---------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                              ---------------------

                                   FORM 10-KSB
                                   -----------

/x/  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended July 31, 2004

                                       OR

/_/  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from to

                        Commission File Number 000-49961


                              ---------------------

                       MAGNUS INTERNATIONAL RESOURCES INC.
                       -----------------------------------
             (Exact Name of Registrant as Specified in its Charter)

                 Nevada                                    98-0351859
                 ------                                    ----------
     (State or other Jurisdiction of                     (IRS Employer
     Incorporation or Organization)                  Identification Number)


     1285 West Pender Street, Suite 110
               Vancouver, BC
                   Canada                                   V6E 4B1
  ----------------------------------------                 ----------
  (Address of Principal Executive Offices)                 (Zip Code)

                                 (604) 694-1432
                                 --------------
              (Registrant's Telephone Number, Including Area Code)

                              ---------------------


Securities registered pursuant to Section 12(b) of the Act:  None.
                                                             -----

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


Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports); and (2) has been subject to the
filing requirements for the past 90 days: Yes /x/ No / /




<PAGE>


                                       ii



Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K: / /

State issuer's revenues for its most recent fiscal year.  July 31, 2004: $-0-


Aggregate market value of outstanding Common Stock held by non-affiliates: As of
--------------------------------------------------------------------------
October 15, 2004, the aggregate market value of outstanding Common Stock of the
registrant held by non-affiliates was approximately $15,914,267.

Outstanding Common Stock: As of October 15, 2004, the Company had 22,543,200*
-------------------------
shares of Common Stock outstanding. An additional 1,833,333 shares are
potentially outstanding pursuant to options which have vested or will vest
within 60 days of October 15, 2004. As of the date of filing this report, no
options have been exercised.


* After taking into effect the forward stock split on a basis of two new shares
for each one old share, which became effective on May 4, 2004.


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




<PAGE>



                                       iii


                                TABLE OF CONTENTS
                                -----------------
                                                                        Page
                                                                       ------
                                                                          1
FORWARD STOCK SPLIT                                                       1
USE OF NAMES                                                              1
CURRENCY                                                                  1
METRIC CONVERSION TABLE                                                   1
UNCERTAINTY OF FORWARD-LOOKING STATEMENTS                                 1

                                     PART I
                                     ------
ITEM 1.  DESCRIPTION OF BUSINESS AND RISK FACTORS                         1
ITEM 2.  DESCRIPTION OF PROPERTY                                          9
ITEM 3.  LEGAL PROCEEDINGS                                               14
ITEM 4.  SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS               14

                                     PART II
                                     -------
ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED
           STOCKHOLDER MATTERS                                           14
ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
           OF OPERATIONS                                                 16
ITEM 7.  FINANCIAL STATEMENTS                                            19
ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
           ON ACCOUNTING AND FINANCIAL DISCLOSURE                        20
ITEM 8A. CONTROLS AND PROCEDURES                                         20
ITEM 8B. OTHER INFORMATION                                               20

                                    PART III
                                    --------
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTRL
         PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT      20
ITEM 10. EXECUTIVE COMPENSATION                                          24
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
           MANAGEMENT AND RELATED STOCKHOLDER MATTERS                    27
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                  30
ITEM 13. EXHIBITS                                                        31

                                     PART IV
                                     -------
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES                          32



<PAGE>


                                        1



                               FORWARD STOCK SPLIT
                               -------------------

Unless specified otherwise, all discussion herein gives effect to the Company's
May 4, 2004 forward stock split on a basis of two new shares for each one old
share.


                                  USE OF NAMES
                                  ------------

In this report, the terms "Magnus" and "Company", unless the context otherwise
requires, mean Magnus International Resources Inc. and its subsidiaries.


                                    CURRENCY
                                    --------

Unless otherwise specified, all dollar amounts in this report are expressed in
United States dollars.


                             METRIC CONVERSION TABLE
                             -----------------------

To Convert Imperial Measurement Units  To Metric Measurement Units   Multiply by
-------------------------------------  ---------------------------   -----------
Acres                                            Hectares              0.4047
Feet                                              Meters               0.3048
Miles                                           Kilometers             1.6093
Tons (short)                                      Tonnes               0.9071
Gallons                                           Liters               3.7850
Ounces (troy)                                     Grams                31.103
Ounces (troy) per ton (short)                 Grams per tonne          34.286


                    UNCERTAINTY OF FORWARD-LOOKING STATEMENTS
                    -----------------------------------------

This document, including any documents that are incorporated by reference as set
forth on the face page under "Documents incorporated by reference", contains
forward-looking statements concerning, among other things, mineralized material,
proven or probable reserves and cash operating costs. Such statements are
typically punctuated by words or phrases such as "anticipates", "estimates",
"projects", "foresees", "management believes", "believes" and words or phrases
of similar import. Such statements are subject to certain risks, uncertainties
or assumptions. If one or more of these risks or uncertainties materialize, or
if underlying assumptions prove incorrect, actual results may vary materially
from those anticipated, estimated or projected. Important factors that could
cause actual results to differ materially from those in such forward-looking
statements are identified in this document under "Part I--Item 1. Description of
the Business and Risk Factors". Magnus assumes no obligation to update these
forward-looking statements to reflect actual results, changes in assumptions, or
changes in other factors affecting such statements.


                                     PART I
                                     ------

ITEM 1.  DESCRIPTION OF BUSINESS AND RISK FACTORS
-------------------------------------------------

General Overview
----------------

Magnus is currently in the development stage and is engaged in the acquisition,
exploration and development of gold, copper, iron ore and silver properties,
focusing on China. The current primary focus of the Company is the exploration
and development of gold and other precious resource properties in China. To this
end, the Company has entered, and plans to enter, various joint venture
agreements with Chinese parties and entities (see "Letters of Intent and
Preliminary Agreements" and "Joint Venture Agreements" below). Generally, these



<PAGE>


                                        2



joint venture arrangements require the Company to contribute capital toward the
exploration and development of various properties while requiring the Chinese
individual or entity to obtain mineral rights for desirable mineral properties
in China, and obtain all required permits and licenses to commence exploration
and mining activities. The Chinese venture partner may also provide geological
expertise and carry out geological evaluations of joint venture properties.

We are incorporated under the laws of the State of Nevada, USA on April 4, 2001
and have a July 31, 2004, fiscal year end.

The current addresses, telephone and facsimile numbers of the offices of the
Company are:

<TABLE>
<CAPTION>
Executive Office                      Registered Office                Kunming, China Field Office
----------------                      -----------------------------    ---------------------------
<S>                                   <C>                              <C>
Magnus International Resources Inc.   Nevada Corporate Headquarters,   Dushimingyuan Bldg.
1285 West Pender Street, Suite 110    Inc.                             No. A-2708, Central Renmin Road
Vancouver, BC                         101 Convention Center Drive      Kunming City, Yunnan Province
Canada                                7th Floor                        650031, People's Republic of China
V6B 5X6                               Las Vegas, Nevada, 89109         Tel: 86-871-3642420
Tel: (604) 694-1432                   Tel:  (702) 873-3488             Fax: 86 871 3642420
Fax: (604) 602-1499                   Fax: (702) 221-0904
</TABLE>

The price of the Company's common stock has been quoted for trading on the OTC
BB since March 25, 2003.


Letters of Intent and Preliminary Agreements
--------------------------------------------

As of July 31, 2004, the Company had signed a number of letter agreements and
preliminary joint venture agreements. By mutual agreement of the parties
involved, some of those agreements will not be formalized, while it is intended
that others will be formalized in the near future.

On December 31, 2003, the Company entered into a letter of intent for a joint
venture with Guangxi Non-ferrous Metals Trading & Management Company, a company
organized under the laws of the People's Republic of China, for the further
prospecting and development of the Guangxi Bobai Yingqiao Silver Mine located in
Yingqiao Town, Bobai County in Guangxi Province, China. The Company paid a
finder's fee of 200,000 shares of common stock of the Company to True North
Management Ltd. ("True North Management"), a company organized under the laws of
Hong Kong, with respect to the entering into the letter of intent for a joint
venture with Guangxi Non-ferrous Metals Trading & Management Company. The
deadline for agreement on a definitive joint venture agreement and articles of
association for the co-operative joint venture company has passed, but the
parties are currently negotiating a possible extension.

On January 15, 2004, the Company entered into a letter of intent with Brigade
209 of the Nuclear Industry of Yunnan Province, People's Republic of China
("Team 209") to form a new co-operative joint venture company to carry out
minerals exploration and development in the 129.5 sq. km. area of the Jinlong
Mountain gold district. The Company paid a finder's fee of 200,000 shares of
common stock of the Company to True North Management with respect to the
entering into the letter of intent for a co-operative joint venture company with
Brigade 209. In September of 2004, the parties, by mutual agreement, decided not
to proceed with the Jinlong joint venture.

On April 6, 2004, Magnus and Team 209 signed a preliminary joint venture
agreement to form a co-operative joint venture company to carry out mineral
exploration and development in the 200 square kilometer area of Zhamashi gold
and copper deposits in Qilian County of Qinghai Province, PRC. In conjunction
with entering into this preliminary joint venture agreement, the parties entered
into a preliminary mine asset purchase agreement for the proposed co-operative
joint venture company to acquire the mining assets, mining rights and mining
permits, permitting the holder to mine in the Property, from a third party for a
total purchase price of approximately $2,000,000 which payments are to be on a
certain payment schedule. This schedule will be set out in the definitive mine
asset purchase agreement to be entered into if and when Magnus and Team 209
enter a definitive joint venture agreement. The operations of the co-operative



<PAGE>


                                        3



joint venture company are to be managed under the control of Magnus. Magnus is
to contribute $5,010,000 as an equity investment into the co-operative joint
venture company and Team 209 is responsible for transferring certain gold and
copper exploration permits and all related data and information on the Property
to the co-operative joint venture company. Upon the full capital contribution by
Magnus and the transfer of the exploration permits by Team 209, Magnus will own
90% and Team 209 will own 10%of the co-operative joint venture company. With
respect to the $5,010,000 equity investment into the co-operative joint venture
company by Magnus, Magnus is required to contribute not less than $750,000
within three months after the issuance of the co-operative joint venture company
business license; and $4,260,000 within thirty-six (36) months after the
issuance of the co-operative joint venture company business license. However,
any amount already paid by Magnus for the acquisition of the mining assets,
mining rights and mining permits from the third party will be deducted from this
amount. The capital contribution by Magnus is subject to certain conditions
precedent being satisfied. If further funding is required for carrying out more
exploration and development activities, Magnus will be responsible for providing
such funding, however, Team 209 will remain a 10% owner of the co-operative
joint venture company. A definitive joint venture agreement and articles of
association for the co-operative joint venture company shall be agreed upon and
signed before November 30, 2004, or such later date as Magnus and Team 209 may
agree upon. Magnus will pay a finder's fee of 100,000 shares of common stock of
Magnus and $100,000 in cash to True North Management upon the execution of a
formal joint venture agreement between Magnus and Team 209 with respect to this
Property. Magnus has already issued 200,000 shares of its common stock to True
North Management with respect to the letter of intent that was executed between
Magnus and Team 209 on January 15, 2004, in relation to this Property. The
parties have been actively negotiating an alternative joint venture agreement,
similar to the one outlined above, which would omit the Preliminary Mine Asset
Purchase Agreement aspect of the joint venture, and only include the transfer of
gold and copper exploration licenses and all geological data to the joint
venture company. Should the alternative joint venture agreement become
formalized, as opposed to the preliminary joint venture agreement already in
place, it is possible that the Company's capital contribution obligations to the
project would be reduced by $2,000,000 (the Preliminary Mine Asset Purchase
Agreement purchase amount).

On July 6, 2004, the Company signed a formal cooperative joint venture contract
with Team 209 to form a new cooperative joint venture company, Long Teng Mining
Ltd., a Chinese corporation, to carry out mineral exploration and development in
an 83.29 square kilometer area of Huidong County in Sichuan Province, China and
an area of 44.02 square kilometers in Luquan County, Yunnan Province, China.
More information on these agreements and these properties is furnished directly
below under "Description of the Business, Joint Venture Agreements" and under
"Description of Properties". Magnus is obligated to pay a finder's fee of
200,000 shares of its common stock and $200,000 to True North Management for the
signing of this formal joint venture agreement between Magnus and Team 209.


Joint Venture Agreements
------------------------

On July 6, 2004, the Company signed a formal cooperative joint venture contract
("JV Agreement") with Team 209 to form a new cooperative joint venture company,
Long Teng Mining Ltd., a Chinese corporation, to carry out minerals exploration
and development in an 83.29 square kilometer area of Huidong County in Sichuan
Province, China and an area of 44.02 square kilometers in Luquan County, Yunnan
Province, China (the "Exploration License areas"). Under the JV Agreement, if
either Magnus or Team 209 acquires any further mining rights for the area
surrounding the Exploration License areas then the respective party must, on a
first priority basis, transfer such mining rights to Long Teng Mining Ltd. for a
fee permitted by law or at an appropriate price.

The operations of the joint venture company are managed under the control of
Magnus. Magnus is to contribute $5,000,000 as an equity investment into Long
Teng Mining Ltd. over the next 3-5 years and Team 209 is responsible for
transferring certain gold and copper exploration permits for the Properties to
Long Teng Mining Ltd. Upon full capital contributions by Magnus and the transfer
of the exploration permits by Team 209, Magnus will own 90% and Team 209 will
own 10% of Long Teng Mining Ltd.


With respect to the $5,000,000 equity investment into Long Teng Mining Ltd. by
Magnus, Magnus is required to contribute not less than $460,000 within three
months after the issuance of the Long Teng Mining Ltd. business license;
$1,000,000 within twenty four (24) months after the issuance of the Long Teng
Mining Ltd. business license; $1,550,000 within thirty-six (36) months after the
issuance of the Long Teng Mining Ltd. business license; and based on the results
of the exploration by Long Teng Mining Ltd., if required, an additional
$1,990,000 within forty-eight (48) months after the issuance of the Long Teng



<PAGE>


                                        4



Mining Ltd. business license. The capital contribution by Magnus is subject to
certain conditions precedent being satisfied. If further funding is required for
carrying out more exploration and development activities, Magnus will be
responsible for providing such funding, however, Team 209 will remain a 10%
owner of Long Teng Mining Ltd.

In addition, Magnus is required to provide Team 209 with the equivalent of
$750,000 in shares of its common stock within 15 days after the Chinese
government approves of the issuance of the Long Teng Mining Ltd. business
license, and the transfer of all relevant exploration permits from Team 209 into
Long Teng Mining Ltd.

On September 29, 2004, this JV Agreement was approved by the Chinese Government
and a business license for Long Teng Mining Ltd. was issued. Application to
transfer the exploration and mining rights from Team 209 to Long Teng Mining
Ltd. is currently under way.

As of July 31, 2004, Magnus had advanced US $500,000 to Long Teng Mining Ltd.,
which will be returned to Magnus if all required government approvals for
conducting business and exploration are not obtained.


Employees
---------

As of July 31, 2004, the Company had 1 full-time employee (over and above its
directors, officers and consultants), who was employed in an administrative
capacity at the Company's office in Kunming, China. The Company uses consultants
with specific skills to assist with various aspects of its project evaluation,
due diligence, acquisition initiatives, corporate governance and property
management. One such consultant, Anthony Tam, is discussed further under "Key
Consultants" below.


Other Property Interests and Mining Claims
------------------------------------------

While the Company is actively seeking new prospects, it currently only has
interests in the above noted joint venture properties in China.


Government Regulation
---------------------

Mining operations and exploration activities are subject to various national,
state, provincial and local laws and regulations in the United States, Canada
and China, as well as other jurisdictions, which govern prospecting,
development, mining, production, exports, taxes, labor standards, occupational
health, waste disposal, protection of the environment, mine safety, hazardous
substances and other matters. The Company has pending applications for those
licenses, permits and other authorizations currently required to conduct its
explorations in China (through its joint venture company). In China, joint
venture agreements, business licenses for joint venture companies, and the
acquisition and transfer of exploration and mining permits are all acquired
subject to government approval. Such approval may involve many levels of
government (i.e. Federal, Provincial, County and/or City approval), and the
Company cannot guarantee that all such approvals will be successfully obtained
even where a joint venture has been successfully established. Moreover, even
where joint venture agreements obtain government approval and business licenses
are issued, there can be no guarantee that the transfer and/or acquisition of
exploration and/or mining permits will be approved, nor can the Company
guarantee that such approvals will be obtained from all levels of government
required for such approval.

The Company believes that it is and will continue to be in compliance in all
material respects with applicable statutes and the regulations passed in China.
There are no current orders or directions relating to the Company with respect
to the foregoing laws and regulations.


Environmental Regulation
------------------------

The Company's exploration projects are subject to various federal, state and
local laws and regulations governing protection of the environment, both in
North America and in China. These laws are continually changing and, as a
general matter, are becoming more restrictive. The Company's policy is to



<PAGE>


                                        5



conduct business in a way that safeguards public health and the environment. The
Company believes that its operations are conducted in material compliance with
applicable laws and regulations.

Changes to current local, state or federal laws and regulations in the
jurisdictions where the Company operates or may operate in the future could
require additional capital expenditures and increased operating costs. Although
the Company is unable to predict what additional legislation, if any, might be
proposed or enacted, additional regulatory requirements could impact the
economics of its projects.

In the proceeding year, there were no material environmental incidents or
non-compliance with any applicable environmental regulations. The Company
estimates that it will not incur material capital expenditures for environmental
control facilities during the current fiscal year.


