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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 20-F /A 
  AMENDMENT NO. 2

[]
  REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE
  ACT OF 1934 
  OR
  [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
  ACT OF 1934 - For the fiscal year ended February 28, 2006 
  OR
  []
  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
  ACT OF 1934

Commission File Number 000-30084

LINUX GOLD CORP.(Exact
name of registrant as specified in its charter)

British Columbia, Canada(Jurisdiction of
incorporation or organization)

1103-11871 Horseshoe WayRichmond, British
Columbia V7A 5H5, Canada(Address of principal executive offices)

Securities registered pursuant to Section 12(g) of the
Act:Common Stock, no par value(Title of Class)

Indicate by check mark if the registration is a well-known seasoned
  issuer, as defined in Rule 405 of the Securities Act 
  []
  Yes [ X ] No

Securities for which there is a reporting obligation pursuant to
Section 15(d) of the Act:None

Indicate the number of outstanding shares of each of the
issuer's class of capital or common stock as of the close of the period covered
by the annual report.

|Title of Each Class         | Outstanding at February 28, 2006
|--------------------------- | --------------------------------
|Common Shares, no par value | 68,287,773                      

Indicate by check mark whether the registrant (1) has filed all
  reports required to be filed by Section 13 or 15(d) of the Securities Exchange
  Act of 1934 during the preceding 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 []
  No [ X ]

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

Indicate by check mark whether the registrant is a large accelerated
  filer, or a non-accelerated filer. See definition of accelerated filer
  and large accelerated filer in Rule 12b-2 of the Exchange Act.
  Large accelerated filer []
  Accelerated file []
  Non-accelerated filer [ X ]

Indicate by check mark which financial statement the registrant
  has elected to follow.
  Item 17. []
  Item 18. [ X ]

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TABLE OF CONTENTS

|PART I   |                                                                                                   | 6 
|-------- | ------------------------------------------------------------------------------------------------- | --
|         |                                                                                                   |   
|ITEM 1.  | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS                                             | 6 
|         |                                                                                                   |   
|ITEM 2.  | OFFER AND STATISTICS AND EXPECTED TIMETABLE                                                       | 6 
|         |                                                                                                   |   
|ITEM 3.  | KEY INFORMATION                                                                                   | 6 
|A.       | SELECTED FINANCIAL DATA                                                                           | 6 
|B.       | CAPITALIZATION AND INDEBTEDNESS                                                                   | 8 
|C.       | REASON FOR THE OFFER AND USE OF PROCEEDS                                                          | 8 
|D.       | RISK FACTORS                                                                                      | 8 
|         |                                                                                                   |   
|ITEM 4.  | INFORMATION ON THE COMPANY                                                                        | 13
|A.       | HISTORY AND DEVELOPMENT                                                                           | 13
|B.       | BUSINESS OVERVIEW                                                                                 | 14
|C.       | ORGANIZATIONAL STRUCTURE                                                                          | 27
|D.       | PROPERTY, PLANT AND EQUIPMENT                                                                     | 27
|         |                                                                                                   |   
|ITEM 5.  | OPERATING AND FINANCIAL REVIEW AND PROSPECTS                                                      | 27
|A.       | OPERATING RESULTS                                                                                 | 27
|B.       | LIQUIDITY AND CAPITAL RESOURCES                                                                   | 29
|C.       | RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC                                               | 30
|D.       | TREND INFORMATION                                                                                 | 30
|         |                                                                                                   |   
|ITEM 6.  | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                                                        | 32
|A.       | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                                                        | 32
|B.       | COMPENSATION                                                                                      | 33
|C.       | BOARD PRACTICES                                                                                   | 34
|D.       | EMPLOYEES                                                                                         | 34
|E.       | SHARE OWNERSHIP                                                                                   | 34
|         |                                                                                                   |   
|ITEM 7.  | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS                                                 | 35
|A.       | MAJOR SHAREHOLDERS                                                                                | 35
|B.       | RELATED PARTY TRANSACTIONS.                                                                       | 35
|C.       | INTERESTS OF EXPERTS AND COUNSEL.                                                                 | 35
|         |                                                                                                   |   
|ITEM 8.  | FINANCIAL INFORMATION                                                                             | 35
|A.       | CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION                                           | 35
|B.       | SIGNIFICANT CHANGES                                                                               | 36
|         |                                                                                                   |   
|ITEM 9.  | THE OFFER AND LISTING                                                                             | 36
|         |                                                                                                   |   
|ITEM 10. | ADDITIONAL INFORMATION                                                                            | 37
|A.       | SHARE CAPITAL                                                                                     | 37
|B.       | MEMORANDUM AND ARTICLES OF ASSOCIATION                                                            | 37
|C.       | MATERIAL CONTRACTS                                                                                | 38
|D.       | EXCHANGE CONTROLS                                                                                 | 39
|E.       | TAXATION                                                                                          | 39
|F.       | DIVIDENDS AND PAYING AGENTS                                                                       | 39
|G.       | STATEMENT BY EXPERTS                                                                              | 39
|H.       | DOCUMENTS ON DISPLAY.                                                                             | 40
|I.       | SUBSIDIARY INFORMATION                                                                            | 40
|         |                                                                                                   |   
|ITEM 11. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                        | 40
|         |                                                                                                   |   
|ITEM 12. | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                                            | 40
|         |                                                                                                   |   
|PART II  |                                                                                                   | 41
|         |                                                                                                   |   
|ITEM 13. | DEFAULTS, DIVIDEND ARREARAGES AND DELIQUENCIES                                                    | 41
|         |                                                                                                   |   
|ITEM 14. | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS
      AND USE OF PROCEEDS.               | 41
|A.       | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS                                          | 41
|B.       | USE OF PROCEEDS                                                                                   | 41
|         |                                                                                                   |   
|ITEM 15. | CONTROLS AND PROCEDURES                                                                           | 41
|         |                                                                                                   |   
|ITEM 16. | AUDIT COMMITTEE FINANCIAL EXPERT, CODE OF ETHICS AND PRINCIPAL
      ACCOUNTANT FEES AND SERVICES | 41
|A.       | AUDIT COMMITTEE FINANCIAL EXPERT                                                                  | 41
|B.       | CODE OF ETHICS                                                                                    | 42
|C.       | PRINCIPAL ACCOUNTANT FEES AND SERVICES                                                            | 42

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|PART III       |                      | 42
|-------------- | -------------------- | --
|               |                      |   
|ITEM 17.       | FINANCIAL STATEMENTS | 42
|               |                      |   
|ITEM 18.       | FINANCIAL STATEMENTS | 42
|               |                      |   
|ITEM 19.       | EXHIBITS             | 42
|               |                     
|SIGNATURE PAGE | 45                  

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GLOSSARY OF MINING TERMS

The following is a glossary of some of the terms used in the
mining industry and referenced herein:

alluvial: A term used to identify particular types of,
or minerals found associated with, deposits made by flowing water, such as
alluvial gold

Arsenopyrite:A major ore of arsenic, Arsenopyite can
contain a small amount of gold as an impurity

assay a precise and accurate analysis of the metal
contents in an ore or rock sample

Au- gold.

auger drill a handheld machine that produces small,
continuous core samples in unconsolidated materials

breccia: A fragmental rock; any rock formation
essentially composed of uncemented, or loosely consolidated, small angular

contained gold total measurable gold in grams or
ounces estimated to be contained within a mineral deposit. Makes no allowance
for economic criteria, mining dilution or recovery losses.

diamond drill a large machine that produces a more or
less continuous core sample of the rock or material being drilled.

feasibility study a detailed report assessing the
feasibility, economics and engineering of placing a mineral deposit into
commercial production

fracture: The general term to include any kind of
discontinuity in a body of rock if produced by mechanical process such as shear
stress or tensile stress

gm/mtor gpt- grams per metric tonne.

gold deposit- means a mineral deposit mineralised with
gold.

gold resource see geological or mineral resource

grams per cubic meter- alluvial mineralisation measured
by grams of gold contained per cubic meter of material, a measure of gold
content by volume not by weight.

graphite: A allotropic form of carbon found in
nature

inferred mineral resource:That part of a mineral
resource for which quantity and grade or quality can be estimated on the basis
of geological evidence and limited sampling and reasonably assumed, but not
verified, geological and grade continuity. The estimate is based on limited
information and sampling gathered through appropriate techniques from locations
such as outcrops, trenches, pits, workings and drill holes

indicated mineral resource: That part of a mineral
resource for which quantity, grade or quality, densities, shape and physical
characteristics, can be estimated with a level of confidence sufficient to allow
the appropriate application of technical and economic parameters, to support
mine planning and evaluation of the economic viability of the deposit. The
estimate is based on detailed and reliable exploration and testing information
gathered through appropriate techniques from locations such as outcrops,
trenches, pits, workings and drill holes that are spaced closely enough for
geological and grade continuity to be reasonably assumed

intrusive:cuts across (is intrusive into)

Listwanite: (carbonate altered serpentinite) is
associated with gold mineralization.

lode mining mining of gold bearing rocks, typically in
the form of veins or stockworks

measured resourcemeans that part of a mineral resource
  for which quantity, grade or quality, densities, shape, physical characteristics
  are so well established that they can be estimated with confidence sufficient
  to allow the appropriate application of technical and economic parameters, to
  support production planning and evaluation of the economic viability of the
  deposit. The estimate is based on detailed and reliable exploration, sampling
  and testing information gathered through appropriate techniques from locations
  such as outcrops, trenches, pits, workings and drill holes that are spaced closely
  enough to confirm both

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geological and grade continuity.

mineral claim or mining claim: The portion of
mining ground held under law by a claimant.

mineralization: Implication that the rocks contain
sulphide minerals and that these could be related to ore.

net profit interest (NPI) effectively a royalty based
on the net profits generated after recovery of all costs

net smelter royalty or NSR- a royalty based on
the gross proceeds received from the sale of minerals less the cost of smelting,
refining, freight and other related costs.

ore a naturally occurring rock or material from which
economic minerals can be extracted at a profit

ounce or oz. - a troy ounce or 20 pennyweights or 480
grains or 31.103 grams.

opt troy ounces per short ton

placer: A place where gold is obtained by washing; an
alluvial or glacial deposit, as of sand or gravel, containing particles of gold
or other valuable minerals including gemstones.

probable reserve- the economically mineable part of an
indicated, and in some circumstances a measured resource demonstrated by at
least a preliminary feasibility study. This study must include adequate
information on mining, processing, metallurgical, economic, and other relevant
factors that demonstrate, at the time of reporting, that economic extraction can
be justified.

prospect an area prospective for economic minerals
based on geological, geophysical, geochemical and other criteria

proven reservemeans the economically mineable part of a
measured resource demonstrated by at least a preliminary feasibility study. This
study must include adequate information on mining, processing, metallurgical,
economic, and other relevant factors that demonstrate, at the time of reporting,
that economic extraction is justified.

reserve: That part of a mineral deposit which could be
economically and legally extracted or produced at the time of the reserve
determination.

reverse circulation drill a large machine that
produces a continuous chip sample of the rock or material being drilled

skarn:a finegrained metamorphic rock that is usually
coloured green or red, ocassionally grey, black, brown or white. It forms
through thermal metamorphism as the mineralogical, chemical and crystallographic
changes in a solid-state rock, i.e. without melting, in response to new
conditions of pressure and/or temperature, and/or introduction of fluids.

Stockwork:Small veins of mineralization that have so
penetrated a rock mass that the whole rock mass can be considered mineralized

ton- short ton (2,000 pounds).

tonne- metric tonne (2,204.6 pounds).

trenching the surface excavation of a linear trench to
expose mineralization for sampling

vein a tabular body of rock typically of narrow
thickness and often mineralized occupying a fault, shear, fissure or fracture
crosscutting another pre-existing rock

For ease of reference, the following conversion factors are
provided:

1 mile
    = 1.609 kilometres
    2,204 pounds
    = 1 tonne1 yard
    = 0.9144 meter
    2,000 pounds/1 short ton
    = 0.907 tonne1 acre
    = 0.405 hectare
    1 troy ounce
    = 31.103 grams


Unless the context otherwise requires, all references to the
  Registrant or the Company or Linux refer
  to Linux Gold Corp. All monetary figures are in terms of United States dollars
  unless otherwise indicated.

5

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Foreign Private Issuer Status

Foreign Private Issuer Status:

Linux Gold Corp. (the "Company), is a Canadian corporation
incorporated under the laws of the Province of British Columbia. Over 50% of its
common stock is held by non-United States citizens and residents; our business
is administered principally outside the United States; and more than 50% of our
assets are located outside the United States. As a result, we believe that we
qualify as a "foreign private issuer" for continuing to report regarding the
registration of our common stock using this Form 20-F annual report format.

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND
ADVISORS

This Form 20-F is being filed as an annual report under the
Exchange Act, and accordingly, the information called for in Item 1 is not
required. Please see Item 6  Directors, Senior Management and Employees
Directors and Senior Management.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

This Form 20-F is being filed as an annual report under the
Exchange Act, and accordingly, the information called for in Item 2 is not
required.

ITEM 3. KEY INFORMATION

A. SELECTED FINANCIAL DATA

The summary consolidated financial information set forth below
should be read in conjunction with, and is qualified in its entirety by
reference to, the Consolidated Financial Statements, as of and for the years
ended February 28, 2006 and February 28, 2005, together with the notes thereto,
which appear elsewhere in this annual report. The Consolidated Financial
Statements as of and for the years ended February 28, 2006 and February 28, 2005
have been audited by Smythe Ratcliffe and Manning Elliott, respectively. The
Consolidated Financial Statements are prepared in accordance with U.S. GAAP. See
Note 2 of the Notes to Consolidated Financial Statements.

The selected financial data set forth in the following table is
expressed in Canadian dollars. Since June 1, 1970, the Government of Canada has
permitted a floating exchange rate to determine the value of the Canadian dollar
as compared to the United States dollar. At February 28, 2006, US$1.00 was equal
to approximately C$1.1379.

The following represents our selected financial data for each
  of the past five fiscal years, ending on February 28/29. The data presented
  is prepared in accordance with generally accepted accounting principles in the
  United States:

6

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Fiscal Years Ended February 28/29

2006
    2005 (Re-stated)
    2004 (Re-stated)
    2003
    2002Net Revenue
    $
                -
    $           -
    $           -
    $           -
    $           -Income (loss) from continuing operations
    (830,605)
    (793,940)
    (433,297)
    (125,020)
    (420,261)Income (loss) from discontinued operations
    -
    -
    369,213
    (25,000)
    (366,448)Income (loss) from continuing operations per Common Share
    (0.01)
    (0.01)
    (0.00)
    -
    (0.02)Income (loss) from discontinued operations per Common Share
    -
    -
    (0.01)
    -
    (0.01)Total Assets
    542,640
    544,708
    322,610
    92,719
    11,240Working Capital (deficit)
    69,670
    128,204
    (91,924)
    (514,235)
    (1,549,592)Shareholders Equity (deficit)
    79,845
    148,729
    (85,924)
    (514,233)
    (1,542,141)Cash Dividends per common share
    $ nil
    $ nil
    $ nil
    $ nil
    $ nil


Reference is made to "Item 4. Information on the Company" and
"Item 5. Operating and Financial Review and Prospects for a description of the
initiation and progression of our activities since incorporation.

Currencies and Exchange Rates:

We publish our financial statements in Canadian dollars. Unless
otherwise indicated, monetary amounts referred to in this annual report are in
Canadian dollars. Unless otherwise indicated, all translations from Canadian
dollars to US dollars have been made at a rate of CDN$ 1.1379 to US$ 1.00, the
noon buying rate as certified for customs purposes by the Federal Reserve Bank
of New York (the "Noon Buying Rate") on February 28, 2006. We do not represent
that Canadian dollar or US dollar amounts could be converted into US dollars or
Canadian dollars, as the case may be, at any particular rate, the rates below or
at all. On June 8, 2006, the Noon Buying Rate was CDN$ 1.1233 to US$ 1.00. The
following table sets forth noon buying rate for US dollars in New York City for
cable transfers in Canadian dollars as certified for customs purposes by the
Federal Reserve Bank of New York for the periods indicated:

The following table reflects the monthly high and low exchange
  rates for U.S.$1.00 to the Canadian dollar for the following periods.

7

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Month
    Year
    High (CAD$)
    Low (CAD$)November
    2005
    1.196
    1.1656December
    2005
    1.1736
    1.1507January
    2006
    1.1726
    1.1436February
    2006
    1.1577
    1.1379March
    2006
    1.1722
    1.132April
    2006
    1.1708
    1.1203May
    2006
    1.1232
    1.0989


The following table lists the average exchange rate for US$1.00
to the Canadian dollar for the last five years based on the average month-end
exchange rates.

Year
    Average
    Low/High
    February 29/282006
    1.1992
    1.1379/ 1.2425
    1.13792005
    1.2888
    1.1774/1.3968
    1.23142004
    1.3667
    1.269 / 1.4905
    1.34052003
    1.5438
    1.5995 / 1.488
    1.48802002
    1.5625
    1.5102/1.6128
    1.6049


B. CAPITALIZATION AND INDEBTEDNESS

This Form 20-F is being filed as an annual report under the
Exchange Act, and accordingly, the information called for in this Item 3.B is
not required

C. REASON FOR THE OFFER AND USE OF PROCEEDS

This Form 20-F is being filed as an annual report under the
Exchange Act, and accordingly, the information called for in Item 3.C is not
required.

D. RISK FACTORS

The occurrence of any of the following risks could hurt our
business, financial condition or results of operations. In such case, the
trading price of our shares could decline and you could lose all or part of your
investment. Other risks and uncertainties not now known to us or that we think
are immaterial may also impair our business.

RISK FACTORS RELATED TO OUR BUSINESS

Our Limited and Changing Operating History.We initially focused the business of the Company on natural resource
development. We changed direction becoming involved in the information
technology industry to take advantage of the booming technology sector and the
declining precious metals markets. We were not successful in that industry
segment. We have returned our focus on mining and exploration.

Financing Risks.There is no assurance that we
will be able to secure the financing necessary to explore, develop and produce
our mineral properties.

We do not presently have sufficient financial resources or operating
  cash-flow to undertake solely all of our planned exploration and development
  programs. The development of our properties may therefore depend on obtaining
  a joint venture partners, and on our ability to obtain additional required financing.
  There is no assurance we will be successful in obtaining the required financing,
  the lack of which could

8

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result in the loss or substantial dilution of our interests (as existing or as proposed to be acquired) in our properties as disclosed herein. In addition, we have no experience in developing mining properties into production and its ability to do
so will be dependent upon securing the services of appropriately experienced personnel or entering into agreements with other major mining companies which can provide such expertise.

As noted in our audited consolidated financial statements for the year ended February 28, 2006 we have incurred significant operating losses and have an accumulated deficit of $ 9,212,774 at February 28, 2006. Furthermore, we had working capital
deficit of $ 69,670 as at February 28, 2006, which is not sufficient to achieve our planned business objectives. Our ability to continue as a going concern is dependent on continued financial support from our shareholders and other related
parties, the ability of the Registrant to raise equity financing, and the attainment of profitable operations, external financings and further share issuances to meet our liabilities as they become payable.

Our ability to continue as a going concern is dependent on continued financial support from our shareholders and other related parties, our ability to raise equity capital financing, and the attainment of profitable operations, external financings
and further share issuance to satisfy working capital and operating needs. The auditors report on the February 28, 2006 consolidated financial statements include additional comments for U.S. readers that states that conditions exist that raise
substantial doubt about our ability to continue as a going concern. The consolidated financial statements do not include adjustments that might result from the outcome of this uncertainty.

Significant Losses for the Foreseeable Future.We expect to incur significant losses for the foreseeable future and cannot
  be certain when or if we will achieve profitability. Failure to become and remain
  profitable will adversely affect the value of our Common Shares and our ability
  to raise capital and continue operations.

**Going
  concern assumption used by our auditor highlights doubts on our ability to successfully
  continue. Our consolidated financial statements have been prepared assuming
  we will continue on a going concern basis; however unless additional funding
  is obtained this assumption will have to change.**

Volatility of The Over-the-Counter Bulletin Board (OTC BB) may adversely affect the price of the Common Stock.Certain stocks listed on the OTC BB have recently experienced significant price and volume fluctuations
and decreases which have adversely affected the market price of our and other stocks listed on the OTC BB without any regard to the underlying fundamentals of such stocks. These broad market fluctuations, which may occur in the future may continue
to adversely affect the market price of the Common Stock.

We do not expect to pay cash dividends. We intend to retain any future earnings to finance our business and operations and any future growth. Therefore, we do not anticipate paying any cash dividends in the foreseeable
future.

Potential lack of attractive investment targets.Continued volatility of stock prices on the OTC BB may have a material adverse effect on our ability to raise capital on the OTC BB or by private investment, and the price of our common
stock could fluctuate substantially.

Other Factors. Our areas of business may be affected from time to time by such matters as changes in general economic conditions, changes in laws and regulations, taxes, tax laws, prices and costs, and other factors of a general
nature which may have an adverse effect on our business.

Conflict of Interest. Some of our current officers
  and directors have other unrelated full-time positions or part-time employment.
  Some officers and directors will be available to participate in management decisions
  on a part-time or as-needed basis only. Our management may devote its time to
  other companies or projects which may compete directly or indirectly with us.

9

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U.S. Investors May Not Be Able To Enforce Their Civil
Liabilities Against Us or Our Directors, Controlling Persons and Officers.We are organized under the laws of Canada. All of our directors,
controlling persons and officers are residents of Canada and all or a
substantial portion of their assets and substantially all of our assets are
located outside of the United States. As a result, it may be difficult for U.S.
holders of our common shares to effect service of process on these persons
within the United States or to realize in the United States upon judgments
rendered against them. In addition, you should not assume that the courts of
Canada (i) would enforce judgments of U.S. courts obtained in actions against us
or such persons predicated upon the civil liability provisions of the U.S.
federal securities laws or other laws of the United States, or (ii) would
enforce, in original actions, liabilities against us or such persons predicated
upon the U.S. federal securities laws or other laws of the United States.

However, U.S. laws would generally be enforced by a Canadian
court provided that those laws are not contrary to Canadian public policy, are
not foreign penal laws or laws that deal with taxation or the taking of property
by a foreign government and provided they are in compliance with applicable
Canadian legislation regarding the limitation of actions. Also, a judgment
obtained in a U.S. court would generally be recognized by a Canadian court
except, for example:

- where the U.S. court where the judgment was rendered had no jurisdiction
  according to applicable Canadian law;
- the judgment was subject to ordinary remedy (appeal, judicial review and
  any other judicial proceeding which renders the judgment not final, or
  enforceable under the laws of the applicable state) or not final, conclusive
  or enforceable under the laws of the applicable state;
- the judgment was obtained by fraud or in any manner contrary to natural
  justice or rendered in contravention of fundamental principles of procedure;
- a dispute between the same parties, based on the same subject matter has
  given rise to a judgment rendered in a Canadian court or has been decided in a
  third country and the judgment meets the necessary conditions for recognition
  in a Canadian court;
- the outcome of the judgment of the U.S. court was inconsistent with
  Canadian public policy;
- the judgment enforces obligations arising from foreign penal laws or laws
  that deal with taxation or the taking of property by a foreign government; or
- there has not been compliance with applicable Canadian law dealing with the
  limitation of actions.

