---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-QSB

(Mark One)

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

For the quarterly period ended**June 30,
2007**

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

For the transition period from  __________ to
__________

Commission file number **000-50146**

TORNADO GOLD INTERNATIONAL
CORPORATION(Exact name of small business issuer as
specified in its charter)

|Delaware                                                             | 94-3409645                       
|-------------------------------------------------------------------- | ---------------------------------
|(State or other jurisdiction of incorporation or
      organization) | (IRS Employer Identification No.)

8600 Technology Way, Suite 118, Reno, Nevada
89521(Address of principal executive offices)

(775) 852-3770(Issuers telephone
number)

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

Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past
90 days.

Yes [X]   No [   ]

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

APPLICABLE ONLY TO CORPORATE ISSUERS

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

30,111,526 common shares issued and outstanding as of August
  1, 2007

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

---

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

These financial statements have been prepared by Tornado Gold
International Corporation (the Company) without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission (SEC).
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted in accordance with such SEC rules and regulations. In the
opinion of management, the accompanying statements contain all adjustments
necessary to present fairly the financial position of the Company as of June 30,
2007, and its results of operations, stockholders equity, and its cash flows
for the six month period ended June 30, 2007 and for the period from inception
(March 19, 2004) to June 30, 2007. The results for these interim periods are not
necessarily indicative of the results for the entire year. The accompanying
financial statements should be read in conjunction with the financial statements
and the notes thereto filed as a part of the Companys annual report on Form
10-KSB filed on April 17, 2007.

---

Tornado Gold International Corp. (An Exploratory Stage
Company) BALANCE SHEET

|                                                             |   | June 30,    |  
|------------------------------------------------------------ | - | ----------- | -
|                                                             |   | 2007        |  
|                                                             |   | (Unaudited) |  
|ASSETS                                                       |  
|                                                             |   |             |  
|CURRENT ASSETS                                               |   |             |  
|Cash and cash equivalents                                    | $ | 3,764       |  
|Prepaid Expenses                                             |   | 41,280      |  
|                                                             |   |             |  
|TOTAL CURRENT ASSETS                                         |   | 45,044      |  
|                                                             |   |             |  
|PROPERTY AND EQUIPMENT,                                      |   |             |  
|Mining claims                                                |   | 1,862,148   |  
|Computer
      equipment, net                                |   | 2,657       |  
|                                                             |   |             |  
|OTHER ASSETS                                                 |   |             |  
|Deferred offering costs                                      |   | 2,500       |  
|Intangible
      assets                                      |   | 5,723       |  
|                                                             |   |             |  
|TOTAL ASSETS                                                 | $ | 1,918,072   |  
|                                                             |   |             |  
|                                                             |   |             |  
|LIABILITIES AND STOCKHOLDERS'
      DEFICIT                  |  
|                                                             |   |             |  
|CURRENT LIABILITIES                                          |   |             |  
|Accounts payable
      - related party                       | $ | 39,478      |  
|Accounts payable  others                                    |   | 107,960     |  
|Accrued expense                                              |   | 178,205     |  
|Loan Payable - related party                                 |   | 330,000     |  
|Notes payable
      (including accrued interest of $136,890) |   | 1,217,706   |  
|TOTAL CURRENT LIABILITIES                                    |   | 1,873,349   |  
|                                                             |   |             |  
|COMMITMENTS AND CONTINGENCIES                                |   | -           |  
|                                                             |   |             |  
|STOCKHOLDERS' DEFICIT                                        |   |             |  
|Common stock;
      $0.001 par value; 100,000,000 shares     |   |             |  
|authorized; 30,111,526 shares issued and outstanding         |   | 30,112      |  
|Additional paid
      in capital                             |   | 1,978,707   |  
|Accumulated deficit                                          |   | (704,993    | )
|Deficit
      accumulated during the exploratory stage       |   | (2,,758,684 | )
|Subscribed warrants                                          |   | 1,500,000   |  
|Stock
      subscription receivable                          |   | (419        | )
|TOTAL STOCKHOLDERS' DEFICIT                                  |   | 44,723      |  
|                                                             |   |             |  
|TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                  | $ | 1,918,072   |  

The accompanying notes are an integral part of these financial
statements

---

Tornado Gold International Corp.
  (An Exploratory Stage Company) 
  STATEMENTS OF OPERATIONS

FromMarch 19,2004For the Three months ended
      
      
      For the Six Months ended
      
      
      throughJune 30
      
      
      June 30
      
      
      June 30,2007
      
      
      2006
      
      
      2007
      
      
      2006
      
      
      2007(Unaudited)
      
      
      (Unaudited)
      
      
      (Unaudited)
      
      
      (Unaudited)
      
      
      (Unaudited)NET REVENUE
      $
      -
      
      $
      -
      
      $
      
      
      
      
      
      
      -OPERATING EXPENSESCompensation expense on option
        grants
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      68,765Mining exploration
        expenses
      
      40,761
      
      
      41,307
      
      
      119,958
      
      
      81,267
      
      
      1,281,176General and administrative expenses
      
      67,696
      
      
      125,508
      
      
      193,454
      
      
      209,318
      
      
      1,012,537108,457
      
      
      166,815
      
      
      313,412
      
      
      290,585
      
      
      2,362,478LOSS FROM OPERATIONS
      
      (108,457
      )
      
      (166,815
      )
      
      (313,412
      )
      
      (290,585
      )
      
      (2,362,478
      )OTHER INCOME (EXPENSE)Accrued potential damages on
        breachof contract
      
      --
      
      
      --
      
      
      (178,205
      )
      
      --
      
      
      (178,205
      )Interest expense
      
      (21,261
      )
      
      (21,557
      )
      
      (42,877
      )
      
      (37,738
      )
      
      (218,001
      )TOTAL OTHER INCOME (EXPENSE)
      
      (21,261
      )
      
      (21,557
      )
      
      (221,082
      )
      
      (37,738
      )
      
      (396,
        206
      )LOSS BEFORE PROVISION FOR INCOME TAXES
      
      (129,718
      )
      
      (188,372
      )
      
      (534,494
      )
      
      (328,323
      )
      
      (2,758,684
      )PROVISION FOR INCOME TAXES
      
      -
      
      
      -
      
      
      
      
      
      
      
      
      -NET LOSS
      $
      (129,718
      )
      $
      (188,372
      )
      
      (534,494
      )
      
      (328,323
      )
      
      (2,758,684
      )NET LOSS PER SHARE - BASIC AND DILUTED
      $
      (0.00
      )
      $
      (0.01
      )
      
      (0.02
      )
      
      (0.01
      )WEIGHTED AVERAGE COMMON EQUIVALENTSHARES OUTSTANDING - BASIC AND DILUTED
      
      30,111,526
      
      
      28,798,266
      
      
      30,111,526
      
      
      28,795,014


The accompanying notes are an integral part of these financial
statements

---

Tornado Gold International Corp. (An Exploratory Stage
Company) STATEMENTS OF CASH FLOWS

|                                                   |   |                          |   |   |             |   |   | From          |  
|-------------------------------------------------- | - | ------------------------ | - | - | ----------- | - | - | ------------- | -
|                                                   |   |                          |   |   |             |   |   | March 19,     |  
|                                                   |   | For the Six Months ended |   |   | 2004        |  
|                                                   |   | June 30,                 |   |   | through     |  
|                                                   |   | 2007                     |   |   | 2006        |   |   | June 30, 2006 |  
|                                                   |   | (Unaudited)              |   |   | (Unaudited) |   |   | (Unaudited)   |  
|                                                   |   |                          |   |   |             |   |   |               |  
|CASH FLOWS FROM OPERATING ACTIVITIES:              |   |                          |   |   |             |   |   |               |  
|Net loss from continuing operations                | $ | (534,494                 | ) | $ | (328,323    | ) | $ | (2,,758,684   | )
|Adjustment to reconcile
      net loss to net cash |   |                          |   |   |             |   |   |               |  
|used in operating
      activities:                |   |                          |   |   |             |   |   |               |  
|Value of options and warrants granted for services |   | -                        |   |   | -           |   |   | 68,765        |  
|Amortization                                       |   | 1,145                    |   |   | -           |   |   | 1,145         |  
|Depreciation                                       |   | 554                      |   |   | -           |   |   | 665           |  
|Changes in:                                        |   |                          |   |   |             |   |   |               |  
|Prepaid
      expenses and other current assets    |   | (43,780                  | ) |   | (17         | ) |   | (38,780       | )
|Accounts payable                                   |   | 67,131                   |   |   | 61,570      |   |   | 222,540       |  
|Accrued
      expenses                             |   | 178,205                  |   |   | -           |   |   | 178,205       |  
|Notes payable                                      |   | 42,877                   |   |   | -           |   |   | 136,890       |  
|Net cash used in operating activities              |   | (288,362                 | ) |   | (266,770    | ) |   | (2,189,254    | )
|                                                   |   |                          |   |   |             |   |   |               |  
|CASH FLOWS FROM INVESTING ACTIVITIES:              |   |                          |   |   |             |   |   |               |  
|Purchase of
      mining claims                    |   | (180,000                 | ) |   | (441,265    | ) |   | (1,795,598    | )
|Purchase
      of equipment                        |   | (1,980                   | ) |   | -           |   |   | (3,323        | )
|Website design
      costs                         |   | -                        |   |   | -           |   |   | (6,868        | )
|Net cash used in investing activities              |   | (181,980                 | ) |   | (441,265    | ) |   | (1,805,789    | )
|                                                   |   |                          |   |   |             |   |   |               |  
|                                                   |   |                          |   |   |             |   |   |               |  
|CASH FLOWS FROM FINANCING ACTIVITIES:              |   |                          |   |   |             |   |   |               |  
|Proceeds
      from loan payable                   |   | 330,000                  |   |   | 649,838     |   |   | 2,435,816     |  
|Proceeds from
      issuance of common stock       |   | -                        |   |   | 3,720       |   |   | 856,802       |  
|Proceeds
      from subscribed warrants            |   | -                        |   |   | -           |   |   | 1,500,000     |  
|Payment on
      note payable                      |   | -                        |   |   | -           |   |   | (42,500       | )
|Repurchase
      of shares on common stock         |   | -                        |   |   | -           |   |   | (577,906      | )
|Offering costs                                     |   | -                        |   |   | -           |   |   | (173,405      | )
|                                                   |   |                          |   |   |             |   |   |               |  
|Net cash provided by financing activities          |   | 330,000                  |   |   | 653,558     |   |   | 3,998,807     |  
|                                                   |   |                          |   |   |             |   |   |               |  
|NET CASH PROVIDED BY CONTINUING OPERATIONS         |   | (140,342                 | ) |   | (54,477     | ) |   | 3,764         |  
|                                                   |   |                          |   |   |             |   |   |               |  
|CASH AND CASH EQUIVALENTS, Beginning of year       |   | 144,106                  |   |   | 64,333      |   |   | -             |  
|                                                   |   |                          |   |   |             |   |   |               |  
|CASH AND CASH EQUIVALENTS, End of year             | $ | 3,764                    |   | $ | 9,856       |   | $ | 3,764         |  
|                                                   |   |                          |   |   |             |   |   |               |  
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: |   |                          |   |   |             |   |   |               |  
|                                                   |   |                          |   |   |             |   |   |               |  
|Interest paid                                      | $ | -                        |   | $ | -           |   |   |               |  
|Income taxes paid                                  | $ | -                        |   | $ | -           |   |   |               |  

The accompanying notes are an integral part of these financial
statements

2

---

TORNADO GOLD INTERNATIONAL CORP. (An Exploratory Stage
Company) NOTES TO FINANCIAL STATEMENTS

NOTE 1  ORGANIZATION AND BASIS OF PRESENTATION

Organization

Tornado Gold International Corp. (formerly Nucotec, Inc.) was
incorporated in the state of Nevada on October 8, 2001. On July 7, 2004, the
name of the company was officially changed to Tornado Gold International Corp.
(the "Company"). The Company is currently in the exploratory stage as defined in
Financial Accounting Standards Board (FASB) Statement of Financial Accounting
Standards (SFAS) No. 7 and has been March 19, 2004, when it changed its
principal activity to the exploration of mining properties for future commercial
development and production (See Note 3). On February 14, 2007, the Company
changed its domicile from Nevada to Delaware.