Competition
-----------

The Company competes with other mining companies in connection with the
acquisition of prospective properties and joint venture projects. There is
competition for the limited number of opportunities, some of which is with other
companies having substantially greater financial resources than the Company. As
a result, the Company may have difficulty acquiring attractive projects at
reasonable prices.

The Company believes no single company has sufficient market power to affect the
price or supply of gold or other minerals in the world market.


Other Recent Events
-------------------

Effective May 4, 2004, Magnus, by action of the majority shareholders, took the
following corporate actions: (i) effected a forward stock split on a basis of
two new shares for each old share; (ii) increased the authorized shares of
common stock of Magnus from 25,000,000 shares to 100,000,000 shares; (iii)
changed its name from Gravity Spin Holdings, Inc. to Magnus International
                      ---------------------------    --------------------
Resources Inc.; (iv) ratified the adoption of the Stock Option Plan adopted by
--------------
Magnus' Board of Directors on January 9, 2004; (v) elected Messrs. Graham
Taylor, Mark Demmons, Raymond Turner and Peter Smith to serve as directors of
Magnus until the next annual meeting of the shareholders or until their
successors shall have been elected and qualified; and (vi) ratified the
selection of Moore Stephens Ellis Foster Ltd. as the independent public
accountant for Magnus for the fiscal year ending July 31, 2004.

Effective May 4, 2004, Magnus began trading under the new symbol of "MGNU" and
had the new CUSIP number of 55972Y 10 3.


Risk Factors
------------

The following risk factors should be considered in connection with an evaluation
of the business of the Company:

THE COMPANY'S LIMITED OPERATING HISTORY MAKES IT DIFFICULT FOR YOU TO JUDGE ITS
-------------------------------------------------------------------------------
PROSPECTS.
----------

The Company has a limited operating history upon which an evaluation of the
Company, its current business and its prospects can be based. You should
consider any purchase of the Company's shares in light of the risks, expenses
and problems frequently encountered by all companies in the early stages of its
corporate development.


LIQUIDITY AND CAPITAL RESOURCES ARE UNCERTAIN.
----------------------------------------------

For the three-month period ending July 31, 2004, the Company had an operating
loss of $711,519. At July 31, 2004, the Company had a working capital deficit of



<PAGE>


                                        6



$480,655. The Company may need to raise additional capital by way of an offering
of equity securities, an offering of debt securities, or by obtaining financing
through a bank or other entity. The Company has not established a limit as to
the amount of debt it may incur nor has it adopted a ratio of its equity to debt
allowance. If the Company needs to obtain additional financing, there is no
assurance that financing will be available from any source, that it will be
available on terms acceptable to us, or that any future offering of securities
will be successful. If additional funds are raised through the issuance of
equity securities, there may be a significant dilution in the value of the
Company's outstanding common stock. The Company could suffer adverse
consequences if it is unable to obtain additional capital which would cast
substantial doubt on its ability to continue its operations and growth.


THE VALUE AND TRANSFERABILITY OF THE COMPANY'S SHARES MAY BE ADVERSELY IMPACTED
-------------------------------------------------------------------------------
BY THE LIMITED TRADING MARKET FOR ITS SHARES AND THE PENNY STOCK RULES.
-----------------------------------------------------------------------

There is only a limited trading market for the Company's shares. The Company's
common stock is traded in the over-the-counter market and "bid" and "asked"
quotations regularly appear on the O-T-C Bulletin Board under the symbol "MGNU".
There can be no assurance that the Company's common stock will trade at prices
at or above its present level, and an inactive or illiquid trading market may
have an adverse impact on the market price. In addition, holders of the
Company's common stock may experience substantial difficulty in selling their
securities as a result of the "penny stock rules," which restrict the ability of
brokers to sell certain securities of companies whose assets or revenues fall
below the thresholds established by those rules.


FUTURE SALES OF SHARES MAY ADVERSELY IMPACT THE VALUE OF THE COMPANY'S STOCK.
-----------------------------------------------------------------------------

If required, the Company may seek to raise additional capital through the sale
of common stock. Future sales of shares by the Company or its stockholders could
cause the market price of its common stock to decline.


MINERAL EXPLORATION AND DEVELOPMENT ACTIVITIES ARE SPECULATIVE IN NATURE.
-------------------------------------------------------------------------

Resource exploration and development is a speculative business, characterized by
a number of significant risks including, among other things, unprofitable
efforts resulting not only from the failure to discover mineral deposits but
from finding mineral deposits which, though present, are insufficient in
quantity and quality to return a profit from production. The marketability of
minerals acquired or discovered by the Company may be affected by numerous
factors which are beyond the control of the Company and which cannot be
accurately predicted, such as market fluctuations, the proximity and capacity of
milling facilities, mineral markets and processing equipment and such other
factors as government regulations, including regulations relating to royalties,
allowable production, importing and exporting of minerals and environmental
protection, the combination of which factors may result in the Company not
receiving an adequate return of investment capital.

Substantial expenditures are required to establish ore reserves through
drilling, to develop metallurgical processes to extract the metal from the ore
and, in the case of new properties, to develop the mining and processing
facilities and infrastructure at any site chosen for mining. Although
substantial benefits may be derived from the discovery of a major mineralized
deposit, no assurance can be given that minerals will be discovered in
sufficient quantities and grades to justify commercial operations or that funds
required for development can be obtained on a timely basis. Estimates of
reserves, mineral deposits and production costs can also be affected by such
factors as environmental permitting regulations and requirements, weather,
environmental factors, unforeseen technical difficulties, unusual or unexpected
geological formations and work interruptions. In addition, the grade of ore
ultimately mined may differ from that indicated by drilling results. Short term
factors relating to reserves, such as the need for orderly development of ore
bodies or the processing of new or different grades, may also have an adverse
effect on mining operations and on the results of operations. Material changes
in ore reserves, grades, stripping ratios or recovery rates may affect the
economic viability of any project.


THE COMPANY WILL BE SUBJECT TO OPERATING HAZARDS AND RISKS WHICH MAY ADVERSELY
------------------------------------------------------------------------------
AFFECT THE COMPANY'S FINANCIAL CONDITION.
-----------------------------------------



<PAGE>


                                        7



Mineral exploration involves many risks, which even a combination of experience,
knowledge and careful evaluation may not be able to overcome. The Company's
operations will be subject to all the hazards and risks normally incidental to
exploration, development and production of metals, such as unusual or unexpected
formations, cave-ins or pollution, all of which could result in work stoppages,
damage to property and possible environmental damage. The Company does not have
general liability insurance covering its operations and does not presently
intend to obtain liability insurance as to such hazards and liabilities. Payment
of any liabilities as a result could have a materially adverse effect upon the
Company's financial condition


THE COMPANY'S ACTIVITIES WILL BE SUBJECT TO ENVIRONMENTAL AND OTHER INDUSTRY
----------------------------------------------------------------------------
REGULATIONS WHICH COULD HAVE AN ADVERSE EFFECT ON THE FINANCIAL CONDITION OF THE
--------------------------------------------------------------------------------
COMPANY.
--------

The Company's activities are subject to environmental regulations promulgated by
government agencies from time to time. Environmental legislation generally
provides for restrictions and prohibitions on spills, releases or emissions of
various substances produced in association with certain mining industry
operations, such as seepage from tailing disposal areas, which would result in
environmental pollution. A breach of such legislation may result in imposition
of fines and penalties. In addition, certain types of operations require the
submission and approval of environmental impact assessments. Environmental
legislation is evolving in a manner which means stricter standards and
enforcement, fines and penalties for non-compliance are more stringent.
Environmental assessments of proposed projects carry a heightened degree of
responsibility for companies and directors, officers and employees. The cost of
compliance with changes in governmental regulations could have an adverse effect
on the financial condition of the Company.

The operations of the Company including exploration and development activities
and commencement of production on its properties, require permits from various
federal, state, provincial and local governmental authorities and such
operations are and will be governed by laws and regulations governing
prospecting, development, mining, production, exports, taxes, labor standards,
occupational health, waste disposal, toxic substances, land use, environmental
protection, mine safety and other matters. Companies engaged in the development
and operation of mines and related facilities generally experience increased
costs and delays in production and other schedules as a result of the need to
comply with applicable laws, regulations and permits.

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


COMPETITION MAY HAVE AN IMPACT ON THE COMPANY'S ABILITY TO ACQUIRE ATTRACTIVE
-----------------------------------------------------------------------------
MINERAL PROPERTIES, WHICH MAY HAVE AN ADVERSE IMPACT ON THE COMPANY'S
---------------------------------------------------------------------
OPERATIONS.
-----------

Significant and increasing competition exists for the limited number of mineral
acquisition opportunities available. As a result of this competition, some of
which is with large established mining companies with substantial capabilities
and greater financial and technical resources than the Company, the Company may
be unable to acquire attractive mineral properties on terms it considers
acceptable. Accordingly, there can be no assurance that any exploration program
intended by the Company on properties it intends to acquire will yield any
reserves or result in any commercial mining operation.


DOWNWARD FLUCTUATIONS IN METAL PRICES MAY SEVERELY REDUCE THE VALUE OF THE
--------------------------------------------------------------------------
COMPANY.
--------

The Company has no control over the fluctuations in the prices of the metals
that it is exploring for. A significant decline in such prices would severely
reduce the value of the Company.



<PAGE>


                                        8




THE COMPANY CURRENTLY RELIES ON CERTAIN KEY INDIVIDUALS AND THE LOSS OF ONE OF
------------------------------------------------------------------------------
THESE CERTAIN KEY INDIVIDUALS COULD HAVE AN ADVERSE EFFECT ON THE COMPANY.
--------------------------------------------------------------------------

The Company's success depends to a certain degree upon certain key members of
the management. These individuals are a significant fact in the Company's growth
and success. The loss of the service of members of the management and certain
key employees could have a material adverse effect on the Company. In
particular, the success of the Company is highly dependant upon the efforts of
the President, Treasurer, Secretary, CEO and director of the Company, Graham
Taylor, the loss of whose services would have a material adverse effect on the
success and development of the Company.


THE COMPANY DOES NOT MAINTAIN KEY MAN INSURANCE TO COMPENSATE THE COMPANY FOR
-----------------------------------------------------------------------------
THE LOSS OF CERTAIN KEY INDIVIDUALS.
------------------------------------

The Company does not anticipate having key man insurance in place in respect of
any of its senior officers or personnel.


WE ARE AN EXPLORATION STAGE COMPANY, AND THERE IS NO ASSURANCE THAT A
---------------------------------------------------------------------
COMMERCIALLY VIABLE DEPOSIT OR "RESERVE" EXISTS ON ANY PROPERTIES FOR WHICH THE
-------------------------------------------------------------------------------
COMPANY HAS, OR MIGHT OBTAIN, AN INTEREST.
------------------------------------------

The Company is an exploration stage company and cannot give assurance that a
commercially viable deposit, or "reserve," exists on any properties for which
the Company currently has (through a joint venture agreement) or may have
(through potential future joint venture agreements or acquisitions) an interest.
Therefore, determination of the existence of a reserve depends on appropriate
and sufficient exploration work and the evaluation of legal, economic, and
environmental factors. If the Company fails to find a commercially viable
deposit on any of its properties, its financial condition and results of
operations will be materially adversely affected.


WE REQUIRE SUBSTANTIAL FUNDS MERELY TO DETERMINE WHETHER COMMERCIAL MINERAL
---------------------------------------------------------------------------
DEPOSITS EXIST ON OUR PROPERTIES.
---------------------------------

Any potential development and production of the Company's exploration properties
depends upon the results of exploration programs and/or feasibility studies and
the recommendations of duly qualified engineers and geologists. Such programs
require substantial additional funds. Any decision to further expand the
Company's operations on these exploration properties is anticipated to involve
consideration and evaluation of several significant factors including, but not
limited to:

          o    Costs of bringing each property into production, including
               exploration work, preparation of production feasibility studies,
               and construction of production facilities;
          o    Availability and costs of financing;
          o    Ongoing costs of production;
          o    Market prices for the minerals to be produced;
          o    Environmental compliance regulations and restraints; and
          o    Political climate and/or governmental regulation and control.


GENERAL MINING RISKS
--------------------

Factors beyond the control of Magnus may affect the marketability of any
substances discovered from any resource properties the Company may acquire.
Metal prices, in particular gold and copper prices, have fluctuated widely in
recent years. Government regulations relating to price, royalties, allowable
production and importing and exporting of minerals can adversely affect the
Company. There can be no certainty that the Company will be able to obtain all



<PAGE>


                                        9



necessary licenses and permits that may be required to carry out exploration,
development and operations on any projects it may acquire and environmental
concerns about mining in general continue to be a significant challenge for all
mining companies.


ITEM 2.  DESCRIPTION OF PROPERTIES.
-----------------------------------

Joint Venture Properties
------------------------

The Company has recently formalized a joint venture partnership with Team 209.
This group of experienced government geologists has been instrumental in the
rapid development of the Boka Gold Project ("Boka") through its own joint
venture partnership with Southwestern Resources Corp. ("Southwestern"), a
British Columbia corporation that is listed and posted for trading on the
Toronto Stock Exchange. Magnus is working closely with Team 209 to pursue an
exploration strategy on its own properties similar to that which resulted in the
Boka discoveries.

Through its joint venture agreement with Team 209, the Company currently has
interests in the following properties:

<TABLE>
<CAPTION>
        Property Location                Property Size         Company's Interest Governed Under
---------------------------------   -----------------------   -----------------------------------

<S>                                 <C>                       <C>
Luquan County Dasongshu district,   83.29 square kilometers   Cooperative Joint Venture Contract,
      Yunnan Province, China                                           dated July 6, 2004

     Sujiayakou, Weiliancun,        44.02 square kilometers   Cooperative Joint Venture Contract,
   Maanshan district, Sichuan                                          dated July 6, 2004
        Province, China
</TABLE>

The JV Agreement with Team 209 grants the Company a right to participate in the
proceeds from the properties above for a term of 30 years, which may be
extended. Such proceeds, if realized, will be split at a ratio of 90/10 (90%
going to the Company, 10% going to Team 209), provided certain financing
schedules are met by the Company (see "Description of the Business and Risk
Factors - Joint Venture Agreements" and exhibit 10.15, "Team 209 Joint Venture
Agreement and amendments").


Property Descriptions
---------------------


Sichuan Province Property (Hui Dong County)
-------------------------------------------


Property Location
-----------------

The 83 square kilometer Hui Dong property is located in Sichuan Province about
280 kilometers north of Kunming, a city of five million people in neighboring
Yunnan Province. The property is located in the eastern region of Hui Dong
County of Sichuan Province and belongs to Gan Hai Zi Township, Ye Niu Ping
Township and part of Song Ping Township of Hui Dong County. Main accesses to the
property are via county roads, with a county-to-township road heading west and
simple roads linking each township. Access and transportation may be a challenge
in some areas due to high mountains and deep valleys, and remote locations from
the main highways. However, as stated, smaller roads exist throughout the
property and chances are reasonable that prospective mining sites may be located
in the vicinity of an existing utility road.

The property is in a plateau region with an average altitude of 2,000 - 3,000
meters. The Jin Sha River passes through the eastern part of the property, at an
altitude of approximately 680 meters. There are many seasonal rivers passing
through the area heading east into the Jin Sha River. The mining site is located
in subtropical climate, yet can be relatively chilly in the winter due to the
higher altitudes. The annual average rainfall is 650 - 850 mm with a minimum



<PAGE>


                                       10



annual rainfall of 570 mm. The rain mainly occurs between July and August, (the
rainy season) with a monthly rainfall of 150-200 mm. During the rainy season,
access can become more challenging as roads become harder to navigate and, in
more extreme cases, roads get washed out and must be repaired.

Regional Geology
----------------

Rocks in the Huidong area consist mainly of a series of weakly metamorphosed
shales, siltstones and sandstones of middle to late Proterozoic age
(approximately 500 million to 1 billion years old). These rocks were subject to
many periods of deformation throughout geologic time, one of the most
significant of which was the development of the north-south Panxi rift zone. By
creating pathways for gold-rich fluids, the Panxi rift and associated faults are
believed to have played an important role in the formation of the gold
mineralization at Boka and Huidong

There are a number of government owned copper mines in the area, the closest
being the Dongchuan Copper Camp about 50 kilometers south of Hui Dong. Over the
past half century there has been little interest in gold exploration on the part
of the Chinese federal government, which focused almost exclusively on the
discovery and development of base metal deposits to support China's industrial
development.

The Boka Trend
--------------

Various geological indicators point to Hui Dong's being on trend (in alignment)
with the north south oriented fault system that controls the multi-zone Boka
Trend, which to date has yielded six different discoveries over a 25 kilometer
plus corridor. A number of shear zones on the Magnus joint venture bear a strong
resemblance to shears along this 25-kilometer-plus structural zone or trend,
including a 9.5 kilometer strike length that hosts the Boka gold discoveries.

Numerous gold-in-soil anomalies at Hui Dong also suggest that the Boka trend
continues onto the Hui Dong Property. Southwestern Resources Corp. recently
confirmed that there is conclusive proof of the "positive association between
mineralization at the Boka Gold Project and gold-in-soil anomalies." Further
supporting Southwestern Resources Corporation's proof is the discovery of
high-grade gold in numerous tunnels cut by peasant miners into the hillsides of
the Boka Gold project. Management of Magnus believes that a similar scenario is
playing out at Hui Dong.