Changes to Economic Policies in China.We are
currently exploring our property in China. We could be adversely affected if
China changes its economic policies. As part of its economic reform, China has
designated certain areas as Special Economic Zones. Foreign enterprises in these
areas benefit from greater economic autonomy and more favorable tax treatment
than enterprises in other parts of China. Changes in the policies or laws
governing Special Economic Zones could have a material adverse effect on us.
Moreover, economic reforms and growth in China have been more successful in
certain provinces than others, and the continuation or increase of these
disparities could affect the political or social stability of China.

RISK FACTORS RELATED TO THE NATURAL RESOURCE
INDUSTRY

Exploration and Development Risks.There is no
  assurance given by the Company 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. At present, none

10

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of the Registrants properties have defined ore bodies with reserves and resources, and the proposed exploration programs are an exploratory search for ore. There is no assurance that our mineral exploration and development activities will
result in any discoveries of bodies of commercial ore. The probability of an individual prospect ever having reserves and being commercially viable is extremely remote, and, in all probability, our properties do not contain any reserves,
and any funds spent on exploration will probably not be recovered. Unusual or unexpected geological structures or formations, fires, power outages, labour disruptions, floods, explosions, cave-ins, land slides and the inability to obtain suitable or
adequate machinery, equipment or labour are other risks involved in the operation of mines and the conduct of exploration programs. We have relied and may continue to rely upon consultants and others for construction and operating expertise. 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. Depending on the price of gold or other minerals produced, we may determine that it is
impractical to commence or continue commercial production. 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.

Estimates of Mineral Deposits.There is no assurance that any estimates of mineral deposits herein will not change. Although all figures with respect to the size and grade of mineralized deposits included herein have been carefully
prepared by the Company, or, in some instances have been prepared, reviewed or verified by independent mining experts, these amounts are estimates only and no assurance can be given that any identified mineralized deposit will ever qualify as a
commercially viable mineable ore body that can be legally and economically exploited.

Mineral Prices.There is no assurance that mineral prices will not change. The mining industry is competitive and mineral prices fluctuate so that there is no assurance, even if commercial quantities of a mineral resource are
discovered, that a profitable market will exist for the sale of same.

Title Opinions. The existence of title opinions should not be construed to suggest that we have good and marketable title to all of our properties. We follow the usual industry practice in obtaining title opinions with respect
to our lands. No examination has been made of the ground to determine if any of our mineral claims have been staked or assessment work carried out.

Regulatory Approvals. Our operations require the procurement of numerous permits and compliance with an extensive number of codes and regulations. Mining, exploration and exploitation permits are required. While we believe that
all requirements in this regard have been met, failure to comply with regulatory requirements could result in permits being withdrawn or suspended. Further, changes in these regulations or in their application may adversely affect our
operations.

Environmental Issues. We must comply with environmental
  laws and regulations. There can be no assurance that violations will not occur.
  In the event of a future violation of environmental laws we could be held liable
  for damages and for the costs of remedial actions. Environmental laws could
  become more stringent over time imposing greater compliance costs and increasing
  risks and penalties associated with a violation.

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Third Party Reliance.Our rights to acquire interests in certain mineral properties have been granted by third parties who themselves hold only an option to acquire such properties. As a result, we may have no direct contractual
relationship with the underlying property holder.

UNCERTAINTIES AND RISKS RELATING TO COMMON SHARES

There is only a limited public market for our common shares on the OTC Bulletin Board and that market is extremely volatile.There is only a limited public market for our common shares on the OTC Bulletin Board, and there is a risk
that that a broader or more active public trading market for our common shares will never develop or be sustained, or that current trading levels will not be sustained.

The market price for the common shares on the OTC Bulletin Board has been and we anticipate will continue to be extremely volatile and subject to significant price and volume fluctuations in response to a variety of external and internal factors.
This is especially true with respect to emerging companies such as ours. Examples of external factors, which can generally be described as factors that are unrelated to the operating performance or financial condition of any particular company,
include changes in interest rates and worldwide economic and market conditions, as well as changes in industry conditions, such as changes in oil and natural gas prices, oil and natural gas inventory levels, regulatory and environment rules, and
announcements of technology innovations or new products by other companies. Examples of internal factors, which can generally be described as factors that are directly related to our consolidated financial condition or results of operations, would
include release of reports by securities analysts and announcements we may make from time-to-time relative to our operating performance, drilling results, advances in technology or other business developments.

Because we have a limited operating history and no profits to date, the market price for the common shares is more volatile than that of a seasoned issuer. Changes in the market price of the common shares, for example, may have no connection with
our operating results or prospects. No predictions or projections can be made as to what the prevailing market price for the common shares will be at any time, or as to what effect, if any, that the sale of shares or the availability of common
shares for sale at any time will have on the prevailing market price.

You will be subject to the penny stock rules to the extent our stock price on the OTC Bulletin Board is less Than $5.00.Since the common shares are not listed on a national stock exchange or quoted on the NASDAQ Market
within the United States, trading in the common shares on the OTC Electronic Bulletin Board is subject, to the extent the market price for the common shares is less than $5.00 per share, to a number of regulations known as the "penny stock
rules". The penny stock rules require a broker-dealer to deliver a standardized risk disclosure document prepared by the SEC, to provide the customer with additional information including current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction, monthly account statements showing the market value of each penny stock held in the customer's account, and to 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. To the extent these requirements may be applicable they will reduce the level of trading activity in the secondary market for the common shares
and may severely and adversely affect the ability of broker-dealers to sell the common shares.

You should not expect to receive dividends.We have never paid any cash dividends on shares of our capital stock, and we do not anticipate that we will pay any dividends in the foreseeable future. Our current business plan is to retain
any future earnings to finance the expansion of our business. Any future determination to pay cash dividends will be at the discretion of our board of directors, and will be dependent upon our consolidated financial condition, results of operations,
capital requirements and other factors as our board of directors may deem relevant at that time.

Our right to issue additional capital stock at any time
  could have an adverse effect on your proportionate ownership and voting rights.We are authorized under our Articles of Incorporation to

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issue 200,000,000 common shares. Subject to compliance with applicable corporate and securities laws, we may issue these shares under such circumstances and in such manner and at such times, prices, amounts and purposes as our board of directors
may, in their discretion, determine to be necessary and appropriate. Your proportionate ownership and voting rights as a common shareholder could be adversely affected by the issuance of additional common shares, including a substantial dilution in
your net tangible book value per share.

ITEM 4. INFORMATION ON THE COMPANY

A. HISTORY AND DEVELOPMENT

The Company was incorporated on February 27, 1979 under a perpetual charter pursuant to the British Columbia Company Act by registration of its Memorandum and Articles and was extraprovincially registered in the Province of Alberta on October 12,
1995 under the name Flame Petro-Minerals Corp.  At an extraordinary general meeting held on March 15, 2000, our shareholders approved the change of name of the Company from Flame Petro-Minerals Corp. to LinuxWizardry Systems, Inc, which name change
was effected on March 21, 2000. At our annual meeting of shareholders on February 20, 2003, our shareholders approved the change of name of the Company from LinuxWizardry Systems, Inc. to Linux Gold Corp., which name change was effected March 18,
2003. Our authorized capital consists of 200,000,000 Common Shares without par value. Of these, 68,287,773 shares were issued and outstanding as of February 28, 2006 and 68,387,773 shares were issued and outstanding as of the date of this Form 20-F.
Our head office is located at #1103 -11871 Horseshoe Way, Richmond, B.C., V7A 5H5.

On February 20, 2003 we held a shareholders meeting at which our shareholders voted to change our name from LinuxWizardry Systems, Inc. to Linux Gold Corp. and obtained a new OTC BB trading symbol LNXGF. We believe our new name, Linux Gold Corp.
more closely represents our true business activities.

On March 29, 2004, the new British Columbia Business Corporations Act (the "BCA") came into force in British Columbia and replaced the former British Columbia Company Act (Former Act) , which is the statute under which we were previously
governed. Under the BCA, we have two years within which to transition ("Transition") under the new statute. In accordance with the BCA, we cannot amend our Articles or Notice of Articles until the Transition to the BCA is completed. We filed a
transition application with the Registrar of Companies British Columbia and completed the Transition on June 11, 2004.

Concurrent with the completion of the Transition, we were required in accordance with the BCA to incorporate certain provisions known as the "Pre-Existing Company Provisions" (the "Pre-Existing Company Provisions") into our Notice of Articles, which
replaced the existing Memorandum . The Company is a pre-existing company under the BCA (that is, a company in existence at the time the BCA came into force). The Pre-Existing Company Provisions provide our company with certain default
provisions in case certain provisions which are required to be included in the Articles under the BCA are not included in our Articles.

We filed our Notice of Articles with the Registrar of Companies which contains basic information relating to the Company, including our name, the particulars of the directors and the authorized capital. This was a mandatory requirement for
transition to the BCA.

On August 16, 2004, at the Annual General Meeting of shareholders,
  our shareholders passed a special resolution that the Notice of Articles, filed
  September 15, 2005, be altered to remove the Pre-existing Company Provisions
  set forth in Part 16 of the Regulations to the Business Corporations Act (British
  Columbia); and delete and replace our Articles in their entirety and no longer
  apply to Linux Gold Corp. The New Articles, among other things, incorporate
  and amend certain of the information required by the Pre-Existing Company Provisions.

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Our Incorporation Number is BC0187279. Our Articles do not restrict the nature of the business that may be carried on by the Company.

Since our inception and during the three fiscal years ending in February 2006, we had been involved in oil and gas exploration/production and mineral property exploration. We have investigated several mineral properties in Canada, the United States,
China and Chile.

We also own a 1.277% net working interest in an oil well located in Fayette County, Texas. To date, we have received no revenues from our mining property activities, and have received negligible net revenues after operating costs from our interest
in the Fayette County oil well during the past five fiscal years. As a result, we wrote off our interest in the oil well located in Fayette County.

We have no current plans to pursue further activities in either the oil or gas business.

Our current plans are to joint venture and explore our mineral properties in Northern B.C., Alaska and China. The Company has acquired a 100% interest in the TY and ORO properties in B.C. and has a 50% interest in the Fish Creek property in Alaska,
which is optioned to Teryl Resources Corp., and an option on a private company, which has an option to earn up to 85% of a mining property in Hebei Province, China.

We are currently in the exploration stage and equity financing is required to continue exploration work on our mineral claims. As a result of the uncertainty that is typical in an explorative company there is doubt about our ability to continue as
going concern as ultimate success will be based on securing adequate equity financing and/or the determination of economically recoverable mineral reserves on its mineral property claims.

B. BUSINESS OVERVIEW

Nature of the Companys Operations

Mineral Properties

We are an exploration stage company and there is 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.

If we complete our current exploration programs and if we are successful in identifying a mineral deposit, we will have to spend substantial funds on further drilling and engineering studies before we will know if we have a commercially viable
mineral deposit or reserve on any of our properties.

We will seek equity financing to provide working capital and to meet exploration commitments on all our properties.

Fish Creek Claims, Alaska

We currently own a 50% joint venture interest in 30 state of Alaska mining claims known as the Fish Creek Prospect, located in the Fairbanks Mining District in Alaska. These claims are subject to an option agreement with Teryl Resources Corp. Teryl
Resources Corp. may purchase the 5% net royalty for $500,000 U.S. within 1 year after production on a 25% working interest. Teryl also agrees to expend a minimum of $500,000 U.S. after three years from the date of the agreement.

The Fish Creek project is located 25 miles north of Fairbanks
  in a road accessible mining district with excellent land status and infrastructure.
  The project is located within host rocks that contain commercially viable mineralization
  elsewhere in the Fairbanks Mining District and is located on streams that were
  mined

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extensively for alluvial gold in the past both upstream and downstream of the Fish Creek project. Limited exploration conducted between 1992 and 2003 did not reveal significant bedrock exposures of mineralization however a significant lode gold
deposit has been outlined immediately adjacent to the Fish Creek property on the south (the Gil deposit) and the Fort Knox gold mine, a large-scale open pit gold mine 3 miles upstream from the Fish Creek property has been in operation since 1996.
Wide-spaced placer gold drilling on a small area of the property conducted in 2003 did not encounter significant placer gold mineralization however, more extensive and closer spaced placer gold drilling conducted in 2004 indicated the presence of
significant concentrations of placer gold on the claims.

Two independent technical consultants are utilized by the Company for work on the Fish Creek property. Evaluations for alluvial (placer) gold are managed by Jeff Keener of NordWand Enterprize, P.O. Box 82811, Fairbanks, Alaska, 99708, USA. Mr.
Keener is a graduate of the University of Alaska, with a B.S. degree in Geology (1991). Mr. Keener is a member of the Alaska Miners Association and has applied for membership with the American Institute of Professional Geologists. From 1986 to the
present he has been actively employed in various capacities in the mining industry in numerous locations in Alaska, Nevada, Arizona, and California.

For lode gold exploration we utilize Avalon Development Corp. of Fairbanks, Alaska, to conduct any proposed exploration work on the Fish Creek Property. Mr. Curt Freeman is the President of Avalon Development Corporation, P.O. Box 80268, Fairbanks,
Alaska, 99708, USA. Mr. Freeman is a graduate of the College of Wooster, Ohio, with a B.A. degree in Geology (1978), and a graduate of the University of Alaska with an M.S. degree in Economic Geology (1980). Mr. Freeman is a licensed geologist in
Alaska (AA#159) and is a member of the American Institute of Professional Geologists (CPG#6901), the Society of Economic Geologists, the Geological Society of Nevada, the Alaska Miners Assoc. and the Prospectors and Developers Assoc. of Canada. From
1980 to the present, he has been actively employed in various capacities in the mining industry in numerous locations in North America, Central America, South America, New Zealand and Africa.

The following map shows the location of and access to our property.

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A ground magnetic survey was completed on the Fish Creek property on November 20, 2003 on the right limit (southeast) side of Fish Creek Valley, approximately 600  700 feet down-valley from the toe of the Fort Knox mine fresh water supply dam.
This program was an orientation survey to test the right limit bench of Fish Creek for a suspected buried placer gold-bearing channel.  High grade gold placer accumulations were encountered in a narrow right-limit channel during excavation of the
Fort Knox mine fresh water dam site but their extent and grade downstream on the Fish Creek property has never been explored. Magnetic surveys of this type have been successful in locating elevated magnetic field intensities associated with the
heavy, magnetic mineral concentrations often associated with placer gold accumulations. The field survey consisted of two lines with 200-foot line spacing and 10-foot station spacing, which appears to provide sufficient detail to extrapolate
magnetic data between lines. Total field and vertical gradient magnetic data have a good correlation, suggestive of adequate base station data. Signatures from the two traverses are interpreted to cross five features, of which three have the
possibility of being associated with alluvial concentrations of various characteristics.

The two anomalies recommended for physical testing are those indicative of alluvial heavy magnetic mineral concentration encountered on the west side of Lines 100N and 300N, just east of Fish Creek, and the strong anomaly on the eastern extent of
Line 300N. Depth estimates for these targets, are generally 8 to 12 feet. A program of additional ground magnetics followed by trenching and/or large-diameter auger drilling to evaluate the two most promising alluvial gold targets was recommended
for early 2004.

In May, 2004 we commenced a closely spaced magnetic survey over the previous magnetic targets that were discovered in 2003 . The magnetic survey located two anomalies indicative of a potential buried placer gold bearing channel

In July 2004 a total of 20 soil samples were collected near Odden Creek with a hand held power auger to depths from 2 to 7.5 feet. These holes were placed on a grid pattern with hole spacings of 200 feet to test for metal anomalies and to examine
bedrock chips in proximity to intrusive colluvium found on the surface. Several groupings of holes were weakly anomalous in gold pathfinder elements and identified as prospective lode gold targets. Total cost of this program was $1,800.

In September and October 2004 a 22 hole (1,506 feet) reverse circulation drilling program was completed on the property. Twenty holes were drilled on two widely spaced lines to test the placer gold potential while two deeper holes were drilled to
test an intrusive-related lode gold target (Keener, 2005b). Six of the twenty placer holes returned intervals with gold values in excess of 0.01 ounces of gold per cubic yard. Values ranged from 0.0108 to 0.0629 ounces per cubic yard over widths of
5 to 8 feet. These values suggest potential for commercially viable alluvial gold resources may exist on the Fish Creek project. Total cost of the combined placer and lode drilling program was approximately $54,000.

After completing the placer drilling, two lode gold exploration holes totaling 405 feet of drilling were completed on the south side of Odden Creek. Samples were collected every five feet, but did not result in any significant concentrations of
metals or other pathfinder elements. The best values for gold were 0.038 ppm and 0.040 ppm, found in T04RC01 at 195 feet and 200 feet, respectively.

There currently are no resources or reserves on the Fish Creek property that comply with the Canadian Institute of Mining and Metallurgy (CIM) Standards on Mineral Resources and Reserves Definitions and Guidelines adopted by CIM Council on August
20, 2000. While encouraging in its results, the drill hole density of the 2004 placer drilling campaign at Fish Creek was not sufficient to allow estimation of CIM compatible resources or reserves

Additional work on the Fish Creek property will be based on
  results from the previous drilling programs. Each successive phase of exploration
  is dependent on generation of encouraging results from the previous programs
  and the increasing potential for delineation of commercially viable resources
  on the project. A two phase program has been recommended as follows:

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|1. | Infill
        Reverse Circulation Drilling: Infill drilling using large diameter reverse
        circulation methods is warranted on the property to better define the
        placer gold mineralization outlined in 2004. Previous experience by Keener
        and other operators within the Fish Creek drainage has shown that drilling
        is an effective method of sampling and valuating the placer deposit and
        provides predictable estimates of subsequent production. Previous work
        suggests that drilling to obtain samples with volumes of 0.05 cubic yards
        each are adequate to estimate the volume and value of the placer gold
        deposit. Sampling procedures similar to those utilized in 2004 should
        be followed except that the volume of each sample should be measured to
        provide a more accurate estimate of the gold grades and to evaluate the
        recovery of the drilling system. Additionally, all holes should be continued
        into bedrock for at least 25 feet to test for the presence of lode gold
        mineralization. The primary goal of this program would be to enable industry
        acceptable mineral resources to be calculated between the two lines of
        drilling completed in 2004. A secondary goal would be to determine if
        significant lode gold mineralization exists in the area drilled. Recommended
        future work on the Fish Creek property should include drilling 20 reverse
        circulation drill holes (8 diameter) for a total of 1,600 feet of
        drilling. Construction of an all- weather creek crossing for off-road
        vehicles, near the mouth of Odden Creek, will facilitate this work. The
        estimated cost of such work is $50,000. Fieldwork will take about
        one to two weeks, whereas sample analysis and reporting will take an additional
        two to four weeks.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|2. | Step-out
        Reverse Circulation Drilling: if results of the phase 1 infill drilling
        are encouraging, step-out drilling using large diameter reverse circulation
        methods is warranted on the property to expand on the placer gold mineralization
        outlined in 2004. Sampling procedures similar to those utilized in 2004
        should be followed except that the volume of each sample should be measured
        to provide a more accurate estimate of the gold grades and to evaluate
        the recovery of the drilling system. Additionally, all holes should be
        continued into bedrock for at least 25 feet to test for the presence of
        lode gold mineralization. The primary goal of this program would be to
        enable industry compliant mineral resources to be calculated for areas
        of the property that lie up and downstream from the 2004 drill lines.
        A secondary goal would be to determine if significant lode gold mineralization
        exists in the area drilled. Recommended future work on the Fish Creek
        property should include drilling 55 reverse circulation drill holes (8
        diameter) for a total of 4,400 feet of drilling. Construction of an all-weather
        creek crossing for off-road vehicles, near the mouth of Odden Creek, will
        facilitate this work. The estimated cost of such work is $150,000.
        Fieldwork will take about two to three weeks, whereas sample analysis
        and reporting will take an additional four to six weeks.                                                                                                                                                                                                                                                                                                                                                                  

In August 2005, we commenced an extensive auger drilling program on the All Gold Creek geophysical anomaly. The auger track rig can drill up to a depth of 80, several auger drill holes are planned to test the aerial geophysical anomaly and the
coincident gravity low target for future R/C drilling, based on positive results for the auger drilling program.

TY Gold Property, Bralorne Mining District, British Columbia

The Ty and ORO properties are located adjacent to one another and roughly 6 miles east of Goldbridge, British Columbia. Access to the property from either Goldbridge (10 km west) or Lillooet (96 km east) is readily gained by way of a gravel highway,
which runs along the north side of Carpenter Lake. Since the property is situated close to the coast of British Columbia and lies between 640 and 1040 meters altitude, it has reasonably long, warm summers and short, crisp winters.

The Alpha zone is situated in a 20 meter wide shear zone in
  massive green and purple volcanics. It strike N80E and dips vertically. The
  Beta zone is not explosed over its full width due to bedrock depths at both
  ends of the backhoe trenches being beyond the digging range of a backhoe. The
  zone strikes NE/SW and dips 30° -50° NW. It is bounded on the hanging
  wall by a 3  5 cm wide, rusty shear which shows well developed slickensides
  and graphite (the footwall side was not exposed because the bedrock surface
  slopes off too steeply and is beyond digging range).

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The Beta zone may have a hanging wall and footwall vein 
  as is typical of gold systems in the Bridge River area and many other vein gold
  districts (ie the Motherlode system of California). This would explain the presence
  of two intersections in some of the holes. The geology of the zone is not yet
  understood, as rotary drill cuttings are not as informative as drill core.

On May 2, 2003 we announced that we had acquired an option to a 100% interest in 21 units in the Bralorne/Lillooet mining division in British Columbia, called the TY Gold Property. We will pay $30,000 over three years and 150,000 common shares.
The TY Gold Property is subject to a 2% net smelter interest (NSR). We have an option to purchase each 1% NSR for $1,000,000 prior to production. The TY Gold Property is adjacent to our newly acquired ORO Property. We now have a total of 41
units in the Bralorne area.

Previous drilling completed on the TY Gold Property on the Beta zone encountered values up to 5 feet of 5.86 oz/ton silver and 1.129 oz/ton gold. Additional drilling was recommended by Sampson Engineering Inc. to further explore the Beta zone.

