U.S. SECURITIES AND EXCHANGE COMMISSION 
  Washington, D.C. 20549

FORM 10-KSB

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COMMISSION FILE NUMBER 000-50180



CARLETON VENTURES CORP.


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|NEVADA                                                         |  | 98-0365605                          
|-------------------------------------------------------------- |  | ------------------------------------
|                                                               |  |                                     
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               |  |                                     
|Suite 306, 1140 Homer Street, Vancouver, BC                    |  | V6B 2X6                             
|                                                               |  |                                     
|(Address of principal executive offices)                       |  | (Zip Code)                          
|                                                               |  |                                     
|604-689-1659                                                   |  |                                     
|                                                               |  |                                     
|Issuer's telephone number                                      |  |                                     

|Securities registered under Section 12(b) of the Exchange
      Act: | NONE.                         
|-------------------------------------------------------------------- | ------------------------------
|                                                                     |                               
|Securities registered under Section 12(g) of the Exchange
      Act: | COMMON STOCK, PAR VALUE $0.001
|                                                                     | PER SHARE.                    

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

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

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

State the aggregate market value of the voting and non-voting
  common equity held by non-affiliates computed by reference to the price at which
  the common equity was sold, or the average bid and asked price of such common
  equity, as of a specified date within the past 60 days. (See definition of affiliate
  in Rule 12b-2 of the Exchange Act.) $MARKET VALUE], based on a price of
  $ per share, being the last sale price of the Registrants commonstock

State the number of shares outstanding of each of the issuer's
  classes of common equity, as of the latest practicable date. 5,640,500
  Shares of Common Stock

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

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CARLETON VENTURES CORP.ANNUAL REPORT ON FORM 10-KSB

INDEX

|         |                                                                                             | PAGE
|-------- | ------------------------------------------------------------------------------------------- | ----
|PART I   |                                                                                             |     
|         |                                                                                             |     
|Item 1.  | Description Of Business.                                                                    | 3   
|         |                                                                                             |     
|Item 2.  | Description Of Property.                                                                    | 15  
|         |                                                                                             |     
|Item 3.  | Legal Proceedings.                                                                          | 15  
|         |                                                                                             |     
|Item 4.  | Submission Of Matters To A Vote Of Security Holders.                                        | 15  
|         |                                                                                             |     
|PART II  |                                                                                             |     
|         |                                                                                             |     
|Item 5.  | Market For Common Equity And Related Stockholder Matters.                                   | 15  
|         |                                                                                             |     
|Item 6.  | Management's Discussion And Analysis Or Plan Of Operation.                                  | 17  
|         |                                                                                             |     
|Item 7.  | Financial Statements.                                                                       | 20  
|         |                                                                                             |     
|Item 8.  | Changes In And Disagreements With Accountants On Accounting
      And Financial Disclosure. | 30  
|         |                                                                                             |     
|PART III |                                                                                             |     
|         |                                                                                             |     
|Item 9.  | Directors, Executive Officers, Promoters And Control Persons;
      Compliance With Section |     
|         | 16(A) Of The Exchange Act.                                                                  | 30  
|         |                                                                                             |     
|Item 10. | Executive Compensation                                                                      | 32  
|         |                                                                                             |     
|Item 11. | Security Ownership Of Certain Beneficial Owners And Management                              | 33  
|         |                                                                                             |     
|Item 12. | Certain Relationships And Related Transactions                                              | 34  
|         |                                                                                             |     
|Item 13. | Exhibits And Reports On Form 8-K.                                                           | 36  
|         |                                                                                             |     
|Item 14. | Controls And Procedures.                                                                    | 37  

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PART I

ITEM 1.      DESCRIPTION OF BUSINESS.

CORPORATE ORGANIZATION

Carleton Ventures Corp. (We, the Company
  or Carleton) was incorporated on May 26, 1999 under the laws of
  the State of Nevada.

We purchased fourteen unpatented mineral claims located in
  Elko County in the State of Nevada from Senate Capital Group Inc. in March 2001.

Mr. Dennis Higgs, our president and a director, and Ms. Aileen
  Lloyd, our secretary, treasurer and a director, have been our sole promoters
  since our inception.

DESCRIPTION OF BUSINESS

In General

We are an exploration stage company engaged in the acquisition
  and exploration of mineral properties. We own fourteen unpatented mineral claims
  that we refer to as the Burner Hills mineral claims. Further exploration of
  these mineral claims is required before a final determination as to their viability
  can be made. There is no assurance that a commercially viable mineral deposit
  exists on our mineral claims. Our plan of operations is to carry out exploration
  work on these claims in order to ascertain whether they possess commercially
  exploitable quantities of gold or silver. We can provide no assurance to investors
  that our mineral claims contain a commercially exploitable mineral deposit,
  or reserve, until appropriate exploratory work is done and an economic evaluation
  based on that work concludes economic viability.

Acquisition of the Burner Hills Unpatented Mineral Claims

We purchased a 100% interest in fourteen unpatented mineral
  claims located in Elko County in the State of Nevada from Senate Capital Group
  Inc. in March 2001. We paid a purchase price of $10,051.88 and issued 1,500,000
  shares of our common stock to Senate Capital Group in consideration for these
  mineral claims.

The Burner Hills mineral claims were recorded on November
  19, 2000 by Mr. John A. Rice. The Burner Hills mineral claims were subsequently
  sold to Senate Capital Group, a private company controlled by Mr. Dennis Higgs,
  our president and a director, in December 2000 for a purchase price of $10,051.88.
  This amount was comprised of Mr. Rices costs in acquiring the mineral
  claims, plus a finders fee of $6,000.

Mr. Rice prepared a geological report on the Burner Hills
  mineral claims in December 2000 for Mr. Higgs on behalf of Senate Capital Group.
  This initial geological report summarized the information from previous exploration
  of the mineral claims and recommended exploration procedures on the mineral
  claims.

We entered into the mineral property purchase agreement with
  Senate Capital Group on March 14, 2001. Under the terms of this agreement, we
  acquired title to the Burner Hills mineral claims and the December 2000 geological
  report prepared by Mr. Rice in a non-arms-length transaction. We paid to Senate
  Capital Group the amount of $10,051.88 and issued to Senate Capital Group a
  total of 1,500,000 shares of our common stock in consideration for this acquisition.
  The total consideration issued to Senate Capital Group was based on the determination
  of the value of the Burner Hills mineral claims by our board of directors as
  being equal to $25,051.88 as of March 14, 2001. This determination was a subjective
  determination made by our board of directors based on several factors, including
  the cost to acquire the mineral claims, the subjective assessment by our board
  of directors of the results of the December 2000 geological report received
  from Mr. Rice and the subjective assessment by our board of directors of the
  market for prospective gold exploration properties of similar merit in the region
  of the Burner Hills minerals claims. Our board of directors did not obtain or
  consider any evaluation of the Burner Hills mineral claims made by any arms-length
  party in making this subjective determination. Accordingly, we can give

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investors no assurance that the value of the Burner Hills
  mineral claims arrived at by our board of directors is representative of the
  fair market value of the Burner Hills mineral claims. The cash consideration
  of $10,051.88 paid to Senate Capital Group was based on the cost paid by Senate
  Capital Group to acquire the mineral claims from Mr. Rice. The share consideration
  issued was based on the last sales price of our common stock of $0.01 per share,
  for total share consideration of $15,000.

The transaction that we entered into with Senate Capital Group
  was not an arms length transaction as Mr. Dennis Higgs, our president and a
  director, is the sole shareholder of Senate Capital Group. Mr. Higgs is one
  of our two directors and had a conflict of interest in this transaction. Accordingly,
  the determination of the market value of the Burner Hills mineral claims and
  the consideration that we paid for the Burner Hills was not an independent arms-length
  transaction.

Recording of the Burner Hills Unpatented Mineral Claims

The Burner Hills mineral claims were recorded with the Bureau
  of Land Management of the United States Department of the Interior under the
  following names and claim numbers:

| | Name of Mineral Claim | Claim Number
| | --------------------- | ------------
| |                       |             
| | Pepper 1              | NMC#822713  
| | Pepper 2              | NMC#822714  
| | Pepper 3              | NMC#822715  
| | Pepper 4              | NMC#822716  
| | Pepper 5              | NMC#822717  
| | Pepper 6              | NMC#822718  
| | Pepper 7              | NMC#822719  
| | Pepper 8              | NMC#822720  
| | Pepper 9              | NMC#822721  
| | Pepper 10             | NMC#822722  
| | Pepper 11             | NMC#822723  
| | Pepper 12             | NMC#822724  
| | Pepper 13             | NMC#822725  
| | Pepper 14             | NMC#822726  

The township, range and sections of the Burner Hills mineral claims are as
  follows:

|Name of Mining Claim          | Section     | Township      | Range        
|----------------------------- | ----------- | ------------- | -------------
|Pepper 1                      | 12          | 41N           | 47E          
|Pepper 2                      | 12          | 41N           | 47E          
|Pepper 3                      | 12          | 41N           | 47E          
|Pepper 4                      | 12          | 41N           | 47E          
|Pepper 5                      | 12          | 41N           | 47E          
|Pepper 6                      | 12          | 41N           | 47E          
|Pepper 7 SW
      Pepper 7 NW | 12
      13 | 41N
      41N | 47E
      47E
|Pepper 8 SW
      Pepper 8 NW | 12
      13 | 41N
      41N | 47E
      47E



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|Name of Mining Claim | Section | Township | Range
|-------------------- | ------- | -------- | -----
|Pepper 9             | 13      | 41N      | 47E  
|Pepper 10            | 13      | 41N      | 47E  
|Pepper 11            | 13      | 41N      | 47E  
|Pepper 12            | 13      | 41N      | 47E  
|Pepper 13            | 13      | 41N      | 47E  
|Pepper 14            | 13      | 41N      | 47E  

Mr. Rice recorded these claims in November 2000 to cover the
  main area of potential gold and silver mineralization. We are the legal and
  beneficial owner of title to the mineral claims, and no other person or entity
  has any interest in the mineral claims. The mineral claims are unpatented mineral
  claims that give us a property right to the minerals in the claims and the right
  to use the surface to extract minerals. Title to the land comprising the mineral
  claims and the surface resources is owned by the United States.

In order to maintain our mineral claims in good standing,
  we must pay maintenance fees in lieu of completing exploration work with the
  Bureau of Land Management of the United States Department of the Interior. Currently,
  a maintenance fee of $100 per mineral claim must be paid in each year to maintain
  the mineral claims for an additional year. In total, we must pay $1,400 per
  year to maintain the Burner Hills mineral claims in good standing for each year.
  Extension of our claims is automatic upon payment of the required maintenance
  fees. If we fail to pay the maintenance fees, then our mineral claims will lapse
  and we will lose all interest that we have in these mineral claims. We extended
  our mineral claims to September 1, 2003 by paying the required maintenance fees
  to the Bureau of Land Management in August, 2002.

Location of the Burner Hills Unpatented Mineral Claims

The Burner Hills mineral claims are located approximately
  sixteen miles north, northeast of Midas, Nevada. Elevations in the area range
  from 1700 meters to 1925 meters. The property is accessed via a two-track dirt
  road from County Road 18, a well-maintained gravel road that provides access
  to Midas from either Winnemucca or Elko.

Geological Report

We received an initial geological evaluation report on the
  Burner Hills mineral claims prepared by Mr. John A. Rice and dated December
  2000. Mr. Rice is a graduate of the Colorado State University and holds a Bachelors
  of Science degree in Geology (1978) and a Masters of Science degree in Economic
  Geology (1984) from the Colorado State University. Mr. Rice is a member of the
  Geological Society of Nevada and the Society of Economic Geologists. We received
  this December 2000 geological report upon our acquisition of the Burner Hills
  mineral claims. We have received an updated geological work program from Mr.
  Rice dated November 2001. This updated geological report incorporates the results
  of the completion by Mr. Rice as our geological consultant of phase one of the
  geological work program recommended by Mr. Rice in his December 2000 geological
  report.

The purpose of the initial geological report was to summarize
  the information from the previous exploration of the mineral claims and to recommend
  exploration procedures on the mineral claims. The initial geological report
  summarizes the results of the history of the exploration of the mineral claims,
  the regional and local geology of the mineral claims and the mineralization
  and the geological formations identified as a result of the prior exploration.
  The initial geological report also gives conclusions regarding

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potential mineralization of the mineral claims and recommended
  a two phase geological exploration program.

Exploration History of the Unpatented Mineral Claims

The history of the exploration of the mineral claims is summarized
  in the geological report that we obtained from Mr. Rice. The following summary
  of the exploration history of the mineral claims is based on Mr. Rices
  description.

|1 | . | The earliest activities
        in the area of the mineral claims began in the 1880s when miners
        extracted silver-lead ore from the Mint mine, an abandoned mine located
        on the Burner Hills mineral claims;
|- | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |   |                                                                                                                                                                                                                              
|2 | . | In 1893, mining operations ceased, but were renewed
      in the 1930s and 1940s;                                                                                                                                          
|  |   |                                                                                                                                                                                                                              
|3 | . | We completed the first phase
        of our exploration program consisting of additional mapping and rock sampling
        during the 2001 field season.                                                                     

Geology of the Unpatented Mineral Claims

In the updated report of Mr. Rice dated November 2001, Mr.
  Rice concludes that there are three veins that have the potential of hosting
  economic gold and silver mineralization on the Burner Hills mineral claims.
  Economic mineralization is the presence of mineralization on our mineral claims
  in sufficient quantity and concentration and in an accessible location that
  would justify the commercial extraction of these minerals through an operating
  mine. Economic mineralization would be identified by delineation of a body of
  ore by drilling and/or underground sampling to demonstrate that the ore body
  has a sufficient tonnage and average grade of metals to justify commercial extraction.