Regional Mining History
-----------------------


Regional Mining History

The Boka Gold Project and the Hui Dong Property straddle five major copper
producing areas in the Sichuan and Yunnan provinces. This area includes one of
China's highest yield mining areas, the Dongchuan Copper Camp, which is located
about 50 kilometers south of Hui Dong and has been mined for more than 500
years.

For the past 50 years, the Chinese government has focused almost exclusively on
the development of copper mines in these areas in support of industrialization.
While the government has not developed the gold deposits in the area, local
artisan miners have, over the last several decades, recovered gold from small
alluvial deposits in the area's rivers that drain unexplored mountain terrain
near Hui Dong and the Boka Project.

Since the 1999 Boka gold discovery, peasant miners have had success by hand
digging pits and tunnels into the mountainsides, where some have found rich gold
mineralization. The regional government has recently intervened and put an end
to individual mining, but the tunnels and pits left behind aided Southwestern
Resources Corporation and its joint venture partner, Team 209, in identifying
gold zones with the greatest potential.


<PAGE>


                                       11



The Boka Trend Discovery
------------------------

A Chinese government exploration team made the first discovery in the Boka Trend
in 1999 following a program of stream sediment sampling and soil geochemistry.
The word of the discovery spread quickly. More than 1,000 artisan miners moved
in and dug some 200 tunnels and pits into the mountainsides. Many high grade
zones have been found in these tunnels, where coarse, visible gold is often
present.

Artisan miners had also begun extracting gold from the mountainsides on the
Magnus Hui Dong property, which lies across the Jin Sha River from the Boka Gold
Project. These pits and tunnels are expected to be an initial focus of the
Company's exploration activities.

One of the first tunnels to be sampled by Southwestern Resources Corporation and
Team 209 yielded a vein 34.5 meters long grading 75.2 grams per ton of gold
(2.42 ounces per ton). To date, about a dozen key discovery zones have been
identified (which are confined to a specific stratigraphic horizon) within a
25-kilometre-plus structural zone or trend at the Boka Gold Project. Mapping,
surveying and geochemical sampling of the approximately 200 tunnels and pits
excavated by peasant miners aided in the evaluation of these zones . The extent
of the Boka Gold Project's mineralized horizon has yet to be fully determined.
One analyst at the U.S. investment firm Raymond James Financial estimates that
the trend's initial eight kilometer strike length could possibly contain up to
8.4 million ounces of gold.

Exploration to Date
-------------------

Prior to Team 209's involvement at Hui Dong, Team 404 of the Sichuan Province
Geological Mining Bureau conducted regional-scale exploration for gold, copper
and other minerals in the area. Work consisted of regional-scale stream sediment
sampling, soil sampling, trenching and some tunneling. Results from eleven
trenches and three deeper tunnels showed encouraging signs of gold and copper
mineralization. Based on the results of this work, Team 404 geologists believe
the area has strong potential for significant gold and /or copper deposits.


Yunnan Province Property (Luquan County)
----------------------------------------

The Luquan Property is located approximately 40km west of Boka, and
approximately 30km southwest of the Hui Dong property. The terrain is very
similar to that of the other properties.

Information on the development and mineralization of the Luquan property is
limited at the moment. It appears that some preliminary work has been done and
that results have been relatively positive, but the Company is still in the
process of having available reports translated to English and is also in the
process of having the limited amount of information that has been translated to
English analyzed by its geological consultants. This property was added to the
Company's joint venture agreement of July 6, 2004, with Team 209, as an addendum
to that agreement while the joint venture agreement was going through the
government approval process. It was suggested, by the government review
authorities, that the Luquan Property should be included under the JV Agreement
originally only covering the Hui Dong property. Changes were subsequently made
to the JV Agreement by mutual agreement of the parties in the interest of
speeding up government approval and improving the overall agreement. Thus, as of
the date of this report, information about the Luquan property is limited.

Exploration Plan for both Properties
------------------------------------

Near-term Exploration Focus
---------------------------

The initial exploration program that encountered a number of important anomalous
gold zones at the Boka Gold Project consisted of geochemical soil sampling,
geological mapping and surveying to define targets for follow-up trenching and
drilling. Magnus is and expects to continue to take a similar approach with the



<PAGE>


                                       12



continuation of its own 2004 exploration program, which includes soil and rock
sampling, as well as detailed structural and stratigraphic mapping. Magnus
intends to follow up with trenching and tunneling in the most prospective areas.
Drilling is expected to commence by June of 2005.

These exploration techniques were instrumental in delineating virtually every
gold discovery at the Boka Project. Ongoing diamond drilling at Boka is helping
to determine the size, scope and average grade of the 25 kilometer plus
mineralized horizon or trend (including a 9.5 kilometer strike length) that
includes these various gold discoveries and other prospects.

Magnus may also expedite efforts to zero in on high grade mineralized structures
and zones with satellite imagery of both the Hui Dong Property and Boka Gold
Project. The Company expects to use this exploration tool to look for zones of
hydrothermal alteration on both properties. By studying the geological footprint
of Southwestern's key discovery zones, Magnus expects to accelerate the
identification of similar features on its Hui Dong Property and Luquan property.

Magnus, in conjunction with Joint Venture partner Team 209, plans a
comprehensive exploration program at Hui Dong to begin in late November 2004.
Work is expected to focus on exploration for gold and copper and to be modeled
after the Team 209 success at the nearby, geologically similar, Boka gold
project. The goal of the program is to define the extent of gold and copper
anomalies in the Hui Dong area through soil and rock sampling, trenching,
tunneling and geological mapping. Then, the anomalies are expected to be tested
by a core drilling program to begin by summer of 2005.

The exploration program is expected to begin by assessing the extent of previous
stream sediment sampling and adding to that survey if necessary. Significant
stream sediment anomalies will be target for more detailed sampling in the soil
geochemistry program to follow. A two-stage soil geochemistry program is
planned. Stage 1 involves property-wide soil sampling and will build on regional
soil and stream sediment sampling previously accomplished by Team 209. A plan
developed in consultation with Paul Taufen, geochemist and AMEC associate, is
expected to begin by collecting soil samples on both north-south and east-west
directed lines with sample centers of 800 x 100 meters. A total of 2350 samples
are planned for this phase of the program which should provide a good picture of
significant fault-controlled mineralization. Following analyses of first stage
results, infill sampling at closer line spacing intervals is expected to be done
to further define significant anomalies. A total of 7500 soil samples are
anticipated in stages 1 and 2.

Geological mapping is planned to be done concurrently with the soil geochemical
survey. Once familiar with the stratigraphic section, Team 209 geologists are
expected to complete geological mapping at a scale of 1:25,000 (approximately 1"
= 2000'). More detailed mapping at 1:10,000 (approximately 1"=1000') is expected
to be done in favorable areas defined by results of the soil geochemical survey.
Satellite imagery is anticipated to be incorporated into the mapping program to
aid in identifying potential ore-controlling faults and also areas of altered
rocks associated with mineralized zones. Appropriate ground-based geophysical
programs including magnetics and IP/resistivity surveys, may be used to identify
buried zones of alteration potentially related to gold and copper
mineralization.

Hand-dug trenches are expected to be constructed across the best anomalies to
obtain better rock exposures for sampling and more detailed mapping. A total of
3000 cubic meters of trenches are anticipated which should yield several hundred
rock samples along outcrop exposures in the trenches. Gold zones, defined by the
trenching and rock sampling, will then be targeted for drilling in mid 2005. For
less accessible areas too difficult for drill rigs to get to, tunneling is
expected to be done to further define and sample gold mineralized zones. If
after tunneling, the zone is still considered to be favorable and warrant
drilling, a road is expected to be constructed to provide drill rig access.
Ore-grade drill intercepts are expected to be followed-up by a second round of
drilling in the fall of 2005. The 2005 exploration program is expected to lay
the ground work for continuing exploration and development at Hui Dong in
subsequent years.



<PAGE>


                                       13



Preliminary Joint Venture Property, Qinghai Province Property (Qilian County)
-----------------------------------------------------------------------------

On April 6, 2004, Magnus and Team 209 signed a preliminary joint venture
agreement to form a co-operative joint venture company to carry out mineral
exploration and development in the 200 square kilometer area of Zhamashi gold
and copper deposits in Qilian County of Qinghai Province, PRC (see "Letters of
Intent and Preliminary Agreements" above).

Property Location
-----------------

The Qilian Project is a 200 square kilometer gold and copper prospect located in
Qinghai province in western China. The project is situated in a largely
unexplored region about 285 kilometers west of the provincial capital city of
Xining. The Qilian region had for many years been a restricted military zone
because of its role in China's space program and as a result was off limits to
any mineral exploration or development. Mineral exploration in the area include
the Donggou Copper Deposit, where recent small scale mining by local miners in
tunnel complexes has revealed the presence of some high-grade copper and
favorable gold values.

Regional Geology
----------------

The Qilian Project lies within a major tectonic zone of parallel, northwest
trending faults. Rocks in the mine area are fractured, creating a very favorable
environment for the emplacement of copper and gold mineralization. Abundant
quartz calcite veins are common near the mine tunnels and especially in the
upper mine tunnels. Mineralization is hosted by shear zones related to the
strong, northwest-trending tectonic forces that shaped the region's geology.
Evidence of placer gold mining (i.e. small pits and rock piles) is common along
the rivers banks and streams channels that drain the area.

Initial Exploration History
---------------------------

Small scale mining by a group of local miners at the Donggou Deposit is underway
on an existing 0.57 square kilometer mining lease, which may be included in the
joint venture. Construction of a small (150 ton/day) mill was completed in 2002.
Mineralized rock from two tunnels, at a combined length of about 1740 meters, is
trucked 16 kilometers down the mountain to a mill that is situated between the
towns of Qilian and Donggou. Here, it is crushed and recovered by floatation to
produce a copper concentrate. Team 209 geologists have also conducted early-
stage channel sampling and trenching, which further corroborated the presence of
impressive mineralization. Although possibly not part of the joint venture
agreement, the presence of the Dongguo deposit is indicative of the mineral
potential in the area. Magnus expects to concentrate its early exploration
program in search of similar areas of copper and gold mineralization.

Magnus and its partner, Team 209, provided a formal joint venture agreement can
be finalized, intend to conduct a systematic exploration program at the Qilian
Project in early 2005. Its initial focus is expected to be on Donggou-like
deposits. The program is expected to consist of sampling of mineralized
outcroppings, surface geological mapping and follow up drilling. Also, ground
based geophysical surveys and airborne reconnaissance, including the use of
satellite imagery, are anticipated to be used to expose similar mineralized
zones within the project area.


Leased Office Space
-------------------

The Company currently leases two administrative offices, one in Vancouver, BC,
and the other in Kunming, China. These leased properties are described in the
table below:


<PAGE>


                                       14


<TABLE>
<CAPTION>
              Address                    Approximate Size        Lease Term      Approximate monthly cost
------------------------------------   --------------------   ----------------   -------------------------

<S>                                     <C>                   <C>                 <C>
Suite 110-1285 West Pender,             1200 Square feet      Month to month      $2900 CDN
Vancouver, BC, Canada                                         lease

Dushimingyuan Bldg., No. A-2708,        1000 Square feet      2 years (expires     RMB 4000, which was
Central Renmin Road, Kunming City,                            April 5, 2006)       equal to approximately
Yunnan Province 650031, People's                                                   $485 USD on July 31,
Republic of China                                                                  2004
</TABLE>


ITEM 3.  LEGAL PROCEEDINGS.
---------------------------

Management is not aware of any legal proceedings contemplated by any
governmental authority or any other party involving the Company or its
properties. None of the Company's directors, officer or affiliates are (i) a
party adverse to the Company in any legal proceedings, or (ii) has an adverse
interest to the Company in any legal proceedings. Management is not aware of any
other legal proceedings pending or that have been threatened against the Company
or its properties.


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

Effective May 4, 2004, Magnus, by action of the majority shareholders, took the
following corporate actions: (i) effected a forward stock split on a basis of
two new shares for each old share; (ii) increased the authorized shares of
common stock of Magnus from 25,000,000 shares to 100,000,000 shares; (iii)
changed its name from Gravity Spin Holdings, Inc. to "Magnus International
Resources Inc."; (iv) ratified the adoption of the Stock Option Plan adopted by
Magnus' Board of Directors on January 9, 2004; (v) elected Messrs. Graham
Taylor, Mark Demmons, Raymond Turner and Peter Smith to serve as directors of
Magnus until the next annual meeting of the shareholders or until their
successors shall have been elected and qualified; and (vi) ratified the
selection of Moore Stephens Ellis Foster Ltd. as the independent public
accountant for Magnus for the fiscal year ending July 31, 2004.


                                     PART II
                                     -------

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

Market Information
------------------

The Common Shares of Magnus are listed and posted for trading on the OTC
Bulletin Board under the symbol "MGNU". The market for Magnus' common stock is
limited, volatile and sporadic. The following table sets forth the high and low
sale prices relating to Magnus' common stock since its was listed and posted for
trading on the OTCBB. These quotations reflect inter-dealer prices without
retail mark-up, mark-down, or commissions, and may not reflect actual
transactions. All prices give effect to the Company's May 4, 2004 forward share
split (2 new shares were given for each one existing share).



<PAGE>


                                       15



Quarter ended
-------------
2003                      High Trade            Low Trade
----                      ----------            ---------
April 30                    0.025                 0.015
July 31                      1.50                  0.03
October 31                   2.25                 0.505

2004
----
January 31                  0.725                  0.25
April 30                     1.35                 0.495
July 31                      1.11                  0.85
October 31                   1.26                  0.90

Holders
-------

As of October 15, Magnus had approximately 41 shareholders of record.

Dividends
---------

The Company has never paid dividends. While any future dividends will be
determined by the directors of the Company after consideration of the earnings,
financial condition and other relevant factors, it is currently expected that
available cash resources will be utilized in connection with the ongoing
acquisition, exploration and development programs of the Company.

Section 15(g) of the Securities Exchange Act of 1934
----------------------------------------------------

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

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

Recent Sales of Unregistered Securities and Changes in Control of the Company
-----------------------------------------------------------------------------

On November 24, 2003, the Board of Directors appointed Mr. Graham Taylor as a
director of the Company. On the same day, Mr. Bruce Turner resigned as a
director and all other offices held by him with the Company. Upon the Board's
acceptance of Mr. Bruce Turner's resignation, Mr. Graham Taylor was appointed as
President, Chief Executive Officer, Secretary and Treasurer of the Company.




<PAGE>


                                       16



On November 25, 2003, Excel Trust, the beneficiary of which is Mr. Graham
Taylor, entered into a share purchase agreement with Oakridge Holdings Inc.
whereby Excel Trust acquired 3,333,333 (pre-forward stock split) shares of
common stock of the Company registered in the name of Oakridge Holdings Inc.
from Oakridge Holdings Inc. at US$0.015 per share for a total of US$50,000.

On November 25, 2003, Emerson Trust, the beneficiary of which is Mr. Graham
Taylor, entered into a share purchase agreement with S.S. Holdings Inc. whereby
Emerson Trust acquired 3,333,334 (pre-forward stock split) shares of common
stock of the Company registered in the name of S.S. Holdings Inc. from S.S.
Holdings Inc. at US$0.015 per share for a total of US$50,000.

Upon completion of the share purchase agreements involving Excel Trust and
Emerson Trust, Mr. Graham Taylor beneficially owns 6,666,667 (pre forward stock
split) shares of common stock of the Company, which then constituted
approximately 62% of the issued and outstanding capital stock of the Company.


ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
--------------------------------------------------------------------------------
OF OPERATIONS.
--------------

The following discussion and analysis should be read in conjunction with the
consolidated financial statements of the Company for the period ended July 31,
2004, and the related notes thereto.


Overview
--------

Magnus is currently in the development stage and is engaged in the acquisition,
exploration and development of gold, copper, iron ore and silver properties,
focusing on China. The current primary focus of the Company is the exploration
and development of gold and other precious resource properties in China. To this
end, the Company has entered, and plans to enter, various joint venture
agreements with Chinese parties and entities (see "Letters of Intent and
Preliminary Agreements" and "Joint Venture Agreements" above). Generally, these
joint venture arrangements require the Company to contribute capital toward the
exploration and development of various properties while requiring the Chinese
individual or entity to obtain mineral rights for desirable mineral properties
in China, and obtain all required permits and licenses to commence exploration
and mining activities.


Outlook
-------

Mineral prices have been rising steadily during our last fiscal year. For
example, at July 31, 2003, the price of gold was 354.75 compared to 391.40 at
July 31, 2004, representing an increase of approximately 10%. Similarly, the
value of copper increased approximately 35% (from 81.80 to 127.55) and the value
of silver increased approximately 21% (from 5.15 to 6.54) during the same
period. Management believes that this trend will continue for several years to
come and as a result, the properties that are owned and controlled by the
Company which contain mineralized material could gain in value. However, there
is no assurance that gold prices will continue to rise (see "Part I--Item 1.9.9,
Business--Risk Factors-- "Downward fluctuations in metal prices may severely
reduce the value of the Company".).

At July 31, 2004, we had interests in two properties that might contain
mineralized material (see "Joint Venture Properties").

The Company does not currently generate operating cash flows. Subject to
sustained mineral prices, management expects to generate revenues and cash flows
in the future.