In August 2003, we completed a phase I drill program. Four diamond drill holes of approximately 200 feet each in length were drilled in the Beta Gold zone to confirm the high-grade results of drilling in 1987.

All four holes drilled have encountered extensive stockwork zones and listwanite alteration, favourable geology for hosting Bralorne-type gold deposits. The core was split and assayed for gold and silver. Soil sampling is also underway to ascertain
the strike length and surface extent of the Beta zone. Based on drill results, a phase II, 3,000 foot diamond drilling program will be recommended to explore the western side of the Beta zone.

On September 2, 2003, we announced that additional units had been staked surrounding the Companys TY Gold property and in several strategic locations in the Bralorne Mining District. Four diamond drill holes have been completed on the TY Gold
property to confirm the high-grade results. Results from the 4 holes are expected in early September.

In September 2003, we continued a second phase of drilling on the TY Gold property. The purpose of the program was to confirm high-grade results encountered by previous drilling on the property.

On November 6, 2003, we announced that diamond drilling results from Holes 3TD-1 through 6. Gold values were mixed though generally low-grade with slightly elevated lead/zinc values over minor intervals. The highest gold value seen (1.48 g/t 
hole 3TD 1:84-89) occurred within a highly stockworked, altered volcanic breccia.

While favorable gold indicators such as listwanite alteration, abundant stockworking and arsenopyrite mineralization were frequently encountered gold values were somewhat lower than anticipated. The drill program is to be extended for additional
holes in an attempt to intercept higher-grade, known mineralization encountered by previous drilling in the 1980s.

We will continue exploration work on the TY Gold property and will meet the terms of the acquisition agreement unless the Company decides to not continue due to poor results or economic reasons.

There currently are no resources or reserves on the Ty property that comply with the Canadian Institute of Mining and Metallurgy (CIM) Standards on Mineral Resources and Reserves Definitions and Guidelines adopted by CIM Council on August 20, 2000.
While encouraging in its results, the previous drilling at Ty was not sufficient to allow estimation of CIM compatible resources or reserves

Additional work on the Ty property will be based on results
  from the previous exploration programs. Each successive phase of exploration
  is dependent on generation of encouraging results from the previous programs
  and the increasing potential for delineation of commercially viable resources
  on the project.

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ORO Property, Lillooet Mining Division, British Columbia

The Ty and ORO properties are located adjacent to one another and roughly 6 miles east of Goldbridge, British Columbia. Access to the property from either Goldbridge (10 km west) or Lillooet (96 km east) is readily gained by way of a gravel highway,
which runs along the north side of Carpenter Lake. Since the property is situated close to the coast of British Columbia and lies between 640 and 1040 meters altitude, it has reasonably long, warm summers and short, crisp winters.

The Alpha zone is situated in a 20 meter wide shear zone in massive green and purple volcanics. It strike N80E and dips vertically. The Beta zone is not explosed over its full width due to bedrock depths at both ends of the backhoe trenches being
beyond the digging range of a backhoe. The zone strikes NE/SW and dips 30° -50° NW. It is bounded on the hanging wall by a 3  5 cm wide, rusty shear which shows well developed slikensides and graphite (the footwall side was not exposed
because the bedrock surface slopes off too steeply and is beyond digging range).

The Beta zone may have a hanging wall and footwall vein  as is typical of gold systems in the Bridge River area and many other vein gold districts (ie the Motherloade system of California). This would explain the lower intersection in some of
the holes. The geology of the zone is not yet understood, as rotary drill cuttings are not as informative as drill core.

In April 2003, we acquired a 100% interest in 20 mineral claim units, subject to a 2% net smelter return, called the ORO property in the Lillooet Mining Division, BC, for $10,000 and 100,000 shares of Linux Gold Corp. We have the option to
purchase back each 1% NSR return for $1,000,000 prior to production. Several Very Low Frequency  Electromagnetic (VLF-EM) conductive zones have been located on the ORO property. The magnetic survey shows the entire property is underlain
with sediments and volcanics, which are important in the placement of gold bearing quartz veins.

The Company has met the terms and conditions of the acquisition agreement by issuing 25,000 of its shares to the vendor during the nine months ended November 30, 2004. This was the final requirement of the purchase agreement. The vendor retains a 2%
net smelter return interest.

We will continue exploration work on the ORO Gold property and will meet the terms of the acquisition agreement unless the Company decides to not continue due to poor results or economic reasons.

There currently are no resources or reserves on the ORO property that comply with the Canadian Institute of Mining and Metallurgy (CIM) Standards on Mineral Resources and Reserves Definitions and Guidelines adopted by CIM Council on August 20, 2000.

Additional work on the ORO property will be based on results from the previous exploration programs. Each successive phase of exploration is dependent on generation of encouraging results from the previous programs and the increasing potential for
delineation of commercially viable resources on the project.

BLN Gold Property, Hebei Province, China

The Bo Luo Nuo (BLN) covers an area of 161km2. It is connected by road to Beijing (about 4 hours drive). The elevation of this mountainous area is between 750-900 meters. The highest point is the peak of Mount Guang Ling which
is 1,434 meters high and consists of Mesozoic granite. The climate is cool continental. The maximum annual temperature ranges between 35.7°C and -28.3°C.

BLN is located at the northern edge of the Northern China
  Platform, which is mainly composed of Archean crystallized basement. The most
  common rocks in this area are Archean metamorphic rocks including schist, gneiss,
  granulite, plagioamphibolite, marble, quartzite, and migmatite Locally, the
  outcrops of the Jurassic sedimentary and volcanic rocks can be seen, which include
  shale, sandstone, basalt and andesite.

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Faults and folds are also well developed in the area. There
  are three groups of structures in the area. NNE, NNW and EW faults. The former
  two are the vital ore-host structures in the area.

The strike of the mineralization bodies in the north half part of the BLN is different from that of those in the southern part. The NNW or NW strike of the mineralization bodies in the north appears to have a dip to the NE while the NNE strike of
mineralization bodies in the south have a dip to the SE. This may imply that the gold mineralization bodies are controlled by at least two different groups of faults.

The gold mineralization can be divided into two types: brown oxidized mineralizations and primary quartz-sulphide mineralization. The Oxided mineralization mainly consist of gold, quartz, hematite and limonite. Primary mineralization mineral
assemblage is mainly gold, quartz cubic pyrite, galena, sphalerite, magnetite, chalcopyrite and chlorite. There is almost no difference about the mineral assemblage of primary mineralization in the various mines in the area.

On January 20, 2004 the Company acquired an option to purchase 100% of the shares of Ginyen Recovery Inc. Ginyen Recovery Inc. has an 85% interest in a co-operative joint venture with Bo Luo Neo Wang Yuan Gold Mine Company (BLN Gold) of
Heibei Province, China. BLN Gold holds an operational gold recovery mill; option to acquire the and license to operate all existing small mines in the district; the option to explore, develop and produce gold and silver in the district and options
to expand to other districts. The Company can earn a 100% interest in the private company, subject to a 5% net profits interest, by issuing 200,000 shares of Linux Gold Corp. in four stages and paying $50,000 cash, and expending a total of
$500,000 in a three-phase work program.

We entered into a consulting agreement with Jim Yin, Ph.D., consulting geologist. Mr. Yin completed his Ph.D. of Science at the China University of Geosciences, Beijing, China. Mr. Yin has previously supervised four joint ventures as the project
representative for mining exploration in China and completed a preliminary investigation report on the Linux Gold optioned property in December 2002.

In April, 2004 we announced assay results indicating high grade gold and silver on the Tuo Dao Gou gold zone, one of many prospects on the Bo Luo Nuo property in China. The Tuo Dao Gou gold zone reported 5.5 ounces of gold per ton with 9 ounces of
silver by Acme Analytical Laboratories on April 1, 2004. The Lan Ying has the highest results, with one sample which assayed 11.75 ounces of gold and 5.75 ounces of silver per ton. The average grade from 15 grab? samples on the Ge Di Gou was 23.36
grams per ton. The third important zone is the Tuo Dao Gou, which was a gold producer zone with stable higher grade gold. The average grade from 18 samples was 11.58 grams per ton gold.

A total of 118 samples were collected from 12 different known gold zones for gold and silver and 32 samples were collected from the platinum, palladium prospect .

The gold zones/veins should be the main targets to follow up in the next exploration program to develop economic high grade gold reserves to feed the 50 ton a day mill.

On June 9, 2004 we announced that Bisheng Liu, of Beijing, China, has been appointed Vice President Corporate Administrator for our gold mining interests in the Peoples Republic of China. Mr. Bisheng is a resident of Beijing, the Peoples Republic of
China, educated in the Tianjins Institute of Foreign Trade and received a Bachelor of Economics degree in China. Previous jobs included a position with the Ministry of Foreign Trade in Beijing and also work with the Chinese Embassy in
Singapore for a three year period as Third Secretary for the commercial office. Mr. Liu is currently working as project manager with Cirque Du Soleil. The board of directors is very pleased to have a representative in China, such as Bisheng Liu,
which is the fastest growing economy in the world today, and look forward to a successful relationship with our projects in China.

On October 12, 2004 we announced that we had received confirmation
  of approval for exploration for Wang Yuan Mine, an additional permit for exploration
  is to be submitted on the nearby Lan Ying Mine. The objective of this years
  exploration program is to develop sufficient gold reserves to feed the 50 ton
  per day mill, which is located on our optioned property. An exploration program
  has commenced on the Wang Yuan mine to dewater the mine and commence a sampling
  program on the known gold zone.

20

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In November 2004, we announced that the exploration license
  for the Dong Gou Gold project has been negotiated by Bisheng Liu, of Beijing,
  China, our Vice President Corporate Administrator for this project. The terms
  and conditions are pursuant to the co-operative joint venture company agreement
  that has an option on mineral exploration rights in Hebei Province, China, covering
  an area of 161 kilometres.

The Dong Gou Gold project consists of 5.12 square kilometres. This area has had three small mines operating in the last seven years, which were mined mainly by hand by the Chinese farmers in the area. One of the past producing mines, the Lan Ying
Mine, appears to be the best organized mine in the area. About 90,000 tons of mineralization has been mined out by hand in the past, at rates of 35 tons of ore per day, grading 11 grams (1/3 of an ounce) of gold per tonne. The exploration goal for
this property, together with the adjacent Wang Yuan Gold project, is to develop sufficient economic gold reserves for the 50 ton per day mill, which is on the property. The sampling program on the Wang Yuan property known gold zones completed and
the assays were completed in February 2005.

The term of the license is effective until a production decision is made by the Company.

In February 2005, we announced assays results for 22 rock samples on the Wang Yuan mine. Based on the results of the samples, a drilling program was recommended.

There currently are no resources or reserves on the BLN property that comply with the Canadian Institute of Mining and Metallurgy (CIM) Standards on Mineral Resources and Reserves Definitions and Guidelines adopted by CIM Council on August 20, 2000.

Additional work on the BLN property will be based on results from the previous exploration programs. Each successive phase of exploration is dependent on generation of encouraging results from the previous programs and the increasing potential for
delineation of commercially viable resources on the project.

Granite Mountain Property, Seward Peninsula, Alaska

In March, 2005, we staked several mineralized areas in western Alaska, near Granite Mountain on the eastern Seward Peninsula, Alaska.

Granite Mountain forms the heart of the historic Koyuk Mining District and is known for the productive placer Au-PGM deposits and igneous hosted base-metal, precious metal and uranium prospects located on its flanks. All the staked lands are State
of Alaska public lands and open to mineral entry. Staking was accomplished by helicopter and conforms to the MTRSC method of locating 160 acre state mining claims.

The Kiwalik igneous-hosted polymetallic property is located in western Alaska, approximately 240 kilometers (150 miles) northeast of the city of Nome and 56 kilometers (35 miles) north of the village of Koyuk (Candle B-5 and C-5 quadrangles). The
propertys east boundary is four kilometers (221⁄2 miles) west of Granite Mountain the tallest point on this part of the eastern Seward Peninsula, at 864 meters (2,835 feet) above sea level. The continental divide runs just east of the
Kiwalik property and all streams originating within the property flow to the Kiwalik River, which flows north to Kotzebue Sound.

The Kiwalik property is composed of 120 State of Alaska 160 acre MTRSC mining claims covering almost 7770 hectares (19,200 acres) of state lands open to mineral entry (fig. 2). The mining claims are located on the Quartz Creek pluton and the
surrounding volcanic and epiclastic country rock and is thought to be prospective for lode deposits of precious metals and base metals.

ACCESS, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE, AND PHYSIOGRAPHY

The Kiwalik property is located in a remote region in western
  Alaska, about 240 kilometers (150 miles) by air northeast of the city of Nome.
  Nome is a modern city of about 4,000 residents with an international airport,
  a recently improved small boat harbor, and barge loading facilities. Villages
  near the property include Koyuk, 56 kilometers (35 miles) to the south, Council,
  about 130 kilometers (80 miles) to the west, and Buckland, about 97

21

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kilometers (60 miles) to the north. There are several winter trails that may be permitted by government regulatory agencies to access the property with heavy equipment from Koyuk, Council, or Kiwalik Lagoon, about 64 km (40 miles) to the north.
Currently, there is no improved overland access to the property and the only immediate access is by air transport. Koyuk, the nearest village to the Kiwalik property, is located at the mouth of the Koyuk River at the northeast head of Norton Bay.
Koyuk enjoys a 760 meter (2,500 foot) airstrip capable of landing a loaded DC-6. Barge facilities are limited to loading from a stationary barge moored to the western bank of the Koyuk River. Koyuk is the seat of the Koyuk Village Corporation and
owns the surface of the lands from the coast to the south shore of the Koyuk River near Dime Landing, 35 kilometers (22 miles) to the north. The Koyuk River is shallow and, without dredging, is only navigable by shallow-draft watercraft, barges and
landing craft.

A fifty-foot easement from Koyuk to Dime Landing exists through the private corporate lands and allows for passage of heavy equipment. A native allotment at Dime Landing has been applied for by a resident of Koyuk, however, the grant has not been
approved by the Bureau of Land Management. From Dime Landing to the Kiwalik mining claims, access is by way of existing winter trails for which authorization from the appropriate regulatory agencies must be acquired. Several airstrips are located
near the Kiwalik property: at Granite Mountain, Quartz Creek, and Bear Creek. The Granite Mountain airstrip was constructed by the U.S. Air Force in 1957 to support the U. S. Department of Defense microwave relay facility (White Alice)
on the summit of Granite Mountain. This facility was decommissioned in 1978 and lies abandoned. The Granite Mountain airstrip is located about five kilometers (three miles) east of the Kiwalik property at an elevation of 380- 400 meters (1250-1300
feet ) above sea level. It is improved with crushed and graded gravel over a length of 1220 meters (4,000 feet ). The landing surface is occasionally maintained by local miners and hunters who use it as primary access to stage equipment and supplies
to outlying mines and hunting camps. The Granite Mountain airstrip is formally closed to the public, however, local air charter services have permission to land there.

The Quartz Creek airstrip, at 305 meters (1,000 feet ) above sea level, is limited to short take-off and landing aircraft and is located about 800 meters (one-half mile) east of the Kiwalik property. The Bear Creek airstrip is150 meters (500 feet )
above sea level and about 460 meters (1,500 feet ) long and has been maintained well by the local placer miners. This airstrip is located about 15 kilometers (9 miles) northeast of the Kiwalik property and is linked the Granite Mt. airstrip and the
Kiwalik property by unimproved trails.

The Kiwalik property is rugged and dominated by tundra and talus covered hills and ridges. Elevation varies within the claim block from approximately 137 meters (450 feet) along the Kiwalik River, to 512 meters (1680 feet) on Weather Ridge; and
climbs to 864 meters (2835 feet) a few kilometers to the east at Granite Mountain. Outcroppings of bedrock are sparse. Valley floors are narrow and recently developed, perhaps initiated by former alpine glaciation and controlled by regional
structures. The climate is semi-arid with short moderate summers and long cold winters, typical of sub-arctic, interior Alaska.

The area is usually snow-free from early June to mid-September. There is no infrastructure developed on the Kiwalik property. As development of the Kiwalik property progresses, roads and other infrastructure will allow for year-round operation, as
has been demonstrated elsewhere by the success of Teck-Comincos Red Dog zinc mine about 320 kilometers (200 miles) to the north.

GEOLOGIC SETTING

The country rock underlying the Kiwalik mineral property is composed of approximately equal volumes of mafic to intermediate epiclastic rocks and volcanic flows. The epiclastic rock is predominantly pebbly sandstone, but includes sparsely scattered
conglomerate and laminated mudstone. The conglomerate is matrix supported, with well rounded volcanic clasts <=55 cm within a fine to medium grained sandy matrix.

Bedding is observed only in the laminated mudstone, but that
  may be due to the scarcity and limited size of outcroppings and the difficulty
  of seeing structure under the nearly complete covering of lichen. The volcanic
  flows vary from nearly aphyric to abundantly porphyritic. In the porphyritic
  rocks, subhedral plagioclase and pyroxene phenocrysts are commonly <=52-3mm,
  although a distinctive flow with abundant pyroxene phenocrysts <=51 cmwas
  observed on the west side of the property and in float elsewhere within the
  prospect area. Plagioclase and pyroxene phenocrysts retain their original igneous
  form, but plagioclase is milky white and/or pale green, and pyroxene is replaced
  by chlorite and possibly actinolite. The groundmass is a mixture of epidote
  and chlorite. Many of the volcanic rocks are magnetic; some have traces of very
  fine-grained sulfide, probably pyrite. Primary igneous and sedimentary features
  are preserved and the rocks are not foliated.

22

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The volcanic rocks are described as andesitic (Patton, 1967)
and interpreted to be upper components of the Koyukuk terrane, remnant of a
Mesozoic intra-oceanic, volcanogenic island-arc that collided with the North
American continent during the late Jurassic to early Cretaceous (Patton and
others, 1994). The volcanogenic rocks were intruded by coeval plutonic rocks
during a period of continuous subduction related magmatism in the early to
mid-Cretaceous along the paleo-Pacific margin (Amato and others, 2004). Within
Alaska, this magmatic belt includes calc-alkaline to alkaline plutons of the
Yukon-Tanana upland, the Ruby Mountains, theYukon-Koyukuk Basin, and the Seward
Peninsula. The event is traceable across the Bering Straits and is exposed in
numerous locations throughout the Chukotka Peninsula.

On the Kiwalik property, the dominant intrusive rock is a
biotite-hornblende quartz monzonite body known as the Quartz Creek pluton
(Miller and Elliot, 1969). Rocks from the Quartz Creek pluton have not been
dated, however, Granite Mountain, a composite pluton located several kilometers
to the east has been radiometrically dated, giving a lead-alpha age of 100 ± 15
Ma (Patton, 1967) and K-Ar age of 108.7±3.0 Ma (on hornblende, Miller, 1971).
These ages correlate the Granite Mountain pluton with other 99-108 Ma plutons
nearby, in the western Yukon-Koyukuk basin. Presumably, the Quartz Creek pluton
is of similar age. The igneous texture of the Quartz Creek pluton is generally
equigranular with local aplitic and porphyritic phases. The plutonic rocks are
poorly exposed in outcrop and primarily evident in talus on the hillsides and
rare exposure in bedrock of streams at the headwaters of Quartz Creek and the
Kiwalik River. Where mapped at the surface, the Quartz Creek pluton is in the
shape of a fish-hook, about 13 kilometers (eight miles) long on its eastern
shank limb and eight kilometers (five miles) long on its western barb limb.
The limbs vary from 400 to 1,600 meters (one-quarter mile to one mile) wide. The
hook shape of the pluton suggests that only the edges of a much larger body is
exhumed and that the overlying volcanic rock forms a roof pendant over the
intrusive rock.

The structural geology of the Granite Mountain area is poorly
understood. Outcrop is sparse and widely scattered, and measurable bedding or
structural orientations or distinctive layers that can be traced for any
distance is wanting. The few bedding orientations measured during reconnaissance
mapping in 2005 include northeast dips between 40 and 50 degrees and south and
southwest dips of 38 and 7 degrees respectively, suggesting broad folding around
a west or northwest trending axis. Outcrop patterns and bedding orientations
mapped in the Bear Creek area, north of the Peace claim block (Herreid, 1965)
are consistent with northwest trending faults and fold axes. Shearing in an
outcrop at the south end of Gossan Ridge trends northeasterly with nearly
vertical dip. The shear zone is approximately normal to the trend of gossan
trails mapped on Gossan Ridge, and the relationship between the two features is
not known.

Outward from the Kiwalik property, late Cenozoic flood basalts
are widespread in low lying areas, however, no evidence has been found to
indicate that flood basalts once covered the property. More recently, glacial
and periglacial mechanisms have modified the surface, in particular small alpine
glaciers originating in headwall cirques on Granite Mt. may have removed much of
the older cover. Deglaciation and the invasion of permafrost have resulted in a
solifluction mantle that is common throughout interior and northern Alaska.

Although the results to date are very encouraging, no trenching
or drilling have taken place. No quantifiable mineral resource has been
established on the Kiwalik property.

The Peace River Claim Block includes 16 mining claims (4
square-miles) and is located on a satellite intrusive stock on the east flank of
Granite Mountain at the headwaters of the Peace River. This area was examined in
the early 1950s for its potential as a uranium prospect and was re-examined
during the 1968 USGS Heavy Minerals Program. Samples of soil and rock indicated
anomolous concentrations of base metals including over 2,000 ppm molybdenum
obtained from a composite grab sample of veined syenite rubble. Pan concentrates
collected from these headwater streams by the U.S. Geological Survey in 1951 and
1952 (Gault, et al, 1953, USGS Circ-250) showed an abundance of base metal
sulfide minerals including bornite, as well as concentrations of uranothorianite
and gummite (up to 0.76%eU) . Particles of placer gold were also found. The
local concentration of uranothorianite in the placers is believed to be the best
lead to a possible high grade uranium lode deposit.

The Dime Creek Claim Block is located about 15 miles to the south
  of Granite Mountain and is composed of 12 mining claims (3 square-miles). The
  placer gold-platinum deposits on Dime Creek were discovered in 1910, but it
  wasnt until 1915 that rich pay was found, setting off a stampede to the
  area. By 1917, about 12,500 ounces of gold and platinum were recovered from
  shoveling-in on the creek placer and from underground drifting on several bench
  placers (Harrington, 1917, USGS B-692). The placer gold is unusually pure with
  a fineness of 960 and occurs in placer concentrates in a ratio to native platinum
  particles of 25:1 to 10:1. In later years, a small bucket-ladder dredge operated
  on the valley bottom from 1928 to 1941 while small open-cut and drifting operations
  continued on the benches until at least 1955. Total production is not known,
  but incomplete historical data shows production to be at least 25,000 ounces
  of gold and platinum. The placer deposit is considered to be highly prospective
  for significant additional placer reserves, as well as for lode sources of the
  placer gold and platinum.

