SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB
(Mark One)

[X ] ANNUAL  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934

                    For the fiscal year ended March 31, 2006

                                       OR

[    ] TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE EXCHANGE ACT OF 1934

          From the transition period from ____________ to ___________.

                        Commission File Number 000-50541

                           Dragon Gold Resources, Inc.
        (Exact name of small business issuer as specified in its charter)

        Nevada                                             88-0507007
(State or other jurisdiction of              (IRS Employer Identification No.)
incorporation or organization)

         Regent's Place, 338 Euston Road, London NW1 3BT, United Kingdom
                    (Address of principal executive offices)

                                + 44 207 416 4920
                           (Issuer's telephone number)

                  Class                                   Date
                  -----                                   ----
         Common, $0.001 par value                     July 13, 2006

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

                                 Yes |X| No |_|

         Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this form10-KSB
or any amendment to this Form 10-KSB. |_|

         The Issuer's revenues for the fiscal year ended March 31, 2005 were $0.

     The number of shares of the  registrant's  common stock  outstanding  as of
July 27, 2006 was  54,221,724.  The  aggregate  market value of the issuer's
voting and non-voting common equity held by non-affiliates computed by reference
to  the  closing  price  of  such  common  equity  as  of  July  13,  2006,  was
approximately $384,000.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None

         Transition Small Business Disclosure Format:   Yes  [  ]   No  [ X ]


<PAGE>




                           DRAGON GOLD RESOURCES, INC.
                                      INDEX

                                TABLE OF CONTENTS

                                                                         Page

PART I

         ITEM 1.      BUSINESS.............................................   3
         ITEM 2.      DESCRIPTION OF PROPERTY..............................   5
         ITEM 3.      LEGAL PROCEEDINGS....................................   7
         ITEM 4.      SUBMISSION OF MATTERS TO A VOTE OF
                      SECURITY HOLDERS.....................................   7

PART II

         ITEM 5.      MARKET FOR COMMON EQUITY AND
                      RELATED STOCKHOLDER MATTERS..........................   7
         ITEM 6.      MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
                      OF OPERATION.........................................   8
         ITEM 7.      FINANCIAL STATEMENTS AND NOTES.......................  10
         ITEM 8.      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                      ON ACCOUNTING AND FINANCIAL DISCLOSURE...............  24
         ITEM 8A.     MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER
                      FINANCIAL REPORTING..................................  25

PART III

         ITEM 9.      DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
                      CONTROL PERSONS; COMPLIANCE WITH
                      SECTION 16(a) OF THE EXCHANGE ACT....................  25
         ITEM 10.     EXECUTIVE COMPENSATION...............................  26
         ITEM 11.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
                      OWNERS AND MANAGEMENT................................  27
         ITEM 12.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.......  27
         ITEM 13.     EXHIBITS AND REPORTS OF FORM 8-K.....................  27
         ITEM 14.     PRINCIPAL ACCOUNTANT FEES AND SERVICES...............  27


SIGNATURES            .....................................................  27




<PAGE>



SPECIAL NOTE  REGARDING  FORWARD-LOOKING  STATEMENTS

Certain statements in this Annual Report on Form 10-KSB (this "Form 10 KSB"),
including statements under "Item 1. Description of Business," and "Item 6.
Management's Discussion and Analysis or Plan of Operation", constitute "forward
looking statements" within the meaning of Section 27A of the Securities Act of
1934, as amended, and the Private Securities Litigation Reform Act of 1995
(collectively, the "Reform Act"). Certain, but not necessarily all, of such
forward-looking statements can be identified by the use of forward-looking
terminology such as "believes", "expects", "may", "will", "should", or
"anticipates", or the negative thereof or other variations thereon or comparable
terminology, or by discussions of strategy that involve risks and uncertainties.
Such forward-looking statements involve known and unknown risks, uncertainties
and other factors which may cause the actual results, performance or
achievements of Dragon Gold Resources, Inc. ("the Company", "we", "us" or "our")
to be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. References in this form
10-KSB, unless another date is stated, are to March 31, 2006.


                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

BUSINESS  DEVELOPMENT

The Company was originally incorporated in the State of Nevada, U.S.A. on
December 13, 2000 as Folix Technologies Inc. On June 1, 2004, the Company filed
a Certificate of Amendment to change its name to Dragon Gold Resources, Inc.
change which became effective on June 14, 2004. Since July 2004, the Company's
management has been based in London, England. Formerly, management was based in
Vancouver, British Columbia, Canada. The Company is an exploration stage company
engaged in the acquisition and exploration of mineral properties in the People's
Republic of China ("China") and Mongolia. The Company's existing interests in
mineral properties are discussed in more detail below under the heading
"Description of Property."

On March 9, 2001, the Company entered into an asset purchase agreement to
acquire certain hair loss prevention and hair loss regrowth intellectual
property. The Company was to pay CDN$25,000 in monthly installments and issue
100,000 shares of common stock. The Company paid CDN$2,000 (US $1,280) and
issued 100,000 shares of common stock before terminating the agreement on May 1,
2001. The Company is no longer involved in the hair loss business. Effective
June 14, 2004, the Company declared a 7 to 1 forward stock split. The effect of
the stock split has been retroactively reflected in this report on Form 10-KSB
unless otherwise stated.

For approximately 6 months during 2004 the Company was in the business of
developing a client-server system as a product for sale. The system was designed
to run computer programs from a centralized location on a user's terminal. The
Company is no longer involved in the development of LINUX-based applications.

On July 15, 2004, the Registrant acquired 100% of the issued and outstanding
common stock of Dragon Minerals Holdings Inc., an International Business Company
incorporated under the laws of the British Virgin Islands in exchange for
16,500,000 newly issued shares of the Registrant's common stock pursuant to an
Exchange Agreement whereby Dragon Mineral Holdings Inc. became a wholly-owned
subsidiary of the Registrant.

Subsequent to the Exchange, the Registrant entered into an agreement with
Gregory Corcoran whereby the Registrant transferred certain assets held
immediately prior to the Exchange, and the Registrant's then existing
liabilities related thereto, to Gregory Corcoran, the Registrant's former
President and Chief Executive Officer, in consideration for $1,000. The
Registrant transferred the following assets to Mr. Corcoran: the tangible assets
excluding cash and the intangible assets including i) the right to the name
"Folix Technologies, Inc."; ii) the right to operate the business of developing
a Linux based application server and thin client system; and iii) any contracts,
agreements, rights or other intangible property, owned by the Registrant
immediately prior to the Exchange (collectively referred to as the "Assets").
The Registrant also transferred the liabilities that relate to the Assets to Mr.
Corcoran.

On September 6th, 2004, Gregory Corcoran, a former director and the former Chief
Executive Officer of the Registrant, sold an aggregate of 11,600,000 shares of
the Registrant's common stock for an aggregate purchase price of $154,800 to
seven individuals and one entity. Johannes Petersen, a director and the Chief
Executive Officer of the Registrant, purchased 1,000,000 of these shares of
common stock from Mr. Corcoran. On that same date, Mr. Corcoran agreed to cancel
16,400,000 shares of the Registrant's common stock. Prior to these events, Mr.
Corcoran owned 41.6% of the Registrant's common stock and together with Raoul
Tsakok, who owned 17.1% at the time, exercised control over the Registrant.
Subsequent to these events, Mr. Corcoran will not own any shares of the
Registrant's common stock.

                                       3
<PAGE>

Dragon Minerals Holdings, Inc. was incorporated on February 25, 2004 as an
International Business Company incorporated under the laws of the British Virgin
Islands. The Registrant is a holding company for Dragon Minerals Holdings Inc.
which in turn holds all of the common stock of Dragon Minerals Inc., Dragon
Minerals - Shiquan, Inc., Dragon Minerals - Taiyu, Inc., and Dragon Minerals -
Xunyang, Inc., all of them International Business Companies incorporated under
the laws of the British Virgin Islands. On July15, 2004, the Registrant acquired
100% of the issued and outstanding common stock of Dragon Minerals Holdings Inc,
as discussed above. The Company is headquartered in London, UK. The Company had
intended to engage in gold exploration and development activities in the
People's Republic of China ("China") and Mongolia and pursuant thereto had
executed a number of letters of intent and cooperative  agreements.  However,
after further assessment of its mining claims, these agreements were terminated.
The Company is presently evaluating further its mining properties and also
exploring other business opportunities.

DESCRIPTION OF THE PRINCIPAL PRODUCTS AND SERVICES

The Company does not currently offer any products or services. Dragon Gold
Resources Inc. is an exploration stage company engaged in the acquisition and
exploration of mineral properties in the People's Republic of China and
Mongolia. The Company anticipates acquiring rights to explore and develop other
properties as viable opportunities arise. In the event that the Company
discovers economic deposits of gold or other minerals, it intends to either sell
the deposits or, depending on the specific characteristics of each discovery,
conduct its own mining operations to extract the gold or other minerals for
future sale.

MARKET OVERVIEW

The business of mineral deposit exploration and extraction involves a high
degree of risk. Few properties that are explored are ultimately developed into
production. At present, none of the Company's properties has a known body of
commercial ore. Other risks facing the Company include competition, reliance on
third parties and joint venture partners, environmental and insurance risks,
political and environmental instability, statutory and regulatory requirements,
fluctuations in mineral process and foreign currencies, share price volatility,
title risks, and uncertainty of additional financing.

COMPETITIVE  BUSINESS  CONDITIONS

The mineral industry is intensely competitive in all its phases. Worldwide, the
competitive business environment for minerals exploration is variable and
dependent upon geographic location, political and regulatory environments,
technology applications, and the specific mineral commodity being sought. The
gold exploration and development industry is a truly global business and it is
very competitive, with well established companies that have more experience and
resources than the Company. These companies are generally more capable to
compete than the Company.

COPYRIGHTS, PATENTS, TRADEMARKS  & LICENSES

The Company does not have any copyrights, patents, trademarks, license or other
types of intellectual property.

NEED FOR GOVERNMENTAL APPROVAL AND THE EFFECTS OF REGULATIONS

In China, the formation of Sino-Foreign Joint Venture Companies requires the
approval of local and/or central government instances in China. In the case the
Company proceeds to form such joint venture companies, several approvals will be
required, such as the issuance of a business license to each Joint Venture
Company formed. Actual exploration and development on the property will require
additional governmental permits such as certain environmental permits. The
Permits grant the right to the mineral resources found below the surface of the
properties.

In Mongolia, exploration licenses are subject to governmental approval in the
form of exploration license renewals, mining license issuance, environmental
studies, among others.

In other jurisdictions, government regulations require permits and, in some
cases, reclamation bonding. The details of such permits and the size of the
bonds are related to the location of the property and size of the anticipated
exploration-related surface disturbance. The effect of these regulations on the
Company will include the cost of obtaining permits, posting reclamation bonds
(if required), and completing environmental restoration work if a property is to
be abandoned.