The Company had working capital deficiency of $480,655 at July 31, 2004. Total
cash requirements stipulated under the Company's Joint Venture Agreement with
Brigade 209 of China calls for a $5,000,000 equity investment into the joint
venture company by Magnus. Under the agreement, Magnus is required to contribute
not less than $460,000 within three months after the issuance of the joint
venture company business license; $1,000,000 within twenty four (24) months



<PAGE>


                                       17



after the issuance of the joint venture company business license; $1,550,000
within thirty-six (36) months after the issuance of the joint venture company
business license; and based on the results of the exploration by the joint
venture company, if required, an additional $1,990,000 within forty-eight (48)
months after the issuance of the joint venture company business license. As of
July 31, 2004, the company had advanced $500,000 to the joint venture company
which, upon government approval of the transfer of exploration licenses, will
become contributed capital. The business license for the joint venture company
was approved and issued o July 29, 2004. Thus, the company has at least 24
months from July 29, 2004, to contribute at least $1,000,000 to the joint
venture company, and then all other contributions must be made as per the
schedule above. The Company will need to raise additional funds through private
placements in order to meet its future investment requirement in the joint
venture. While the Company has been successful in raising money by private
placements in the past, there are no guarantees that the Company will be
successful in the future. Management believes, however, that absent sufficient
funding through a private placement or some other financing the company will not
generate sufficient revenue to cover any shortfall in the next year.

In addition to the above agreement, the Company has entered a letter of intent
(the Guangxi Bobai Yingqiao Silver Mine project) and a preliminary joint venture
agreement (Qilian County of Qinghai Province project) that may lead to other
formal joint venture agreements similar to the one outlined above. ("Description
of Business and Risk Factors, Letters of Intent and Preliminary Agreements").
Should one or both of these agreements formalize, the Company will have a
substantially higher monetary commitments than that outlined above.


Results from Operations
-----------------------

Summary
-------

The Company's consolidated net loss for the current fiscal year was $1,737,327
or $.08 per share compared to the previous year's consolidated net income of
$32,274 or $0.0015 per share for a net decrease of $1,769,601. The largest new
expense was related to consulting services (including finder's fees), performed
by True North Management and other consultants in association with closing the
formal joint venture agreement, the preliminary joint venture agreement, and the
various letters of intent (see "Letters of Intent and Preliminary Agreements",
"Joint Venture Agreements" and "Significant Employees / Consultants").

Mineral production and revenue
------------------------------

As we are still a development stage company and in the exploration stage of
development on our two Chinese properties, we have not, as of yet, produced any
revenues nor produced any minerals.

Exploration, property evaluation and holding costs
--------------------------------------------------

We are committed to contribute at least $1,000,000 to the joint venture company
within 24 months of July 29, 2004. This contribution will be used for the
preliminary geological testing described above under "Exploration Plan for Both
Properties." At this preliminary stage, it is difficult to estimate whether the
exploration costs will exceed the Company's total capital commitments required
under the joint venture agreement.

Corporate administration and investor relations
-----------------------------------------------

Corporate administrative and investor relations costs were $240,033 in the
current fiscal year compared to $1,754 in the previous year, representing an
increase of $238,279. Included in these costs are the costs of an investor
relations program started in the year, the cost of setting up the Company's
offices in Vancouver and Kunming, and business development costs in association
with new joint ventures in China. Also included are travel expenses for
executives and geologists to China, travel to various conferences, and other
miscellaneous office expenses.



<PAGE>


                                       18



Financial Position, Liquidity and Capital Resources
---------------------------------------------------

Cash used in Operations
-----------------------

Cash used in operations was $544,567 in the current fiscal year compared to cash
uses of $7,863 in the previous year.

The increase of $536,704 can be attributed to the administrative increases noted
above, the addition of an employee and several consultants, and other costs
(legal, etc.) associated with increased business activity (mainly, the
procurement and signing of our various joint ventures, preliminary joint
ventures, and letters of intent).

Financing Activities
--------------------

The Company received cash from financing activities of 1,327,254 in the current
fiscal year compared to $60,940 in the previous year.

The Company was in the middle of a private placement at July 31, 2004. By July
31, 2004, a total of $1,327,254 had been raised from 17 subscribers, and as at
October 15, 2004, a total of $1,552,254 had been raised from 20 subscribers. The
Company expects the private placement to close in late 2004. This private
placement consists of an offering of up to 5,000,000 units (each a "Unit") at a
price of $0.50 per Unit, with each Unit consisting of one common share, one
non-transferable share purchase warrant (each a "Warrant"), and one
non-transferable piggyback warrant (each a "Piggyback Warrant"). Each Warrant
entitles the holder thereof to acquire one additional share of common stock at a
price of $1.00 per share and having an expiry date of January 9, 2005. Each
Piggyback Warrant entitles the holder thereof, only if all the Warrants are
first exercised in full, to acquire one additional share of common stock of the
Company at a price of $2.00 per share and having an expiry date of January 9,
2006. As of October 15, 2004, no shares had yet been issued pending closing of
this private placement.

Liquidity and Capital Resources
-------------------------------

At July 31, 2004, the Company's total assets were $838,169 as compared to $23
the previous year. Long-term liabilities as of July 31, 2004 totaled $0 as
compared to $0 in the previous year. The Company had working capital deficiency
of $480,655 at July 31, 2004. The Company is in the midst of raising additional
capital through a private placement (see above under "Financing Activities"),
                                                      --------------------
and may do additional financings in the future. Subscriptions received during
the current private placement are presented in the financial statements as a
current liability, pending closure of the placement and issuance of the shares.
The placement is expected to close in late 2004.

Major cash commitments in the next fiscal year are related to proposed
exploration activities, corporate administration and operations (including
financial commitments to the Chinese joint venture company, as described above).


Transactions with Related Parties / Subsequent Events
-----------------------------------------------------

As of September 29, 2004, the formation of the Company's joint venture company,
Long Teng Mining, Ltd. ("Long Teng") was approved by the Chinese Government and
a business license was issued. According to the terms of the Joint Venture
Agreement entered into between Magnus and Team 209, dated July 6, 2004, Magnus
is to appoint three (3) members of the board of directors of Long Teng and Team
209 is to appoint two (2). Magnus has decided to appoint Messrs. Graham Taylor,
Pete Smith, and Anthony Tam to the Long Teng board. Mr. Anthony Tam is the sole
owner and director of True North Management, to which Magnus pays $10,000 per
month in consulting fees, as well and various other finder's fees for new joint
venture properties obtained through the efforts of Mr. Tam (see "Significant



<PAGE>


                                       19



Employees/Consultants"). Under the joint venture agreement, assuming Magnus
maintains its capital contribution obligations, Magnus will own 90% of the joint
venture company.


ITEM 7.  FINANCIAL STATEMENTS
-----------------------------



<PAGE>












                       MAGNUS INTERNATIONAL RESOURCES INC.
                       -----------------------------------
                     (formerly Gravity Spin Holdings, Inc.)





                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------




                                                                        Page
                                                                        ----
Consolidated Financial Statements:

     Report of Independent Registered Public Accounting Firm             F-2

     Consolidated Balance Sheets                                         F-3

     Consolidated Statements of Operations                               F-4

     Consolidated Statements of Cash Flows                               F-5

     Consolidated Statements of Stockholders' Equity                     F-6

     Notes to Consolidated Financial Statements                          F-7



















                                       F-1
<PAGE>








REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
-------------------------------------------------------



To the Board of Directors and Stockholders
------------------------------------------

MAGNUS INTERNATIONAL RESOUCES INC. ("the Company")
--------------------------------------------------
(formerly Gravity Spin Holdings, Inc.)
(an exploration stage enterprise)


We have audited the consolidated balance sheet of Magnus International Resources
                                                  ------------------------------
Inc. (formerly Gravity Spin Holdings, Inc.) (an exploration stage enterprise) as
----
at July 31, 2004, and the consolidated statements of operations,  cash flows and
stockholders'  equity  for the year then  ended.  These  consolidated  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audit. The Company's  consolidated  financial statements
as of and for the year ended July 31, 2003 were audited by other  auditors whose
report,  dated  October 31,  2003,  expressed  an  unqualified  opinion on these
statements. The other auditors' report has been furnished to us, and our report,
insofar as it relates to the amounts  included for such prior  period,  is based
solely on the report of such other auditors.

We  conducted  our audit in  accordance  with  standards  of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and  perform  an audit to obtain  reasonable  assurance  whether  the  financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  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 July 31, 2004,
and the results of its operations and its cash flows for the year then ended, in
conformity with U.S. generally accepted accounting principles.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has insufficient working capital,
has sustained  operating  loss, and has  insufficient  capital to continue these
sustained losses,  which raises  substantial doubt about its ability to continue
as a going  concern.  Management's  plans in  regard to these  matters  are also
described in Note 2. The  consolidated  financial  statements do not include any
adjustments that might result from the outcome of this uncertainty.


                                          /s/ Moore Stephens Ellis Foster Ltd.

Vancouver, Canada
October 15, 2004                                   Chartered Accountants




                                       F-2
<PAGE>





<TABLE>
<CAPTION>
                       MAGNUS INTERNATIONAL RESOURCES INC.
                       -----------------------------------
                     (formerly Gravity Spin Holdings, Inc.)
                         (An Exploration Stage Company)
                           Consolidated Balance Sheets
                            (Expressed in US Dollars)

                                                                                   July 31,
                                                                     ------------------------------------
                                                                           2004                2003
                                                                     ----------------    ----------------
                                     ASSETS

<S>                                                                  <C>                 <C>
CURRENT ASSETS:
   Cash                                                              $       273,455     $            23
   Advances receivable and prepaid expenses                                   56,106                  --
                                                                     ----------------    ----------------
      Total current assets                                                   329,561                  23

EQUIPMENT
   Equipment, net of $647 accumulated depreciation                             8,608                  --

ADVANCE TO JOINT VENTURE (Note 3)                                            500,000                  --

MINERAL PROPERTY LICENSES (Note 3)                                                --                  --
                                                                     ----------------    ----------------

      Total assets                                                   $       838,169     $            23
                                                                     ================    ================



                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
   Accounts payable and accrued liabilities, including
      related party payable of $12,574                               $       357,514     $            --
                                                                     ----------------    ----------------

COMMITMENTS (Note 3)

STOCKHOLDERS' EQUITY
   Common stock
      Authorized 100,000,000 shares at par value of  $0.001 each
      Issued and outstanding 22,543,200 (2003 - 21,543,200)                   22,543              21,543
   Subscription received                                                   1,327,254                  --
   Common stock to be issued                                                 190,000                  --
   Additional paid-in capital                                                755,328              55,623
   Accumulated (deficit) during exploration stage                         (1,814,470)            (77,143)
                                                                     ----------------    ----------------
         Total shareholders' equity                                          480,655                  23
                                                                     ----------------    ----------------

      Total liabilities and shareholders' equity                     $       838,169     $            23
                                                                     ================    ================
</TABLE>








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

                                       F-3
<PAGE>





<TABLE>
<CAPTION>
                       MAGNUS INTERNATIONAL RESOURCES INC.
                       -----------------------------------
                     (formerly Gravity Spin Holdings, Inc.)
                         (An Exploration Stage Company)
                      Consolidated Statements of Operations
                            (Expressed in US Dollars)

                                                                      Year Ended July 31,
                                                              ------------------------------------
                                                                    2004                2003
                                                              ----------------    ----------------
                                                                  (Note 1)

<S>                                                           <C>                 <C>
EXPENSES:
   Consulting                                                 $       334,438     $            --
   Finder fees                                                        642,000                  --
   Legal and professional fees                                        143,966              33,528
   Salaries and benefits                                              100,185                  --
   Stock-based compensation                                           276,705                  --
   Other administrative expenses                                      240,033               1,754
                                                              ----------------    ----------------
      Total expenses                                                1,737,327              35,282

Net (loss) from continuing operations                              (1,737,327)            (35,282)

DISCONTINUED OPERATIONS (Note 7)
   Income from discontinued operations, net of taxes                       --               7,491
   Gain on disposal of discontinued operations, net
      of taxes                                                             --              60,065
                                                              ----------------    ----------------
      Total income from discontinued operation                             --              67,556
                                                              ----------------    ----------------

      Net income (loss) for the year                          $    (1,737,327)    $        32,274
                                                              ================    ================

Net earnings (loss) per common share - basic and diluted:
   Continued operations                                       $         (0.08)    $         (0.00)
   Discontinued operations                                              (0.00)               0.00
                                                              ----------------    ----------------
   Net income (loss) for the year                             $         (0.08)    $          0.00
                                                              ================    ================

Weighted average number of common stock outstanding
                                                                   22,106,042          21,543,200
                                                              ================    ================
</TABLE>











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

                                       F-4
<PAGE>





<TABLE>
<CAPTION>
                       MAGNUS INTERNATIONAL RESOURCES INC.
                       -----------------------------------
                     (formerly Gravity Spin Holdings, Inc.)
                         (An Exploration Stage Company)
                      Consolidated Statements of Cash Flows
                            (Expressed in US Dollars)

                                                                       Year Ended July 31,
                                                               ------------------------------------
                                                                     2004                2003
                                                               ----------------    ----------------
<S>                                                            <C>                 <C>
Cash flows from (used in) operating activities:
   Net income (loss)                                           $    (1,737,327)    $        32,274
   Adjustments to reconcile net (loss) to net cash used in
   operating activities:
      Stock-based compensation                                         276,705                  --
      Stock issued for services                                        614,000                  --
      Depreciation                                                         647              16,493
      Imputed interest                                                      --               2,625
      Gain on disposal of discontinued operations                           --             (60,065)
      Net change in operating assets and liabilities:
         Accounts receivable                                                --              42,398
         Advances receivable and prepaid expenses                      (56,106)             (3,709)
         Accounts payable and accrued liabilities                      357,514             (31,603)
         Unearned income                                                    --              (6,276)
                                                               ----------------    ----------------
   Net cash used in operating activities                              (544,567)             (7,863)
                                                               ----------------    ----------------

Cash flows used in investing activities:
   Advance to joint venture company                                   (500,000)                 --
   Cash disposed in connection with disposition of
      subsidiary                                                            --             (91,715)
   Purchase of office equipment                                         (9,255)             (7,288)
                                                               ----------------    ----------------
Net cash used in investing activities                                 (509,255)            (99,003)
                                                               ----------------    ----------------

Cash flows from financing activities:
   Subscription received                                             1,327,254                  --
   Advances from related party                                              --              60,940
                                                               ----------------    ----------------
Net cash provided by financing activities                            1,327,254              60,940
                                                               ----------------    ----------------

Effect of exchange rate changes on cash                                     --               4,652
                                                               ----------------    ----------------
Net change in cash                                                     273,432             (41,274)

Cash, beginning of year                                                     23              41,297
                                                               ----------------    ----------------
Cash, end of year                                              $       273,455     $            23
                                                               ================    ================

Non-cash transactions:
   Common stock issued/ allotted for services                  $       614,000     $            --
                                                               ================    ================
Supplemental disclosure of cash flow information:
   Interest paid                                               $            --     $            --
                                                               ================    ================
   Income taxes paid                                           $            --     $            --
                                                               ================    ================
</TABLE>



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

                                       F-5
<PAGE>

<TABLE>
<CAPTION>
                       MAGNUS INTERNATIONAL RESOURCES INC.
                       -----------------------------------
                     (formerly Gravity Spin Holdings, Inc.)
                         (An Exploration Stage Company)
                 Consolidated Statements of Stockholders' Equity
                            (Expressed in US Dollars)

                                                                                                      Cumulative
                                                                                        Common          Other
                                                                                        Stock          Compre-        Additional
                                           Common                     Subscription      to be          hensive         Paid-in
                                           Stock          Amount         received       Issued      Income (loss)      Capital
                                        ------------   ------------   ------------   ------------   --------------   ------------

<S>                                      <C>           <C>            <C>            <C>            <C>              <C>
Balance July 31, 2002                    21,543,200    $    21,543    $        --    $        --    $       2,362    $    59,008

Capital contributed by shareholder               --             --             --             --               --          3,086
Disposition of paid-in capital
for subsidiary sold
                                                 --             --             --             --               --         (6,471)
Net income for the year                          --             --             --             --           (2,362)            --
                                        ------------   ------------   ------------   ------------   --------------   ------------

Balance July 31, 2003                    21,543,200         21,543             --             --               --    $    55,623
Shares issued as a finder's fees
in connection with a letter of
intent, December 31, 2003                   200,000            200             --             --               --         79,800
Shares issued as a finder's fees
in connection with two letters
of intent, January 15, 2004                 400,000            400             --             --               --        171,600
Shares issued as consulting fees,
ranging from $0.26 to $0.54 per
share, between November 30, 2004 and
February 29, 2004                           400,000            400             --             --               --        171,600
200,000 Shares to be issued as a
finder's fee in connection with a
joint venture agreement, July 6, 2004            --             --             --        190,000               --             --
Shares subscription received                     --             --      1,327,254             --               --             --
Stock-based  compensation                        --             --             --             --               --        276,705
Net (loss) for the year                          --             --             --             --               --             --
                                        ------------   ------------   ------------   ------------   --------------   ------------

Balance July 31, 2004                    22,543,200    $    22,543    $ 1,327,254    $   190,000    $          --    $   755,328
                                        ============   ============   ============   ============   ==============   ============

<CAPTION>
(continued)
-----------
                                          Deficit
                                        Accumulated
                                           During
                                        Exploration    Stockholders'
                                           Stage          Equity
                                        ------------   -------------

<S>                                     <C>            <C>
Balance July 31, 2002                   $  (109,417)   $    (26,504)

Capital contributed by shareholder               --           3,086
Disposition of paid-in capital
for subsidiary sold
                                                 --          (6,471)
Net income for the year                      32,274          29,912
                                        ------------   -------------

Balance July 31, 2003                       (77,143)             23
Shares issued as a finder's fees
in connection with a letter of
intent, December 31, 2003                        --          80,000
Shares issued as a finder's fees
in connection with two letters
of intent, January 15, 2004                      --         172,000
Shares issued as consulting fees,
ranging from $0.26 to $0.54 per
share, between November 30, 2004 and
February 29, 2004                                --         172,000
200,000 Shares to be issued as a
finder's fee in connection with a
joint venture agreement, July 6, 2004            --         190,000
Shares subscription received                     --       1,327,254
Stock-based  compensation                        --         276,705
Net (loss) for the year                  (1,737,327)     (1,737,327)
                                        ------------   -------------

Balance July 31, 2004                   $(1,814,470)   $    480,655
                                        ============   =============
</TABLE>

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

                                       F-6
<PAGE>



                       MAGNUS INTERNATIONAL RESOURCES INC.
                       -----------------------------------
                     (formerly Gravity Spin Holdings, Inc.)
                         (An Exploration Stage Company)
                   Notes to Consolidated Financial Statements
                                  July 31, 2004
                            (Expressed in US Dollars)


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
-----------------------------------------------

This  summary  of  significant   accounting  policies  of  Magnus  International
Resources,  Inc. (an Exploration Stage Company)  (hereinafter referred to as the
"Company")  is  presented to assist in  understanding  the  Company's  financial
statements.  These accounting  policies conform to generally accepted accounting
principles in the United States of America and have been consistently applied in
the preparation of the financial statements.