Basis of Presentation

The accompanying interim financial statements have been
prepared by the Company pursuant to the rules and regulations of the Securities
and Exchange Commission (the SEC) for interim financial reporting. These
interim financial statements are unaudited and, in the opinion of management,
include all adjustments (consisting of normal recurring adjustments and
accruals) necessary to present fairly the balance sheet, operating results and
cash flows for the periods presented in accordance with accounting principles
generally accepted in the United States of America (GAAP). Operating results
for the six months ended June 30, 2007 are not necessarily indicative of the
results that may be expected for the year ending December 31, 2007 or for any
other interim period during such year. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with GAAP have been omitted in accordance with the rules and regulations of the
SEC. These interim financial statements should be read in conjunction with the
audited financial statements and notes thereto contained in the Companys Form
10-KSB for the year ended December 31, 2006.

Going Concern

The accompanying financial statements have been prepared in
conformity with accounting principles generally accepted in the United States of
America, which contemplate continuation of the Company as a going concern. The
Company has no established source of material revenue, has incurred a net loss
for the six months ended June 30, 2007 of $534,494, as of June 30, 2007 had a
negative working capital of $1,828,305, and had an accumulated deficit since its
inception of $3,463,677. These conditions raise substantial doubt as to the
Company's ability to continue as a going concern. These financial statements do
not include any adjustments that might result from the outcome of this
uncertainty. These financial statements do not include any adjustments relating
to the recoverability and classification of recorded asset amounts, or amounts
and classification of liabilities that might be necessary should the Company be
unable to continue as a going concern.

Management recognizes that the Company must generate additional
resources to enable it to continue operations. Management intends to raise
additional funds through debt and/or equity financing or through other means
that it deems necessary. However, no assurance can be given that the Company
will be successful in raising additional capital. Further, even if the company
raises additional capital, there can be no assurance that the Company will
achieve profitability or positive cash flow. If management is unable to raise
additional capital and expected significant revenues do not result in positive
cash flow, the Company will not be able to meet its obligations and may have to
cease operations.

Stock Split

On April 19, 2004, the Company authorized a 50-for-1 stock
split. On August 18, 2004, the Company authorized a 6.82 -for-1 stock split. On
May 16, 2005, the Company authorized a 1.20 -for-1 stock split. All references
in the

3

---

accompanying financial statements to the number of shares
outstanding and per-share amounts have been restated to reflect the various
indicated stock splits.

NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Stock Based Compensation

The Company accounts for stock-based compensation under SFAS
No. 123R, "Share- based Payment " and SFAS No. 148, "Accounting for Stock-Based
Compensation--Transition and Disclosure--An amendment to SFAS No. 123. These
standards define a fair value based method of accounting for stock-based
compensation. In accordance with SFAS Nos. 123R and 148, the cost of stock-based
employee compensation is measured at the grant date based on the value of the
award and is recognized over the vesting period. The value of the stock-based
award is determined using the Black-Scholes option-pricing model, whereby
compensation cost is the excess of the fair value of the award as determined by
the pricing model at the grant date or other measurement date over the amount an
employee must pay to acquire the stock. The resulting amount is charged to
expense on the straight-line basis over the period in which the Company expects
to receive the benefit, which is generally the vesting period. During 2006, the
Company recognized no compensation expense under SFAS No. 123R as no options
were issued to employees during these two periods (See Note 6).

As of April 15, 2005, the Company adopted its 2005 stock option
plan to compensate its directors. As of June 30, 2007, no options have been
granted to the directors.

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 reported
amounts of assets and liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenue and expenses during the reporting periods. Actual results could differ
from these estimates.

Fair Value of Financial Instruments

The Companys financial instruments consist of cash and cash
equivalents, accounts payable, accrued expenses and notes payable, Pursuant to
SFAS No. 107, Disclosures About Fair Value of Financial Instruments,
the Company is required to estimate the fair value of all financial instruments
at the balance sheet date. The Company considers the carrying values of its
financial instruments in the financial statements to approximate their fair
values.

Cash and Cash Equivalents

For purposes of the statements of cash flows, the Company
defines cash equivalents as all highly liquid debt instruments purchased with a
maturity of three months or less, plus all certificates of deposit.

Property and Equipment

Property and equipment are stated at cost less accumulated
depreciation and amortization. Depreciation and amortization are calculated
using the straight-line method and with useful lives used in computing
depreciation of 3 years. When property and equipment are retired or otherwise
disposed of, the related cost and accumulated depreciation are removed from the
respective accounts, and any gain or loss is included in operations.
Expenditures for maintenance and repairs are charged to operations as incurred;
additions, renewals and betterments are capitalized.

Long- Lived Assets

The Company accounts for its long-lived assets in accordance
with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets." SFAS No. 144 requires that long-lived assets be reviewed for impairment

4

---

whenever events or changes in circumstances indicate that the
historical cost carrying value of an asset may no longer be appropriate. The
Company assesses recoverability of the carrying value of an asset by estimating
the future net cash flows expected to result from the asset, including eventual
disposition. If the future net cash flows are less than the carrying value of
the asset, an impairment loss is recorded equal to the difference between the
asset's carrying value and fair value or disposable value. As of June 30, 2007,
the Company did not deem any of its long-term assets to be impaired.

Concentration of Credit Risk

Financial instruments, which potentially subject the Company to
concentrations of credit risk, consist of cash. The Company places its cash with
high quality financial institutions and at times may exceed the FDIC $100,000
insurance limit. The Company extends credit based on an evaluation of the
customer's financial condition, generally without collateral. The Company
monitors its exposure for credit losses and maintains allowances for anticipated
losses, as required.

Revenue Recognition

The Company has not generated any revenue from its mining
operations.

Mining Costs

Costs incurred to purchase, lease or otherwise acquire property
are capitalized when incurred. General exploration costs and costs to maintain
rights and leases are expensed as incurred. Management periodically reviews the
recoverability of the capitalized mineral properties and mining equipment.
Management takes into consideration various information including, but not
limited to, historical production records taken from previous mining operations,
results of exploration activities conducted to date, estimated future prices and
reports and opinions of outside consultants. A provision is made for any
expected loss on a project or property when it is determined that the project or
property will be abandoned or its carrying value has been impaired.

Website Development Costs

Under FASB Emerging Issues Task Force Statement 00-2,
Accounting for Web Site Development Costs ("EITF 00-2"), costs and expenses
incurred during the planning and operating stages of the Company's web site
development are expensed as incurred. Under EITF 00-2, costs incurred in the web
site application and infrastructure development stages are capitalized by the
Company and amortized to expense over the web site's estimated useful life or
period of benefit. As of June 30, 2007, the Company had net capitalized costs of
$5,723 related to its web site development, which are being depreciated on a
straight-line basis over an estimated useful life of 3 years. Amortization
expense for the six months ended June 30, 2007 and 2006 amounted to $1,145 and
$0, respectively.

A schedule of amortization expense for the three years ending
June 30, 2010 is as follows:

June 30, 2008
    $
    2,289June 30, 2009
    
    2,289June 30, 2010
    
    1,145$
    5,723


Income Taxes

The Company accounts for income taxes in accordance with SFAS
No. 109, "Accounting for Income Taxes." Deferred taxes are provided on the
liability method whereby deferred tax assets are recognized for deductible
temporary differences, and deferred tax liabilities are recognized for taxable
temporary differences. Temporary differences are the differences between the
reported amounts of assets and liabilities and their tax bases. Deferred tax
assets are reduced by a valuation allowance when, in the opinion of management,
it is more likely than not that some portion or all of the deferred tax assets
will be realized. Deferred tax assets and liabilities are adjusted for the
effects of changes in tax laws and rates on the date of enactment.

5

---

Loss Per Share

The Company reports earnings (loss) per share in accordance
with SFAS No. 128, "Earnings per Share." Basic earnings (loss) per share is
computed by dividing income (loss) available to common shareholders by the
weighted average number of common shares available. Diluted earnings (loss) per
share is computed similar to basic earnings (loss) per share except that the
denominator is increased to include the number of additional common shares that
would have been outstanding if the potential common shares had been issued and
if the additional common shares were dilutive. Diluted earnings (loss) per share
has not been presented since the effect of the assumed conversion of options to
purchase common shares would have an anti-dilutive effect. The only potential
common shares as of June 30, 2007 were 160,200 options, 11,795,000 warrants, and
$649,838 of debt convertible into 1,477,283 shares of the Companys common stock
that have been excluded from the computation of diluted net loss per share
because the effect would have been anti-dilutive. The only potential common
shares as of June 30, 2006 were 210,000 options and 650,000 warrants that have
been excluded from the computation of diluted net loss per share because the
effect would have been anti-dilutive. If such shares were included in diluted
EPS, they would have resulted in weighted-average common shares of 44,518,766
and 29,626,725 for the three months and six-months ended June 30, 2007 and 2006,
respectively

Recent Accounting Pronouncements

SFAS No. 157 - In September 2006, the FASB issued
Statement 157, Fair Value Measurements.This Statement defines fair
value, establishes a framework for measuring fair value in generally accepted
accounting principles (GAAP), and expands disclosures about fair value
measurements. This Statement applies under other accounting pronouncements that
require or permit fair value measurements, the Board having previously concluded
in those accounting pronouncements that fair value is the relevant measurement
attribute. Accordingly, this Statement does not require any new fair value
measurements. However, for some entities, the application of this Statement will
change current practice. This Statement is effective for financial statements
issued for fiscal years beginning after November 15, 2007, and interim periods
within those fiscal years. Earlier application is encouraged, provided that the
reporting entity has not yet issued financial statements for that fiscal year,
including financial statements for an interim period within that fiscal year.
The Company has evaluated the impact of the adoption of SFAS 157, and does not
believe the impact will be significant to the Company's overall results of
operations or financial position.

SFAS No. 158 - In September 2006, the FASB issued
Statement No. 158 Employers Accounting for Defined Benefit Pension and Other
Postretirement Plansan amendment of FASB Statements No. 87, 88, 106, and
132(R). This Statement improves financial reporting by requiring an employer
to recognize the over funded or under funded status of a defined benefit
postretirement plan (other than a multiemployer plan) as an asset or liability
in its statement of financial position and to recognize changes in that funded
status in the year in which the changes occur through comprehensive income of a
business entity or changes in unrestricted net assets of a not-for-profit
organization. This Statement also improves financial reporting by requiring an
employer to measure the funded status of a plan as of the date of its year-end
statement of financial position, with limited exceptions. An employer with
publicly traded equity securities is required to initially recognize the funded
status of a defined benefit postretirement plan and to provide the required
disclosures as of the end of the fiscal year ending after December 15, 2006. An
employer without publicly traded equity securities is required to recognize the
funded status of a defined benefit postretirement plan and to provide the
required disclosures as of the end of the fiscal year ending after June 15,
2007. The Company has evaluated the impact of the adoption of SFAS 158, and does
not believe the impact will be significant to the Company's overall results of
operations or financial position.

SAB No. 108  In September 2006, the Securities and
Exchange Commission issued Staff Accounting Bulletin No. 108 (SAB No. 108),
Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements. The guidance in SAB No. 108
requires Companies to base their materiality evaluations on all relevant
quantitative and qualitative factors. This involves quantifying the impact of
correcting all misstatements, including both the carryover and reversing effects
of prior year misstatements, on the current year financial statements. The
Company has adopted this standard.