RESEARCH & DEVELOPMENT OVER THE PAST TWO YEARS

The Company has not conducted any research and development activities since
inception. The Company does not have plans to conduct any research and
development during the next twelve months. During the next twelve months,
however, the Company does intend to conduct exploration and development
activities on its properties in Mongolia and in any other properties it
eventually adds to its portfolio.


                                       4
<PAGE>

EMPLOYEES

Andrew F de P Malim, our Non-executive Chairman, devotes approximately 8 hours
per week to our business. Johannes Petersen, our Chief Executive Officer, and
Xiaojun "Albert" Cui, our Director of Explorations, each devotes approximately
40 hours per week to our business. The Company will use a small number of
consultants when needed during the development stage.

ITEM 2.  DESCRIPTION OF PROPERTY

Mineral Properties, Mongolia

The Company owns and/or has the right to acquire a series of mineral exploration
licenses in Mongolia as described on the following table:
<TABLE>

---- ----------------- ----------- --------------- --------------- --------------------------------------
     Area Name         License #   Province        Area (Km2)      Description
---- ----------------- ----------- --------------- --------------- --------------------------------------
<S>   <C>              <C>         <C>             <C>               <C>

1.   Olon Aarg         L7551X      Dornogovi               100.14  Option Agreement to acquire 100% (1)
---- ----------------- ----------- --------------- --------------- --------------------------------------
---- ----------------- ----------- --------------- --------------- --------------------------------------
2.   Baruun Khavtsal   L7422X      Uvs                     100.42  Option Agreement to acquire 100% (1)
---- ----------------- ----------- --------------- --------------- --------------------------------------
---- ----------------- ----------- --------------- --------------- --------------------------------------
3.   Yamaat            L7552X      Zavkhan                 105.71  Option Agreement to acquire 100% (1)
---- ----------------- ----------- --------------- --------------- --------------------------------------
---- ----------------- ----------- --------------- --------------- --------------------------------------
4.   Uneged Uul        L7423X      Uvs / Zavkhan            97.57  Option Agreement to acquire 100% (1)
---- ----------------- ----------- --------------- --------------- --------------------------------------
---- ----------------- ----------- --------------- --------------- --------------------------------------
5.   Ondor Khoshuu     L8048X      Dornogovi                74.26  Option Agreement to acquire 100% (1)
---- ----------------- ----------- --------------- --------------- --------------------------------------
---- ----------------- ----------- --------------- --------------- --------------------------------------
6.   Del-Khad          L7389X      Uvurkhangai              61.26  Owner of a 100% interest (2)
---- ----------------- ----------- --------------- --------------- --------------------------------------
---- ----------------- ----------- --------------- --------------- --------------------------------------
7.   Oyut              L7390X      Uvurkhangai             172.26  Owner of a 100% interest (2)
---- ----------------- ----------- --------------- --------------- --------------------------------------
</TABLE>

(1) On January 20, 2005, the Company entered into an option agreement (the
"Agreement") to acquire a 100% interest, subject to a 2% net smelter royalty, in
certain mining claims located in Mongolia. To acquire its interest, the Company
paid CDN$20,000 upon execution of the Agreement, and is required to pay,
CDN$30,000 on or before January 20, 2006, and CDN$50,000 on or before January
20, 2007. The Company has the right to purchase the first two-thirds of the
royalty interest at any time in consideration of payments of CDN$300,000 for
each one-third portion. The Company also has the right of first refusal for the
remaining one-third royalty interest.  On November 23, 2003, the Company
determined not exercise its option to acquire a 100% interest in these mining
claims.

(2) On June 2, 2005, the Company entered into an Exploration License Transfer
Agreement. The Company acquired two mining claims in the Taragt subprovince of
the Uvurkhangai Province of Mongolia. The claims were sold by Mine Info, Ltd.
for a purchase price of US$19,000. The Company paid 50% of the $19,000 purchase
price on June 2, 2005 and will pay the balance on successful government
registration of the claim.

NORTHWEST MONGOLIA

Baruun Khavtsal  (L7422X) - The field is located in Uvs Province,  approximately
1300 km away  from  Ulaanbaatar  and  occupies  an area of 10,042  hectars.  The
property is accessible  via paved road all year round.  This property is located
within the Ozernaya  terrane in  northwest  Mongolia and lies to the east of the
International  Uranium  Corporation's  Tsagaan  Tolgoi/Shiveen  Gol  copper-gold
project. Previous exploration work identified copper and iron occurrences.

Uneged Uul  (L7423X) - The  property  lies on two  provinces:  Uvs and  Zavkhan,
approximately  1120km  westward  of  Ulaanbaatar.  It  covers  an area of  9,757
hectares  and it is located in the western  part of hte Hangai  range within the
Northern Mongolian folding system and exposed to sedimentary-volcanic complex of
the north-western  part of he Zavkhan  structural  formation.  Geographically it
restss within small  mountains in the north uprising of the Hunguin River basis.
Access to the property is via a dirt road.  The area  underwent  geological  and
stratigraphic surveys at various levels.

Yammat  (L7552X) - This  property is located at  approximately  1,070 km west of
Ulaanbaatar,  in Zavkhan  province.  It covers an area of 10,571  hectares.  The
exploration  field is located in the western part of the Hangai  mountain  range
within the Northern  Mongolian  folding system and exposed to Permian  intrusive
complex of the  Zavkhan  structural  formation.  Geographiclly  it restss in the
north  uprising of the Zavkhan  River and belongs to a high mountain  zone.  The
area underwent geological and stratigraphic surveys at various levels.

SOUTHEASTERN MONGOLIA
                                       5
<PAGE>

Ondor Khoshuu (L8048X) - The property rests 575 km south of Ulaabatar and covers
an area of 7,462 hectates.  It is located within the South Mongolian  terrane or
the South Gobi  porphyry  copper-gold  belt.  This region is known to host giant
copper  and  gold  deposits  such  as the Oyu  Tolgoi  deposit.  No  significant
mineralization points or occurrences were found under previous geological works.
All year-round access to the property via paved roads.

CENTRAL MONGOLIA

Del Khad (L7389X) - The property is located in Uvurkhangai province at 420 km
southwest of Ulaanbaatar and it covers 6,126 hectares. Access is via paved road.
According to the previous exploratory work reports, lower to middle
Carboniferous sedimentary rocks of the Khangain series and a late Permian to
early Triassic granodiorite stock are exposed within the license area. The rocks
were further intruded by granitic porphyry and rhyolite dykes. Hydrothermal
alteration zones, quartz-pegmatite veins and veinlets and dykes of sub-volcanic
origins with intensive silicification, pyritization, and chloritization occur
around the granodiorite stock body. Gold grades of 0.01 to 8 g/t were indicated
by limited samples collected from the alteration zones and quartz vein samples.
These results were recorded in previous exploration reports and have not been
verified by the Company.

Oyut Area (L7390X) - The property is located in Uvurkhangai province and it
covers 17,226 hectares. Access is via paved road. The property is located in the
Oyut area, 400 km southwest of Ulaanbaatar. Middle-upper Devonian and early
Carboniferous volcanic-sedimentary rocks are widely exposed in the license area.
Also quartzite, jasperoid veins, stock bodies are widely spread. Mineralization
points and ancient Chinese pits were discovered previously, and six rock-chip
samples were collected by the previous license holder. The unverified samples
show gold grades ranging from 0.04 to 0.21 g/t in 2 samples, and a copper grade
of 0.47% to 2.2 % in 4 samples. These results were recorded in previous
exploration reports and have not been verified by the Company.

Mineral Properties, China

The Company intends to setup joint venture companies to hold exploration permits
to explore and develop mineral properties in the People's Republic of China. At
this time, the Company has not entered into any joint ventures, received or
contributed any funds to any joint ventures.

At this time. the Company has signed three letters of intent (the "Letters of
Intent") to enter into joint ventures for gold exploration and potential
development on a choice of properties located in Shaanxi Province, China (the
"Permits"). The Letters of Intent anticipate that the Company will contribute
cash to the joint ventures, while the other parties to the joint ventures would
contribute permits for exploration and development on an aggregate of up to
twenty (20) exploration license areas. The government of China owns the
properties to which the Permits relate. The Permits grant the right to the
mineral resources found below the surface of the properties. The Letters of
Intent contemplate two phases of activities: the exploration phase and the
development phase. The development phase is contingent on, and will not proceed
unless there are, positive results from the exploration phase.

Letters of Intent, Cooperative Agreements

On September 21, 2005, the Company entered into a cooperative agreement with
Yinchuan Gaoxin District Shijin Mining Ltd. ("Yinchuan Mining") to form a
Sino-Foreign cooperative joint venture company ("JV Company") for the
exploration and development of the Xijishui Gold Property and its surrounding
area located in Jingyuan County, Gansu Province, China. Pursuant to the
agreement, the Company must pay $150,000 to Yinchuan Mining over a period of 12
months after Yinchuan Mining transfers its mineral exploration rights to the JV
Company. The Company will have the right to earn an 80% interest in the JV
Company by spending $1,200,000 for exploration activities over a two year
period. The term of the cooperation agreement was 30 years. In May 2006, the
Company terminated the cooperative agreement with Yinchuan Mining.

On September 10, 2005, the Company entered into a cooperative agreement with the
Guilin Research Institute of Geology and Mineral Resources ("Institute") to form
a Sino-Foreign cooperative joint venture company ("JVC") for the exploration and
development of the Maling and Longhou Gold Properties located in Guangxi
Province, China. Pursuant to the agreement, the Company must pay $800,000 to the
Institute in stages over a period of 30 months after the Institute transfers its
mineral exploration rights to the JVC. The Company will have the right to earn a
75% interest in the JVC by spending $2,500,000 for exploration activities over a
three year period. The term of the cooperation agreement was 30 years. In May
2006 the Company terminated the cooperative agreement with Institute.

On June 2, 2005, the Company entered into an Exploration License Transfer
Agreement to acquire a 100% interest in two mining claims located in Mongolia.
The Company is required to pay $9,500 on execution of the agreement, and an
additional $9,500 upon the transfer of the exploration licenses.
                                       6
<PAGE>

On March 15, 2005, the Company entered into a Letter of Intent with the Hanzhong
Geological Brigade of the Bureau of Geology & Mineral Exploration of Shaanxi
Province, China ("Brigade") to form a Sino-Foreign cooperative joint venture
company for the exploration and development of up to seven properties located in
Hanzhong, Shaanxi Province. Pursuant to the Letter of Intent, the Company would
contribute cash to the joint ventures and Brigade would contribute the
Exploration Permit and their previous exploratory findings. In May 2006 the
Company terminated the Letter of Intent with Brigade.

