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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-K

(Mark One)

[ x ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended February 28, 2009

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 
For the transition period from _____to _____

COMMISSION FILE NUMBER000-53008

KUSHI RESOURCES INC.(Exact
name of registrant as specified in its charter)

|NEVADA                                                             | 98-0559606                          
|------------------------------------------------------------------ | ------------------------------------
|State or other jurisdiction of incorporation or
      organization | (I.R.S. Employer Identification No.)
|                                                                   |                                     
|Attn: Greg Corcoran, Apartados 0823-01488                          |                                     
|Panama City, Panama                                                |                                     
|(Address of principal executive offices)                           | (Zip Code)                          

(702) 553-2776Registrant's telephone number,
including area code

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

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 Par Value Per Share.

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

Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the Act.[ ] Yes[ x
]No

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

Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (s. 229.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files). [ ] Yes  [ ] No

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (s229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrants
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ x
]

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of large accelerated filer,
accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act.

|Large accelerated filer [ ]                                                   | Accelerated filer [ ]         
|----------------------------------------------------------------------------- | ------------------------------
|Non-accelerated filer [ ] (Do not check if a smaller
      reporting company) | Smaller reporting company[ x ]

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

State the aggregate market value of the voting and non-voting
common equity held by non-affiliates computed by reference to the price at which
the common equity was last sold, or the average bid and asked price of such
common equity, as of the last business day of the registrants most recently
completed second fiscal quarter: $111,500 as of August 29,
2008,based on a price of $0.05 per share, being the price
at which we last sold our common stock.

Indicate the number of shares outstanding of each of the
registrants classes of common stock, as of the latest practicable date.
As of May 28, 2009, the Registrant had 5,230,000 shares of common stock
outstanding.

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|KUSHI RESOURCES INC.                
|------------------------------------
|ANNUAL REPORT ON FORM 10-K          
|FOR THE YEAR ENDED FEBRUARY 28, 2009
|TABLE OF CONTENTS                   

|            |                                                                                                                    |    | PAGE
|----------- | ------------------------------------------------------------------------------------------------------------------ | -- | ----
|PART I      |                                                                                                                    | 3 
|ITEM 1.     | BUSINESS                                                                                                           | 3 
|ITEM 1A.    | RISK FACTORS                                                                                                       | 6 
|ITEM 2.     | PROPERTIES                                                                                                         | 11
|ITEM 3.     | LEGAL PROCEEDINGS                                                                                                  | 16
|ITEM 4.     | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                                | 16
|PART II     |                                                                                                                    | 17
|ITEM 5.     | MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER
      MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES | 17
|ITEM 7.     | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
      CONDITION AND RESULTS OF OPERATIONS                        | 18
|ITEM 8.     | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.                                                                       | 22
|ITEM 9.     | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
      ACCOUNTING AND FINANCIAL DISCLOSURE                         | 23
|ITEM 9A(T). | CONTROLS AND PROCEDURES                                                                                            | 23
|ITEM 9B.    | OTHER INFORMATION.                                                                                                 | 24
|PART III    |                                                                                                                    | 25
|ITEM 10.    | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.                                                            | 25
|ITEM 11.    | EXECUTIVE COMPENSATION.                                                                                            | 26
|ITEM 12.    | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
      MANAGEMENT AND RELATED STOCKHOLDER MATTERS.              | 26
|ITEM 13.    | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
      DIRECTOR INDEPENDENCE.                                   | 27
|ITEM 14.    | PRINCIPAL ACCOUNTING FEES AND SERVICES.                                                                            | 28
|ITEM 15.    | EXHIBITS, FINANCIAL STATEMENT SCHEDULES.                                                                           | 28
|SIGNATURES  |                                                                                                                    | 29

2

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PART I

The information in this discussion contains forward-looking
statements. These forward-looking statements involve risks and uncertainties,
including statements regarding the Company's capital needs, business strategy
and expectations. Any statements contained herein that are not statements of
historical facts may be deemed to be forward-looking statements. In some cases,
you can identify forward-looking statements by terminology such as "may,"
"will," "should," "expect," "plan," "intend," "anticipate," "believe,"
"estimate, "predict," "potential" or "continue," the negative of such terms or
other comparable terminology. Actual events or results may differ materially. In
evaluating these statements, you should consider various factors, including the
risks described below, and, from time to time, in other reports the Company
files with the United States Securities and Exchange Commission (the SEC).
These factors may cause the Company's actual results to differ materially from
any forward-looking statement. The Company disclaims any obligation to publicly
update these statements, or disclose any difference between its actual results
and those reflected in these statements.

As used in this Annual Report, the terms we, us, our,
Kushi, and the Company mean Kushi Resources Inc., unless otherwise
indicated. All dollar amounts in this Annual Report are expressed in U.S.
dollars, unless otherwise indicated.

|ITEM 1. | BUSINESS.
|------- | ---------

General

We were incorporated on October 3, 2005 under the laws of the
State of Nevada.

We are an exploration stage company engaged in the acquisition
and exploration of mineral properties. We currently own a 100% undivided
interest in a mineral property that we call the Bee Peak Claim. The Bee Peak
Claim consists of approximately 410.65 hectares and is located in the Atlin
mining district of northwest British Columbia, Canada. A description of the Bee
Peak Property and the details of our exploration program are provided under the
heading Item 2. Properties.

We have not generated any revenues from our mineral exploration
activities. There is no assurance that a commercially viable mineral deposit
exists on the Bee Peak Claim. Further exploration will be required before an
evaluation as to the economic feasibility of the Bee Peak Claim can be
determined. The Bee Peak Claim is without known reserves and management is
intending to proceed with a three-phase mineral exploration program as
recommended by our consulting geological technician, as described below.

Recent Corporate Developments

The following corporate developments occurred subsequent to our
fiscal year ended February 29, 2008:

|1. | During the fiscal year ended February 28, 2009, we
      completed a helicopter-supported magnetic survey on the Bee Peak Claim at
      a cost of approximately $11,648. The details of the helicopter- supported
      magnetic survey are provided under the heading Item 2.
  Properties.                                                                                                                                                                                                                                                                             
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|2. | On September 10, 2008, Rajan Rai, our former sole
      executive officer and former director, and Matthew Diehl entered into a
      share purchase agreement (the Share Purchase Agreement) whereby Mr.
      Diehl acquired 3,000,000 shares of our common stock from Mr. Rai in a
      private transaction in consideration for $3,000, or $0.001 per share. The
      transfer of the shares under the Share Purchase Agreement resulted in a
      change of control.                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Under the terms of the Share Purchase Agreement, Rajan
      Rai resigned as our Chief Executive Officer, Chief Financial Officer,
      President, Secretary, and Treasurer. Mr. Matthew Diehl, 31 years old, was
      appointed as our Chief Executive Officer, Chief Financial Officer,
      President, Secretary, and Treasurer in place of Mr. Rai. In September
      2008, following the filing and mailing of a Schedule 14F- 1 Information
      Statement to our shareholders, Mr. Rai resigned as our sole director and
      appointed Mr. Diehl in his place.

3

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|3. | On December 17, 2008, Matthew Diehl, our former sole
      executive officer and former director, entered into a share transfer
      agreement (the Share Transfer Agreement) with Greg Corcoran, our sole
      executive officer and director. On January 13, 2009, pursuant to the terms
      of the Share Transfer Agreement, Mr. Diehl sold 3,000,000 shares of our
      common stock to Mr. Corcoran in consideration of the payment of $3,000. As
      a result of the closing of the Share Transfer Agreement, Mr. Corcoran now
      owns approximately 57.4% of our common stock.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Competition

We are a mineral resource exploration company. We compete with
other mineral resource exploration and development companies for financing and
for the acquisition of new mineral properties. Many of the mineral resource
exploration and development companies with whom we compete have greater
financial and technical resources than we do. Accordingly, these competitors may
be able to spend greater amounts on acquisitions of mineral properties, on
exploration of their mineral properties and on development of their mineral
properties. In addition, they may be able to afford greater geological expertise
in the targeting and exploration of mineral properties. This competition could
result in competitors having mineral properties of greater quality and interest
to prospective investors who may finance additional exploration and development.
This competition could adversely impact our ability to finance further
exploration and to achieve the financing necessary for us to develop our mineral
properties.

The mineral exploration industry, in general, is intensively
competitive and, even if commercial quantities of ore are discovered, a ready
market may not exist for the sale of the ore. Numerous factors beyond our
control may affect the marketability of any substances discovered. These factors
include market fluctuations, the proximity and capacity of natural resource
markets and processing equipment, government regulations, including regulations
relating to prices, taxes, royalties, land tenure, land use, importing and
exporting of minerals and environmental protection. The exact effect of these
factors cannot be accurately predicted, but the combination of these factors may
result in us not receiving an adequate return on invested capital.

Compliance With Government and Environmental
Regulations

We will be required to comply with all regulations, rules and
directives of governmental authorities and agencies applicable to the
exploration of minerals in the Province of British Columbia. The main agency
that governs the exploration of minerals in the Province of British Columbia is
the Ministry of Energy, Mines and Petroleum Resources (the Ministry of
Mines).

The Ministry of Mines manages the development of British
Columbia's mineral resources, and implements policies and programs respecting
their development while protecting the environment. In addition, the Ministry of
Mines regulates and inspects the exploration and mineral production industries
in British Columbia to protect workers, the public and the environment.

The material legislation applicable to us is the British
Columbia Mineral Tenure Act, and the British Columbia Mines Act, as well as the
Health, Safety and Reclamation Code and the Mineral Exploration Code.

The Mineral Tenure Act and its regulations govern the
procedures involved in the location, recording and maintenance of mineral titles
in British Columbia. The Mineral Tenure Act also governs the issuance of leases
which are long term entitlements to minerals.

All mineral exploration activities carried out on a mineral
claim or mining lease in British Columbia must be done in compliance with the
Mines Act. The Mines Act applies to all mines during exploration, development,
construction, production, closure, reclamation and abandonment. It outlines the
powers of the Chief Inspector of Mines, to inspect mines, the procedures for
obtaining permits to commence work in, on or about a mine and other procedures
to be observed at a mine. Additionally, the provisions of the Health, Safety and
Reclamation Code for mines in British Columbia contain standards for employment,
occupational health and safety, accident investigation, work place conditions,
protective equipment, training programs, and site supervision. Also, the Mineral
Exploration Code contains standards for exploration activities including
construction and maintenance, site preparation, drilling, trenching and work in
and about a water body.

Additional approvals and authorizations may be required from
other government agencies, depending upon the nature and scope of the proposed
exploration program. If the exploration activities require the falling of

4

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timber, then either a free use permit or a license to cut must
be issued by the Ministry of Forests. Items such as waste approvals may be
required from the Ministry of Environment, Lands and Parks if the proposed
exploration activities are significantly large enough to warrant them. Waste
approvals refer to the disposal of rock materials removed from the earth which
must be reclaimed. An environmental impact statement may be required.

We have not budgeted for regulatory compliance costs in the
proposed work program recommended by our geological report on the Bee Peak
Claim.

We will also have to sustain the cost of reclamation and
environmental remediation for all exploration work undertaken. Both reclamation
and environmental remediation refer to putting disturbed ground back as close to
its original state as possible. Other potential pollution or damage must be
cleaned-up and renewed along standard guidelines outlined in the usual permits.
Reclamation is the process of bringing the land back to its natural state after
completion of exploration activities. Environmental remediation refers to the
physical activity of taking steps to remediate, or remedy, any environmental
damage caused. The amount of these costs is not known at this time as we do not
know the extent of the exploration program that will be undertaken beyond
completion of the recommended work program. Because there is presently no
information on the size, tenor, or quality of any resource or reserve at this
time, it is impossible to assess the impact of any capital expenditures on
earnings, our competitive position or on us in the event a potentially economic
deposit is discovered.

If we anticipate disturbing ground during our mineral
exploration activities, we will be required to make an application under the
Mines Act for a permit. A permit is issued within 45 days of a complete and
satisfactory application. We do not anticipate any difficulties in obtaining a
permit, if needed. The initial exploration activities on the Bee Peak Claim
(grid establishment, geological mapping, soil sampling, geophysical surveys and
helicopter-supported magnetic surveys) do not involve ground disturbance and as
a result do not, at this time, require a work permit. Any follow-up trenching
and/or drilling will require permits, applications for which will be submitted
well in advance of the planned work.

If we enter the production phase, of which there is no
assurance, the cost of complying with permit and regulatory environment laws
will be greater because the impact on the project area is greater. Permits and
regulations will control all aspects of the production program if the project
continues to that stage. The regulatory requirements that we will have to meet
will likely include:

| | (i)   | Ensuring that any water discharge meets drinking water
      standards;                                                                         
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                 
| | (ii)  | Dust generation will have to be minimal or otherwise
      re-mediated;                                                                         
| |       |                                                                                                                                                 
| | (iii) | Dumping of material on the surface will have to be
      re-contoured and re-vegetated with natural vegetation;                                 
| |       |                                                                                                                                                 
| | (iv)  | All material to be left on the surface will need to be
      environmentally benign;                                                            
| |       |                                                                                                                                                 
| | (v)   | Ground water will have to be monitored for any potential
      contaminants;                                                                    
| |       |                                                                                                                                                 
| | (vi)  | The socio-economic impact of the project will have to be
      evaluated and if deemed negative, will have to be re-mediated;
  and             
| |       |                                                                                                                                                 
| | (vii) | There will have to be an impact report of the work on the
      local fauna and flora including a study of potentially endangered
      species.

Employees

Other than our sole executive officer and director, we have no
employees as of the date of this Annual Report. We conduct our business largely
through agreements with consultants and arms-length third parties.

Research And Development Expenditures

We have not incurred any research or development expenditures
since our inception.

5

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Patents And Trademarks

We do not own any patents or trademarks.

|ITEM 1A. | RISK FACTORS.
|-------- | -------------

The following are some of the important factors that could
affect our financial performance or could cause actual results to differ
materially from estimates contained in our forward-looking statements. We may
encounter risks in addition to those described below. Additional risks and
uncertainties not currently known to us, or that we currently deem to be
immaterial, may also impair or adversely affect our business, financial
condition or results of operation.

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

As of February 28, 2009, we had cash on hand of $70 and we have
not earned any revenue since our inception. Our current operating funds are not
sufficient to meet the anticipated costs of our exploration programs. As such,
we will require additional financing to fund our operations for the next twelve
months. If the actual costs of our exploration program significantly exceed our
estimates or if we decide to proceed to or beyond Phase Three of our exploration
program or if we decide to begin mining efforts in the event that it is
determined that our property contains mineral reserves, we will need to obtain
additional financing in order to complete our business plan. Our plan of
operation calls for significant expenses in connection with the exploration of
our mineral claim. We currently do not have any arrangements for financing and
we may not be able to obtain financing when required. Obtaining additional
financing would be subject to a number of factors outside of our control,
including the results from our exploration program, and any unanticipated
problems relating to our mineral exploration activities, including environmental
assessments and additional costs and expenses that may exceed our current
estimates. These factors may make the timing, amount, terms or conditions of
additional financing unavailable to us in which case our business will fail.