The quartz veins identified on the Burner Hills mineral claims
  are present within volcanic and sedimentary rocks present on the Burner Hills
  mineral claims. A quartz vein is a body of quartz rock, frequently long and
  narrow, that may contain gold. Quartz veins that host gold, silver and base
  metal mineralization are typical of a low sulfidation, epithermal hot-springs
  gold system. A low sulfidation, epithermal hot-springs gold system is a gold
  deposit formed by hot-springs activity with low sulfur content.

The primary area of exploration interest on the Burner Hills
  mineral claims is the area of the Mint Mine, where historic production of silver
  and lead began in the 1880s. The Mint mine is an abandoned mine located
  on the Burner Hills mineral claims. The Mint mine is located on a quartz vein
  known as the Mint vein. The Mine vein refers to a quartz vein identified on
  the Burner Hills mineral claims. Prospect pits and quartz vein material associated
  with the Mint vein occur on the surface of the Burner Hills mineral claims over
  an extent of 450 meters (approximately 1500 feet). A parallel vein to the south
  of the Mint vein has also been identified on the Burner Hills mineral claims.
  Mineralization occurring at the junctions of the identified veins are primary
  exploration targets because of the possibility of locating high grade gold and
  silver deposits at these structurally prepared intersections.

Mr. Rice notes in his updated report that recent successes
  in Nevada have occurred in old mining districts with drilling below zones of
  historic production. The Burner Hills property has this type of potential, and
  thus, Mr. Rice concludes that it should be thoroughly explored.

Exploration Program

In his geological report dated December 2000, Mr. Rice recommended
  the completion of a two phase geological work program on the Burner Hills mineral
  claims. The first phase of the work program was recommended to consist of geologic
  mapping and sampling and a soil geochemistry orientation survey. A soil geochemistry
  orientation survey involves the identification of elements or suite of elements
  present in soil sampled from the mineral claims with the objective of assessing
  the geology of the mineral claims. We proceeded with a portion of this recommended
  first phase of the exploration program during the 2001 field season at a cost
  of $1,830. This work program was completed by Mr. Rice as our consulting geologist
  and included the geological mapping and sampling work recommended by Mr. Rice
  in his December 2000 geological report, but did not include the soil geochemistry
  survey. As a result of the

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completion of this first phase of the work program, Mr. Rice
  delivered to us an updated geological report dated November 2001.

Results and Recommendations of the Phase I Report and Phase II Reports .

Samples collected by Mr. Rice from the Burner Hills mineral
  claims during phase one of our exploration program show that the area of the
  mineral claims is anomalous in gold and highly anomalous with silver, with the
  best results in the northeast striking veins, the Mint vein and the parallel
  vein to the south of the Mint vein. Assay results from these rock chip samples
  indicate that a mineralized system containing gold and silver is present. An
  assay is a chemical analysis of a rock sample to determine the amounts of metals
  in the rock sample and to test the rock sample for mineral composition, purity
  and weight. Anomalous concentrations of gold and silver are defined as concentrations
  of gold and silver that are statistically significantly greater than the base
  concentrations of gold and silver that would be expected to be found in the
  bedrock. The best assay results are from the Mint vein and the parallel vein
  identified to the south of the Mint claim. The assay results indicating a mineralized
  system containing gold and silver are important as we would not proceed to further
  stages of exploration on our property without assay results indicating mineralization
  in rock samples taken from the surface of the property.

Based on these assay results, Mr. Rice recommended a further
  three phase geological work program. This recommendation was based on the conclusion
  of Mr. Rice that the assay results were indicative of a gold and silver mineralized
  system below the surface of the Burner Hills mineral claims. The second and
  third phases of this exploration program were recommended in order to better
  identify exploration targets and to determine if further additional claims are
  required. If the location of additional claims was recommended, we would conduct
  a search of the Bureau of Land Management to determine if the land of interest
  adjacent to our unpatented mineral claims is available for staking. If the land
  had not been staked by any other person and was available for staking, we would
  retain our consulting geologist to complete the staking and make the required
  filings with the Bureau of Land Management in order to acquire unpatented mineral
  claims to this land. The location of further additional mineral claims adjacent
  to the existing Burner Hills mineral claims may be required if the exploration
  completed on the existing claims indicates that the identified mineralization
  extends beyond these claims, thereby warranting the location of additional claims
  to adequately cover the prospective mineralized system. The fourth phase would
  consist of a modest drilling program of a minimum of three holes.

We accepted the recommendations of the phase one updated geological
  report and we proceeded to complete the second phase of the recommended exploration
  program in the summer of 2002. Mr. Rice visited the site of the mineral claims
  and completed the gathering of samples for analysis as part of this phase of
  exploration. The second phase included the completion of a detailed orientation
  soil grid. We received the geological report on Mr. John Rice summarizing the
  results of this second phase and giving further conclusions and recommendations
  in August 2002.

In his August 2002 geological report, Mr. Rice concluded that
  the results of the soil survey completed as part of the second phase show that
  there is a recognizable zone of mineralization present on the Burner Hills mineral
  claims. This zone is indicated by anomalous values of gold, silver and arsenic.
  Anomalous values of elements are concentrations that are statistically significantly
  greater than the base concentrations of elements that would be expected to be
  found in the bedrock. Mr. Rice concluded that these anomalies correlate with
  the Mint vein zone. Mr. Rice also concluded that the soil survey agrees with
  the geological map of the Mint vein is a discontinuous geological structure
  that trends from the old workings in the northeast to the southwestern edge
  of the property: a minimum distance of 900 metres (approximately 3000 feet).
  The gold soil map and silver soil map prepared by Mr. Rice as part of his August
  2002 report show that high values of gold and silver are confined to the Mint
  vein structure. Mr. Rice concluded that these results were encouraging and recommended
  proceeding to phase three of the recommended exploration program. Phase three
  would involve the completion of an induced polarization geophysical survey.
  An induced polarization geophysical survey will involve the application of a
  current into the ground using a pair of electrodes and sampling of the results
  at various locations throughout the mineral claims. The results are then plotted
  on a map in order to map the lateral and vertical variations in electrical resistivity
  and chargeability of the minerals present on the claims. These results would
  then be interpreted by our geologist. The data from this work would be used
  to define targeted locations for the drilling program to be completed as part
  of the fourth phase of exploration. The estimated cost of completion of this
  third phase is $13,000. This estimate includes the costs associated with a geologists
  review of the work conducted and interpretation of results.

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The fourth phase of the recommended exploration program is
  to complete a modest drilling program consisting of a minimum of three drill
  holes. The estimated cost of completion of this fourth phase is $40,000. This
  estimate includes the costs associated with a geologists review of the
  work conducted and interpretation of results.

The total cost for these two additional phases of the exploration
  program is thus estimated to be $53,000. Our working capital deficit position
  as of December 31, 2002 was $10,619. While our working capital is not sufficient
  to enable us to complete the third and fourth stages of our exploration program,
  we have received a commitment from Senate Capital Group, a related party, to
  loan us additional funds, to a maximum of $13,000, being the budged cost of
  phase three, to complete the third phase. Accordingly, we will require additional
  financing in order to complete the full four stage exploration program. We currently
  do not have any arrangements for additional financing and we can provide no
  assurance to investors that we will be able to obtain additional financing when
  required. Obtaining additional financing would be subject to a number of factors,
  including the market prices for silver and gold and the costs of mining these
  materials. These factors may make the timing, amount, terms or conditions of
  additional financing unavailable to us.

We will make a determination whether to proceed with phase
  four upon completion of phase three and our review of the results of this third
  phase. In making this determination, we will assess whether the results of phase
  three are sufficiently positive to enable us to obtain the financing we will
  need for us to continue through phase four of the exploration program. Results
  that would be sufficiently positive will be based on the recommendations and
  conclusions of our geologist that will be contained in a geological report that
  we will receive on the results of this phase of exploration. The conclusions
  and recommendations will be based on the professional opinion of our geologist
  based on the results of this phase of exploration. Whether these conclusions
  and recommendations will warrant further investment will be based on many factors,
  including the price of gold, the market for shares of junior exploration companies,
  the market for financing of mineral exploration projects and the individual
  decisions of investors at the time of their evaluation of an investment. Given
  these factors, we can give investors no assurance as to what recommendations
  and conclusions arising from the results of phase three will be sufficiently
  positive for us to obtain additional financing and proceed with further exploration.

If we determine not to proceed with additional exploration
  on the Burner Hills mineral claims based on the results of phase three, then
  we anticipate that we will pursue the acquisition of an interest in an additional
  mineral property. We anticipate that any acquisition of an interest in an additional
  mineral property would be made by the acquisition of an option to acquire an
  interest in the mineral property that would be exercisable by our completing
  exploration work on the property. We anticipate that the acquisition of an option
  in a mineral property would be our only feasible plan of operations, as we anticipate
  that our financial resources after completion of phase two will be insufficient
  to acquire a full ownership interest in a property of merit. There is no assurance
  that we would be able to acquire an interest in any additional mineral property
  or achieve the additional financing necessary for us to proceed with exploration
  if an interest in an additional mineral property was acquired.

Each phase of the recommended work program would include a
  geological review and interpretation of the results of the phase. The geological
  review and interpretations required in each phase of the exploration program
  would be comprised of reviewing the data acquired and analyzing this data to
  assess the potential mineralization of the mineral claims. Geological review
  entails the geological study of an area to determine the geological characteristics,
  identification of rock types and any obvious indications of mineralization.
  The purpose of undertaking the geological review would be to determine if there
  is sufficient indication of mineralization to warrant additional exploration.
  Positive results at each stage of the exploration program would be required
  to justify continuing with the next phase. Such positive results would include
  the identification of the zones of mineralization.

If we are not able to further proceed with phase four of the
  exploration of the Burner Hills mineral claims due to our inability to fund
  future exploration, then we plan to pursue the acquisition of another mineral
  property. We anticipate that any future acquisition would involve the acquisition
  of an option to earn an interest in a mineral claim as we anticipate that we
  would not have sufficient cash to purchase a mineral claim of sufficient merit
  to warrant exploration. We may also decide to expand the scope of targeted properties
  to include potential oil and gas properties if the market for minerals continues
  to be depressed. If we are unable to secure a mineral or natural resource property
  for exploration, then we would pursue

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the acquisition of another business or business asset. There
  is no assurance that we would be able to acquire any interest in any other mineral
  or natural resource property or other business in view of our limited financial
  resources. Further, we anticipate that we would be required to secure further
  financing in order to conduct any exploration on any mineral or natural resource
  property or business acquired. There is no assurance that we would be able to
  secure the required financing or that we would achieve profitability if financing
  was completed.

Our reasons for pursuing the acquisition of an additional
  property if we do not continue with exploration of the Burner Hills mineral
  claims would be to create value for our shareholders, although we anticipate
  that shareholders would suffer dilution if we were able to achieve additional
  financing to explore any new property. We anticipate that any new property would
  not be acquired in a related-party transaction with one of our officers or directors.
  However, our articles and bylaws and Nevada corporate law do not prohibit an
  acquisition of a new property in a related-party transaction with one of our
  officers or directors. Accordingly, it is possible that we could property in
  a related-party transaction with one of our officers or directors. We have no
  present intention to acquire or merge with any other company or to acquire any
  new property in a related-party transaction with one of our officers or directors.
  While our bylaws do not contain any required procedures in the event of a potential
  acquisition of any new property in a related-party transaction, our policy is
  to require the interested director to disclose to the board of directors the
  nature and extent of their interest in the transaction. The remaining directors
  on our board who do not have any interest in the possible transaction will then
  consider and if deemed fair to the corporation, approve the acquisition. In
  making this determination, the disinterested directors will have the authority,
  but will not be required to, seek an independent valuation of the assets to
  be acquired. The consideration or entering into of a related party transaction
  with one of our directors will create the potential for a conflict between our
  interests and the interests of the interest director.

Current State of Exploration

Our mineral claims presently do not have any mineral reserves.
  The property that is the subject of our mineral claims is undeveloped and does
  not contain any open-pit or underground mines. There is no mining plant or equipment
  located on the property that is the subject of the mineral claim. Currently,
  there is no power supply to the mineral claims.

We have only recently commenced exploration of the mineral
  claims and exploration is currently in the preliminary stages. Our planned exploration
  program is exploratory in nature and there is no assurance that mineral reserves
  will be found.

The search for valuable minerals involves numerous hazards.
  As a result, we may become subject to liability for such hazards, including
  pollution, cave-ins and other hazards against which we cannot insure or against
  which we may elect not to insure. We may not have sufficient capital available
  to cover the payment of such liabilities or damages which could result in our
  having to shut down our exploration activities. We do not have any insurance
  to cover such potential liabilities or damages.

