drops below the
Fixed Price, the Company has the option to redeem the bonds, provided it pays a
16% redemption premium on the amount redeemed.  If the bonds are not
converted, the Company is required to make interest-only payments for a period
of one year following the bonds’ inception.  Thereafter, we shall
continue making monthly interest payments, in addition to quarterly principal
payments of $325,000 and quarterly 16% redemption premium payments that amount
to $52,000 per quarter ($208,000 total).





74




April
30, 2009 Bonds






On April
30, 2009, the Company issued $300,000 in convertible secured bonds to a
stockholder for net proceeds of $258,856 (including two months of prepaid
interest totaling $4,500 retained by the stockholder that was amortized to
interest expense by December 31, 2009).  The bonds bear interest of 9%
and mature (if not converted) on October 31, 2010.  Upon default, the
interest rate is increased to 18%.  The stockholder incurred bond
issuance costs of $41,144, which are being amortized to interest expense on a
straight-line basis over the term of the bond.  The
carrying amount of the bond issuance costs at December 31, 2009 was $29,715, net
of $11,429 in amortization for the year ended December 31,
2009.  Interest payments are made at month-end, resulting in bond
interest payable or $2,464 at December 31, 2009.  Bond interest
expense was $22,679 (including $11,429 in bond issuance cost amortization) for
the year ended December 31, 2009.






The bonds
have an optional conversion feature whereby the stockholder is entitled to
convert the bonds and accrued interest at any time based on the lesser of the
stock price on the bonds’ inception (the ‘Fixed Price,’ which was determined to
be $.61 per share) or the lowest daily closing volume weighted average price
during the five days preceding conversion.  If the common stock price
drops below the Fixed Price, the Company has the option to redeem the bonds,
provided it pays a 16% redemption premium on the amount redeemed.  If
the bonds are not converted, the Company is required to make interest-only
payments for a period of eighteen months following the bonds’
inception.  Thereafter, the Company shall continue making monthly
interest payments, in addition to quarterly principal payments of $75,000 and
quarterly 16% redemption premium payments that amount to $12,000 per quarter
($48,000 total).  Due to the contingent nature of the conversion
price, no beneficial conversion feature was noted.






October
12, 2009 Bonds






On
October 12, 2009, the Company issued $210,000 in convertible secured bonds to a
stockholder for net proceeds of $210,000 The bonds bear interest of 9% and
mature (if not converted) on January 12, 2010 or upon completion of any new
investments in the company exceeding $1,500,000.  Upon default, the
interest rate is increased to 18%, and the company may convert all bonds held by
lender without restriction.  The Company incurred bond issuance costs
of $42,000, which are being accrued to bonds payable on a straight-line basis
over the term of the bond.  The carrying amount of the bond issuance
costs at December 31, 2009 was $23,062. Interest payments are made at month-end,
resulting in bond interest payable or $4,115 at December 31,
2009.  Bond interest expense was $4,115 for the year ended December
31, 2009.  Use of the funds was to provide services for new financing,
payment on mortgages, payment of past due bills, and to support
operations.






The bonds
have an optional conversion feature whereby the stockholder is entitled to
convert the bonds and accrued interest at any time based on the lesser of the
stock price on the bonds’ inception (the ‘Fixed Price,’ which was determined to
be $.07 per share) or the lowest daily closing volume weighted average price
during the five days preceding conversion.  If the common stock price
drops below the Fixed Price, the Company has the option to redeem the bonds,
provided it pays a 16% redemption premium on the amount redeemed.  Due
to the contingent nature of the conversion price, no beneficial conversion
feature was noted. Limitations on conversion prevent the number of shares issued
from exceeding 9.99%.  The bonds carry a currency rate conversion
clause wherein if the Euro to US dollar exchange rate is lower than the rate of
October 12, 2009 then the number of shares to be issued shall be increased by an
equal percentage of the decline in the exchange rate.