Organization and Description of Business
----------------------------------------

The Company was  incorporated  as Gravity  Spin  Holdings,  Inc. in the State of
Nevada  on April 4,  2001.  On June  30,  2001,  the  Company  acquired  all the
outstanding stock of Gravity Spin, Inc.  ("Gravity Spin",  formerly E-Fusion ATP
Inc.), a company  incorporated on March 3, 2000 in Canada, by issuing 10,000,000
shares  of  its  common  stock.  Gravity  Spin  engaged  in  advertising,  sales
promotion,  graphic design, branding, new media, and design services principally
in Canada. The two companies were under identical shareholder control.  Prior to
the  acquisition,  the  Company had only  nominal  assets and  liabilities.  The
transaction was treated as a reverse acquisition for accounting purposes,  which
is a capital  transaction and not a business  combination.  The Company sold its
subsidiary, Gravity Spin, Inc., on June 2, 2003 (Note 7).

Subsequent to the sale of its operating  subsidiary on June 2, 2003, the Company
entered an exploration stage in pursuit of new business  opportunities (Note 3).
As an exploration stage company,  the Company presents its financial  statements
in conformity with the accounting  principles  generally  accepted in the United
States that apply in establishing operating  enterprises.  The Company discloses
the  deficit  accumulated  during  the  exploration  stage  and  the  cumulative
statements  of operations  and cash flows from the inception of the  exploration
stage  through July 31, 2004.  Because the Company had no  transactions  between
June 2, 2003 and July 31, 2003,  the statements of operations and cash flows for
the year ended July 31, 2004 reflect all the  activities  since the inception of
the exploration stage.

Effective  May 4, 2004 the  Company  changed  its name to  Magnus  International
Resources Inc. The Company has an office in Vancouver, Canada.

The Company formed a subsidiary  called Gravity Spin Event  Marketing,  Inc., in
May 2003. The Company formed two new  subsidiaries  called Magnus  International
Resources Inc. ("Magnus BVI") and Magnus Resources (HK) Limited ("Magnus HK") in
April 2004 and December 29, 2003,  respectively.  Gravity Marketing,  Magnus BVI
and Magnus HK have no transactions as of July 31, 2004.





                                       F-7
<PAGE>



                       MAGNUS INTERNATIONAL RESOURCES INC.
                       -----------------------------------
                     (formerly Gravity Spin Holdings, Inc.)
                         (An Exploration Stage Company)
                   Notes to Consolidated Financial Statements
                                  July 31, 2004
                            (Expressed in US Dollars)


Principles of Consolidation
---------------------------

The consolidated  financial  statements  include accounts of the Company and its
wholly-owned  subsidiaries,  Gravity  Marketing,  Magnus  BVI and Magnus HK. All
significant inter-company balances and transactions are eliminated.

Cash Equivalents
----------------

Cash  equivalents  are  comprised of certain  highly liquid  instruments  with a
maturity of three months or less when  purchased.  As at July 31, 2004 and 2003,
the Company did not have any cash equivalents.

Mineral Properties and Exploration Expenses
-------------------------------------------

Mineral property  acquisition,  exploration and development costs are charged to
operations as incurred  until such time that proven or probable ore reserves are
discovered. From that time forward, the Company will capitalize all costs to the
extent that future cash flow from reserves equals or exceeds the costs deferred.
The deferred costs will be amortized using the unit-of-production  method when a
property reaches commercial production. As at July 31, 2004, the Company did not
have proven or probable reserves.

Assets Retirement Obligations
-----------------------------

The  Company  has  adopted  SFAS  No.  143,   Accounting  for  Asset  Retirement
Obligations  which  requires  that the fair  value of a  liability  for an asset
retirement obligation be recognized in the period in which it is incurred.  SFAS
No.  143  requires a  liability  to be  recorded  for the  present  value of the
estimated site  restoration  costs with  corresponding  increase to the carrying
amount of the related  long-lived  asset. The liability will be accreted and the
asset will be depreciated  over the life of the related assets.  Adjustments for
changes  resulting  from the passage of time and changes to either the timing or
amount of the original present value estimate  underlying the obligation will be
made.

As at July 31, 2004, the Company did not have asset retirement obligations

Equipment
---------

Equipment is composed of office furniture and equipment and is being depreciated
on a straight-line basis over five years, which is their estimated useful lives.







                                       F-8
<PAGE>



                       MAGNUS INTERNATIONAL RESOURCES INC.
                       -----------------------------------
                     (formerly Gravity Spin Holdings, Inc.)
                         (An Exploration Stage Company)
                   Notes to Consolidated Financial Statements
                                  July 31, 2004
                            (Expressed in US Dollars)


Advertising Expenses
--------------------

Advertising expense are expensed as incurred. There were no advertising expenses
incurred by the Company for years ended July 31, 2004 and 2003.

Foreign Currency
----------------

The Company  operates outside of the United States of America and maintains U.S.
dollars as its  functional  currency.  Transactions  in foreign  currencies  are
translated at the rate in effect at the time of the transaction. Monetary assets
and  liabilities  denominated  in the foreign  currencies  are  presented in the
balance  sheet at the rate in effect at the balance  sheet date.  The  resulting
foreign exchange gains and losses are included in operations.

Use of Estimates
----------------

The  preparation  of the  Company's  financial  statements  in  conformity  with
generally  accepted  accounting  principles of United States of America requires
management to make estimates and assumptions that affect the amounts reported in
these financial  statements and accompanying  notes. Actual results could differ
from those estimates.

Earnings (Loss) Per Share
-------------------------

Basic earnings  (loss) per share of common stock is computed by dividing the net
earnings  (loss) by the weighted  average  number of common  shares  outstanding
during the period.  The Company has  adopted  SFAS No. 128  Earnings  Per Share.
Diluted  earnings  (loss)  per share is equal to the basic  earnings  (loss) per
share  for the  years  ended  July  31,  2004  and  2003  because  common  stock
equivalents  consisting of options to acquire  4,000,000  (2003 - nil) shares of
common stock that are outstanding at July 31, 2004 are  anti-dilutive,  however,
they may be dilutive in future.

Fair Value of Financial Instruments
-----------------------------------

The  carrying  value of  cash,  refundable  deposit,  advances  receivable,  and
accounts  payable and accrued  liabilities at July 31, 2004,  reflected in these
financial  statements,  approximates  their  fair  value  due to the  short-term
maturity of the instruments.

Comprehensive Income
--------------------

The Company has adopted Statement of Financial  Accounting  Standards (SFAS) No.
130, "Reporting Comprehensive Income".  Comprehensive income includes net income
and all changes in equity  during a period that arises from  non-owner  sources,
such as  foreign  currency  items and  unrealized  gains and  losses on  certain



                                       F-9
<PAGE>



                       MAGNUS INTERNATIONAL RESOURCES INC.
                       -----------------------------------
                     (formerly Gravity Spin Holdings, Inc.)
                         (An Exploration Stage Company)
                   Notes to Consolidated Financial Statements
                                  July 31, 2004
                            (Expressed in US Dollars)


investments  in equity  securities.  During the year ended  July 31,  2004,  the
Company has no comprehensive income other than net income (loss).

Income taxes
------------

The Company  records  deferred  taxes in accordance  with Statement of Financial
Accounting  Standards  (SFAS)  No.  109,  "Accounting  for  Income  Taxes."  The
statement  requires  recognition  of  deferred  tax assets and  liabilities  for
temporary  differences  between the tax bases of assets and  liabilities and the
amounts at which they are carried in the  financial  statements,  based upon the
enacted tax rates in effect for the year in which the  differences  are expected
to reverse.  A valuation  allowance  is  established  when  necessary  to reduce
deferred tax assets to the amount expected to be realized.

Long-Lived Assets Impairment
----------------------------

The  Company   periodically   analyzes  its  long-lived   assets  for  potential
impairment,  assessing  the  appropriateness  of  lives  and  recoverability  of
unamortized balances through measurement of undiscounted operation cash flows in
accordance  with SFAS No.  144,  Accounting  for the  Impairment  or Disposal of
Long-lived  Assets.  If impairment is deemed to exist, the asset will be written
down to its fair value.  Fair value is generally  determined  using a discounted
cash flow analysis.  As at July 31, 2004 and 2003,  there was no impairment loss
adjustment.

Stock-Based Compensation
------------------------

As permitted by Statement of Financial  Accounting Standards No. 123, Accounting
for  Stock-Based  Compensation  ("SFAS  No.  123)  and as  amended  by No.  148,
Accounting for Stock-Based Compensation - Transition and Disclosure, the Company
continues to account for stock  options  granted to its  employees and directors
using the  intrinsic  value method of  accounting,  as  prescribed in Accounting
Principles  Board  Opinion No. 25  Accounting  for Stock Issued to Employees and
related  interpretations.  Under the  intrinsic  value method,  no  compensation
expense is recorded if the exercise  price of the options is equal to or greater
than the market price of the underlying  stock on the date of grant. The Company
has stock-based compensation plan that is described more fully in Note 6.

Accounting for Derivative Instruments and Hedging Activities
------------------------------------------------------------

The Financial Accounting Standards Board ("FASB") issued SFAS No. 133 Accounting
for  Derivative  Instruments  and  Hedging  Activities.  SFAS No.  133  requires
companies to recognize all derivatives contracts as either assets or liabilities
in the balance  sheet and to measure them at fair value.  If certain  conditions
are met, a derivative may be specifically  designated as a hedge,  the objective



                                      F-10
<PAGE>



                       MAGNUS INTERNATIONAL RESOURCES INC.
                       -----------------------------------
                     (formerly Gravity Spin Holdings, Inc.)
                         (An Exploration Stage Company)
                   Notes to Consolidated Financial Statements
                                  July 31, 2004
                            (Expressed in US Dollars)


of which is to match  the  timing  of gain or loss  recognition  on the  hedging
derivative  with the  recognition  of (i) the  changes  in the fair value of the
hedged asset or liability that are  attributable  to the hedged risk or (ii) for
the designated as a hedging instrument, the gain or loss is recognized in income
in the period of change.

Historically,  the Company has not entered into derivative  contracts  either to
hedge existing risks or for speculative purposes. The adoption of this statement
does not have an impact on the Company's consolidated financial statements.

New Accounting Pronouncements
-----------------------------

In  December  2003,  the FASB  issued  Interpretation  No.  46  (Revised  2003),
"Consolidation of Variable Interest  Entities,  an Interpretation of ARB No. 51"
("FIN 46R").  This  interpretation  explains how to identify  variable  interest
entities and how an  enterprise  assesses  its  interest in a variable  interest
entity to  decide  whether  to  consolidate  that  entity.  This  interpretation
requires existing  unconsolidated  variable interest entities to be consolidated
by their primary beneficiaries if the entities do not effectively disperse risks
among parties involved.  Variable  interest  entities that effectively  disperse
risks  will not be  consolidated  unless a single  party  holds an  interest  or
combination of interest that  effectively  recombines risks that were previously
dispersed.  This  interpretation is effective no later than the end of the first
reporting  period that ends after March 15, 2004. This  interpretation  does not
have an impact on the Company's financial position or results of operations.

In December 2003,  the FASB issued SFAS No. 132(R),  a revision to SFAS No. 132,
"Employers'  Disclosure about Pensions and Other Postretirement  Benefits.  SFAS
No. 132(R) requires additional disclosures about the assets,  obligations,  cash
flows and net periodic  benefit cost of defined  benefit pension plans and other
defined benefit postretirement plans. SFAS No. 132(R) is effective for financial
statements  with fiscal years ending after December 15, 2003, with the exception
of disclosure requirements related to foreign plans and estimated future benefit
payments  which are effective  for fiscal years ending after June 15, 2004.  The
adoption  of SFAS  132(R)  does not have an  impact on the  Company's  financial
position or results of operations.

In December 2003, the American Institute of Certified Public Accountants and the
Securities and Exchange  Commission ("SEC") expressed the opinion that rate-lock
commitments  represent  written  put  options,  and  therefore  be  valued  as a
liability. The SEC indicated that they expect registrants to disclose the effect
on the financial  statement of recognizing the rate-lock  commitments as written
put options, for quarters commencing after March 15, 2004. Additionally, the SEC
recently issued Staff  Accounting  Bulletin (SAB) No. 105. SAB No. 105 clarifies
the SEC's  position that the inclusion of cash flows from servicing or ancillary



                                      F-11
<PAGE>



                       MAGNUS INTERNATIONAL RESOURCES INC.
                       -----------------------------------
                     (formerly Gravity Spin Holdings, Inc.)
                         (An Exploration Stage Company)
                   Notes to Consolidated Financial Statements
                                  July 31, 2004
                            (Expressed in US Dollars)


income in the  determination of the fair value of interest rate lock commitments
is not appropriate.  SAB No. 105 is effective for loan commitments  entered into
on or after April 1, 2004.  The  adoption of SAB No. 105 does not have an impact
on the Company's consolidated financial statements.


2. BASIS OF PRESENTATION - GOING CONCERN
----------------------------------------

These  financial  statements  have been  prepared in conformity  with  generally
accepted  accounting   principles  in  the  United  States  of  America,   which
contemplates  continuation  of the Company as a going  concern.  The Company has
limited working capital,  has incurred  recurring  operating losses and requires
additional  funds to meet its  obligations  and maintain its  operations.  These
conditions raise  substantial doubt about the Company's ability to continue as a
going concern.  Management plans in this regard are to raise equity financing as
required.


3. MINERAL PROPERTIES AND JOINT VENTURES
----------------------------------------

During the year ended July 31,  2004,  the Company  entered  into the  following
agreements to acquire certain mineral properties and licenses in China.

Long Teng Mining Ltd.
---------------------

On July 6, 2004,  the Company  entered into a formal  Cooperative  Joint Venture
Contract ("JV  Agreement")  with Geology Brigade 209 of the Nuclear  Industry of
Yunnan Province of China ("Team 209") to form a new joint venture company called
Long Teng Mining Ltd. ("Long Teng"), a Chinese corporation. Long Teng will carry
out mineral  exploration and  development in Luquan county,  Yunnan province and
Huidong county,  Sichuan province,  China.  Under the terms of the JV Agreement,
the Company will  contribute  $5,000,000 as an equity  investment into Long Teng
over the next four (4) years and Team 209 will transfer  certain gold and copper
exploration  licenses to Long Teng.  Upon initial capital  contributions  by the
Company and the  transfer of the  exploration  licenses by Team 209, the Company
will own a 90% interest in Long Teng.  Subject to certain  conditions  precedent
being satisfied, the Company is required to contribute $5,000,000 as follows:

     o    not less than  $460,000  within three months after the issuance of the
          business license;
     o    $1,000,000  within  twenty-four  months  after  the  issuance  of  the
          business license;
     o    $1,550,000 within thirty-six months after the issuance of the business
          license; and





                                      F-12
<PAGE>



                       MAGNUS INTERNATIONAL RESOURCES INC.
                       -----------------------------------
                     (formerly Gravity Spin Holdings, Inc.)
                         (An Exploration Stage Company)
                   Notes to Consolidated Financial Statements
                                  July 31, 2004
                            (Expressed in US Dollars)


     o    an additional  $1,990,000 within forty-eight months after the issuance
          of the  business  license,  if  required,  based on the results of the
          exploration by Long Teng.

If further funding is required for carrying out more exploration and development
activities, the Company will be responsible for providing such funding. Team 209
will remain a 10% owner of Long Teng.

In addition,  the Company is required to provide Team 209 with the equivalent of
$750,000 in shares of its common  stock within 15 days after the issuance of the
business license of Long Teng, the joint venture company,  and the completion of
transfer of the aforementioned  exploration  licenses.  The business license for
Long Teng was received on July 29, 2004. Application to transfer the exploration
licenses from Team 209 to Long Teng is currently under way.

The Company  agreed to pay a finder's fee of 200,000  shares of its common stock
valued at $190,000 and $200,000  cash. As at July 31, 2004,  200,000 shares were
allotted and $200,000 cash remained unpaid and was included in accounts  payable
and accrued liabilities.