Competitive Conditions

We are a junior mineral resource exploration company engaged
  in the business of mineral exploration. We compete with other junior mineral
  resource exploration companies for financing from a limited number of investors
  that are prepared to make investments in junior mineral resource exploration
  companies. The presence of competing junior mineral resource exploration companies
  may impact on our ability to raise additional capital in order to fund our exploration
  programs if investors are of the view that investments in competitors are more
  attractive based on the merit of the mineral properties under investigation
  and the price of the investment offered to investors.

We also compete for mineral properties of merit with other
  junior exploration companies. Competition could reduce the availability of properties
  of merit or increase the cost of acquiring the mineral properties. This competition
  could result in junior exploration companies acquiring mineral claims adjacent
  to the Burner Hills mineral claims which would result in our inability to acquire
  those adjacent mineral claims.

If the results of our mineral exploration program are successful,
  we may try to sell our mineral claims to a senior exploration company or to
  enter into a joint venture agreement with a senior exploration company for the
  further exploration and possible production of our mineral claims. We would
  face competition

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from other junior mineral resource exploration companies if
  we attempt to enter into a sale or a joint venture agreement with a senior exploration
  company. Senior exploration companies have limited ability to purchase properties
  from junior exploration properties or to enter into joint venture agreements
  with junior exploration programs and will seek the junior exploration companies
  who have the properties that they deem to be the most attractive in terms of
  potential return and investment cost.

Many of the junior mineral resource exploration companies
  with whom we compete have greater financial and technical resources than we
  do. Accordingly, these competitors may be able to spend greater amounts on acquisitions
  of mineral properties of merit and on exploration of their mineral properties.
  In addition, they may be able to afford greater geological expertise in the
  targeting and exploration of mineral properties. This competition could result
  in our competitors having mineral properties of greater quality and interest
  to prospective investors who may finance additional exploration and to senior
  exploration companies that may purchase mineral properties or enter into joint
  venture agreements with junior exploration companies. This competition could
  adversely impact on our ability to finance further exploration, to sell our
  mineral claims to a senior exploration company or to enter into a joint venture
  agreement with a senior exploration company.

Compliance with Government Regulation

We will be required to conduct all mineral exploration activities
  in accordance with the Bureau of Land Management of the United States Department
  of the Interior. We have paid all maintenance fees on the Burner Hills mineral
  claims required to date. We have the right to remove mineral samples from the
  claims, to complete a soil geochemistry survey and an IP survey without obtaining
  any permit or government approval, provided that none of these exploration activities
  result in disturbance to the surface. Accordingly, we will be able to complete
  phase three of our exploration program without obtaining any permits or other
  government approval. The completion of phase three will not result in any environmental
  impact on the Burner Hills minerals claims and consequently there will be no
  expense associated with compliance with environmental laws for this phase.

We will be required to obtain a permit prior to the initiation
  of the fourth phase of the recommended exploration program as this stage will
  involve diamond drilling on the property. This permit must be obtained from
  the Bureau of Land Management. In order to obtain the permit, we would file
  a notice of intent with the BLM which would describe our plan of operations,
  including a description of our planned drilling program, the number of holes
  to be drilled and the disturbance to the land. We would also be required to
  demonstrate to the BLM that we had the necessary resources to pay for any required
  reclamation. It is estimated that it would take approximately two months to
  obtain the required permit at an estimated cost to us of $1,000.

We will incur additional expense associated with compliance
  with environmental laws in completing the fourth phase of the exploration program.
  Environmental laws will require that we reclaim the roads that we construct
  to carry out the drilling program comprising phase four and that we contain
  and bury the drilling fluids generated in the drilling process. The cost of
  road reclamation is typically 50% of the cost of road construction. This reclamation
  cost is estimated to be approximately $1,000 and is included in the budget of
  $40,000 for the completion of phase four. The cost of containing and burying
  the drilling fluids is negligible as it can be completed as part of the road
  reclamation project.

Employees

We have no employees as of the date of this Annual Report
  other than our two officers.

We conduct our business largely through agreements with consultants
  and arms-length third parties.

Exploration Expenditures

We incurred $5,605 in exploration expenditures during the
  year ended December 31, 2002 and $4,091 in exploration expenditures during our
  fiscal year ended December 31, 2001. These exploration expenditures were comprised
  of expenses incurred in connection with the exploration of our mineral claims.

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Subsidiaries

We do not have any subsidiaries.

Patents and Trademarks

We do not own, either legally or beneficially, any patent
  or trademark.

RISK FACTORS

An investment in our common stock involves a high degree of
  risk. You should carefully consider the risks described below and the other
  information in this Annual Report before investing in our common stock. If any
  of the following risks occur, our business, operating results and financial
  condition could be seriously harmed. The trading price of our common stock could
  decline due to any of these risks, and you may lose all or part of your investment.

Risks Related To Our Financial Condition And Business Model

If we do not obtain additional financing, our business
  will fail.

Our current operating funds are less than necessary to complete
  the exploration of the mineral claims, and therefore we will need to obtain
  additional financing in order to complete our business plan. As of December
  31, 2002, we had cash in the amount of $7,814 and a working capital deficit
  of $10,619. We currently do not have any operations and we have no income. Our
  business plan calls for significant expenses in connection with the exploration
  of our mineral claims. We have sufficient funds to commence phase three of the
  recommended exploration program on the Burner Hills mineral claim and we have
  a financing commitment from a related party to advance to us a maximum of $13,000,
  being the budgeted cost of phase three, to enable us to complete this phase.
  However, we will require additional financing in order to complete the fourth
  phase of our exploration program due to our working capital deficiency. We will
  also require additional financing if the costs of the exploration of our optioned
  mineral claim are greater than anticipated. We will require additional financing
  to sustain our business operations if we are not successful in earning revenues
  once exploration is complete. We currently do not have any arrangements for
  financing and we can provide no assurance to investors that we will be able
  to obtain financing when required. Obtaining additional financing would be subject
  to a number of factors, including the market prices for silver and gold and
  the costs of mining these materials. These factors may make the timing, amount,
  terms or conditions of additional financing unavailable to us. Even if we are
  successful in completing our current exploration program and we receive positive
  results, we will still have to undertake an extensive and expensive drilling
  program to determine the extent of mineralization on the Burner Hills mineral
  claims.

There is substantial doubt about our ability to continue
  as a going concern.

Our financial statements included with this Annual Report
  have been prepared assuming we will continue as a going concern. Our auditors
  have made reference to the substantial doubt about our ability to continue as
  a going concern in their audit report on our audited financial statements for
  the year ended December 31, 2001. As discussed in the notes to our audited financial
  statements, we have incurred a net loss of $49,623 from May 26, 1999 (inception)
  to December 31, 2001, have not attained profitable operations and are dependent
  upon obtaining adequate financing to fulfil our exploration activities. We have
  incurred a net loss of $101,294 from May 26, 1999 (inception) to December 31,
  2002. These factors raise substantial doubt that we will be able to continue
  as a going concern. Our financial statements do not include any adjustments
  that might result from the outcome of this uncertainty.

Because we have not earned revenues from business operations,
  we face a high risk of business failure.

We have just begun the initial stages of exploration of our
  mineral claims, and thus have no way to evaluate the likelihood that we will
  be able to operate the business successfully. We were incorporated on May 26,
  1999 and to date have been involved primarily in organizational activities,
  the acquisition of the mineral claims and obtaining a geological report on our
  mineral claims. We have not earned any

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revenues as of the date of this Annual Report and there is
  no assurance that we will achieve revenues if we carry out our plan of operations.
  We face a high risk of business failure as a result of these factors.

Because of the speculative nature of exploration of mineral
  exploration properties, there is substantial risk that no commercially exploitable
  minerals will be found and our business will fail.

The search for valuable minerals as a business is extremely
  risky. The likelihood of our success must be considered in light of the problems,
  expenses, difficulties, complications and delays encountered in connection with
  the exploration of the mineral properties that we plan to undertake. We can
  provide investors with no assurance that our mineral claims contain commercially
  exploitable reserves of gold and silver. Exploration for minerals is a speculative
  venture necessarily involving substantial risk. The expenditures to be made
  by us in the exploration of the mineral claims may not result in the discovery
  of commercial quantities of ore. Problems such as unusual or unexpected formations
  and other conditions are involved in mineral exploration and often result in
  unsuccessful exploration efforts. Additional potential problems include, but
  are not limited to, unanticipated problems relating to exploration, and additional
  costs and expenses that may exceed current estimates of recommended work programs.
  These risks may result in us being able to establish the presence of commercial
  quantities of ore on our mineral claims with the result that we may not be able
  to fund future exploration activities. In such a case, we would be unable to
  complete our business plan.

Because we anticipate our operating expenses will increase
  prior to our earning revenues, we may never achieve profitability.

Prior to completion of our exploration stage, we anticipate
  that we will incur increased operating expenses without realizing any revenues.
  We therefore expect to incur significant losses into the foreseeable future.
  We recognize that if we are unable to generate significant revenues from the
  exploration of our mineral claims and the production of minerals thereon, if
  any, we will not be able to earn profits or continue operations. There is no
  history upon which to base any assumption as to the likelihood that we will
  prove successful, and we can provide investors with no assurance that we will
  generate any operating revenues or ever achieve profitable operations. If we
  are unsuccessful in addressing these risks, our business will most likely fail.

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

The search for valuable minerals involves numerous hazards.
  As a result, we may become subject to liability for such hazards, including
  pollution, cave-ins and other hazards against which we cannot insure or against
  which we may elect not to insure. We may not have sufficient capital available
  to cover the payment of such liabilities or damages which could result in our
  having to shut down our operations. We do not have any insurance to cover such
  potential liabilities or damages.

Because our president has only agreed to provide his services
  on a part-time basis, he may not be able or willing to devote a sufficient amount
  of time to our business operations, causing our business to fail.

Mr. Higgs, our president, is a consultant who provides his
  management services to many companies, including companies involved in geological
  exploration. Mr. Higgs provides his services on a part-time basis averaging
  approximately 8 hours per week. We have entered into an office facilities and
  service contract with Senate Capital Group Inc., wholly owned by Dennis Higgs
  to provide office facilities and administrative services. This agreement, however,
  provides that Mr. Higgs and Senate Capital are entitled to pursue other business
  activities, provided that these other activities do not interfere with Mr. Higgss
  obligations to us. Mr. Higgs anticipates that he will not spend a significant
  amount of his business time on our business activities based on our current
  plan of operations. If the demands of our business require the full business
  time of Mr. Higgs, he is prepared to adjust his timetable to devote more time
  to our business. However, there can be no assurance that Mr. Higgs will be able
  to devote sufficient time to the management of our business, as and when needed.

Because our executive officers do not have formal training
  specific to the technicalities of mineral exploration, there is a higher risk
  our business will fail.

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While Mr. Dennis Higgs and Ms. Aileen Lloyd, our executive
  officers and directors, have experience managing a mineral exploration company,
  they do not have formal training as geologists or in the technical aspects of
  management of a mineral exploration company. Additionally, neither Mr. Higgs
  nor Ms. Lloyd have ever managed any company involved in starting or operating
  a mine. With no direct training or experience in these areas, our management
  may not be fully aware of many of the specific requirements related to working
  within this industry. Our decisions and choices may not take into account standard
  engineering or managerial approaches mineral exploration companies commonly
  use. Consequently, the lack of training and experience of our management in
  this industry could result in management making decisions that could result
  in a reduced likelihood of our being able to locate commercially exploitable
  reserves on our mineral claims with the result that we would not be able to
  achieve revenues or raise further financing to continue exploration activities.
  In view of this risk, we will have to rely on the technical services of others
  trained in appropriate areas. If we are unable to contract for the services
  of such individuals, it will make it difficult and maybe impossible to pursue
  our business plan.

Our management may have conflicts of interest that will
  not be resolved in the best financial interest of Carleton Ventures.

Our president and one of our directors, Mr. Dennis Higgs,
  is the sole shareholder of a private company, Senate Capital Group Inc., which
  originally purchased our mineral claims and subsequently sold our mineral claims
  to us at a cost greater than the cost originally paid for the claims. In addition,
  we are party to a management agreement with Senate Capital Group Inc. whereby
  Senate Capital Group provides the management services of Mr. Higgs and office
  administration services in consideration for a monthly fee of $1,000 per month.
  Neither of these transactions were arms-length transactions as Mr. Higgs was
  one of our directors and officers at the time we entered into the transaction.
  There is a risk that Mr. Higgs may develop a conflict of interest with respect
  to the management contract or other business matters, pursuant to which he and
  Carleton Ventures have adverse interests. There can be no assurance that any
  conflict that may arise will be resolved in the best economic interest of Carleton
  Ventures.

Because members of our management control all matters requiring
  shareholder approval, there is a possibility that they may cause Carleton Ventures
  to act or refrain from acting in a way that is inconsistent with the best interest
  of shareholders other than themselves.