We have yet to earn revenue and, because our ability to
sustain our operations is dependent on our ability to raise financing, our
accountants believe that there is substantial doubt about our ability to
continue as a going concern.

Because we have only recently commenced business operations, we
expect to incur substantial losses for the foreseeable future. We have never
earned any revenues and we have never been profitable. Prior to completing our
exploration program for the Bee Peak Claim, we will likely incur increased
operating expenses without realizing any revenues. This could cause our business
to fail.

We have accrued net losses of $129,884 for the period from our
inception on October 3, 2005 to February 28, 2009, and have no revenues to date.
Our future is dependent upon our ability to obtain financing and upon future
profitable operations from the development of our mineral claim. These factors
raise substantial doubt that we will be able to continue as a going concern. Our
independent auditors, Madsen & Associates CPAs, Inc., have expressed
substantial doubt about our ability to continue as a going concern given our
accumulated losses. This opinion could materially limit our ability to raise
additional funds by issuing new debt or equity securities or otherwise. If we
fail to raise sufficient capital, we will not be able to complete our business
plan.

Because of the unique difficulties and uncertainties
inherent in mineral exploration ventures, we face a high risk of business
failure.

Investors should be aware of the difficulties normally
encountered by new mineral exploration companies and the high rate of failure of
such enterprises. The likelihood of success must be considered in light of the
problems, expenses, difficulties, complications and delays encountered in
connection with the exploration of the mineral properties that we plan to
undertake. These potential problems include, but are not limited to,
unanticipated problems relating to exploration, and additional costs and
expenses that may exceed current estimates. The Bee Peak Claim does not contain
a known body of commercial ore and, therefore, any program conducted on the Bee
Peak Claim would be an exploratory search of ore. There is no certainty that any
expenditures made in the exploration of the Bee Peak Claim will result in
discoveries of commercial quantities of ore. Most exploration projects do not
result in the discovery of commercially mineable deposits

6

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of ore. Problems such as unusual or unexpected formations and
other conditions are involved in mineral exploration and often result in
unsuccessful exploration efforts. If the results of our exploration program do
not reveal viable commercial mineralization, we may decide to abandon our claim
and acquire new claims for new exploration. The acquisition of additional claims
will be dependent upon our possessing capital resources at the time in order to
purchase such claims. If no funding is available, we may be forced to abandon
our operations.

Access to the Bee Peak Claim may be restricted by inclement
weather during the year, which may delay our proposed mineral exploration
programs and any future mining efforts.

Access to the Bee Peak Claim is restricted to the period
between May 1 and October 15 of each year due to snow in the area. As a result,
any attempts to visit, test, or explore the Bee Peak Claim are largely limited
to these few months of the year when weather permits such activities. These
limitations can result in significant delays in exploration efforts, as well as
mining and production if commercial amounts of minerals are found. Such delays
could also result in our inability to meet deadlines for exploration
expenditures as defined by the Province of British Columbia. This could cause
our business to fail and the loss of investors' entire investment.

We have no mineral reserves. If we do not find a mineral
reserve or if we cannot complete the exploration of the mineral reserve, either
because we do not have the money to do it or because it will not be economically
feasible to do it, we will have to cease operations and investors will lose
their investment.

Mineral exploration is highly speculative. It involves many
risks and is often non-productive. Even if we are able to find mineral reserves
on our property, our production capability is subject to further risks
including:

- costs of bringing the property into production including exploration work,
  preparation of production feasibility studies, and construction of production
  facilities, all of which we have not budgeted for;
- availability and costs of financing;
- ongoing costs of production; and
- environmental compliance regulations and restraints.

The marketability of any minerals acquired or discovered may be
affected by numerous factors which are beyond our control and which cannot be
accurately predicted, such as market fluctuations, the lack of milling
facilities and processing equipment near the Bee Peak Claim, and such other
factors as government regulations, including regulations relating to allowable
production, importing and exporting of minerals, and environmental
protection.

Given the above noted risks, the chances of finding reserves on
our mineral property are remote and funds expended on exploration will likely be
lost.

Because of the speculative nature of exploration of mineral
properties, there is a substantial risk that our business will fail.

The search for valuable minerals as a business is extremely
risky. We cannot provide investors with any assurance that our Bee Peak Claim
contains commercially exploitable reserves of base or precious minerals.
Exploration for minerals is a speculative venture necessarily involving
substantial risk. The expenditures to be made by us in the exploration of the
Bee Peak Claim may not result in the discovery of commercial quantities of
minerals. Problems such as unusual or unexpected formations and other conditions
are involved in mineral exploration and often result in unsuccessful exploration
efforts. In such a case, we would be unable to complete our business plan and
investors could lose their entire investment.

We face significant competition in the mineral exploration
industry.

We compete with other mining and exploration companies
possessing greater financial resources and technical facilities than us in
connection with the acquisition of mineral exploration claims and other precious
metals prospects and in connection with the recruitment and retention of
qualified personnel. There is significant competition for the limited number of
mineral acquisition opportunities and, as a result, we may be unable to acquire
an interest in attractive mineral exploration properties on terms we consider
acceptable on a continuing basis.

7

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Compliance with health, safety and environmental regulations
may impose burdensome costs and if compliance is not achieved our business and
reputation may be detrimentally impacted.

The nature of the industries in which we operate means that our
activities are highly monitored by health, safety and environmental groups. As
regulatory standards and expectations are constantly developing, we may be
exposed to increased litigation, compliance costs and unforeseen environmental
remediation expenses.

The search for valuable minerals involves numerous hazards. As
a result, we may become subject to liability for such hazards, including
pollution, cave-ins and other hazards against which we cannot insure or against
which we may elect not to insure. The payment of such liabilities may have a
material adverse effect on our financial position.

We may continue to be exposed to increased operational costs
due to the costs and lost workers time associated with the health and
well-being of our workforce on our project areas. Despite our best efforts and
best intentions, there remains a risk that health, safety and/or environmental
incidents or accidents may occur which may negatively impact our reputation and
freedom or license to operate.

Market factors in the mining industry are out of our
control, and as a result, we may not be able to market any minerals that may be
found on the Bee Peak Claim.

The mining industry, in general, is intensely competitive and
management can provide no assurance that even if minerals are discovered on the
Bee Peak Claim that a ready market will exist from the sale of any ore found.
Numerous factors beyond our control may affect the marketability of minerals.
These factors include market fluctuations, the proximity and capacity of natural
resource markets and processing equipment, government regulations, including
regulations relating to prices, taxes, royalties, land tenure, land use,
importing and exporting of minerals and environmental protection. The exact
effect of these factors cannot be accurately predicted, but the combination of
these factors may result in not receiving an adequate return on invested capital
and investors may lose their entire investment.

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

There are several governmental regulations that materially
restrict mineral exploration. We will be subject to the laws of the Province of
British Columbia as we carry out our exploration program. We may be required to
obtain work permits, post bonds and perform remediation work for any physical
disturbance to the land in order to comply with these laws. If we enter the
production phase, the cost of complying with permit and regulatory environment
laws will be greater because the impact on the project area is greater. Permits
and regulations will control all aspects of the production program if the
project continues to that stage. Examples of regulatory requirements
include:

| | (i)   | Water discharge will have to meet drinking water
      standards;                                                                               
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                 
| | (ii)  | Dust generation will have to be minimal or otherwise
      re-mediated;                                                                         
| |       |                                                                                                                                                 
| | (iii) | Dumping of material on the surface will have to be
      re-contoured and re-vegetated with natural vegetation;                                 
| |       |                                                                                                                                                 
| | (iv)  | An assessment of all material to be left on the surface
      will need to be environmentally benign;                                           
| |       |                                                                                                                                                 
| | (v)   | Ground water will have to be monitored for any potential
      contaminants;                                                                    
| |       |                                                                                                                                                 
| | (vi)  | The socio-economic impact of the project will have to be
      evaluated and if deemed negative, will have to be remediated;
and                
| |       |                                                                                                                                                 
| | (vii) | There will have to be an impact report of the work on the
      local fauna and flora including a study of potentially endangered
      species.

8

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Our annual cost of compliance with the Mineral Tenure Act is
currently approximately $2,600 (CDN$3,285) per year. There is a risk that new
regulations could increase our costs of doing business and prevent us from
carrying out our exploration program. We will also have to sustain the cost of
reclamation and environmental remediation for all exploration work undertaken.
Both reclamation and environmental remediation refer to putting disturbed ground
back as close to its original state as possible. Other potential pollution or
damage must be cleaned up and renewed along standard guidelines outlined in the
usual permits. Reclamation is the process of bringing the land back to its
natural state after completion of exploration activities. Environmental
remediation refers to the physical activity of taking steps to remediate, or
remedy, any environmental damage caused. The amount of these costs is not known
at this time as we do not know the extent of the exploration program that will
be undertaken beyond completion of the recommended work program. If remediation
costs exceed our cash reserves we may be unable to complete our exploration
program and have to abandon our operations.

Our failure to make required payments or expenditures could
cause us to lose title to the mineral claim.

In the Province of British Columbia, the recorded holder of a
mineral claim is required to perform a minimum amount of exploration work on a
claim or make payment in the equivalent sum in lieu of work. The fee is $4.00
CDN per hectare (approximately $3.20 US per hectare) in the first three years
and $8.00 CDN per hectare (approximately $6.40 US per hectare) in subsequent
years plus a $0.40 CDN per hectare (approximately $0.32 US per hectare)
recording fee annually. Our mineral claim consists of 410.65 hectares. As such,
the minimum exploration expenditures and/or filing fee required to maintain the
Bee Peak Claim in good standing is $2,600 (CDN$3,285) per year. Our claim is in
good standing until January 30, 2012. Following the expiry date, if we fail to
incur the minimum exploration expenditures or make any of the required payments
in lieu thereof, we could lose title to the Bee Peak Claim.

If we do not obtain clear title to the mineral claim, our
business may fail.

Under British Columbia law, title to British Columbia mineral
claim can only be held by individuals, British Columbia corporations or foreign
corporations extra-provincially registered in British Columbia. Since we are a
Nevada corporation and we are not extra-provincially registered in British
Columbia, we are not legally allowed to hold claims in British Columbia.
Accordingly, our mineral claim is being held in trust for us by our former
director, Rajan Rai. If we confirm economically viable mineral deposits on our
mineral claim, we will incorporate a British Columbia subsidiary to hold title
to the mineral claim and Mr. Rai will transfer the claim to the subsidiary.
Until we can confirm mineral deposits, Mr. Rai will hold the claim in trust for
us. However, there could be situations such as the death of the titleholder that
could hinder us from obtaining a registered title to the mineral claim. If we
are unable to obtain a registered title to the mineral claim, our business will
be adversely affected.

Aboriginal land claims may negatively impact our
operations.

We are not aware of any outstanding aboriginal land claims on
the area of the Bee Peak Claim; however, it is possible that an aboriginal land
claim could be made in the future. British Columbia government policy at this
time is to consult with all potentially affected aboriginal bands and other
stakeholders in the area of any potential mining. Should we encounter a
situation where an aboriginal person or group claims an interest in our mineral
claims, we may be unable to provide compensation to the affected party in order
to continue with our mineral exploration work, or if such an option is not
available, we may have to relinquish our interest in these claims. In either
case, the costs and/or losses could be greater than our financial capacity, and
our business would fail.

We may not be able to attract and retain qualified personnel
necessary for the implementation of our business strategy and mineral
exploration program.

Our future success depends largely upon the continued service
of our sole director and officer. Our future success also depends on our ability
to attract, retain and motivate qualified personnel when needed. Key personnel
represent a significant asset, and the competition for qualified personnel is
intense in the mineral exploration industry.

9

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We may have particular difficulty attracting and retaining key
personnel in the initial phases of our mineral exploration program. We do not
currently maintain key person life insurance on our sole director and officer.
The loss of one or more of our key employees or our inability to attract, retain
and motivate qualified personnel could negatively impact our ability to complete
our mineral exploration program.

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

Greg Corcoran, our sole executive officer and director, does
not have any formal training as a geologist or in the technical aspects of
management of a mineral exploration company. With no direct training or
experience in these areas, our management may not be fully aware of the specific
requirements related to working within this industry. Our management's decisions
and choices may not take into account standard engineering or managerial
approaches mineral exploration companies commonly use. Consequently, our
operations, earnings, and ultimate financial success could suffer irreparable
harm due to management's lack of experience in this industry.

As our business assets and our sole executive officer and
director are located outside of the United States, investors may be limited in
their ability to enforce civil actions against our assets or our sole executive
officer and director.

Our business assets are located in Canada and our sole director
and executive officer is a resident of Panama. Consequently, it may be difficult
for United States investors to effect service of process within the United
States upon our assets or our sole executive officer and director, or to realize
in the United States upon judgments of United States courts predicated upon
civil liabilities under U.S. Federal Securities Laws. A judgment of a U.S. court
predicated solely upon such civil liabilities may not be enforceable in Canada
or Panama by a Canadian or Panamanian court if the U.S. court in which the
judgment was obtained did not have jurisdiction, as determined by the Canadian
or Panamanian court, in the matter. There is substantial doubt whether an
original action could be brought successfully in Canada or Panama against any of
our assets or our sole executive officer and director predicated solely upon
such civil liabilities.

Because our sole executive officer and director, Greg
Corcoran, owns 57.4% of our outstanding common stock, investors may find that
corporate decisions controlled by Mr. Corcoran are inconsistent with the
interests of other stockholders.

Greg Corcoran, our sole executive officer and director,
controls 57.4% of issued and outstanding shares of our common stock.
Accordingly, in accordance with our Articles of Incorporation and Bylaws, Mr.
Corcoran is able to control who is elected to our board of directors and thus
could act, or could have the power to act, as our management. Since Mr. Corcoran
is not simply a passive investor but is also one of our active executives, his
interests as an executive may, at times, be adverse to those of passive
investors. Where those conflicts exist, our shareholders will be dependent upon
Mr. Corcoran exercising, in a manner fair to all of our shareholders, his
fiduciary duties as an officer or as a member of our board of directors. Also,
due to his stock ownership position, Mr. Corcoran will have: (i) the ability to
control the outcome of most corporate actions requiring stockholder approval,
including amendments to our Articles of Incorporation; (ii) the ability to
control corporate combinations or similar transactions that might benefit
minority stockholders which may be rejected by Mr. Corcoran to their detriment,
and (iii) control over transactions between him and the Company.

We may conduct further offerings in the future in which case
your shareholdings will be diluted.

Since our inception, we have relied on such equity sales of our
common stock to fund our operations. We may conduct further equity offerings in
the future to finance our current projects or to finance subsequent projects
that we decide to undertake. If common stock is issued in return for additional
funds, the price per share could be lower than that paid by our current
stockholders. We anticipate continuing to rely on equity sales of our common
stock in order to fund our business operations. If we issue additional stock,
stockholders percentage interest in us will be diluted. The result of this could
reduce the value of investors' stock.

10

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Because our stock is a penny stock, shareholders will be
more limited in their ability to sell their stock.