23

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During August of 2005, we conducted geologic mapping and geochemical
  sampling. Phase I orientation and reconnaissance exploration consisted of mapping
  rock contacts and units and collecting rock, soil, stream sediment and pan concentrate
  samples during ridge and stream traverses. This work confirmed and added more
  detail to previous mapping and sampling performed by the U.S. Geological Survey.
  Phase II mineral exploration during 2006 is recommended to consist of an airborne
  geophysical survey, additional geological mapping and geochemical sampling,
  and drilling two- 1,000 ft and four- 500 ft (total 4,000 ft) diamond drill holes.

Four types of geochemical samples were collected from the Kiwalik and Peace claim blocks, including 153 soil samples, 93 rock samples, 45 stream sediment samples, and 31 pan concentrate samples. The results of this program indicate that on the
Kiwalik claims, a mineralized trend, striking north with a length of over 11 kilometers, is spatially associated with the eastern contact of the Quartz Creek pluton (quartz monzonite) and the andesitic flows and volcaniclastic country rock. A
similar trend was detected on the Peace claims, where mineralization was found within plutonic (syenite) bedrock over a strike length of 1.7 kilometers. On both properties the limits of the mineralized trends are not clearly defined and may be more
extensive than currently known.

At the ground surface, the Quartz Creek mineral trend appears to be zoned and can be partitioned into base-metal deposits within the volcanic wallrock and precious- metal deposits within both intrusive and volcanic rocks. Highlights of soil and rock
grab samples collected within the base-metal zones include 52.3 g/t silver, over 10,000 ppm lead, over 10,000 ppm zinc, 1,256 ppm copper, 704 ppm antimony and 83 ppb gold. Precious metal zones were sampled with a soil grid placed on veined,
brecciated, and oxidized volcanic rock, as well as with grab samples of veined and intensely altered intrusive rock, resulting in concentrations of up to 0.26 g/t gold, 29.2 g/t silver, over 10,000 ppm arsenic and elevated levels of lead, copper,
and antimony. Pan concentrates that were collected on the upper branches of the Kiwalik River show a marked enrichment of gold (up to 20.6 g/t in fire assay) where the streams erode mineralized intrusive bedrock.

The Peace claims were sampled similarly to the Kiwalik claims, but to less extent. This work indicates that the eastern branch of the headwaters of the Peace River is eroded into mineralized syenite and is anomalous in precious and base metals in a
relatively narrow trend, striking northeast. Results include 4.3 g/t gold, 0.15% tungsten, and 230 ppm uranium in pan samples and concentrations of up to 0.20 g/t gold, 83.5 g/t silver, 0.12% molybdenum, 6,327 ppm copper, 1,232 ppm antimony and
elevated lead, bismuth and tungsten in rock grab samples.

Detailed analysis of the geochemical data is ongoing, however, the results to date suggest that several types of polymetallic deposits may be found near the surface along the Quartz Creek mineral trend and that a large porphyry system may lie at
depth. The relationship of the Peace River polymetallic deposit to the Quartz Creek mineral belt is not known, but may represent another phase or portion of a larger plutonic porphyry system. A US$1.5 million budget is recommended in 2006 to
explore the igneous system at depth and to search for additional evidence of mineral deposits near the surface. This work should include:

1. A regional airborne geophysical survey to indicate rock contacts, structure and alteration, as well as for the presence of sulfide enrichment zones;

2. Additional geological mapping and geochemical sampling to explore the extensions of the known mineralized trends and to investigate unexplored areas;

3. Diamond drill holes to explore the rocks underlying significant geochemical and (anticipated) geophysical anomalies;

4. Structural, chemical, and geochronological studies to examine the relationship of the Kiwalik and Peace igneous rocks and mineral trends with the goal of expanding the potential mineral resource.

This report was prepared by Jeffrey O. Keener, project geologist for the Granite Mountain exploration program and reviewed and approved by Robert B. Murray, registered geologist with the state of Oregon. Robert Murray is currently completing a
National Instrument 43-101 report on the Granite Mountain property. [need consent]

Robert Murray, registered geologist and qualified person for the 2005 project has recommended the following drilling and exploration plan for 2006.

Objectives for Drilling and Exploration Plan for 2006:

24

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To initiate a scout drilling program by placing four
diamond-core drill holes on the mineral deposits located in 2005.

- The Gossan Ridge sub-volcanic gold-silver-copper prospect.
- The Saddle cordilleran-vein lead-zinc-silver prospect.
- The Quartz Creek plutonic gold-copper-bismuth prospect.
- The Peace River plutonic molybdenum-copper-gold-uranium prospect.

An additional hole will be placed to drill into the cupola of
the Quartz Creek pluton to investigate the volcanic thermal contact zone
overlying the intrusive.

Continue the geochemical surveying program by expanding the
soil grids on the Gossan Ridge and Peace River prospects, place a soil grid on
the Saddle prospect, and run discreet soil lines across linear structures
identified in the geophysical survey or through surface geological mapping.
Ongoing geological mapping will be conducted at a scale of 1:63,360 in
previously unmapped areas and at a scale of 1:10,000 for detailed structural and
mineralogic data.

The proposed budget to accomplish these goals is (U.S.)
$1,500,000. Contracts and permits are currently being negotiated and applied for
to start-up field work on July 1st.

Corporate Finance

During the year ended February 28, 2006:

| | a) | During the year ended February 28, 2006, the Company
      issued 50,000 common shares at a value of $0.41 per share pursuant to the
      Ty mineral property option agreement.                                                                                                                                                                   
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                    
| | b) | During the year ended February 28, 2006, the Company
      completed a private placement and issued 3,000,000 shares at a price of
      US$0.20 per share for proceeds of $695,127 (US$600,000) before issue costs
      of $42,571. The Company issued 100,000 shares as a finders fee in
      connection with this private placement offering.
| |    |                                                                                                                                                                                                                                                                                                                                                    
| | c) | During the year ended February 28, 2006, the Company
      issued 93,750 common shares at a value of US$0.10 per share pursuant to
      the exercise of stock options.                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                    
| | d) | During the year ended February 28, 2006, the Company
      issued 92,500 common shares at a value of US$0.20 per share pursuant to
      the exercise of share purchase warrants.                                                                                                                                                                  

During the year ended February 28, 2005:

| | a) | During the year ended February 28, 2005, the Company
      issued 25,000 common shares at a value of $0.10 per share pursuant to the
      mineral Oro mineral property option agreement .                                                                                                                                                                                                                                                                                                                                                  
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | b) | During the year ended February 28, 2005, the Company
      issued 50,000 common shares at a value of $0.39 per share and issued
      50,000 common shares as a finders fee pursuant to the BLN Gold Property
      option agreement .                                                                                                                                                                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | c) | During the year ended February 28, 2005, the Company
      completed a private placement and issued 2,777,777 units at a price of
      US$0.18 per unit for proceeds of $620,850 (US$500,000) before issue costs
      of $2,185. Each unit consisted of one common share and one warrant. One
      whole warrant entitles the holder to purchase one share at a price of
      US$0.18 per share for a two year period. The Company issued 208,333 shares
      as a finders fee in connection with this private placement
    offering.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | d) | During the year ended February 28, 2005, the Company
        completed a private placement and issued 1,219,500 units at a price of
        US$0.15 per unit for proceeds of $241,424 (US$182,925). Each unit consisted
        of one common share and one-half warrant. One whole warrant entitles the
        holder to purchase one share at a price of US$0.20 per share in the first
        year and US$0.25 per share in the second year.                                                                                           

25

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Additionally, 87,500 stock options were exercised.

During the year ended February 28, 2004:

| | e) | During the year ended February 29, 2004, the Company
      completed a private placement and issued 875,000 units at a price of
      US$0.20 per unit for proceeds of US$175,000. Each unit consisted of one
      common share and one-half warrant. One whole warrant entitles the holder
      to purchase one additional common share at a price of US$0.20 per share
      for a one year period.                                                
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | f) | During the year ended February 29, 2004, the Company
      issued 175,000 common shares at a value of $0.10 pursuant to the BLN
      property option agreement .                                                                                                                                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | g) | During the year ended February 29, 2004, the Company
      issued 1,000,000 shares pursuant to a consulting agreement for services
      beginning April 2, 2003 for a period of six months. The Company was also
      obligated to issue 100,000 shares per month starting May 2, 2003. On July
      11, 2003, the Company terminated this agreement due to non-performance and
      has demanded return of the 1,000,000 shares previously issued.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | h) | The Company issued 200,000 shares to settle a prior
      years rental agreement.                                                                                                                                                                                                                                                                                                                                                                     

Shareholder approval for the granting and exercise of incentive
stock options was obtained at the Companys annual general meeting held on
August 26, 2005.

Description of the Markets in Which the Company Competes

This is no longer applicable due to the discontinuance of the
business operations of our wholly-owned subsidiary.

Competition

Significant and increasing competition exists for the limited
number of gold acquisition opportunities available in North, South and Central
America and elsewhere in the world. As a result of this competition, some of
which is with large established mining companies which have greater financial
and technical resources than the Registrant, the Registrant may be unable to
acquire additional attractive gold mining properties on terms it considers
acceptable. Accordingly, there can be no assurance that the Registrants
exploration and acquisition programs will yield any new reserves or result in
any commercial mining operation.

Seasonality

We believe that there is no seasonality which affects our business.

Availability of Raw Materials

We do not manufacture any products directly.

Marketing Strategy

We do not have any plans for a marketing strategy at this time.

26

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Dependence on Certain Commercial Agreements or Intellectual Property

We do not have any material agreements upon which we are dependent.

Material effects of Government Regulation

Exploration and development activities, require permits from various foreign, federal, state and local governmental authorities. To the best of our knowledge, we are operating in compliance with all applicable environmental regulations.

C. ORGANIZATIONAL STRUCTURE

For a list of our significant subsidiaries, see Item 10  Additional Information  Subsidiary Information.

D. PROPERTY, PLANT AND EQUIPMENT

We do not own any properties. We currently utilize office space in a commercial business park building located in Richmond, British Columbia, Canada, a suburb of Vancouver. The space is shared with several other companies which share common
management. The monthly rent for its portion of this 1,500 square foot space is $500.00. The present facilities are believed to be adequate for meeting our needs for the immediate future. If required in the future, we do not anticipate that we
will have any difficulty in obtaining additional space at favorable rates. There are no current plans to purchase or otherwise acquire any properties in the near future.

Since our inception and during the three fiscal years ending in February 2006, we had been involved in oil and gas exploration/production and more recently, mineral property exploration and development.

Please refer to section 4.B. BUSINESS OVERVIEW, Nature of the Companys Operations, Mineral Properties for a description of our mineral properties.

ITEM 4A. UNRESOLVED STAFF COMMENTS

This section is not applicable as we are not an accelerated filer or a large accelerated filer, as defined in Rule 12b-2 of the Exchange Act, or a well-known seasoned issuer as defined in Rule 405 of the Securities Act.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion should be read in conjunction with the Consolidated Financial Statements and Notes thereto included elsewhere herein. The Consolidated Financial Statements have been prepared in accordance with US GAAP.

A. OPERATING RESULTS

Discontinued Operations

During fiscal 2002, we discontinued the business operations of our wholly-owned subsidiary, LinuxWizardry, Inc.

Continuing Operations

Fiscal Year Ended February 28, 2006 compared to Fiscal
  year Ended February 28, 2005 Results of Operations

27

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During fiscal 2006, we received no revenues from operations as compared to $nil revenues in 2005.

Administrative
  expenses in 2006 totaled $501,000 as compared to $611,000 in 2005. The expenses
  decreased from the prior year due not issuing stock-based compensation in 2006.
  Travel totaled $24,000 compared to $40,000 in 2005. A significant portion of
  the decrease relates to the decrease in consulting costs of $134,000 in 2006
  as compared to $234,000 in 2005. This decrease was due to not granting stock
  options for stock-based compensation as compared to 2005.

We paid $330,000 for mining acquisitions and related exploration work in 2006 as compared to $183,000 in 2005.

Fiscal Year Ended February 28, 2005 compared to Fiscal year Ended February 28, 2004

Results of Operations

During fiscal 2005, we received no revenues from operations as compared to $nil revenues in 2004.

Administrative
  expenses in 2005 totaled $611,000 as compared to $312,000 in 2004. The expenses
  increased from the prior year due to the increased activity of the Company.
  Office, rent and telephone totaled $194,000 compared to $62,000 in 2004. Professional
  fees totaled $42,000 compared to $28,000 in 2004. We also incurred an imputed
  interest charge of $35,000 compared to $23,000 in 2004. Imputed interest at
  15% was charged to operations based on the advances from related parties and
  treated as donated capital. This amount increased during 2005 due to the additional
  advances received in the first three fiscal quarters of 2005, before being paid
  down in the last fiscal quarter of 2005. Consulting and subcontract expenses
  increased to $234,000 in 2005 from $174,000 in 2004. This increase was due to
  the inclusion of stock-based compensation of $100,000 recognized from the granting
  of stock options. Travel increased from $4,000 in 2004 to $40,000 in 2005 due
  to increased operations.

We paid $183,000 for mining acquisitions and related exploration work in 2005 as compared to $122,000 in 2004.

Fiscal Year Ended February 28, 2004 compared to Fiscal year Ended February 28, 2003

Results of Operations

During fiscal 2004, we received no revenues from operations as compared to $nil revenues in 2003.

Administrative
  expenses in 2004 totaled $312,000 as compared to $201,000 in 2003. The expenses
  increased from the prior year due to the increased activity of the Company.
  Office, rent and telephone totaled $62,000 compared to $13,000 in 2003. Professional
  fees totaled $28,000 compared to $16,000 in 2003. We also incurred an imputed
  interest charge of $23,000 compared to $90,000 in 2003. Imputed interest at
  15% was charged to operations based on the advances from related parties and
  treated as donated capital. This amount decreased during 2004 due to the settlement
  of debt in 2003. Filing and regulatory expenses increased due to increased reporting
  activities. Consulting and subcontract expenses increased to $174,000 in 2004
  from $17,000 in 2003. This increase was due to a payment of $100,000 to Barry
  Clarke and a payment of $30,000 to Capital Research for financing consulting.

In 2003 we recorded an option payment of $80,000 which
  represented the 200,000 shares we received pursuant to the joint venture agreement
  with Teryl Resources Corp. We paid $122,000 for mining acquisitions and
  related exploration work as compared to $6,000 in 2003. In 2003 we issued
  3,000,000 shares to purchase a license from Mailprotek.com. The license value
  was valued at $238,000 but Mailprotek.coms was $25,000 which resulted
  in a deemed dividend of $213,800.

28

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B. LIQUIDITY AND CAPITAL RESOURCES

Liquidity and Capital Resources

The audited
  financial statements have been prepared assuming that the Company will continue
  as a going-concern. As discussed in note 2 to the financial statements, the
  Company has no revenues and limited capital, which together raise substantial
  doubt about its ability to continue as a going-concern. Management plans in
  regard to these matters are also described in note 2. The financial statements
  do not include any adjustments that might result from the outcome of this uncertainty.

We have been successful in the past in acquiring capital through the issuance of shares of our Common Stock, and through advances from related parties. Although we intend to continue utilizing these sources, there has been no assurance in the past
that these sources and methods would continue to be available in the future. On July 16, 1999, we received from John G. Robertson, its then President, currently the Chairman of the Board, a "Commitment to Provide Financing to Flame Petro-Minerals
Corp. as Required for Ongoing Operations". In substance, the Commitment states that if we are not able to obtain funds required for maintaining our ongoing operations and status as a publicly traded company, from other sources, Mr. Robertson agrees
and commits to provide, and/or arrange for any such funds for us on either a loan, equity, or combination basis, on mutually agreeable terms, and which comply with any regulatory rules and regulations applicable to such transactions. Mr. Robertson
further states that such maintenance funding requirements are estimated at approximately $50,000 per year and that he is capable of arranging for such funding and/or is able to generate net earnings from revenues which will sustain our ongoing
operations.

In the event that Mr. Robertson were not able to raise funds, and no other sources of capital were available to us in the future, on a reasonable financial basis, it would face the same obstacles as many small, undercapitalized companies do, and, in
the worst case, we could be forced to reorganize or liquidate, either of which consequence would likely have an adverse financial effect upon our shareholders.

Liquidity

Fiscal Year Ended February 28, 2006 compared to Fiscal year Ended February 28, 2005

During 2006 we financed our operations by the issue of 3,336,250 common shares for cash proceeds of $727,790. This consists of the issue of 3,000,000 common shares pursuant to private placement offerings completed during the year to raise cash
proceeds of $652,556 after issue costs, the issue of 93,750 common shares pursuant to the exercise of stock options for cash proceeds of $10,838, and the issue of 92,500 shares pursuant to the exercise of share purchase warrants for cash
proceeds of $21,825.

During 2006, we spent $703,000 of these funds on operating activities as discussed above under Results of Operation for the Year Ended February 28, 2006 as compared to $665,000 the year ended February 28, 2005.

Our cash position has decreased by $2,000 to $396,000 and our working capital as at February 28, 2006 was $70,000.

Fiscal Year Ended February 28, 2005 compared to Fiscal year Ended February 28, 2004

During
  2005 we financed our operations by the issue of 4,543,110 common shares for
  cash proceeds of $931,580. This consists of the issue of 4,205,610 common shares
  pursuant to private placement offerings completed during the year to raise cash
  proceeds of $860,089 after issue costs, the issue of 87,500 common shares pursuant
  to the exercise of stock options for cash proceeds of $10,606, and the issue
  of 250,000 shares pursuant to the exercise of share purchase warrants for cash
  proceeds of $37,500.

During 2005, we spent $665,000 of these funds on operating activities as discussed above under Results of Operation for the Year Ended February 28, 2005 as compared to $154,000 the year ended February 28, 2004.

Our cash position has increased by $247,000 to $398,000
  and our working capital as at February 28, 2005 was $98,000.

29

---

Fiscal Year Ended February 28, 2004 compared to Fiscal year
Ended February 28, 2003

Liquidity

During 2004 we financed our operations and received $479,000
by:

| | (i)  | receiving financial support from companies affiliated
        with the President of the Company in the amount of $179,000. These amounts
        are unsecured, non-interest bearing and due on demand;
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                        
| | (ii) | issuing shares for $301,000.                                                                                                                                                                           

During 2004, we spent $154,000 of these funds on operating
activities as discussed above under Results of Operation for the Year Ended
February 29, 2004 as compared to $144,000 the Year Ended February 28, 2003.

Our cash position has increased by $141,000 to $152,000 and our
working capital deficit, as at February 29, 2004 was $92,000.

C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.

Our aggregate research and development expenditures over the
past three years ended February 29, 2004, February 28, 2005 and February 28,
2006 amount to $nil, $nil and $nil respectively. We do not hold any patents,
trademarks or copyrights.

D. TREND INFORMATION

We currently have no active business operations that would be
effected by recent trends in productions, sales, etc. We have no material net
sales or revenues that would be affected by recent trends other than the general
effect of mineral prices on our ability to raise capital and those other general
economic items.

E. OFF-BALANCE SHEET ARRANGEMENTS

There are
  no known off-balance sheet arrangements other than those disclosed in this Form
  20-F and in our audited consolidated financial statements for the year ended
  February 28, 2006.

F. TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

The following table provides information as of the latest
fiscal year end balance sheet date with respect to the Companys known
contractual obligations specified below.

Payments due by periodContractual Obligations
    Total
    Less than 1 year
    1-3 years
    3-5 years
    More than 5 yearsMineral Property Obligations
    $555,000 and 200,000 shares
    -
    $555,000 and 200,000 shares
    -
    -Long-term debt obligations
    -
    -
    -
    -
    -Capital (Finance) Lease obligations
    -
    -
    -
    -
    -Operating lease obligations
    $28,395
    $25,918
    $2,477
    -
    -Purchase Obligations
    $25,000
    $25,000
    -
    -
    -Other Long-term liabilities reflected on the
      Companys Balance sheet under US GAAP
    -
    -
    -
    -
    -Total
    $608,395 and 200,000 shares
    $50,918
    $557,477 and 200,000 shares
    -
    - 30


---

As we explore our properties, we decide which ones to proceed
with and which ones to abandon. To fully exercise the options under various
agreements for the acquisition of interests in properties located in Canada,
Alaska and China, we must incur exploration expenditures on the properties and
make payments to the optionors as follows:

Property
    Calendar Year
    Option/Advance Royalty Payment
    Expenditure Commitment
    Number of SharesTY, BC, Canada
    2006
    $ -
    $ -
    -2007
    $ -
    $ -
    -ORO, BC, Canada
    2006
    $ -
    $ -
    -2007
    $ -
    $ -
    -BLN Gold Property, Hebei Province, China
    2005- 2006
      $55,000
      $500,000
      150,000


These amounts may be reduced in the future as we determine
which properties are of merit and abandon those with which we do not intend to
proceed.

G. Safe Harbor

This annual report includes "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements may include conclusions of prefeasibility and
feasibility studies, estimates of future production, capital and operating
costs, prices of silver and gold and other known and unknown risks. These and
other factors and uncertainties may cause material differences from future
results as expressed or implied by these forward looking statements. These
risks, uncertainties and other factors include but are not limited to the risks
involved in the exploration, development and mining business.

All statements, other than statements of historical facts,
included in this annual report that address activities, events or developments
which we expect or anticipate will or may occur in the future are
forward-looking statements. The words "believe", "intend", "expect",
"anticipate", "project", "estimate", "predict" and similar expressions are also
intended to identify forward-looking statements.

Our estimated or anticipated future results or other
non-historical facts are forward-looking and reflect our current perspective of
existing trends and information. These statements involve risks and
uncertainties that cannot be predicted or quantified, and consequently actual
results may differ materially from those expressed or implied by such
forward-looking statements. Such risks and uncertainties include, among others,
the success of our exploration and development activities, environmental and
other regulatory requirements, foreign exchange issues, mineral deposit
estimates and mineral prices, competition by other mining companies, financing
risks, mineral title issues, insider conflicts of interest, political stability
issues, and other risks and uncertainties detailed in this report and from time
to time in our other Securities and Exchange Commission (SEC) filings.

Consequently, all of the forward-looking statements made in
this annual report are qualified by these cautionary statements. We cannot
assure you that the actual results or developments anticipated by us will be
realized or, even if substantially realized, that they will have the expected
effect on us or our business or operations.

Forward-looking statements are subject to a variety of risks
  and uncertainties in addition to the risks referred to in Risk Factors
  under Item 3.D above.

31

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ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

As of February 28, 2006, our Board of Directors consisted of
four Directors, two of whom are independent (or outside) non-executive
Directors. The following table provides certain information about the members of
our Board of Directors as of February 28, 2006.