Our management presently controls 57.6% of our common stock,
  representing a majority of our common stock. Mr. Dennis Higgs owns 2,250,000
  shares, representing 39.9% of our common stock. Ms. Aileen Lloyd, our secretary,
  treasurer and one of our directors, owns 1,000,000 shares, representing 17.7%
  of our common stock. Accordingly, Mr. Higgs and Ms. Lloyd will have the ability
  to elect all of the members of our board of directors and will have the ability
  to approve or disapprove all significant corporate transactions to which we
  are a party. This control over all matters requiring shareholder approval could
  lead our management to cause us to enter into agreements, take actions or refrain
  from taking action that is in their individual best interests, but not in the
  best interests of other shareholders.

Because we face competition from other junior exploration
  companies, there is risk that we will face a decreased likelihood of being able
  to obtain necessary financing, additional mineral properties of merit or being
  able to enter into arrangements for the further exploration of our mineral property.

We presently compete with other junior mineral exploration
  companies. We compete for financing from a limited number of investors that
  are prepared to make investments in junior mineral resource exploration companies.
  We also compete for mineral properties of merit which may affect our ability
  to acquire additional claims in the region of the Burner Hills mineral claims.
  We will also face competition if we try to sell our mineral claims to a senior
  exploration company or if we attempt to enter into a joint venture agreement
  with a senior exploration company for the further exploration of our mineral
  claims. These factors could result in a decreased likelihood of our obtaining
  additional financing and could adversely impact on our ability to continue further
  exploration.

Risks Related To Legal Uncertainty

As we undertake exploration of our mineral claims, we will
  be subject to compliance with government regulation that may increase the anticipated
  cost of our exploration program.

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There are several governmental regulations that materially
  restrict the exploration and use of minerals. We will be subject to the State
  of Nevada and US federal laws as we carry out our exploration program. We may
  be required to obtain work permits, post bonds and perform remediation work
  for any physical disturbance to the land in order to comply with these laws.
  While our planned exploration program budgets for regulatory compliance, there
  is a risk that new regulations could increase our costs of doing business and
  prevent us from carrying out our exploration program.

Risks Related To The Market For Our Common Stock

If a market for our common stock does not develop, shareholders
  may be unable to sell their shares.

There is currently no market for our common stock and we can
  provide no assurance that a market will develop. We have applied for trading
  of our common stock on the NASD over-the-counter bulletin board. However, we
  can provide investors with no assurance that our shares will be approved for
  trading on the bulletin board or, if traded, that a public market will materialize.
  If our common stock is not traded on the bulletin board or if a public market
  for our common stock does not develop, investors may not be able to re-sell
  the shares of our common stock that they have purchased and may lose all of
  their investment.

If our selling shareholders sell a large number of shares
  all at once or in blocks, the market price of our shares would most likely decline.

We have registered the resale of up to 1,340,500 shares of
  our common stock by our existing shareholders on a registration statement filed
  with the United States Securities and Exchange Commission. Our common stock
  is presently not traded on any market or securities exchange, but should a market
  develop, shares sold at a price below the current market price at which the
  common stock is trading will cause that market price to decline. Moreover, the
  offer or sale of a large number of shares at any price may cause the market
  price to fall. The outstanding shares of common stock covered by the registration
  statement represent approximately 23.8% of our shares of common stock outstanding
  as of the date of this Annual Report.

Our common stock will be penny stock, with
  the result that trading of our common stock in any secondary market may be impeded.

The Securities Exchange Commission has adopted rules that
  regulate broker-dealer practices in connection with transactions in penny stocks.
  Penny stocks are generally equity securities with a price of less than $5.00,
  other than securities registered on certain national securities exchanges or
  quoted on the Nasdaq system, provided that current price and volume information
  with respect to transactions in such securities is provided by the exchange
  or system. The penny stock rules require a broker-dealer, prior to a transaction
  in a penny stock, to deliver a standardized risk disclosure document prepared
  by the Commission, that: (a) contains a description of the nature and level
  of risk in the market for penny stocks in both public offerings and secondary
  trading; (b) contains a description of the broker's or dealer's duties to the
  customer and of the rights and remedies available to the customer with respect
  to a violation to such duties or other requirements of Securities' laws; (c)
  contains a brief, clear, narrative description of a dealer market, including
  bid and ask prices for penny stocks and the significance of the spread between
  the bid and ask price; (d) contains a toll-free telephone number for inquiries
  on disciplinary actions; (e) defines significant terms in the disclosure document
  or in the conduct of trading in penny stocks; and (f) contains such other information
  and is in such form, including language, type, size and format, as the Commission
  shall require by rule or regulation. The broker-dealer also must provide, prior
  to effecting any transaction in a penny stock, the customer with: (a) bid and
  offer quotations for the penny stock; (b) the compensation of the broker-dealer
  and its salesperson in the transaction; (c) the number of shares to which such
  bid and ask prices apply, or other comparable information relating to the depth
  and liquidity of the market for such stock; and (d) a monthly account statements
  showing the market value of each penny stock held in the customer's account.
  In addition, the penny stock rules require that prior to a transaction in a
  penny stock not otherwise exempt from those rules; the broker-dealer must make
  a special written determination that the penny stock is a suitable investment
  for the purchaser and receive the purchaser's written acknowledgment of the
  receipt of a risk disclosure statement, a written agreement to transactions
  involving penny stocks, and a signed and dated copy of a written suitability
  statement. These disclosure requirements may have the effect of reducing the
  trading activity in the secondary market for our stock if it

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becomes subject to these penny stock rules. Therefore, if
  our common stock becomes subject to the penny stock rules, stockholders may
  have difficulty selling those securities.

ITEM 2.      DESCRIPTION OF PROPERTY.

We own a 100% interest in the Burner Hills mineral claims,
  as described in Item 1  Description of Business of this Annual Report
  on Form 10-KSB. We do not own or lease any property other than our interest
  in the Burner Hills mineral claims.

Our principal executive offices are located at Suite 306 
  1140 Homer Street, Vancouver, British Columbia in the business premises of Senate
  Capital Group. These offices are provided to us pursuant to an office facilities
  and service agreement with Senate Capital Group whereby we are provided with
  office space, administrative services and phone and equipment usage in exchange
  for a payment of $1,000 per month. Mr. Dennis Higgs, our president and a director,
  is the sole stockholder of Senate Capital Group.

ITEM 3.      LEGAL PROCEEDINGS.

We are not a party to any material legal proceedings and to
  our knowledge, no such proceedings are threatened or contemplated.

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

No matters were submitted to our security holders for a vote
  during the fourth quarter of our fiscal year ending December 31, 2002.

PART II

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

No Public Market for Common Stock

There is presently no public market for our common stock.
  We are in the process of making an application for trading of our common stock
  on the NASD over the counter bulletin board. However, we can provide no assurance
  that our shares will be traded on the bulletin board or, if traded, that a public
  market will materialize.

Holders of Our Common Stock

As of the date of this registration statement, we had forty-four
  (44) registered shareholders.

Dividends

There are no restrictions in our Articles of Incorporation
  or bylaws that restrict us from declaring dividends. The Nevada Revised Statutes,
  however, prohibit us from declaring dividends where, after giving effect to
  the distribution of the dividend:

|(A) | we would not be able to
        pay our debts as they become due in the usual course of business; or                                                                                                                                               
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                    
|(B) | our total assets would be
        less than the sum of our total liabilities, plus the amount that would
        be needed to satisfy the rights of shareholders who have preferential
        rights superior to those receiving the distribution.

We have neither declared nor paid any cash dividends on our
  capital stock and do not anticipate paying cash dividends in the foreseeable
  future. Our current policy is to retain any earnings in order to finance

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the expansion of our operations. Our board of directors will
  determine future declaration and payment of dividends, if any, in light of the
  then-current conditions they deem relevant and in accordance with the Nevada
  Revised Statutes.

RECENT SALES OF UNREGISTERED SECURITIES

Since the date of our incorporation, we have completed the
  sales of the following securities that were not registered pursuant to the Securities
  Act of 1933:

We issued 1,500,000 shares of common stock on February 26,
  2001 to Mr. Dennis Higgs, Senate Equities Corp. and Ms. Aileen Lloyd. Mr. Higgs
  is one of our directors and is our president and chief executive officer. Mr.
  Higgs acquired 375,000 shares at a price of $0.001 per share. Senate Equities
  Corp. is a company wholly owned by Menace Capital Corp. Mr. Higgs is the sole
  shareholder of Menace Capital Corp. and Senate Equities Corp. Senate Equities
  acquired an additional 375,000 shares at a price of $0.001 per share. Ms. Lloyd
  is one of our directors and is our secretary, treasurer and chief financial
  officer. Ms. Lloyd acquired 750,000 shares at a price of $0.001 per share. These
  shares were issued pursuant to Section 4(2) of the Securities Act of 1933 and
  are restricted shares as defined in the Act.

We completed an offering of 2,500,000 shares of our common
  stock at a price of $0.01 per share to a total of ten purchasers on March 12,
  2001. The total amount we received from this offering was $25,000. We completed
  the offering pursuant to Regulation S of the Securities Act. Each purchaser
  represented to us that he was a non-US person as defined in Regulation S. We
  did not engage in a distribution of this offering in the United States. Each
  purchaser represented his intention to acquire the securities for investment
  only and not with a view toward distribution. Appropriate legends were affixed
  to the stock certificate issued to each purchaser in accordance with Regulation
  S. Each investor was given adequate access to sufficient information about us
  to make an informed investment decision. None of the securities were sold through
  an underwriter and accordingly, there were no underwriting discounts or commissions
  involved. No registration rights were granted to any of the purchasers.

We issued 1,500,000 shares of our common stock on March 14,
  2001 to Senate Capital Group Inc. pursuant to the mineral property purchase
  agreement in which we acquired our mineral claims. Senate Capital Group is a
  company controlled by Mr. Dennis Higgs. These shares were issued pursuant to
  Section 4(2) of the Securities Act of 1933 and are restricted shares as defined
  in the Act.

We completed an offering of 90,500 shares of our common stock
  at a price of $0.35 per share to a total of twenty-nine purchasers on June 14,
  2001. The total amount we received from this offering was $31,675. We completed
  the offering pursuant to Regulation S of the Securities Act. The purchaser represented
  to us that he was a non-US person as defined in Regulation S. We did not engage
  in a distribution of this offering in the United States. The purchaser represented
  his intention to acquire the securities for investment only and not with a view
  toward distribution. Appropriate legends were affixed to the stock certificate
  issued to the purchaser in accordance with Regulation S. The investor was given
  adequate access to sufficient information about us to make an informed investment
  decision. None of the securities were sold through an underwriter and accordingly,
  there were no underwriting discounts or commissions involved. No registration
  rights were granted to the purchaser.

We completed an offering of 50,000 shares of our common stock
  at a price of $0.35 per share to one purchaser on June 21, 2002. The total amount
  we received from this offering was $17,500. We completed the offering pursuant
  to Regulation S of the Securities Act. Each purchaser represented to us that
  he was a non-US person as defined in Regulation S. We did not engage in a distribution
  of this offering in the United States. Each purchaser represented his intention
  to acquire the securities for investment only and not with a view toward distribution.
  Appropriate legends were affixed to the stock certificate issued to each purchaser
  in accordance with Regulation S. Each investor was given adequate access to
  sufficient information about us to make an informed investment decision. None
  of the securities were sold through an underwriter and accordingly, there were
  no underwriting discounts or commissions involved. No registration rights were
  granted to any of the purchasers.

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ITEM 6.      MANAGEMENT'S DISCUSSION AND ANALYSIS
  OR PLAN OF OPERATION.

Plan Of Operations

Our business plan is to proceed with the exploration of the
  Burner Hills mineral claims to determine whether there are commercially exploitable
  reserves of gold and silver. We have completed the initial two phases of a recommended
  geological work program on the Burner Hills mineral claims. We have decided
  to continue through the third phase of the exploration program recommended by
  the geological report. We anticipate that phase three of the recommended geological
  exploration program will cost approximately $13,000. We had $7,814 in cash reserves
  as of December 31, 2002 and a working capital deficit of $10,619 as of December
  31, 2002. Senate Capital, a private company controlled by Mr. Dennis Higgs,
  one of our directors, has agreed to advance to us the funds necessary to enable
  us to complete phase three of the exploration program to the extent that we
  have insufficient cash reserves necessary to pay for this expense, to a maximum
  of $13,000, being the budgeted cost of phase three.

We have advanced funds to Mr. Rice, our geologist, to commence
  the third phase of the work program. We anticipate receiving a geological report
  summarizing the results of this phase of the exploration program from Mr. Rice
  upon completion of this third phase of exploration. We will assess the results
  of this program upon receipt of Mr. Rices report.

We will assess whether to proceed to phase four of the recommended
  geological exploration program upon completion of an assessment of the results
  of phase three. In making this determination, we will review the conclusions
  and recommendations that we receive from Mr. Rice based on his geological review
  of the results of the first three phases. In making this determination, we will
  make an assessment as to whether the results of phase three are sufficiently
  positive to enable us to obtain the financing necessary to proceed. If we decide
  to proceed with the fourth phase of the recommended exploration program, we
  will have to raise additional funds as the anticipated cost of this fourth phase,
  which would include a drilling program, is $40,000. The anticipated cost of
  the fourth phase of the exploration program is in excess of our projected cash
  reserves remaining upon completion of phase three. We anticipate that we would
  start phase four in the first half of 2003 if we determine to proceed with this
  phase and we are successful in raising the required financing. We would apply
  to the Bureau of Land Management for the permit required to enable us to proceed
  with the fourth phase, which would include a drilling program, once we had raised
  the financing necessary for us to proceed with this fourth phase. We anticipate
  that we would apply for this permit approximately two months prior to proceeding
  to commence the fourth phase.