The SEC has adopted rules that regulate broker-dealer practices
in connection with transactions in penny stocks. Penny stocks are generally
equity securities with a price of less than $5.00, other than securities
registered on certain national securities exchanges or quoted on the Nasdaq
system, provided that current price and volume information with respect to
transactions in such securities is provided by the exchange or quotation
system.

Because our securities constitute penny stocks within the
meaning of the rules, the rules apply to us and to our securities. The rules may
further affect the ability of owners of shares to sell our securities in any
market that might develop for them. As long as the trading price of our common
stock is less than $5.00 per share, the common stock will be subject to rule
15g-9 under the Exchange Act. The penny stock rules require a broker-dealer,
prior to a transaction in a penny stock, to deliver a standardized risk
disclosure document prepared by the SEC, that:

|1. | contains a description of the nature and level of risk in
      the market for penny stocks in both public offerings and secondary
      trading;                                                                                        
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                          
|2. | contains a description of the brokers or dealers duties
      to the customer and of the rights and remedies available to the customer
      with respect to a violation to such duties or other requirements of
      securities laws;
|   |                                                                                                                                                                                                                                          
|3. | contains a brief, clear, narrative description of a
      dealer market, including bid and ask prices for penny stocks and the
      significance of the spread between the bid and ask price;                                           
|   |                                                                                                                                                                                                                                          
|4. | contains a toll-free telephone number for inquiries on
      disciplinary actions;                                                                                                                                                       
|   |                                                                                                                                                                                                                                          
|5. | defines significant terms in the disclosure document or
      in the conduct of trading in penny stocks; and                                                                                                                             
|   |                                                                                                                                                                                                                                          
|6. | contains such other information and is in such form,
      including language, type, size and format, as the SEC shall require by
      rule or regulation.                                                                              

The broker-dealer also must provide, prior to effecting any
transaction in a penny stock, the customer with: (a) bid and offer quotations
for the penny stock; (b) the compensation of the broker-dealer and its
salesperson in the transaction; (c) the number of shares to which such bid and
ask prices apply, or other comparable information relating to the depth and
liquidity of the market for such stock; and (d) a monthly account statements
showing the market value of each penny stock held in the customer's account. In
addition, the penny stock rules require that prior to a transaction in a penny
stock not otherwise exempt from those rules; the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitably statement. These
disclosure requirements may have the effect of reducing the trading activity in
the secondary market for our stock.

|ITEM 2. | PROPERTIES.
|------- | -----------

We currently do not own any physical property or own any real
property. We own a 100% undivided interest in a mineral claim that we call the
Bee Peak Claim.

Our principal office is located at Apartados 0823-01488, Panama
City, Panama and is provided to us at no costs.

11

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THE BEE PEAK CLAIM

Description of Bee Peak Claim

The Bee Peak Claim consists of 410.65 hectares and is located
24 km due west of Atlin, British Columbia.

The Bee Peak Claim is recorded with the British Columbia
Ministry of Energy, Mines and Petroleum Resources (the Ministry of Mines) as
follows:

Name of Mineral Claim
    Area in Hectares
    Tenure Number
    Expiry DateBee Peak
    410.65
    526773
    January 30, 2012


The Province of British Columbia owns the land covered by the
mineral claim. To our knowledge, there are no aboriginal land claims that might
affect our title to our mineral claims or the Provinces title of the
property.

Conditions to Maintain Title to the Bee Peak Claim

The Bee Peak Claim is in good standing until January 30, 2012.
In order to maintain the Bee Peak Claim in good standing, it will be necessary
for us to perform and record valid exploration work with value of CDN$4.00 per
hectare in anniversary years 1, 2, and 3, and CDN$8.00 per hectare in subsequent
years or pay to the Province of British Columbia the equivalent sum in lieu of
work. Failure to perform and record valid exploration work or pay the equivalent
sum to the Province of British Columbia on the anniversary dates will result in
forfeiture of title to the Bee Peak Claim.

As such, we are required to incur approximately $2,600
(CDN$3,285) on or before January 30, 2012 and each year thereafter on
exploration or pay the equivalent sum in cash in lieu of work to the Province of
British Columbia, in order to retain title to the Bee Peak Claim. During the
year ended February 28, 2009, we spent approximately $11,647.87 on a
helicopter-supported magnetic survey on the Bee Peak Claim. We have spent a
total of $21,240.07 in locating, exploring and obtaining geological reports on
the Bee Peak Claim.

Location and Access

The Bee Peak Claim is located within the northwestern corner of
British Columbia, 24 km due west of Atlin Village which is on the east shore of
Atlin Lake and which is 145 km 150° (S30°E) of the City of Whitehorse, Yukon and
1,290 km 333°E of the City of Vancouver, British Columbia. The property is
located on Bee Peak about 4 km east of Tagish Lake.

Access to the Bee Peak Claim is from Atlin or from Whitehorse,
by helicopter or float plane to one of the lakes, or by an hour-long boat ride
from Atlin, across Atlin Lake, up Atlin River, along Graham Inlet and to the
main part of Tagish Lake.

The Bee Peak Claim is located at high elevation on Engineer
Mountain in a dissected plateau terrain and for practical purposes is best
accessed by helicopter. The Bee Peak Claim can also be accessed by boat. Travel
time by boat with good conditions takes approximately 1.75 hours.

The town of Atlin is situated on the east shore of Atlin Lake,
in northern British Columbia, has a population of about 350 permanent residents,
and offers most services required in support of mineral exploration activities.

History of Atlin and the Bee Peak Claim Area

Atlin, British Columbia has always been closely identified with
the mining industry, having been established about 1900 as a supply base and
winter home for miners and prospectors working in the nearby mines, prospects
and placer gold fields. Placer gold fields are areas where gold is found in the
gravels of a mineral claim. Placer mining continues to be an important component
of the local economy and other mining ventures have become increasingly
significant in recent years with several properties either in or approaching the
permitting and significant financing phases. Significant mining properties that
are located in the Tulesequah

12

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River valley, 200 kilometers (approximately 120 miles) south of
Atlin, are in advanced stages of exploration and approval process and are best
accessed from Atlin.

In recent years, the Atlin mining district has been mapped by
scientists from the British Columbia Ministry of Mines, who expanded on the
pioneering studies of the federal Geological Survey of Canada conducted from
1957 to 1959. The formerly enigmatic geology of the area has been rationalized
and revealed in publications of the Ministry of Mines.

Mining exploration intensified during the 1970's when porphyry
molybdenum deposits and uranium occurrences located west and north of Surprise
Lake were explored by technical surveys and drilling. The town of Atlin also
served as a base of operations for prospecting and geological crews working in
the nearby Coast Mountains and the Interior Plateau.

In 1989 and 1990 Golden Bee Minerals Inc. of Kamloops, British
Columbia conducted two exploration programs on mineral claims located northeast
of the Engineer Mine. The Engineer Mine is situated close to the east shore of
Tagish Lake. These claims likely covered the Bee Peak Claim. Golden Bee Minerals
Inc. reported the presence on their claims of epitermal to hydrothermal
gold-silver mineralization and the discovery of two new mineralized zones. One
zone was on Gleaner Mountain and the other one was in proximity to the Bee Peak
Claim.

Geology of the Bee Peak Claim

The Bee Peak Claim is the subject of a geological report
prepared by Stephen G. Diakow, Geological Technician, dated December 28, 2006.

The Atlin mining district is geologically varied and complex.
It is bordered to the west by the precipitous and glacier shrouded Coast
Mountains and the attendant Coast Crystalline Complex of granitic terrains. The
central portion is a deeply dissected plateau dominated by Mesozoic strata of
mixed volcanic and volcanogenic formations. The east sector is a more mature
terrain underlain by Cache Creek Group sedimentary rocks of oceanic origin and
farther east the underlying formations of Sylvester Group of low grade
metamorphic rocks of the mid to late Paleozoic ages.

The Atlin mining district is also structurally complex, with
numerous northwesterly-striking fault complexes, some of which are of crustal
scale. These fault complexes can be traced far from the Bee Peak Claim while
others are splays that create imbrications of slivers of the various formation.
Early Middle Jurassic deformation resulted in substantial crustal shortening.
The geological complexity encountered in the area results at least in part form
its history of several continental plate collisions followed by adjustments as
plate fragments moved one against another to form the present mosaic-like
configuration.

The geological setting of the Bee Peak Claim is a structurally
complex area of Laberge Group and Sloko Group formations and granitic
intrusions. It is situated north of the Llewellyn fault and immediately east of
the former Engineer mine. It is located in Stikinia terrain in the southerly
continuation of the Whitehorse Trough, a regional syncline. The Bee Peak Claim
appears to be underlain by Eocene Sloko Group rocks that overlie Lower Jurassic
Laberge Group members, and a small plug of Coast Intrusion is shown in
proximity. The Llewellyn fault zone occurs as a series of northwest striking,
steeply dipping to vertical faults strands at the contact between Mesozoic
strata of the southerly continuation of the Whitehorse Trough and the
metamorphosed rocks of the Boundary Ranges of the Coast Crystalline terrane. It
varies in width from some tens of meters to as much as several kilometers.
Eocene Sloko Group rocks are present in the Bee Peak Claim area only as
erosional remnants and may have occupied a much larger area that was
subsequently eroded. They are heterogeneous volcanic rocks comprising basal
conglomeratic sandstone, rhyolite flows, dikes and ignimbrites, dacitic and
andesitic pyroclastic members, basalt, and vitrophyric tuff and breccia.

Physiography and Vegetation

The Bee Peak Claim is found within the Tagish Highland, which
is part of the Yukon Plateau, which itself is a physiographic unit of the
Interior Plateau System. The Tagish Highland is characterized by areas of
relatively smooth, gently rolling upland surface lying, for the most part
between 1,500 and 2,000 meters, with local peaks rising above. The area is
incised to an elevation of about 670 meters by tributary rivers of Atlin and

13

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Tagish Lakes. The valleys are wide and U-shaped and many to the
west of Atlin, such as the Bee Peak Claim area, are occupied by lakes.

Elevations on the property vary from 1,400 meters (4,590 feet)
at the bottom of one of the tributaries to Hope Creek along the western edge of
the property near its southwestern corner, to over 1,940 meters (6,365 feet) on
the mountain peak within the southern part of the property. This gives a
property relief of 540 meters (1,775 feet). Bee Peak, which occurs within the
northwestern part of the property reaches an elevation of 1,860 meters (6,100
feet). Slopes vary from moderate to mostly steep.

Glaciers occupied the Tagish Highland and thus much of the
claim area is covered by glacial drift. For the most part the glacial drift is
not thick, but within areas around the bigger lakes it is much thicker. The main
water sources on the property are the creeks, the main one being Rupert Creek,
which flows easterly on the east part of the claim, and Hope Creek, which flows
westerly along the west side of the claim. Tree line is at about 1,400 meters
(4,600 feet) on north-facing slopes and 1,500 meters (4,900 feet) on
south-facing slopes. Above the tree line, which is all of the Bee Peak Property,
the area is mostly covered in alpine vegetation, which is predominantly heather
and sedges, as well as stunted buck brush. Below the tree line it is covered
with light to medium forest consisting of lodge-pole pine, black spruce, aspen,
and scrub birch. The underbrush is generally light but can be thick in areas
around streams.

The temperatures can reach 30°C in the summer months, with an
average of 20° C whereas in winter they can drop down to 35°C with an average
of 15°C. Snowfall in winter months is moderate. Depending on the elevation,
mining exploration can be carried out from May until the end of October. On a
good year this can extend well into November, though this cannot be relied
on.

Geological Report and Recommendations

In December 2006, we engaged Stephen G. Diakow, a geological
technician, who is familiar with the Atlin area, to develop a report on and
about the Bee Peak Claim. The report entitled The Report on the Bee Peak Mining
Claim dated December 28, 2006 describes the property, the regional geology, the
mineral potential of the Bee Peak Claim and recommends how we should explore the
Bee Peak Claim (the Geological Report).

The Geological Report recommended a three-phase exploration
program as follows:

Phase
    Exploration Program
    Approximate Cost
    StatusOne
    Prospecting, Trenching and Sampling and
      Helicopter-Supported Magnetic Survey
    $20,500 (CDN$26,000)
    Completed Helicopter- Supported Magnetic Survey at
      a cost of $11,648. Balance expected to be completed in June
      2010.Two
    Coverage of the area with VLF-EM and
      magnetometer surveys
    between $51,200 and $118,000 (CDN$65,000
      - $150,000)
    Dependent upon the results of Phase One.Three
    Geological mapping and sampling
    between $157,400 and $196,700
      (CDN$200,000 - $250,000)
    Dependent upon the results
      of Phase Two.Total Estimated Cost
    between $229,100 and $335,200
      (CDN$291,000 - $426,000)


According to the Geological Report, the potential economic
significance of the Bee Peak Claim is that it is underlain by both Laberge and
Sloko Group rocks in proximity to a granitic pluton and a major fault zone.
Plutonic rock is rock that forms from cooled magma deep in the Earth's crust.
This geology indicates there is potential to locate gold, as the principal
metallic mineral, with a list of associated minerals, including minor amounts of
pyrite, tetrahedrite, chalcopyrite, and telluride minerals.

14

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Phase One Exploration Program (approximate cost of
$20,500 (CDN$26,000))

Based on the recommendations of the Geological Report, we
commenced Phase One of our exploration program by conducting a
helicopter-supported magnetic survey on our Bee Peak Claim. The main purpose of
the magnetic survey was to locate gold and silver mineralization on our Bee Peak
Claim. In January 2009, we received the Geophysical Report on a
Helicopter-Supported Magnetic Survey on the Bee Peak Property from David G.
Mark, P.Geo. of Geotronics Consulting Inc. (the "Survey Report"). The results of
our helicopter-supported magnetic survey are provided below under the heading
Item 2. Properties  Current State of Exploration.

The remainder of Phase One is expected to be completed before
the end of the 2010 exploration season. Subject to obtaining financing, we
expect to send a team to the Bee Peak Claim for a period of 14 days. The crew
will generally survey the Bee Peak Claim seeking any outcroppings and locating
streams. An outcropping is a part of a rock formation that appears above the
surface of the surrounding land. The crew will use global positioning equipment
and take a total of 80 samples, including rock, stream sediment, and stream
sediment panned concentrate samples. All samples will be bagged and tagged for
location, date and time for later analysis.

The samples obtained during Phase One of the mineral
exploration program will be analyzed and considered with reference to the
regional database. We will engage a consulting geologist to interpret the
results of Phase One. If we are able to identify favorable rock formations and
structures with elevated metal values we will proceed to conduct Phase Two of
the mineral exploration program.

Phase Two Exploration Program (approximate cost between
$51,200 and $118,000 (CDN$65,000 -$150,000)).

If we proceed with Phase Two of our exploration program, we
expect to helicopter a prospector and geologist to the Bee Peak Claim for a
period of approximately ten days. During this period, the crew will use global
positioning equipment and will obtain 50 samples from locations that are to be
determined during the Phase One review. All samples will be bagged and tagged
for location, date and time for later analysis. Also, the program will include
further rock and soil geochemistry sampling, a limited amount of trenching using
hand tools and dynamite, additional geochemical sampling, and simple geophysical
survey methods. After this period is over the crew will return to Atlin by
helicopter.