Name
    Position with Registrant
    Term of Office
    Office Held SinceJohn G. Robertson
    President, CEO and Chairman of the Board
      and Director, and Director of Subsidiary
    Annual Shareholders Meeting in 2003
      3/05/79Jennifer Lorette
      Director
    Annual Shareholders Meeting in 2003
      6/01/94Susanne Robertson
      Director
    Annual Shareholders Meeting in 2003
      8/28/02Monique van Oord
    Chief Financial Officer and Corporate
      Secretary
    Annual Shareholders Meeting in 2004
      8/16/04


John G. Robertson. Mr. Robertson is the Chairman of the
Board, CEO and founder of the Company and a Director of the Company since its
inception. Mr. Robertson has been the Chairman, President and Chief Executive
Officer of REGI U.S., Inc., an Oregon corporation traded on the OTC bulletin
board, since July 1992, a U.S. public company engaged in the development of a
rotary engine/compressor (Rand Cam Engine) and hydrogen separator technology.
Since October 1984 Mr. Robertson has been President and a Director of Reg
Technologies Inc., a British Columbia corporation listed on the TSX Venture
Exchange that has financed the research on the Rand Cam Engine since 1986. REGI
U.S. is ultimately controlled by Reg Technologies Inc. Mr. Robertson has been
the President and Principal Executive Officer and a Director of IAS
Communications, Inc. since its formation in December 1994, a U.S. public company
which is developing and marketing proprietary antenna technology. Since June
1997 Mr. Robertson has been President, Principal Executive Officer and a
Director of Information Highway.com, Inc., a Florida corporation. Mr. Robertson
is also the President and founder of Teryl Resources Corp., a British Columbia
company trading on the TSX Venture Exchange involved in mineral exploration.
Since May 1977 Mr. Robertson has been President and a member of the Board of
Directors of SMR Investments Ltd., a private British Columbia corporation
engaged in management of public companies. Mr. Robertson is also the President
and Director of the following private companies: JGR Petroleum, Inc., BlueCrow
Internet Co. Ltd., 394754 B.C. Ltd., dba SOVO Computer Centre, Pavlik Travel
Services Ltd., World Tel-Internet (Toronto) Ltd., International Diamond
Syndicate Ltd., Argon Investment Corporation, and Airstream Communications, Inc.
Mr. Robertson is a citizen and resident of Canada.

Jennifer Lorette- Ms. Lorette has held several
positions with the Company since June 1994. Also, since June 1994 Ms. Lorette,
has been Vice President of REGI U.S., Inc., an Oregon corporation traded on the
OTC bulletin board. Since April 1994 she has also been Vice President of
Administration for Reg Technologies, Inc., a British Columbia corporation listed
on the TSX Venture Exchange. REGI U.S. is ultimately controlled by Reg
Technologies Inc. Since June 1997 Ms. Lorette has been Secretary/Treasurer, and
a Director of Information Highway.com, Inc., a Florida corporation. Ms. Lorette
is a founder, and has been Secretary/Treasurer of IAS Communications, Inc. since
February 1995. Ms. Lorette is a citizen and resident of Canada.

Susanne Robertson- Ms. Robertson was elected a director
  of the Company in August 2001. She is also a director of Teryl Resources Corp.
  and owns SMR Investments Ltd. a company providing management services to public
  companies. Ms. Robertson is a citizen and resident of Canada.

32

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Monique van Oord Ms. van Oord was elected a director
  of the Company in August 2004. She is the Companys Chief Financial Officer
  and Secretary. She is also a director of Teryl Resources Corp. Ms. van Oord
  is a citizen and resident of Canada.

B. COMPENSATION

For the fiscal year ended February 29, 2006 the Company and its
  subsidiaries paid $42,000 in compensation to directors, officers and related
  companies as a group. $30,000 of this amount was not paid, but was accrued.

SMR Investments Ltd., a company owned by Susanne M. Robertson,
  wife of John G. Robertson, receives, in accordance with a management agreement
  $2,500 per month for management fees provided to the Company. A further $1,000
  per month is paid to the Chairman of the Board of the Company, John G. Robertson,
  as a director's fee. John G. Robertson is also president and a director of SMR
  Investments Ltd.

No cash or non-cash compensation was paid or distributed to the
  executive officers of the Company under any pension or other plans nor is there
  any plan for such payments or distributions during the following fiscal year
  contributed to the directors and officers.

During the fiscal year ended February 28, 2006 no new stock options
  were granted pursuant to stock option plans, 93,750 options were exercised and
  1,050,000 options were cancelled (expired)(see Note 8 to our Financial Statements).

Total options currently exercisable at the date of this 20-F
  are 2,343,750. All exercise prices are US dollars. Of those, 1,800,000 are exercisable
  at $0.10 expiring on dates ranging from February 21, 2008 to October 20, 2008.
  318,750 options are exercisable at $0.18 and expire on September 17, 2007, 225,000
  are exercisable at $0.30 expiring between June 9, 2006 and April 22, 2009. Please
  see Note 8 to the financial statements.

Options to Purchase Registrant's Common Shares Held by Officers
  and Directors of Registrant

NAME OF OPTIONEE
      NUMBER OF OPTIONS
      EXERCISE PRICE (US $)
      EXPIRY DATEJohn G. Robertson
      1,000,000
      $0.10
      February 21, 2008Jennifer Lorette
      150,000
      $0.10
      February 21, 2008Monique van Oord
      50,000
      $0.30
      April 22, 2009Susanne Robertson
      300,000
      $0.10
      February 25, 2008TOTAL HELD AS A GROUP:
      1,500,000


Options to Purchase Registrants Common Shares Held by
  Persons Other than Officers and Directors of the Registrant

Name of Optionee
      No. of Optioned Shares
      Exercise Price Per Share
      Expiry DateJames Vandeberg
      75,000
      $0.10 US
      February 21, 2008Bruce Bragagnolo
      50,000
      $0.10 US
      February 25, 2008James Kerr
      75,000
      $0.10 US
      February 25, 2008Arnie Winrob
      12,500
      $0.10 US
      February 25, 2008James Kerr
      75,000
      $0.10 US
      September 17, 2008Peter Zihlmann
      62,500
      $0.10 US
      October 20, 2008Jillian Thow
      300,000
      US$0.18
      Sept. 17, 2007Arnie Winrob
      25,000
      US$0.30
      April 22, 2009Wazmakay Charlwood
      150,000
      US$0.30
      June 9, 2006Jagdish Singh
      -
      US$0.20
      November 9, 2009Cindy Broad
      18,750
      US$0.20
      November 9, 2009Hal Clark
      -
      US$0.05
      April 1, 2006TOTAL HELD AS A GROUP:
      843,750 33




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C. BOARD PRACTICES

Under section 224 of the Business Corporations Act,S.B.C.
  2002, c. 57, the directors of a company must, at their first meeting on or after
  each annual reference date, elect an audit committee, to hold office until the
  next annual reference date. The audit committee must be composed of at least
  3 directors, and a majority of the members of the committee must not be officers
  or employees of the company or of an affiliate of the company. The members must
  elect a chair from among their number and determine their own procedures. The
  auditor of a company must be given reasonable notice of, and has the right to
  appear before and to be heard at each meeting of the companys audit committee
  and must appear before the audit committee when request to do so by the committee
  and after being given reasonable notice to do so. Our Board of Directors established
  an Audit Committee which members consist of Monique van Oord, Susanne Robertson
  and Jennifer Lorette.

The Directors are elected by the shareholders to hold office
  for a term of one year or until re-elected at the next annual general meeting.

D. EMPLOYEES

We employed no employees during any of the years ended February
  28, 2006, February 28, 2005 and February 28, 2004. Our legal, accounting, marketing
  and administrative functions are, and have been during the last three fiscal
  years, contracted out to consultants.

We have no employees; as such, no directors of officers belong
  to any labor unions. We have not been subject to any strikes or other labor
  disturbances that have interfered with our operations.

E. SHARE OWNERSHIP

The following table sets forth the ownership of our common shares
  by our Directors and Officers as at June 27, 2006:

Shareholder
      Number of shares issued and 
        outstanding
      Percentage ownership (1)John G. Robertson
      2,318,138 (2)
      3.39%Jennifer Lorette
      238,100 (3)
      *Monique van Oord
      75,000 (4)
      *Susanne Robertson
      6,381,327 (5)
      9.3%


| | (1) | as at June 27, 2006, there were 68,287,773 issued and
        outstanding common shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | includes 8,482 shares registered in the name of Access
        Information Services, Ltd., a corporation controlled by the Robertson
        Family Trust, and 1,000,000 options that are currently exercisable. Mr.
        Robertson is one of three trustees of the Robertson Family Trust, which
        acts by the majority vote of the three trustees. Mr. Robertson disclaims
        beneficial ownership of the shares owned or controlled by the Robertson
        Family Trust. Mr. Robertson's address is the same as our address.
| | (3) | Includes 88,100 options that are currently exercisable.
        Ms. Lorette's address is the same as our address.                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (4) | Includes 25,000 options that are currently exercisable.
        Ms. van Oords address is the same as the Companys.                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (5) | includes 5,284,3278 shares registered in the name of
        SMR Investments Ltd., and 797,000 options that are currently exercisable.
        Ms. Robertson's address is the same as the Companys.                                                                                                                                                                                                                                                                                                                                           

* Beneficially owns less than one percent of our common shares.

For information regarding the ownership of stock options to acquire
  our common shares which are held by our

34

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Directors and Officers, and also by our employees, please
  refer to Item 6.B above  Stock Options Granted to Employees, Directors
  and Senior Managers.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. MAJOR SHAREHOLDERS.

To the best of our knowledge, we are not indirectly owned
  or controlled by any other corporation, foreign government or by any other natural
  or legal person, except as set out below.

As of June 27, 2006, 68,387,773 Common Shares were outstanding.
  At such date, we are aware of one shareholder who owns 5% or greater of the
  voting shares of the Company. Sue Robertson, our director, owns 6,381,327 of
  our issued and outstanding common shares. Of these, 5,284,327 shares are registered
  in the name of SMR Investments Ltd., a corporate controlled by Ms. Robertson.
  Mrs. Robertson does not have any different voting rights.

Over the past three years, there has not been a significant
  change in the percentage ownership held by any major shareholder.

We do not know of any arrangements which could result in a
  change in control of the Company.

B. RELATED PARTY TRANSACTIONS.

We are a party to a management services agreement with SMR
  Investment Ltd. (SMR) under which SMR incurred management fees of
  $30,000 in each of fiscal years 2006, 2005 and 2004, and rent of $3,000
  in fiscal 2004. SMR is a private company owned by Susanne M. Robertson, the
  wife of John G. Robertson.

We paid a director's fee of $12,000 to John G. Robertson,
  our Chairman of the Board, during each of fiscal years 2006, 2005 and 2004.

We had related party advances outstanding of $204,394
  at the February 2006 year-end, compared to $188,156 at the end of our previous
  fiscal year. These were unsecured, non-interest bearing and with no fixed terms
  of repayment.

Also refer to Liquidity and Capital Resources
  regarding the "Commitment to Provide Financing to Flame Petro-Minerals Corp.
  as Required for Ongoing Operations" by John Robertson.

C. INTERESTS OF EXPERTS AND COUNSEL.

Not applicable.

ITEM 8. FINANCIAL INFORMATION

A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

See page F-1 to F-13 following Item 19.

Legal Proceedings

We are not a party to any material legal proceedings.

Dividend Distribution Policy

We have not paid any cash dividends to date and we do not
  intend to pay cash dividends in the foreseeable future.

35

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B. SIGNIFICANT CHANGES

None.

ITEM 9. THE OFFER AND LISTING

Not applicable, except for Item 9.A.4 and Item 9.C.

Our shares traded solely on the Alberta Stock Exchange (the "ASE")
  between November, 1995 and December 14, 1999, at which time it voluntarily delisted
  from the ASE. The Company's stock currently trades on the Over the Counter Bulletin
  Board under the symbol LNXGF.

The following table shows the annual high and low closing prices
  of our stock traded on the OTC Bulletin Board during the last five fiscal years
  as follows:

Year
      High
      Low
      Close2006
      $0.54
      $0.10
      $0.3512005
      $0.35
      $0.12
      $0.192004
      $0.455
      $0.04
      $0.302003
      $0.094
      $0.011
      $0.072002
      $0.14
      $0.01
      $0.013


The following table shows the quarterly high and low closing
  prices of our stock traded on the OTC Bulletin Board during the last two fiscal
  years, for each quarter as follows:

Period
      High
      Low
      Close
      Volume2006 
        Q4 2/28/06
      $0.54
      $0.23
      $0.351
      34,939,979Q3 11/30/05
      0.275
      0.11
      0.236
      9,902,368Q2 8/31/05
      0.17
      0.105
      0.1203
      3,250,142Q1 5/31/05
      0.21
      0.10
      0.125
      5,162,4882005 
        Q4 2/28/05
      $0.35
      $0.12
      $0.19Q3 11/30/04
      0.20
      0.12
      0.185
      6,986,354Q2 8/31/04
      0.24
      0.12
      0.19
      10,631,057Q1 5/31/04
      $0.35
      $0.20
      $0.21
      12,924,7132004 
        Q1 5/31/03
      $0.08
      $0.04
      $0.05
      5,055,400Q2 8/31/03
      $0.10
      $0.04
      $0.077
      9,792,900Q3 11/30/03
      $0.28
      $0.053
      $0.265
      26,849,789Q4 2/29/04
      $0.45
      $0.20
      $0.30
      32,438,989


_________
  all prices in US$

(Information provided by The Over The Counter Bulletin Board.
  The quotations reflect inter-dealer prices, without retail mark-up, markdown,
  or commission and may not represent actual transactions.)

The following table shows the high and low closing prices of
  our stock traded on the OTC Bulletin Board during the most recent six months,
  for each month as follows:

Month
      High*
      Low*2006, May
      0.575
      0.37 36


---

2006, April
      0.50
      0.332006, March
      0.394
      0.322006, February
      0.41
      0.2852006, January
      0.54
      0.332005, December
      0.33
      0.23


_________
  * All prices are in U.S. dollars.

(Information provided by The Over The Counter Bulletin Board.
  The quotations reflect inter-dealer prices, without retail mark-up, markdown,
  or commission and may not represent actual transactions.)

ITEM 10. ADDITIONAL INFORMATION

A. SHARE CAPITAL

Not applicable.

B. MEMORANDUM AND ARTICLES OF ASSOCIATION

The Memorandum and Articles of the Company are incorporated by
  reference to the information in our registration statement on Form 20-F filed
  with the Securities and Exchange Commission, in Washington, D.C. on June 4,
  1999, which became effective August 3, 1999, to which our Articles of Incorporation
  and Memorandum were filed as exhibits.

On March 29, 2004, the new British Columbia Business Corporations
  Act (the "BCA") came into force in British Columbia and replaced the former
  Company Act (Former Act) , which is the statute under which we were
  previously governed. Under the BCA, we have two years within which to transition
  ("Transition") under the new statute. In accordance with the BCA, we cannot
  amend our Articles or Notice of Articles until the Transition to the BCA is
  completed. We filed a transition application with the Registrar of Companies
  British Columbia and completed the Transition on June 11, 2004.

Concurrent with the completion of the Transition, we were required
  in accordance with the BCA to incorporate certain provisions known as the "Pre-Existing
  Company Provisions" (the "Pre-Existing Company Provisions") into our Notice
  of Articles, which replaced the existing Memorandum . The Company is a pre-existing
  company under the BCA (that is, a company in existence at the time the
  BCA came into force). The Pre-Existing Company Provisions provide our company
  with certain default provisions in case certain provisions which are required
  to be included in the Articles under the BCA are not included in our Articles.

We filed our Notice of Articles with the Registrar of Companies
  which contains basic information relating to the Company, including our name,
  the particulars of the directors and the authorized capital. This was a mandatory
  requirement for transition to the BCA.

On August 16, 2004, at the Annual General Meeting of shareholders,
  our shareholders passed a special resolution that the Notice of Articles, once
  filed, be altered to remove the Pre-existing Company Provisions set forth in
  Part 16 of the Regulations to the Business Corporations Act(British
  Columbia); and delete and replace our Articles in their entirety and no longer
  apply to Linux Gold Corp.

The New Articles, among other things, incorporate and amend certain
  of the information required by the Pre-Existing Company Provisions.

Our Incorporation Number is BC0187279. Our Articles do not restrict
  the nature of the business that may be carried on by the Company.

37

---

On June 6, 2006, we registered in the State of Alaska under
  a Certificate of Authority.

C. MATERIAL CONTRACTS

During the past two years ended February 28, 2006 and February
  28, 2005, we entered into the following material contracts.

Property Option Agreement  Peter Tse

Ginyen Recovery Inc. (Ginyen) has a license to
  mine the Bo Luonuo (the BLN Project) District of Hebei Province
  in China. Peter Tse own 100% of Ginyen. Tse granted Linux the sole, exclusive
  and irrevocable option to purchase up to 100% of the rights, title and interest
  in and to 100% of all the outstanding shares of Ginyen, subject to the grant
  of a 5% Net Profits royalty in the BLN Project.

Linux exercised an option as to 25% of the Optioned Shares
  by paying to Tse, $10,000 and issuing 50,000 Linux Shares to Tse and causing
  to be carried out the Phase I mining exploration and/or development work in
  respect of the BLN and expending in connection therewith the total sum of $160,000.

Linux may exercise the option as to a further 35% of the Optioned
  Shares following the completion of the Phase I Program by (i) paying the additional
  sum of $15,000 and issuing a further 50,000 Linux Shares to Tse; and (ii)
  causing to be carried out the Phase II mining exploration and/or development
  work in respect of the BLN Project or such other secondary work program as shall
  be recommended by a qualified engineer or geologist acceptable to the parties
  hereto (the "Phase II Program") and expending in connection therewith the total
  sum of $130,000.

Provided that Linux has previously exercised the 35% Option
  we may exercise the option as to a further 25% of the Optioned Shares following
  the completion of the Phase II Program by (i) paying the additional sum of $15,000
  and issuing a further 50,000 Linux Shares to Tse; and (ii) causing to be carried
  out the Phase III mining exploration and/or development work in respect of the
  BLN Project or such other continuing work program as shall be recommended by
  a qualified engineer or geologist acceptable to the parties hereto (the "Phase
  III Program") and expending in connection therewith the total sum of $210,000.
  Provided that Linux has previously exercised the above mentioned options, we
  may exercise the Option as to the final 5% of the Optioned Shares, following
  the completion of the Phase III Program by (i) issuing a further 50,000 Linux
  Shares to Tse; and (ii) entering into a Royalty Agreement which grants to Tse
  a Net Profits Royalty in the BLN Project.

If and when the option is exercised in full, 100% of all right,
  title and interest in and to the Optioned Shares shall vest in Linux free and
  clear of all charges, encumbrances and claims.

Fish Creek Joint Venture Agreement

On
  March 5, 2002 we announced that a joint venture has been completed for a 50%
  interest in 30 Fish Creek claims in Alaska based on the following terms and
  conditions. Teryl Resources Corp. will issue 200,000 treasury shares of its
  common shares, which shares were issued on December 16, 2002, and will give
  to Linux Gold Corp. a 5% royalty interest until $2,000,000 U.S. has been
  received from the royalty payments. Teryl Resources Corp. may purchase the 5%
  net royalty for $500,000 U.S. within 1 year after production. Teryl also
  agrees to expend a minimum of $500,000 U.S. after three years from the date
  of the agreement.

On
  November 4, 2002, we amended the March 5, 2002 agreement with Teryl Resources
  Corp. We agreed that in consideration for receiving a mining license which was
  not disclosed to us at the time of the March 5, 2002 agreement, both parties
  agreed to grant Linux a back in working interest for a 25% interest in the mining
  lease after Teryl completes the US$500,000 expenditures.

38

---

In
  March 2005, the joint venture agreement was extended until March 5, 2007. Other
  than the extension, all other terms remain the same. Subject to regulatory approval,
  Teryl shall issue 100,000 shares of its common stock to Linux Gold Corp. as
  consideration for the extension.

D. EXCHANGE CONTROLS.

There are no governmental laws, decrees or regulations in
  Canada relating to restrictions on the export of capital affecting the remittance
  of interest, dividends or other payments to nonresident holders of the Registrant's
  shares. Any such remittances, however, are subject to withholding tax. See Item
  10.E, "Taxation".

There are no limitations under the laws of Canada, the Province
  of British Columbia or in the charter or any other constituent documents of
  the Company on the right of foreigners to hold or vote the shares of the Company.
  However, under the provisions of the Investment Canada Act, when control of
  a Canadian business is acquired by a non- Canadian, the transaction may be reviewable
  in certain circumstances by Investment Canada, an agency of the federal government
  of Canada. Reviewable transactions are those in which a non-Canadian acquires
  the assets of a Canadian business or the voting shares of a Canadian corporation
  the value of which assets or shares exceeds $5 million (Canadian). Also,
  certain transactions are specifically exempted from review.

E. TAXATION.

Withholding

Generally, cash dividends paid by Canadian corporations to
  nonresident shareholders are subject to a withholding tax of 25 percent. However,
  pursuant to Article X[2 of the Canada-United States tax treaty, dividends paid
  to a resident if a company of the United States are only subject to a 15 percent
  withholding tax. Further, if the United states resident owns 10 percent or more
  of the voting shares of the Canadian company paying the dividends, the withholding
  tax is reduced to 10 percent. In addition to dividend withholding, interest
  paid to United States residents is subject to a 15 percent withholding tax pursuant
  to Article XI[2 of the Canada-United States tax treaty.

Capital Gains

A nonresident purchaser who holds shares of the Company as
  capital property will not be subject to tax on capital gains realized on the
  disposition of such shares unless such shares are "taxable Canadian property"
  within the meaning of the Income Tax Act (Canada) and no relief is afforded
  under any applicable tax treaty. The shares of the Company would be taxable
  Canadian property of a nonresident purchaser if the nonresident purchaser used
  the shares in carrying on a business in Canada or if at any time during the
  five-year period immediately preceding the disposition not less than 25 percent
  of the issued shares of any class of the Company belonged to the particular
  purchaser, persons with whom the purchaser did not deal at arm's length or any
  combination thereof.

Holders of Common Shares of the Company should seek independent
  advice from their own professional tax advisors with respect to the Canadian
  Income Tax consequences arising from the holding of Common Shares of the Company.

F. DIVIDENDS AND PAYING AGENTS

Not applicable.

G. STATEMENT BY EXPERTS.

39

---

Not applicable.