We anticipate that additional funding required to fund future
  phases of our exploration program will be in the form of equity financing from
  the sale of our common stock. However, we cannot provide investors with any
  assurance that we will be able to raise sufficient funding from the sale of
  our common stock to fund additional phases of the exploration program, should
  we decide to proceed with any additional phase beyond phase three. We believe
  that debt financing will not be an alternative for funding future phases of
  our exploration program. We do not have any arrangements in place for any future
  equity financing.

If we determine not to proceed with additional exploration
  on the Burner Hills mineral claims based on the results of phase three, then
  we anticipate that we will pursue the acquisition of an interest in an additional
  mineral property. We anticipate that any acquisition of an interest in an additional
  mineral property would be made by the acquisition of an option to acquire an
  interest in the mineral property that would be exercisable by our completing
  exploration work on the property. We anticipate that the acquisition of an option
  in a mineral property would be our only feasible plan of operations, as we anticipate
  that our financial resources after completion of phase three will be insufficient
  to acquire a full ownership interest in a property of merit. There is no assurance
  that we would be able to acquire an interest in any additional mineral property
  or achieve the additional financing necessary for us to proceed with exploration
  if an interest in an additional mineral property was acquired. Our reasons for
  pursuing the acquisition of an additional property if we do not continue with
  exploration of the Burner Hills mineral claims would be to create value for
  our shareholders, although we anticipate that shareholders would suffer dilution
  if we were able to achieve additional financing to explore any new property.
  We anticipate that any new property would not be acquired in a related-party
  transaction with one of our officers or directors. We have no present intention
  to acquire or merge with any other company.

17

---

We anticipate that we will incur the following expenses over
  the next twelve months:

|1. | $13,000 in connection with the completion
      of the third phase of our recommended geological work program;                                                                                                                                                                                                                                                                  
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                 
|2. | $40,000
        in connection with the completion of the fourth phase of our recommended
        geological work program, if we decide to proceed with this phase;                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                 
|3. | $22,000 for
        operating expenses, including professional legal and accounting expenses
        associated with complying with ongoing reporting obligations under the
        Securities Exchange Act of 1934. These operating expenses include our
        expenses under our office and facilities contract with Senate Capital
        Group, in the amount of $12,000;

We had cash in the amount of $7,814 and a working capital
  deficit in the amount of $10,619 as of December 31, 2002. Our total expenditures
  over the next twelve months are anticipated to be $75,000, of which $23,000
  are anticipated to be incurred during the next six months. This total expenditure
  figure includes the third and fourth phase to our exploration program and all
  operating expenses, including the legal and accounting fees associated with
  this registration statement. We will require additional financing to fund our
  operations for the next twelve months.

We plan to pursue additional financing in order to fund our
  plan of operations. We anticipate that any financing would involve private placement
  sales of our common stock. We can give investors no assurance as to whether
  we will achieve the financing required to continue our plan of operations or
  whether the financing will be completed as we are planning. If we do not raise
  any additional financing at this time, then we will not be able to continue
  our plan of operations.

Our plan of operations subsequent to the completion of phase
  four will depend on the success of the drilling program completed in phase four
  and on the success of further exploration that we will be required to carry
  out if we continue with exploration based on the results of phase four. If we
  proceeded to complete phase four, we would still be required to carry out further
  exploration activities, including completion of the following steps:

|1. | Completion
        of additional geological analysis, including additional geologic mapping
        and sampling. We estimate that this additional geological analysis could
        take approximately three months and cost up to $20,000;
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                             
|2. | Completion of
        additional road building, drilling and sampling. We estimate that this
        additional work could take up to three months and cost up to $20,000;                                                                  
|   |                                                                                                                                                                                                                                             
|3. | bulk sampling
        for metallurgical testing and engineering testing of drill samples for
        mineral recovery rates. We estimate that this additional testing could
        take approximately six months and cost up to $75,000.   

These subsequent exploration activities would be determined
  based upon the results of the drilling program completed in phase four and a
  geological interpretation of the results of this phase. These results would
  be the subject of a geological report on the results of phase four. The nature
  of the subsequent exploration activities, the extent of additional exploration
  activities and the cost of these additional exploration activities would be
  determined based on the recommendations contained in this geological report.
  Accordingly, the projected timetable and costs for completing the subsequent
  exploration activities are estimates only. Even once these additional exploration
  activities are undertaken, we may still be required to take further exploration
  activities to establish the commercial viability of our mineral claims. There
  is no assurance that we would be able to establish the commercial viability
  of our mineral claims if these additional exploration activities are undertaken.

Even if we are successful in completing our current exploration
  program and we receive positive results, we will still have to undertake an
  extensive and expensive drilling program to determine the extent of mineralization
  on the Burner Hills mineral claims. Even if this further exploration is successful,
  we will have to undertake expensive engineering and feasibility studies.

18

---

If we do not obtain additional financing necessary to conduct
  continued exploration, we may consider bringing in a joint venture partner to
  provide the required funding. We have not undertaken any efforts to locate a
  joint venture partner. In addition, we cannot provide investors with any assurance
  that we will be able to locate a joint venture partner who will assist us in
  funding our exploration of the Burner Hills mineral claim.

Results of Operations for Year Ended December 31, 2002
  and the Year ended December 31, 2001

We did not earn any revenues during the year ended December
  31, 2002 or the year ended December 31, 2001. We do not anticipate earning revenues
  until such time as we have entered into commercial production of our mineral
  properties. We are presently in the exploration stage of our business and we
  can provide no assurance that we will discover commercially exploitable levels
  of mineral resources on our properties, or if such resources are discovered,
  that we will enter into commercial production of our mineral properties.

We incurred operating expenses in the amount of $51,671 for
  the year ended December 31, 2002, compared to $47,158 for the year ended December
  31, 2001. Our loss for the year ended December 31, 2002 was comprised primarily
  of professional fees in the amount of $33,666 incurred in connection with our
  filing a registration statement with the Securities and Exchange Commission
  under the Securities Act of 1933 and consulting fees paid or accrued to Senate
  Capital Group in the amount of $12,000. Acquisition and exploration expenses
  for the year ended December 31, 2002 were $5,605, compared to $29,143 for the
  year ended December 31, 2001.

We anticipate our operating expenses will increase as we undertake
  our plan of operations. The increase will be attributable to our completion
  of phase three of our geological exploration program and ongoing operating expenses
  will also increase due to complying with ongoing reporting obligations under
  the Securities Exchange Act of 1934.

We incurred a loss in the amount of $51,671 for the year ended
  December 31, 2002, compared to $47,158 for the year ended December 31, 2001.
  Our losses were attributable entirely to our operating expenses.

Liquidity and Capital Resources

We had cash of $7,814 as of December 31, 2002, compared to
  cash of $30,576 as of December 31, 2001. We had a working capital deficit of
  $10,619 as of December 31, 2002, compared to working capital of $23,552 as of
  December 31, 2001.

Senate Capital Group, a private company controlled by Mr.
  Dennis Higgs, one of our directors, has agreed to advance to us the funds necessary
  to enable us to complete phase three of the exploration program to the extent
  that we have insufficient cash reserves necessary to pay for this expense. This
  commitment to advance funds is capped at a maximum of $13,000, being the budgeted
  cost of phase three. Any funds would be advanced to us as a loan repayable on
  demand without interest. We anticipate that we will be required to borrow approximately
  $10,000 from Senate Capital Group during our current fiscal quarter under this
  commitment to complete phase three of our exploration program.

We had accounts payable of $18,433 as of December 31, 2002.
  Of this amount, $[@] was owed to Senate Capital Group. Senate Capital
  Group has agreed to defer payment of this amount in order to enable us to proceed
  with phase three of our recommended exploration program. We anticipate spending
  $12,000 over the next twelve months in connection with our office and facilities
  contract with Senate Capital Group. We do not anticipate making any other payments
  to Senate Capital Group over the next twelve months, other than payment of the
  deferred management fees outlined above. Carletons payment of these deferred
  management fees will only be made if we achieve sufficient additional financing
  that would enable us to pay these accrued liabilities without impeding our exploration
  plans. We entered into a legally binding agreement with Senate Capital Group
  effective December 31, 2002 whereby Senate Capital Group has agreed to defer
  payment of accrued liabilities in the amount of $5,500 and its monthly management
  fee of $1,000 per month until such time as we achieve sufficient additional
  financing that would enable us to pay these accrued liabilities without impeding
  our exploration plans.

19

---

We completed the sale of 50,000 shares of our common stock
  at a price of $0.35 per share for total proceeds of $17,500 in June 2002. We
  will apply a portion of the proceeds of this offering to the third phase of
  our exploration program. We will require additional financing in order to enable
  us to proceed with any further exploration of our mineral claims, as discussed
  above under Plan of Operations. In addition, we anticipate that we will require
  approximately $75,000 over the next twelve months to pay for our ongoing expenses
  if we proceed with both phase three and phase four of our recommended exploration
  program. These expenses include consulting expenses payable to Senate Capital
  Group in respect of office facilities and services and professional fees associated
  with our being a reporting company under the Securities Exchange Act of 1934.
  These cash requirements are in excess of our current cash resources. Accordingly,
  we will require additional financing in order to continue operations. We have
  no arrangements in place for any additional financing and there is no assurance
  that we will achieve the required additional funding.

We have not attained profitable operations and are dependent
  upon obtaining financing to pursue exploration activities. For these reasons
  our auditors stated in their report that they have substantial doubt we will
  be able to continue as a going concern.

ITEM 7.      FINANCIAL STATEMENTS.

Index to Financial Statements:

|1. | Auditors Report;                                                                  
|-- | -----------------------------------------------------------------------------------
|   |                                                                                    
|2. | Audited Financial Statements for the
      year ended December 31, 2002, including:
|   |                                                                                    
|   | a.                                                                                 
|   |                                                                                    
|   | b.                                                                                 
|   |                                                                                    
|   | c.                                                                                 
|   |                                                                                    
|   | d.                                                                                 
|   |                                                                                    
|   | e.                                                                                 

20

---













CARLETON VENTURES CORP. (An Exploration Stage Company)



FINANCIAL STATEMENTS



DECEMBER 31, 2002 AND 2001
  (Stated in U.S. Dollars)







21

---





INDEPENDENT AUDITORS' REPORT

To the Shareholders and Directors of
  Carleton Ventures Corp. 
  (An exploration stage company)

We have audited the balance sheets of Carleton Ventures Corp. (an exploration stage company) as at December 31, 2002 and 2001, and the statements of loss and deficit accumulated during the exploration stage, cash flows, and stockholders equity
for the years ended December 31, 2002 and 2001. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with United States of America generally accepted auditing standards. 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, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2002 and 2001, and the results of its operations and cash flows for the years ended December
31, 2002 and 2001 in accordance with United States of America generally accepted accounting principles.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in to Note 1(c) to the financial statements, the Company has incurred a net loss of $101,294 since inception, has not
attained profitable operations and is dependent upon obtaining adequate financing to fulfil its exploration activities. These factors raise substantial doubt that the Company will be able to continue as a going concern. The financial statements do
not include any adjustments that might result from the outcome of this uncertainty.

|Vancouver, B.C. |  | Morgan & Company   
|--------------- |  | ---------------------
|                |  |                      
|March 18, 2003  |  | Chartered Accountants





22

---



CARLETON VENTURES CORP.
  (An Exploration Stage Company)

BALANCE SHEETS
  (Stated in U.S. Dollars)

|                                                              |   |             |   |   |         |  
|------------------------------------------------------------- | - | ----------- | - | - | ------- | -
|                                                              |   | DECEMBER 31 |  
|                                                              |   | 2002        |   |   | 2001    |  
|                                                              |   |             |   |   |         |  
|                                                              |   |             |   |   |         |  
|ASSETS                                                        |   |             |   |   |         |  
|                                                              |   |             |   |   |         |  
|                                                              |   |             |   |   |         |  
|Current                                                       |   |             |   |   |         |  
|Cash                                                          | $ | 7,814       |   | $ | 30,576  |  
|                                                              |   |             |   |   |         |  
|Mineral Property Interest(Note 3)                             |   | -           |   |   | -       |  
|                                                              |   |             |   |   |         |  
|                                                              |   |             |   |   |         |  
|                                                              | $ | 7,814       |   | $ | 30,576  |  
|                                                              |   |             |   |   |         |  
|                                                              |   |             |   |   |         |  
|LIABILITIES                                                   |   |             |   |   |         |  
|                                                              |   |             |   |   |         |  
|                                                              |   |             |   |   |         |  
|Current                                                       |   |             |   |   |         |  
|Accounts
      payable                                        | $ | 18,433      |   | $ | 7,024   |  
|                                                              |   |             |   |   |         |  
|                                                              |   |             |   |   |         |  
|SHAREHOLDERS EQUITY (DEFICIENCY)                             |   |             |   |   |         |  
|                                                              |   |             |   |   |         |  
|Share Capital                                                 |   |             |   |   |         |  
|Authorized:                                                   |   |             |   |   |         |  
|100,000,000
      Common shares, par value $0.001 per share   |   |             |   |   |         |  
|10,000,000
      Preferred shares, par value $0.001 per share |   |             |   |   |         |  
|                                                              |   |             |   |   |         |  
|Issued
      and outstanding:                                 |   |             |   |   |         |  
|5,640,500
      Common shares at December 31, 2002 and        |   |             |   |   |         |  
|5,590,500
      Common shares at December 31, 2001            |   | 5,641       |   |   | 5,591   |  
|                                                              |   |             |   |   |         |  
|Additional
      paid-in capital                              |   | 85,034      |   |   | 67,584  |  
|                                                              |   |             |   |   |         |  
|Deficit Accumulated During The Exploration
      Stage        |   | (101,294    | ) |   | (49,623 | )
|                                                              |   |             |   |   |         |  
|                                                              |   | (10,619     | ) |   | 23,552  |  
|                                                              |   |             |   |   |         |  
|                                                              |   |             |   |   |         |  
|                                                              | $ | 7,814       |   | $ | 30,576  |  
|                                                              |   |             |   |   |         |  