SFAS No. 159 - In February 2007, the FASB issued
Statement No. 159, The Fair Value Option for Financial Assets and Financial
LiabilitiesIncluding an amendment of FASB Statement No. 115.This
Statement permits entities to choose to measure many financial instruments and
certain other items at fair value. The objective is to improve

6

---

financial reporting by providing entities with the opportunity
to mitigate volatility in reported earnings caused by measuring related assets
and liabilities differently without having to apply complex hedge accounting
provisions. This Statement is expected to expand the use of fair value
measurement, which is consistent with the Boards long-term measurement
objectives for accounting for financial instruments. This Statement applies to
all entities, including not-for-profit organizations. Most of the provisions of
this Statement apply only to entities that elect the fair value option. However,
the amendment to FASB Statement No. 115, Accounting for Certain Investments
in Debt and Equity Securities,applies to all entities with
available-for-sale and trading securities. Some requirements apply differently
to entities that do not report net income. This Statement is effective as of the
beginning of an entitys first fiscal year that begins after November 15, 2007.
Early adoption is permitted as of the beginning of a fiscal year that begins on
or before November 15, 2007, provided the entity also elects to apply the
provisions of FASB Statement No. 157, Fair Value Measurements.No entity
is permitted to apply this Statement retrospectively to fiscal years preceding
the effective date unless the entity chooses early adoption. The choice to adopt
early should be made after issuance of this Statement but within 120 days of the
beginning of the fiscal year of adoption, provided the entity has not yet issued
financial statements, including required notes to those financial statements,
for any interim period of the fiscal year of adoption. This Statement permits
application to eligible items existing at the effective date (or early adoption
date). The Company has evaluated the impact of the implementation of SFAS No.
159 and does not believe the impact will be significant to the Company's overall
results of operations or financial position.

NOTE 3  COMPUTER EQUIPMENT

A summary of computer equipment at June 30, 2007 is as
follows:

Computer equipment
    $
    3,323Accumulated depreciation
    
    (666
    )$
    2,657


Depreciation expense for the six months ended June 30, 2007 and
2006 amounted to $666 and $0, respectively.

NOTE 4 - MINING CLAIMS

NT Green Property, HMD Gold Property, Goodwin Hill Gold
Property, and Wilson Peak Property

On May 31, 2004, the Company entered into four agreements with
a company wholly owned by Mr. Carl Pescio ("Pescio"), a Director of the Company,
to lease four mining properties. The terms of the four leases are substantially
identical and are as follows.

A schedule of the advanced lease payments for each of the four
properties is as follows:

Due Date
    
    Amount--------
    
    ------June 5, 2004
    $
    15,000May 15, 2005
    $
    22,500February 5, 2006
    $
    30,000February 5, 2007
    $
    37,500February 5, 2008
    $
    50,000February 5, 2009
    $
    62,500February 5, 2010
    $
    75,000February 5, 2011 and eachyear thereafter untilproduction commences
    $
    100,000


7

---

Upon completion of a bankable feasibility study and payments
totaling $105,000, the Company will own 100% of the property subject to a
continuing production royalty of 4%. Once the $105,000 is paid, all subsequent
payments will convert into advance minimum royalty payments that are credited
against the 4% production royalty due. A 1% royalty is also due Pescio on
production on property consisting of a 2 mile circumference surrounding the
leased property.

The Company will pay additional land acquisition and filling
fees on the property. The Company is committed to drill 5,000 feet on the
property in each year commencing on or before September 1, 2006 and continuing
until the completion of the feasibility study. Drilling on the subject
properties has commenced. Excess footage drilled in any year will be carried
forward to subsequent years. The Company has the option to pay Pescio $10 per
foot committed to and not drilled.

Prior to the completion of the feasibility study, the Company
has the right to purchase 2% of the 4% production royalty for $1,500,000 for
each percentage point. The Company also has the option to purchase 50% of the 1%
royalty for $500,000.

The Company shall be responsible for all environmental
liabilities and reclamation costs it creates and indemnifies Pescio against any
such claims or obligations. The Company can terminate the lease at any time by
giving 30 days notice provided that there are no outstanding environmental or
reclamation liabilities and that all lease and production royalty payments are
current.

Jack Creek Property

On October 3, 2005, the Company paid the Bureau of Land
Management $30,875 as consideration on the Exploration License and Option to
Lease Agreement entered into between the Company and Mr. Earl Abbott, and
Stanley Keith ("the owners"), to explore 247 claims (nearly 5,000 acres) known
as the Jack Creek Property. Mr. Abbott is the Company's President and Mr. Keith
was a Company Director through 2006.

The Company entered into a definitive Exploration License and
Option to Lease Agreement for the above claims for a period of twenty years.
Under this agreement, the Company is responsible to make minimum lease payments
to the owners as follows:

Due Date
    
    Amount---------------------------
    
    ------Upon signing
    $
    22,5001st anniversary
    $
    30,0002nd anniversary
    $
    37,5003rd anniversary
    $
    50,0004th anniversary
    $
    62,5005th anniversary and eachanniversary thereafter
    $
    100,000


If any payments due by the Company to the owners are not paid
within 30 days of its due date, interest will begin to accrue on the late
payment at a rate of 2% over the prime rate established by the Department of
Business and Industry of the State of Nevada.

Upon completion of a bankable feasibility study and payments
totaling $140,000, all subsequent payments will convert into advance minimum
royalty payments that are credited against the 4% production royalty due.

The Company shall have the option to purchase one-half (1/2) of
the royalty applicable to the property representing two percent (2%) of the Net
Smelter Returns. The Company shall have the right to elect to purchase such part
of the royalty in increments representing one percent (1%) of the Net Smelter
Returns and the purchase price for each such

8

---

increment shall be $1,500,000. The Company shall have the
option to purchase one-half (1/2) of the area-of-interest royalty applicable to
mineral rights, mining claims and properties which the Company acquires from
third parties representing one-half percent (.5%) of the Net Smelter Returns.
The purchase price for such part of the area-of-interest royalty shall be
$500,000 for the one-half percent (.5%) of the area-of-interest royalty
applicable to mineral rights, mining claims and properties which the Company
acquires from any third party.

The Company shall be responsible for all environmental
liabilities and reclamation costs it creates and indemnifies the owners against
any such claims or obligations. The Company can terminate the lease at any time
by giving 30 days notice provided that there are no outstanding environmental or
reclamation liabilities and that all lease and production royalty payments are
current.

In addition, on August 7, 2006, the Company acquired an option
for 53 additional claims (approx 1,000 acres) at the Jack Creek Property. The
option was acquired from Gateway Gold (USA) Corp. through two of the Companys
directors, Earl Abbott and Stanley Keith, and is subject to the Area of Interest
clause in the original Jack Creek agreement between the Company and those
directors that the Company announced in its October 3, 2005, news release. The
Company has the option to earn a 50% undivided interest in the 53 claims through
its expenditure on the claims of a total of $500,000 in various stages by March
1, 2007, 2008, and 2009. Thereafter, the Company and Gateway Gold could form a
joint venture; but, if Gateway declines to participate at its 50% level, the
Company could exercise its option to earn an additional 20% in the claims
through its expenditure on the claims of an additional $500,000 in two equal
stages on or before March 1, 2010, and 2011. Mr. Abbott is also an officer of
the Company.

Additional Properties

On October 6, 2005, the Company entered into a preliminary
agreement with Mr. Carl Pescio, a Director of the Company, to lease 10 mineral
properties (about 1,300 claims) in Nevada. Under the term of the preliminary
agreement, the Company is to make advance lease payments to Mr. Pescio on each
property based upon the following schedule:

Due Date
    
    Amount---------------------------
    
    ------Upon signing
    $
    35,0001st anniversary
    $
    55,0002nd anniversary
    $
    75,0003rd anniversary
    $
    100,0004th anniversary
    $
    125,0005th anniversary
    $
    150,0006th anniversary and eachanniversary thereafter
    $
    200,000


On August 23, 2006, the Company entered into an agreement to
acquire the Illipah gold prospect consisting of 191 unpatented mining claims
located in White Pine County, Nevada in consideration for $100,000 and 300,000
shares of its common stock. Under the terms of the purchase agreement, $50,000
was paid and 50,000 shares of the Companys common stock were issued upon
signing with an additional $50,000 paid and 100,000 shares of restricted common
stock issued on November 21, 2006. An additional 200,000 shares of restricted
common stock is to be issued on or before August 23, 2007. Further, the Company
assumed the sellers obligations in an underlying exploration and mining lease
agreement on the claims, and granted to the seller a production royalty of two
percent of net smelter returns on all rents and mineral production from the
property. The Company also agreed to pay $48,007 to the United States Department
of the Interior Bureau of Land Management for mining claim maintenance fees, and
be responsible for future annual maintenance and filing fees on the acquired
claims and any advanced minimum royalty payments due to Carl Pescio, a Company
director, and Janet Pescio under an August 31, 2001, agreement between the
Pescios and the seller. The Company agreed to register all of such shares for
re-sale within

9

---

60 days of the closing date but not later than 150 days after
August 23, 2006. The Company also agreed to use its best efforts to cause the
registration of the shares to be declared effective as soon as practicable
thereafter, but within 120 days after the closing date and no later than 210
days after August 23, 2006.

The Company has the option, exercisable at any time prior to
commercial production on any of the Illipah claims, to reduce production
royalties due Seller from two percent to one percent by paying it $1,000,000 or
its equivalent in gold bullion priced as of the August 24, 2006 closing price of
gold on the New York Commodity Exchange. The Company also agreed to undertake an
exploration program on the Illipah property and related area of interest, and
incur exploration and development expenditures of at least $750,000 within two
years, of which $250,000 is to be expended during the first year of the
agreement.

Based upon the actual and preliminary terms of the above
leases, the Company's obligation as of June 30, 2007 for the payment of minimum
lease payments on these 16 properties is as follows:

2007
    $
    751,2352008
    $
    1,237,5002009
    $
    1,550,0002010
    $
    1,862,500Minimum lease payments inSubsequent years
    $
    2,500,000


A description of the mining properties leased by the Company is
as follows:

NT Green Property is located in central Lander County, Nevada
about 40 miles southwest of the town of Battle Mountain. The property is within
the Battle Mountain/Eureka (Cortez) Trend at the northern end of the Toiyabe
Range.

HMD Gold Property is located in Eureka County, Nevada along the
west side of the Cortez Range, about 30 miles southwest of the town of Carlin,
and about 10 miles north of the Buckhorn deposit. Access to the property is
gained by driving 41 miles west of Elko on I-80, then 20 miles south on SH-306
to the town of Crescent Valley. A well-maintained gravel road leads
east-southeast past the Hot Springs Point to the vicinity of the Dean Ranch. A
two-track road leads to the southeast and the property position is reached in
about one-half mile.

Goodwin Hill Gold Property is located in east central Lander
County, Nevada about 60 miles south of the town of Battle Mountain and about 25
miles northeast of the town of Austin. It is positioned in grass Valley between
the Simpson Park Range to the east and the Toiyabe Range to the west.

Wilson Peak property is located in Elko County, Nevada about 70
miles north of the town of Elko and about 20 miles north of the town of
Tuscarora. The property area is west of the Independence Gold Trend and is part
of a north-south line of gold-silver occurrences in Tertiary volcanic rocks.

Jack Creek Property is located in the northern Independence
Range about 50 miles north of Elko, Elko County, Nevada. It is comprised of 247
lode mining claims (nearly 5,000 acres) adjacent to Gateway Gold Corp.'s (TSX
Venture: GTQ) Big Springs and Dorsey Creek Properties.