75


November
3, 2009 Bonds




On
November 3, 2009, we entered into a convertible secured bond debenture in the
principal amount of $210,000. Interest accrues monthly at the rate of 9% APR and
is payable monthly.  Unless converted, principal is payable in full on
January 12, 2010 or upon completion of any new investments in us exceeding
$1,500,000. Upon default, the interest rate is increased to 18% and we may
convert all bonds held by the bond holder without restriction. Interest payments
are made at month end resulting in bond interest payable or $2,993 at December
31, 2009. Bond interest expense was $2,993 for the fiscal year ended December
31, 2009. The bond has an optional conversion feature whereby the bond holder is
entitled to convert the bond and accrued interest at any time based on the
lesser of the stock price on the bonds’ inception (the “Fixed Price”), which was
determined to be $0.07 per share) or the lowest daily closing volume weighted
average price during the five days preceding conversion. If the common stock
price drops below the Fixed Price, we have the option to redeem the bond
provided we pay a 16% redemption premium on the amount redeemed. Limitations on
conversion prevent the number of shares issued from exceeding 9.99%. The bonds
carry a currency rate conversion clause wherein if the Euro to US dollar
exchange rate is lower than the rate of October 12, 2009, then the number of
shares to be issued shall be increased by an equal percentage of the decline in
the exchange rate.




ITEM 14. PRINCIPAL ACCOUNTING
FEES AND SERVICES




(1) Audit Fees





The
aggregate fees billed for each of the last two fiscal years for professional
services rendered by the principal accountant for our audit of annual financial
statements and review of financial statements included in our Form 10-Qs or
services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements for those fiscal years
was:





2009
            $65,000
            Child,
      Van Wagoner & Bradshaw, PLLC2008
            $15,000
            Child,
      Van Wagoner & Bradshaw, PLLC





(2)
Audit-Related Fees





The
aggregate fees billed in each of the last two fiscal years for assurance and
related services by the principal accountants that are reasonably related to the
performance of the audit or review of our financial statements and are not
reported in the preceding paragraph:





2009
            $575
            Child,
      Van Wagoner & Bradshaw, PLLC2008
            $1,250
            Child,
      Van Wagoner & Bradshaw, PLLC





(3)
Tax Fees





The
aggregate fees billed in each of the last two fiscal years for professional
services rendered by the principal accountant for tax compliance, tax advice,
and tax planning was:





2009
            $1,000
            Child,
      Van Wagoner & Bradshaw, PLLC2008
            $0
            Child,
      Van Wagoner & Bradshaw, PLLC





76


(4)
All Other Fees





The
aggregate fees billed in each of the last two fiscal years for the products and
services provided by the principal accountant, other than the services reported
in paragraphs (1), (2), and (3) was:





2009
            $0
            Child,
      Van Wagoner & Bradshaw, PLLC2008
            $0
            Child,
      Van Wagoner & Bradshaw, PLLC





(5) Our
audit committee’s pre-approval policies and procedures described in paragraph
(c)(7)(i) of Rule 2-01 of Regulation S-X were that the audit committee
pre-approve all accounting related activities prior to the performance of any
services by any accountant or auditor.





(6) The
percentage of hours expended on the principal accountant’s engagement to audit
our financial statements for the most recent fiscal year that were attributed to
work performed by persons other than the principal accountant’s full time,
permanent employees was 0%.





ITEM 15. EXHIBITS AND FINANCIAL
SCHEDULES




The
following exhibits are filed as part of this Annual Report.












The
following exhibits are filed as part of this Annual Report.




Incorporated by
referenceFiledExhibit
            
            Document Description
            
            Form
            
            Date
            
            Number
            
            herewith3.1
            
            Articles
      of Incorporation of Registrant
            
            SB-2
            
            10-31-06
            
            3.13.1.1
            
            Certificate of Incorporation of Trilliant Diamonds Limited
            
            8-K
            
            07-09-09
            
            3.1.13.1.2
            
            Memorandum
      and Articles of Association for Trilliant Diamonds
            
            8-K
            
            07-09-09
            
            3.1.23.1.3
            
            Certificate
      of Designation of Series I Preferred Stock
            
            8-K
            
            07-09-09
            
            3.1.33.1.4
            
            Amendment
      to Designation of Series I Preferred Stock
            
            8-K
            
            07-09-09
            
            3.1.43.2
            
            Bylaws
            
            SB-2
            
            10-31-06
            
            3.210.1
            
            Share
      Transfer Agreement Registrant, Pacifico and Muluncygold
            
            10-K
            
            04-15-09
            
            10.110.2
            
            Muluncay
      Project Report Prepared by Exploration Alliance Ltd.
            