23

---

CARLETON VENTURES CORP.
  (An Exploration Stage Company)
  STATEMENTS OF LOSS AND DEFICIT (Stated in U.S. Dollars)

|                                           |   |             |  |   |           |  |   |           | 
|------------------------------------------ | - | ----------- |  | - | --------- |  | - | --------- | 
|                                           |   |             |  |   |           |  |   | PERIOD    | 
|                                           |   |             |  |   |           |  |   | FROM      | 
|                                           |   |             |  |   |           |  |   | INCEPTION | 
|                                           |   |             |  |   |           |  |   | MAY 26    | 
|                                           |   | YEARS ENDED |  |   | 1999 TO   | 
|                                           |   | DECEMBER 31 |  |   | DECEMBER  | 
|                                           |   |             |  |   |           |  |   | 31        | 
|                                           |   | 2002        |  |   | 2001      |  |   | 2002      | 
|                                           |   |             |  |   |           |  |   |           | 
|                                           |   |             |  |   |           |  |   |           | 
|Expenses                                   |   |             |  |   |           |  |   |           | 
|Professional
      fees                    | $ | 33,666      |  | $ | 5,632     |  | $ | 41,763    | 
|Office
      and sundry                    |   | 400         |  |   | 1,383     |  |   | 1,783     | 
|Office
      facilities and services       |   | 12,000      |  |   | 11,000    |  |   | 23,000    | 
|Mineral
      property acquisition and     |   |             |  |   |           |  |   |           | 
|exploration
      expenditures             |   | 5,605       |  |   | 29,143    |  |   | 34,748    | 
|                                           |   |             |  |   |           |  |   |           | 
|                                           |   |             |  |   |           |  |   |           | 
|Net Loss For The Year                      |   | 51,671      |  |   | 47,158    |  | $ | 101,294   | 
|                                           |   |             |  |   |           |  |   |           | 
|                                           |   |             |  |   |           |  |   |           | 
|Deficit Accumulated During The             |   |             |  |   |           |  |   |           | 
|Exploration Stage, Beginning
      Of Year |   | 49,623      |  |   | 2,465     |  |   |           | 
|                                           |   |             |  |   |           |  |   |           | 
|                                           |   |             |  |   |           |  |   |           | 
|Deficit Accumulated During The             |   |             |  |   |           |  |   |           | 
|Exploration Stage, End
      Of Year       | $ | 101,294     |  | $ | 49,623    |  |   |           | 
|                                           |   |             |  |   |           |  |   |           | 
|                                           |   |             |  |   |           |  |   |           | 
|                                           |   |             |  |   |           |  |   |           | 
|                                           |   |             |  |   |           |  |   |           | 
|                                           |   |             |  |   |           |  |   |           | 
|                                           | $ | 0.01        |  | $ | 0.01      |  |   |           | 
|Basic And Diluted Loss Per Share           |   |             |  |   |           |  |   |           | 
|                                           |   |             |  |   |           |  |   |           | 
|                                           |   |             |  |   |           |  |   |           | 
|                                           |   |             |  |   |           |  |   |           | 
|                                           |   |             |  |   |           |  |   |           | 
|                                           |   |             |  |   |           |  |   |           | 
|                                           |   |             |  |   |           |  |   |           | 
|Weighted Average Number Of Shares          |   | 5,616,527   |  |   | 4,529,042 |  |   |           | 
|Outstanding                                |   |             |  |   |           |  |   |           | 
|                                           |   |             |  |   |           |  |   |           | 



24

---

CARLETON VENTURES CORP.
  (An Exploration Stage Company)

STATEMENTS OF CASH FLOWS (Stated in U.S. Dollars)

|                                              |   |             |   |   |          |   |   |           |  
|--------------------------------------------- | - | ----------- | - | - | -------- | - | - | --------- | -
|                                              |   |             |   |   |          |   |   | PERIOD    |  
|                                              |   |             |   |   |          |   |   | FROM      |  
|                                              |   |             |   |   |          |   |   | INCEPTION |  
|                                              |   |             |   |   |          |   |   | MAY 26    |  
|                                              |   | YEARS ENDED |   |   | 1999 TO  |  
|                                              |   | DECEMBER 31 |   |   | DECEMBER |  
|                                              |   |             |   |   |          |   |   | 31        |  
|                                              |   | 2002        |   |   | 2001     |   |   | 2002      |  
|                                              |   |             |   |   |          |   |   |           |  
|                                              |   |             |   |   |          |   |   |           |  
|Cash Flows From Operating Activity            |   |             |   |   |          |   |   |           |  
|Net loss
      for the year                   | $ | (51,671     | ) | $ | (47,158  | ) | $ | (101,294  | )
|                                              |   |             |   |   |          |   |   |           |  
|Adjustments To Reconcile Net Loss To Net      |   |             |   |   |          |   |   |           |  
|Cash Used By Operating
      Activity         |   |             |   |   |          |   |   |           |  
|Stock issued for other than cash              |   | -           |   |   | 15,000   |   |   | 15,000    |  
|Changes
      in accounts payable             |   | 11,409      |   |   | 4,559    |   |   | 18,433    |  
|                                              |   |             |   |   |          |   |   |           |  
|                                              |   | (40,262     | ) |   | (27,599  | ) |   | (67,861   | )
|                                              |   |             |   |   |          |   |   |           |  
|                                              |   |             |   |   |          |   |   |           |  
|Cash Flows From Financing Activity            |   |             |   |   |          |   |   |           |  
|Share capital
      issued                    |   | 17,500      |   |   | 58,175   |   |   | 75,675    |  
|                                              |   |             |   |   |          |   |   |           |  
|                                              |   |             |   |   |          |   |   |           |  
|Increase (Decrease) In Cash                   |   | (22,762     | ) |   | 30,576   |   |   | 7,814     |  
|                                              |   |             |   |   |          |   |   |           |  
|Cash, Beginning Of Year                       |   | 30,576      |   |   | -        |   |   | -         |  
|                                              |   |             |   |   |          |   |   |           |  
|                                              |   |             |   |   |          |   |   |           |  
|Cash, End Of Year                             | $ | 7,814       |   | $ | 30,576   |   | $ | 7,814     |  
|                                              |   |             |   |   |          |   |   |           |  
|                                              |   |             |   |   |          |   |   |           |  
|                                              |   |             |   |   |          |   |   |           |  
|Supplemental Disclosure Of Non-Cash           |   |             |   |   |          |   |   |           |  
|Financing And Investing
      Activities      |   |             |   |   |          |   |   |           |  
|                                              |   |             |   |   |          |   |   |           |  
|Common
      shares issued to acquire mineral | $ | -           |   | $ | 15,000   |   | $ | 15,000    |  
|property
      interest                       |   |             |   |   |          |   |   |           |  
|                                              |   |             |   |   |          |   |   |           |  

25

---

CARLETON VENTURES CORP.
  (An Exploration Stage Company)

STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIENCY)

DECEMBER 31, 2002 AND 2001
  (Stated in U.S. Dollars)

|                             |              |  |   |             |  |   |            |  |   |             |   |   |         |  
|---------------------------- | ------------ |  | - | ----------- |  | - | ---------- |  | - | ----------- | - | - | ------- | -
|                             | COMMON STOCK |  |   | DEFICIT     |  |   |            | 
|                             |              |  |   | ACCUMULATED |  |   |            | 
|                             |              |  |   |             |  |   | ADDITIONAL |  |   | DURING THE  |   |   |         |  
|                             |              |  |   |             |  |   | PAID-IN    |  |   | EXPLORATION |   |   |         |  
|                             | SHARES       |  |   | AMOUNT      |  |   | CAPITAL    |  |   | STAGE       |   |   | TOTAL   |  
|                             |              |  |   |             |  |   |            |  |   |             |   |   |         |  
|Net loss for the period      | -            |  | $ | -           |  | $ | -          |  | $ | (2,465      | ) | $ | (2,465  | )
|                             |              |  |   |             |  |   |            |  |   |             |   |   |         |  
|December 31, 1999            | -            |  |   | -           |  |   | -          |  |   | (2,465      | ) |   | (2,465  | )
|Net loss for the year        | -            |  |   | -           |  |   | -          |  |   | -           |   |   | -       |  
|                             |              |  |   |             |  |   |            |  |   |             |   |   |         |  
|Balance, December 31, 2000   | -            |  |   | -           |  |   | -          |  |   | (2,465      | ) |   | (2,465  | )
|Shares issued for cash at    |              |  |   |             |  |   |            |  |   |             |   |   |         |  
|$0.001                       | 1,500,000    |  |   | 1,500       |  |   | -          |  |   | -           |   |   | 1,500   |  
|Shares issued for cash at    |              |  |   |             |  |   |            |  |   |             |   |   |         |  
|$0.01                        | 2,500,000    |  |   | 2,500       |  |   | 22,500     |  |   | -           |   |   | 25,000  |  
|Shares issued to acquire     |              |  |   |             |  |   |            |  |   |             |   |   |         |  
|mineral property interest at |              |  |   |             |  |   |            |  |   |             |   |   |         |  
|$0.01                        | 1,500,000    |  |   | 1,500       |  |   | 13,500     |  |   | -           |   |   | 15,000  |  
|Shares issued for cash at    |              |  |   |             |  |   |            |  |   |             |   |   |         |  
|$0.35                        | 90,500       |  |   | 91          |  |   | 31,584     |  |   | -           |   |   | 31,675  |  
|Net loss for the year        | -            |  |   | -           |  |   | -          |  |   | (47,158     | ) |   | (47,158 | )
|                             |              |  |   |             |  |   |            |  |   |             |   |   |         |  
|Balance, December 31, 2001   | 5,590,500    |  |   | 5,591       |  |   | 67,584     |  |   | (49,623     | ) |   | 23,552  |  
|Shares issued for cash at    |              |  |   |             |  |   |            |  |   |             |   |   |         |  
|$0.35                        | 50,000       |  |   | 50          |  |   | 17,450     |  |   | -           |   |   | 17,500  |  
|Net loss for the year        | -            |  |   | -           |  |   | -          |  |   | (51,671     | ) |   | (51,671 | )
|                             |              |  |   |             |  |   |            |  |   |             |   |   |         |  
|Balance, December 31, 2002   | 5,640,500    |  | $ | 5,641       |  | $ | 85,034     |  | $ | (101,294    | ) | $ | (10,619 | )
|                             |              |  |   |             |  |   |            |  |   |             |   |   |         |  



26

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CARLETON VENTURES CORP.
  (An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2002 AND 2001
  (Stated in U.S. Dollars)



|1. | NATURE OF OPERATIONS                                                                                                                                                                                                                                                                                                                                                                                                             
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | c)                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                  
|2. | SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | The financial
        statements of the Company have been prepared in accordance with generally
        accepted accounting principles in the United States. Because a precise
        determination of many assets and liabilities is dependent upon future
        events, the preparation of financial statements for a period necessarily
        involves the use of estimates which have been made using careful judgement.

27

---

CARLETON VENTURES CORP.
  (An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2002 AND 2001
  (Stated in U.S. Dollars)

|2. | SIGNIFICANT ACCOUNTING POLICIES(Continued)                                                                                                                                                                                
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                           
|   | The financial statements have, in
      managements opinion, been properly prepared within reasonable limits
      of materiality and within the framework of the significant accounting policies
      summarized below:
|   |                                                                                                                                                                                                                           
|   | a)                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                           
|   | b)                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                           
|   | c)                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                           

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

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

28

---

CARLETON VENTURES CORP.
  (An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2002 AND 2001
  (Stated in U.S. Dollars)



|2. | SIGNIFICANT ACCOUNTING POLICIES
      (Continued)                                                                                                                                                                                                                                                                          
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                            
|   | e)                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                            
|3. | MINERAL PROPERTY INTEREST                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                            
|   | Pursuant to an
        agreement, dated March 14, 2001, the Company has acquired a 100% interest
        in fourteen mineral claims located in northwestern Elko County, Nevada,
        in consideration of the cash payment of $10,052, and the issuance of 1,500,000
        common shares with a fair value of $15,000.
|   |                                                                                                                                                                                                                                                                                                                            
|4. | RELATED PARTY TRANSACTIONS                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                            
|   | a)                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                            
|   | b)                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                            
|   | c)                                                                                                                                                                                                                                                                                                                         

29

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

Not applicable.