Stargo Property is located in the Monitor Range about 45 miles
southwest of the town of Eureka and about 20 miles west of the Northumberland
Mine and comprises of a total of 257 lode claims (about 5,140 acres) in Nye
County, Nevada.

West Whistler Property is located on the west flank of Whistler
Mountain, about 10 miles northwest of the town of Eureka and comprises of a
total of 103 lode claims (about 2,060 acres) in Eureka County, Nevada.

10

---

Brock Property is located in the Monitor Range about 36 miles
southwest of the town of Eureka and about 24 miles northeast of the
Northumberland Mine and comprises a total of 222 lode claims (about 4,440 acres)
in Eureka County, Nevada.

Horseshoe Basin Property is located in the Fish Creek Mountains
about 30 miles south of the town of Battle Mountain and about 4 miles south of
the McCoy and Cove deposits.

South Lone Mountain Property is located on the west flank of
the Mountain Boy Range in Antelope Valley about 15 miles southwest of the town
of Eureka and consists of a total of 140 lode claims (about 2,800 acres) in
Eureka County, Nevada.

Golconda Property is located in Rock Creek Valley about 12
miles east of the town of Winnemucca and near the intersection of the Getchell
Trend and the north end of the Battle Mountain-Eureka Trend and comprises of a
total of 108 lode claims (about 2,160 acres) in Humboldt County, Nevada.

North Battle Mountain Property is located in the Sheep Creek
Range about 4 miles northeast of the town of Battle Mountain near the northern
extension of the Battle Mountain-Eureka (Cortez) Trend and comprises a total of
73 lode claims (about 1,460 acres) in Lander County, Nevada.

Dry Hills Property is located in the Dry Hills about 20 miles
southwest of the town of Carlin and comprises of a total of 96 lode claims
(about 1,920 acres) in Eureka County, Nevada.

Walti Property is located in Grass Valley about 62 miles south
of the town of Carlin and consists of a total of 402 lode claims (about 8,040
acres) in Eureka and Lander Counties, Nevada.

Marr Property is located between the Fish Creek Mountains and
the Ravenswood Mountains about 50 miles southwest of the town of Battle
Mountain. The property is along the Western Nevada Rift and consists of a total
of 93 lode claims (about 1,840 acres) in Lander County, Nevada.

The Illipah gold prospect is situated in eastern Nevada at the
southern extension of the Carlin Trend (T 18N, R 58E). The property consists of
one hundred ninety one unpatented federal Bureau of Land Management lode mining
claims, approximately 3,820 acres.

As of June 30, 2007, the Company incurred a total of $1,862,148
in acquisition costs. The Company has recently commenced exploration of its
properties and has yet to determine whether any of its properties are
commercially feasible. In order for the Company to complete its analysis,
additional funding is required.

NOTE 5  NOTES PAYABLE

On July 1, 2005, the Company borrowed $100,000 from Gatinara
Holdings, Inc., an unrelated third party. The loan is evidenced by an unsecured
promissory note. The note accrues interest at 8% per annum and matures on
December 31, 2006. Accrued interest related to this note as of June 30, 2007
amounted to $15,978. The principal and accrued interest was not paid as of
December 31, 2006 and is now in default.

From August 9, 2005 to October 5, 2005, the Company borrowed a
total of $330,978 from Greenshoe Investment, Inc., an unrelated third party. The
loans are evidenced by unsecured promissory notes. The notes accrue interest at
8% per annum and mature on December 31, 2007. Accrued interest related to these
notes as of June 30, 2007 amounted to $48,285. The principal balance due is
convertible into common shares of the Companys common stock at a conversion
price of $.40 per share.

During the six months ended June 30, 2006, the Company borrowed
a total of $649,838 from Greenshoe Investment, Inc. The loans are evidenced by
unsecured promissory notes. The notes accrue interest at 8% per annum and mature
on December 31, 2007. Accrued interest related to these notes as of June 30,
2007 amounted to $72,627. The principal balance due is convertible into common
shares of the Companys common stock at a conversion price of $.40 per share.

11

---

NOTE 6  STOCKHOLDERS EQUITY (DEFICIT)

Common Stock

On April 19, 2004, the Company authorized a 50-for-1 stock
split. On August 18, 2004, the Company authorized a 6.82 -for-1 stock split. On
May 16, 2005, the Company authorized a 1.20 -for-1 stock split. In addition, the
Company increased it authorized shares to 100,000,000. The accompanying
financial statements have been retroactively restated to present the effect of
these three stock splits.

On April 15, 2005, the Company's officers and directors agreed
to redeem an aggregate of 27,172,800 of their shares for $7,906 or $.0002909 per
share. The shares include 13,586,400 shares from Dr. Abbott, and 6,793,200
shares from each of Messrs. Pescio and Keith. Dr. Abbott's shares were redeemed
for $3,954, and Messrs. Pescio and Keith each received $1,976 for their shares.
These amounts are the equivalent to the pre-split prices they paid for their
shares when they joined the Company in March 2004. The $7,906 was paid during
the three months ended September 30, 2005.

In April 15, 2005, the holders of the notes payable converted
the principal amount of the notes totaling $1,025,000 and accrued interest of
$79,271 into 1,325,126 shares of the Company's common stock.

In the fourth quarter of 2005, the Company sold 625,000 shares
of common stock to an investor for total cash proceeds of $500,000. In
connection with this transaction, the Company also issued to this investor a
warrant to purchase 625,000 shares of common stock for $0.85 per shares. As of
December 31, 2005, the Company received $499,582. The remaining $418 has been
charged to equity and included in subscription receivable.

In the second quarter of 2006, the Companys former management
exercised some of their options to purchase a total of 24,800 shares of the
Companys common stock at a price of $.15 per share.

In the third quarter of 2006, the Company sold 1,145,000 units
through a private Reg S offering for $343,500. Each unit consisted of one share
of the Companys common stock and one warrant to purchase one share of the
Companys common stock at $.60 per share. The warrant expires three years from
date of issuance. The warrants and underlying common shares are anti-dilutive.

In the fourth quarter of 2006, the Company issued 100,000
shares of its common stock in connection with the purchase of its Illipah mining
claims. The shares were valued at $33,000 which represents the shares market
value on date of issuance. The $33,000 was capitalized and included in the costs
mining claims.

Options and Warrants

| | 1) | In March 2004, the Company issued 60,000 options to
      former employees of the Company. In June 2006, former management exercised
      some of their options to purchase a total of 24,800 shares of the
      Companys common stock for $3,720.                                                                                                                                                                                                                                                                                                                                                                                                                     
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | 2) | In accordance with a consulting agreement with Access
      Capital Management Corp., the Company issued Access Capital, 25,000
      options in September 2005 to purchase shares of the Companys common stock
      for $0.75 per shares. In December 2005, the Company extended the term of
      the agreement and granted Access an additional 125,000 options to purchase
      shares of the Companys common stock at a price of $0.75 per shares. The
      150,000 options granted expire on September 28, 2010 unless Access Capital
      no longer provides services for the Company whereby the options expire one
      year from the date of termination.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | 3) | As discussed above, in connection with the issuance of
      the 625,000 shares of the Companys common stock, the Company granted
      625,000 warrants to purchase shares of the Companys common stock at $.85
      per share.                                                                                                                                                                                                                                                                                                                                                                                                                                       

12

---

| | 4) | In connection with the Companys July 2006 private
      offering, the Company issued 1,145,000 warrants to purchase shares of the
      Companys common stock at $.60 per share. The warrants expire three years
      from the date of issuance.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    | The warrant holders have the right to convert the
      warrants granted into shares of the Companys common stock for no further
      consideration based upon a formula indicated in the warrant
    agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | 5) | Also in July 2006, the Company received $1,500,000 in
      exchange for the issuance of 5,000,000 warrants which can be converted
      into 5,000,000 shares of the Companys common stock at any time by the
      warrant holder for no further consideration through July 14, 2016 on which
      date the Company will issue the 5,000,000 shares. The warrant holder was
      also granted an additional 5,000,000 warrants to purchase shares of the
      Companys common stock at a price of $.60 per share. These additional
      warrants expire three years from the date of issuance.                                                                                                                                                                                                                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    | The warrant holders have the right to convert the
      additional warrants granted into shares of the Companys common stock for
      no further consideration based upon a formula indicated in the warrant
      agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    | In connection with the July 2006 common stock offering
      and granting of warrants, the Company agreed to register all common shares
      relating to the offering with the Securities and Exchange Commission
      within 180 days of receiving the proceeds from the offering. Under the
      terms of the Registration Rights Agreement, the investors are entitled to
      liquidating damages in an amount equal to 1% of the aggregate amount
      invested for each 30-day period or pro rata for any portion thereof, in
      which a registration statement was not declared effective by the
      Securities Exchange Commission. The Company has accrued $178,205 relating
      to this breach which it charged to operations. Certain warrant holders
      have made demand for payment under the Registration Rights Agreement and
      the Company is currently in discussions with the investors relating to
      this matter.

The following table summarizes the
options and warrants outstanding at June 30, 2007:

WeighedOptions/
    
    
    AverageWarrants
    
    
    ExerciseOutstanding
    
    
    PriceBalance - December 31,
      2004
    
    60,000
    
    $
    .1500Granted
    
    775,000
    
    $
    .8306Exercised
    
    -Forfeited
    
    -Balance - December 31,
      2005
    
    835,000
    
    $
    .7817Granted
    
    11,145,000
    
    $
    .4654Exercised
    
    (24,800
    )
    $
    (.1500
    )Forfeited
    
    -Balance  December 31, 2006
    
    11,955,200
    
    $
    .4886Granted
    
    -
    
    
    -Exercised
    
    -
    
    
    -Forfeited
    
    -
    
    
    -Balance  June 30, 2007
    
    11,955,200
    
    $
    .4886


All of the above options and warrants are exercisable at June
30, 2007.

13

---

NOTE 7  INCOME TAXES

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

Deferred tax assets:Net operating
      loss
    $
    1,073,000Less valuation allowance
    
    (1,073,000
    )$
    -


At June 30, 2007, the Company had federal net operating loss
("NOL") carryforwards of approximately $3,156,000. Federal NOLs could, if
unused, begin to expire in 2024. The increase in deferred tax assets in 2007 of
$182,000 related to the Companys 2007 net operating loss which was reduced to
$0 due to the Companys 2007 valuation allowance.

Utilization of the net operating loss and tax credit
carryforwards is subject to significant limitations imposed by the change in
control under Internal Revenue Code Section 382.

NOTE 8  RELATED PARTY TRANSACTIONS

During the six months ended June 30, 2007 and 2006, the Company
had the following transactions with related parties:

As discussed in Note 3, the Company entered into agreements
with a company owned by Mr. Carl Pescio, a Director of the Company, to acquire
mining claims. During the six months ended June 30, 2007, the Company paid Mr.
Pescio $150,000 related to these agreements.

As further discussed in Note 3, the Company entered into an
agreement with Messrs. Abbott and Keith to acquire certain mining properties.
During the six months ended June 30, 2007, the Company paid Mr. Abbott $11,700
and Mr. Keith $18,300 related to this agreement.

During the six month ended June 30, 2007 and 2006, the Company
incurred consulting fees for services provided by Mr. Earl Abbott and related
reimbursed costs totaling $36,951 and $101,898, respectively. Of the $36,951
incurred in 2007, $27,495 related to mining exploration and $9,456, related to
general administrative activities. Of the $101,898 incurred in 2006, $64,276
related to mining exploration and $37,622 related to general administrative
activities.

During the six months ended June 30, 2006, the Company incurred
consulting fees of $10,000 to Mr. George Drazenovic, its Chief Financial
Officer. Mr. Drazenovic was not affiliated with the Company until 2006.