On January 20, 2005, the Company entered into an option agreement (the
"Agreement") to acquire a 100% interest, subject to a 2% net smelter royalty, in
certain mining claims located in Mongolia. To acquire its interest, the Company
paid CDN$20,000 upon execution of the Agreement, and must pay CDN$30,000 on or
before January 20, 2006, and an additional CDN$50,000 on or before January 20,
2007. The Company has the right to purchase the first two-thirds of the royalty
interest at any time in consideration of payments of CDN$300,000 for each
one-third portion. The Company also has the right of first refusal for the
remaining one-third royalty interest. On November 23, 2005, the Company
determined not to exercise its option to acquire a 100% interest in these mining
claims.

On March 1, 2004, Company's wholly-owned subsidiary Dragon Minerals Inc. ("DMI")
entered into a Letter of Intent with the Northwest Geology and Exploration
Bureau for Nonferrous Metals Party ("Party") in China to form a Sino-Foreign
cooperative joint venture company for the exploration and development of a
property located in Southern Shaanxi Province. Pursuant to the Letter of Intent,
the Company would contribute cash to the joint venture and Party would
contribute the Permit and their previous exploratory findings.

On February 24, 2004, DMI entered into a Letter of Intent with the Bureau of
Geology and Mineral Exploration & Development of Shaanxi Province ("Bureau") in
China to form a Sino-Foreign cooperative joint venture company for the
exploration and development of up to twelve properties located in the Southern
Shaanxi Province. Pursuant to the Letter of Intent, the Company would contribute
cash to the joint ventures and Bureau would contribute the Permits and their
previous exploratory findings.

Subsequent to the Company's fiscal year-end, it executed termination  agreements
and all of the  letters of intent and  cooperative  agreements  were  cancelled.
Because of the  termination of these  agreements,  the company is also exploring
other business opportunities.

ITEM 3.  LEGAL PROCEEDINGS

The Company is not aware of any legal proceedings, pending or threatened, which
it is a party to.

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

None

                                     PART II

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

Since the acquisition of Dragon Minerals Holdings Inc., and Subsidiaries and
adoption of our current business plan in July 2004, our Common Stock has been
listed on the over-the-counter electronic bulletin board ("OTCBB") under the
symbol "DRGO.OB". The following table sets forth the range of high and low bid
prices for each quarter since July 2004
                                            Year Ended          Year Ended
------------------------------------------ -----------------  -----------------
                                            March 31, 2005      March 31, 2006
------------------------------------------ -----------------  -----------------
                                            High      Low       High      Low
------------------------------------------ -------- --------  -------- --------
------------------------------------------ -------- --------  -------- --------
Fourth Quarter                               $1.37    $0.58      $.17     $.05
------------------------------------------ -------- --------  -------- --------
------------------------------------------ -------- --------  -------- --------
Third Quarter                                 0.83     0.59       .13      .05
------------------------------------------ -------- --------  -------- --------
------------------------------------------ -------- --------  -------- --------
Second Quarter *                              1.00     0.60       .20      .11
------------------------------------------ -------- --------  -------- --------
------------------------------------------ -------- --------  -------- --------
*The quarter ending September 30, 2004           -        -      1.37      .26
------------------------------------------ -------- --------  -------- --------

The quotations reflect inter-dealer prices without retail mark-up, mark-down or
commission and may not represent actual transactions. The quotations give effect
to a seven-for-one stock split effective June 14, 2004.

At July 12, 2005, the closing bid price of the Common Stock was $0.24.

As of July 12, 2005, we estimate that there were in excess of 300 beneficial
holders of our Common Stock.

During the fourth quarter of the year ended March 31, 2005, we issued 399,930
shares of common stock to various non-U.S. investors for $199,965. The issuances
of shares between March 2003 and August 2003 were made exclusively to foreign
persons with no U.S. selling efforts pursuant to the provisions of Regulation S.

On August 23, 2005, the Company entered into a stock subscription agreement
whereby the Company issued 1,000,000 shares of common stock at $0.10 per share
for cash proceeds of $100,000.

                                       7
<PAGE>

On June 22, 2005, the Company entered into a stock subscription agreement
whereby the Company issued 500,000 shares of common stock at $0.20 per share for
cash proceeds of $100,000.

On May 16, 2005, the Company issued 1,000,000 shares of common stock as a stock
bonus under the terms of a consulting agreement with a fair value of $340,000.
The shares were valued based upon the closing price of the Company's common
stock on the date of issue. Refer to Note 10(b).

On May 17, 2005, the Company entered into a stock subscription agreement whereby
the Company issued 400,000 shares of common stock at $0.25 per share for cash
proceeds of $100,000.

On April 1, 2005, the Company received the proceeds from the stock subscription
receivable of $100,000.

On June 14, 2004, the Company completed a forward split of its common stock on a
seven for one basis whereas every share of fully paid common stock issued and
outstanding immediately prior to the forward split was changed into seven new
shares of common stock of the Company. All share amounts have been retroactively
adjusted for all periods presented. The increase in common stock was accounted
for as a reduction in additional paid in capital for all periods presented.
Additionally, the authorized common stock was increased to 500,000,000 shares of
common stock and the par value was re-authorized at $0.001 per common stock.


ITEM 6.  MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

This report contains forward looking statements within the meaning of Section
27a of the Securities Act of 1933 and Section 21e of the Securities Exchange Act
of 1934. These forward looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from
historical results or anticipated results, including those set forth under "RISK
FACTORS" in this Management's Discussion and Analysis or Plan of Operation" and
elsewhere in this report. The following discussion and analysis should be read
in conjunction with the Company's financial statements and notes thereto
included in "Item 7. Financial Statements."


Year-ended March 31, 2006 Compared to Year-ended March 31, 2003

The Company had no revenues for either the year ended March 31, 2006 or March
31, 2005

Expenses for the Company increased by $280,871 or 51.1% to $830,486 for the year
ended March 31, 2006 from $549,615 for the year ended March 31, 2005. This
increase consisted of increases in depreciation and amortization of $2,743,
consulting of $447,996, foreign exchange of $322 and general and administration
expenses of $4,671. These increases were partially offset by decreases in
accounting and auditing of $11,575, legal and organizational of $30,789 and
reduction in impairment losses of $119,465, in rent of $2,567 and travel and
promotion of $10,467.

For the year-ended March 31, 2005, the company reported a gain on the sale of
assets of $1,000. There was no gain or loss for the year ended March 31, 2006.
As a result of the foregoing, the Company's net operating loss for the
year-ended March 31, 2006 increased to $830,486, or ($.02) per share from a loss
of $548,615 or ($.01) per share for the year ended March 31, 2005.

Liquidity and Capital Resources

As of March 31, 2006, the Company had cash of $4,348 and negative working
capital of $31,613. This compares with cash of $11,280 and negative working
capital of $16,450 as of March 31, 2005.

Net cash used in operating activities increased to $325,007 for the year-ended
March 31, 2006 from $168,583 for the year ended March 31, 2005. This increase
resulted from an increase in the net operating loss of $281,871 and a reduction
of impairment loss of $119,465 which was partially offset by an increase in
depreciation and amortization of $2,743. The reversal of deferred compensation
of $17,188, expenses paid by a related party of $53,000 an increase in shares
issued for services or properties of $152,500 and net changes in the current
accounts of $1,457.

Net cash used in investing activities decreased to $81,925 for the year ended
March 31, 2006 from $221,131 for the year ended March 31, 2005. For the year
ended March 31, 2006, the company purchased mineral properties for $81,338 and
property and equipment for $587. This compares with the purchase of mineral
properties for $200,803, plant and equipment for $5,328 and intangible assets
for $15,000 during the year-ended March 31, 2005.

Cash provided by financing activities totaled $400,000 for the year-ended March
31, 2006 and $299,965 for the year-ended March 31, 2005. All of the proceeds for
each period were from the sale of common stock.

                                       8
<PAGE>

As a result of teh Company executing termination agreements subsequent to year
end which effectively terminated all of the outstanding letters of intent and
cooperative agreements, the Company's need forimmediate cash has been reduced.
However, administrative costs and expenses continue.

Because the company has not yet generated revenue or earnings, it has been
dependant on the sale of its shares on loans from related parties. There is no
guaranty that the Company will be able to procure such loans or sell its shares
in the future. However, unless it is able to generate funds from such sources in
the future, it will be unable to execute its business plan or continue its
operations for the next twelve months.

                                       9
<PAGE>

ITEM 7.  FINANCIAL STATEMENTS


Dragon Gold Resources, Inc.
(An Exploration Stage Company)


                                                                Index

Report of Independent Registered Public Accounting Firm...........F-1

Consolidated Balance Sheets.......................................F-2

Consolidated Statements of Operations.............................F-3

Consolidated Statements of Cash Flows.............................F-4

Consolidated Statement of Stockholders' Equity (Deficit)..........F-5

Notes to the Consolidated Financial Statements....................F-6


                                       10
<PAGE>
HAM,
  LANGSTON &
   BREZINA, L.L.P.
Certified Public Accountants



             Report of Independent Registered Public Accounting Firm


To the Board of Directors and Stockholders of
Dragon Gold Resources, Inc.


We have audited the  accompanying  balance sheet of Dragon Gold Resources,  Inc.
(the "Company") as of March 31, 2005, and the related  statements of operations,
stockholders'  equity  and cash flows for the year then ended and for the period
from  inception,  December  13,2000  through  March 31,  2005.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audit. The Company's financial statements as of and for the year ended March
31, 2004, and for the period from inception, December 13, 2000 to March 31, 2004
were audited by other  auditors  whose  report dated June 2, 2004,  expressed an
unqualified  opinion on those  statements and included an explanatory  paragraph
describing the  substantial  doubt about the Company's  ability to continue as a
going concern. The financial statements for the period from inception,  December
13,  2000 to  March  31,  2004  reflect  total  revenues  and net loss of $0 and
$17,693,  respectively,  of the related totals.  The other auditor;s  report has
been  furnished  to us, and our  opinion,  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 the audit to obtain reasonable assurance about 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,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Dragon Gold Resources,  Inc. as
of March 31, 2005,  and the results of its operations and its cash flows for the
year then ended and for the period from  inception,  December  13, 2000  through
March 31, 2005 in conformity with accounting  principles  generally  accepted in
the United States of America.

The accompanying  financial  statements have been prepared  assuming the Company
will  continue  as a going  concern.  As  discussed  in Note 1 to the  financial
statements,  the  Company  has never  generated  any  revenue  and has  suffered
recurring  losses from operations and at March 31, 2005 is in a negative working
capital  position.  These  factors raise  substantial  doubt about the Company's
ability to continue as a going  concern.  Management's  plans in regard to these
matters are also  described in Note 1. The  financial  statements do not include
any adjustments that might result from the outcome of this uncertainty.

                                          /s/ Ham, Langston & Brezina, L.L.P.


Houston, Texas
June 21, 2005

                                       11

<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders
Dragon Gold Resources, Inc.