PART III

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

Our executive officers and directors and their respective ages as of March 24, 2003 are as follows:

|Directors:       |     | 
|---------------- | --- | 
|                 |     | 
|Name of Director | Age | 
|                 |     | 
|Dennis Higgs     | 45  | 
|Aileen Lloyd     | 50  | 

Executive Officers:

|Name of Officer | Age |  | Office                                          
|--------------- | --- |  | ------------------------------------------------
|                |     |  |                                                 
|Dennis Higgs    | 45  |  | President and Chief Executive Officer           
|Aileen Lloyd    | 50  |  | Secretary, Treasurer and Chief Financial Officer

Set forth below is a brief description of the background and
  business experience of each of our executive officers and directors for the
  past five years.

Mr. Dennis Higgs is our president and chief executive
  officer and is a member of our board of directors. Mr. Higgs was appointed to
  our board of directors as our president and chief executive officer on May 26,
  1999.

In 1981, Mr. Higgs graduated from the University of British
  Columbia, Vancouver, British Columbia, Canada with a Bachelor of Commerce degree.
  He then completed the Canadian Securities Course conducted by the Canadian Securities
  Institute of Toronto, Canada. In 1982, Mr. Higgs completed The Registered Representatives
  Exam also conducted by the Canadian Securities Institute, Toronto, Canada. In
  1983, Mr. Higgs completed the Canadian Options Course offered by the Canadian
  Securities Institute, Canada.

Mr. Higgs has served as a director and officer of the following
  companies during the past five years:

|1. | Mr. Higgs is
        a director and officer of Senate Capital Group Inc., a British Columbia
        company since July 1990. In this position, Mr. Higgs provides management
        consulting and investor relations services.                                                                                                          
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                            
|2. | Mr. Higgs has
        been a director and the president of Miranda Gold Corp. (formerly Miranda
        Diamond Corp. and formerly Thrush Industries Inc.), a Canadian public
        reporting gold exploration company, since May 1993. In this position,
        Mr. Higgs provides management consulting services to Miranda Gold Corp.



30

---





|3. | Mr. Higgs has been a director
        and officer of Ubex Capital Inc., a private British Columbia company since
        February 1984. Ubex Capital is in the business of investing in start-up
        companies and providing management consulting services, including advising
        on the acquisition and disposition of mineral properties. These management
        consulting services include services provided by Mr. Higgs through Ubex
        Capital.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|4. | Mr. Higgs was a director
        and the president of Airbomb.com Inc, a public reporting company from
        July 1987 to July 1990 and then again from March 1991 through December
        1999. From December 1999 to December 2000, Mr. Higgs was only a director
        of Airbomb. Airbomb is a sporting goods company reporting under the US
        Securities Exchange Act of 1934.                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|5. | Mr. Higgs was a director
        of Braddick Resources Ltd., a Canadian public reporting company from October
        1993 to December 1997. Braddick is a junior resource company engaged in
        the business of mineral exploration.                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|6. | Mr. Higgs was a director
        of First Choice Industries Inc., a Canadian public reporting company from
        October 1993 to March 1998. Mr. Higgs was president from October 1993
        to April 1995. First Choice is a junior resource company engaged in the
        business of mineral exploration.                                                                                                                                                      

Ms. Aileen Lloydis our secretary, treasurer and chief
  financial officer and is a member of our board of directors. Ms. Lloyd was appointed
  to our board of directors and as our secretary, treasurer and chief financial
  officer on May 26, 1999.

Ms. Lloyd has been an administrative assistant with Senate
  Capital Group Inc., a private venture capital and management consulting company,
  since October 1990. In this position she provides management services to publicly
  traded companies.

Ms. Lloyd has served as a director or officer of the following
  companies during the past five years:

|1. | Ms. Lloyd has been a director
        of Miranda Gold Corp. (formerly Miranda Diamond Corp. and formerly Thrush
        Industries Inc.), a Canadian public reporting gold exploration company
        since May 1993. In this position, Ms. Lloyd provides management services.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                 
|2. | Ms. Lloyd was a director
        of First Choice Industries Inc., a Canadian public reporting resource
        exploration company from July 1992 through March 1998. In this position,
        Ms. Lloyd provided management services.                                         
|   |                                                                                                                                                                                                                                                                                 
|3. | Ms. Lloyd was a director
        of North American Scientific Inc., a US public reporting manufacturing
        company from July 1990 through 1997. In this position, Ms. Lloyd provided
        management services.                                                          

Term of Office

Our Directors are appointed for a one-year term to hold office
  until the next annual general meeting of our shareholders or until removed from
  office in accordance with our bylaws. Our officers are appointed by our board
  of directors and hold office until removed by the board.

Significant Employees

We have no significant employees other than the officers and
  directors described above.

31

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ITEM 10.      EXECUTIVE COMPENSATION.

Summary Compensation Table

The table below summarizes all compensation awarded to, earned
  by, or paid to our executive officers by any person for all services rendered
  in all capacities to us for the fiscal years ended December 31, 2002, 2001 and
  2000:

|              | AnnualCompensation                  | Long TermCompensation
|------------- | ----------------------------------- | ---------------------
|Name          | Title                               | Year                 
|Dennis Higgs* | President,CEO andDirector           | 200220012000         
|Aileen Lloyd  | Secretary,Treasurer,CFO andDirector | 200220012000         

* Senate Capital Group receives $1,000 per month under an
  office facilities and service contract. All of the shares of common stock of
  Senate Capital Group is owned by Mr. Dennis Higgs.

STOCK OPTION GRANTS

We did not grant any stock options to any of our officers,
  directors or employees during our most recent fiscal year ended December 31,
  2002. We have also not granted any stock options to any of our officers, directors
  or employees since December 31, 2002.

EXERCISES OF STOCK OPTIONS AND YEAR-END OPTION VALUES

No stock options were exercised by our officers, directors
  or employees during the financial year ended December 31, 2002. No stock options
  have been exercised since December 31, 2002.

OUTSTANDING STOCK OPTIONS

We do not have any stock options outstanding.

COMPENSATION AGREEMENT

We are not party to any compensation agreements, including
  any employment or consultant agreements, with either Mr. Higgs or Ms. Lloyd,
  our sole executive officers. We do not pay any amount to Mr. Higgs or Ms. Lloyd
  in consideration for their acting as directors of Carleton.

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE
  ACT

Section 16(a) of the Exchange Act requires the Company's executive
  officers and directors, and persons who beneficially own more than ten percent
  of the Company's equity securities, to file reports of ownership and changes
  in ownership with the Securities and Exchange Commission. Officers, directors
  and greater than ten percent shareholders are required by SEC regulation to
  furnish the Company with copies of all Section 16(a) forms they file. These
  filing requirements under Section 16(a) of the Exchange

32

---

Act did not apply to our executive officers, directors and
  10% shareholders during the fiscal year ended December 31, 2002 due to the fact
  that we did not become a reporting issuer under the Exchange Act until February
  12, 2003.

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

The following table sets forth certain information concerning
  the number of shares of our common stock owned beneficially as of March 24,
  2003 by: (i) each person (including any group) known to us to own more than
  five percent (5%) of any class of our voting securities, (ii) each of our directors,
  (iii) each of our named executive officers; and (iv) officers and directors
  as a group. Unless otherwise indicated, the shareholders listed possess sole
  voting and investment power with respect to the shares shown.

|                                 |                                |                      |                 
|-------------------------------- | ------------------------------ | -------------------- | ----------------
|                                 | Name and address               | Number of Shares     | Percentage of   
|Title of class                   | of beneficial owner            | of Common Stock      | Common Stock (1)
|                                 |                                |                      |                 
|DIRECTORS AND EXECUTIVE OFFICERS |                                |                     
|                                 |                                |                      |                 
|Common Stock                     | Dennis Higgs                   | 2,250,000 shares (2) | 39.9%           
|                                 | Director, President and        |                      |                 
|                                 | Chief Executive Officer        |                      |                 
|                                 | Suite 306  1140 Homer Street  |                      |                 
|                                 | Vancouver, British Columbia    |                      |                 
|                                 | Canada V6B 2X6                 |                      |                 
|                                 |                                |                      |                 
|Common Stock                     | Aileen Lloyd                   | 1,000,000 shares (3) | 17.7%           
|                                 | Director, Secretary, Treasurer |                      |                 
|                                 | and Chief Financial Officer    |                      |                 
|                                 | Suite 306  1140 Homer Street  |                      |                 
|                                 | Vancouver, British Columbia    |                      |                 
|                                 | Canada V6B 2X6 (3)             |                      |                 
|                                 |                                |                      |                 
|Common Stock                     | All Officers and Directors     | 3,250,000 shares     | 57.6%           
|                                 | as a Group (2 persons)         |                      |                 
|                                 |                                |                      |                 
|5% STOCKHOLDERS                  |                                |                      |                 
|                                 |                                |                      |                 
|Common Stock                     | Eric G. Fergie                 | 300,000 shares       | 5.3%            
|                                 | 2221 Venables St.              |                      |                 
|                                 | Vancouver, BC                  |                      |                 
|                                 | Canada V5V 2J5                 |                      |                 
|                                 |                                |                      |                 
|Common Stock                     | Darcy Higgs                    | 700,000 shares (4)   | 12.4%           
|                                 | 4756 Drummond Drive            |                      |                 
|                                 | Vancouver, BC                  |                      |                 
|                                 | Canada V6R 1K8                 |                      |                 
|                                 |                                |                      |                 
|Common Stock                     | Carleen Higgs                  | 700,000 shares (5)   | 12.4%           
|                                 | 4756 Drummond Drive            |                      |                 
|                                 | Vancouver, BC                  |                      |                 
|                                 | Canada V6R 1K8                 |                      |                 
|                                 |                                |                      |                 

33

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|(1) | The percent of class is
        based on 5,640,500 shares of common stock issued and outstanding as of
        March 24, 2003.                                                                                                                                                                                                                                                                                                        
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Includes 375,000 shares
        in the name of Dennis Higgs, 375,000 shares held in the name of Senate
        Equities Corp., which is wholly owned by Menace Capital Corp., which is
        in turn wholly owned by Dennis Higgs, and 1,500,000 shares were acquired
        in the name of Senate Capital Group Inc. in exchange for the assignment
        of the mineral claims. Senate Capital is wholly owned by Dennis Higgs.
|(3) | Includes 750,000 shares
        in the name of Aileen Lloyd and 250,000 in the name of her husband, Gordon
        Lloyd.                                                                                                                                                                                                                                                                                                             
|(4) | Includes 350,000 shares
        in the name of Darcy Higgs and 350,000 shares in the name of Santorini
        Investment Corp., a private company controlled by Carleen Higgs, the wife
        of Darcy Higgs.                                                                                                                                                                                                                      
|(5) | Includes 350,000 shares
        in the name of Santorini Investment Corp., a private company controlled
        by Carleen Higgs, and 350,000 shares in the name of Darcy Higgs, the husband
        of Carleen Higgs.                                                                                                                                                                                                                

It is believed by us that all persons named have full voting
  and investment power with respect to the shares indicated, unless otherwise
  noted in the table. Under the rules of the Securities and Exchange Commission,
  a person (or group of persons) is deemed to be a "beneficial owner" of a security
  if he or she, directly or indirectly, has or shares the power to vote or to
  direct the voting of such security, or the power to dispose of or to direct
  the disposition of such security. Accordingly, more than one person may be deemed
  to be a beneficial owner of the same security. A person is also deemed to be
  a beneficial owner of any security, which that person has the right to acquire
  within 60 days, such as options or warrants to purchase our common stock.

CHANGE IN CONTROL

We are not aware of any arrangement that might result in a
  change in control in the future.

ITEM 12.      CERTAIN RELATIONSHIPS
  AND RELATED TRANSACTIONS.

Except as described below, none of the following parties has,
  since our date of incorporation, had any material interest, direct or indirect,
  in any transaction with us or in any presently proposed transaction that has
  or will materially affect us, other than noted in this section:

- Any of our directors or officers;
- Any person proposed as a nominee for election as a director;
- Any person who beneficially owns, directly or indirectly,
      shares carrying more than 10% of the voting rights attached to our outstanding
      shares of common stock;
- Any of our promoters;
- Any relative or spouse of any of the foregoing persons who has the same
    house as such person.

Mr. Dennis Higgs, our president, chief executive officer,
  and director, acquired 375,000 shares of our common stock in his own name at
  a price of $0.001 US per share on February 26, 2001. Mr. Dennis Higgs paid a
  total purchase price of $375 for these shares. Senate Equities Corp., a company
  that is wholly owned and operated by Menace Capital Corp., acquired 375,000
  shares of our common stock at a price of $0.001 US per share on February 26,
  2001. Senate Equities Corp. paid a total purchase price of $375 for these shares.
  Mr. Dennis Higgs is the sole stockholder of Menace Capital Corp, the sole shareholder
  of Senate Equities Corp .