Once we have completed Phase Two of our mineral exploration
program, we will review the Phase Two results with a consulting geologist. If we
are able to confirm elevated metal values at specific hand drilled targets, we
will consider implementing Phase Three of our exploration program, subject to
our obtaining financing.

Phase Three Exploration Program (approximate cost
between $157,400 and $196,700 (CDN$200,000 -$250,000)).

Phase Three will depend on the location and configuration of
the mineral zones. It is likely that further geophysical surveys with different
techniques or more densely spaced observations will be required to assist in
designing a program of diamond drill holes to test the deeper potential of the
best parts of the Bee Peak Claim. Costs, including the cost of a limited
drilling campaign, are difficult to estimate but in a somewhat remote area like
the Bee Peak Claim are likely to be fairly high. At this stage, we would seek to
link with a major resource company in a joint venture relationship in
recognition of financing requirements. There are no assurances that we will
advance to Phase Three of our Exploration Program or that if results are
favorable, that we will be successful in entering into a joint venture
relationship to proceed with further exploration and development of the Bee Peak
Claim.

Current State of Exploration

In January 2009, we received the Survey Report on our
helicopter-supported magnetic survey of the Bee Peak Claim. The magnetic survey
was carried out with two proton precession magnetometers, with one being a base
station, by taking readings every 50 meters along 15 lines for a total survey
length of 31,500 meters. The readings were input into a computer and plotted
onto a base map at a scale of 1:5000.

15

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The magnetic survey revealed seven lineations of magnetic lows
striking in two main directions, northwesterly and northeasterly. Magnetic low
lineations are often indicative of geologic structure such as faults and shear
zones. Mineralizing fluids flow along geologic structure and thus magnetic
lineations of lows are exploration targets especially where they cross each
other.

The magnetic survey also revealed two lineations of magnetic
highs that may be caused by mafic intrusions. One strikes northwesterly and the
second one strikes almost due north. Mafic intrusions in this area are often
associated with gold mineralization.

Recommendations of Survey Report

The magnetic survey has shown this area to have medium to weak
exploration potential, especially in the area of the north facing slope of Bee
Peak. The author of the Survey Report recommended that we prospect and sample
the survey area. Following prospecting and sampling, it was recommended that we
conduct MMI soil geochemistry and geophysical surveys such as IP resistivity,
especially in the area of the known showings and in those areas where magnetic
lineations cross each other.

Management is currently reviewing the results and
recommendation of the Survey Report and discussing with our consulting
geological technician to determine the economic viability of the Bee Peak Claim
based on the data obtained from the Survey Report. The remainder of Phase One
will commence if our consulting geological technician advises us to proceed.

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

We are not a party to any other legal proceedings and, to our
knowledge; no other legal proceedings are pending, threatened or
contemplated.

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

None.

16

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PART II

|ITEM 5. | MARKET FOR REGISTRANTS COMMON
      EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
      PURCHASES OF EQUITY SECURITIES.
|------- | -------------------------------------------------------------------------------------------------------------------------

Market Information

Our common shares are quoted on the Over-The-Counter Bulletin
Board (the OTC Bulletin Board) under the symbol KUSI." Although our shares
became eligible for quotation on the OTC Bulletin Board in March 2008, the high
and low bid information for our common stock for the year ended February 28,
2009 was not available from the OTC Bulletin Board.

Registered Holders Of Our Common Stock

As of May 28, 2009, there were 15 registered holders of record
of our common stock.

Dividends

We have neither declared nor paid any cash dividends on our
capital stock since our inception and do not contemplate paying cash dividends
in the foreseeable future. It is anticipated that earnings, if any, will be
retained for the operation of our business. Our board of directors will
determine future dividend declarations and payments, if any, in light of the
then-current conditions they deem relevant and in accordance with Chapter 78 of
the Nevada Revised Statutes (the Nevada Revised Statutes).

There are no restrictions in our articles of incorporation or
in our bylaws which prevent us from declaring dividends. The Nevada Revised
Statutes, however, do prohibit us from declaring dividends where, after giving
effect to the distribution of a dividend:

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

Recent Sales Of Unregistered Securities

None.

17

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|ITEM 7. | MANAGEMENT'S DISCUSSION
      AND ANALYSIS OF FINANCIAL CONDITION
      AND RESULTS OF OPERATIONS.
|------- | --------------------------------------------------------------------------------------------------

PLAN OF OPERATION

Our plan of operation is to conduct mineral exploration
activities on the Bee Peak Claim in order to assess whether the property
contains mineral reserves that are capable of commercial extraction. Our
exploration program is designed to explore for commercially viable deposits of
copper, silver and gold. We have not, nor has any predecessor, identified any
commercially exploitable reserves of these minerals on our mineral claim.

We received a geological evaluation report on the Bee Peak
Claim titled Report on the Bee Peak Claim prepared by Stephen G. Diakow, a
geological technician, on December 28, 2006. In his geological report, Mr.
Diakow recommended that a three phase continuing exploration program be
conducted as follows:

Phase
    Exploration Program
    Approximate Cost
    StatusOne
    Prospecting, Trenching and Sampling and
      Helicopter-Supported Magnetic Survey
    $20,500 (CDN$26,000)
    Completed Helicopter- Supported Magnetic Survey at
      a cost of $11,648. Balance expected to be completed in June
      2010Two
    Coverage of the area with VLF-EM and
      magnetometer surveys
    between $51,200 and $118,000 (CDN$65,000
      - $150,000)
    Dependent upon the results of Phase One.Three
    Geological mapping and sampling
    between $157,400 and $196,700
      (CDN$200,000 - $250,000)
    Dependent upon the results
      of Phase Two.Total Estimated Cost
    between $229,100 and $335,200
      (CDN$291,000 - $426,000)


We commenced Phase One of our exploration program by conducting
a helicopter-supported magnetic survey on our Bee Peak Claim. The magnetic
survey has shown this area to have medium to weak exploration potential,
especially in the area of the north facing slope of the Bee Peak. Mr. David G.
Mark, the author of report titled Geophysical Report on a Helicopter Supported
Magnetic Survey on the Bee Peak Property (the Survey Report), has recommended
that we conduct further prospecting and sampling in the area. Following
prospecting and sampling, Mr. Mark has recommended that we follow up with a MMI
soil geochemistry and geophysical surveys such as IP resistivity, especially in
the area of the known showings and in those areas where magnetic lineations
cross each other.

Management is currently reviewing the results and
recommendation of the Survey Report and discussing with our consulting
geological technician to determine the economic viability of the Bee Peak Claim
based on the data obtained from the Survey Report. The remainder of Phase One
will commence if our consulting geological technician advises us to proceed

Over the next twelve months, we anticipate that we will incur
the following expenses:

Category
    Planned Expenditures Over The
      Next 12 Months (US$)Legal and Accounting Fees
    $39,600Regulatory and
      Other Operating Expenses
    $7,000Mineral Property Exploration Expenses
    $8,850TOTAL
    $55,450


Our total expenditures over the next twelve months are
anticipated to be approximately $55,450. Our cash on hand as of February 28,
2009 was $70 and we had a working capital deficit of $73,384. We do not have
sufficient cash on hand to pay the anticipated costs of our three-phase
exploration program. As such, we will

18

---

require additional financing to fund our operations for the
next twelve months. In addition, there are no assurances that the actual costs
of completing this exploration program will not exceed our estimates of those
costs. If the actual costs of the exploration program are substantially greater
than what we have estimated, or if we decide to proceed with additional work
beyond Phase Three, of which there is no assurance, we may also be required to
seek additional financing. We currently do not have any arrangements for
additional financing.

RESULTS OF OPERATIONS

|Summary of Year End Results |   |                   |   |   |                   |   |  |                       | 
|--------------------------- | - | ----------------- | - | - | ----------------- | - |  | --------------------- | 
|                            |   | Year Ended        |   |   | Year Ended        |   |  | Percentage            | 
|                            |   | February 28, 2009 |   |   | February 29, 2008 |   |  | Increase / (Decrease) | 
|Revenue                     | $ | -                 |   | $ | -                 |   |  | n/a                   | 
|Expenses                    |   | (55,335           | ) |   | (52,206           | ) |  | 6.0%                  | 
|Net Loss                    | $ | (55,335           | ) | $ | (52,206           | ) |  | 6.0%                  | 

Revenue

We did not have any operating revenues from inception on
October 31, 2005 to our fiscal year ended February 28, 2009. To date, our activities
have been financed through the proceeds from the sale of our common stock and
funds advanced by our former President. Due to the nature of our business we do
not expect to have operating revenues within the next year.

Expenses

The major components of our expenses for the years ended
February 28, 2009 and February 29, 2008 are outlined in the table below:

|                            |   | Year
      Ended  |  |   | Year
      Ended  |  |  | Percentage            | 
|--------------------------- | - | ----------------- |  | - | ----------------- |  |  | --------------------- | 
|                            |   | February 28, 2009 |  |   | February 29, 2008 |  |  | Increase / (Decrease) | 
|Administrative Fees         | $ | 8,400             |  | $ | 6,450             |  |  | 30.2%                 | 
|Bank Charges and Interest   |   | 337               |  |   | 361               |  |  | (6.6)%                | 
|Exploration and Development |   | 11,648            |  |   | 1,824             |  |  | 538.6%                | 
|Professional Fees           |   | 30,805            |  |   | 42,571            |  |  | (27.6)%               | 
|Regulatory                  |   | 4,145             |  |   | 1,000             |  |  | 314.5%                | 
|Total Operating Expenses    | $ | 55,335            |  | $ | 52,206            |  |  | 6.0%                  | 

Our operating expenses
increased by $3,129 or 6% from $52,206 for the year ended February 29, 2008 to
$55,335 for the year ended February 28, 2009. This increase in operating
expenses was primarily due to obtaining our helicopter-supported magnetic survey
which increased our exploration and development costs and an increase in
regulatory reporting costs in connection with meeting our reporting obligations
under the Exchange Act. These increases were partially offset by a decrease in
professional fees which were higher during the year ended February 29, 2008 due
to the costs associated with the preparation of Registration Statement on Form
SB-2.

Over the next twelve months, we do not anticipate generating
any revenue and we expect our operating expenses to be approximately $55,450,
primarily due to increases in costs associated with the outsourcing of our
administration and accounting services and completing the balance of Phase One
of our exploration program. We plan to continue to fund Phase One of our mineral
exploration program and our operations through equity financing from the sale of
our shares of common stock, private advances or through the sale of a part
interest or joint venture in the Bee Peak Claim. We do not have any financing
arranged and cannot provide any assurance that we will be able to raise
sufficient funding from the sale of our shares of common stock, that we will
receive private advances or that we will be able to sell a part interest or
joint venture the Bee Peak Claim.

19

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LIQUIDITY AND CAPITAL RESOURCES

|Working Capital                   |   |                   |   |   |                   |   |  |                       |   
|--------------------------------- | - | ----------------- | - | - | ----------------- | - |  | --------------------- | --
|                                  |   | At                |   |   | At                |   |  | Percentage            |   
|                                  |   | February 28, 2009 |   |   | February 29, 2008 |   |  | Increase / (Decrease) |   
|Current Assets                    | $ | 70                |   | $ | 1,916             |   |  | (96.3                 | )%
|Current Liabilities               |   | (73,454           | ) |   | (19,965           | ) |  | 267.9%                |   
|Working Capital Surplus (Deficit) | $ | (73,384           | ) | $ | (18,049           | ) |  | 306.6%                |   

|Cash Flows                              |   |                   |   |   |                   |  
|--------------------------------------- | - | ----------------- | - | - | ----------------- | -
|                                        |   | Year Ended        |   |   | Year Ended        |  
|                                        |   | February 28, 2009 |   |   | February 29, 2008 |  
|Cash Flows used in Operating Activities | $ | (1,846            | ) | $ | (36,741           | )
|Cash Flows used in Investing Activities |   | -                 |   |   | -                 |  
|Cash Flows from Financing Activities    |   | -                 |   |   | -                 |  
|Net Increase in Cash During Period      | $ | (1,846            | ) | $ | (36,741           | )

As at February 28, 2009, we had cash of $70 and negative cash
flow from operations of $1,846. To date we have funded our operations with cash
that we received from the sale of our common stock and advances from our former
President.

We had a working capital deficit of $73,384 as of February 28,
2009 compared to a working capital deficit of $18,049 as of February 29, 2008.
The increase in our working capital deficit is attributable to: (i) an increase
in accounts payable due to our lack of capital to meet our ongoing expenditures;
and (ii) an increase in advances payable from our former President.

Going Concern

Due to lack of operating history and our present inability to
generate revenues, there currently exists substantial doubt about our ability to
continue as a going concern. Even if we complete our current exploration program
and we are successful in identifying a mineral deposit, we will have to spend
substantial funds on further drilling and engineering studies before we will
know if we have a commercially viable mineral deposit or reserve.

The notes to the accompanying financial statements have been
prepared on a going concern basis, which implies that we will continue to
realize our assets and discharge our liabilities in the normal course of
business. We have not generated any revenues since inception and have never paid
any dividends and are unlikely to pay dividends or generate earnings in the
immediate or foreseeable future. Our continuation as a going concern is
dependent upon the continued financial support from our shareholders, our
ability to obtain necessary equity financing to continue operations, and the
attainment of profitable operations. Our ability to achieve and maintain
profitability and positive cash flows is dependent upon our ability to locate
profitable mineral properties, generate revenues from our mineral production and
control production costs. Based upon current plans, we expect to incur operating
losses in future periods. At February 28, 2009, we had a working capital deficit
of $73,384 and accumulated losses of $129,844 since inception. These factors
raise substantial doubt regarding our ability to continue as a going concern.
There is no assurance that we will be able to generate revenues in the future.
The audited financial statements contained in this Annual Report on Form 10-K do
not give any effect to any adjustments that would be necessary should we be
unable to continue as a going concern and therefore be required to realize our
assets and discharge our liabilities in other than the normal course of business
and at amounts different from those reflected in the accompanying audited
financial statements contained in this Annual Report on Form 10-K.

Financing Requirements

We expect to continue to incur substantial losses as we
continue the development of our business. Since our inception, we have funded
operations through common stock issuances, related party loans, and the support
of creditors in order to meet our strategic objectives. Our management believes
that sufficient funding will be

20

---

available to meet our business objectives, including
anticipated cash needs for working capital, and are currently evaluating several
financing options. However, there can be no assurance that we will be able to
obtain sufficient funds to continue the development of and, if successful, to
commence the sale of, our products.

We do not have any financing agreement in place, and there is
no assurance that we will be able to obtain additional financing if and when
required. We anticipate that additional financing may come in the form of sales
of additional shares of our common stock which may result in dilution to our
current shareholders.

OFF-BALANCE SHEET ARRANGEMENTS

We have no significant off-balance sheet arrangements that have
or are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that is
material to stockholders.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with
generally accepted accounting principles requires our management to make
estimates and assumptions that affect the reported amount 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 reporting period. Actual results could differ from those estimates.
Our management routinely makes judgments and estimates about the effects of
matters that are inherently uncertain.