We have  audited  the  accompanying  consolidated  balance  sheet of Dragon Gold
Resources,   Inc.  and  its  subsidiaries  (an  exploration  stage  company)(the
"Company"),  as of March 31, 2006 and the  related  consolidated  statements  of
operations,  shareholders'  deficit and cash flows for the year then ended,  and
the  period  from  inception  (December  13,  2000) to  March  31,  2006.  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  March 31,  2005,  and for the  period
December 13, 2000 through  March 31, 2005 were audited by other  auditors  whose
report,  dated  June  21,  2005,  expressed  an  unqualified  opinion  on  those
statements,  and included an explanatory  paragraph  describing the  substantial
doubt  about  the  Company's  ability  to  continue  as  a  going  concern.  The
consolidated  financial  statements for the period from inception  (December 13,
2000)  through  March 31, 2005  reflect no revenue  and a net loss of  $576,497,
respectively,  of the  related  totals.  The  other  auditors'  report  has been
furnished to us, and our opinion,  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 the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and  perform  the  audit  to  obtain  reasonable  assurance  about  whether  the
consolidated  financial statements are free of material  misstatement.  An audit
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the  consolidated  financial  statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall consolidated  financial statement
presentation.  We believe  that our audit  provides a  reasonable  basis for our
opinion.

In our  opinion,  based on our  audit  and the  report  of other  auditors,  the
consolidated  financial  statements  referred to above  present  fairly,  in all
material respects,  the financial position of Dragon Gold Resources,  Inc. as of
March 31,  2006,  and the results of its  operations  and its cash flows for the
year then ended, and for the period from inception  (December 13, 2000) to March
31, 2006, in conformity with  accounting  principles  generally  accepted in the
United States of America.

The accompanying  financial  statements have been prepared  assuming the Company
will  continue  as a going  concern.  As  discussed  in Note 1 to the  financial
statements,  the  Company  has never  generated  any  revenue  and has  suffered
recurring  losses from operations and at March 31, 2006 is in a negative working
capital  position.  These  factors raise  substantial  doubt about the Company's
ability to continue as a going  concern.  Management's  plans in regard to these
matters are also  described in Note 1. The  financial  statements do not include
any adjustments that might result from the outcome of this uncertainty.



Thomas Leger & Co. L.L.P.


June 30, 2006
Houston, Texas


                                       12
<PAGE>


Dragon Gold Resources, Inc.
(An Exploration Stage Company)
Consolidated Balance Sheets
(expressed in U.S. dollars)

<TABLE>

                                                             March 31,    March 31,
                                                               2006          2005
                                                                 $            $
                                                            ----------   ----------
<S>                                                          <C>         <C>


Assets

Current Assets

Cash                                                          4,348        11,280
Accounts receivable                                           2,610             -
Prepaid expenses and deposits                                 3,829         7,806
                                                            ---------     ---------
Total Current Assets                                         10,787        19,086

Intangible Assets (Note 3)                                    9,063        12,813
Property and Equipment (Note 4)                               3,151         4,536
                                                            ---------     ---------
Total Assets                                                 23,001        36,435
                                                            ---------     ---------
Liabilities and Stockholders' Equity (Deficit)

Current Liabilities

Accounts payable                                             20,212        17,484
Accrued liabilities                                           1,228        16,899
Due to related parties (Note 6(a))                           20,960         1,153
                                                            ---------     ---------
Total Current Liabilities                                    42,400        35,536
                                                            ---------     ---------
Commitments (Note 1 and 10)

Stockholders' Equity (Deficit)

Common Stock,
500,000,000 common shares authorized with a par
value of $0.001, 54,221,724 common shares issued
and outstanding (2005 - 51,321,724 shares)                   54,222        51,322

Additional Paid In Capital                                1,333,362       643,262

Stock Subscription Receivable                                     -      (100,000)

Deferred Compensation                                             -       (17,188)

Deficit Accumulated During the Exploration Stage         (1,406,983)     (576,497)
                                                          ---------     ---------
Total Stockholders' Equity (Deficit)                        (19,399)          899
                                                           ---------     ---------
Total Liabilities and Stockholders' Equity                   23,001        36,435
                                                           ---------     ---------
</TABLE>

                                       13

   The accompanying notes are an integral part of these financial statements

<PAGE>


Dragon Gold Resources, Inc.
(An Exploration Stage Company)
Consolidated Statements of Operations
(expressed in U.S. dollars, except shares outstanding)
<TABLE>


                                                                  Year Ended                Accumulated From
                                                                                            December 13, 2000
                                                                                         (Date of Inception) to
                                                        ----------------------------
                                                         March 31,         March 31,            March 31,
                                                            2006              2005                2006
<S>                                                      <C>                 <C>         <C>


Revenue                                                            -              -                   -


Expenses

   Accounting and audit                                     $ 16,145      $  27,720          $  55,465
   Depreciation and amortization                               5,722          2,979              8,701
   Consulting (Note 6)                                       580,412        132,416            718,028
   Foreign exchange                                            2,281          1,959              4,454
   General and administrative                                 23,050         18,379             46,538
   Legal and organizational                                   17,080         47,869             70,517
   Impairment loss on mineral property acquisition costs      81,338        200,803            282,141
   Rent                                                       26,277         28,844             55,121
   Travel and promotion                                       78,181         88,646            167,018
---------------------------------------------------------------------------------------------------------

Total Expenses                                               830,486        549,615          1,407,983
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------

Gain on sale of assets                                             -         (1,000)            (1,000)
---------------------------------------------------------------------------------------------------------

Net Loss                                                   $(830,486)     $(548,615)       $(1,406,983)
---------------------------------------------------------------------------------------------------------



Net Loss Per Share - Basic and Diluted                      $  (0.02)      $  (0.01)
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------

Weighted Average Shares Outstanding                       54,260,000     53,040,000
---------------------------------------------------------------------------------------------------------
</TABLE>



                                       14

   The accompanying notes are an integral part of these financial statements

<PAGE>



Dragon Gold Resources, Inc.
(An Exploration Stage Company)
Consolidated Statements of Cash Flows
(expressed in U.S. dollars)
<TABLE>


                                                                                                           Accumulated From
                                                                              Year Ended               December 13, 2000
                                                                 -------------------------------------
                                                                                                      (Date of Inception)
                                                                                                              to
                                                                 -------------------------------------
                                                                    March 31,          March 31,          March 31,
                                                                      2006              2005               2006
                                                                        $                  $                  $
<S>                                                                 <C>                <C>              <C>


Operating Activities

Net loss                                                            (830,486)          (548,615)       (1,406,983)

Adjustments to reconcile net loss to net cash used
in operating activities
   Depreciation and amortization                                       5,722              2,979             8,701
   Deferred compensation                                              17,188            (17,188)                -
   Expenses paid by related party                                     53,000                  -            53,000
   Impairment loss on mineral property acquisition costs              81,338            200,803           282,141
   Shares issued to settle expenses                                        -                  -             5,070
   Shares issued for services                                        340,000             18,750           358,750
   Shares issued for mineral property costs                                -            165,000           165,000

Change in operating assets and liabilities
Accounts receivable                                                   (2,610)                 -            (2,610)
Deposits and prepaid expenses                                          3,977             (7,806)           (3,829)
Accounts payable and accrued liabilities                             (12,943)            22,729            21,440
Amounts due to related parties                                        19,807             (5,235)           15,924
---------------------------------------------------------------------------------------------------------------------
-
Net Cash Used in Operating Activities                               (325,007)          (168,583)         (503,396)
---------------------------------------------------------------------------------------------------------------------

Investing Activities

      Mineral property acquisition costs                             (81,338)          (200,803)         (282,141)
      Purchase of property and equipment                                (587)           (5,328)            (5,915)
      Purchase of intangible assets                                        -           (15,000)           (15,000)
---------------------------------------------------------------------------------------------------------------------

Net Cash Used in Investing Activities                                (81,925)         (221,131)          (303,056)
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------

Financing Activities

   Proceeds from related party loan                                        -                  -            12,745
   Proceeds from issuance of common shares                           400,000            299,965           798,055
---------------------------------------------------------------------------------------------------------------------

Net Cash Provided by Financing Activities                            400,000            299,965           810,800
---------------------------------------------------------------------------------------------------------------------

Increase (decrease) in cash                                           (6,932)           (89,749)            4,348

Cash - beginning of period                                            11,280            101,029                 -
---------------------------------------------------------------------------------------------------------------------

Cash - end of period                                                   4,348             11,280             4,348
---------------------------------------------------------------------------------------------------------------------

Supplemental Disclosures
     Interest paid                                                         -                  -                 -
     Income tax paid                                                       -                  -                 -

Non-Cash Financing Activities

   Issuance of common stock for asset purchase                             -                  -               100
   Issuance of common stock for payment of expenses                        -                  -             4,970
   Issuance of common stock for services                             340,000             18,750           358,750
   Issuance of common stock for acquisition of subsidiary                  -            165,000           165,000
   Issuance of common stock for settlement of related party loans          -                  -             7,708
---------------------------------------------------------------------------------------------------------------------

</TABLE>


                                       15

   The accompanying notes are an integral part of these financial statements

<PAGE>



Dragon Gold Resources, Inc.
(An Exploration Stage Company)
Consolidated Statement of Stockholders' Equity (Deficit)
From December 13, 2000 (Date of Inception) to March 31, 2006
(expressed in U.S. dollars)
<TABLE>


                                                                                                 Deficit
                                                         Additional                           Accumulated
                                                          Paid In      Stock                  During the
                                                          Capital   Subscription  Deferred    Development
                                     Shares     Amount   (Discount) Receivable  Compensation     Stage       Total
                                       #           $         $           $            $            $           $
<S>                                   <C>       <C>       <C>        <C>         <C>           <C>           <C>


Balance - December 13, 2000 (Date
of Inception)                               -           -         -        -             -             -         -

Common stock issued for cash       10,962,000      10,962    (9,396)       -             -             -     1,566

Common stock issued for
organizational expenses             6,790,000       6,790    (5,820)       -             -             -       970

Common stock issued for asset
purchase                              700,000         700      (600)       -             -             -       100

Net loss for the period                     -           -         -        -             -        (3,437)   (3,437)
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------

Balance - March 31, 2001           18,452,000      18,452   (15,816)       -             -        (3,437)     (801)

Common stock issued for services   28,000,000      28,000   (24,000)       -             -             -     4,000

Net loss for the year                       -           -         -        -             -        (5,508)   (5,508)
--------------------------------------------------------------------------------------------------------------------

Balance - March 31, 2002           46,452,000      46,452   (39,816)       -             -        (8,945)   (2,309)

Net loss for the year                       -           -         -        -             -        (1,244)   (1,244)
--------------------------------------------------------------------------------------------------------------------

Balance - March 31, 2003           46,452,000      46,452   (39,816)       -             -       (10,189)   (3,553)

Common stock issued for cash, net
of offering costs of $8,476         3,675,000       3,675    92,849        -             -             -    96,524

Common stock issued for debt
settlement                            269,794         270     7,439        -             -             -     7,709

Net loss for the year                       -           -         -        -             -       (17,693)  (17,693)
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------

Balance - March 31, 2004           50,396,794      50,397    60,472        -             -       (27,882)   82,987