As at July 31, 2004,  the Company has  advanced  $500,000 to Long Teng under the
terms of the JV  Agreement.  Should Long Teng fail to receive  approval from the
government of China for the transfer of exploration  licenses from Team 209, the
$500,000 deposit will be refunded to the Company.

Zhamashi Gold and Copper Deposits, Qinghai Province
---------------------------------------------------

On January 15,  2004,  the Company and Team 209 entered  into a letter of intent
with respect to forming a cooperative joint venture company to carry out mineral
exploration  and  development of the Zhamashi gold and copper deposits in Qilian
county of Qinghai  province,  China.  On April 6, 2004, the Company and Team 209
signed a Preliminary  Joint Venture Agreement  ("Preliminary JV Agreement").  In
conjunction  with  entering  into this  Preliminary  JV  Agreement,  the parties
entered into a Preliminary Mine Asset Purchase  Agreement for the proposed joint
venture  company to acquire the mining  assets and mining  licenses from a third
party for a total purchase price of approximately $2,000,000. The $2 million are
to be made on a certain  payment  schedule set out in the definitive  mine asset
purchase agreement to be entered into if and when the Company and Team 209 enter
a definitive  joint  venture  agreement.  The  operations  of the joint  venture
company will be managed under the control of the Company. Under the terms of the
Preliminary JV Agreement,  the Company will  contribute  $5,010,000 as an equity
investment into the joint venture company and Team 209 will transfer the related
gold and  copper  exploration  licenses  and all  geological  data to the  joint



                                      F-13
<PAGE>



                       MAGNUS INTERNATIONAL RESOURCES INC.
                       -----------------------------------
                     (formerly Gravity Spin Holdings, Inc.)
                         (An Exploration Stage Company)
                   Notes to Consolidated Financial Statements
                                  July 31, 2004
                            (Expressed in US Dollars)


venture  company.  The  Company  will own a 90%  interest  in the joint  venture
company. Subject to certain conditions precedent being satisfied and signing the
definitive  joint  venture  agreement,  the Company is  required  to  contribute
$5,010,000 as follows:

     o    not less than  $750,000  within three months after the issuance of the
          business license; and
     o    $4,260,000 within thirty-six months after the issuance of the business
          license. Any amount already paid by the Company for the acquisition of
          the mining  assets,  mining  rights and mining  permits from the third
          party will be deducted from this amount.

If further funding is required for carrying out more exploration and development
activities, the Company will be responsible for providing such funding. Team 209
will remain a 10% owner of the joint venture company.

A definitive  joint venture  agreement and articles of association for the joint
venture  company  shall be agreed upon and signed  before  November 30, 2004, or
such later date as the Company  and Team 209 may agree  upon.  As at October 15,
2004, the definitive joint venture agreement has not been signed.  However,  the
Company are  negotiating an alternative  joint venture  agreement with Team 209,
similar to the one outlined above,  which would omit the Preliminary  Mine Asset
Purchase Agreement aspect of the joint venture, and only include the transfer of
gold and  copper  exploration  licenses  and all  geological  data to the  joint
venture  company.   Should  the  alternative   joint  venture  agreement  become
formalized,  as opposed to the preliminary  joint venture  agreement  already in
place, it is possible that the Company's capital contribution obligations to the
project  would be reduced by $2,000,000  (the  Preliminary  Mine Asset  Purchase
Agreement purchase amount).

The Company paid a finder's fee of 200,000  shares of its common stock valued at
$86,000  for signing  the letter of intent.  The  Company  also agreed to pay an
additional  finder's fee of 100,000 shares of its common stock and $100,000 cash
upon signing the definitive joint venture agreement.

Bobai Yinqiao Silver Mine, Guangxin Province
--------------------------------------------

On December 31, 2003,  the Company  entered into a letter of intent with respect
to a joint venture for  prospecting and development of the Guangxi Bobai Yinqiao
Silver Mine in Guangxi province, China. The Company was required to make written
notification  before  April 30,  2004 of its intent to  continue  with the joint
venture.  The Company did not make formal written notification but has continued
informal study of the project and is carrying on negotiations for an extension.



                                      F-14
<PAGE>



                       MAGNUS INTERNATIONAL RESOURCES INC.
                       -----------------------------------
                     (formerly Gravity Spin Holdings, Inc.)
                         (An Exploration Stage Company)
                   Notes to Consolidated Financial Statements
                                  July 31, 2004
                            (Expressed in US Dollars)


The Company paid a finder's fee of 200,000  shares of its common stock valued at
$80,000 for signing the letter of intent.

Jinlong Mountain Gold District, Yunnan Province
-----------------------------------------------

On January 15, 2004, the Company entered into a letter of intent with respect to
a joint venture for  prospecting  and  development of the Jinlong  Mountain Gold
District,  Yunnan province, China. In September 2004, the Company decided not to
proceed with the joint venture.

The Company paid a finder's fee of 200,000  shares of its common stock valued at
$86,000 for signing the letter of intent.


4. COMMON STOCK
---------------

From  November  13,  2003 to July 31,  2004,  the  Company  received  a total of
$1,438,154  from  investors  under  subscription  agreements for the purchase of
2,876,308  units of the Company at a price of $0.50 per unit. Each unit consists
of one  share of common  stock,  one  share  purchase  warrant  to  purchase  an
additional  one share of  common  stock of the  Company  at a price of $1.00 per
share until January 9, 2005 and one piggyback  warrant to purchase an additional
one share of common  stock of the  Company  at a price of $2.00 per share  until
January 9, 2006 only if the holder thereof exercises the share purchase warrant.

Effective May 4, 2004, the Company  increased its authorized  share capital from
25,000,000 shares to 100,000,000 shares and approved a two for one forward stock
split. All references in the accompanying  financial statements to the number of
common stock outstanding and per share amounts have been restated to reflect the
stock split.  The above  described  subscription  agreements  for common  stock,
warrants  and piggy  back  warrants  have been  adjusted  as to shares and share
prices corresponding to the stock split.

In 2004, the Company paid finder's fees of 600,000 shares of its common stock at
a value of  $252,000  with  respect  to three  letters  of intent  for the joint
venture  agreements  (Note 3). The Company issued an aggregate of 400,000 shares
valued at $172,000 for consulting services received.

As at July 31, 2004, 200,000 shares are to be issued as a finder's fee valued at
$190,000 in connection with the formal joint venture  agreement signed with Team
209 (Note 3).






                                      F-15
<PAGE>



                       MAGNUS INTERNATIONAL RESOURCES INC.
                       -----------------------------------
                     (formerly Gravity Spin Holdings, Inc.)
                         (An Exploration Stage Company)
                   Notes to Consolidated Financial Statements
                                  July 31, 2004
                            (Expressed in US Dollars)


5. RELATED PARTY TRANSACTIONS
-----------------------------

Related party transactions not disclosed elsewhere in the consolidated financial
statements are as follows:

In 2004,  the Company paid $10,054 (2003 - $nil) to two directors of the Company
for consulting services rendered.

In 2004, the Company paid $25,004 (2003 - $nil) for legal services rendered by a
company  controlled by an individual who  subsequently  became a director of the
Company.


6. STOCK-BASED COMPENSATION
---------------------------

The  Company's  2004 Stock Option Plan (the "Plan")  allows the Company to award
stock options for up to 6,000,000 shares to its directors,  officers, employees,
and  consultants.  The plan is administered by the Company's Board of Directors,
or its assigned committee,  who has discretion as to the awards and terms of the
options to be issued.

During the year ended July 31, 2004,  4,000,000  (post-split) stock options have
been granted  under the Plan with the exercise  price of $0.50 per share,  being
the market  price at the time of the grant.  Of these  options,  1,624,000  were
issued to directors and employees and 2,376,000 were issued to consultants.

166,667 of 4,000,000  options  vested on February 1, 2004 (the "Initial  Vesting
Date") with the reminder to vest in equal monthly  proportions  over a period of
twenty-three  (23) months from the Initial  Vesting Date.  The options expire on
January 26, 2009.

The Company follows Accounting Principles Board Opinion (APB) No. 25, Accounting
for Stock Issued to Employees,  and related  Interpretations,  in its accounting
for  stock-based  compensation  to  employees  whereby  any  intrinsic  value as
determined  on the  measurement  date results in  compensation.  No  stock-based
employees compensation expense is recognized in the statements of operations, as
all options  granted to directors and  employees had an exercise  price equal to
the market price of the  underlying  common stock on the date of grant.  Options
issued  to  non-employees  are  recorded  in  accordance  with  the  fair  value
recognition provisions of Statement of Financial Accounting Standards (SFAS) No.
123, Accounting for Stock-Based Compensation.








                                      F-16
<PAGE>



                       MAGNUS INTERNATIONAL RESOURCES INC.
                       -----------------------------------
                     (formerly Gravity Spin Holdings, Inc.)
                         (An Exploration Stage Company)
                   Notes to Consolidated Financial Statements
                                  July 31, 2004
                            (Expressed in US Dollars)


A summary of the Company's stock options activities is presented below:

                                                                        Weighted
                                                      Number of          Average
                                                   Common Stock   Exercise Price
                                                 --------------   --------------

Options outstanding at July 31, 2002 and 2003           --        $       --
Granted                                            4,000,000            0.50
                                                 --------------   --------------

Options outstanding as at July 31, 2004            4,000,000      $     0.50
                                                 ==============   ==============

Options exercisable as at July 31, 2004            1,000,000      $     0.50
                                                 ==============   ==============

The fair value of the options  granted  during the year of 2004 was estimated at
$0.47 per share, using the Black-Scholes Option Pricing Model with the following
weighted average assumptions:

Volatility:                                                    256%
Risk-free interest rate:                                       3.13%
Dividend yield:                                                 --
Expected lives    (years):                                      5

The following  table  illustrates the effect on net earnings (loss) and earnings
(loss) per share if the Company had applied the fair value recognition provision
of SFAS No. 123:

<TABLE>
<CAPTION>
                                                             2004                2003
                                                       ------------------------------------

<S>                                                    <C>                 <C>
Net income (loss), as reported                         $    (1,737,327)    $        32,274
Deducted: total stock-based employee compensation
 expenses determined under fair value based method
 for all awards                                               (192,038)                 --
                                                       ------------------------------------

Pro-forma net income (loss)                            $    (1,929,365)    $        32,274
                                                       ====================================

Earnings (loss) per share:
  Basic and diluted, as reported                       $         (0.08)    $          0.00
                                                       ====================================

  Basic and diluted, pro-forma                         $         (0.08)    $          0.00
                                                       ====================================
</TABLE>






                                      F-17
<PAGE>



                       MAGNUS INTERNATIONAL RESOURCES INC.
                       -----------------------------------
                     (formerly Gravity Spin Holdings, Inc.)
                         (An Exploration Stage Company)
                   Notes to Consolidated Financial Statements
                                  July 31, 2004
                            (Expressed in US Dollars)


7. DISCONTINUED OPERATIONS
--------------------------

On June 2, 2003, the Company sold its wholly-owned subsidiary, Gravity Spin Inc.
("Gravity Spin), to two of its officers and shareholders. The sales price was $7
plus the assumption of certain of the Company's liabilities by Gravity Spin. The
revenue and expenses for the year ended July 31, 2003 have been  reclassified as
income from discontinued operations.


8. INCOME TAXES
---------------

The Company is subject to United States income taxes,  Canadian income taxes (to
the extent of its  operations in Canada) and Chinese income taxes (to the extent
of its  operations in China).  The company had no income tax expense  during the
reported periods due to net operating losses.

Deferred tax assets at year-end consisted solely of the estimated benefit of net
operating loss carryforwards.  The deferred tax assets have been fully offset by
a valuation  allowance due to the  uncertainty of the realization of the assets.
The  valuation  allowance  was  adjusted for the years by an amount equal to the
change in the deferred tax asset to result in a net deferred tax asset of zero.


9. SEGMENTED INFORMATION
------------------------

The  Company  is  operating  in  a  single  segment  based  upon  the  Company's
organizational  structure,  the way in which  its  operations  are  managed  and
evaluated,  the  availability  of separate  financial  results  and  materiality
considerations. The Company's assets by geographical location are as follows:

                                                    2004               2003
                                          ----------------   ----------------

North America                             $       338,169    $            23
China                                             500,000                 --
                                          ----------------   ----------------

Total                                     $       838,169    $            23
                                          ================   ================









                                      F-18
<PAGE>


                                       20



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

On July 9, 2004, the Company dismissed Miller & McCollom as the principal
independent accountant. The Board of Directors of the Company authorized the
dismissal of Miller & McCollom on July 9, 2004.

During the Company's two most recent fiscal years and any subsequent interim
period preceding the dismissal of Miller & McCollom there were no disagreements
with Miller & McCollom which were not resolved on any matter concerning
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements, if not resolved to the satisfaction of
Miller & McCollom would have caused Miller & McCollom to make reference to the
subject matter of the disagreements in connection with its reports. Miller &
McCollom as the Company's principal independent accountant, did not provide an
adverse opinion or disclaimer of opinion to the Company's financial statements,
nor modify its opinion as to uncertainty, audit scope or accounting principles.
The audit opinions were modified to contain a going concern qualification during
the Company's two most recent fiscal years.

On January 9, 2004, the board of directors of the Company approved and
authorized the engagement of Moore Stephens Ellis Foster Ltd., Chartered
Accountants, of 1650 West 1st Ave., Vancouver, B.C., Canada, V6J 1G1, as the
principal independent accountant for the Company. In addition, effective May 4,
2004 by action of a majority of the shareholders of the Company, the
shareholders approved and ratified the selection of Moore Stephens Ellis Foster
Ltd. as the independent public accountants for the Company for the fiscal year
ending July 31, 2004.


ITEM 8A.  CONTROLS AND PROCEDURES.
----------------------------------

The Company has under the supervision of its President and Chief Financial
Officer, conducted an evaluation of the effectiveness of the design and
operation of its disclosure controls and procedures within ninety (90) days of
the filing date of this Annual Report. Based upon the results of this
evaluation, the Company believes that it maintains proper procedures for
gathering, analyzing and disclosing all information in a timely fashion that is
required to be disclosed in its reports under the Securities Exchange Act of
1934, as amended. There have been no significant changes in the Company's
controls subsequent to the evaluation date.

There were no significant changes in the Company's internal controls or in other
factors that could significantly affect its internal controls subsequent to the
evaluation date.


ITEM 8B.  OTHER INFORMATION.
----------------------------

There is no other information that is reportable under this heading.


                                    PART III
                                    --------

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

Current Directors and Executive Officers
----------------------------------------

As of the date of this Annual Report, the Company's directors and executive
officers are as follows:



<PAGE>


                                       21



NAME                        AGE              OFFICES HELD
----                        ---              ------------
Graham Taylor               35               President, CEO, CFO, Secretary,
                                             Treasurer and a Director
Mark Demmons                31               Director
Raymond Turner              30               Director
Pete Smith                  34               Director

The Directors hold their positions until the next annual general meeting of
Magnus's shareholders or until their successors are duly elected and qualified.
Magnus's executive officers serve at the pleasure of the Board of Directors.

The backgrounds of our directors and executive officers are as follows:
-----------------------------------------------------------------------

GRAHAM TAYLOR has been the President, CEO, CFO, Secretary, Treasurer and a
Director of the Company since November 24, 2003. In addition, Mr. Taylor is the
founder and President of Technique Capital Corporation, which was founded in
1999 and is a venture capital, mergers and acquisitions, and corporate advisory
firm for companies in North America and internationally. Mr. Taylor has almost
ten years of experience in the world of global finance, having started his
finance career in the investment industry in London, England with such
international investment banks as Nomura International and Banque National de
Paris. In 1996, he returned to Vancouver, British Columbia, Canada to establish
himself as a financier to small cap companies publicly listed in Canada and the
United States. Since that time, Mr. Taylor has been involved in private and
public securities deal structuring and financing for a variety of companies
spanning several different industries. Mr. Taylor is not a director of any other
reporting company. Mr. Taylor attended University of British Columbia as well as
Simon Fraser University in British Columbia and has qualified to graduate with a
Bachelors in Business Administration.

MARK DEMMONS has been a director of the Company since December 4, 2001. Mr.
Demmons started his career as a research assistant at Cash Appraisal in 1985,
receiving his Florida State Certified Residential Appraiser certification, and
his Real Estate Broker's license in 1990. In 1991, Mr. Demmons established his
own appraisal company, Florida Appraisal Group Inc. in Clearwater, Florida. His
firm performs both conventional and FHA appraisals throughout the Clearwater,
Tampa Bay region. Mr. Demmons is a member of the Tampa Bay Chapter of the
National Association of Independent Appraisers (AIFA) where he has served for
five years. Mr. Demmons has not been a director of any other reporting company.

RAYMOND TURNER has been a director of the Company since December 4, 2001. Mr.
Turner studied International Business Management at Seneca College, Canada. For
over 10 years Mr. Turner pursued a career in Sales and Marketing prior to moving
to Florida in 1996. From 1996 to 1998 Mr. Turner worked for Linmark Financial,
obtaining his Florida State Mortgage Brokers License in 1997. Since 1998, Mr.
Turner has led a successful career as a Mortgage Banker with AmSouth Bank in
Clearwater, Florida. Mr. Turner has not been a director of any other reporting
company.