During the six months ended June 30, 2007, Mr. Carl Pescio
advanced $330,000 which is unsecured, non-interest bearing and due on demand.

NOTE 9  PRIVATE STOCK OFFERING

The Company is offering to the general public 1,250,000 units
at price per unit of $.20. Each unit consists of one share of the Companys
common stock and a warrant to purchase one/half of one share of the Companys
common stock at a price of $.30 per share. Warrants expire 2 years after date of
grant. The Company is deferring all direct costs associated with the offering.
Costs will either be charged against the proceeds received through the offering,
if the offering is successful, or charged to operations, if the offering is
unsuccessful. As of June 30, 2007, deferred offering costs amount to $2,500. No
units have been sold as of June 30, 2007.

14

---

Item 2. Managements Discussion and Analysis or Plan of
Operation.

FORWARD-LOOKING STATEMENTS

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

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

Our financial statements are stated in United States dollars
and are prepared in conformity with generally accepted accounting principles in
the United States of America for interim financial statements. The following
discussion should be read in conjunction with our financial statements and the
related notes that appear elsewhere in this quarterly report.

As used in this quarterly report and unless otherwise
indicated, the terms we, us and our refer to Tornado Gold International
Corporation and our subsidiaries, unless otherwise indicated. Unless otherwise
specified, all dollar amounts are expressed in United States dollars and all
references to common shares refer to the common shares in our capital stock.

Corporate History

We were incorporated in Nevada as Nucotec, Inc. on October 8,
2001, in order to serve as a holding company for Saltys Warehouse, Inc. We
disposed of that asset in March 2004 as described herein and changed our name to
Tornado Gold International Corp. in July 2004. Our new management has undertaken
to change our business focus. Prior to March 2004, we operated through Saltys
Warehouse; under our new management, we are an exploration stage company that
has begun to acquire low-risk, high-grade properties for gold exploration in
Nevada. Using the evaluation technique described herein, we hope to acquire
properties that will offer new economically viable gold mining properties for
resale to entities who will undertake to begin mining operations on those
properties. We believe that our technical team, consisting of our current
management, will help us operate successfully. Earl W. Abbott, our officer and
director, has extensive data and program management experience; Carl A. Pescio,
also one of our directors, has on-the-ground prospecting and property
knowledge; and George Drazenovic, our newest director and Chief Financial
Officer, has experience in managing the financial functions of public reporting
companies. There is, however, no assurance that a commercially viable mineral
deposit exists on any of our properties. Further exploration will be required
before a final evaluation as to the economic and legal feasibility is
determined.

Effective February 28, 2007, we changed our domicile from
Nevada to Delaware. The change of domicile was effected by merging Tornado Gold
International Corporation, our recently incorporated and wholly-owned
subsidiary, with and into our company, with our company carrying on as the
surviving corporation under the name Tornado Gold International
Corporation.

One of our former directors, Stanley B. Keith, has developed
what we believe to be a new and unique technological approach for the
exploration of certain types of gold deposits; we had the benefit of using this
approach to identify suitable properties. Mr. Keiths approach has been
developed over a twenty-year period and has been applied to a large, world-wide
database that links specific geochemical signatures of certain types of gold
deposits. Even though Mr. Keith is no longer a director of our company, we
believe we have acquired sufficient knowledge in this technological approach to
identify suitable properties.

15

---

With our most recent acquisitions of property interests in the
fourth quarter of 2005, we now have a total of 15 properties comprised of about
44,840 acres, all located in the North Central Nevada area. We believe that our
acquisitions up to now have provided us with a significant package of claims in
what we believe to be a premier gold producing region.

On May 31, 2004, we entered into four preliminary agreements
with a company wholly owned by Mr. Pescio to lease four mining properties. As of
April 5, 2005, we finalized those agreements, giving us rights to four
properties in Nevada that meet our preliminary screening criteria and have begun
to undertake our more detailed evaluation process. In addition, we are actively
seeking additional properties; our technical team currently has about 30 such
properties on a watch list for acquisition.

On October 3, 2005, we paid the Bureau of Land Management
$30,875 as consideration on the Exploration License and Option to Lease
Agreement entered into between the Company and Mr. Earl Abbott, and Stanley
Keith to explore 247 claims (nearly 5,000 acres) known as the Jack Creek
Property. Mr. Abbott is our President, Chief Executive Officer and one of our
directors and Mr. Keith was a director of our company at that time. In addition,
on August 7, 2006, we acquired an option for 53 additional claims at the Jack
Creek Property. The option was acquired from Gateway Gold (USA) Corp. through
Messrs. Abbott and Keith.

During October 2005, we entered into ten preliminary agreements
with Mr. Carl A. Pescio, one of our directors, to acquire ten mineral properties
in Nevada. These properties are comprised of approximately 1600 claims and are
subject to availability and are being acquired by us without warranty from Mr.
Pescio as to total availability and/or mineral potential. We have not yet
finalized these agreements, but a short description of these properties is
contained herein. We acquired these properties for $35,000 per property, or
$350,000, with a down payment of $50,000 and two payments of $150,000 - one on
November 30, 2005, and one on December 30, 2005. We also agreed to issue 100,000
shares of common stock for each property to Mr. Pescio in the form of warrants,
options, or other, to be mutually agreed upon.

Other Claims Acquired in 2005.

Jack Creek Property - On October 3, 2005, we announced the
acquisition of 247 claims (nearly 5,000 acres) on the Jack Creek property in
Elko County, Nevada. Prior to September 30, 2005, we paid $30,875 to the BLM to
secure the claims. This payment was made as consideration on the Exploration
License and Option to Lease Agreement entered into between us and Dr. Abbott and
Mr. Keith (the Owners), to explore the 247 claims (nearly 5,000 acres) known
as the Jack Creek Property.

Claims Acquired in 2006

On August 23, 2006, we entered into an agreement to acquire the
Illipah gold prospect consisting of 191 unpatented mining claims located in
White Pine County, Nevada in consideration for $100,000 and 300,000 shares of
our common stock. Under the terms of the purchase agreement, $50,000 was paid
upon signing with an additional $50,000 and 100,000 shares of restricted common
stock paid and issued on November 21, 2006. An additional 200,000 shares of
restricted common stock is to be issued on or before August 23, 2007. Further,
we assumed the sellers obligations in an underlying exploration and mining
lease agreement on the claims, and granted to the seller a production royalty of
two percent of net smelter returns on all rents and mineral production from the
property. We also agreed to pay $48,006.50 to the United States Department of
the Interior Bureau of Land Management for mining claim maintenance fees, and be
responsible for future annual maintenance and filing fees on the acquired claims
and any advanced minimum royalty payments due to Carl Pescio, a director of our
company, and Janet Pescio under an August 31, 2001, agreement between the
Pescios and the seller.

We have the option, exercisable at any time prior to commercial
production on any of the Illipah claims, to reduce production royalties due to
the seller from two percent to one percent by paying it $1,000,000 or its
equivalent in gold bullion priced as of the August 24, 2006 closing price of
gold on the New York Commodity Exchange. We also agreed to undertake an
exploration program on the Illipah property and related area of interest, and
incur exploration and development expenditures of at least $750,000 within two
years, of which $250,000 is to be expended during the first year of the
agreement.

16

---

Critical Accounting Policies

Our Managements Discussion and Analysis or Plan of Operation
section discusses our financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States of
America. The preparation of these financial statements requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. On an on-going basis,
management evaluates its estimates and judgments, including those related to
revenue recognition, accrued expenses, financing operations, and contingencies
and litigation. Management bases its estimates and judgments on historical
experience and on various other factors that are believed to be reasonable under
the circumstances, the results of which form the basis for making judgments
about the carrying value of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates under
different assumptions or conditions. The most significant accounting estimates
inherent in the preparation of our financial statements include estimates as to
the appropriate carrying value of certain assets and liabilities, which are not
readily apparent from other sources, accruals for other costs, and the
classification of net operating loss and tax credit carry-forwards between
current and long-term assets.

Mining Costs.

Costs incurred to purchase, lease or otherwise acquire property
are capitalized when incurred. General exploration costs and costs to maintain
rights and leases are expensed as incurred. Management periodically reviews the
recoverability of the capitalized mineral properties and mining equipment.
Management takes into consideration various information including, but not
limited to, historical production records taken from previous mine operations,
results of exploration activities conducted to date, estimated future prices and
reports, and opinions of outside consultants. When it is determined that a
project or property will be abandoned or its carrying value has been impaired, a
provision is made for any expected loss on the project or property.

Liquidity and Capital Resources.

We had cash totalling $3,764 and prepaid expenses totalling
$41,280 as of June 30, 2007, making our total current assets $45,044. We also
had mining claims of $1,862,148, computer equipment of $2,657, deferred offering
costs of $2,500 and intangible assets of $5,723, making our total assets
$1,918,072 as of June 30, 2007. As of that date, our available cash and cash
equivalents were not sufficient to pay our day-to-day expenditures or to
effectuate our business plan. In July 2006, we sold approximately $1.84 million
of our equity securities in a private placement. We are committed to continue to
seek the necessary financing needed to continue operating through the sale of
equity or debt financing, though there is no guarantee we will be able to do
so.

As of June 30, 2007, we had a net working capital deficit of
$1,828,305.

Net cash used in operating activities was $288,362 for the six
month period ended June 30, 2007 compared to $266,770 for the six month period
ended June 30, 2006.

Due to numerous economic and competitive risks, any or all of
which may have a material adverse impact upon our operations, there can be no
assurance that we will be able to generate significant revenues or achieve a
level of positive cash flow that would permit us to continue our current
business plan. Our current plans encompass the identification and acquisition of
properties exhibiting the potential for gold mining operations by others.
However, as noted, we must continue to raise additional capital in order to
ensure the availability of resources sufficient to fund all of our general and
administrative expenses for the next twelve months.

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

Plan of Operations.

In July 2006, we closed a financing of US $1,844,000. A
substantial portion of the funds have been devoted to the lease costs of our 15
properties. We used a material portion for administrative overhead and future
acquisition opportunities. Thus, we expect to have less than $500,000 available
for exploration on its current properties over the

17

---

next 12 months, during which period we will continue to pursue
additional financing opportunities to further its exploration and acquisition
program.

We begin our exploration process by attempting to understand
the regional geology of our prospects and by progressing through the
district-wide geologic setting. Eventually, we graduate to the geologic setting
of each individual proposed drill hole. Before drilling, we attempt to predict
our probability of success, and we will drill only sites that we believe have
the best chance of encountering a gold deposit. Typically, we will engage in
integrated surface geological, geochemical, and geophysical analysis before we
begin drilling. Some of the specific methods that we will engage in include
magmatic affinity, pluton vectoring, kinetic structural analysis, and metal
dispersion.

To date, we have acquired leases in several claim blocks in the
North Central Nevada area. In total, the property package represents 15
properties comprised of approximately 44,840 acres. However, in addition to our
initial exploration program, we will need to spend significant funds to complete
further in-depth drilling and engineering studies before we can identify whether
or not we have a commercially viable mineral deposit.

Future funding levels will also determine the extent and number
of properties that we will explore. No certainty can be ascertained on our
overall exploration program until significant funding levels have been
achieved.

While most properties will be examined and sampled, we will
also analyze the results of all previous work that is publicly available for the
properties. We currently expect that in Spring 2007, we will perform a small
amount of drilling on the Jack Creek property. A ranking system will enable us
to decide which properties will undergo detailed work and drill at the earliest
opportunity. The remaining properties will be made available for farm-out or for
development at a later date, or dropped all-together from further work.