H. DOCUMENTS ON DISPLAY.

We filed a registration statement on Form 20-F filed the Securities
  and Exchange Commission in Washington, D.C. (Registration No. 000-30084) on
  June 4, 1999, which became effective August 3, 1999. The Registration Statement
  contains exhibits and schedules. Any statement in this annual report about any
  of our contracts or other documents is not necessarily complete. If the contract
  or document is filed as an exhibit to the Registration Statement, the contract
  or document is deemed to modify the description contained in this annual report.
  You must review the exhibits themselves for a complete description of the contract
  or documents.

You may inspect and copy our registration statements, including
  their exhibits and schedules, and the reports and other information we file
  with the Securities and Exchange Commission in accordance with the Exchange
  Act at the public reference facilities maintained by the Securities and Exchange
  Commission at Judiciary Plaza, 450 Fifth Street, Room 1024, N.W., Washington,
  D.C. 20549 and at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
  Illinois 60661. You may also inspect the registration statements, including
  their exhibits and schedules, at the office of the New York Stock Exchange,
  Wall Street, New York, New York 10005. Copies of such material may also be obtained
  from the Public Reference Section of the Securities and Exchange Commission
  at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. You
  may obtain information regarding the Washington D.C. Public Reference Room by
  calling the Securities and Exchange Commission at 1-800-SEC-0330 or by contacting
  the Securities and Exchange Commission over the Internet at its website at http://www.sec.gov.

I. SUBSIDIARY INFORMATION.

We hold a 100% interest in LinuxWizardry, Inc., a private
  Florida corporation which is currently inactive.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
  RISK

In June 1998, the Financial Accounting Standards Board issued
  SFAS No. 133. "Accounting For Derivative Instruments and Hedging Activities."
  This statement establishes accounting and reporting standards for derivative
  instruments, including certain derivative instruments embedded in other contracts,
  and for hedging activities. SFAS No. 133 was effective for our fiscal year beginning
  March 1, 2004. The Company believes that it does not have any material exposure
  to interest or commodity risks. The Company does not own any derivative instruments,
  does not engage in any hedging transactions and does not have any outstanding
  long-term debt. Because we are not involved in any activities covered by SFAS
  No. 133, the adoption of SFAS No. 133 is not expected to have a material effect
  on our financial position or results of operations.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

40

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PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELIQUENCIES

None.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY
  HOLDERS AND USE OF PROCEEDS.

A. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS

None.

B. USE OF PROCEEDS.

Not applicable

ITEM 15. CONTROLS AND PROCEDURES

Based upon the evaluation of the effectiveness of the disclosure
  controls and procedures as of the end of the period covered by this annual report,
  our Chief Executive Officer and Chief Financial Officer have concluded that,
  as of such date, the disclosure controls and procedures were effective to ensure
  that material information relating to the Registrant was made known to others
  within the company particularly during the period in which this annual report
  and accounts were being prepared, and such controls and procedures were effective
  to ensure that information required to be disclosed by the Registrant in the
  reports that it files or submits under regulatory rules and securities laws
  is recorded, processed, summarized and reported, within the time periods specified.
  Management of the Registrant recognizes that any controls and procedures can
  only provide reasonable assurance, and not absolute assurance, of achieving
  the desired control objectives, and management necessarily was required to apply
  its judgement in evaluating the cost-benefit relationship of possible controls
  and procedures.

Changes in Internal Controls over Financial Reporting.

There were no changes in the Registrant's internal controls
  over financial reporting that occurred during the period covered by the annual
  report that has materially affected, or is reasonably likely to materially affect
  our internal control over financial reporting.

ITEM 16. [Reserved]

ITEM 16A. Audit Committee Financial Expert

We do not currently have a financial expert in our audit committee
  due to our relatively small size. In 2006, we had no employees and we relied
  upon the services of a chartered accounting firm in Vancouver, BC, Canada, to
  prepare our interim unaudited quarterly consolidated financial statements. Also,
  we retained the audit services of Smythe Ratcliffe Chartered Accountants to
  perform the audit on our year-end consolidated financial statements.

Moreover, the audit committee is comprised of seasoned business
  professionals, whereby two members have over 25 years of experience in the investment
  business and are board members of several corporations.

41

---

On these bases, we believe that the audit committee has adequate
  resources available to it when financial expertise and advice are necessary.

ITEM 16B. Code of Ethics

We have not adopted a formal written code of ethics given our
  relatively small size, whereby we had no employees in 2006.

Directors are subject to the laws of the Province of British
  Columbia, Canada, whereby they are required to act honestly, in good faith and
  in the best interests of the Company.

ITEM 16C. Principal Accountant Fees and Services

The following table discloses accounting fees and services of
  the Registrant:

(Stated in terms of Canadian dollars)

|                          | 2006        | 2005       
|------------------------- | ----------- | -----------
|Type of Services Rendered | Fiscal Year | Fiscal Year
|                          |             |            
|                          |             |            
|(a) Audit Fees            | US$16,900   | US$16,500  
|                          |             |            
|(b) Audit-Related Fees    | $1,200      | $nil       
|                          |             |            
|(c) Tax Fees              | $870        | $500       
|                          |             |            
|(d) All Other Fees        | $nil        | $nil       

PART III

ITEM 17. FINANCIAL STATEMENTS

The Company has elected to provide financial statements pursuant
  to Item 18.

ITEM 18. FINANCIAL STATEMENTS

Reference is made to Item 19 for a list of all financial statements
  filed as part of this annual report.

Our consolidated financial statements are stated in Canadian
  Dollars (CDN$) and are prepared in accordance with U.S. Generally Accepted Accounting
  Principles (GAAP). The consolidated financial statements as required under Item
  18 are included immediately following the text of this Report.

ITEM 19. EXHIBITS

The following consolidated financial statements, together with
  the report of Smythe Ratcliffe Chartered Accountants on the annual financial
  statements referred to below, are filed as part of this annual report, and are
  included immediately following the text of this 20-F:

42

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Report of Registered Public Accounting Firm 
  Consolidated Balance Sheets
  Consolidated Statements of Loss and Deficit 
  Consolidated Statements of Cash Flows 
  Notes to the Consolidated Financial Statements

Documents filed as exhibits to this annual report:

|Number | Description                                                                                                                                                                                                                                                                                                                                                             |    
|------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---
|       |                                                                                                                                                                                                                                                                                                                                                                         |    
|1.1    | Memorandum and articles of incorporation with
      bylaws dated February 27, 1979                                                                                                                                                                                                                                                                                      | (1)
|1.2    | Altered memorandum and special resolution dated September 20,
      1993 increasing the authorized capital to 100,000,000 common shares from
      90,000,000 and redesignating Class A Common voting shares without
      par value as common shares without par value and redesignating Class B
      Common non-voting shares as common shares without par value | (1)
|1.3    | Altered memorandum and special resolution dated
      March 15, 2000 changing the name of the Company from Flame Petro-Minerals
      Corp. to LinuxWizardry Systems, Inc.                                                                                                                                                                                              |    
|1.4    | Altered memorandum and special resolution dated February 20,
      2003 changing the name of the Company from LinuxWizardry Systems, Inc. to
      Linux Gold Corp.                                                                                                                                                                                                     | (5)
|1.5    | Memorandum and articles of incorporation amended
      effective September 15, 2004                                                                                                                                                                                                                                                                                     | (7)
|2.1    | Specimen copy of Registrants common share certificate                                                                                                                                                                                                                                                                                                                  | (2)
|4.1    | Commitment by John G. Robertson dated July
      16, 1999 to provide financing to the Registrant as required for ongoing
      operations                                                                                                                                                                                                                               | (2)
|4.2    | Share Purchase Agreement dated January 7, 2000 between Flame
      Petro- Minerals Corp. and Mike Carpenter and LinuxWizardry, Inc.                                                                                                                                                                                                                                     | (3)
|4.3    | Purchase order dated May 22, 2000 between LinuxWizardry,
      Inc. and Motorola, Inc., Personal Communications Sector                                                                                                                                                                                                                                                  | (4)
|4.4    | License Agreement dated June 30, 2000 between LinuxWizardry
      Systems, Inc. and LinuxWizardry, Inc. and Lineo, Inc                                                                                                                                                                                                                                                  | (4)
|4.5    | Vendor Agreement dated January 5, 2001 between
      Merrimack Services Corporation d/b/a PC Connection and LinuxWizardry Systems,
      Inc.                                                                                                                                                                                                                           | (4)
|4.6    | Joint Venture Agreement between Linux Gold Corp. and Teryl
      Resources Corp. dated March 5, 2002                                                                                                                                                                                                                                                                    | (5)
|4.7    | Amendment to Joint Venture Agreement between
      Linux Gold Corp. and Teryl Resources Corp. dated November 4, 2002                                                                                                                                                                                                                                                    | (5)
|4.8    | Edward Skoda Purchase Agreement  TY Gold Property                                                                                                                                                                                                                                                                                                                      | (6)
|4.9    | Edward Skoda Purchase Agreement  ORO
      Mineral Claims                                                                                                                                                                                                                                                                                                              | (6)
|4.10   | Property Option Agreement  Peter Tse                                                                                                                                                                                                                                                                                                                                   | (6)
|12.1   | Certification pursuant
      to Title 18, United States Code, Section 1350 as adopted pursuant to Section
      302 of the Sarbanes-Oxley Act of 2002 (John G. Robertson)                                                                                                                                                                                               | (8)
|12.2   | Certification pursuant to Title 18,
      United States Code, Section 1350 as adopted pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002 (Monique van Oord)                                                                                                                                                                                                | (8)

43

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|13.1 | Certification pursuant
      to Title 18, United States Code, Section 1350 as adopted pursuant to Section
      906 of the Sarbanes-Oxley Act of 2002 (John G. Robertson) | (8)
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---
|13.2 | Certification pursuant
      to Title 18, United States Code, Section 1350 as adopted pursuant to Section
      906 of the Sarbanes-Oxley Act of 2002 (Monique van Oord)  | (8)
|14.1 | Consent of Independent Auditors -
      Smythe Ratcliffe LLP                                                                                                              | (8)
|14.2 | Consent
      of Independent Auditors - Manning Elliott LLP                                                                                                               | (8)

| | (1) | incorporated by reference to the Registrants Registration
        Statement on Form 20-F filed on June 4, 1999 with the US Securities and
        Exchange Commission
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | incorporated by reference to the Registrants Amendment
        No. 1 to the Registration Statement dated July 22, 1999                                               
| | (3) | incorporated by reference to the Registrants Annual
        Report on Form 20-F filed on September 14, 2000                                                          
| | (4) | incorporated by reference to the Registrants Annual
        Report on Form 20-F filed on July 14, 2001                                                               
| | (5) | incorporated by reference to the Registrants Annual
        Report on Form 20-F filed on August 25, 2003                                                             
| | (6) | incorporated by reference to the Registrants Annual
        Report on Form 20-F filed on July 19, 2004                                                               
| | (7) | incorporated by reference to the Registrants Annual
        Report on Form 20-F filed on July 19, 2005                                                               
| | (8) | attached hereto.                                                                                                                                                      

44

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SIGNATURE PAGE

The Registrant hereby certifies that it meets all of the requirements for filing
  on Form 20-F and that it has duly caused and authorized the undersigned to sign
  this transitional report on its behalf.

LINUX GOLD CORP.REGISTRANT

|Dated: March
      2, 2007 | By: | /s/ John
      G. Robertson   
|-------------------------- | --- | ------------------------------
|                           |     | John G. Robertson             
|                           |     | Chairman of the Board/Director

45

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|LINUX GOLD CORP.                 
|---------------------------------
|(An Exploration Stage Company)   
|                                 
|CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in Canadian dollars)  
|                                 
|                                 
|                                 
|February 28, 2006 and 2005       

---



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE DIRECTORS AND STOCKHOLDERS OF LINUX GOLD CORP.(An Exploration Stage Company)

We have audited the accompanying consolidated balance sheet of
  Linux Gold Corp. (An Exploration Stage Company) as of February 28, 2006 and
  the related consolidated statements of loss, stockholders' deficiency and cash
  flows for the year then ended. These financial statements are the responsibility
  of the Company's management. Our responsibility is to express an opinion on
  these financial statements based on our audit.

We also have audited the adjustments described in Note 13 that
  were applied to restate the 2005 and 2004 financial statements to correct an
  error. In our opinion, such adjustments are appropriate and have been properly
  applied. We were not engaged to audit, review, or apply any procedures to the
  2005 and 2004 financial statements of the Company other than with respect to
  the adjustments and, accordingly, we do not express an opinion or any other
  form of assurance on the 2005 and 2004 financial statements taken as a whole.

We conducted our audit in accordance with auditing standards
  of the Public Company Accounting Oversight Board (United States of America).
  Those standards require that we plan and perform an audit to obtain reasonable
  assurance whether the financial statements are free of material misstatement.
  An audit includes examining, on a test basis, evidence supporting the amounts
  and disclosures in the financial statements. An audit also includes assessing
  the accounting principles used and significant estimates made by management,
  as well as evaluating the overall financial statement presentation. We believe
  that our audit provides a reasonable basis for our opinion.

In our opinion, based on our audit, the financial statements
  referred to above present fairly, in all material respects, the consolidated
  financial position of the Company as at February 28, 2006 and the consolidated
  results of its operations and its cash flows for the year then ended in conformity
  with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming
  that the Company will continue as a going-concern. As discussed in note 2 to
  the financial statements, the Company has no revenues and limited capital, which
  together raise substantial doubt about its ability to continue as a going-concern.
  Management plans in regard to these matters are also described in note 2. These
  financial statements do not include any adjustments that might result from the
  outcome of this uncertainty.

Smythe Ratcliffe (signed)

Chartered Accountants

Vancouver, Canada
  June 12, 2006



---



**Report of Independent Registered Public Accounting Firm**

To the Stockholders and Board of Directors of
  Linux Gold Corp.

We have audited, before the effects of the adjustments to retrospectively
  apply the change in accounting described in Note 13, the consolidated balance
  sheets of Linux Gold Corp. (An Exploration Stage Company) as at February 28,
  2005 and the consolidated statements of operations and deficit, cash flows and
  stockholders’ equity for the years ended February 28, 2005 and February
  29, 2004 (these consolidated financial statements before the effects of the
  adjustments discussed in Note 13 are not presented herein). These consolidated
  financial statements are the responsibility of the Company’s management.
  Our responsibility is to express an opinion on these consolidated financial
  statements based on our audits.

We conducted our audits in accordance with the standards of
  the Public Company Accounting Oversight Board (United States). Those standards
  require that we plan and perform an audit to obtain reasonable assurance whether
  the financial statements are free of material misstatement. An audit includes
  examining, on a test basis, evidence supporting the amounts and disclosures
  in the financial statements. An audit also includes assessing the accounting
  principles used and significant estimates made by management as well as evaluating
  the overall financial statement presentation. We believe that our audits provide
  a reasonable basis for our opinion.

In our opinion, the financial statements referred to above,
  before the effects of the adjustments to retrospectively apply the change in
  accounting described in Note 13, present fairly, in all material respects, the
  financial position of the Company as at February 28, 2005 and the results of
  its operations and its cash flows for the years ended February 28, 2005 and
  February 29, 2004 in accordance with generally accepted accounting principles
  used in the United States.

The accompanying consolidated financial statements have been
  prepared assuming the Company will continue as a going concern. As discussed
  in Note 1 to the consolidated financial statements, the Company has not generated
  profitable operations since inception. These factors raise substantial doubt
  about the Company’s ability to continue as a going concern. Management’s
  plans in regard to these matters are also discussed in Note 1. These consolidated
  financial statements do not include any adjustments, which might result from
  the outcome of these uncertainties.

We were not engaged to audit, review, or apply any procedures
  to the adjustments to retrospectively apply the change in accounting described
  in Note 13 and, accordingly, we do not express an opinion or any other form
  of assurance about whether such adjustments are appropriate and have been properly
  applied. Those adjustments were audited by Smythe Ratcliffe, Chartered Accountants.

*/s/ “Manning Elliott LLP”*

CHARTERED ACCOUNTANTS
  Vancouver, Canada
  July 15, 2005

---



|LINUX GOLD CORP.               
|-------------------------------
|(An Exploration Stage Company) 
|CONSOLIDATED BALANCE SHEETS    
|(Expressed in Canadian Dollars)

|                                                           |   | February 28 |  
|---------------------------------------------------------- | - | ----------- | -
|                                                           |   | 2006        |  
|                                                           |   |             |  
|ASSETS                                                     |   |             |  
|Current                                                    |   |             |  
|Cash and cash equivalents                                  | $ | 396,049     |  
|Amounts receivable                                         |   | 53,417      |  
|Marketable securities                                      |   | 72,000      |  
|Prepaid expenses and deposits                              |   | 10,999      |  
|Total Current Assets                                       |   | 532,465     |  
|Property and Equipment (Note 4)                            |   | 10,175      |  
|                                                           |   |             |  
|Total Assets                                               | $ | 542,640     |  
|                                                           |   |             |  
|LIABILITIES                                                |   |             |  
|Current                                                    |   |             |  
|Accounts payable                                           | $ | 142,943     |  
|Accrued liabilities                                        |   | 26,643      |  
|Accrued liabilities to related parties
      (Note 6(a))   |   | 88,815      |  
|Due to related parties
      (Note 6(b))                   |   | 204,394     |  
|Total Liabilities                                          |   | 462,795     |  
|                                                           |   |             |  
|Commitments (Note 10)                                      |   |             |  
|                                                           |   |             |  
|STOCKHOLDERS EQUITY                                       |   |             |  
|                                                           |   |             |  
|Common Stock and Paid-in Capital (Note 7)                  |   |             |  
|200,000,000 Shares
      authorized with no par value      |   |             |  
|68,287,773
      Issued and outstanding (2005 64,951,523) |   | 9,005,424   |  
|                                                           |   |             |  
|Donated Capital                                            |   | 295,195     |  
|                                                           |   |             |  
|Accumulated Other Comprehensive Loss                       |   | (8,000      | )
|                                                           |   |             |  
|Deficit Accumulated from Prior Operations                  |   | (7,524,145  | )
|                                                           |   |             |  
|Deficit Accumulated During the Exploration Stage           |   | (1,688,629  | )
|Total Stockholders Equity                                 |   | 79,845      |  
|                                                           |   |             |  
|Total Liabilities and Stockholders Equity                 | $ | 542,640     |  

|Approved by the Directors:
|--------------------------

|J.
      Robertson    |  | J. Lorette         
|----------------------- |  | ---------------------
|J. Robertson  Director |  | J. Lorette  Director

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

F-3

---

|LINUX GOLD CORP.                           
|-------------------------------------------
|(An Exploration Stage Company)             
|CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT
|(Expressed in Canadian Dollars)            

|                                                    |   |              |   |   |              |   |   |              |   |   | Cumulative     |  
|--------------------------------------------------- | - | ------------ | - | - | ------------ | - | - | ------------ | - | - | -------------- | -
|                                                    |   |              |   |   |              |   |   |              |   |   | From Inception |  
|                                                    |   | Years Ended  |   |   | May 1, 2003  |  
|                                                    |   |              |   |   |              |   |   |              |   |   | Through        |  
|                                                    |   | February 28, |   |   | February 28, |   |   | February 29, |   |   | February 28,   |  
|                                                    |   | 2006         |   |   | 2005         |   |   | 2004         |   |   | 2006           |  
|                                                    |   |              |   |   |              |   |   |              |   |   |                |  
|General and Administrative Expenses                 |   |              |   |   |              |   |   |              |   |   |                |  
|Amortization of property                            |   |              |   |   |              |   |   |              |   |   |                |  
|and equipment                                       | $ | 10,686       |   | $ | 5,346        |   | $ |             |   | $ | 16,032         |  
|Consulting and subcontract                          |   | 133,953      |   |   | 233,789      |   |   | 173,555      |   |   | 541,297        |  
|Filing and regulatory fees                          |   | 14,632       |   |   | 26,103       |   |   | 26,113       |   |   | 66,848         |  
|Foreign exchange (recovery)                         |   | 6,407        |   |   | 6,877        |   |   | (38,254      | ) |   | (24,970        | )
|Imputed interest (Note 6(b))                        |   | 31,722       |   |   | 35,013       |   |   | 22,960       |   |   | 89,695         |  
|Management and directors                           |   |              |   |   |              |   |   |              |   |   |                |  
|fees (Note 6(a))                                    |   | 30,000       |   |   | 30,250       |   |   | 34,500       |   |   | 94,750         |  
|Office, rent and telephone                          |   |              |   |   |              |   |   |              |   |   |                |  
|(Note 6(a))                                         |   | 198,856      |   |   | 193,522      |   |   | 61,839       |   |   | 454,217        |  
|Professional fees                                   |   | 54,909       |   |   | 42,235       |   |   | 27,662       |   |   | 124,806        |  
|Travel                                              |   | 23,902       |   |   | 39,750       |   |   | 3,902        |   |   | 67,554         |  
|Less: Interest income                               |   | (4,053       | ) |   | (1,858       | ) |   | (624         | ) |   | (6,535         | )
|                                                    |   | 501,014      |   |   | 611,027      |   |   | 311,653      |   |   | 1,423,694      |  
|                                                    |   |              |   |   |              |   |   |              |   |   |                |  
|Natural Resources                                   |   |              |   |   |              |   |   |              |   |   |                |  
|Exploration costs                                   |   | 309,091      |   |   | 137,342      |   |   | 61,298       |   |   | 507,730        |  
|Mineral acquisition
      costs                     |   | 20,500       |   |   | 45,571       |   |   | 60,346       |   |   | 126,418        |  
|                                                    |   | 329,591      |   |   | 182,913      |   |   | 121,644      |   |   | 634,148        |  
|                                                    |   |              |   |   |              |   |   |              |   |   |                |  
|Loss from Continuing Operations                     |   | (830,605     | ) |   | (793,940     | ) |   | (433,297     | ) |   | (2,057,842     | )
|                                                    |   |              |   |   |              |   |   |              |   |   |                |  
|Income from
      Discontinued Operations (Note 14) |   |             |   |   |             |   |   | 369,213      |   |   | 369,213        |  
|                                                    |   |              |   |   |              |   |   |              |   |   |                |  
|Net Loss for the
      Period                       | $ | (830,605     | ) | $ | (793,940     | ) | $ | (64,084      | ) | $ | (1,688,629     | )
|                                                    |   |              |   |   |              |   |   |              |   |   |                |  
|                                                    |   |              |   |   |              |   |   |              |   |   |                |  
|Net
      Loss Per Share                            |   |              |   |   |              |   |   |              |   |   |                |  
|Continuing
      operations – basic and diluted     | $ | (0.01        | ) | $ | (0.01        | ) | $ | (0.01        | ) |   |                |  
|Discontinued
      operations – basic and diluted   |   | –            |   |   | –            |   |   | 0.01         |   |   |                |  
|Net loss per share
      – basic and diluted        | $ | (0.01        | ) | $ | (0.01        | ) | $ | –            |   |   |                |  
|                                                    |   |              |   |   |              |   |   |              |   |   |                |  
|Weighted Average Number of Common                   |   |              |   |   |              |   |   |              |   |   |                |  
|Shares Outstanding                                  |   | 64,981,000   |   |   | 61,345,000   |   |   | 58,664,000   |   |   |                |  