            10-K
            
            04-15-09
            
            10.210.3
            
            Geological
      Report of the Mulcaney Deposit
            
            10-K
            
            04-15-09
            
            10.310.4
            
            Report
      on Exploration Potential – Muluncay Project
            
            10-K
            
            04-15-09
            
            10.410.5
            
            Ecuador
      Mining Law
            
            10-k
            
            04-15-09
            
            10.510.6
            
            Diagram
      of Current 40 Ton Plant
            
            10-K
            
            04-15-09
            
            10.610.7
            
            Loan
      Agreement and Note between Registrant and Charms Investments
      Ltd.
            
            10-K
            
            04-15-09
            
            10.710.8
            
            Stock
      Purchase Agreement between Registrant and Trafalgar Capital Specialized
      Investment Fund
            
            8-K
            
            04-20-09
            
            10.810.9
            
            Redeemable
      Debenture issued to Trafalgar Capital Specialized Investment
      Fund
            
            8-K
            
            04-20-09
            
            10.910.10
            
            Global
      Diamond Subscription Agreement
            
            8-K
            
            07-09-09
            
            10.1010.11
            
            Trilliant
      Diamonds Charge of Shares
            
            8-K
            
            07-09-09
            
            10.1110.12
            
            Loan
      Note Instrument/Convertible Debenture
            
            8-K
            
            07-09-09
            
            10.1210.13
            
            Registrant
      Loan Note Certificate
            
            8-K
            
            07-09-09
            
            10.1310.14
            
            Stock
      Purchase Agreement between Registrant and Samazo Limited
            
            8-K
            
            07-23-09
            
            10.1410.15
            
            Order
      of the Eastern Caribbean Supreme Court
            
            8-K
            
            09-25-09
            
            10.1510.16
            
            Sale
      and Purchase Agreement
            
            8-K
            
            09-30-09
            
            10.1610.17
            
            Extrajudicial
      Complaint
            
            8-K
            
            10-08-09
            
            10.1710.18
            
            Securities
      Purchase Agreement between Registrant and Trafalgar Capital Specialized
      Investment Fund
            
            8-K
            
            10-13-09
            
            10.1810.19
            
            Redeemable
      Debenture
            
            8-K
            
            10-13-09
            
            10.1910.20
            
            Securities
      Purchase Agreement between Registrant and Trafalgar Capital Specialized
      Investment Fund
            
            8-K
            
            11-12-09
            
            10.2010.21
            
            Redeemable
      Debenture
            
            8-K
            
            11-12-09
            
            10.2114.1
            
            Code of
    Ethics
            
            10-K
            
            04-15-09
            
            14.199.1
            
            Audit Committee Charter
            
            10-K
            
            04-15-09
            
            99.199.2
            
            Disclosure Committee
Charter
            
            10-K
            
            04-15-09
            
            99.231.1
            
            Certification of Chief Executive
      Officer pursuant to 15d-15(e), promulgated under the Securities and
      Exchange Act of 1934, as amended.
            
            
            
            X31.2
            
            Certification of Chief Financial
      Officer pursuant to 15d-15(e), promulgated under the Securities and
      Exchange Act of 1934, as amended.
            
            
            
            X32.1
            
            Certification pursuant to 18
      U.S.C. Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002 (Chief Executive
Officer)
            
            
            
            X32.2
            
            Certification pursuant to 18
      U.S.C. Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002 (Chief Financial
Officer)
            
            
            
            X











77





TRILLIANT EXPLORATION
CORPORATION    Pursuant
to the requirements of the Exchange Act, the registrant caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
 
  TRILLIANT
      EXPLORATION CORPORATIONDated:
      April 16, 2010
              By:
              /s/ JEFFREY
      STERNBERGJeffrey
      Sternberg, President/ChiefExecutive
      OfficerDated:
      April 16, 2010
              By:
              /s/
      JEFFREY STERNBERGJeffrey
      Sternberg, Chief Financial Officer
   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.
 
 
 Dated:
      April 16, 2010
              By:
              /s/ JEFFREY
      STERNBERGDirector