The following is a list of projects on which, as of the date
  of this quarterly report, we have decided to focus during the next 12 months.
  The prioritization of, and the projects themselves, are expected to change depending
  on funding levels and preliminary sampling results:

Jack Creek. We intend to undertake geological and
structural analysis, as well as soil sampling and geophysical surveys, on this
property, located in the Independence Mountains mining district about 50 miles
north of Elko, Nevada. The intended work is in preparation for an intended drill
program on the property currently expected to be performed in Spring 2007,
which, in aggregate, is expected to cost up to approximately $100,000.

The Jack Creek property comprises a total of approximately
6,000 acres in Elko County, Nevada, and is located in the northern Independence
Mountains. Management believes that the property is attractive because it
occupies the southwest flank of a prominent gravity high, indicating the
presence of relatively shallow Paleozoic carbonate sedimentary rocks.

Recently, we acquired an option for 53 additional claims at the
Jack Creek Property, Elko County, Nevada. The option was acquired from Gateway
Gold (USA) Corp. through a director and former director, Earl Abbott and Stanley
Keith. We have the option to earn a 50% undivided interest in the 53 claims
through our expenditure on the claims of a total of $500,000 in various stages
by March 1, 2007, 2008, and 2009. Currently, however, we do not have such funds
available and will need to raise additional funds in order to exercise the
option.

NT Green. Exploration currently anticipated to occur
during the Spring of 2007 will focus on delineating drill targets. The property
will be prospected by sampling and analysis of mineralized rock. We expect to
perform a kinematic structural analysis of the property and expect to produce a
more realistic geologic map than those made available in the past. A soil
geochemistry program will aid in identifying favorable fault structures and
intersections, as well as the centers of the most active hydrothermal activity.
A pluton vectoring study is expected to be performed by analysis of all
intrusive rocks and their interpretation. In addition, an airborne magnetic
survey is expected to be performed over the property to aid in the discovery of
dikes and sills and to aid in the mapping and structural analysis. It is
intended that by the Spring of 2007, we will have identified targets for
permitting and drilling. We have budgeted up to approximately $100,000 to
complete this program; however, that amount may vary depending on preliminary
results.

Goodwin Hill. Exploration on this property may include
geologic mapping to identify prospective fault structures that can be projected
under alluvium. Sampling of all mineralized rocks is expected to provide a
vector toward the

18

---

center of hydrothermal activity. Gravity and magnetic
geophysical studies are expected to be performed to define the buried shallow
basement rocks better. These studies are intended to provide low risk drilling
targets for permitting and drilling in the Spring of 2007. As of the date of
this quarterly report, we have budgeted nearly $50,000 for this program.

Work to date in the area has indicated a large Carlin type
system within prospective lower plate carbonate rocks on the flanks of a major
dome and near intrusive bodies.

HMD. Exploration on this property will be directed
toward delineating low-risk drill targets. We currently expect that we will
undertake a kinematic structural analysis of the exposed silicified rocks along
the HMD structure combined with careful rock sampling to locate points along the
fault where hydrothermal activity is most intense. We intend to supplement these
studies with soil sampling, and the resulting drill targets will be sharpened by
detailed IP surveys. By the Spring of 2007, we hope to have targets prepared for
permitting and drilling. We expect to spend up to approximately $50,000 for this
program over the next 12 months.

Wilson Peak. A program of kinematic structural analysis,
combined with multi-element rock and soil sampling, is currently planned for
Wilson Peak. Potential drill targets will be sharpened by IP geophysical
surveys. Assuming we have raised sufficient funds, permitting and drilling are
planned for Spring 2007. We expect that this program will require up to
approximately $50,000 for the next 12 months.

Other Properties. We hope to undertake additional
exploration studies on the Stargo, West Whistler, Brock, Horseshoe Basin, South
Lone Mountain, Golconda, North Battle Mountain, Dry Hills Property, Walti, and
Marr Properties, but no detailed plans to conduct exploration on these
properties have yet been determined. We believe that it could expect to spend up
to approximately $150,000 on these properties, thus, bringing the total funds
budgeted for the next 12 months to $500,000.

Our forecast for the period for which our financial resources
will be adequate to support our operations involves risks and uncertainties, and
actual results could fail as a result of a number of factors. We will need to
raise additional capital to exploit our properties. In the event that we
experience a shortfall in our capital, we intend to pursue capital through
public or private financing as well as borrowings and other sources. We cannot
guarantee that additional funding will be available on favorable terms, if at
all and if adequate funds are not available. Our ability to continue or expand
our operations may be significantly hindered. We have not contemplated any plan
of liquidation in the event that we do not generate revenues.

As an exploration company, we are not currently conducting any
research and development activities and we do not anticipate conducting such
activities in the near future. In the event that we obtain significant funding
to fully implement our exploration program, we will need to hire additional
employees or independent contractors and possibly purchase or lease additional
equipment. With large current demand for resource exploration equipment and
human capital in the state of Nevada, there is no guarantee that we will be able
to meet our equipment and human capital needs. However, management believes that
the network of relationships developed over the years by our officers and
directors in Nevada will largely mitigate any shortages that similar companies
face.

The projects described above will be managed by Dr. Earl
Abbott. Dr. Abbott holds a Ph.D degree in geology from Rice University where he
studied the tectonics of the western U.S. He has spent 34 years exploring for
mineral deposits, 26 of them for gold in Nevada, and, with Carl Pescio, he
managed an exploration program in Nevada in 1981 resulting in the acquisition of
3 gold orebodies that were mined profitably. Over his career, Dr. Abbott has
consulted to the mining industry and has been an officer and director of several
junior mining companies. Dr. Abbott is a Certified Professional Geologist by the
American Institute of Professional Geologists (AIPG) and past President of the
Nevada Chapter. He is also a member and past President of the Geological Society
of Nevada (GSN), the Nevada Petroleum Society (NPS), and the Denver Region
Exploration Geologists Society (DREGS); and he is a member of the Society of
Economic Geologists (SEG), the Society for Mining, Metallurgy, and Exploration
(SME), the Geological Society of America (GSA), the Northwest Mining Association
(NWMA), the British Columbia & Yukon Chamber of Mines, and the Prospectors
and Developer Association of Canada (PDAC). Dr. Abbott is a Qualified Person
under the rules of National Instrument 43-101.

We expect to utilize the services of various third-party
geological professionals to assist with the various projects. The number of
consultants will depend on our initial exploratory results and funding levels.
No plans are in place for a significant change in the number of full-time
personnel.

19

---

Currently, we have no research and development plans and no
intention to purchase or sell plant or significant equipment.

Result of Operations.

For the three month period ended June 30, 2007, compared to
the three month period ended June 30, 2006.

Revenue - We have realized no revenues for the three month
period ended June 30, 2007 and no revenues for the three month period ended June
30, 2006.

Operating Expenses - For the three month period ended June 30,
2007, our total operating expenses were $108,457, compared to our total
operating expenses of $166,815 in the corresponding prior period. Of the
$108,457 incurred in the three month period ended June 30, 2007, $40,761 related
to our mining exploration, $67,696 related to general and administrative
activities, and $Nil related to our compensation expense on option grants. Of
the $166,815 incurred in the three month period ended June 30, 2006, $41,307
related to mining exploration, $125,508 related to general and administrative
activities, and $Nil related to our compensation expense on options grants.
During the three month period ended June 30, 2007, we accrued $21,261 in
interest expenses on notes payable, compared to interest accruing during the
three month period ended June 30, 2006, of $21,557. No interest has been paid on
notes payable during either period.

For the six month period ended June 30, 2007, compared to
the six month period ended June 30, 2006.

Revenue - We have realized no revenues for the six month period
ended June 30, 2007 and no revenues for the six month period ended June 30,
2006.

Operating Expenses - For the six month period ended June 30,
2007, our total operating expenses were $313,412, compared to our total
operating expenses of $290,585 in the corresponding prior period. Of the
$313,412 incurred in the six month period ended June 30, 2007, $119,958 related
to our mining exploration, $193,454 related to general and administrative
activities, and $Nil related to our compensation expense on option grants. Of
the $290,585 incurred in the six month period ended June 30, 2006, $81,267
related to mining exploration, $82,579 related to general and administrative
activities, and $Nil related to our compensation expense on options grants.
During the six month period ended June 30, 2007, we accrued $42,877 in interest
expenses on notes payable, compared to interest accruing during the six month
period ended June 30, 2006, of $37,738. No interest has been paid on notes
payable during either period. In addition, during the six month period ended
June 30, 2007, we accrued $178,205 in potential liquidating damages relating to
our failure to register the underlying shares issued in our July 2006 private
offering (See Note 6 to the financial statements).

Off-Balance Sheet Arrangements.

There are no 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; except for our commitment to lease certain mining property that
require us to make substantial lease payments in the future as disclosed in
Notes to the financial statements included in our 10-KSB filed on April 17,
2007.

Significant Accounting Policies

In December 2004, the FASB issued SFAS No. 123R, Share-Based
Payment (SFAS 123R), which revises SFAS No. 123, Accounting for Stock Based
Compensation, and supersedes APB 25. Among other items, SPAS 123R eliminates
the use of APS 25 and the intrinsic value method of accounting, and requires
companies to recognize in the financial statements the cost of employee services
received in exchange for awards of equity instruments, based on the grant date
fair value of those awards. This cost is to be recognized over the period during
which an employee is required to provide service in exchange for the award
(typically the vesting period). SFAS 123R also requires that benefits associated
with tax deductions In excess of recognized compensation cost be reported as a
financing cash inflow, rather than as an operating cash flow as required under
current literature.

SFAS 123R permits companies to adopt its requirements using
either a modified prospective method, or a modified retrospective method.

20

---

Under the modified prospective method, compensation cost is
recognized in the financial statements beginning with the effective date, based
on the requirements of SFAS 123R for all share-based awards granted or modified
after that date, and based on the requirements of SFAS 123 for all unvested
awards granted prior to the effective date of SFAS 1 23R, Under the modified
retrospective method, the requirements are the same as under the modified
prospective method, but this method also permits entities to restate financial
statements of previous periods based on pro forma disclosures made in accordance
with SFAS 123.

In May 2005, the FASB issued SFAS No. 154, Accounting Changes
and Error Corrections (SFAS 154), which changes the requirements for the
accounting for and reporting of a change in accounting principle. The statement
requires retrospective application to prior period financial statements of
changes in accounting principle, unless impracticable to do so. It also requires
that a change in the depreciation, amortization, or depletion method for
long-lived non-financial assets be accounted as a change in accounting estimate,
effected by a change in accounting principle. Accounting for error corrections
and accounting estimate changes will continue under the guidance in APB Opinion
20, Accounting Changes, as carried forward in this pronouncement. The
statement is effective for fiscal years beginning after December 15, 2005.

In November 2005, the FASB issued FSP Nos. FAS 115-1 and 124-1.
The Meaning of Other-Than-Temporary Impairment and Its Application to Certain
Investments. This FSP addresses the determination as to when an investment is
considered impaired, whether the impairment is other-than-temporary, and the
measurement of an impairment loss. The investment is impaired if the fair value
is less than cost. The impairment is other-than-temporary for equity
securities and debt securities that can contractually be prepaid or otherwise
settled in such a way that the investor would not recover substantially all of
its cost. if other-than-temporary, an impairment loss shall be recognized in
earnings equal to the difference between the investments cost and its fair
value. The guidance in this FSP is effective in reporting periods beginning
after December 15, 2005. Our company is reviewing FSP Nos. FAS 115-1 and 124-1,
but does not expect that the adoption of this FSP will have a material effect on
its consolidated financial statements.

We do not anticipate that the adoption of these standards will
have a material impact on our financial statements.

RISK FACTORS

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

Such estimates, projections or other forward-looking
statements involve various risks and uncertainties as outlined below. We
caution the reader that important factors in some cases have affected and, in
the future, could materially affect actual results and cause actual results to
differ materially from the results expressed in any such estimates, projections
or other forward-looking statements.