Cancellation of common stock by
former Director                   (16,400,000)    (16,400)   16,400        -             -             -         -

Common stock issued for
acquisition
of subsidiary                      16,500,000      16,500   148,500        -             -             -   165,000

Common stock issued for cash          799,930         800   399,165 (100,000)            -             -   299,965

Stock issued for services              25,000          25    18,725        -       (17,188)            -     1,562

Net loss for the year                       -           -         -        -             -      (548,615) (548,615)
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------

Balance - March 31, 2005           51,321,724      51,322   643,262  (100,000)     (17,188)     (576,497)      899
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       16

   The accompanying notes are an integral part of these financial statements

<PAGE>

Dragon Gold Resources, Inc.
(An Exploration Stage Company)
Consolidated Statement of Stockholders' Equity (Deficit)
From December 13, 2000 (Date of Inception) to March 31, 2006
(expressed in U.S. dollars)
<TABLE>


                                                                                                Deficit
                                                                                              Accumulated
                                                          Additional    Stock                   During the
                                                          Paid In   Subscription  Deferred    Development
                                     Shares     Amount    Capital   Receivable  Compensation     Stage        Total
                                        #          $         $           $            $            $            $
<S>                                  <C>        <C>       <C>        <C>          <C>          <C>          <C>


Balance - March 31, 2005            51,321,724     51,322   643,262  (100,000)    (17,188)         (576,497)      899

Cash received for stock
subscription receivable                      -          -         -   100,000            -                -   100,000

Common stock issued for cash         1,900,000      1,900   298,100        -             -                -   300,000

Stock issued for services            1,000,000      1,000   339,000        -             -                -   340,000

Deferred compensation                        -          -         -        -        17,188                -    17,188

Expenses paid by related party               -          -    53,000        -             -                -    53,000

Net loss for the year                        -          -         -        -             -         (830,486) (830,486)
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------

Balance - March 31, 2006            54,221,724     54,222 1,333,362        -             -       (1,406,983)  (19,399)
-----------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       17
   The accompanying notes are an integral part of these financial statements

<PAGE>



1.   Exploration Stage Company

     Dragon Gold Resources,  Inc. (the "Company") was  incorporated in the State
     of Nevada,  U.S.A. on December 13, 2000 under the name "Folix Technologies,
     Inc."  Effective June 14, 2004, the Company changed its name to Dragon Gold
     Resources,  Inc. The Company's  principal business was the development of a
     Linux based application  server and thin client computing  systems.  During
     the year  ended  March 31,  2005,  the  Company  entered  into the  mineral
     resource exploration business through the acquisition of a 100% interest in
     Dragon  Minerals  Holdings Inc.  ("DMHI"),  a private British Virgin Island
     company.  DMHI is involved in mineral property  acquisition and exploration
     in China. Refer to Notes 5 and 12 (c).

     The Company was previously in the development stage as defined by Statement
     of Financial Accounting Standard ("SFAS") No.7 "Accounting and Reporting by
     Development  Stage  Enterprises"  related to its Linux based business.  The
     Company  changed to the  exploration  stage during the year ended March 31,
     2005 with the acquisition of its interest in Dragon Minerals Holdings, Inc.
     The Company has not presently  determined  whether its  properties  contain
     mineral  reserves  that  are  economically  recoverable.   These  financial
     statements  have been prepared on a going concern basis,  which implies the
     Company will continue to realize its assets and  discharge its  liabilities
     in the normal course of business.  The Company has never generated revenues
     since  inception  and is unlikely to generate  earnings in the immediate or
     foreseeable  future.  The continuation of the Company as a going concern is
     dependent upon the continued  financial support from its shareholders,  the
     ability of the Company to obtain  necessary  equity  financing  to continue
     operations  and  to  determine  the  existence,  discovery  and  successful
     exploitation   of  economically   recoverable   reserves  in  its  resource
     properties,  confirmation  of the  Company's  interests  in the  underlying
     properties,  and the  attainment of profitable  operations.  As of March 31
     2006, the Company has  accumulated  losses of $1,406,983  since  inception.
     These   financial   statements  do  not  include  any  adjustments  to  the
     recoverability   and   classification   of  recorded   asset   amounts  and
     classification of liabilities that might be necessary should the Company be
     unable to continue as a going  concern.  These  factors  raise  substantial
     doubt regarding the Company's ability to continue as a going concern.

2.   Summary of Significant Accounting Policies

(a)  Basis of Presentation

     These consolidated  financial statements and related notes are presented in
     accordance  with  accounting  principles  generally  accepted in the United
     States,  and are  expressed  in US dollars.  These  consolidated  financial
     statements  include  the  accounts  of the  Company  and  its  wholly-owned
     subsidiary,   Dragon  Minerals  Holdings  Inc.  ("DMHI").  DMHI  owns  four
     wholly-owned  subsidiaries,  Dragon Minerals, Inc., Dragon Minerals-Shiquan
     Inc.,  Dragon  Minerals-Taiyu  Inc., and Dragon  Minerals-Xunyang  Inc. All
     intercompany   transactions   and   balances   have  been   eliminated   in
     consolidation. (b) Use of Estimates

     The  preparation  of financial  statements  in conformity  with  accounting
     principles  generally accepted in the United States requires  management to
     make estimates and assumptions  that affect the reported  amounts of assets
     and liabilities and disclosure of contingent  assets and liabilities at the
     date of the financial  statements and the reported  amounts of revenues and
     expenses  during  the  periods.  Actual  results  could  differ  from those
     estimates. (c) Cash and Cash Equivalents

     The Company  considers  all highly  liquid  instruments  with a maturity of
     three  months or less at the time of issuance to be cash  equivalents.  (d)
     Foreign Currency Translation

     The  Company's  functional  and  reporting  currency  is the United  States
     dollar.  Monetary assets and liabilities  denominated in foreign currencies
     are  translated  using the exchange  rate  prevailing  at the balance sheet
     date.  Gains and losses  arising on  translation  or  settlement of foreign
     currency   denominated   transactions  or  balances  are  included  in  the
     determination  of income.  Foreign  currency  transactions  are  undertaken
     primarily in Canadian dollars, Chinese Yuan and British pounds. The Company
     has  not,  to  the  date  of  these  financials  statements,  entered  into
     derivative   instruments   to  offset  the   impact  of  foreign   currency
     fluctuations.

(e)  Income Taxes

     The Company uses the liability method of accounting for income taxes. Under
     this  method,  deferred  income  taxes  are  recorded  to  reflect  the tax
     consequences on future years of temporary differences between the tax basis
     of assets and  liabilities  and their  financial  amounts at year-end.  The
     Company  provides a valuation  allowance  to reduce  deferred tax assets to
     their net realizable value.

                                       18
<PAGE>


2.   Summary of Significant Accounting Policies (continued)

(f)  Basic and Diluted Net Income (Loss) Per Share

     The Company  computes net income (loss) per share in  accordance  with SFAS
     No. 128, "Earnings per Share" (SFAS 128). SFAS 128 requires presentation of
     both basic and diluted  earnings  per share (EPS) on the face of the income
     statement. Basic EPS is computed by dividing net income (loss) available to
     common  shareholders  (numerator) by the weighted  average number of shares
     outstanding  (denominator)  during the period.  Diluted EPS gives effect to
     all  potential   dilutive  common  shares  outstanding  during  the  period
     including stock options,  using the treasury stock method,  and convertible
     preferred stock,  using the if-converted  method. In computing Diluted EPS,
     the average stock price for the period is used in determining the number of
     shares  assumed  to be  purchased  from the  exercise  of stock  options or
     warrants.  Diluted EPS  excludes  all  potential  dilutive  shares if their
     effect is anti dilutive. (g) Financial Instruments

     Financial instruments which include cash and equivalents, prepaid expenses,
     deposits, accounts payable, accrued liabilities, and due to related parties
     were estimated to approximate their carrying values due to the immediate or
     short-term  maturity of these financial  instruments.  Virtually all of the
     Company's assets and liabilities are giving rise to significant exposure to
     market risks from changes in foreign  currency rates. The financial risk is
     the risk to the  Company's  operations  that  arise  from  fluctuations  in
     foreign  exchange  rates  and the  degree  of  volatility  of these  rates.
     Currently,  the Company does not use  derivative  instruments to reduce its
     exposure to foreign currency risk.

(h)  Concentrations of Credit Risk

     The  Company  maintains  its cash in well known banks  selected  based upon
     management's  assessment  of  the  banks'  financial  stability.   Balances
     periodically  exceed  the  $100,000  federal  depository  insurance  limit;
     however, the Company has not experienced any losses on deposits.

(i)  Comprehensive Loss

     SFAS No. 130, "Reporting  Comprehensive  Income," establishes standards for
     the reporting and display of  comprehensive  loss and its components in the
     financial  statements.  As of March 31,  2006 and 2005 the  Company  had no
     items that represent comprehensive loss and, therefore,  has not included a
     schedule of comprehensive loss in the financial statements.

(j)  Mineral Property Costs

     The Company has been in the  exploration  stage  since its  acquisition  of
     Dragon  Minerals  Holdings,  Inc. on July 15, 2004 and has not yet realized
     any revenues from its planned  operations.  It is primarily  engaged in the
     acquisition  and  exploration  of  mining   properties.   Mineral  property
     exploration  costs are expensed as incurred.  Mineral property  acquisition
     costs are initially  capitalized  when incurred  using the guidance in EITF
     04-02,  "Whether  Mineral  Rights Are Tangible or Intangible  Assets".  The
     Company  assesses  the  carrying  costs  for  impairment  under  SFAS  144,
     "Accounting for Impairment or Disposal of Long Lived Assets" at each fiscal
     quarter end.  When it has been  determined  that a mineral  property can be
     economically  developed  as a result of  establishing  proven and  probable
     reserves,  the costs  incurred to develop such property,  are  capitalized.
     Such costs will be amortized using the units-of-production  method over the
     estimated  life  of  the  probable  reserve.   If  mineral  properties  are
     subsequently  abandoned or impaired,  any capitalized costs will be charged
     to operations.

(k)  Website Development Costs

     The Company  recognizes the costs  associated  with developing a website in
     accordance  with the American  Institute of  Certified  Public  Accountants
     ("AICPA") Statement of Position ("SOP") No. 98-1, "Accounting for the Costs
     of Computer Software  Developed or Obtained for Internal Use".  Relating to
     website  development costs the Company follows the guidance pursuant to the
     Emerging  Issues  Task  Force  (EITF) No.  00-2,  "Accounting  for  Website
     Development Costs".

     Capitalized costs associated with the website consist primarily of payments
     to a third party for development of web pages. These capitalized costs will
     be amortized based on their estimated useful life over four years.  Payroll
     and related costs are not capitalized, as the amounts principally relate to
     maintenance.  Internal costs related to the  development of website content
     are expensed as incurred.