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

F-4

---

|LINUX GOLD CORP.                                      
|------------------------------------------------------
|(An Exploration Stage Company)                        
|Consolidated Statements of Stockholders Deficiency   
|Period from Inception May 1, 2004 to February 28, 2006
|(Expressed in Canadian Dollars)                       

|                                         |  |              |  |   |           |  |   |                 |  |   |             |   |   | Deficit     |   |   |               |   |   |               |  
|---------------------------------------- |  | ------------ |  | - | --------- |  | - | --------------- |  | - | ----------- | - | - | ----------- | - | - | ------------- | - | - | ------------- | -
|                                         |  |              |  |   | Common    |  |   |                 |  |   | Deficit     |   |   | Accumulated |   |   |               |   |   |               |  
|                                         |  | Shares of    |  |   | Stock and |  |   |                 |  |   | Accumulated |   |   | During the  |   |   | Other         |   |   | Total         |  
|                                         |  | Common Stock |  |   | Paid-in   |  |   |                 |  |   | from Prior  |   |   | Exploration |   |   | Comprehensive |   |   | Stockholders |  
|                                         |  | Issued       |  |   | Capital   |  |   | Donated Capital |  |   | Operations  |   |   | Stage       |   |   | Income (Loss) |   |   | Deficiency    |  
|                                         |  |              |  |   |           |  |   |                 |  |   |             |   |   |             |   |   |               |   |   |               |  
|Balance from prior operations,           |  |              |  |   |           |  |   |                 |  |   |             |   |   |             |   |   |               |   |   |               |  
|March 1, 2003                            |  | 57,458,413   |  | $ | 6,804,412 |  | $ | 205,500         |  | $ | (7,524,145  | ) | $ |            |   | $ |              |   | $ | (514,233      | )
|Common stock issued for mineral property |  | 175,000      |  |   | 17,500    |  |   |                |  |   |            |   |   |            |   |   |              |   |   | 17,500        |  
|Common stock issued for services         |  | 1,000,000    |  |   | 100,000   |  |   |                |  |   |            |   |   |            |   |   |              |   |   | 100,000       |  
|Common stock issued for settlement of    |  |              |  |   |           |  |   |                 |  |   |             |   |   |             |   |   |               |   |   |               |  
|rent obligation                          |  | 200,000      |  |   | 19,200    |  |   |                |  |   |            |   |   |            |   |   |              |   |   | 19,200        |  
|Options exercised                        |  | 150,000      |  |   | 19,812    |  |   |                |  |   |            |   |   |            |   |   |              |   |   | 19,812        |  
|Warrants exercised                       |  | 1,300,000    |  |   | 280,922   |  |   |                |  |   |            |   |   |            |   |   |              |   |   | 280,922       |  
|Imputed interest                         |  |             |  |   |          |  |   | 22,960          |  |   |            |   |   |            |   |   |              |   |   | 22,960        |  
|Marketable securities adjustment         |  |             |  |   |          |  |   |                |  |   |            |   |   |            |   |   | 44,000        |   |   | 44,000        |  
|Net loss for period                      |  |             |  |   |          |  |   |                |  |   |            |   |   | (64,084     | ) |   |              |   |   | (64,084       | )
|                                         |  |              |  |   |           |  |   |                 |  |   |             |   |   |             |   |   |               |   |   |               |  
|Balance, February 29, 2004               |  | 60,283,413   |  |   | 7,241,846 |  |   | 228,460         |  |   | (7,524,145  | ) |   | (64,084     | ) |   | 44,000        |   |   | (73,923       | )
|Common stock issued for mineral property |  | 125,000      |  |   | 45,384    |  |   |                |  |   |            |   |   |            |   |   |              |   |   | 45,384        |  
|Common stock issued for cash             |  | 4,205,610    |  |   | 860,089   |  |   |                |  |   |            |   |   |            |   |   |              |   |   | 860,089       |  
|Options exercised                        |  | 87,500       |  |   | 10,606    |  |   |                |  |   |            |   |   |            |   |   |              |   |   | 10,606        |  
|Warrants exercised                       |  | 250,000      |  |   | 37,500    |  |   |                |  |   |            |   |   |            |   |   |              |   |   | 37,500        |  
|Imputed interest                         |  |             |  |   |          |  |   | 35,013          |  |   |            |   |   |            |   |   |              |   |   | 35,013        |  
|Stock based-compensation                 |  |             |  |   | 82,000    |  |   |                |  |   |            |   |   |            |   |   |              |   |   | 82,000        |  
|Marketable securities adjustment         |  |             |  |   |          |  |   |                |  |   |            |   |   |            |   |   | (54,000       | ) |   | (54,000       | )
|Net loss for year                        |  |             |  |   |          |  |   |                |  |   |            |   |   | (793,940    | ) |   |              |   |   | (793,940      | )
|                                         |  |              |  |   |           |  |   |                 |  |   |             |   |   |             |   |   |               |   |   |               |  
|Balance, February
      28, 2005         |  | 64,951,523   |  | $ | 8,277,425 |  | $ | 263,473         |  | $ | (7,524,145  | ) | $ | (858,024    | ) | $ | (10,000       | ) | $ | 148,729       |  

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

F-5

---

|LINUX GOLD CORP.                                                     
|---------------------------------------------------------------------
|(An Exploration Stage Company)                                       
|Consolidated Statements of Stockholders Deficiency
      (Continued)
|Period from Inception May 1, 2004 to February 28, 2006               
|(Expressed in Canadian Dollars)                                      

|                                         |  |              |  |   |           |  |   |                 |  |   |             |   |   | Deficit     |   |   |               |   |   |               |  
|---------------------------------------- |  | ------------ |  | - | --------- |  | - | --------------- |  | - | ----------- | - | - | ----------- | - | - | ------------- | - | - | ------------- | -
|                                         |  |              |  |   | Common    |  |   |                 |  |   | Deficit     |   |   | Accumulated |   |   |               |   |   |               |  
|                                         |  | Shares of    |  |   | Stock and |  |   |                 |  |   | Accumulated |   |   | During the  |   |   | Other         |   |   | Total         |  
|                                         |  | Common Stock |  |   | Paid-in   |  |   |                 |  |   | from Prior  |   |   | Exploration |   |   | Comprehensive |   |   | Stockholders |  
|                                         |  | Issued       |  |   | Capital   |  |   | Donated Capital |  |   | Operations  |   |   | Stage       |   |   | Income (Loss) |   |   | Deficiency    |  
|                                         |  |              |  |   |           |  |   |                 |  |   |             |   |   |             |   |   |               |   |   |               |  
|Balance, February 28, 2005               |  | 64,951,523   |  | $ | 8,277,425 |  | $ | 263,473         |  | $ | (7,524,145  | ) | $ | (858,024    | ) | $ | (10,000       | ) | $ | 148,729       |  
|Common stock issued for mineral property |  | 50,000       |  |   | 20,500    |  |   |                |  |   |            |   |   |            |   |   |              |   |   | 20,500        |  
|Common stock issued for cash             |  | 3,100,000    |  |   | 672,556   |  |   |                |  |   |            |   |   |            |   |   |              |   |   | 672,556       |  
|Options exercised                        |  | 93,750       |  |   | 10,838    |  |   |                |  |   |            |   |   |            |   |   |              |   |   | 10,838        |  
|Warrants exercised                       |  | 92,500       |  |   | 21,825    |  |   |                |  |   |            |   |   |            |   |   |              |   |   | 21,825        |  
|Imputed interest                         |  |             |  |   |          |  |   | 31,722          |  |   |            |   |   |            |   |   |              |   |   | 31,722        |  
|Stock based-compensation                 |  |             |  |   | 2,280     |  |   |                |  |   |            |   |   |            |   |   |              |   |   | 2,280         |  
|Marketable securities adjustment         |  |             |  |   |          |  |   |                |  |   |            |   |   |            |   |   | 2,000         |   |   | 2,000         |  
|Net loss for year                        |  |             |  |   |          |  |   |                |  |   |            |   |   | (830,605    | ) |   |              |   |   | (830,605      | )
|                                         |  |              |  |   |           |  |   |                 |  |   |             |   |   |             |   |   |               |   |   |               |  
|Balance, February 28, 2006               |  | 68,287,773   |  | $ | 9,005,424 |  | $ | 295,195         |  | $ | (7,524,145  | ) | $ | (1,688,629  | ) | $ | (8,000        | ) | $ | 79,845        |  

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

F-6

---

|LINUX GOLD CORP.                     
|-------------------------------------
|(An Exploration Stage Company)       
|CONSOLIDATED STATEMENTS OF CASH FLOWS
|(Expressed in Canadian Dollars)      

|                                            |   |              |   |   |              |   |   |              |   |  | Cumulative     |  
|------------------------------------------- | - | ------------ | - | - | ------------ | - | - | ------------ | - |  | -------------- | -
|                                            |   |              |   |   |              |   |   |              |   |  | From Inception |  
|                                            |   | Years Ended  |   |   | May 1, 2003  |  
|                                            |   |              |   |   |              |   |   |              |   |  | Through        |  
|                                            |   | February 28, |   |   | February 28, |   |   | February 29, |   |  | February 28,   |  
|                                            |   | 2006         |   |   | 2005         |   |   | 2004         |   |  | 2006           |  
|                                            |   |              |   |   |              |   |   |              |   |  |                |  
|Cash Flows Used In Operating Activities     |   |              |   |   |              |   |   |              |   | 
|Net loss
      for the period               | $ | (830,605     | ) | $ | (793,940     | ) | $ | (64,084      | ) |  | (1,688,629     | )
|                                            |   |              |   |   |              |   |   |              |   |  |                |  
|Items not involving cash                    |   |              |   |   |              |   |   |              |   |  |                |  
|Amortization of property                    |   |              |   |   |              |   |   |              |   |  |                |  
|and
      equipment                         |   | 10,686       |   |   | 5,346        |   |   |             |   |  | 16,032         |  
|Imputed interest                            |   | 31,722       |   |   | 35,013       |   |   | 22,960       |   |  | 89,695         |  
|Stock-based
      compensation              |   | 2,280        |   |   | 82,000       |   |   |             |   |  | 84,280         |  
|Shares issued for services                  |   | 20,000       |   |   |             |   |   | 100,000      |   |  | 120,000        |  
|Shares issued
      for mineral             |   |              |   |   |              |   |   |              |   |  |                |  
|properties                                  |   | 20,500       |   |   | 22,000       |   |   | 17,500       |   |  | 60,000         |  
|Shares issued
      for settlement of       |   |              |   |   |              |   |   |              |   |  |                |  
|rent obligation                             |   |             |   |   |             |   |   | 19,200       |   |  | 19,200         |  
|Write-off
      of subsidiarys             |   |              |   |   |              |   |   |              |   |  |                |  
|accounts payable                            |   |             |   |   |             |   |   | (369,213     | ) |  | (369,213       | )
|                                            |   | (745,416     | ) |   | (649,581     | ) |   | (273,637     | ) |  | (1,668,634     | )
|Changes in non-cash working capital         |   |              |   |   |              |   |   |              |   |  |                |  
|Accounts
      receivable                   |   | (3,867       | ) |   | (41,981      | ) |   | (5,986       | ) |  | (51,834        | )
|Prepaid expenses                            |   | (4,799       | ) |   | 27,009       |   |   | (33,209      | ) |  | (10,999        | )
|Accounts
      payable and                  |   |              |   |   |              |   |   |              |   |  |                |  
|accrued liabilities                         |   | 36,323       |   |   | 3,359        |   |   | (55,777      | ) |  | (16,095        | )
|Accrued liabilities
      to related        |   |              |   |   |              |   |   |              |   |  |                |  
|parties                                     |   | 14,255       |   |   | 38,560       |   |   | 36,000       |   |  | 88,815         |  
|Advances
      from (repayments             |   |              |   |   |              |   |   |              |   |  |                |  
|to) related parties                         |   |             |   |   | (42,474      | ) |   | 178,574      |   |  | 136,100        |  
|                                            |   | 41,912       |   |   | (15,527      | ) |   | 119,602      |   |  | 145,987        |  
|Cash Used in Operating Activities           |   | (703,504     | ) |   | (665,108     | ) |   | (154,035     | ) |  | (1,522,647     | )
|                                            |   |              |   |   |              |   |   |              |   |  |                |  
|Cash Flows Used In Investing Activities     |   |              |   |   |              |   |   |              |   | 
|Purchase
      of property and              |   |              |   |   |              |   |   |              |   |  |                |  
|equipment                                   |   | (337         | ) |   | (19,871      | ) |   | (6,000       | ) |  | (26,208        | )
|                                            |   |              |   |   |              |   |   |              |   |  |                |  
|Cash Flows Provided By Financing Activities |   |              |   |   |              |   |   |              |   | 
|Advances
      from related parties         |   | 16,238       |   |   |             |   |   |             |   |  | 16,238         |  
|Private placement costs                     |   | (42,571      | ) |   |             |   |   |             |   |  | (42,571        | )
|Proceeds
      from sale of                 |   |              |   |   |              |   |   |              |   |  |                |  
|common stock                                |   | 727,790      |   |   | 931,580      |   |   | 300,733      |   |  | 1,960,103      |  
|                                            |   | 701,457      |   |   | 931,580      |   |   | 300,733      |   |  | 1,933,770      |  
|                                            |   |              |   |   |              |   |   |              |   |  |                |  
|(Decrease) Increase in Cash and             |   |              |   |   |              |   |   |              |   |  |                |  
|Cash Equivalents                            |   | (2,384       | ) |   | 246,601      |   |   | 140,698      |   |  | 384,915        |  
|                                            |   |              |   |   |              |   |   |              |   |  |                |  
|Cash and Cash Equivalents,                  |   |              |   |   |              |   |   |              |   |  |                |  
|Beginning of Period                         |   | 398,433      |   |   | 151,832      |   |   | 11,134       |   |  | 11,134         |  
|                                            |   |              |   |   |              |   |   |              |   |  |                |  
|Cash and Cash Equivalents,                  |   |              |   |   |              |   |   |              |   |  |                |  
|End
      of Period                         | $ | 396,049      |   | $ | 398,433      |   | $ | 151,832      |   |  | 396,049        |  

NON-CASH FINANCING AND INVESTING ACTIVITIES (Note 11)

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

F-7

---

|LINUX GOLD CORP.                          
|------------------------------------------
|(An Exploration Stage Company)            
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                          
|February 28, 2006 and 2005                
|(Expressed in Canadian Dollars)           

|1. | NATURE OF OPERATIONS AND CONTINUANCE OF
        BUSINESS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The Company was incorporated February 27,
        1979 in Canada under the British Columbia Company Act and was extraprovincially
        registered in the province of Alberta on October 12, 1995.                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The Company voluntarily delisted from the
        Canadian Venture Exchange on December 14, 1999. The Companys stock
        currently trades on the Over the Counter Bulletin Board in the United
        States under the symbol LNXGF.                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | On February 20, 2003, the shareholders approved
        a change of name to Linux Gold Corp. and increased the authorized share
        capital to 200,000,000 common shares without par value. The Company had
        been previously pursuing various business opportunities and, elective
        March 1, 2003, the Company changed its principal operations to mineral
        exploration. Accordingly, as of March 1, 2003, the Company is considered
        an exploration stage company.                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|2. | GOING-CONCERN                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | These consolidated financial statements have
        been prepared by management on the basis of generally accepted accounting
        principles applicable to a going-concern, which assumes the
        Company will continue in operation for the foreseeable future and will
        be able to realize its assets and discharge its liabilities in the normal
        course of operations.                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The Company has an accumulated deficit during
        the exploration stage of $1,688,629 and total since inception of $9,133,381,
        has not yet commenced revenue-producing operations, and has significant
        expenditure requirements to continue to advance its exploration and development
        activities.                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | These consolidated financial statements do
        not reflect adjustments that would be necessary if the going-concern assumption
        were not appropriate because management believes that the actions already
        taken or planned will mitigate the adverse conditions and events, which
        raise doubts about the validity of the going-concern assumption used in
        preparing these consolidated financial statements. Management intends
        to raise additional capital through share issuances to finance operations
        and invest in other business opportunities.                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | If the going-concern assumption were not appropriate
        for these consolidated financial statements, then adjustments would be
        necessary to the carrying values of the assets and liabilities, the reported
        revenues and expenses, and the balance sheet classifications used.                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The continuation of the Company as a going-concern
        is dependent upon the continued financial support from its shareholders,
        the ability of the Company to obtain necessary equity financing to continue
        operations and to determine the existence, discovery and successful exploitation
        of economically recoverable reserves in its resource properties, confirmation
        of the Companys interest in the underlying properties, and the attainment
        of profitable operations. These consolidated financial statements have
        been prepared on a going-concern basis.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|3. | SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

F-8

---

|LINUX GOLD CORP.                          
|------------------------------------------
|(An Exploration Stage Company)            
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                          
|February 28, 2006 and 2005                
|(Expressed in Canadian Dollars)           

|3. | SIGNIFICANT ACCOUNTING POLICIES(Continued)
|-- | ------------------------------------------
|   |                                           
|   | c)                                        
|   |                                           
|   |                                           
|   |                                           
|   | d)                                        
|   |                                           
|   |                                           
|   |                                           
|   | e)                                        
|   |                                           
|   |                                           
|   |                                           
|   | f)                                        
|   |                                           
|   |                                           
|   |                                           
|   |                                           

| |                                 |              | Years Ended  |             
| | ------------------------------- | ------------ | ------------ | ------------
| |                                 | February 28, | February 28, | February 29,
| |                                 | 2006         | 2005         | 2004        
| |                                 |              |              |             
| | Risk-free interest rate         | N/A          | 3.38%        | 5.80%       
| | Expected volatility             | N/A          | 154%         | 50%         
| | Expected dividends              | N/A          |             |            
| | Expected option life (in years) | N/A          | 3            | 0.50        

F-9

---

|LINUX GOLD CORP.                          
|------------------------------------------
|(An Exploration Stage Company)            
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                          
|February 28, 2006 and 2005                
|(Expressed in Canadian Dollars)           

|3. | SIGNIFICANT ACCOUNTING POLICIES(Continued)
|-- | ------------------------------------------
|   |                                           
|   | f)                                        
|   |                                           
|   |                                           

| |                                                                    |              | Years Ended         |              
| | ------------------------------------------------------------------ | ------------ | ------------------- | -------------
| |                                                                    | February 28, | February 28,        | February 29, 
| |                                                                    | 2006         | 2005
      restated | 2004 restated
| |                                                                    |              |                     |              
| | Net loss  as reported                                             | $ (830,605)  | $ (793,940)         | $ (64,084)   
| | Add: Stock-based compensation expense included in net loss
      - |              |                     |              
| | as reported                                                        | N/A          | 82,000              |             
| | Deduct: Stock-based compensation expense determined                |              |                     |              
| | under fair value method                                            | N/A          | (96,000)            | (9,186)      
| |                                                                    |              |                     |              
| | Net loss  pro forma                                               | $ (830,605)  | $ (807,940)         | $ (73,270)   
| |                                                                    |              |                     |              
| | Net loss per share (basic and diluted) 
      as reported         | $ (0.01)     | $ (0.01)            |             
| | Net loss per share (basic and diluted)  pro forma                 | $ (0.01)     | $ (0.01)            |             

| | g) | Exploration Expenditures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | The Company is in the exploration stage of developing
        its mineral properties and has not yet determined whether these properties
        contain ore reserves that are economically recoverable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | Exploration expenses incurred prior to determination
        of the feasibility of a mining operation and administrative expenses are
        expensed as incurred. Mineral property acquisition costs and exploration
        and development expenditures incurred subsequent to the determination
        of the feasibility of a mining operation are deferred until the property
        is placed into production, sold, allowed to lapse or abandoned. Acquisition
        costs include cash and the fair market value of common shares. These capitalized
        costs will be amortized over the estimated life of the property following
        commencement of commercial production or written off if the property is
        sold, allowed to lapse or abandoned, or when an impairment of value has
        occurred.                                                                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | Ownership in mineral interests involves certain inherent
        risks due to the difficulties of determining the validity of certain claims
        as well as the potential for problems arising from the frequent, ambiguous
        conveyance history characteristic of mineral interests. The Company has
        investigated ownership of its mineral interests, and to the best of its
        knowledge, ownership of its interests is in good standing.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | h) | Cash and Cash Equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | The Company considers all highly liquid instruments
        with a maturity of three months or less at the time of issuance to be
        cash equivalents.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | i) | Assets Retirement Obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | The basis of this policy is the recognition of a legal
        liability for obligations related to the retirement of property, plant
        and equipment and obligations arising from the acquisition, construction,
        development or normal operations of those assets. Such asset retirement
        costs must be recognized at fair value when a reasonable estimate of fair
        value can be estimated in the period in which the liability is incurred.
        A corresponding increase to the carrying amount of the related asset,
        when one is identifiable, is recorded and amortized over the life of the
        asset. Where a related future value is not easily identifiable with a
        liability, the change in fair value over the course of the year is expensed.
        The amount of the liability is subject to re- measurement at each reporting
        period. The estimates are based principally on legal and regulatory requirements.