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

Risks Related to Our Business and Our Industry

There is no assurance that we will operate profitably or
will generate positive cash flow in the future.

We have never generated any revenues from operations. We do not
presently have sufficient financial resources or any operating cash flow to
undertake by ourselves all of our planned exploration and development programs.
If we cannot generate positive cash flows in the future, or raise sufficient
financing to continue our normal operations, then we may be forced to scale down
or even close our operations. Furthermore, our ability to meet our business plan
could be adversely affected.

We will depend almost exclusively on outside capital to pay for
the continued exploration and development of our properties. Such outside
capital may include the sale of additional stock and/or commercial borrowing.
Capital may

21

---

not be available to meet our continuing exploration and
development costs or, if the capital is available, it may not be on terms
acceptable to us. The issuance of additional equity securities by us would
result in a significant dilution in the equity interests of our then-current
stockholders. Obtaining commercial loans, assuming those loans would be
available, will increase our liabilities and future cash commitments.

If we are unable to obtain financing in the amounts and on
terms deemed acceptable to us, we may be unable to continue our business, and as
a result, we may be required to scale back or cease operations for our business,
the result of which would be that our stockholders would lose some or all of
their investment.

We have a limited operating history, and if we are not
successful in continuing to grow our business, we may have to scale back or even
cease our ongoing business operations.

Our company has a limited operating history and must be
considered in the exploration stage. Our operations will be subject to all the
risks inherent in the establishment of a developing enterprise and the
uncertainties arising from the absence of a significant operating history. We
may be unable to operate on a profitable basis. We are in the exploration stage
and potential investors should be aware of the difficulties normally encountered
by enterprises in the exploration stage. If our business plan is not successful,
and we are not able to operate profitably, investors may lose some or all of
their investment in our company.

There are numerous exploration and development risks
associated with our industry.

There is no assurance given by us that our exploration and
development programs and properties will result in the discovery, development,
or production of a commercially viable ore body.

The business of exploration for minerals and mining involves a
high degree of risk. Few properties that are explored are ultimately developed
into producing mines. There is no assurance that our mineral exploration and
development activities will result in any discoveries of bodies of commercial
ore. The economics of developing gold and other mineral properties are affected
by many factors, including capital and operating costs, variations of the grade
of ore mined, fluctuating mineral markets, costs of processing equipment, and
such other factors as government regulations, including regulations relating to
royalties, allowable production, importing and exporting of minerals, and
environmental protection. Substantial expenditures are required to establish
reserves through drilling, to develop metallurgical processes to extract metal
from ore, and to develop the mining and processing facilities and infrastructure
at any site chosen for mining. No assurance can be given that funds required for
development can be obtained on a timely basis. The marketability of any minerals
acquired or discovered may be affected by numerous factors which are beyond our
control and which cannot be accurately foreseen or predicted, such as market
fluctuations, the global marketing conditions for precious and base metals, the
proximity and capacity of milling facilities, mineral markets, and processing
equipment, and such other factors as government regulations, including
regulations relating to royalties, allowable production, importing and exporting
minerals, and environmental protection.

The price of gold can be volatile.

Gold prices historically have fluctuated widely and are
affected by numerous factors outside of our control, including industrial and
retail demand, central bank lending, sales and purchases of gold, forward sales
of gold by producers and speculators, levels of gold production, short-term
changes in supply and demand because of speculative hedging activities,
confidence in the global monetary system, expectations of the future rate of
inflation, the strength of the US dollar (the currency in which the price of
gold is generally quoted), interest rates, and global or regional political or
economic events.

The potential profitability of our operations is directly
related to the market price of gold. A decline in the market price of gold would
materially and adversely affect our financial position. A decline in the market
price of gold may also require us to write-down any mineral reserves that we
might book, which would have a material and adverse effect on our earnings and
financial position. Further, if the market price of gold declines, we may
experience liquidity difficulties if and when we attempt to sell any gold we
discover. This may reduce our ability to invest in exploration and development,
which would materially and adversely affect future production, earnings, and our
financial position.

22

---

Competition in the gold mining industry is highly
competitive and there is no assurance that we will be successful in acquiring
leases.

The gold mining industry is intensely competitive. We compete
with numerous individuals and companies, including many major gold exploration
and mining companies, that have substantially greater technical, financial, and
operational resources and staffs. Accordingly, there is a high degree of
competition for desirable mining leases, suitable properties for mining
operations, and necessary mining equipment, as well as for access to funds. We
cannot predict if the necessary funds can be raised or that any projected work
will be completed. There are other competitors that have operations in the
Nevada area and the presence of these competitors could adversely affect our
ability to acquire additional leases.

Government regulation and environmental regulatory
requirements may impact our operations.

Failure to comply with applicable environmental laws,
regulations, and permitting requirements may result in enforcement actions
thereunder, including orders issued by regulatory or judicial authorities,
causing operations to cease or be curtailed, and may include 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
thereof, could have a material adverse impact on us and cause increases in
capital expenditures or production costs or reduction in levels of production at
producing properties or require abandonment or delays in development of new
mining properties.

To the best of our knowledge, we are operating in compliance
with all applicable environmental regulations.

Adversarial legal proceedings may adversely affect
us.

We may become party to litigation or other adversary
proceedings, with or without merit, in a number of jurisdictions. The cost of
defending such claims may take away from management time and effort and if
determined adversely to us, may have a material and adverse effect on our cash
flows, results of operation, and financial condition. As at the date of this
quarterly report, we are not a party to any material litigation or other
adversary proceeding.

Our directors and/or officers may have conflicts of
interest.

There is no assurance given by us that our directors and
officers will not have conflicts of interest from time to time.

Our directors and officers have entered into, and may continue
to enter into, numerous mining leases and options with us, which may not have
been, or may not be, at arms-length.

Furthermore, our directors and officers may serve as directors
or officers of other public resource companies or have significant shareholdings
in other public resource companies and, to the extent that such other companies
may participate in ventures in which we may participate, our directors may have
a conflict of interest in negotiating and concluding terms respecting the extent
of such participation. The interests of these companies may differ from time to
time. In the event that such a conflict of interest arises at a meeting of our
directors, a director who has such a conflict will abstain from voting for or
against any resolution involving any such conflict.

We may be subject to uninsured risks.

There is no assurance given by us that we are adequately
insured against all risks.

We may become subject to liability for cave-ins, pollution, or
other hazards against which we cannot insure or against which we have elected
not to insure because of high premium costs or other reasons. The payment of
such liabilities would reduce the funds available for exploration and mining
activities.

23

---

Our Bylaws contain provisions indemnifying our officers
and directors against all costs, charges, and expenses incurred by
them.

Our Bylaws contain provisions with respect to the
indemnification of our officers and directors against all costs, charges, and
expenses, including an amount paid to settle an action or satisfy a judgment,
actually and reasonably incurred by him, in a civil, criminal, or administrative
action or proceeding, to which he is made a party by reason of his being or
having been one of our directors or officers.

Our Bylaws do not contain anti-takeover provisions, which
could result in a change of our management and directors if there is a take-over
of us.

We do not currently have a stockholder rights plan or any
anti-takeover provisions in our Bylaws. Without any anti-takeover provisions,
there is no deterrent for a take-over of us, which may result in a change in our
management and directors.

Risks Related to Owning Our Stock

A decline in the price of our common stock could affect
our ability to raise further working capital and adversely impact our
operations.

A prolonged decline in the price of our common stock could
result in a reduction in the liquidity of our common stock and a reduction in
our ability to raise capital. Because our operations have been primarily
financed through the sale of convertible debt and equity securities, a decline
in the price of our common stock could be especially detrimental to our
liquidity and our continued operations. Any reduction in our ability to raise
equity capital in the future would force us to reallocate funds from other
planned uses and would have a significant negative effect on our business plans
and operations, including our ability to develop new projects and continue our
current operations. If our stock price declines, we may not be able to raise
additional capital or generate funds from operations sufficient to meet our
obligations.

Trading of our stock may be restricted by the SECs
Penny Stock regulations, which may limit a stockholders ability to buy and
sell our stock.

The U.S. Securities and Exchange Commission has adopted
regulations which generally define penny stock to be any equity security that
has a market price (as defined) less than $5.00 per share or an exercise price
of less than $5.00 per share, subject to certain exceptions. Our securities are
covered by the penny stock rules, which impose additional sales practice
requirements on broker-dealers who sell to persons other than established
customers and accredited investors. The term accredited investor refers
generally to institutions with assets in excess of $5,000,000 or individuals
with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or
$300,000 jointly with their spouse. The penny stock rules require a
broker-dealer, prior to a transaction in a penny stock not otherwise exempt from
the rules, to deliver a standardized risk disclosure document in a form prepared
by the SEC, which provides information about penny stocks and the nature and
level of risks in the penny stock market. The broker-dealer also must provide
the customer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction, and
monthly account statements showing the market value of each penny stock held in
the customers account. The bid and offer quotations, and the broker-dealer and
salesperson compensation information, must be given to the customer orally or in
writing prior to effecting the transaction and must be given to the customer in
writing before or with the customers confirmation. In addition, the penny stock
rules require that prior to a transaction in a penny stock not otherwise exempt
from these 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 level of trading activity in the secondary
market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor interest
in, and limit the marketability of, our common stock.

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

In addition to the penny stock rules described above, the
NASD has adopted rules that require that in recommending an investment to a
customer, a broker-dealer must have reasonable grounds for believing that the
investment is suitable for that customer. Prior to recommending speculative
low-priced securities to their non-institutional customers, broker-dealers must
make reasonable efforts to obtain information about the customers

24

---

financial status, tax status, investment objectives, and other
information. Under interpretations of these rules, the NASD believes that there
is a high probability that speculative low-priced securities will not be
suitable for at least some customers. The NASD requirements make it more
difficult for broker-dealers to recommend that their customers buy our common
stock, which may limit your ability to buy and sell our stock and have an
adverse effect on the market for our shares.

Trading in our common shares on the OTC Bulletin Board is
limited and sporadic, making it difficult for our stockholders to sell their
shares or liquidate their investments.

Our common shares are currently quoted on the OTC Bulletin
Board. The trading price of our common shares has been subject to wide
fluctuations. The market price of a publicly traded stock, especially a junior
resource issuer like us, is affected by many variables in addition to those
directly related to exploration successes or failures. Such factors include the
general condition of the market for junior resource stocks, the strength of the
economy generally, the availability and attractiveness of alternative
investments, and the breadth of the public market for the stock. The effect of
these and other factors on the market price of the common shares on the OTC
Bulletin Board suggests that our shares will continue to be volatile. The stock
market has generally experienced extreme price and volume fluctuations that have
often been unrelated or disproportionate to the operating performance of
companies with no current business operation. There can be no assurance that
trading prices and price earnings ratios previously experienced by our common
shares will be matched or maintained. These broad market and industry factors
may adversely affect the market price of our common shares, regardless of our
operating performance. Therefore, investors could suffer significant losses if
our shares are depressed or illiquid when an investor seeks liquidity and needs
to sell our shares.

In the past, following periods of volatility in the market
price of a companys securities, securities class-action litigation has often
been instituted. Such litigation, if instituted, could result in substantial
costs for us and a diversion of managements attention and resources.

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

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

Investors interests in our company will be diluted and
investors may suffer dilution in their net book value per share if we issue
additional shares or raise funds through the sale of equity
securities.

In the event that we are required to issue any additional
shares or enter into private placements to raise financing through the sale of
equity securities, investors interests in us will be diluted and investors may
suffer dilution in their net book value per share, depending on the price at
which such securities are sold. If we issue any such additional shares, such
issuances also will cause a reduction in the proportionate ownership and voting
power of all other stockholders. Further, any such issuance may result in a
change in our control.

Failure to pay mandatory state fees may impact our
business prospects.