We have identified certain accounting policies, described
below, that are most important to the portrayal of our current financial
condition and results of operations. Our significant accounting policies are
disclosed in the notes to our audited financial statements included in this
Annual Report on Form 10-K.

Foreign Currency Translation

Our functional and reporting currency is the United States
dollar. Monetary assets and liabilities denominated in foreign currencies are
translated in accordance with SFAS No. 52 Foreign Currency Translation,
using the exchange rate prevailing at the balance sheet date. Gains and losses
arising on settlement of foreign currency denominated transactions or balances
are included in the determination of income. Foreign currency transactions are
primarily undertaken in Canadian dollars. We have not entered into derivative
instruments to offset the impact of foreign currency fluctuations.

Mineral Property Costs

We have been in the exploration stage since our inception on
October 3, 2005 and have not yet realized any revenues from our planned
operations. We are 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 the Emerging Issues Task Force (EITF) 04-02, Whether Mineral Rights are Tangible or Intangible Assets.We assess the carrying costs for impairment under SFAS No. 144,
Accounting for Impairment or Disposal of Long Lived Assets at each fiscal
quarter end. An impairment is recognized when the sum of the expected
undiscounted future cash flows is less than the carrying amount of the mineral
property. Impairment losses, if any, are measured as the excess of the carrying
amount of the mineral property over its estimated fair value.

When it has been determined that a mineral property can be
economically developed as a result of establishing proven and probable reserves,
the costs then 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 reserves. If mineral properties are subsequently abandoned or
impaired, any capitalized costs will be charged to operations.

21

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|ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY
      DATA.
|------- | --------------------------------------------------

| | 1. | Report of Independent
      Registered Public Accounting Firm (Madsen & Associates CPAs, Inc.);                                                                              
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2. | Balance Sheets as at February 28, 2009 and
      February 29, 2008;                                                                                                          
| | 3. | Statements of Operations for
      the years ended February 28, 2009, February 29, 2008, and for the period
      from inception on October 3, 2005 to February 28, 2009;    
| | 4. | Statement of Stockholders Deficit for the
      period from inception on October 3, 2005 to February 28, 2009;                                                              
| | 5. | Statements of Cash Flows for
      the years ended February 28, 2009, February 29, 2008, and for the period
      from inception on October 3, 2005 to February 28, 2009; and
| | 6. | Notes to the Financial Statements.                                                                                                                                           

22

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KUSHI RESOURCES INC.(AN EXPLORATION STAGE COMPANY)

FINANCIAL STATEMENTS

AT FEBRUARY 28, 2009 AND FEBRUARY 29, 2008, FOR THE YEARS ENDED
  FEBRUARY 28, 2009 
  AND FEBRUARY 29, 2008 AND FOR THE PERIOD FROM OCTOBER 3, 2005 (INCEPTION) TOFEBRUARY 28, 2009

|REPORT OF INDEPENDENT REGISTERED ACCOUNTING
      FIRM
|------------------------------------------------------
|BALANCE SHEETS                                        
|STATEMENTS OF OPERATIONS                              
|STATEMENTS OF STOCKHOLDERS DEFICIT                    
|STATEMENTS OF CASH FLOWS                              
|NOTES TO FINANCIAL STATEMENTS                         

F-1

---



F-2

---

|KUSHI RESOURCES INC.                      
|------------------------------------------
|(AN EXPLORATION STAGE COMPANY)            
|BALANCE SHEETS                            
|AT FEBRUARY 28, 2009 AND FEBRUARY 29, 2008

|                                                                        |   | 2009     |   |   | 2008    |  
|----------------------------------------------------------------------- | - | -------- | - | - | ------- | -
|                                                                        |   |          |   |   |         |  
|ASSETS                                                                  |   |          |   |   |         |  
|                                                                        |   |          |   |   |         |  
|Current assets:                                                         |   |          |   |   |         |  
|Cash                                                                    | $ | 70       |   | $ | 1,916   |  
|                                                                        |   |          |   |   |         |  
|Total
      assets                                                      | $ | 70       |   | $ | 1,916   |  
|                                                                        |   |          |   |   |         |  
|LIABILITIES AND STOCKHOLDERS' DEFICIT                                   |   |          |   |   |         |  
|                                                                        |   |          |   |   |         |  
|Current liabilities:                                                    |   |          |   |   |         |  
|Accounts payable                                                        | $ | 42,558   |   | $ | 3,575   |  
|Accrued administrative fees                                             |   | 3,150    |   |   | 3,180   |  
|Accrued professional fees                                               |   | -        |   |   | 7,159   |  
|Advances payable                                                        |   | 27,365   |   |   | 6,051   |  
|Due to related party                                                    |   | 381      |   |   | -       |  
|                                                                        |   |          |   |   |         |  
|Total liabilities                                                       |   | 73,454   |   |   | 19,965  |  
|                                                                        |   |          |   |   |         |  
|Commitments and contingencies                                           |   |          |   |   |         |  
|                                                                        |   |          |   |   |         |  
|Stockholders' deficit:                                                  |   |          |   |   |         |  
|Common stock; authorized 75,000,000; $0.001 par
      value; 5,230,000  |   |          |   |   |         |  
|issued
      and outstanding at February 28, 2009 and February 29, 2008 |   | 5,230    |   |   | 5,230   |  
|Additional paid in capital                                              |   | 51,270   |   |   | 51,270  |  
|Deficit accumulated during the exploration
      stage                  |   | (129,884 | ) |   | (74,549 | )
|                                                                        |   |          |   |   |         |  
|Total stockholders' deficit                                             |   | (73,384  | ) |   | (18,049 | )
|                                                                        |   |          |   |   |         |  
|Total liabilities and stockholders'
      deficit                       | $ | 70       |   | $ | 1,916   |  

The accompanying notes are an integral part of these financial
  statements

F-3

---

|KUSHI RESOURCES INC.          
|------------------------------
|(AN EXPLORATION STAGE COMPANY)
|STATEMENTS OF OPERATIONS      

|                                               |   |              |   |   |                 |   |   | From              | 
|---------------------------------------------- | - | ------------ | - | - | --------------- | - | - | ----------------- | 
|                                               |   | Years Ended  |   |   | October 3, 2005 |  
|                                               |   | February 28, |   |   | February 29,    |   |   | (Inception) to    | 
|                                               |   | 2009         |   |   | 2008            |   |   | February 28, 2009 | 
|                                               |   |              |   |   |                 |   |   |                   | 
|Operating Expenses:                            |   |              |   |   |                 |   |   |                   | 
|                                               |   |              |   |   |                 |   |   |                   | 
|Administrative fees                            | $ | 8,400        |   | $ | 6,450           |   | $ | 15,850            | 
|Bank charges and interest                      |   | 337          |   |   | 361             |   |   | 948               | 
|Donated rent                                   |   | -            |   |   | -               |   |   | 4,000             | 
|Donated services                               |   | -            |   |   | -               |   |   | 8,000             | 
|Exploration and development
      costs        |   | 11,648       |   |   | 1,824           |   |   | 21,240            | 
|Professional fees                              |   | 30,805       |   |   | 42,571          |   |   | 73,876            | 
|Regulatory                                     |   | 4,145        |   |   | 1,000           |   |   | 5,970             | 
|                                               |   |              |   |   |                 |   |   |                   | 
|Net loss                                       | $ | 55,335       |   | $ | 52,206          |   | $ | 129,884           | 
|                                               |   |              |   |   |                 |   |   |                   | 
|Net loss per share:                            |   |              |   |   |                 |   |   |                   | 
|Basic
      and diluted                        | $ | (0.01        | ) | $ | (0.01           | ) |   |                   | 
|                                               |   |              |   |   |                 |   |   |                   | 
|Weighted average number of shares outstanding: |   |              |   |   |                 |   |   |                   | 
|Basic and diluted                              |   | 5,230,000    |   |   | 5,230,000       |   |   |                   | 

The accompanying notes are an integral part of these financial
  statements

F-4

---

|KUSHI RESOURCES INC.                                                      
|--------------------------------------------------------------------------
|(AN EXPLORATION STAGE COMPANY)                                            
|STATEMENT OF STOCKHOLDERS' DEFICIT                                        
|FOR THE PERIOD FROM OCTOBER 3, 2005 (INCEPTION) TO FEBRUARY
      28, 2009

|                                            |  |                     |   |   |             |   |   |            |   |   | Deficit     |   |   |         |  
|------------------------------------------- |  | ------------------- | - | - | ----------- | - | - | ---------- | - | - | ----------- | - | - | ------- | -
|                                            |  | Common Stock Issued |   |   | Accumulated |   |   |            |  
|                                            |  |                     |   |   |             |   |   | Additional |   |   | During the  |   |   |         |  
|                                            |  | Number of           |   |   |             |   |   | Paid-in    |   |   | Exploration |   |   |         |  
|                                            |  | Shares              |   |   | Amount      |   |   | Capital    |   |   | Stage       |   |   | Total   |  
|                                            |  |                     |   |   |             |   |   |            |   |   |             |   |   |         |  
|Balance at October 3, 2005 (Inception)      |  | -                   |   | $ | -           |   | $ | -          |   | $ | -           |   | $ | -       |  
|                                            |  |                     |   |   |             |   |   |            |   |   |             |   |   |         |  
|Common stock
      issued for cash          |  | 5,350,000           |   |   | 5,350       |   |   | 39,150     |   |   | -           |   |   | 44,500  |  
|Donated services and rent                   |  | -                   |   |   | -           |   |   | 3,750      |   |   | -           |   |   | 3,750   |  
|Net loss                                    |  | -                   |   |   | -           |   |   | -          |   |   | (4,431      | ) |   | (4,431  | )
|                                            |  |                     |   |   |             |   |   |            |   |   |             |   |   |         |  
|                                            |  |                     |   |   |             |   |   |            |   |   |             |   |   |         |  
|Balance at February 28, 2006                |  | 5,350,000           |   |   | 5,350       |   |   | 42,900     |   |   | (4,431      | ) |   | 43,819  |  
|                                            |  |                     |   |   |             |   |   |            |   |   |             |   |   |         |  
|Common stock returned to
      treasury     |  | (105,000            | ) |   | (105        | ) |   | (3,945     | ) |   | -           |   |   | (4,050  | )
|Common stock
      issued from treasury for |  | 105,000             |   |   | 105         |   |   | 5,145      |   |   | -           |   |   | 5,250   |  
|cash                                        |  |                     |   |   |             |   |   |            |   |   |             |   |   |         |  
|Common stock
      cancelled                |  | (120,000            | ) |   | (120        | ) |   | (1,080     | ) |   | -           |   |   | (1,200  | )
|Donated services and rent                   |  | -                   |   |   | -           |   |   | 8,250      |   |   | -           |   |   | 8,250   |  
|Net loss                                    |  | -                   |   |   | -           |   |   | -          |   |   | (17,912     | ) |   | (17,912 | )
|                                            |  |                     |   |   |             |   |   |            |   |   |             |   |   |         |  
|                                            |  |                     |   |   |             |   |   |            |   |   |             |   |   |         |  
|Balance at February 28, 2007                |  | 5,230,000           |   |   | 5,230       |   |   | 51,270     |   |   | (22,343     | ) |   | 34,157  |  
|                                            |  |                     |   |   |             |   |   |            |   |   |             |   |   |         |  
|Net loss                                    |  | -                   |   |   | -           |   |   | -          |   |   | (52,206     | ) |   | (52,206 | )
|                                            |  |                     |   |   |             |   |   |            |   |   |             |   |   |         |  
|                                            |  |                     |   |   |             |   |   |            |   |   |             |   |   |         |  
|Balance at February 29, 2008                |  | 5,230,000           |   |   | 5,230       |   |   | 51,270     |   |   | (74,549     | ) |   | (18,049 | )
|                                            |  |                     |   |   |             |   |   |            |   |   |             |   |   |         |  
|Net loss                                    |  | -                   |   |   | -           |   |   | -          |   |   | (55,335     | ) |   | (55,335 | )
|                                            |  |                     |   |   |             |   |   |            |   |   |             |   |   |         |  
|                                            |  |                     |   |   |             |   |   |            |   |   |             |   |   |         |  
|Balance at February
      28, 2009          |  | 5,230,000           |   | $ | 5,230       |   | $ | 51,270     |   | $ | (129,884    | ) | $ | (73,384 | )

The accompanying notes are an integral part of these financial
  statements

F-5

---

|KUSHI RESOURCES INC.          
|------------------------------
|(AN EXPLORATION STAGE COMPANY)
|STATEMENTS OF CASH FLOWS      

|                                                   |   |              |   |   |              |   |   | From            |  
|-------------------------------------------------- | - | ------------ | - | - | ------------ | - | - | --------------- | -
|                                                   |   |              |   |   |              |   |   | October 3, 2005 |  
|                                                   |   | Year Ended   |   |   | (Inception)  |  
|                                                   |   | February 28, |   |   | February 29, |   |   | to February 28, |  
|                                                   |   | 2009         |   |   | 2008         |   |   | 2009            |  
|                                                   |   |              |   |   |              |   |   |                 |  
|Cash flows from operating activities:              |   |              |   |   |              |   |   |                 |  
|Net loss                                           | $ | (55,335      | ) | $ | (52,206      | ) | $ | (129,884        | )
|Adjustments to reconcile net loss to net cash      |   |              |   |   |              |   |   |                 |  
|used in operating activities:                      |   |              |   |   |              |   |   |                 |  
|Donated rent and services                          |   | -            |   |   | -            |   |   | 12,000          |  
|Changes
      in operating assets and liabilities: |   |              |   |   |              |   |   |                 |  
|Accounts payable                                   |   | 38,983       |   |   | 3,575        |   |   | 42,558          |  
|Accrued administrative fees                        |   | (30          | ) |   | 2,180        |   |   | 3,150           |  
|Accrued exploration fees                           |   | -            |   |   | (2,500       | ) |   | -               |  
|Accrued professional fees                          |   | (7,159       | ) |   | 6,659        |   |   | -               |  
|Advances payable                                   |   | 21,314       |   |   | 5,551        |   |   | 27,365          |  
|Due to related
      party                         |   | 381          |   |   | -            |   |   | 381             |  
|                                                   |   |              |   |   |              |   |   |                 |  
|Net
      cash used in operating activities        |   | (1,846       | ) |   | (36,741      | ) |   | (44,430         | )
|                                                   |   |              |   |   |              |   |   |                 |  
|Cash flows from financing activities               |   |              |   |   |              |   |   |                 |  
|Cash from issuance of common
      stock           |   | -            |   |   | -            |   |   | 49,750          |  
|Cash
      paid on cancellation of common stock    |   | -            |   |   | -            |   |   | (5,250          | )
|                                                   |   |              |   |   |              |   |   |                 |  
|Net
      cash provided by financing activities    |   | -            |   |   | -            |   |   | 44,500          |  
|                                                   |   |              |   |   |              |   |   |                 |  
|Decrease in cash during the period                 |   | (1,846       | ) |   | (36,741      | ) |   | 70              |  
|                                                   |   |              |   |   |              |   |   |                 |  
|Cash, beginning of
      period                    |   | 1,916        |   |   | 38,657       |   |   | -               |  
|                                                   |   |              |   |   |              |   |   |                 |  
|Cash, end of period                                | $ | 70           |   | $ | 1,916        |   | $ | 70              |  
|                                                   |   |              |   |   |              |   |   |                 |  
|Supplemental disclosure of cash flow information:  |   |              |   |   |              |   |   |                 |  
|Cash paid during the period                        |   |              |   |   |              |   |   |                 |  
|Taxes                                              | $ | -            |   | $ | -            |   | $ | -               |  
|Interest                                           | $ | -            |   | $ | -            |   | $ | -               |  

The accompanying notes are an integral part of these financial
  statements

F-6

---

|KUSHI RESOURCES INC.             
|---------------------------------
|(AN EXPLORATION STAGE COMPANY)   
|NOTES TO THE FINANCIAL STATEMENTS
|FEBRUARY 28, 2009                

NOTE 1  ORGANIZATION AND BASIS OF PRESENTATION

Nature of Operations

Kushi Resources Inc. (Kushi) was incorporated on October 3, 2005,
  under the laws of the State of Nevada. Kushis principal business is the
  acquisition and exploration of mineral resources in northern British Columbia,
  Canada. Kushi has not presently determined whether its properties contain mineral
  reserves that are economically recoverable. Kushi has not commenced significant
  operations and is considered an Exploration Stage Company, as defined by SEC
  Industry Guide 7, and follows Statement of Financial Accounting Standard (SFAS)
  No.7

Accounting and Reporting by Development Stage Enterprises,
  where applicable. In these notes, the terms Company, we, us or ourmean
  Kushi.