F-10

---

|LINUX GOLD CORP.                          
|------------------------------------------
|(An Exploration Stage Company)            
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                          
|February 28, 2006 and 2005                
|(Expressed in Canadian Dollars)           

|3. | SIGNIFICANT ACCOUNTING POLICIES(Continued)
|-- | ------------------------------------------
|   |                                           
|   | i)                                        
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   | j)                                        
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   | k)                                        
|   |                                           
|   |                                           
|   |                                           
|   | l)                                        
|   |                                           
|   |                                           

F-11

---

|LINUX GOLD CORP.                          
|------------------------------------------
|(An Exploration Stage Company)            
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                          
|February 28, 2006 and 2005                
|(Expressed in Canadian Dollars)           

|3. | SIGNIFICANT ACCOUNTING POLICIES(Continued)
|-- | ------------------------------------------
|   |                                           
|   | m)                                        
|   |                                           
|   |                                           
|   |                                           
|   | n)                                        
|   |                                           
|   |                                           

| |                                               |   |              |   |   | Years Ended   |   |   |               |  
| | --------------------------------------------- | - | ------------ | - | - | ------------- | - | - | ------------- | -
| |                                               |   | February 28, |   |   | February 28,  |   |   | February 29,  |  
| |                                               |   | 2006         |   |   | 2005 restated |   |   | 2004 restated |  
| | Net loss for the year                         | $ | (830,605     | ) | $ | (793,940      | ) | $ | (64,084       | )
| |                                               |   |              |   |   |               |   |   |               |  
| | Other comprehensive income (loss)             |   |              |   |   |               |   |   |               |  
| | Unrealized holding gain (loss) on investments |   | 2,000        |   |   | (54,000       | ) |   | 34,000        |  
| | Comprehensive loss for the year               | $ | (828,605     | ) | $ | (847,940      | ) | $ | (30,084       | )

| | o) | Property and Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    | Property and equipment consists of office furniture,
        computer equipment and vehicle, which are recorded at cost. Office furniture
        is amortized on a declining-balance basis at 20% per annum, computer equipment
        is amortized on a straight-line basis over three years, and the vehicle
        is amortized on a declining-balance basis at 30% per annum.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | p) | Recent Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    | In December 2004, the Financial Accounting Standards
        Board (FASB) issued SFAS No. 153, Exchanges of Non-monetary
        Assets - An Amendment of APB Opinion No. 29. The guidance in
        APB Opinion No. 29, Accounting for Non-monetary Transactions,
        is based on the principle that exchanges of non-monetary assets should
        be measured based on the fair value of the assets exchanged. The guidance
        in that Opinion, however, included certain exceptions to that principle.
        SFAS No. 153 amends APB Opinion No. 29 to eliminate the exception for
        non-monetary exchanges of similar productive assets and replaces it with
        a general exception for exchanges of non-monetary assets that do not have
        commercial substance. A non- monetary exchange has commercial substance
        if the future cash flows of the entity are expected to change significantly
        as a result of the exchange. The provisions of SFAS No. 153 are effective
        for non-monetary asset exchanges occurring in fiscal periods beginning
        after June 15, 2005. Early application is permitted and companies must
        apply the standard prospectively. The adoption of this standard is not
        expected to have a material effect on the Companys results of operations
        or financial position.

F-12

---

|LINUX GOLD CORP.                          
|------------------------------------------
|(An Exploration Stage Company)            
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                          
|February 28, 2006 and 2005                
|(Expressed in Canadian Dollars)           

|3. | SIGNIFICANT ACCOUNTING POLICIES(Continued)
|-- | ------------------------------------------
|   |                                           
|   | p)                                        
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|4. | PROPERTY AND EQUIPMENT                    

| |                   |          | February 28, 2006 |             
| | ----------------- | -------- | ----------------- | ------------
| |                   |          | Accumulated       | Net Carrying
| |                   | Cost     | Amortization      | Value       
| |                   |          |                   |             
| | Computer hardware | $ 25,358 | $ 25,358          | $          
| | Office furniture  | 1,408    | 898               | 510         
| | Vehicle           | 15,531   | 5,866             | 9,665       
| |                   |          |                   |             
| |                   | $ 42,297 | $ 32,122          | $ 10,175    

F-13

---

|LINUX GOLD CORP.                          
|------------------------------------------
|(An Exploration Stage Company)            
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                          
|February 28, 2006 and 2005                
|(Expressed in Canadian Dollars)           

|4. | PROPERTY AND EQUIPMENT (Continued)
|-- | ----------------------------------

| |                   |          | February 28, 2005 |             
| | ----------------- | -------- | ----------------- | ------------
| |                   |          | Accumulated       | Net Carrying
| |                   | Cost     | Amortization      | Value       
| |                   |          |                   |             
| |                   |          |                   |             
| | Computer hardware | $ 25,021 | $ 18,323          | $ 6,698     
| | Office furniture  | 1,408    | 782               | 626         
| | Vehicle           | 15,531   | 2,330             | 13,201      
| |                   |          |                   |             
| |                   |          |                   |             
| |                   | $ 41,960 | $ 21,435          | $ 20,525    

|5. | MINERAL PROPERTIES
|-- | ------------------

| |                                    |           | February 28, 2006 |      
| | ---------------------------------- | --------- | ----------------- | -----
| |                                    |           | British           |      
| |                                    | Alaska    | Columbia          | China
| |                                    |           |                   |      
| | Acquisition costs:                 | $        | $ 20,500          | $   
| |                                    |           |                   |      
| | Exploration and development costs: |           |                   |      
| | Staking and recording fees         | 33,938    |                   |     
| | Geological consulting              | 229,442   | 3,875             |     
| | Transportation                     | 41,836    |                  |     
| |                                    |           |                   |      
| | Incurred during the year           | $ 305,216 | $ 24,375          | $   

| |                                    |         | February 28, 2005 |          
| | ---------------------------------- | ------- | ----------------- | ---------
| |                                    |         | British           |          
| |                                    | Alaska  | Columbia          | China    
| |                                    |         |                   |          
| | Acquisition costs:                 | $ 1,023 | $ 16,385          | $ 39,000 
| |                                    |         |                   |          
| | Exploration and development costs: |         |                   |          
| | Field supplies and other           | 99      |                  | 5,901    
| | Assaying                           |        | 1,059             | 7,603    
| | Staking and recording fees         | 2,264   | 4,066             | 26,602   
| | Geological consulting              |        | 4,560             | 46,555   
| | Transportation                     |        |                  | 27,796   
| |                                    |         |                   |          
| | Incurred during the year           | $ 3,386 | $ 26,070          | $ 153,457

F-14

---

|LINUX GOLD CORP.                          
|------------------------------------------
|(An Exploration Stage Company)            
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                          
|February 28, 2006 and 2005                
|(Expressed in Canadian Dollars)           

|5. | MINERAL PROPERTIES(Continued)
|-- | -----------------------------
|   |                              
|   | a)                           
|   |                              
|   |                              
|   |                              
|   |                              
|   |                              
|   | b)                           
|   |                              
|   |                              
|   |                              
|   |                              
|   |                              
|   |                              
|   |                              
|   |                              
|   |                              
|   |                              
|   |                              
|   |                              
|   |                              
|   |                              
|   |                              
|   |                              
|   |                              
|   |                              
|   |                              
|   | c)                           
|   |                              
|   |                              
|   |                              
|   |                              
|   |                              
|   |                              

F-15

---

|LINUX GOLD CORP.                          
|------------------------------------------
|(An Exploration Stage Company)            
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                          
|February 28, 2006 and 2005                
|(Expressed in Canadian Dollars)           

|5. | MINERAL PROPERTIES(Continued)
|-- | -----------------------------
|   |                              
|   |                              
|   |                              
|   |                              

|6. | RELATED PARTY TRANSACTIONS
|-- | --------------------------
|   |                           
|   | a)                        
|   |                           
|   |                           
|   |                           
|   |                           
|   |                           
|   |                           
|   |                           
|   |                           
|   |                           
|   |                           
|   |                           
|   | b)                        

| |                                   |   | February 28, |   |   | Advances     |   |   | February 28, |  
| | --------------------------------- | - | ------------ | - | - | ------------ | - | - | ------------ | -
| |                                   |   | 2005         |   |   | (Repayments) |   |   | 2006         |  
| |                                   |   |              |   |   |              |   |   |              |  
| | Access Information Services, Inc. | $ | 48,287       |   | $ |             |   | $ | 48,287       |  
| | IAS Communications Inc.           |   | (3,151       | ) |   |             |   |   | (3,151       | )
| | JGR Petroleum, Inc.               |   | 64,599       |   |   | 1,500        |   |   | 66,099       |  
| | J. Robertson, President and CEO   |   |             |   |   | 3,029        |   |   | 3,029        |  
| | Rainbow Network                   |   | 59,801       |   |   | 8,809        |   |   | 68,610       |  
| | Reg Technologies Inc.             |   |             |   |   |             |   |   |             |  
| | REGI U.S., Inc.                   |   | (38          | ) |   |             |   |   | (38          | )
| | SMR Investments Ltd.              |   | 18,658       |   |   | (37,316      | ) |   | (18,658      | )
| | Teryl Resources Corp.             |   |             |   |   | 40,215       |   |   | 40,216       |  
| |                                   |   |              |   |   |              |   |   |              |  
| |                                   | $ | 188,156      |   | $ | 16,237       |   | $ | 204,394      |  

F-16

---

|LINUX GOLD CORP.                          
|------------------------------------------
|(An Exploration Stage Company)            
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                          
|February 28, 2006 and 2005                
|(Expressed in Canadian Dollars)           

|7. | COMMON STOCK                                                                                 
|-- | ---------------------------------------------------------------------------------------------
|   |                                                                                              
|   | a)                                                                                           
|   |                                                                                              
|   | b)                                                                                           
|   |                                                                                              
|   | c)                                                                                           
|   |                                                                                              
|   | d)                                                                                           
|   |                                                                                              
|   | e)                                                                                           
|   |                                                                                              
|   | f)                                                                                           
|   |                                                                                              
|8. | WARRANTS                                                                                     
|   |                                                                                              
|   | A summary of the changes in the Companys
        share purchase warrants is presented below:

| |                            | February 28, 2006 |                | February 28, 2005
| | -------------------------- | ----------------- | -------------- | -----------------
| |                            |                   | Weighted       |                  
| |                            |                   | Average        |                  
| |                            | Number            | Exercise Price |                  
| |                            |                   |                |                  
| | Balance, beginning of year | 3,563,527         | US$ 0.21       |                  
| | Granted                    | 1,500,000         | US$ 0.25       |                  
| | Exercised                  | (92,500)          | US$ 0.20       |                  
| | Forfeited / Expired        | (160,000)         | US$
      0.23 |                  
| |                            |                   |                |                  
| | Balance, end of year       | 4,811,027         | US$
      0.20 |                  

As at February 28, 2006, the following
  share purchase warrants were outstanding:

| |                                     | Exercise      | Years Ended
| | ----------------------------------- | ------------- | -----------
| |                                     | Price         | 2006       
| |                                     |               |            
| | October 18, 2005                    | $ 0.20        | 0          
| | July 6, 2006                        | $ 0.07        | 0          
| | November 18, 2005/2006              | $ 0.20/$ 0.25 | 533,250    
| | December 6, 2006                    | $ 0.18        | 2,777,777  
| | February 21, 2007/February 21, 2008 | $ 0.25/$ 0.30 | 1,500,000  
| |                                     |               | 4,811,027  

F-17

---

|LINUX GOLD CORP.                          
|------------------------------------------
|(An Exploration Stage Company)            
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                          
|February 28, 2006 and 2005                
|(Expressed in Canadian Dollars)           

|9. | STOCK OPTIONS
|-- | -------------

The Company has a stock option plan to
  issue up to 10% of the issued common shares to certain directors and employees.
  A summary of the changes in the Companys common share purchase options
  is presented below:

| |                            | February 28, 2006 |                | February 28, 2005
| | -------------------------- | ----------------- | -------------- | -----------------
| |                            |                   | Weighted       |                  
| |                            |                   | Average        |                  
| |                            |                   | Exercise       |                  
| |                            | Number            | Price          |                  
| |                            |                   |                |                  
| | Balance, beginning of year | 3,587,500         | US$ 0.11       |                  
| | Granted                    |                  |               |                  
| | Exercised                  | (93,750)          | US$ 0.10       |                  
| | Forfeited / Expired        | (1,050,000)       | US$
      0.20 |                  
| |                            |                   |                |                  
| | Balance, end of year       | 2,443,750         | US$
      0.13 |                  

Additional information regarding options
  outstanding as at February 28, 2006 is as follows:

| |                   |           | Outstanding        |          |  | Exercisable
| | ----------------- | --------- | ------------------ | -------- |  | -----------
| |                   |           | Weighted           |          |  |            
| |                   |           | average            | Weighted |  |            
| |                   |           | remaining          | average  |  |            
| |                   | Number of | contractual        | exercise |  | Number of  
| | Exercise price    | shares    | life
      (years) | price    |  | shares     
| |                   |           |                    |          |  |            
| | US$ 0.00  $ 0.10 | 1,893,750 | 2.27               | US$ 0.10 |  | 1,893,750  
| | US$ 0.11  $ 0.20 | 325,000   | 2.21               | US$ 0.18 |  | 325,000    
| | US$ 0.21  $ 0.30 | 225,000   | 1.73               | US$ 0.30 |  | 225,000    
| |                   |           |                    |          |  |            
| |                   | 2,443,750 | 2.21               | US$ 0.13 |  | 2,443,750  

During the year ended February 28, 2006,
  the total stock-based compensation recognized under the fair value method was
  $2,280 (2005 - $82,000) using the Black-Scholes option pricing model (Note 3(f)).

The following assumptions were used for
  the Black-Scholes option pricing model valuation of stock options granted:

| |                       | Years Ended February 28,
| | --------------------- | ------------------------
| |                       | 2006                    
| |                       |                         
| | Expected life (years) | 5                       
| | Interest rate         | 3.07%                   
| | Volatility            | 78%                     
| | Dividend yield        |                        

Option pricing models require the input
  of highly subjective assumptions including the expected price volatility. Changes
  in the subjective input assumptions can materially affect the fair value estimate,
  and therefore the existing models do not necessarily provide a reliable single
  measure of the fair value of the Companys stock option.

F-18

---

|LINUX GOLD CORP.                          
|------------------------------------------
|(An Exploration Stage Company)            
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                          
|February 28, 2006 and 2005                
|(Expressed in Canadian Dollars)           

|10. | COMMITMENTS
|--- | -----------

The Company entered into a two-year lease
  agreement to rent 1,018 square feet of office space commencing April 1, 2004.
  Subsequent to year-end, the Company extended the agreement to June 1, 2006.
  Basic annual rent is $30,336. The future commitment is as follows:

| |                                       |   | 2007  | 
| | ------------------------------------- | - | ----- | 
| | Basic rent                            | $ | 3,816 | 
| | Property taxes and operating expenses |   | 3,768 | 
| |                                       | $ | 7,584 | 

|11. | NON-CASH FINANCING AND INVESTING ACTIVITIES                                                                                                                                                                                                                                                                             
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                         
|    | During the year ended February 28, 2006:                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                         
|    | i)                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                         
|    | ii)                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                         
|    | During the year ended February 29, 2005:                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                         
|    | i)                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                         
|    | ii)                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                         
|    | iii)                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                         
|    | iv)                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                         
|12. | INCOME TAXES                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                         
|    | Potential benefits of income tax losses are
        not recognized in the accounts until realization is more likely than not.
        The Company has adopted SFAS No. 109, Accounting for Income Taxes,
        as of its inception. The Company has incurred Canadian non-capital losses
        as scheduled below:

Year of
      
      
      Year ofLoss
      
      Amount
      Expiration2000
      $
      164,000
      20072001
      
      1,223,000
      20082002
      
      239,000
      20092003
      
      28,000
      20102004
      
      347,000
      20112005
      
      399,000
      20152006
      
      361,000
      2016$
      2,761,000 F-19


---

|LINUX GOLD CORP.                          
|------------------------------------------
|(An Exploration Stage Company)            
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                          
|February 28, 2006 and 2005                
|(Expressed in Canadian Dollars)           

|12. | INCOME TAXES(Continued)                                                                                                                                                                                                                                                                                                                                                            
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                    
|    | Pursuant to SFAS No. 109, the Company is required to
        compute tax asset benefits for non-capital losses carried forward. Potential
        benefit of non-capital losses have not been recognized in these financial
        statements because the Company cannot be assured it is more likely than
        not it will utilize the losses carried forward in future years.
|    |                                                                                                                                                                                                                                                                                                                                                                                    
|    | The reconciliation of income tax attributable to continuing
        operations computed at the statutory tax rates to income tax expense is:                                                                                                                                                                                                                                       

| |                                                               |   | 2006     |   |   | 2005     |  
| | ------------------------------------------------------------- | - | -------- | - | - | -------- | -
| |                                                               |   |          |   |   |          |  
| | Income tax benefit computed at Canadian statutory
      rates | $ | 283,569  |   | $ | 271,051  |  
| | Amortization in excess of capital cost allowance              |   | (3,648   | ) |   | (1,825   | )
| | Share issuance and financing costs                            |   | (14,534  | ) |   | 0        |  
| | Non-deductible stock-based compensation                       |   | (778     | ) |   | (27,995  | )
| | Non-deductible write-down of investment                       |   | (683     | ) |   | 18,436   |  
| | Utilized (unrecognized) tax losses                            |   | (263,926 | ) |   | (259,667 | )
| |                                                               |   |          |   |   |          |  
| | Future income tax benefit                                     | $ | 0        |   | $ | 0        |  

Significant components of the Companys
  future tax assets and liabilities, after applying enacted corporate income tax
  rates, are as follows:

| |                                                                       |   | 2006       |   |   | 2005       |  
| | --------------------------------------------------------------------- | - | ---------- | - | - | ---------- | -
| |                                                                       |   |            |   |   |            |  
| | Future income tax assets                                              |   |            |   |   |            |  
| | Excess of book value over market value of marketable
      securities | $ | 2,731      |   |   | 3,414      |  
| | Excess of undepreciated capital cost over net book                    |   |            |   |   |            |  
| | value of fixed assets                                                 | $ | 2,635      |   | $ | 1,825      |  
| | Excess of unused exploration expenditures for Canadian                |   |            |   |   |            |  
| | tax purposes over net book value of resource
      properties         |   | 456,457    |   |   | 343,934    |  
| | Net losses carried forward                                            |   | 942,605    |   |   | 845,306    |  
| |                                                                       |   |            |   |   |            |  
| |                                                                       |   | 1,404,428  |   |   | 1,194,479  |  
| | Valuation allowance for future income tax assets                      |   | (1,404,428 | ) |   | (1,194,479 | )
| |                                                                       |   |            |   |   |            |  
| | Future income tax assets, net                                         | $ | 0          |   | $ | 0          |  

The valuation allowance reflects the
  Companys estimate that the tax assets, more likely than not, will not
  be realized and consequently have not been recorded in these financial statements.

F-20

---

|LINUX GOLD CORP.                          
|------------------------------------------
|(An Exploration Stage Company)            
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                          
|February 28, 2006 and 2005                
|(Expressed in Canadian Dollars)           

|13. | RESTATEMENT                                                                                                                                                                                                                                                                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                              
|    | During 2004, the Company accrued $3,000 of rent and
        $9,000 of directors fees all of which had already been paid. Also,
        during 2005 the Company accrued $6,000 of rent and $12,000 of directors
        fees all of which had also been paid.                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                              
|    | During the years ended 2004 and 2005 the Company expensed
        $30,152 in each of the years. These amounts represent amortization of
        discount on convertible debt, which was settled in 2002. Since the debt
        was settled in 2002, these amounts along with the remaining unamortized
        balance of $19,091 should have been fully expensed when the debt was settled.
|    |                                                                                                                                                                                                                                                                                                                                                                                              
|    | As a result of the above errors, prior period statements
        have been retroactively restated to reflect the reversal of such errors.
        The effect of this correction on net loss and related per share amounts
        is as follows:                                                                                                                                             

| |                                                  |   | 2005     |   |   | 2004     |  
| | ------------------------------------------------ | - | -------- | - | - | -------- | -
| |                                                  |   |          |   |   |          |  
| | Net loss as previously reported                  | $ | (842,092 | ) | $ | (106,234 | )
| | Over accrued rent                                |   | 6,000    |   |   | 3,000    |  
| | Over accrued directors fees                     |   | 12,000   |   |   | 9,000    |  
| | Amortization of debt discount                    |   | 30,152   |   |   | 30,150   |  
| |                                                  |   |          |   |   |          |  
| | Net loss as restated                             | $ | (793,940 | ) | $ | (64,084  | )
| |                                                  |   |          |   |   |          |  
| | Basic net loss per share, as previously reported | $ | (0.01    | ) | $ | (0.01    | )
| | Prior period adjustments                         |   | 0.00     |   |   | 0.00     |  
| |                                                  |   |          |   |   |          |  
| | Basic net loss per share, as restated            | $ | (0.01    | ) | $ | (0.01    | )

---

|LINUX GOLD CORP.                          
|------------------------------------------
|(An Exploration Stage Company)            
|                                          
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                          
|February 28, 2006 and 2005                
|(Expressed in Canadian Dollars)           

|14. | DISCONTINUED OPERATIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | On February 20, 2003, the shareholders approved
      a change of name to Linux Gold Corp. and increased the authorized share
      capital to 200,000,000 common shares without par value. The Company had
      been previously pursuing various business opportunities and, effective March
      1, 2003, the Company changed its principal operations to mineral exploration.
      Accordingly, discontinued operations consist of the Companys former
      businesses.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | The results of discontinued operations are summarized
      as follows:                                                                                                                                                                                                                                                                                                                                                                                                        

| |                                           |  |              |  |  |              |  |  |              |  |  | Cumulative     | 
| | ----------------------------------------- |  | ------------ |  |  | ------------ |  |  | ------------ |  |  | -------------- | 
| |                                           |  |              |  |  |              |  |  |              |  |  | From Inception | 
| |                                           |  |              |  |  |              |  |  |              |  |  | May 1, 2003    | 
| |                                           |  | Year Ended   |  |  | Year Ended   |  |  | Year Ended   |  |  | Through        | 
| |                                           |  | February 28, |  |  | February 28, |  |  | February 29, |  |  | February 28,   | 
| |                                           |  | 2006         |  |  | 2005         |  |  | 2004         |  |  | 2006           | 
| |                                           |  | $            |  |  | $            |  |  | $            |  |  | $              | 
| |                                           |  |              |  |  |              |  |  |              |  |  |                | 
| |                                           |  |              |  |  |              |  |  |              |  |  |                | 
| | Revenue                                   |  |             |  |  |             |  |  |             |  |  |               | 
| | Expenses                                  |  |             |  |  |             |  |  |             |  |  |               | 
| | Net Operating Loss                        |  |             |  |  |             |  |  |             |  |  |               | 
| | Gain on write-off of subsidiary accounts  |  |              |  |  |              |  |  |              |  |  |                | 
| | payable                                   |  |             |  |  |             |  |  | 369,213      |  |  | 369,213        | 
| | Income From Discontinued
      Operations |  |             |  |  |             |  |  | 369,213      |  |  | 369,213        | 

| | Assets and liabilities disposed of comprised the following:
| | -----------------------------------------------------------

| |                         |   | February 28, |  |   | February 28, |  |   | February 29, | 
| | ----------------------- | - | ------------ |  | - | ------------ |  | - | ------------ | 
| |                         |   | 2006         |  |   | 2005         |  |   | 2004         | 
| |                         | $ |              |  | $ |              |  | $ |              | 
| |                         |   |              |  |   |              |  |   |              | 
| | Accounts
      payable  |   |             |  |   |             |  |   | 369,213      | 
| | Total
      Liabilities |   |             |  |   |             |  |   | 369,213      | 

|**15.** | **SUBSEQUENT EVENTS**
|------- | ---------------------
|        |                      
|        | a)                   
|        |                      
|        |                      



F-22

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