We must pay annual fees to the State of Nevada in connection
with certain of our mining claims. Failure to pay those fees could result in the
temporary or permanent loss of our rights to such mining claims. To the best of
our knowledge, we are current on all fees owed to the State of Nevada.

Item 3. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

As of June 30, 2007, the end of the period covered by this
report, our Chief Executive Officer, Earl W. Abbott, and our Chief Financial
Officer, George Drazenovic, reviewed and evaluated the effectiveness of our
disclosure controls

25

---

and procedures (as defined in Exchange Act Rule 13a-15 and Rule
15d-15(e)), which are designed to ensure that material information we must
disclose in our report filed or submitted under the Securities Exchange Act of
1934, as amended (the Exchange Act) is recorded, processed, summarized, and
reported on a timely basis. We have concluded, based on that evaluation, that,
as of such date, the disclosure controls and procedures were effective to ensure
that information required to be disclosed in reports filed or submitted under
the Exchange Act 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. The evaluation did not detect
any material weaknesses in our system of internal accounting controls over
financial reporting. There have been no changes in our internal controls or in
other factors that could significantly affect internal controls subsequent to
the date we carried out our evaluation.

During our most recently completed fiscal quarter ended June
30, 2007, there were no changes in our internal control over financial reporting
that have materially affected, or are reasonably likely to affect, our internal
control over financial reporting.

The term internal control over financial reporting is defined
as a process designed by, or under the supervision of, our principal executive
and principal financial officers, or persons performing similar functions, and
effected by our board of directors, management and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles and includes those policies and
procedures that:

| | (a) | Pertain to the maintenance of records that in reasonable
      detail accurately and fairly reflect the transactions and dispositions of
      our assets;                                                                                                                                                                                              
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                         
| | (b) | Provide reasonable assurance that transactions are
      recorded as necessary to permit preparation of financial statements in
      accordance with generally accepted accounting principles, and that
      receipts and expenditures of our company are being made only in accordance
      with authorizations of our management and directors; and
| |     |                                                                                                                                                                                                                                                                                                                                                         
| | (c) | Provide reasonable assurance regarding prevention or
      timely detection of unauthorized acquisition, use or disposition of our
      assets that could have a material effect on the financial
    statements.                                                                                                                                      

Limitations on the Effectiveness of Internal
Controls

Our management, including our Chief Executive Officer and Chief
Financial Officer, does not expect that our disclosure controls and procedures
or our internal control over financial reporting will necessarily prevent all
fraud and material error. An internal 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 the
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 our 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 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 override of the internal control. 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, control may become inadequate because of changes in conditions,
and/or the degree of compliance with the policies or procedures may deteriorate.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

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

26

---

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

None.

Item 3. Defaults Upon Senior Securities.

None.

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

Other than as described below, there were no matters submitted
to a vote of our security holders either through solicitation of proxies or
otherwise in the three month period ended June 30, 2007:

On January 24, 2007 we held our Annual General Meeting of
Shareholders (the Meeting) pursuant to a Notice and Proxy Statement duly filed
pursuant to Regulation 14A under the Securities Exchange Act of 1934.

At the Meeting, the following persons were elected Directors of
our company: Earl W. Abbott, George Drazenovic and Carl Pescio. The appointment
of Jonathon P. Reuben, CPA as our auditor for the ensuing year was also ratified
at the Meeting.

To provide our shareholders with more time to consider and
understand the proposed agreement and plan of merger with our wholly-owned
Delaware subsidiary, so that we may be re-incorporated as a Delaware
corporation, a motion was passed to adjourn the Meeting to 12:00 P.M. February
14, 2007 at the offices of Clark Wilson LLP at 800  885 West Georgia Street,
Vancouver, British Columbia.

On February 14, 2007 we held our Annual and Special General
Meeting of Shareholders adjourned from January 24, 2007 (the Adjourned
Meeting). At the Adjourned Meeting, our shareholders passed the resolution to
approve the proposed agreement and plan of merger with our wholly-owned Delaware
subsidiary so that we may be reincorporated as a Delaware corporation.

Item 5. Other Information.

None.

Item 6. Exhibits.

Exhibits required by Item 601 of Regulation S-B

|Exhibit | Description of Exhibit                                                                                                                                                                                                                                       
|------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                                                                                                                                              
|3(i).1  | Articles of
        Incorporation filed with the Nevada Secretary of State on October 8, 2001
        (Incorporated by reference from our Registration Statement on Form SB-2,
        filed on September 11, 2002, as amended (Registration No. 333-99443)).
|        |                                                                                                                                                                                                                                                              
|3(i).2  | Certificate
        of Amendment to Articles of Incorporation filed with the Nevada Secretary
        of State on July 7, 2004. (Incorporated by reference to Exhibit 3.1.1
        of our Current Report on Form 8-K filed on July 13, 2004).               
|        |                                                                                                                                                                                                                                                              
|3(i).3  | Certificate
        of Amendment to Articles of Incorporation filed with the Nevada Secretary
        of State on August 25, 2004. (Incorporated by reference to Exhibit 3.1
        of our Current Report on Form 8-K filed on August 31, 2004).            
|        |                                                                                                                                                                                                                                                              
|3(ii).1 | Bylaws (Incorporated
        by reference from our Registration Statement on Form SB-2, filed on September
        11, 2002, as amended (Registration No. 333-99443)).                                                                                       
|        |                                                                                                                                                                                                                                                              
|4.1     | 2005 Stock Option
        Plan. (Incorporated by reference to Exhibit 4.1 of our Amended Annual
        Report for 2005 filed on September 1, 2005).                                                                                                         

27

---

|5.1   | Form of Opinion of Bryan Cave LLP regarding the legality
      of common stock (to be filed by amendment).                                                                                                                                                                                                                           
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                                                                                                                                                                      
|10.1  | Plan of Reorganization and Acquisition, dated May 10,
      2002 (Incorporated by reference from our Registration Statement on Form
      SB-2, filed on September 11, 2002, as amended (Registration No.
      333-99443)).                                                                                                         
|      |                                                                                                                                                                                                                                                                                                                                      
|10.2  | Promissory note between the Company and Gattinara
      Holdings, Inc. (Incorporated by reference to Exhibit 10 of the Companys
      Quarterly Report for the second quarter of 2005 on Form 10-QSB filed on
      August 23, 2005.)                                                                                               
|      |                                                                                                                                                                                                                                                                                                                                      
|10.3  | Consulting Agreement with Carl Pescio. (Incorporated by
      reference to Exhibit 10.12 of our Amended Annual Report for 2004 filed on
      September 1, 2005).                                                                                                                                                                    
|      |                                                                                                                                                                                                                                                                                                                                      
|10.4  | Consulting Agreement with Earl Abbott. (Incorporated by
      reference to Exhibit 10.13 of our Amended Annual Report for 2004 filed on
      September 1, 2005).                                                                                                                                                                    
|      |                                                                                                                                                                                                                                                                                                                                      
|10.5  | Consulting Agreement with Stanley Keith. (Incorporated by
      reference to Exhibit 10.14 of our Amended Annual Report for 2004 filed on
      September 1, 2005).                                                                                                                                                                  
|      |                                                                                                                                                                                                                                                                                                                                      
|10.6  | Mining Lease and Option to Purchase Agreement - Goodwin
      Hill. (Incorporated by reference to Exhibit 10.15 of our Amended Annual
      Report for 2004 filed on September 1, 2005).                                                                                                                                             
|      |                                                                                                                                                                                                                                                                                                                                      
|10.7  | Mining Lease and Option to Purchase Agreement - NT Green.
      (Incorporated by reference to Exhibit 10.16 of our Amended Annual Report
      for 2004 filed on September 1, 2005).                                                                                                                                                 
|      |                                                                                                                                                                                                                                                                                                                                      
|10.8  | Mining Lease and Option to Purchase Agreement - Wilson
      Peak. (Incorporated by reference to Exhibit 10.17 of our Amended Annual
      Report for 2004 filed on September 1, 2005).                                                                                                                                              
|      |                                                                                                                                                                                                                                                                                                                                      
|10.9  | Mining Lease and Option to Purchase Agreement - HMD.
      (Incorporated by reference to Exhibit 10.18 of our Amended Annual Report
      for 2004 filed on September 1, 2005).                                                                                                                                                      
|      |                                                                                                                                                                                                                                                                                                                                      
|10.10 | Letter Agreement with Carl Pescio dated November 10,
      2005. (Incorporated by reference to Exhibit of our Current Report on Form
      8-K filed on November 14, 2005).                                                                                                                                                          
|      |                                                                                                                                                                                                                                                                                                                                      
|10.11 | Promissory note issued to Green Shoe Investment, Inc.
      (Incorporated by reference to our Quarterly Report for the third quarter
      of 2005 filed on November 17, 2005).                                                                                                                                                      
|      |                                                                                                                                                                                                                                                                                                                                      
|10.12 | Form of Subscription Agreement. (Incorporated by
      reference to Exhibit 10.1 of our Current Report on Form 8-K filed on July
      24, 2006).                                                                                                                                                                                    
|      |                                                                                                                                                                                                                                                                                                                                      
|10.13 | Form of Common Stock Purchase Warrant. (Incorporated by
      reference to Exhibit 10.2 of our Current Report on Form 8-K filed on July
      24, 2006).                                                                                                                                                                             
|      |                                                                                                                                                                                                                                                                                                                                      
|10.14 | Form of Registration Rights Agreement. (Incorporated by
      reference to Exhibit 10.3 of our Current Report on Form 8-K filed on July
      24, 2006).                                                                                                                                                                             
|      |                                                                                                                                                                                                                                                                                                                                      
|10.15 | Form of Special Warrant. (Incorporated by reference to
      Exhibit 10.4 of our Current Report on Form 8-K filed on July 24,
    2006).                                                                                                                                                                                             
|      |                                                                                                                                                                                                                                                                                                                                      
|10.16 | Exploration License and Option to Lease Agreement,
      effective as of October 1, 2005, including, as Exhibit B thereto, Mining
      Lease and Option to Purchase Agreement, entered on or about April 1, 2006.
      (Incorporated by reference to Exhibit 10.1 of our Current Report on Form
      8-K filed on August 7, 2006).
|      |                                                                                                                                                                                                                                                                                                                                      
|10.17 | Option and Joint Venture Agreement, made as of May 1,
      2006. (Incorporated by reference to Exhibit 10.2 of our Current Report on
      Form 8-K filed on August 7, 2006).                                                                                                                                                       

28

---

|10.18 | Form of Letter
        Agreement between the registrant and Golden Cycle Gold Corporation, entered
        on or about August 23, 2006. (Incorporated by reference to Exhibit 10.1
        of our Current Report on Form 8- K filed on August 29, 2006).
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                                                                                         
|17.1  | Letter of resignation
        of Earl Abbott as Chief Financial Officer. (Incorporated by reference
        to our Current Report on Form 8-K filed on March 30, 2006).                                                                                 
|      |                                                                                                                                                                                                                                                         
|31.1* | Certification
        of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002.                                                                                                                           
|      |                                                                                                                                                                                                                                                         
|31.2* | Certification
        of Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002.                                                                                                                           
|      |                                                                                                                                                                                                                                                         
|32.1* | Certification
        of Principal Executive Officer and Principal Financial Officer pursuant
        to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
        Act of 2002.                                          

29

---

SIGNATURES

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

TORNADO GOLD INTERNATIONAL CORPORATION

By: */s/ Earl W. Abbott*
  Earl W. Abbott 
  CEO, President, Secretary, Treasurer 
  (Principal Executive Officer) 
  Date: August 20, 2007

By: */s/ George Drazenovic*
  George Drazenovic 
  Chief Financial Officer 
  (Principal Financial Officer and Principal Accounting Officer) 
  Date: August 20, 2007

30

---