Exploration Stage

These financial statements and related notes are presented in
  accordance with accounting principles generally accepted in the United States
  of America. The Company has not produced any revenues from its principal business
  and is an exploration stage company as defined by Statement of Financial Accounting
  Standard (SFAS) No. 7.

The Company is in the early exploration stage. In an exploration
  stage company, management devotes most of its time to conducting exploratory
  work and developing its business. 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 paid any dividends and is unlikely to pay dividends or generate
  earnings in the immediate or foreseeable future. The Companys continuation
  as a going concern and its ability to emerge from the exploration stage with
  any planned principal business activity is dependent upon the continued financial
  support of its shareholders and its ability to obtain the necessary equity financing
  and attain profitable operations.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Reclassifications

Certain prior period amounts in the accompanying financial statements
  have been reclassified to conform to the current periods presentation.
  These reclassifications had no effect on the results of operations or financial
  position for any period presented.

Cash and Cash Equivalents

For purposes of the balance sheet and statement of cash flows,
  the Company considers all amounts on deposit with financial institutions and
  highly liquid investments with maturities of 90 days or less to be cash equivalents.
  At February 28, 2009, the Company did not have any cash equivalents.

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 in accordance with SFAS No. 52 Foreign Currency Translation,
  using the exchange rate prevailing at the balance sheet date. Gains and losses
  arising on settlement of foreign currency denominated transactions or balances
  are included in the determination of income. Foreign currency transactions are
  primarily undertaken in Canadian dollars. The Company has not to the date of
  these financial statements, entered into derivative instruments to offset the
  impact of foreign currency fluctuations.

F-7

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|KUSHI RESOURCES INC.             
|---------------------------------
|(AN EXPLORATION STAGE COMPANY)   
|NOTES TO THE FINANCIAL STATEMENTS
|FEBRUARY 28, 2009                

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Comprehensive Income (Loss)

Comprehensive Income (loss) reflects changes in equity that results
  from transactions and economic events from non-owner sources. At February 28,
  2009 and February 29, 2008, the Company has no items that represent a comprehensive
  income (loss) and, therefore, has not included a schedule of comprehensive income
  (loss) in the financial statements.

Mineral Property Costs

The Company has been in the exploration stage since its inception
  on October 3, 2005 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 the Emerging Issues Task Force (EITF) 04-02, Whether Mineral Rights are
  Tangible or Intangible Assets.The Company assesses the carrying costs for
  impairment under SFAS No. 144, Accounting for Impairment or Disposal of Long
  Lived Assets at each fiscal quarter end. An impairment is recognized when
  the sum of the expected undiscounted future cash flows is less than the carrying
  amount of the mineral property. Impairment losses, if any, are measured as the
  excess of the carrying amount of the mineral property over its estimated fair
  value.

When it has been determined that a mineral property can be economically
  developed as a result of establishing proven and probable reserves, the costs
  then 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 reserves. If mineral properties are subsequently abandoned or impaired,
  any capitalized costs will be charged to operations.

Asset Retirement Obligations

SFAS No. 143 (SFAS 143), Accounting for Asset Retirement Obligations
  addresses financial accounting and reporting for obligations associated with
  the retirement of tangible long-lived assets and the associated asset retirement
  costs. Specifically, SFAS 143 requires that the fair value of a liability for
  an asset retirement obligation be recognized in the period in which it is incurred
  if a reasonable estimate of fair value can be made. In addition, the asset retirement
  cost is capitalized as part of the assets carrying value and subsequently
  allocated to expense over the assets useful life. At February 28, 2009,
  the Company did not have any asset retirement obligations.

Financial Instruments

Foreign Exchange Risk

The Company is subject to foreign exchange risk for transactions
  denominated in foreign currencies. Foreign currency risk arises from the fluctuation
  of foreign exchange rates and the degree of volatility of these rates relative
  to the United States dollar. The Company does not believe that it has any material
  risk due to foreign currency exchange.

Fair Value of Financial Instruments

The Companys financial instruments include cash, accounts
  payable, accrued administrative fees and accrued professional fees. The fair
  value of these financial instruments approximate their carrying values due to
  their short maturities.

F-8

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|KUSHI RESOURCES INC.             
|---------------------------------
|(AN EXPLORATION STAGE COMPANY)   
|NOTES TO THE FINANCIAL STATEMENTS
|FEBRUARY 28, 2009                

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Concentration of Credit Risk

Financial instruments that potentially subject the Company to
  significant concentrations of credit risk consist principally of cash deposits.
  At February 28, 2009 and February 29, 2008, the Company had approximately $70
  and $2,000, respectively in cash that was not insured. This cash is on deposit
  with a major chartered Canadian bank. As part of its cash management process,
  the Company performs periodic evaluations of the relative credit standing of
  this financial institution. The Company has not experienced any losses in cash
  balances and does not believe it is exposed to any significant credit risk on
  its cash.

Accounting Estimates

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

The Companys financial statements are based on a number
  of estimates, including accruals for estimated administrative and professional
  fees.

Income Taxes

Income tax expense is based on pre-tax financial accounting income.
  Deferred tax assets and liabilities are recognized for the future tax consequences
  attributable to differences between the financial statement carrying amounts
  of existing assets and liabilities and their respective tax bases. Deferred
  tax assets, including tax loss and credit carryforwards, and liabilities are
  measured using enacted tax rates expected to apply to taxable income in the
  years in which those temporary differences are expected to be recovered or settled.
  The effect on deferred tax assets and liabilities of a change in tax rates is
  recognized in income in the period that includes the enactment date. Deferred
  income tax expense represents the change during the period in the deferred tax
  assets and deferred tax liabilities. The components of the deferred tax assets
  and liabilities are individually classified as current and non-current based
  on their characteristics. Deferred tax assets are reduced by a valuation allowance
  when, in the opinion of management, it is more likely than not that some portion
  or all of the deferred tax assets will not be realized.

Basic and Diluted Net (Loss) Per Common Share (EPS)

Basic net (loss) per share is computed by dividing the net (loss)
  attributable to the common stockholders by the weighted average number of common
  shares outstanding during the reporting period. Diluted net income per common
  share includes the potential dilution that could occur upon exercise of the
  options and warrants to acquire common stock computed using the treasury stock
  method which assumes that the increase in the number of shares is reduced by
  the number of shares which could have been repurchased by the Company with the
  proceeds from the exercise of the options and warrants (which were assumed to
  have been made at the average market price of the common shares during the reporting
  period).

Potential common shares are excluded from the diluted loss per
  share computation in net loss periods as their inclusion would be anti-dilutive.

At February 28, 2009 and February 29, 2008, the Company had issued
  5,230,000 common shares and had no outstanding options or warrants.

F-9

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|KUSHI RESOURCES INC.             
|---------------------------------
|(AN EXPLORATION STAGE COMPANY)   
|NOTES TO THE FINANCIAL STATEMENTS
|FEBRUARY 28, 2009                

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Stock-Based Compensation

The Company accounts for Stock-Based Compensation in accordance
  with the Financial Accounting Standards Board (FASB) issued SFAS No. 123(R),
  Share-Based Payment (SFAS 123(R)), which requires recording expense for
  stock compensation based on a fair value based method.

The Company uses the modified prospective method
  which requires the Company to recognize compensation costs for all stock-based
  payments granted, modified or settled in financial statements.

Recent Accounting Pronouncements

In September 2006, the FASB issued SFAS No. 158 (SFAS 158), Employers
  Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment
  of FASB Statements No. 87, 88, 106, and 132(R). This statement requires
  an employer to recognize the over funded or under funded status of a defined
  benefit postretirement plan as an asset or liability in its statement of financial
  position and to recognize changes in that funded status in the year in which
  the changes occur through comprehensive income of a business entity. This statement
  also requires an employer to measure the funded status of a plan as of the date
  of its year end statement of financial position, with limited exceptions. The
  Company is required to initially recognize the funded status of a defined benefit
  postretirement plan and to provide the required disclosures as of the end of
  the fiscal year ending after December 15, 2006. The requirement to measure plan
  assets and benefit obligations as of the date of the employers fiscal
  year end statement of financial position is effective for fiscal years ending
  after December 15, 2008, or February 28, 2009 for us. The adoption of SFAS 158
  did not have a material impact on our financial statements.

In February 2007, the FASB issued SFAS No. 159 (SFAS 159), The
  Fair Value Option for Financial Assets and Financial LiabilitiesIncluding
  an amendment of FASB Statement No. 115. SFAS 159 permits measurement of
  certain financial assets and financial liabilities at fair value. If the fair
  value option is elected, the unrealized gains and losses are reported in earnings
  at each reporting date. Generally, the fair value option may be elected on an
  instrument-by-instrument basis, as long as it is applied to the instrument in
  its entirety. The fair value option election is irrevocable, unless a new election
  date occurs. SFAS 159 was effective for us on March 1, 2008. The adoption of
  SFAS 159 did not have a material impact on our financial statements as we did
  not elect the fair value option for any of our financial assets or liabilities.

In June 2007, the EITF of the FASB reached a consensus on Issue
  No. 07-3, Accounting for Nonrefundable Advance Payments for Goods or Services
  Received for Use in Future Research and Development Activities(EITF 07-3).
  EITF 07-3 requires that non-refundable advance payments for goods or services
  that will be used or rendered for future research and development activities
  should be deferred and capitalized. As the related goods are delivered or the
  services are performed, or when the goods or services are no longer expected
  to be provided, the deferred amounts would be recognized as an expense. This
  Issue is effective for financial statements issued for fiscal years beginning
  after December 15, 2007 and earlier application is not permitted. This consensus
  is to be applied prospectively for new contracts entered into on or after the
  effective date. EITF 07-03 was effective for us on March 1, 2008. The adoption
  of this pronouncement did not have a material effect on our financial statements.

F-10

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|KUSHI RESOURCES INC.             
|---------------------------------
|(AN EXPLORATION STAGE COMPANY)   
|NOTES TO THE FINANCIAL STATEMENTS
|FEBRUARY 28, 2009                

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recent Accounting Pronouncements (continued)

In December 2007, the FASB issued SFAS No. 141(R), Business
  Combinations(SFAS 141(R)), which replaces SFAS 141, Business Combinations,
  requires an acquirer to recognize the assets acquired, the liabilities assumed,
  and any non-controlling interest in the acquiree at the acquisition date, measured
  at their fair values as of that date, with limited exceptions. This Statement
  also requires the acquirer in a business combination achieved in stages to recognize
  the identifiable assets and liabilities, as well as the non-controlling interest
  in the acquiree, at the full amounts of their fair values. SFAS 141(R) makes
  various other amendments to authoritative literature intended to provide additional
  guidance or to confirm the guidance in that literature to that provided in this
  Statement. This Statement applies prospectively to business combinations for
  which the acquisition date is on or after the beginning of the first annual
  reporting period beginning on or after December 15, 2008. This statement will
  be effective for us on March 1, 2009. We expect SFAS 141(R) will have an impact
  on our accounting for future business combinations once adopted, but the effect
  is dependent upon the acquisitions that are made in the future.

In December 2007, the EITF of the FASB reached a consensus on
  Issue No. 07-1, Accounting for Collaborative Arrangements(EITF 07-1).
  The EITF concluded on the definition of a collaborative arrangement and that
  revenues and costs incurred with third parties in connection with collaborative
  arrangements would be presented gross or net based on the criteria in EITF 99-19
  and other accounting literature. Based on the nature of the arrangement, payments
  to or from collaborators would be evaluated and its terms, the nature of the
  entitys business, and whether those payments are within the scope of other
  accounting literature would be presented. Companies are also required to disclose
  the nature and purpose of collaborative arrangements along with the accounting
  policies and the classification and amounts of significant financial-statement
  amounts related to the arrangements. Activities in the arrangement conducted
  in a separate legal entity should be accounted for under other accounting literature;
  however required disclosure under EITF 07-1 applies to the entire collaborative
  agreement. This Issue is effective for financial statements issued for fiscal
  years beginning after December 15, 2008, and interim periods within those fiscal
  years, and is to be applied retrospectively to all periods presented for all
  collaborative arrangements existing as of the effective date. EITF 07-1 will
  be effective for us on March 1, 2009. We do not expect adoption of EITF 07-1
  to have a significant impact on our financial statements.

In December 2007, FASB issued SFAS No. 160, Noncontrolling
  Interests in Consolidated Financial Statements(SFAS 160), which amends
  Accounting Research Bulletin No. 51, Consolidated Financial Statements,
  to improve the relevance, comparability, and transparency of the financial information
  that a reporting entity provides in its consolidated financial statements. SFAS
  160 establishes accounting and reporting standards that require the ownership
  interests in subsidiaries not held by the parent to be clearly identified, labeled
  and presented in the consolidated statement of financial position within equity,
  but separate from the parents equity. This statement also requires the
  amount of consolidated net income attributable to the parent and to the non-controlling
  interest to be clearly identified and presented on the face of the consolidated
  statement of income. Changes in a parents ownership interest while the
  parent retains its controlling financial interest must be accounted for consistently,
  and when a subsidiary is deconsolidated, any retained non-controlling equity
  investment in the former subsidiary must be initially measured at fair value.
  The gain or loss on the deconsolidation of the subsidiary is measured using
  the fair value of any non-controlling equity investment. The Statement also
  requires entities to provide sufficient disclosures that clearly identify and
  distinguish between the interests of the parent and the interests of the non-controlling
  owners. This Statement applies prospectively to all entities that prepare consolidated
  financial statements and applies prospectively for fiscal years, and interim
  periods within those fiscal years, beginning on or after December 15, 2008.
  This statement is effective for us on March 1, 2009. We do not expect adoption
  of SFAS 160 to have a significant impact on our financial statements.