                                       19
<PAGE>

2.       Summary of Significant Accounting Policies (continued)

(l)      Property and Equipment

         Property and equipment consists of computer hardware and is recorded at
         cost. The computer hardware is being amortized on a straight-line basis
         over its estimated life of three years. Expenditures for major renewals
         and betterments that extend the original estimated economic useful
         lives of the applicable assets are capitalized. Expenditures for normal
         repairs and maintenance are charged to expense as incurred. The cost
         and related accumulated depreciation of assets sold or otherwise
         disposed of are removed from the account, and any gain or loss is
         included in operations.

(m)      Long-Lived Assets

         In accordance with SFAS No. 144, "Accounting for the Impairment or
         Disposal of Long Lived Assets", the carrying value of long-lived assets
         is reviewed on a regular basis for the existence of facts or
         circumstances that may suggest impairment. The Company recognizes
         impairment when the sum of the expected undiscounted future cash flows
         is less than the carrying amount of the asset. Impairment losses, if
         any, are measured as the excess of the carrying amount of the asset
         over its estimated fair value.

(n)      Stock-Based Compensation

         The Company accounts for its stock-based awards under the recognition
         and measurement provisions of Accounting Principles Board Opinion No.
         25, "Accounting for Stock Issued to Employees" using the intrinsic
         value method of accounting, under which compensation expense was only
         recognized if the exercise price of the Company's employee stock
         options was less than the market price of the underlying common stock
         on the date of grant. The Company will be required to adopt SFAS No.
         123R on April 1, 2006.

(o)      Recent Accounting Pronouncements

         In May 2005, the Financial Accounting Standards Board (FASB) issued
         SFAS No. 154, "Accounting Changes and Error Corrections - A Replacement
         of APB Opinion No. 20 and SFAS No. 3". SFAS 154 changes the
         requirements for the accounting for and reporting of a change in
         accounting principle and applies to all voluntary changes in accounting
         principle. It also applies to changes required by an accounting
         pronouncement in the unusual instance that the pronouncement does not
         include specific transition provisions. SFAS 154 requires retrospective
         application to prior periods' financial statements of changes in
         accounting principle, unless it is impracticable to determine either
         the period-specific effects or the cumulative effect of the change. The
         provisions of SFAS No. 154 are effective for accounting changes and
         correction of errors made in fiscal years beginning after December 15,
         2005. The adoption of this standard did not have a material effect on
         the Company's results of operations or financial position.

         In December 2004, the FASB issued SFAS No. 153, "Exchanges of
         Nonmonetary Assets - An Amendment of APB Opinion No. 29". The guidance
         in APB Opinion No. 29, "Accounting for Nonmonetary Transactions", is
         based on the principle that exchanges of nonmonetary assets should be
         measured based on the fair value of the assets exchanged. The guidance
         in that Opinion, however, included certain exceptions to that
         principle. SFAS No. 153 amends Opinion No. 29 to eliminate the
         exception for nonmonetary exchanges of similar productive assets and
         replaces it with a general exception for exchanges of nonmonetary
         assets that do not have commercial substance. A nonmonetary exchange
         has commercial substance if the future cash flows of the entity are
         expected to change significantly as a result of the exchange. The
         provisions of SFAS No. 153 are effective for nonmonetary asset
         exchanges occurring in fiscal periods beginning after June 15, 2005.
         Early application is permitted and companies must apply the standard
         prospectively. The adoption of this standard is not expected to have a
         material effect on the Company's results of operations or financial
         position.

         The FASB has issued SFAS No. 155 "Accounting for Certain Hybrid
         Financial Instruments - an amendment of FASB Statements No. 133 and
         140" and No. 156 "Accounting for Servicing of Financial Assets - an
         amendment of FASB Statement No. 140", but they will not have a material
         effect in the Company's results of operations or financial position.

p)       Reclassifications

         Certain reclassifications have been made to the prior year's financial
         statements to conform to the current year's presentation.


                                       20
<PAGE>


3.       Intangible Assets
<TABLE>
                                                                  March 31,         March 31,
                                                                    2006             2005
                                               Accumulated      Net Carrying     Net Carrying
                                     Cost     Amortization         Value             Value
                                       $            $                $                 $
<S>                                   <C>        <C>                <C>           <C>


         Website development costs   15,000       5,937             9,063           12,813
         ----------------------------------------------------------------------------------------
         ----------------------------------------------------------------------------------------


4.       Property and Equipment
                                                                 March 31,         March 31,
                                                                    2006             2005
                                               Accumulated      Net Carrying     Net Carrying
                                     Cost     Amortization         Value             Value
                                       $            $                $                 $

         Computer equipment           5,915       2,764             3,151            4,536
         ----------------------------------------------------------------------------------------
         ----------------------------------------------------------------------------------------
</TABLE>


5.       Acquisition of Business

         On July  15,  2004,  the  Company  purchased  100% of the  issued  and
         outstanding common shares of Dragon Minerals Holdings Inc. ("DMHI"), a
         private British Virgin Islands  company.  DMHI owns 100% of the issued
         and  outstanding  common  shares of Dragon  Minerals Inc.  ("DMI"),  a
         private British Virgin Islands  company.  Accordingly,  the results of
         operations   for  DMHI  have  been   included   in  the   accompanying
         consolidated financial statements from the date of acquisition. DMI is
         involved in mineral property acquisition and exploration in China. The
         purchase  price was $184,579  which  included the issue of  16,500,000
         common  shares  at a fair  value  of  $165,000,  acquisition  costs of
         $12,235 and negative  book value of DMHI of $7,344.  The common shares
         were  valued at a nominal  $0.01  per  share as the  Company  had just
         disposed of its Linux based  business and had no  significant  assets,
         liabilities,  nor operations.  The Company used the purchase method of
         accounting for this  acquisition  and the purchase price was allocated
         to mineral  property costs.  As the mineral  property did not have any
         proven  or  probable   reserves,   the  costs  have  been  charged  to
         operations. Refer to Note 12 (c).

6.       Related Party Transactions

(a)      The amount due to related parties at March 31, 2006 (2005 - $1,153) of
         $20,960 represents expenses of $159 paid on behalf of the Company by a
         former Director and $25,000 in consulting fees due to directors, offset
         by $4,199 advanced to current directors. These amounts are non-interest
         bearing, unsecured and have no specific terms of repayment.

(b)      During the year ended March 31, 2006, the Company incurred $120,000
         (2005 - $95,000) for consulting services performed by the President of
         the Company, $39,650 (2005 - $27,853) for consulting services provided
         by a company owned by a significant shareholder of the Company and
         $402,500 for consulting services provided by the Chairman of the Board
         of Directors of the Company, which includes $62,500 as part of an
         employment agreement and a one time bonus of 1,000,000 shares of
         restricted common stock with a fair value of $340,000.

(c)      During the year ended  March 31,  2006, the Company recognized $50,000
         for  donated  services  and $3,000 for donated rent provided by the
         President of the Company.

7.       Mineral Properties

(a)      On September 21, 2005, the Company entered into a cooperative agreement
         with Yinchuan Gaoxin District Shijin Mining Ltd. ("Yinchuan Mining") to
         form a Sino-Foreign cooperative joint venture company ("JV Company")
         for the exploration and development of the Xijishui Gold Property and
         its surrounding area located in Jingyuan County, Gansu Province, China.
         Pursuant to the agreement, the Company must pay $150,000 to Yinchuan
         Mining over a period of 12 months after Yinchuan Mining transfers its
         mineral exploration rights to the JV Company. The Company will have the
         right to earn an 80% interest in the JV Company by spending $1,200,000
         for exploration activities over a two year period. The term of the
         cooperation agreement was 30 years. In May 2006, the Company terminated
         the cooperative agreement with Yinchuan Mining.


                                       21
<PAGE>

7.        Mineral Properties (continued)

(b)       On September 10, 2005, the Company entered into a cooperative
          agreement with the Guilin Research Institute of Geology and Mineral
          Resources ("Institute") to form a Sino-Foreign cooperative joint
          venture company ("JVC") for the exploration and development of the
          Maling and Longhou Gold Properties located in Guangxi Province, China.
          Pursuant to the agreement, the Company must pay $800,000 to the
          Institute in stages over a period of 30 months after the Institute
          transfers its mineral exploration rights to the JVC. The Company will
          have the right to earn a 75% interest in the JVC by spending
          $2,500,000 for exploration activities over a three year period. The
          term of the cooperation agreement was 30 years. In May 2006 the
          Company terminated the cooperative agreement with Institute.

(c)       On June 2, 2005, the Company entered into an Exploration License
          Transfer Agreement to acquire a 100% interest in two mining claims
          located in Mongolia. The Company is required to pay $9,500 on
          execution of the agreement, and an additional $9,500 upon the transfer
          of the exploration licenses.

(d)       On March 15, 2005, the Company entered into a Letter of Intent with
          the Hanzhong Geological Brigade of the Bureau of Geology & Mineral
          Exploration of Shaanxi Province, China ("Brigade") to form a
          Sino-Foreign cooperative joint venture company for the exploration and
          development of up to seven properties located in Hanzhong, Shaanxi
          Province. Pursuant to the Letter of Intent, the Company would
          contribute cash to the joint ventures and Brigade would contribute the
          Exploration Permit and their previous exploratory findings. In May
          2006 the Company terminated the Letter of Intent with Brigade.

(e)       On January 20, 2005, the Company entered into an option agreement (the
          "Agreement") to acquire a 100% interest, subject to a 2% net smelter
          royalty, in certain mining claims located in Mongolia. To acquire its
          interest, the Company paid CDN$20,000 upon execution of the Agreement,
          and must pay CDN$30,000 on or before January 20, 2006, and an
          additional CDN$50,000 on or before January 20, 2007. The Company has
          the right to purchase the first two-thirds of the royalty interest at
          any time in consideration of payments of CDN$300,000 for each
          one-third portion. The Company also has the right of first refusal for
          the remaining one-third royalty interest. On November 23, 2005, the
          Company determined not to exercise its option to acquire a 100%
          interest in these mining claims.

(f)       On March 1, 2004, Company's wholly-owned subsidiary Dragon Minerals
          Inc. ("DMI") entered into a Letter of Intent with the Northwest
          Geology and Exploration Bureau for Nonferrous Metals Party ("Party")
          in China to form a Sino-Foreign cooperative joint venture company for
          the exploration and development of a property located in Southern
          Shaanxi Province. Pursuant to the Letter of Intent, the Company would
          contribute cash to the joint venture and Party would contribute the
          Permit and their previous exploratory findings.

(g)       On February 24, 2004, DMI entered into a Letter of Intent with the
          Bureau of Geology and Mineral Exploration & Development of Shaanxi
          Province ("Bureau") in China to form a Sino-Foreign cooperative joint
          venture company for the exploration and development of up to twelve
          properties located in the Southern Shaanxi Province. Pursuant to the
          Letter of Intent, the Company would contribute cash to the joint
          ventures and Bureau would contribute the Permits and their previous
          exploratory findings.