PETER SMITH has been a director of the company since May 4, 2004 . He attained a
Bachelor of Laws degree from the University of British Columbia in 1999, a
Masters degree from Cambridge University in the United Kingdom in 1998, and a
Bachelor of Arts degree from Simon Fraser University in 1995. At each
institution, Mr. Smith finished either at the top, or in the top 10% of his
class. In June of 2000, Mr. Smith founded the Wrestle-plex Sports Entertainment
Group, Ltd., a Nevada company that was eventually publicly traded on the Over
the Counter Bulletin Board Market in the United States. Mr. Smith served as the
company's president until January of 2001, when he left to accept a clerkship
position at the Supreme Court of Canada for the honorable Justice Louise Arbour.
From September 2002 to September 2003, Mr. Smith was an associate with the law
firm of Debevoise & Plimption in New York City. Mr. Smith left New York in late
2003 to return to his home on the West Coast in Vancouver, British Columbia. Mr.
Smith currently teaches Criminal Law at Simon Fraser University and
independently consults for various public and non-public companies.




<PAGE>


                                       22



Significant Employees /Consultants
----------------------------------

The Company has one key person outside the directors and officers noted above.
The Company entered into a consulting agreement with True North Management Ltd.
("True North"), a company organized under the laws of Hong Kong, on November 1,
2003 and March 1, 2004, to act as our liason with various Chinese contacts and
to consult on various matters involving geology and geographic reports. True
North is, in effect, Mr. Anthony Tam, who is currently the sole owner and
director of True North. Magnus currently pays True North a monthly consulting
fee of $10,000 per month for providing consulting services designed to assist
the Company as its chief representative in China with respect to negotiations on
joint venture option agreements on properties of merit as well as initial
geological assessment and engineering assessment of properties of merit to help
develop the business of the Company. As of July 31, 2004, True North Management
has earned under finder's fee agreements with Magnus $200,000 in cash and
800,000 shares of common stock of Magnus. As of October 15, 2004, only 600,000
of these finder's fee shares had been issued to True North and none of the
$200,000 had been paid to True North. The finder's fee arrangements in relation
to the signing of various letters of intent and formal joint ventures are
summarized in the following table:

<TABLE>
<CAPTION>
Project / Task (1)                                      True North's Remuneration
---------------------------------------------------     ------------------------------------------------
<S>                                                     <C>
Guangxi Bobai Yingqiao Silver Mine Project signing      200,000 shares of common
of stock Letter of Intent

Jinlong Mountain Gold signing of Letter of Intent       200,000 shares of common stock

Qilian County of Qinghai Province signing of Letter     200,000 shares of common stock
of Intent

Huidong County and Luquan County signing of formal      200,000 shares of common stock and $200,000 (2)
Joint Venture Agreement

<FN>
(1) In addition, under a finders fee agreement between True North and the
Company, dated April 6, 2004, the Company has agreed to issue an additional
100,000 shares and $100,000 to True North if the Qilian County preliminary joint
venture agreement becomes a formal joint venture agreement.
(2) As of October 15, 2004, these 200,000 shares and $200,000 have not been paid
to True North, which are due and owing as of July 6, 2004.
</FN>
</TABLE>

Furthermore, Mr. Anthony Tam has also been issued 200,000 shares under a
consulting agreement entered into between the Company and Mr. Tam on November
29, 2003, with an effective date of November 1, 2003 and a termination date of
February 28, 2004, whereby Mr. Tam provided consulting services designed to
assist the Company as its chief representative in China with respect to
negotiations on joint venture option agreements on properties of merit as well
as initial geological assessment and engineering assessment of properties of
merit to help develop the business of the Company. The 200,000 shares that were
issued to Mr. Tam were subsequently registered on a Form S-8, which was filed on
April 9, 2004.

ANTHONY TAM has been consulting for the Company, through True North, since
November of 2003. During the past five years, Mr. Tam has lived in Hong Kong.
Over that period, he spent July 1999 to October 2003 working as general manager
for Unimet Capital Ltd. (a Canadian company specializing in mineral investment
in China), November of 2002 to December of 2003 consulting with the Manele Bay
Venture (a gold exploration project in Guizhou and Yunnan provinces, China), and
November of 2003 to the present working as a consultant to the Company in China.
Mr. Tam has received a B.Sc. in Engineering from Queen's University in Kingston,
Ontario (1971), a B.Sc. in Mining Engineering from Queen's (1973), and he is a
Chartered Accountant (university of British Columbia, Vancouver, 1978).


Involvement in Certain Legal Proceedings
----------------------------------------

To our knowledge, during the past five years, no present or former director or
executive officer of the Company: (1) filed a petition under the federal
bankruptcy laws or any state insolvency law, nor had a receiver, fiscal agent or
similar officer appointed by a court for the business or present of such a
person, or any partnership in which he was a general partner at or within two



<PAGE>


                                       23



yeas before the time of such filing, or any corporation or business association
of which he was an executive officer within two years before the time of such
filing; (2) was convicted in a criminal proceeding or named subject of a pending
criminal proceeding (excluding traffic violations and other minor offenses); (3)
was the subject of any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining him from or otherwise limiting the following activities:
(i) acting as a futures commission merchant, introducing broker, commodity
trading advisor, commodity pool operator, floor broker, leverage transaction
merchant, associated person of any of the foregoing, or as an investment
advisor, underwriter, broker or dealer in securities, or as an affiliated
person, director of any investment company, or engaging in or continuing any
conduct or practice in connection with such activity; (ii) engaging in any type
of business practice; (iii) engaging in any activity in connection with the
purchase or sale of any security or commodity or in connection with any
violation of federal or state securities laws or federal commodity laws; (4) was
the subject of any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any federal or state authority barring, suspending or
otherwise limiting for more than 60 days the right of such person to engage in
any activity described above under this Item, or to be associated with persons
engaged in any such activity; (5) was found by a court of competent jurisdiction
in a civil action or by the Securities and Exchange Commission to have violated
any federal or state securities law and the judgment in subsequently reversed,
suspended or vacate; (6) was found by a court of competent jurisdiction in a
civil action or by the Commodity Futures Trading Commission to have violated any
federal commodities law, and the judgment in such civil action or finding by the
Commodity Futures Trading Commission has not been subsequently reversed,
suspended or vacated.


Compliance with Section 16(a) of the Exchange Act
-------------------------------------------------

Section 16(a) of the Exchange Act, as amended, requires our executive officers,
directors and persons who beneficially own more than 10% of our shares of common
stock to file reports of their beneficial ownership and changes in ownership
(Forms 3, 4 and 5, and any amendment thereto) with the SEC. Executive officers,
directors, and greater-than-ten percent holders are required to furnish us with
copies of all Section 16(a) forms they file.

Based solely upon a review of the Forms 3, 4, and 5 furnished to us for the
fiscal year ended June 30, 2004, we have determined that our directors,
officers, and greater than 10% beneficial owners complied with all applicable
Section 16 filing requirements, except as described below.

Mr. Graham Taylor failed to timely file his initial Form 3 relating to his
appointment as a director and executive officer of the Company on November 24,
2003. However, Mr. Taylor filed his Form 3 on December 15, 2003. In addition,
Mr. Taylor failed to timely file his Form 4 within two day of January 26, 2004,
the date on which he was granted 1,600,000 (post-split) stock options. However,
Mr. Taylor filed his Form 4 on March 23, 2004. .

Mr. Pete Smith failed to timely file his initial Form 3 relating to his
appointment as a director and executive officer of the Company on May 4, 2004.
However, Mr. Smith filed his Form 3 on November 9, 2004.

Mr. Raymond Turner, failed to timely file his initial Form 3 relating to his
appointment as a director and executive officer of the Company on December 4,
2001. Mr. Turner intends to file his Form 3 in the near future.

Mr. Mark Demmons, failed to timely file his initial Form 3 relating to his
appointment as a director and executive officer of the Company on December 4,
2001. Mr. Demmons intends to file his Form 3 in the near future.




<PAGE>


                                       24



Information concerning the Company's audit committee, including designation of
------------------------------------------------------------------------------
the "Audit Committee Financial Expert" under applicable Securities and Exchange
-------------------------------------------------------------------------------
Commission rules
----------------

At the present time, the Company does not have an audit committee, nor does it
employ a financial expert. We currently rely on our book-keeper, our accountant,
and our auditor to prepare and audit our financial statements, and, of these,
only our book-keeper is a full time employee of the Company. The Company intends
to appoint an audit committee in the future.


Code of Ethics
--------------

At the present time, the Company has not adopted a code of ethics as it is still
in the early stages of developing its business. The Company intends to adopt a
code of ethics in the future.


ITEM 10.  EXECUTIVE COMPENSATION.
---------------------------------

The following table sets forth information with respect to compensation paid by
the Company to the Chief Executive Officer during the three most recent fiscal
years. The Company did not have any other highly compensated executive officers
with annual salary and bonus in excess of $100,000 per year.

<TABLE>
<CAPTION>
                                                        Other       Re-     Securities               All
Name and                                               Annual    stricted   Underlying              Other
Principal               Fiscal                         Compen-    Stock     Options/       LTIP    Compen-
Position                 Year     Salary     Bonus     sation     Awards     SARs        Payouts   sation
---------------------   ------   --------   -------   --------   --------   ----------   -------   -------
<S>                      <C>      <C>        <C>        <C>        <C>      <C>            <C>       <C>
Graham Taylor(1)(2)      2004     $70,000    $0.00      $0.00      None     1,600,000      None      None
CEO, President, CFO
Secretary, Treasurer
and Director

<FN>
(1) Mr. Graham Taylor was appointed the President, CEO, CFO, Secretary,
Treasurer and a Director of the Company on November 24, 2003. As of December 1,
2003, Mr. Taylor is being paid $10,000 per month to serve as the President, CEO,
CFO, Secretary, Treasurer and a Director of the Company.

(2) On January 26, 2004, the Board of Directors granted 4,000,000 stock options
to various directors, officers, employees and consultants of the Company. Mr.
Graham Taylor was granted 1,600,000 stock options with the following terms: 1/24
of the options vested on February 1, 2004, and a further 1/24 of the original
grant vests on the first day of each subsequent month. The exercise price for
these stock options is $0.50 per share. These stock options have an expiry date
of January 26, 2009. As of the date of this Annual Report, Mr. Taylor has not
exercised any of his vested stock options.
</FN>
</TABLE>

Officers and directors of the Company are reimbursed for any out-of-pocket
expenses incurred by them on behalf of the Company. None of the Company's
directors or officers are currently a party to employment agreements with the
Company. The Company presently has no pension, health, annuity, insurance, or
profit sharing plans.

No long term incentive plan awards were made to any executive officer during the
fiscal year ended February 28, 2003.



<PAGE>


                                       25



Option/SAR Grants in Last Fiscal Year
-------------------------------------

<TABLE>
<CAPTION>
                          Number of            % of Total
                          Securities          Options/SARS
      Name                Underlying           Granted to        Exercise or                        Market Price on Date
and Principal            Options/SARS         Employees in        Base Price                              of Grant
    Position               Granted            Fiscal Year           ($/Sh)        Expiration Date         ($/Sh) (4)
    --------               --------           -----------           ------        ---------------         -------

<S>                      <C>                     <C>              <C>              <C>                     <C>
Graham Taylor (1)
President, CEO and       1,600,000               40.0%            $0.50            January 26,             $0.47
Director                                                                              2009
Pete Smith (2)             250,000               6.25%            $0.50            January 26,             $0.47
Director                                                                              2009
Anthony Tam              1,000,000               25.0%            $0.50            January 26,             $0.47
                                                                                      2009
Michael Tan                412,000               10.3%            $0.50            January 26,             $0.47
                                                                                      2009
Roberto Ebrahimi            48,000                1.2%            $0.50            January 26,             $0.47
                                                                                      2009
Adrian Beeston             200,000                5.0%            $0.50            January 26,             $0.47
                                                                                      2009
Devlin Jensen               80,000                2.0%            $0.50            January 26,             $0.47
                                                                                      2009
Tracey Gabert               60,000                1.5%            $0.50            January 26,             $0.47
                                                                                      2009
Mike Shannon                50,000               1.25%            $0.50            January 26,             $0.47
                                                                                      2009
Tom Stepp                   24,000                0.6%            $0.50            January 26,             $0.47
                                                                                      2009
Xiang Li                    24,000                0.6%            $0.50            January 26,             $0.47
                                                                                      2009
Qin Minzhu                  12,000                0.3%            $0.50            January 26,             $0.47
                                                                                      2009
Paul Muto                   60,000                1.5%            $0.50            January 26,             $0.47
                                                                                      2009
Earl Abbott                 48,000                1.2%            $0.50            January 26,             $0.47
                                                                                      2009
Jay Bassan                  24,000                0.6%            $0.50            January 26,             $0.47
                                                                                      2009
Aida Leung                  12,000                0.3%            $0.50            January 26,             $0.47
                                                                                      2009
Nick Leung                  12,000                0.3%            $0.50            January 26,             $0.47
                                                                                      2009
Patrick Cotter              12,000                0.3%            $0.50            January 26,             $0.47
                                                                                      2009
Marc Davis                  12,000                0.3%            $0.50            January 26,             $0.47
                                                                                      2009
David Stothart              30,000               0.75%            $0.50            January 26,             $0.47
                                                                                      2009
Sacha Spindler              30,000               0.75%            $0.50            January 26,             $0.47
                                                                                      2009


<PAGE>


                                       26



<FN>
(1)  On January 26, 2004, Mr. Graham Taylor was granted 1,600,000 stock options
with the following terms: 1/24 of the options vested on February 1, 2004, and a
further 1/24 of the original grant vests on the first day of each subsequent
month. The exercise price for these stock options is $0.50 per share. These
stock options have an expiry date of January 26, 2009. As of the date of this
Annual Report, Mr. Taylor has not exercised any of his vested stock options.

(2)  On January 26, 2004, Mr. Pete Smith was granted 250,000 stock options with
the following terms: 1/24 of the options vested on February 1, 2004, and a
further 1/24 of the original grant vests on the first day of each subsequent
month. The exercise price for these stock options is $0.50 per share. These
stock options have an expiry date of January 26, 2009. As at the date of this
Annual Report, Mr. Smith has not exercised any of his vested stock options. Mr.
Smith was granted these options as a consultant to the Company, but has since
become a director of the Company.
</FN>
</TABLE>


Aggregated Option/SAR Exercises and Year-End Option/SAR Value Table
-------------------------------------------------------------------

<TABLE>
<CAPTION>
                        Securities        Aggregate             Unexercised             Value of Unexercised in the
                       Acquired on          Value          Options/SARs at FY-End          Money Options/SARs at
    Name               Exercise (#)     Realized ($)                 (#)                       FY-End ($)
    ----               ------------     ------------     --------------------------     ---------------------------

<S>                         <C>              <C>         <C>                                    <C>
Graham Taylor               None             None          400,000 (Exercisable)                $396,000
President, CEO and                                       1,200,000 (Unexercisable)
Director
Peter Smith                 None             None          62,500 (Exercisable)                  $61,875
Director                                                  187,500 (Unexercisable)
Anthony Tam                 None             None          250,000 (Exercisable)                $247,500
                                                          750,000 (Unexercisable)
Michael Tan                 None             None         103,000 (Exercisable)                 $101,970
                                                          309,000 (Unexercisable)
Roberto Ebrahimi            None             None          12,000 (Exercisable)                  $11,880
                                                          36,000 (Unexercisable)
Adrian Beeston              None             None          50,000 (Exercisable)                  $49,500
                                                          150,000 (Unexercisable)
Devlin Jensen               None             None          20,000 (Exercisable)                  $19,800
                                                          60,000 (Unexercisable)
Tracey Gabert               None             None          15,000 (Exercisable)                  $14,850
                                                          45,000 (Unexercisable)
Mike Shannon                None             None          12,500 (Exercisable)                  $12,375
                                                          37,500 (Unexercisable)
Tom Stepp                   None             None           6,000 (Exercisable)                   $5,940
                                                          18,000 (Unexercisable)
Xiang Li                    None             None           6,000 (Exercisable)                   $5,940
                                                          18,000 (Unexercisable)
Qin Minzhu                  None             None           3,000 (Exercisable)                   $2,970
                                                           9,000 (Unexercisable)
Paul Muto                   None             None          15,000 (Exercisable)                  $14,850
                                                          45,000 (Unexercisable)
Earl Abbott                 None             None          12,000 (Exercisable)                  $11,880
                                                          36,000 (Unexercisable)



<PAGE>


                                       27



Jay Bassan                  None             None           6,000 (Exercisable)                   $5,940
                                                          18,000 (Unexercisable)
Aida Leung                  None             None           3,000 (Exercisable)                   $2,970
                                                           9,000 (Unexercisable)
Nick Leung                  None             None           3,000 (Exercisable)                   $2,970
                                                           9,000 (Unexercisable)
Patrick Cotter              None             None           3,000 (Exercisable)                   $2,970
                                                           9,000 (Unexercisable)
Marc Davis                  None             None           3,000 (Exercisable)                   $2,970
                                                           9,000 (Unexercisable)
David Stothart              None             None           7,500 (Exercisable)                   $7,425
                                                          22,500 (Unexercisable)
Sacha Spindler              None             None           7,500 (Exercisable)                   $7,425
                                                          22,500 (Unexercisable)
</TABLE>


ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
----------------------------------------------------------------------------
RELATED STOCKHOLDER MATTERS
---------------------------

The following table sets forth information as of the date of this Annual Report,
with respect to the Company's directors, named executive officers, and each
person who is known by the Company to own beneficially, more than five percent
(5%) of the Company's common stock, and with respect to shares owned
beneficially by all of the Company's directors and executive officers as a
group. Common Stock not outstanding but deemed beneficially owned by virtue of
the right of an individual to acquire shares within 60 days is treated as
outstanding only when determining the amount and percentage of Common Stock
owned by such individual. Except as noted, each person or entity has sole voting
and sole investment power with respect to the shares shown.