F-11

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|KUSHI RESOURCES INC.             
|---------------------------------
|(AN EXPLORATION STAGE COMPANY)   
|NOTES TO THE FINANCIAL STATEMENTS
|FEBRUARY 28, 2009                

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recent Accounting Pronouncements (continued)

On January 1, 2008, the Company adopted SFAS No. 157 (SFAS 157),
  Fair Value Measurements. SFAS 157 relates to financial assets and financial
  liabilities. In February 2008, the FASB issued FASB Staff Position (FSP) No.
  FAS 157-2, Effective Date of FASB Statement No. 157, which delayed the
  effective date of SFAS 157 for all nonfinancial assets and nonfinancial liabilities,
  except those that are recognized or disclosed at fair value in the financial
  statements on at least an annual basis, until January 1, 2009 for calendar year-end
  entities. Also in February 2008, the FASB issued FSP No. FAS 157-1, Application
  of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements
  That Address Fair Value Measurements for Purposes of Lease Classification or
  Measurement under Statement 13, which states that SFAS No. 13, Accounting
  for Leases, (SFAS 13) and other accounting pronouncements that address fair
  value measurements for purposes of lease classification or measurement under
  SFAS 13 are excluded from the provisions of SFAS 157, except for assets and
  liabilities related to leases assumed in a business combination that are required
  to be measured at fair value under SFAS No. 141, Business Combinations,
  (SFAS 141) or SFAS No. 141 (revised 2007), Business Combinations, (SFAS
  141(R)).

SFAS 157 defines fair value, establishes a framework for measuring
  fair value in accounting principles generally accepted in the United States
  of America (GAAP), and expands disclosures about fair value measurements. The
  provisions of this standard apply to other accounting pronouncements that require
  or permit fair value measurements and are to be applied prospectively with limited
  exceptions. The adoption of SFAS 157, as it relates to financial assets and
  financial liabilities had no impact on our financial statements.

SFAS 157 defines fair value as the price that would be received
  to sell an asset or paid to transfer a liability in an orderly transaction between
  market participants at the measurement date. This standard is now the single
  source in GAAP for the definition of fair value, except for the fair value of
  leased property as defined in SFAS 13. SFAS 157 establishes a fair value hierarchy
  that distinguishes between (1) market participant assumptions developed based
  on market data obtained from independent sources (observable inputs) and (2)
  an entitys own assumptions, about market participant assumptions, that
  are developed based on the best information available in the circumstances (unobservable
  inputs). The fair value hierarchy consists of three broad levels, which gives
  the highest priority to unadjusted quoted prices in active markets for identical
  assets or liabilities (Level 1) and the lowest priority to unobservable inputs
  (Level 3). The three levels of the fair value hierarchy under SFAS 157 are described
  below:

- Level 1 - Unadjusted quoted prices in active markets that are accessible
      at the measurement date for identical, unrestricted assets or liabilities.
- Level 2 - Inputs other than quoted prices included within Level 1 that
      are observable for the asset or liability, either directly or indirectly,
      including quoted prices for similar assets or liabilities in active markets;
      quoted prices for identical or similar assets or liabilities in markets
      that are not active; inputs other than quoted prices that are observable
      for the asset or liability (e.g., interest rates); and inputs that are derived
      principally from or corroborated by observable market data by correlation
      or other means.
- Level 3 - Inputs that are both significant to the fair value measurement
      and unobservable.

F-12

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|KUSHI RESOURCES INC.             
|---------------------------------
|(AN EXPLORATION STAGE COMPANY)   
|NOTES TO THE FINANCIAL STATEMENTS
|FEBRUARY 28, 2009                

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recent Accounting Pronouncements (continued)

In March 2008, the FASB issued SFAS No. 161 (SFAS 161), Disclosures
  about Derivative Instruments and Hedging Activities  An Amendment of FASB
  Statement No. 133 (SFAS 133). This statement is intended to improve financial
  reporting of derivative instruments and hedging activities by requiring enhanced
  disclosures about (a) how and why an entity uses derivative instruments, (b)
  how derivative instruments and related hedged items are accounted for under
  SFAS 133 and its related interpretations and (c) how derivative instruments
  and related hedged items affect an entitys financial position, financial
  performance and cash flows. The provisions of SFAS 161 are effective for fiscal
  years beginning after November 15, 2008. This statement is effective for us
  on March 1, 2009. Early adoption of this provision is prohibited. We do not
  expect this statement to have a material impact on our financial statements.

In April 2008, the FASB issued FSP No. 142-3, Determination
  of the Useful Life of Intangible Assets (FSP 142-3). FSP 142-3 amends the
  factors to be considered in developing renewal or extension assumptions used
  to determine the useful life of intangible assets under SFAS No. 142, Goodwill
  and Other Intangible Assets. Its intent is to improve the consistency between
  the useful life of an intangible asset and the period of expected cash flows
  used to measure its fair value. This FSP is effective prospectively for intangible
  assets acquired or renewed after March 1, 2009. We do not expect FSP 142-3 to
  have a material impact on our accounting for future acquisitions of intangible
  assets.

In May, 2008, FASB issued SFAS No. 162, The Hierarchy of Generally
  Accepted Accounting Principles (SFAS 162). SFAS 162 identifies the sources
  of accounting principles and the framework for selecting the principles used
  in the preparation of financial statements of nongovernmental entities that
  are presented in conformity with generally accepted accounting principles in
  the United States. The adoption of this statement did not have a material impact
  on our financial statements.

On May 9, 2008, the FASB issued FASB Staff Position No. APB 14-1
  (FSP APB 14-1), Accounting for Convertible Debt Instruments That May Be Settled
  in Cash upon Conversion (Including Partial Cash Settlement).FSP APB 14-1
  clarifies that convertible debt instruments that may be settled in cash upon
  conversion (including partial cash settlement) are not addressed by paragraph
  12 of APB Opinion No. 14, Accounting for Convertible Debt and Debt Issued
  with Stock Purchase Warrants. Additionally, FSP APB 14-1 specifies that
  issuers of such instruments should separately account for the liability and
  equity components in a manner that will reflect the entity's nonconvertible
  debt borrowing rate when interest cost is recognized in subsequent periods.
  FSP APB14-1 is effective for financial statements issued for fiscal years beginning
  after December 15, 2008, and interim periods within those fiscal years. FSP
  APB 14-1 will be effective for us on March 1, 2009. The adoption of FSP APB
  14-1 is not expected to have a material impact on our results of operations
  or financial position.

On June 16, 2008, the FASB issued FASB Staff Position No. EITF
  03-6-1 (FSP No. EITF 03-6-1), Determining Whether Instruments Granted in
  Share-Based Payment Transactions Are Participating Securities, to address
  the question of whether instruments granted in share-based payment transactions
  are participating securities prior to vesting. FSP EITF 03-6-1 indicates that
  unvested share-based payment awards that contain rights to dividend payments
  should be included in earnings per share calculations. The guidance will be
  effective for fiscal years beginning after December 15, 2008. FSP EITF 03-6-1
  is effective for us on March 1, 2009. Adoption of FSP EITF 03-6-1 is not expected
  to have a material impact on our results of operations or financial position.

F-13

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|KUSHI RESOURCES INC.             
|---------------------------------
|(AN EXPLORATION STAGE COMPANY)   
|NOTES TO THE FINANCIAL STATEMENTS
|FEBRUARY 28, 2009                

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recent Accounting Pronouncements (continued)

In June 2008, the FASB issued EITF Issue 07-5 (EITF 07-5), Determining
  whether an Instrument (or Embedded Feature) is indexed to an Entitys Own
  Stock. EITF No. 07-5 is effective for financial statements issued for fiscal
  years beginning after December 15, 2008, and interim periods within those fiscal
  years. Early application is not permitted. Paragraph 11(a) of SFAS No. 133 Accounting
  for Derivatives and Hedging Activities, specifies that a contract that would
  otherwise meet the definition of a derivative but is both (a) indexed to the
  Companys own stock and (b) classified in stockholders equity in
  the statement of financial position would not be considered a derivative financial
  instrument. EITF 07-5 provides a new two-step model to be applied in determining
  whether a financial instrument or an embedded feature is indexed to an issuers
  own stock and thus able to qualify for the SFAS No. 133 paragraph 11(a) scope
  exception. EITF 07-5 is effective for us on March 1, 2009. Adoption of EITF
  07-5 is not expected to have a material impact on our financial statements.

In June 2008, the FASB issued FSP EITF 03-6-1, Determining
  Whether Instruments Granted in Share-Based Payment Transactions are Participating
  Securities (FSP 03-6-1). FSP 03-6-1 clarifies that unvested share-based
  payment awards that contain nonforfeitable rights to dividends or dividend equivalents
  (whether paid or unpaid) are participating securities and are to be included
  in the computation of earnings per share under the two-class method described
  in SFAS No. 128, Earnings Per Share. This FSP is effective for us on
  March 1, 2009 and requires all prior-period earnings per share data that is
  presented to be adjusted retrospectively. We do not expect FSP 03-6-1 to have
  a material impact on our earnings per share calculations.

In October 2008, the FASB issued FSP No. 157-3, Determining
  the Fair Value of a Financial Asset When the Market for That Asset Is Not Active
  (FSP 157-3). FSP 157-3 clarifies the application of SFAS 157 in a market that
  is not active and provides an example to illustrate key considerations in determining
  the fair value of a financial asset when the market for that financial asset
  is not active. As it relates to our financial assets and liabilities recognized
  or disclosed at fair value in our consolidated financial statements on a recurring
  basis (at least annually), the adoption of FSP 157-3 did not have a material
  impact on our financial statements.

In December 2008, the FASB issued FSP FAS 140-4 and FIN 46(R)-8,
  Disclosures by Public Entities (Enterprises) About Transfers of Financial
  Assets and Interest in Variable Interest Entities (FSP 140-4). FSP 140-4
  requires additional disclosure about transfers of financial assets and an enterprises
  involvement with variable interest entities. FSP 140-4 was effective for the
  first reporting period ending after December 15, 2008. The adoption of FSP 140-4
  did not have a material impact on our consolidated financial statements.

In December 2008, the FASB issued FASB Staff Position (FSP) No.132
  (R)-1, Employers Disclosures about Pensions and Other Postretirement
  Benefits (FSP 132R-1). FSP 132R-1 requires enhanced disclosures about the
  plan assets of a Companys defined benefit pension and other postretirement
  plans. The enhanced disclosures required by this FSP are intended to provide
  users of financial statements with a greater understanding of: (1) how investment
  allocation decisions are made, including the factors that are pertinent to an
  understanding of investment policies and strategies; (2) the major categories
  of plan assets; (3) the inputs and valuation techniques used to measure the
  fair value of plan assets; (4) the effect of fair value measurements using significant
  unobservable inputs (Level 3) on changes in plan assets for the period; and
  (5) significant concentrations of risk within plan assets. This FSP is effective
  for us for the year ending January 31, 2010 and is not expected to have a material
  impact on our financial statements.

F-14

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|KUSHI RESOURCES INC.             
|---------------------------------
|(AN EXPLORATION STAGE COMPANY)   
|NOTES TO THE FINANCIAL STATEMENTS
|FEBRUARY 28, 2009                

NOTE 3  GOING CONCERN

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 not generated
  any revenues since inception and has never paid any dividends and is unlikely
  to pay dividends or 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 the attainment of profitable
  operations. The Companys ability to achieve and maintain profitability
  and positive cash flows is dependent upon its ability to locate profitable mineral
  properties, generate revenues from its mineral production and control production
  costs. Based upon current plans, the Company expects to incur operating losses
  in future periods. At February 28, 2009, the Company had a working capital deficit
  of $73,384 and accumulated losses of $129,884 since inception. These factors
  raise substantial doubt regarding the Companys ability to continue as
  a going concern. There is no assurance that the Company will be able to generate
  revenues in the future. These financial statements do not give any effect to
  any adjustments that would be necessary should the Company be unable to continue
  as a going concern and therefore be required to realize its assets and discharge
  its liabilities in other than the normal course of business and at amounts different
  from those reflected in the accompanying financial statements.

NOTE 4 - RELATED PARTY TRANSACTIONS

At February 28, 2009 and February 29, 2008 the Company was indebted
  to its president in the amounts of $381 and $0 respectively. These advances
  do not bear interest, are unsecured and have not fixed terms of repayment.

NOTE 5  ADVANCES PAYABLE

At February 28, 2009 and February 29, 2008, the Company was indebted
  to its former president in the amounts of $27,365 and $6,051. These advances
  do not bear interest, are unsecured and have not fixed terms of repayment.

NOTE 6 - UNPROVED MINERAL PROPERTIES

On January 30, 2006, the Company staked a mineral claim near
  Atlin, British Columbia, Canada, comprising an area of 410.65 hectares. The
  Company is required to incur approximately $2,600 (CDN$3,285) on or before January
  30, 2013 and each year thereafter in exploration expenditures or pay the equivalent
  sum in cash in lieu of work, in order to retain title to the claims. In January
  2008, the Company paid $1,635 (CDN$1,643) in cash to the Province of British
  Columbia, in lieu of work, to retain title to the claims until January 30, 2009
  and on January 5, 2009, the Company registered $11,257 (CDN$12,000) in exploration
  work performed on its unproved mineral properties with the Government of British
  Columbia, which extend the Companys title to the claims until January
  30, 2012.

All of the Companys mineral claims are registered in the
  name of a former president of the Company and pursuant to a trust agreement
  are held in trust on behalf of the Company.

F-15

---

|KUSHI RESOURCES INC.             
|---------------------------------
|(AN EXPLORATION STAGE COMPANY)   
|NOTES TO THE FINANCIAL STATEMENTS
|FEBRUARY 28, 2009                

NOTE 7 - COMMON STOCK

On November 28, 2005, the Company issued 3,000,000 common shares
  at $0.001 per share for cash of $3,000 to a former president.

On January 30, 2006, the Company issued 1,900,000 common shares
  at $0.01 per share for cash of $19,000.

On February 28, 2006, the Company issued 450,000 common shares
  at $0.05 per share for cash of $22,500. 25,000 of these common shares were issued
  to relatives of a former president of the Company.

On November 10, 2006, the Company purchased and removed from
  the issued and outstanding 75,000 and 30,000 common shares at their original
  sale price of $0.05 and $0.01 respectively, per share. No gain or loss was recognized
  on this transaction.

On November 10, 2006, the Company purchased and cancelled 120,000
  common shares at their original sale price of $0.01 per share. No gain or loss
  was recognized on this transaction.

On November 10, 2006, the Company issued 105,000 common shares
  at $0.05 per share for proceeds of $5,250.