In addition to this acquisition of stock, Mr. Dennis Higgs
  acquired a beneficial interest in 1,500,000 shares of our common stock through
  the issuance of common stock to Senate Capital Group Inc. in exchange for its
  assignment of the Burner Hills mineral claims. Mr. Dennis Higgs owns all of
  the stock of Senate Capital Group. Senate Capital Group also received $10,051.88
  as part of this transaction.

34

---

In addition, Senate Capital Group has entered into an office
  facilities and service contract with us in which it provides office space, services,
  phones and equipment usage in exchange for a payment of $1,000 per month. Through
  September 30, 2002, $20,000 had been charged to us under this agreement, of
  which $5,500 has been accrued and $14,500 has been paid. We entered into a legally
  binding agreement with Senate Capital Group effective September 30, 2002 whereby
  Senate Capital Group has agreed to defer payment of accrued liabilities in the
  amount of $5,500 and its monthly management fee of $1,000 per month until such
  time as we achieve sufficient additional financing that would enable us to pay
  these accrued liabilities without impeding our exploration plans.

Senate Capital Group has agreed to advance to us the funds
  necessary to enable us to complete phase three of the exploration program to
  the extent that we have insufficient cash reserves necessary to pay for this
  expense. Any funds would be advanced to us as a loan repayable on demand without
  interest. We anticipate that we will be required to borrow approximately $10,000
  from Senate Capital Group under this commitment to complete phase three of our
  exploration program.

Ms. Lloyd, our Secretary, Treasurer and Chief Financial Officer,
  acquired 750,000 shares of our common stock at a price of $0.001 US per share
  on February 26, 2001. Ms. Lloyd paid a total purchase price of $750 for these
  shares. Gordon Lloyd, the husband of Aileen Lloyd, acquired 250,000 shares of
  our common stock at a price of $0.01 per share for a total cash acquisition
  cost of $2,500 on March 12, 2001.

Mr. Darcy Higgs, one of our 5% shareholders, acquired 350,000
  shares of our common stock at a price of $0.01 per share for a total cash acquisition
  cost of $3,500 on March 12, 2001. Santorini Investment Corp., a private company
  controlled by Carleen Higgs, the wife of Darcy Higgs, acquired 350,000 shares
  of our common stock at a price of $0.01 per share for a total cash acquisition
  cost of $3,500 on March 12, 2001.

Mr. Eric Fergie, one of our 5% shareholders, acquired 300,000
  shares of our common stock at a price of $0.01 per share for a total cash acquisition
  cost of $3,000 on March 12, 2001.









35

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ITEM 13.      EXHIBITS AND REPORTS ON FORM 8-K.

(a)      Exhibits and Index of Exhibits

|Exhibit Number |  | Description of Exhibit                                                                                                                                                                         
|-------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|               |  |                                                                                                                                                                                                
|               |  |                                                                                                                                                                                                
|3.1            |  | Articles of Incorporation(1)                                                                                                                                                                   
|3.2            |  | Bylaws, as amended(1)                                                                                                                                                                          
|4.1            |  | Share Certificate(1)                                                                                                                                                                           
|10.1           |  | Mineral Property Purchase
        Agreement between the Company and Senate Equities Corp. dated March 14,
        2001(1)                                                                      
|10.2           |  | Office Facilities and Services Contract(1)                                                                                                                                                     
|10.3           |  | Agreement between the Company
        and Senate Capital Group dated September 30, 2002 regarding deferral of
        payment of amounts owing under Office Facilities and Services Contract(1)
|10.4           |  | Funding Commitment Letter of Senate Capital Group
      (1)                                                                                                                                    
|99.1           |  | Certification of Chief Executive
        Officer pursuant to pursuant to 18 U.S.C. Section 1350, as adopted pursuant
        to Section 906 of the Sarbanes-Oxley Act of 2002(2)               
|99.2           |  | Certification of Chief Financial
        Officer pursuant to pursuant to 18 U.S.C. Section 1350, as adopted pursuant
        to Section 906 of the Sarbanes-Oxley Act of 2002(2)               
|               |  |                                                                                                                                                                                                
|               |  |                                                                                                                                                                                                

|(1) | Previously filed with the Securities and Exchange
        Commission as an exhibit to the Registrants Form SB-2 Registration
        Statement originally filed on March 15, 2002, as amended.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                
|(2) | Filed as an exhibit to this Annual Report on Form 10-KSB.                                                                                                                                      
|    |                                                                                                                                                                                                
|    |                                                                                                                                                                                                

(b)      Reports on Form 8-K.

No reports on Form 8-K were filed during the last quarter
  of our fiscal year ended December 31, 2002.

No reports on Form 8-K have been filed since December 31,
  2002.



36

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ITEM 14.      CONTROLS AND PROCEDURES.

As required by Rule 13a-15 under the Securities Exchange Act
  of 1934 (the Exchange Act), we carried out an evaluation of the
  effectiveness of the design and operation of our disclosure controls and procedures
  within the 90 days prior to the filing date of this report. This evaluation
  was carried out under the supervision and with the participation of our Chief
  Executive Officer, Mr. Dennis Higgs, and Chief Financial Officer, Mr. Aileen
  Lloyd. Based upon that evaluation, our Chief Executive Officer and Chief Financial
  Officer concluded that our disclosure controls and procedures are effective
  in timely alerting management to material information relating to us required
  to be included in our periodic SEC filings. There have been no significant changes
  in our internal controls or in other factors that could significantly affect
  internal controls subsequent to the date we carried out our evaluation.

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









37

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SIGNATURES

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

| |     | CARLETON VENTURES CORP.                            
| | --- | ---------------------------------------------------
| |     |                                                    
| | By: | /s/ Dennis
      Higgs                             
| |     |                                                    
| |     | Dennis Higgs, President and Chief Executive Officer
| |     | Director                                           
| |     | Date: March 28, 2003                               

In accordance with the Securities Exchange Act, this report
  has been signed below by the following persons on behalf of the registrant and
  in the capacities and on the dates indicated.

|By: | /s/ Dennis
      Higgs                                        
|--- | --------------------------------------------------------------
|    |                                                               
|    | Dennis Higgs, President and Chief Executive Officer           
|    | (Principal Executive Officer)                                 
|    | Director                                                      
|    | Date:    March 28, 2003                                       
|    |                                                               
|    |                                                               
|By: | /s/
      Aileen Lloyd                                        
|    |                                                               
|    | Aileen Lloyd, Treasurer and Chief Financial Officer           
|    | (Principal Financial Officer and Principal Accounting Officer)
|    | Director                                                      
|    | Date:    March 28, 2003                                       





38

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CERTIFICATION

I, Dennis Higgs, Chief Executive Officer of Carleton Ventures Corp., certify that;

|1. | I have reviewed this annual report on Form 10-KSB
      of Carleton Ventures Corp.;                                                                                                                                                                                                                                                                     
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                         
|2. | Based on my knowledge, this
        annual report does not contain any untrue statement of a material fact
        or omit to state a material fact necessary to make the statements made,
        in light of the circumstances under which such statements were made, not
        misleading with respect to the period covered by this annual report;
|   |                                                                                                                                                                                                                                                                                                                                                         
|3. | Based on my knowledge, the
        financial statements, and other financial information included in this
        annual report, fairly present in all material respects the financial condition,
        results of operations and cash flows of the registrant as of, and for,
        the periods presented in this annual report;                   
|   |                                                                                                                                                                                                                                                                                                                                                         
|4. | The registrants other
        certifying officers and I are responsible for establishing and maintaining
        disclosure controls and procedures (as defined in Exchange Act Rules 13a-14
        and 15d-14) for the registrant and have:                                                                                                          

| | a) | designed such disclosure
        controls and procedures to ensure that material information relating to
        the registrant, including its consolidated subsidiaries, is made known
        to us by others within those entities, particularly during the period
        in which this annual report is being prepared;
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                             
| | b) | evaluated the effectiveness
        of the registrants disclosure controls and procedures as of a date
        within 90 days prior to the filing date of this annual report (the Evaluation
        Date); and                                                                                                          
| |    |                                                                                                                                                                                                                                                                                                                             
| | c) | presented in this annual
        report our conclusions about the effectiveness of the disclosure controls
        and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                        

|5. | The registrants
        other certifying officers and I have disclosed, based on our most recent
        evaluation, to the registrants auditors and the audit committee
        of registrants board of directors (or persons performing the equivalent
        functions):
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) | all significant deficiencies
        in the design or operation of internal controls which could adversely
        affect the registrants ability to record, process, summarize and
        report financial data and have identified for the registrants auditors
        any material weaknesses in internal controls; and
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                               
| | b) | any fraud, whether or not
        material, that involves management or other employees who have a significant
        role in the registrants internal controls; and                                                                                                                                                        

|6. | The registrants other
        certifying officers and I have indicated in this annual report whether
        there were significant changes in internal controls or in other facts
        that could significantly affect internal controls subsequent to the date
        of our most recent evaluation, including any corrective actions with regard
        to significant deficiencies and material weaknesses.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Date: | March 28, 2003 | /s/
      Dennis Higgs 
|----- | -------------- | -----------------------
|      |                |                        
|      |                | (Signature)            
|      |                |                        
|      |                | Chief Executive Officer
|      |                |                        
|      |                | (Title)                



39

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CERTIFICATION

I, Aileen Lloyd, Chief Financial Officer of Carleton Ventures Corp., certify
  that;

|1. | I have reviewed this annual report on Form 10-KSB
      of Carleton Ventures Corp.;                                                                                                                                                                                                                                                                     
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                         
|2. | Based on my knowledge, this
        annual report does not contain any untrue statement of a material fact
        or omit to state a material fact necessary to make the statements made,
        in light of the circumstances under which such statements were made, not
        misleading with respect to the period covered by this annual report;
|   |                                                                                                                                                                                                                                                                                                                                                         
|3. | Based on my knowledge, the
        financial statements, and other financial information included in this
        annual report, fairly present in all material respects the financial condition,
        results of operations and cash flows of the registrant as of, and for,
        the periods presented in this annual report;                   
|   |                                                                                                                                                                                                                                                                                                                                                         
|4. | The registrants other
        certifying officers and I are responsible for establishing and maintaining
        disclosure controls and procedures (as defined in Exchange Act Rules 13a-14
        and 15d-14) for the registrant and have:                                                                                                          

| | a) | designed such disclosure
        controls and procedures to ensure that material information relating to
        the registrant, including its consolidated subsidiaries, is made known
        to us by others within those entities, particularly during the period
        in which this annual report is being prepared;
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                             
| | b) | evaluated the effectiveness
        of the registrants disclosure controls and procedures as of a date
        within 90 days prior to the filing date of this annual report (the Evaluation
        Date); and                                                                                                          
| |    |                                                                                                                                                                                                                                                                                                                             
| | c) | presented in this annual
        report our conclusions about the effectiveness of the disclosure controls
        and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                        

|5. | The registrants
        other certifying officers and I have disclosed, based on our most recent
        evaluation, to the registrants auditors and the audit committee
        of registrants board of directors (or persons performing the equivalent
        functions):
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) | all significant deficiencies
        in the design or operation of internal controls which could adversely
        affect the registrants ability to record, process, summarize and
        report financial data and have identified for the registrants auditors
        any material weaknesses in internal controls; and
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                               
| | b) | any fraud, whether or not
        material, that involves management or other employees who have a significant
        role in the registrants internal controls; and                                                                                                                                                        

|6. | The registrants other
        certifying officers and I have indicated in this annual report whether
        there were significant changes in internal controls or in other facts
        that could significantly affect internal controls subsequent to the date
        of our most recent evaluation, including any corrective actions with regard
        to significant deficiencies and material weaknesses.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Date: | March 28, 2003 | /s/
      Aileen Lloyd 
|----- | -------------- | -----------------------
|      |                |                        
|      |                | (Signature)            
|      |                |                        
|      |                | Chief Financial Officer
|      |                |                        
|      |                | (Title)                



40

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CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, AILEEN LLOYD, certify, pursuant to 18 U.S.C. Section 1350,
  as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the
  Annual Report on Form 10-KSB of Carleton Ventures Corp. for the year ended December
  31, 2002 fully complies with the requirements of Section 13(a) or 15(d) of the
  Securities Exchange Act of 1934 and that the information contained in the Annual
  Report on Form 10-KSB fairly presents in all material respects the financial
  condition and results of operations of Carleton Ventures Corp.

| | By:    | /s/ Aileen Lloyd       
| | ------ | -----------------------
| |        |                        
| |        |                        
| | Name:  | AILEEN LLOYD           
| |        |                        
| | Title: | Chief Financial Officer
| |        |                        
| | Date:  | March 28, 2003         



41

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CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, DENNIS HIGGS, certify, pursuant to 18 U.S.C. Section 1350,
  as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the
  Annual Report on Form 10-KSB of Carleton Ventures Corp. for the year ended December
  31, 2002 fully complies with the requirements of Section 13(a) or 15(d) of the
  Securities Exchange Act of 1934 and that the information contained in the Annual
  Report on Form 10-KSB fairly presents in all material respects the financial
  condition and results of operations of Carleton Ventures Corp.

| | By:    |  Dennis Higgs        
| | ------ | -----------------------
| |        |                        
| |        |                        
| | Name:  | DENNIS HIGGS           
| |        |                        
| | Title: | Chief Executive Officer
| |        |                        
| | Date:  | March 28, 2003         





42

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