8.        Common Stock

(a)       On August 23, 2005, the Company entered into a stock subscription
          agreement whereby the Company issued 1,000,000 shares of common stock
          at $0.10 per share for cash proceeds of $100,000.

(b)       On June 22, 2005, the Company entered into a stock subscription
          agreement whereby the Company issued 500,000 shares of common stock at
          $0.20 per share for cash proceeds of $100,000.

(c)       On May 16, 2005, the Company issued 1,000,000 shares of common stock
          as a stock bonus under the terms of a consulting agreement with a fair
          value of $340,000. The shares were valued based upon the closing price
          of the Company's common stock on the date of issue. Refer to Note
          10(b).

(d)       On May 17, 2005, the Company entered into a stock subscription
          agreement whereby the Company issued 400,000 shares of common stock at
          $0.25 per share for cash proceeds of $100,000.

(e)       On April 1, 2005, the Company received the proceeds from the stock
          subscription receivable of $100,000.

(f)       On June 14, 2004, the Company completed a forward split of its common
          stock on a seven for one basis whereas every share of fully paid
          common stock issued and outstanding immediately prior to the forward
          split was changed into seven new shares of common stock of the
          Company. All share amounts have been retroactively adjusted for all
          periods presented. The increase in common stock was accounted for as a
          reduction in additional paid in capital for all periods presented.
          Additionally, the authorized common stock was increased to 500,000,000
          shares of common stock and the par value was re-authorized at $0.001
          per common stock.


                                       22
<PAGE>

     9. Stock Options

     During the year ended March 31, 2006, the Company granted stock options to
     acquire up to 3,000,000 shares of common stock exercisable at $0.366 per
     share on or before May 12, 2010. One-third of the options vest each year,
     for the first three years, on the anniversary date of the agreement. Refer
     to Note 10(b).

     A summary of the Company's stock option activity is as follows:
<TABLE>

                                                 Year ended                            Year ended
                                               March 31, 2006                        March 31, 2005
                                     -----------------------------------     --------------------------------
                                     ------------------ ----------------     -------------- -----------------
                                     Number of Options         Weighted          Number of          Weighted
                                                                Average                              Average
                                                         Exercise Price            Options    Exercise Price
   --------------------------------- ------------------ ----------------     -------------- -----------------
<S>                                   <C>                <C>                  <C>            <C>

   Balance, beginning of period                      -           $    -                  -            $    -

   Granted                                   3,000,000            0.366                  -                 -

   Cancelled / Forfeited                             -                -                  -                 -

   Exercised                                         -                -                  -                 -
   --------------------------------- ------------------ ---------------- --- -------------- -----------------
   --------------------------------- ------------------ ---------------- --- -------------- -----------------

   Balance, end of period                    3,000,000         $  0.366                  -            $    -
   --------------------------------- ------------------ ---------------- --- -------------- -----------------

     As at March 31, 2006, the following options are outstanding:

                                                      Outstanding                               Exercisable
                                      ---------------------------------------------    ------------------------------
                                      ------------- -------------- ----------------    --------------- --------------
            Exercise price                               Weighted         Weighted                          Weighted
                                                          average          Average                           Average
                                                        remaining         Exercise                          Exercise
                                         Number of    contractual            Price          Number of          Price
                   $                        shares   life (years)                $             shares              $
                                      ------------- -------------- ----------------    --------------- --------------
                                      ------------- -------------- ----------------    --------------- --------------

                 0.366                 3,000,000           4.13        $ 0.366                   -          $   -
                                      ------------- -------------- ----------------    --------------- --------------
</TABLE>

     The following table illustrates the effect on net loss and loss per share
     if the Company had applied the fair value recognition provisions of SFAS
     123 to options granted under the Company's stock option plans in all
     periods presented. For purposes of this pro forma disclosure, the value of
     the options is estimated using a Black-Scholes option-pricing formula and
     amortized to expense over the options' service period.

     The fair value of the options granted during the period was estimated at
     the date of the grant using the Black-Scholes option pricing model with the
     following assumptions: dividend yield of 0%; risk-free interest of 3.71%;
     expected volatility of 114%; and weighted average life of 3 years. The
     Company will recognize stock-based compensation expense in the amount of
     $535,952, ratably over the service period.
<TABLE>


                                                                           Year Ended March    Year Ended March
                                                                              31, 2006            31, 2005
<S>                                                                         <C>                  <C>


      Net Loss - as reported                                                  $ (830,486)         $ (548,615)
        Add: Stock-based compensation expense included in net loss - as
        reported                                                                        -                   -
        Deduct: Stock-based compensation expense determined under fair
        value method                                                            (156,319)                   -
                                                                          -----------------        ------------

      Net Loss - Pro-Forma                                                     $(986,805)          $(548,615)
                                                                          =================        ============

      Basic and diluted net loss per share - as reported                         $ (0.02)            $ (0.01)
                                                                          -----------------        ------------

      Basic and diluted net loss per share - Pro-Forma                           $ (0.02)            $ (0.01)
                                                                          =================        ============
</TABLE>

     Subsequent to March 31, 2006, the stock options to acquire 3,000,000 shares
     of common stock of the Company were cancelled (Note 12 (a)).


                                       23
<PAGE>


10.      Commitments

(a)  On April 1, 2005,  the Company  entered into a consulting  agreement  ("the
     Agreement")  with a  company  owned  by a  significant  shareholder  of the
     Company,  for management and geological  services.  The Agreement was for a
     period of one year  commencing  April 1, 2005 at CDN$6,875 per month.  This
     Agreement  replaced in full a previous  agreement  for  CDN$5,625 per month
     signed on October 1, 2004.  Effective September 30, 2005, the Agreement was
     terminated.

(b)  On May 12, 2005, the Company entered into a five-year  employment agreement
     for  the  position  of  Chairman  Non-Executive  (the  "Employee")  for the
     provision of services for 52 days per year in  consideration  for an annual
     salary of $60,000. The Company will pay $500 per day for each day in excess
     of 52 days. The Employee  received  1,000,000 shares of common stock of the
     Company upon  execution of the  agreement.  The Company also granted  stock
     options to acquire  3,000,000 shares of common stock for a term of 5 years,
     exercisable  at $0.366 per share.  One-third of the options vest each year,
     for the  first  three  years,  on the  anniversary  date of the  agreement.
     Subsequent to March 31, 2006,  the  employment  agreement  that the Company
     entered  into  with the  Employee  was  terminated.  Under the terms of the
     termination, the Company will cancel the stock options to acquire 3,000,000
     shares of common  stock that was issued to the  Employee.  The Company will
     then issue 5,000,000  shares of common stock to the Employee.  The Employee
     will remain as a director of the Company.

(c)  On March 3, 2005,  the Company  entered  into an  agreement to issue 50,000
     shares of common stock to an individual in exchange for consulting services
     to be rendered over a two year period. Upon execution of the agreement, the
     Company  issued  25,000 shares of common stock and will issue the remaining
     25,000  shares  within 30 days after the end of the first year of  service.
     The latter 25,000 shares have yet to be issued.

11.  Income Tax

     The Company has incurred losses since its inception and, therefore, has not
     been subject to federal income taxes. The Company has net operating loss
     carry forwards of approximately $883,000, which expire beginning in 2020.
     Under the provisions of Section 382 of the Internal Revenue Code, any
     significant ownership change in the Company could severely limit the
     Company's ability to utilize its NOL carryforward to reduce future taxable
     income and related tax liabilities. Additionally, because United States tax
     laws limit the time during which NOL carryforwards may be applied against
     future taxable income, the Company may be unable to take full advantage of
     its NOL for federal income tax purposes should the Company generate taxable
     income.

     The composition of deferred tax assets and liabilities and the related tax
effects at March 31, 2006 and 2005 are as follows:

                                                     March 31,        March 31,
                                                      2006             2005
                                                        $                $

      Deferred tax assets:
         Net operating losses                        300,299       139,378
         Valuation allowance                        (300,299)     (139,378)
   --------------------------------------------- ------------- ----------------
   --------------------------------------------- ------------- ----------------

      Total deferred tax assets                            --            --
   --------------------------------------------- ------------- ----------------
   --------------------------------------------- ------------- ----------------

      Deferred tax liability                               --            --
   --------------------------------------------- ------------- ----------------
   --------------------------------------------- ------------- ----------------

      Net deferred tax asset (liability)                   --            --
   --------------------------------------------- ------------- ----------------

The difference  between the income tax benefit in the accompanying  statement of
operations and the amount that would result if the U.S.  Federal  statutory rate
of 34% was  applied to pre-tax  loss for the years ended March 31, 2006 and 2005
is as follows:
<TABLE>

                                                        March 31, 2006            March 31, 2005
                                                           Amount         %           Amount       %
<S>                                                     <C>             <C>        <C>            <C>

     Provision (benefit) for income tax at federal
        statutory rate                                 $(282,365)    (34.0)       $(186,529)    (34.0)
     Increase (decrease) in valuation allowance          160,921      20.0          129,858      23.7
     Non-deductible mineral property expense                 --        --            56,100      10.2
     Non-deductible compensation expense                 121,444      14.0              571       0.1
      -------------------------------------------------- ------------ --------- ---------------- ---------
                                                         $     -                   $      -         -
                                                          =======    ========         =======
</TABLE>

12.      Subsequent Events

(a)      In May 2006, the employment agreement that the Company entered into
         (Note 10 (b)) with the Chairman Non-Executive (the "Employee") was
         terminated. Under the terms of the termination, the Company will cancel
         the stock options to acquire 3,000,000 shares of common stock that was
         issued to the Employee. The Company will then issue 5,000,000 shares of
         common stock to the Employee. The Employee will remain as a director of
         the Company.
(b)      In May 2006, the Company terminated cooperative agreements and Letter
         of Intents in regards to setting up joint venture companies with three
         entities in China. The three entities are Yinchuan Gaoxin District
         Shijin Mining Ltd., Guilin Research Institute of Geology and Mineral
         Resources, and Hanzhong Geological Brigade of the Bureau of Geology &
         Mineral Exploration of Shaanxi Province (Notes 7 (a), (b) and (d),
         respectively).
(c)      On May 5, 2006, the Company and its wholly owned subsidiary, Dragon
         Minerals Holdings Inc. ("DMHI") terminated their agreement dated July
         14, 2004 (Note 5) whereby the Company acquired all the issued and
         outstanding shares of DMHI for 16,500,000 shares of the Company's
         common stock. Pursuant to the Termination Agreement, the Company
         returned to the Shareholders their shares in DMHI and the Shareholders
         returned 13,500,000 shares of the Company's common stock. A director of
         the Company and the director's spouse retained 3,000,000 shares of the
         Company's common stock. The director was issued an additional 1,000,000
         shares for services performed.
(d)      On May 5, 2006,  the  Company  issued  2,500,000  shares of common
         stock of the Company to the  President  of the Company for
         services rendered.