As of the date of this Annual Report, there are 22,543,200 shares of common
stock issued and outstanding.

<TABLE>
<CAPTION>
Name and Address of                                          Amount and Nature of       Percent of
Beneficial Owner               Position                     Beneficial Ownership *     Common Stock (1)
-------------------            --------                     ----------------------     ----------------

<S>                            <C>                                <C>                        <C>
Graham Taylor                  Chief Executive Officer,             800,000 (2)               3.43%
c/o 1285 W. Pender St.,        President, and Director
Suite 110
Vancouver, B.C.
Canada, V6B

Mark Demmons                   Director                              20,000                    (*)
1927 Ripon Drive
Clearwater, Florida
USA  33764

Raymond Turner                 Director                              20,000                    (*)
7574 Camden Harbor Dr.
Bradenton, Florida
USA  34212

Pete Smith                     Director                             125,000 (3)               0.55%
843 W. 7th Ave.
Vancouver, B.C.
Canada, V5Z 1R8

Excel Trust                    Shareholder                        6,666,666 (4)              29.57%
Suite 4 Temple Bldg.
Main & Prince William St.
Charlestown, Federation of
St. Kitts & Nevis


<PAGE>


                                       28



Emerson Trust                  Shareholder                        6,666,668 (5)              29.57%
Suite 4 Temple Bldg.
Main & Prince William St.
Charlestown, Federation of
St. Kitts & Nevis

Anthony Tam                    Consultant                         1,300,000 (6)               5.76%
Ste. 702, Block 81, Xiangxi
Estate
Luo Wu, Shenzhen
Guangdong, China

All officers and directors as                                       965,000 (7)                4.3%
a group (4 persons)

<FN>
(*)  indicates less than 1%

(1)  Beneficial ownership of common stock has been determined for this purpose
in accordance with Rule 13d-3 under the Exchange Act, under which a person is
deemed to be the beneficial owner of securities if such person has or shares
voting power or investment power with respect to such securities, has the right
to acquire beneficial ownership within 60 days or acquires such securities with
the purpose or effect of changing or influencing the control of the Company.

(2)  This figure includes 600,000 stock options which have already vested as of
October 1, 2004, and 200,000 stock options which will vest within 60 days of the
date of this Annual Report.

(3)  This figure includes 93,750 stock options which have already vested as of
October 1, 2004, and 31,250 stock options which will vest within 60 days of the
date of this Annual Report.

(4)  Excel Trust is a trust organized under the laws of the Federation of St.
Kitts & Nevis, West Indies. The principal business of Excel Trust is that of a
trust. The trustee of Excel Trust is IFG Trust Services Inc. The beneficiary of
Excel Trust is Graham Taylor, however, IFG Trust Services Inc. has sole voting
and dispositive power of the 6,666,666 shares held by Excel Trust.

(5)  Emerson Trust is a trust organized under the laws of the Federation of St.
Kitts & Nevis, West Indies. The principal business of Emerson Trust is that of a
trust. The trustee of Emerson Trust is IFG Trust Services Inc. The beneficiary
of Emerson Trust is Graham Taylor, however, IFG Trust Services Inc. has sole
voting and dispositive power of the 6,666,668 shares held by Emerson Trust.

(6)  This figure includes 200,000 shares directly held by Mr. Tam, 600,000
shares indirectly held by Mr. Tam through True North Management Ltd. (see
"Significant Employees/Consultants"), 375,000 stock options which have already
vested as of October 1, 2004, and 125,000 stock options which will best within
60 days of the date of this Annual Report. The Company is also obligated to
issue to Mr. Tam another 200,000 shares under an existing finder's fee
agreement, however, the Company has not yet issued these shares and these
200,000 shares have not been included in this figure.

(7)  This figure includes 20,000 shares of common stock owned directly by Mark
Demmons, 20,000 shares of common stock owned directly by Raymond Turner, 800,000
stock options which are owned by Graham Taylor and which have vested or will
vest within 60 days of the date of this Annual Report, and 125,000 stock options
which are owned by Pete Smith and which have vested or will vest within 60 days
of the date of this Annual Report.
</FN>
</TABLE>


Securities Authorized for Issuance Under Equity Compensation Plans
------------------------------------------------------------------

On January 9, 2004, the Board of Directors of the Company unanimously approved
and adopted a stock option plan (the "Stock Option Plan"). The purpose of the
Stock Option Plan is to advance the interests of the Company and its
shareholders by affording key personnel of the Company an opportunity for
investment in the Company and the incentive advantages inherent in stock
ownership in the Company. Pursuant to the provisions of the Stock Option Plan,
stock options (the "Stock Options") will be granted only to key personnel of the



<PAGE>


                                       29



Company, generally defined as a person designated by the Board of Directors upon
whose judgment, initiative and efforts the Company may rely including any
director, officer, employee or consultant of the Company.

The Stock Option Plan is to be administered by the Board of Directors of the
Company, which shall determine (i) the persons to be granted Stock Options under
the Stock Option Plan; (ii) the number of shares subject to each option, the
exercise price of each Stock Option; and (iii) whether the Stock Option shall be
exercisable at any time during the option period of ten (10) years or whether
the Stock Option shall be exercisable in installments or by vesting only. The
Stock Option Plan provides authorization to the Board of Directors to grant
Stock Options to purchase a total number of shares of common stock of the
Company, not to exceed thirty percent (30%) of the total issued and outstanding
shares of common stock of the Company as at the date of adoption by the Board of
Directors of the Stock Option Plan. At the time the Stock Option is granted
under the Stock Option Plan, the Board of Directors shall fix and determine the
exercise price at which shares of common stock of the Company may be acquired;
provided, however, that any such exercise price shall not be less than that
permitted under the rules and policies of any stock exchange or over-the-counter
market which is applicable to the Company.

In the event an optionee who is a director or officer of the Company ceases to
serve in that position, any Stock Option held by such optionee generally may be
exercisable within up to ninety (90) days after the effective date that his
position ceases, and after such ninety-day period any unexercised Stock Option
shall expire. In the event an optionee who is an employee or consultant of the
Company ceases to be employed by the Company, any Stock Option held by such
optionee generally may be exercisable within up to ninety (90) days (or up to
thirty (30) days where the optionee provided only investor relations services to
the Company) after the effective date that his employment ceases, and after such
ninety- or thirty-day period any unexercised Stock Option shall expire.

No Stock Options granted under the Stock Option Plan will be transferable by the
optionee, and each Stock Option will be exercisable during the lifetime of the
optionee subject to the option period of ten (10) years or limitations described
above. Any Stock Option held by an optionee at the time of his death may be
exercised by his estate within one (1) year of his death or such longer period
as the Board of Directors may determine.

The exercise price of a Stock Option granted pursuant to the Stock Option Plan
shall be paid in cash or certified funds upon exercise of the option.

     Incentive Stock Options
     -----------------------

The Stock Option Plan further provides that, subject to the provisions of the
Stock Option Plan, the Board of Directors may grant to any key personnel of the
Company who is an employee eligible to receive options one or more incentive
stock options to purchase the number of shares of common stock allotted by the
Board of Directors (the "Incentive Stock Options"). The option price per share
of common stock deliverable upon the exercise of an Incentive Stock Option shall
be no less than fair market value of a share of common stock on the date of
grant of the Incentive Stock Option. In accordance with the terms of the Stock
Option Plan, "fair market value" of the Incentive Stock Option as of any date
shall not be less than the closing price for the shares of common stock on the
last trading day preceding the date of grant. The option term of each Incentive
Stock Option shall be determined by the Board of Directors, which shall not
commence sooner than from the date of grant and shall terminate no later than
ten (10) years from the date of grant of the Incentive Stock Option, subject to
possible early termination as described above.

As of the date of this Annual Report, the Company has granted 4,000,000 Stock
Options and/or Incentive Stock Options. By action of the majority shareholders
which occurred on May 4, 2004, the majority of the shareholders of the Company
approved the Stock Option Plan and the Board of Directors is authorized, without
further shareholder approval, to grant stock options from time to time to
acquire up to an aggregate of 6,000,000 shares of the Company's restricted
common stock.



<PAGE>


                                       30



ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
---------------------------------------------------------

As of September 29, 2004, the formation of the Company's joint venture company,
Long Teng Mining, Ltd. ("Long Teng") was approved by the Chinese Government and
a business license was issued. According to the terms of the July 6, 2004 joint
venture agreement with Team 209, Magnus is to appoint three (3) members of the
board of directors of Long Teng and Team 209 is to appoint two (2) members of
the board of directors of Long Teng. Magnus has decided to appoint Messrs.
Graham Taylor, Pete Smith, and Anthony Tam to the Long Teng board. Under the
formal joint venture agreement, assuming Magnus maintains its capital
contribution obligations, Magnus will own 90% of the Long Teng.

On November 29, 2003, Magnus and Mr. Anthony Tam entered into a consulting
agreement (the "Consulting Agreement") with an effective date of November 1,
2003 and a termination date of February 28, 2004, whereby Mr. Tam provided to
the Company consulting services designed to assist the Company as its chief
representative in China with respect to negotiations on joint venture option
agreements on properties of merit as well as initial geological assessment and
engineering assessment of properties of merit to help develop the business of
the Company. As consideration for Mr. Tam's services, the Company issued 100,000
shares of common stock of the Company and registered such shares on a Form S-8,
which was filed on April 9, 2004.

On December 31, 2003, Magnus entered into a Finder's Fee Agreement with True
North Management Ltd. ("True North"), whereby Magnus issued 200,000 shares of
common stock of Magnus to True North for the execution of the letter of intent
entered into between Magnus and Guangxi Non-ferrous Metals Trading & Management
Company ("Guangxi"), a company organized under the laws of the People's Republic
of China, for the further prospecting and development of the Guangxi Bobai
Yingqiao Silver Mine located in Yingqiao Town, Bobai County in Guangxi Province,
China.

On January 15, 2004, Magnus entered into a Finder's Fee Agreement with True
North, whereby Magnus issued 400,000 shares of common stock of Magnus to True
North for the execution of the two letters of intent entered into between Magnus
and Team 209 with respect to forming two co-operative joint venture companies
for the exploration and development of the gold and copper deposits in the 129.5
sq. km. area of the Jinlong Mountain gold district and the exploration and
development of the gold and copper deposits in the 200 sq. km. area of the
Zhamashi gold and copper deposits in Qilian County of Qinghai Province.

On February 24, 2004, Magnus and Michael Tan entered into a consulting agreement
whereby Magnus pays Michael Tan $8,000 per month in consulting fees for
assisting Magnus in management and marketing to develop the business of Magnus.
This agreement has a term of three years and as of the date of this Annual
Report, this consulting agreement remains in effect.

On March 1, 2004, Magnus and True North (beneficially owned by Mr. Anthony Tam)
entered into a consulting agreement whereby Magnus pays True North $10,000 per
month in consulting fees for providing consulting services designed to assist
the Company as its chief representative in China with respect to negotiations on
joint venture option agreements on properties of merit as well as initial
geological assessment and engineering assessment of properties of merit to help
develop the business of the Company (see "Significant Employees/Consultants").
As of the date of this Annual Report, this consulting arrangement remains in
effect.

On April 6, 2004, Magnus entered into a Finder's Fee Agreement with True North,
whereby Magnus agreed to issue 200,000 shares of common stock of Magnus and
$200,000 to True North upon the execution of a formal joint venture agreement
between Magnus and Team 209 for the formation of a co-operative joint venture
company to carry out minerals exploration and development in an 83.29 sq. km.
area of Huidong County in Sichuan Province located across the Jinsha Jiang River
to the immediate northwest of the Boka gold project in Yunnan Province. A formal
joint venture agreement was executed between Magnus and Team 209 on July 6,
2004, however, Magnus has not yet issued to True North the 200,000 shares or
paid to True North the $200,000 as the finder's fee.




<PAGE>
                                       31

On April 6, 2004, Magnus entered into a Finder's Fee Agreement with True North,
whereby Magnus agreed to issue 100,000 shares of common stock of Magnus and
$100,000 to True North upon the execution of a formal joint venture agreement
between Magnus and Team 209 for the formation of a co-operative joint venture
company to carry out mineral exploration and development in the 200 sq. km. area
of Zhamashi gold and copper deposits in Qilian County of Qinghai Province. As of
the date of this Annual Report Magnus and Team 209 have not executed a formal
joint venture agreement with respect to the Zhamashi gold and copper deposits in
Qilian County.


ITEM 13.  EXHIBITS
------------------

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

Exhibit #

  3.1          Certificate of Amendment to the Articles of Incorporation filed
               April 29, 2004

 10.1 (1)      Consulting Agreement entered into between the Company and
               Anthony Tam, dated November 29, 2003

 10.2 (2)      Consulting Agreement entered into between the Company and
               Michael Tan, dated November 29, 2003

 10.3 (3)      Letter of Intent entered into between the Company and Guangxi
               Non-ferrous Metals Trading & Management Company, dated December
               31, 2003

 10.4          Finder's Fee Agreement entered into between the Company and True
               North Management Ltd., dated December 31, 2003

 10.5          Stock Option Plan dated January 9, 2004

 10.6 (4)      Letter of Intent entered into between the Company and Team
               209 with respect to the Jinlong Mountain gold district, dated
               January 15, 2004

 10.7 (5)      Letter of Intent entered into between the Company and Team
               209 with respect to the Zhamashi gold and copper deposits in
               Qilian County, dated January 15, 2004

 10.8          Finder's Fee Agreement entered into between the Company and True
               North Management Ltd., dated January 15, 2004

 10.9          Consulting Agreement entered into between the Company and Michael
               Tan, dated March 1, 2004

 10.10         Consulting Agreement entered into between the Company and True
               North Management Ltd., dated March 1, 2004

 10.11 (6)     Preliminary Joint Venture Agreement entered into between the
               Company and Team 209 with respect to the 83.29 sq. km. area in
               Huidong County, dated April 6, 2004

 10.12 (7)     Preliminary Joint Venture Agreement entered into between the
               Company and Team 209 with respect to Zhamashi gold and copper
               deposits in Qilian County, dated April 6, 2004

 10.13         Finder's Fee Agreement entered into between the Company and True
               North Management Ltd. with respect to the 83.29 sq. km. area in
               Huidong County, dated April 6, 2004

 10.14         Finder's Fee Agreement entered into between the Company and True
               North Management Ltd. with respect to the Zhamashi gold and
               copper deposits in Qilian County, dated April 6, 2004

 10.15         C-operative Joint Venture Contract entered into between the
               Company and Team 209, dated July 6, 2004

 24.1          Power of Attorney executed by Mark Demmons and Raymond Turner

 31.1          Certificate pursuant to Rule 13a-14(a)

 32.1          Certificate pursuant to 18 U.S.C. Section 1350

(1)  Previously filed as Exhibit 99.2 to the Form S-8 filed on April 9, 2004 and
     incorporated by reference
(2)  Previously filed as Exhibit 99.1 to the Form S-8 filed on April 9, 2004 and
     incorporated by reference
(3)  Previously filed as Exhibit 10.1 to the Form 8-K filed on March 17, 2004
     and incorporated by reference
(4)  Previously filed as Exhibit 10.2 to the Form 8-K filed on March 17, 2004
     and incorporated by reference
(5)  Previously filed as Exhibit 10.3 to the Form 8-K filed on March 17, 2004
     and incorporated by reference
(6)  Previously filed as Exhibit 10.1 to the Form 8-K filed on May 20, 2004 and
     incorporated by reference
(7)  Previously filed as Exhibit 10.2 to the Form 8-K filed on May 20, 2004 and
     incorporated be reference
<PAGE>


                                       32



ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES
------------------------------------------------

(1)  Audit Fees
---------------

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

2004 - Nil - Moore Stephens Ellis Foster Ltd.
2004 - $13,710 Miller & McCollom
2003 - $16,203 Miller & McCollom

(2)  Audit - Related Fees
-------------------------

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

2004 - Nil - Moore Stephens Ellis Foster Ltd.
2004 - Nil - Miller & McCollom
2003 - Nil - Miller & McCollom

(3)  Tax Fees
-------------

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

2004 - Nil - Moore Stephens Ellis Foster
2004 - Nil - Miller & McCollom
2003 - Nil - Miller & McCollom

(4)  All Other Fees
-------------------

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

2004 - Nil - Moore Stephens Ellis Foster Ltd.
2004 - Nil - Miller & McCollom
2003 - Nil Miller & McCollom




<PAGE>


                                       33



                                   SIGNATURES
                                   ----------

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized on this 15th day of
November, 2004.

                                       MAGNUS INTERNATIONAL
                                       RESOURCES INC.
                                       (Registrant)


                                       By: /s/ Graham Taylor
                                          -------------------------------------
                                          Graham Taylor
                                          President and Chief Executive Officer


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

Signature                            Title                  Date
---------                            -----                  ----

/s/ Graham Taylor                    President, CEO,        November 15, 2004
----------------------               CFO, Secretary,
Graham Taylor                        Treasurer and
                                     Director

/s/ Pete Smith                       Director               November 15, 2004
----------------------
Pete Smith

/s/ Mark Demmons                     Director               November 15, 2004
----------------------
Mark Demmons

/s/  Raymond Turner                  Director               November 15, 2004
----------------------
Raymond Turner