NOTE 8 - INCOME TAXES

Income tax expense has not been recognized for the years ended
  February 28, 2009 and February 29, 2008 and no taxes were payable at February
  28, 2009 or February 29, 2008, because the Company has incurred losses since
  its inception.

The Companys net operating losses (NOLs) for the
  years ended February 28, 2009 and February 29, 2008, were:

2009
      
      2008$ 55,335
      
      $ 52,206


At February 28, 2009 and February 29, 2008 the Company had the
  following deferred tax assets that primarily relate to NOLs. A 100% valuation
  allowance has been established as management believes it is more likely than
  not that the deferred tax assets will not be realized.

2009
      
      
      2008Federal loss carryforwards
      $
      45,459
      
      $
      26,092Less: valuation allowance
      
      (45,459
      )
      
      (26,092
      )$
      -
      
      $
      -


The Companys valuation allowance increased during 2009
  and 2008 by $19,367 and $18,272 respectively.

F-16

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|KUSHI RESOURCES INC.             
|---------------------------------
|(AN EXPLORATION STAGE COMPANY)   
|NOTES TO THE FINANCIAL STATEMENTS
|FEBRUARY 28, 2009                

NOTE 8 - INCOME TAXES (Continued)

The Company had the following NOL carryforwards at February 28,
  2009 and February 29, 2008:

2009
      
      2008$ 129,884
      
      $ 74,549


The federal and Canadian NOLs expire through February 28,
  2029. The Company is a Nevada corporation and is not subject to state taxes.

F-17

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|ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH
      ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
|------- | -------------------------------------------------------------------------------------------

None.

ITEM 9A(T). CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

We carried out an evaluation of the effectiveness of our
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) as of February 28, 2009 (the Evaluation Date). This evaluation
was carried out under the supervision and with the participation of our Chief
Executive and Financial Officer. Based upon that evaluation, our Chief Executive
and Financial Officer concluded that our disclosure controls and procedures were
effective as of the Evaluation Date.

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

Management's Annual Report on Internal Control Over
Financial Reporting

Our management, including our Chief Executive and Financial
Officer, is responsible for establishing and maintaining a process to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles.

Our management, with the participation of our Chief Executive
and Financial Officer, evaluated the effectiveness of our internal control over
financial reporting as of February 28, 2009. Our managements evaluation of our
internal control over financial reporting was based on the framework in Internal
ControlIntegrated Framework, issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on this evaluation, our
management concluded that our internal control over financial reporting was
effective as of the Evaluation Date and that there were no material weaknesses
in our internal control over financial reporting.

A material weakness is a deficiency or a combination of control
deficiencies in internal control over financial reporting such that there is a
reasonable possibility that a material misstatement of our annual or interim
financial statements will not be prevented or detected on a timely basis

This annual report does not include an attestation report of
our registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the our
registered public accounting firm pursuant to temporary rules of the SEC that
permit us to provide only management's report in this annual report

Changes in internal control over financial reporting

There were no changes in our internal control over financial
reporting that occurred during the fiscal year ended February 28, 2009 that have
materially affected, or that are reasonably likely to materially affect, our
internal control over financial reporting.

Limitations on the effectiveness of controls and
procedures

Our management, including our Chief Executive and Financial
Officer, does not expect that our controls and procedures will prevent all
potential errors or fraud. A control system, no matter how well conceived and

23

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operated, can provide only reasonable, not absolute, assurance
that the objectives of the control system are met.

|ITEM 9B. | OTHER INFORMATION.
|-------- | ------------------

Amendment to Code Of Ethics

On June 9, 2009, we amended and fully restated our Code of
Ethics (the "Amended Code of Ethics") applicable to our officers and directors,
which is a code of ethics as defined by applicable rules of the SEC. Each
director and officer of the Corporation must comply with the letter and spirit
of the Code of Ethics. This purpose of the Code of Ethics is to:

|1. | Focus the Board of Directors and each director and
      officer on areas of ethical risk;
|-- | ------------------------------------------------------------------------------------------
|2. | Provide guidance to directors to help them recognize and
      deal with ethical issues;  
|3. | Provide mechanisms to report unethical conduct;
  and                                     
|4. | Help foster a culture of honesty and
    accountability.                                  

Our Amended Code of Ethics is attached as an exhibit to this
Annual Report.

24

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PART III

|ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
      GOVERNANCE.
|-------- | -------------------------------------------------------------

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth the name and positions of our
sole executive officer and director as of the date hereof.

Name
    Age
    PositionsGreg Corcoran
    45
    Chief Executive Officer, Chief Financial
      Officer, President, Secretary, Treasurer and Director


Greg Corcoranhas been our Chief Executive Officer,
Chief Financial Officer, President, Secretary, Treasurer and a Director since
January 13, 2009. Mr. Corcoran founded Dragon Gold Resources, Inc. in December
2000. From 1998 to 2003, Gregory Corcoran has been self-employed as a technology
consultant through Spidex Technologies ("Spidex"), which he founded in 1996.
Spidex sold web server technology for the Microsoft Windows CE operating system
to Intrinsyc Software ("Intrinsyc"). This web server technology allowed
Intrinsyc to become a leader within the Windows CE industry and establish
Intrinsyc as a leader in the Windows CE market space. The web server product won
industry recognition. From December 1999 to September 2001, Mr. Corcoran also
served as director and CEO of AudioMonster Online, Inc., a company working in
the MP3 music market area. Mr. Corcoran has been published in trade journals
including the CE Tech Journal, a Microsoft sponsored trade journal. Mr. Corcoran
received a B.Sc. Degree majoring in Physics from the University of British
Columbia in 1986 and a Diploma of Technology in Robotics from the British
Columbia Institute of Technology in 1989.

SIGNIFICANT EMPLOYEES

We have no significant employees other than our sole executive
officer and director.

TERMS OF OFFICE

Our sole director is elected to hold office until the next
annual meeting of the shareholders and until his respective successor has been
elected and qualified. Our executive officers are appointed by our board of
directors and hold office until removed by our board of directors or until their
successors are appointed.

AUDIT COMMITTEE

Mr. Corcoran is our sole director. As a result, we do not
maintain a separately-designated standing audit committee. As a result, our sole
director acts as our audit committee. Mr. Corcoran does not meet the definition
of an audit committee financial expert. We believe that the cost related to
appointing a financial expert to our board of directors at this time is
prohibitive.

CODE OF ETHICS

On June 9, 2009, we amended and fully restated our Code of
Ethics (the "Amended Code of Ethics") applicable to our officers and directors,
which is a code of ethics as defined by applicable rules of the SEC. If we
make any further amendments to our Code of Ethics other than technical,
administrative, or other non-substantive amendments, or grant any waivers,
including implicit waivers, from a provision of our Code of Ethics to our Chief
Executive Officer, Chief Financial Officer or certain other finance executives,
we will disclose the nature of the amendment or waiver, its effective date and
to whom it applies in a Current Report

25

---

on Form 8-K filed with the SEC. A copy of our Amended Code of
Ethics is attached as an exhibit to this Annual Report on Form 10-K for the year
ended February 28, 2009.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires
our executive officers and directors, and persons who own more than 10% of a
registered class of our securities (Reporting Persons), to file reports of
ownership and changes in ownership with the SEC. Reporting Persons are required
by SEC regulations to furnish us with copies of all forms they file pursuant to
Section 16(a). Based solely on our review of the copies of such forms received
by us, we believe that during the last fiscal year, all Reporting Persons
complied with all Section 16(a) filing requirements applicable to them.

|ITEM 11. | EXECUTIVE COMPENSATION.
|-------- | -----------------------

SUMMARY COMPENSATION TABLE

We did not pay any compensation to our sole executive officer
and director, Mr. Greg Corcoran, or to our former executive officers and
directors during the fiscal years ended February 28, 2009 and February 29,
2008.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

As at February 28, 2009, we did not have any outstanding equity
awards.

EMPLOYMENT CONTRACTS

We do not have an employment contract with our sole executive
officer and director. We also do not have any termination of employment or
change-in-control arrangements with our sole executive officer and sole
director.

|ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
      OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
|-------- | -----------------------------------------------------------------------------------------------------

EQUITY COMPENSATION PLANS

We have no equity compensation plans (including individual
compensation arrangements) under which our equity securities are authorized for
issuance.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

The following table sets forth certain information concerning
the number of shares of our common stock owned beneficially as of May 28, 2009
by: (i) each person (including any group) known to us to own more than five
percent (5%) of any class of our voting securities, (ii) each of our directors
and each of our named executive officers (as defined under Item 402(m)(2) of
Regulation S-K), and (iii) officers and directors as a group. Unless otherwise
indicated, the shareholders listed possess sole voting and investment power with
respect to the shares shown.

26

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Title of Class
    Name and Address of Beneficial
      Owner
    Number of Shares of Common
      Stock(1)
    Percentage of Common
      Stock(1)DIRECTORS AND OFFICERSCommon Stock
    Greg Corcoran, Chief Executive Officer,
      Chief Financial Officer, President, Secretary, Treasurer and
      Director
    3,000,000 (direct)
    57.4%5%
      SHAREHOLDERSCommon Stock
    Greg Corcoran, Chief Executive Officer,
      Chief Financial Officer, President, Secretary, Treasurer and
      Director Apartados 0823-01488 Panama City, Panama
    3,000,000 (direct)
    57.4%


|(1) | Under Rule 13d-3, a beneficial owner of a security
      includes any person who, directly or indirectly, through any contract,
      arrangement, understanding, relationship, or otherwise has or shares: (i)
      voting power, which includes the power to vote, or to direct the voting of
      shares; and (ii) investment power, which includes the power to dispose or
      direct the disposition of shares. Certain shares may be deemed to be
      beneficially owned by more than one person (if, for example, persons share
      the power to vote or the power to dispose of the shares). In addition,
      shares are deemed to be beneficially owned by a person if the person has
      the right to acquire the shares (for example, upon exercise of an option)
      within 60 days of the date as of which the information is provided. In
      computing the percentage ownership of any person, the amount of shares
      outstanding is deemed to include the amount of shares beneficially owned
      by such person (and only such person) by reason of these acquisition
      rights. As a result, the percentage of outstanding shares of any person as
      shown in this table does not necessarily reflect the persons actual
      ownership or voting power with respect to the number of shares of common
      stock actually outstanding on May 28, 2009. As of May 28, 2009, there were
      5,230,000 shares of our common stock issued and
  outstanding.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

CHANGES IN CONTROL

We are not aware of any arrangement which may result in a
change in control in the future.

|ITEM 13. | CERTAIN RELATIONSHIPS
      AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE.
|-------- | --------------------------------------------------------------------------------------

RELATED TRANSACTIONS

Except as otherwise described below, none of the following
persons has, during the past two fiscal years, any direct or indirect material
interest in any transaction to which we were or are a party, or in any proposed
transaction to which we propose to be a party:

|(a) | any director or officer;                                                                                                                                
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | any person proposed as a nominee for election as a
      director;                                                                                      
|(c) | any person who beneficially owns, directly or indirectly,
      shares carrying more than 5% of the voting rights attached to our common
      stock; or
|(d) | any immediate family member, including any spouse, child,
      parent, step-child, step-parent, sibling or in-law, of any of the
      foregoing.      

As at February 28, 2009, we were indebted to our sole executive
officer and director in the amount of $381. This amount is unsecured, bears no
interest and has no fixed terms of repayment.

27

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As at February 28, 2009 and February 29, 2008, we were indebted
to our former President in the amount of $27,365 and $6,051, respectively. This
amount is unsecured, bears no interest and has no fixed terms of repayment.

DIRECTOR INDEPENDENCE

Our common stock is quoted on the OTC Bulletin Board
inter-dealer quotation system, which does not have director independence
requirements. Under NASDAQ Rule 5605(a)(2), a director is not considered to be
independent if he or she is also an executive officer or employee of the
corporation. Our sole director, Greg Corcoran, is also our sole executive
officer. As a result, we do not have any independent directors.

As a result of our limited operating history and minimal
resources, our management believes that it will have difficulty in attracting
independent directors. In addition, we would likely be required to obtain
directors and officers insurance coverage in order to attract and retain
independent directors. Our management believes that the costs associated with
maintaining such insurance is prohibitive at this time.

|ITEM 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES.
|-------- | ---------------------------------------

The aggregate fees billed for the two most recently completed
fiscal years for professional services rendered by the principal accountant for
the audit of our annual financial statements and review of the financial
statements included in our Quarterly Reports on Form 10-Q and services that are
normally provided by the accountant in connection with statutory and regulatory
filings or engagements for those fiscal periods were as follows:

|                   |   | Year Ended February 28, 2009 |  |   | Year Ended February 29, 2008 | 
|------------------ | - | ---------------------------- |  | - | ---------------------------- | 
|Audit Fees         | $ | 12,000                       |  | $ | 12,500                       | 
|Audit-Related Fees |   | Nil                          |  |   | Nil                          | 
|Tax Fees           |   | 675                          |  |   | Nil                          | 
|All Other Fees     |   | Nil                          |  |   | Nil                          | 
|Total              | $ | 12,675                       |  | $ | 12,500                       | 

|ITEM 15. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
|-------- | ----------------------------------------

The following exhibits are either provided with this Annual
Report or are incorporated herein by reference:

|Exhibit Number | Description of Exhibit                                                                                                                                                                          
|-------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1            | Articles of Incorporation.(1)                                                                                                                                                                   
|3.2            | Bylaws.(1)                                                                                                                                                                                      
|10.1           | Bare Trust Agreement dated January
      30, 2006 executed by Rajan Rai as Trustee.(1)                                                                                                          
|14.1           | Code of Ethics.(1)                                                                                                                                                                              
|14.2           | Code
      of Ethics, as amended.                                                                                                                                                               
|31.1           | Certification of Chief
      Executive Officer and Chief Financial Officer pursuant to Section 302 of
      the Sarbanes-Oxley Act of 2002.                                                     
|32.1           | 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.

|(1) | Previously filed as an Exhibit to our Registration
      Statement on Form SB-2, as amended, originally filed with the SEC on
      October 12, 2007.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------

28

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SIGNATURES

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

|      |              |     | KUSHI RESOURCES INC.                                           
|----- | ------------ | --- | ---------------------------------------------------------------
|      |              |     |                                                                
|      |              |     |                                                                
|      |              |     |                                                                
|Date: | June 9, 2009 | By: | /s/
      Greg Corcoran                                        
|      |              |     | GREG CORCORAN                                                  
|      |              |     | President, Secretary, Treasurer, Chief
      Executive Officer,
|      |              |     | Chief Financial Officer and
      Director                     
|      |              |     | (Principal Executive Officer and Principal
      Accounting    
|      |              |     | Officer)                                                       

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

|Date: | June 9, 2009 | By: | /s/
      Greg Corcoran                                        
|----- | ------------ | --- | ---------------------------------------------------------------
|      |              |     | GREG CORCORAN                                                  
|      |              |     | President, Secretary, Treasurer, Chief
      Executive Officer,
|      |              |     | Chief Financial Officer and
      Director                     
|      |              |     | (Principal Executive Officer and Principal
      Accounting    
|      |              |     | Officer)                                                       

---