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

On April 8, 2005, the Registrant terminated the engagement of Manning Elliot,
Chartered Accountants from its position as the Company's independent
accountants.

The audit report of Manning Elliot, on June 2, 2004, for the year ended March
31, 2004 contained no adverse opinion, disclaimer of opinion or modification of
the opinion except for concerns expressed about the Company's ability to
continue as a going concern..

The Registrant's Board of Directors participated in and approved the decision to
change independent accountants.

In connection with its audit for the most recent fiscal year and the interim
period until the date of dismissal, there have been no disagreements with
Manning Elliot, Chartered Accountants on any matter of accounting principle or
practice, financial statement disclosure, or auditing scope or procedure, which
disagreement if not resolved to the satisfaction of Manning Elliot, Chartered
Accountants would have caused them to make reference thereto in their report on
the financial statements.

During the most recent fiscal year and the interim period until the date of
dismissal , there have been no reportable events (as defined in Regulation S-K
Item 304 (a)(1)(v)).

                                       24
<PAGE>

The Registrant requested that Manning Elliot, Chartered Accountants furnish it
with a letter addressed to the SEC stating whether or not it agrees with the
above statements. A copy of such letter was filed as an Exhibit to the Form 8-K
filed on April 13, 2005.

New independent accountants

On April 8, 2005, the Registrant engaged Ham, Langston, & Brezina, L.L.P. to
audit its financial statements for the year ended March 31, 2005. During the two
most recent fiscal years and through March 31, 2005, the Registrant has not
consulted with Ham, Langston, & Brezina, L.L.P regarding (i) the application of
accounting principles to a specified transaction, either completed or proposed
or the type of audit opinion that might be rendered on the Registrant's
financial statements, and no written report or oral advice was provided to the
Registrant by concluding there was an important factor to be considered by the
Registrant in reaching a decision as to an accounting, auditing or financial
reporting issue; or (ii) any matter that was either the subject of a
disagreement, as that term is defined in item 304 (a)(1)(iv) of Regulation S-K
and the related instructions to Item 304 of Regulation S-K, or a reportable
event, as that term is defined in Item 304 (a)(1)(v) of Regulation S-K.

On April 18, 2006 Ham, Langston Brezina LLP resigned as the Company's
independent certifying accountants.

On May 24, 2006, the Board of Directors of the Company engaged Thomas Leger &
Co. LLP to be its independent certifying accountants for the year ended March
31, 2006.

During the two most recent fiscal years and through March 31, 2006, the
Registrant has not consulted with Thomas Leger & Co. LLP, regarding (i) the
application of accounting principles to a specified transaction, either
completed or proposed or the type of audit opinion that might be rendered on the
Registrant's financial statements, and no written report or oral advise was
provided to the Registrant by concluding there was an important factor to be
considered by the Registrant in reaching a decision as to an accounting,
auditing or financial reporting issue; or (ii) any matter that was either the
subject of a disagreement, as that term is defined in item 304 (a)(1)(iv) of
Regulation S-K and the related instructions to Item 304 of Regulation S-K, or a
reportable event, as that term is defined in Item 304 (a)(1)(v) of Regulation
S-K.

In July 2004, the Company's management offices were relocated to London, England
and the Company significantly reduced its affiliation with Vancouver, BC. In
addition, the Company's legal counsel is headquartered in Houston, Texas.
Considering these facts, the Company selected a Certifying Accounting Firm in
Houston, Texas to act as its new independent accountants.

ITEM 8A. MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

As of the end of the period covered by this report, we have evaluated the
effectiveness of the design and operation of our disclosure controls and
procedures under the supervision of and with the participation of our Chief
Executive Officer ("CEO") who is also our Chief Financial Officer ("CFO"). Based
on this evaluation, our management, including our CEO / CFO, concluded that our
disclosure controls and procedure were effective, that there have been no
significant changes in our internal controls or in other factors that could
significantly affect internal controls subsequent to the evaluation.

ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth the names and ages of the present executive
officers and directors of the Company and the positions held by each.

Name                   Age              Title
Andrew Malim           63       Chairman of the Board of Directors
Johannes Petersen      33       Chief Executive Officer, Chief Financial
                                Officer, and Director
Xiaojun "Albert" Cui   34       Director

                                       25
<PAGE>

Each of the directors has been elected to serve until the next annual meeting of
the directors by the shareholders or until their respective successors have been
duly elected and shall have qualified.

Mr. Andrew Malim was appointed to the Board of Directors and named its Chairman
during the current fiscal year. Mr. Malim has over thirty years of experience as
a finance executive in the mining industry. For the past twenty-five years he
was the principal of the Lion Mining Group (which he founded), an entity which
as financier, both as principal and agent, to numerous mining companies and
projects. Mr. Malim is regular speaker at mining conferences and regularly
contributes to journals or mining finance.

Johannes Petersen was elected Chief Executive Officer, Chief Financial Officer,
and Director on July 15, 2004. Mr. Petersen holds an MBA from the London
Business School (England) with a concentration in Finance, and a BSc in
Economics from Universidad del Pacifico (Peru). He has previously covered a
variety of positions, ranging from fixed income and currency trading, to
managerial roles. He has also worked in business development and business
planning for private and public companies, with an emphasis in the resources
industry. From April of 1999 until July of 2001 Mr. Petersen was Managing
Director of a commodity export brokerage firm in Peru. From 2001 through 2003,
Mr. Petersen attended business school in London. In August 2003 Mr. Petersen
performed independent consulting and business planning for natural resources
industry companies and other organizations.

Xiaojun "Albert" Cui was elected as a Director on July 15, 2004. Mr Cui holds a
BSc in Geology from China University of Geosciences - Wuhan, an MSc from Beijing
University and a PhD in Geology from University of Missouri - Columbia. Mr Cui
has ample experience in geological surveys, mineral exploration and
exploitation. He has also conducted front-edge geological research in various
geological fields and has written numerous publications in first level
international scientific journals. From 2002 through 2004, he worked as a
postdoctoral research fellow for the University of British Columbia in Canada.
From 1997 through 2002, he worked as a research assistant at the University of
Missouri - Columbia, USA.

ITEM 10. EXECUTIVE COMPENSATION

Executive Compensation

Summary Compensation Table

The  following  table  sets  forth  information  concerning  cash  and  non-cash
compensation  paid or accrued  for  services  in all  capacities  to the Company
during the year ended March 31, 2006 of each person who served as the  Company's
Chief  Executive  Officer during fiscal year 2005 and the four other most highly
paid executive  officers  whose total annual salary and bonus exceeded  $100,000
during the fiscal year ended March 31, 2006 and 2005 (the "Named Officers").
<TABLE>

                                                                         Long-Term Compensation
                       Annual Compensation Awards Payouts
    Name and                                                      Restricted    Securities
   Principal                                      Other Annual       Stock      Underlying    LTIP          All Other
    Position      Year(1)    Salary     Bonus     Compensation      Awards        Options      Payouts    Compensation
----------------- -------- ----------- --------- ---------------- ------------ -------------- ---------- ----------------
<S>               <C>       <C>         <C>       <C>             <C>           <C>           <C>         <C>

Johannes             2006    $120,000         -                -            -              -          -                -
Petersen             2005     $95,000         -                -            -              -          -                -
Xiaojun Cui          2006     $39,650         -                -            -              -          -                -
                     2005     $27,853         -                -            -              -          -                -
Andrew Malim         2006     $62,500                $340,000(1)(2)
</TABLE>


                                       26
<PAGE>


(1) Represents the fiscal year ended March 31 (2) Issued 1,000,000 shares of
common stock valued at $340,000

ITEM 11.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

As of March 31, 2006 Mr. Johannes Petersen owned 3,500,000 shares of common
stock. As of July 12,2006, Mr Xiaojun "Albert" Cui owned 2,500,000 shares of
common stock.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The company has a management consulting agreement in place with Sagit
Investments Management Inc for managerial and geological consulting services.
Sagit Investment Management Ltd is a company owned by Mr Raoul Tsakok a major
shareholder of the Company. For the year ended March 31, 2006, the company paid
$33,860 for consulting services provided by this company.

During the year ended March 31, 2006, the Company paid $5,788 for consulting
services performed by a director of the Company, and $120,000 for consulting
services performed by the CEO, CFO and Director of the Company.

No other relationships existed and no other related transactions occurred that
require disclosure under Reg. ss.228.404.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

a) Option Agreement dated January 30, 2005 with Jaroslav Ruza, to purchase an
option to acquire a 100% right, title and interest in the Optionor's mining
claims.

b) Consulting Agreement dated March 3, 2005 with Mr. Minghe Chen for a two year
period.

c) Sino-foreign joint venture dated March 15, 2005 with the Hanzhong Geological
Brigade of the Bureau of Geology & Mineral Exploration of Shaanxi Province,
China (the "Brigade").

d) Cooperative Agreement dated September 10, 2005 with Guilin Research Institute
of Geology and Mineral Resources.

e) Cooperative Agreement dated September 21, 2005 with Yinghuan Gaoxin District
Shijin Mining, Ltd.

f) Termination Agreement dated May 5, 2006 with Dragon Mineral Holdings

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

For their auditing services, the Company paid US$9,000 for the year ended March
31, 2005 and $10,000 for the year ended March 31, 2006.

                                   SIGNATURES

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


                           DRAGON GOLD RESOURCES, INC.


                                  By:
                                  Johannes Petersen
                                  Executive Officer & Chief Financial Officer
Dated: July 24, 2006

                                       27
<PAGE>

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

Name                       Title                              Date


Johannes Petersen          Chief Executive Officer            July 24, 2006
                           Chief Financial Officer &
                           Director



                                       28
<PAGE>

                                 CERTIFICATIONS

I, Johannes Petersen, certify that:

1. I have reviewed this annual report on Form 10-KSB of Dragon Gold Resources,
Inc.

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. I am responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and I have:

         a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, is made known to me by others
within those entities, particularly during the period in which this quarterly
report is being prepared;

         b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

         c) presented in this quarterly report my conclusions about the
effectiveness of the disclosure controls and procedures based on my evaluation
as of the Evaluation Date;

5. I have disclosed, based on my most recent evaluation, to the registrant's
auditors and the audit committee of registrant's board of directors (or persons
performing the equivalent function):

         a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

         b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and

6. I have indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.

Dated: July 24, 2006

By: /s/ Johannes Peterson
Johannes Peterson
Chief Executive Officer and Chief Financial Officer


                                       29
<PAGE>



 CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT
               TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
                 SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Johannes Peterson, certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual
Report of Dragon Gold Resoures, Inc. on Form 10-KSB for the annual period ended
March 31, 2006 fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 and that information contained in such Form
10-KSB fairly presents in all material respects the financial condition and
results of operations of Dragon Gold Resources, Inc.

By: /s/ Johannes Peterson
----------------------------
Name: Johannes Peterson
Title: Chief Executive Officer
& Chief Financial Officer

July 24, 2006

                                       30