**Table
            of Contents**
 **Index
            to Financial Statements**
 **UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 **WASHINGTON,
        D.C. 20549**
  **FORM
        10-KSB**
 
 x
              ANNUAL
                  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                  OF
                  1934
 For
        the fiscal year ended December 31,
        2005
 
 o
              TRANSITION
                  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                  OF
                  1934
 For
        the transition period from
        __________ to __________
 
 Commission
        file number: **0-27947**
 
 **AMERICAN
        SOUTHWEST HOLDINGS, INC.**
 (Name
        of
        small business issuer in its charter)
  **Delaware**
                  **86-0800964**(State
                      or other jurisdiction of
                  (IRS
                      Employer Identification No.)incorporation
                      or organization)**4225
                      N. Brown Ave., Scottsdale, Arizona**
                  **85251**(Address
                      of principal executive offices)
                  (ZIP
                      Code)
  Issuer’s
        telephone
        number: **(480) 946-4006**
 
 Securities
        registered under Section 12(b) of the Exchange Act:  
**None**
 
 Securities
        to be registered under Section 12(g) of the Act:
 
 **Common
        Stock, $.001 par value**
 (Title
        of
        Class)
 
 Check
          whether the issuer is not required to file reports pursuant to Section
          13 or
          15(d) of the Exchange Act.  ̈
 Check
          whether the issuer (1) filed all reports required to be filed by Section
          13 or
          15(d) of the Exchange Act during the past 12 months (or for such shorter
          period
          that the registrant was required to file such reports), and (2) has been
          subject
          to such filing requirements for the past 90 days.
          Yes ý
          No
 ̈
 
 Check
          if
          there is no disclosure of delinquent filers in response to Item 405 of
          Regulation S-B contained in this form, and no disclosure will be contained,
          to
          the best of registrant’s knowledge, in definitive proxy or information
          statements incorporated by reference in Part III of this Form 10-KSB or
          any
          amendment to this Form 10-KSB. ý
 
 Indicate
          by check mark whether the registrant is a shell company (as defined in
          Rule
          12b-2 of the Exchange Act).  ̈
 
 State
          issuer’s revenues for its most recent fiscal year:   $0.
 
 
 
 State
          the
          aggregate market value of the voting and non-voting common equity held
          by
          non-affiliates computed by reference to the price at which the common equity
          was
          sold, or the average bid and asked price of such common equity, as of a
          specified date within the past 60 days.     $4,951,912 as of
          May 5, 2006
 
 The
            number of shares outstanding of the registrant’s common stock, $0.001 par value,
            was 141,795,806 as of May 5, 2006.
 Transitional
          Small Business Disclosure Format (Check one): Yes  ̈
          No
ý
 2
  
 **AMERICAN
        SOUTHWEST HOLDINGS, INC.**
 
 **TABLE
        OF CONTENTS**
  PagePart
                      IItem
                      1.
                  Business
                  4Item
                      2.
                  Properties
                  5Item
                      3.
                  Legal
                      Proceedings
                  8Item
                      4.
                  Submission
                      of Matters to a Vote of Security
                      Holders
                  8Part
                      IIItem
                      5.
                  Market
                      for the Company’s Common Equity and Related
                      Shareholder Matters
                  9Item
                      6.
                  Management’s
                      Discussion and Analysis or Plan of
                      Operation
                  10Item
                      7.
                  Financial
                      Statements
                  11Item
                      8.
                  Changes
                      in and Disagreements with Accountants on
                      Accounting and Financial Disclosure
                  12Item
                      8A.
                  Controls
                      and Procedures
                  13Part
                      IIIItem
                      9.
                  Directors,
                      Executive Officers, Promoters and
                      Control Persons; Compliance with Section 16(a) of the Exchange
                      Act
                  14Item
                      10.
                  Executive
                      Compensation
                  15Item
                      11.
                  Security
                      Ownership of Certain Beneficial Owners
                      and Management and Related Stockholder Matters
                  17Item
                      12.
                  Certain
                      Relationships and Related
                      Transactions
                  17Item
                      13.
                  Exhibits
                  19Item
                      14.
                  Principal
                      Accountant Fees and
                      Services
                  19Signatures
                  20
 3
 **Table
            of Contents**
 **Index
            to Financial
            Statements**
 
 **PART
        I**
 
 **ITEM
                  1.**
                **BUSINESS**
 
 American
          Southwest Holdings, Inc. (the “Company”) was incorporated in the State of
          Delaware on October 20, 1989, and on December 15, 1989 merged with Cordon
          Corporation, a Nevada corporation, with the Delaware entity, Ameriserv
          Financial
          Corporation, being the surviving corporation. We were formed for the primary
          purpose of selling home warranty services pursuant to contracts with homeowners.
          In 1993 we filed for bankruptcy. On April 19, 1994, the U.S. Bankruptcy
          Court,
          Northern District of Texas, issued an order closing and finalizing our
          bankruptcy proceedings. Under the terms of the bankruptcy, we were forced
          to
          liquidate all of our assets. The proceeds were then distributed among our
          creditors, thereby satisfying all of our outstanding debts. We halted operations
          and ceased to do business at the conclusion of the bankruptcy proceedings.
          We
          utilized a “fresh-start” accounting method in our reorganization.
 
 On
          July
          28, 1995, our name was changed from Ameriserv Financial Corporation to
          Namibian
          Copper Mines, Inc. On June 9, 2000, our name was changed from Namibian
          Copper
          Mines, Inc. to American Southwest Holdings, Inc. We entered into an agreement
          to
          acquire the Hiab Copper Project’s mining claims owned by Hiab Copper Co. (Pty)
          Limited. The total purchase consideration was $3,780,000, subject to CPI
          indexation and installments totaling $427,000 were paid to Hiab Copper
          Co. (Pty)
          Limited. In 1998, due to the down turn in copper prices, we withdrew from
          the
          project. We lost our interest in the project at that time.
 
 On
          December 15, 2004 we completed the acquisition of Metal Sands Limited, an
          Australian company (“Metal Sands”), which has 16 exploration licenses and 11
          prospecting licenses throughout the Scott Coastal Plain in Western Australia.
          We
          issued 33,100,000 shares of our common stock to the shareholders of Metal
          Sands.
 In
            April
            2006, we entered into a non-binding letter of intent with a London-based
            entity
            which will invest $5,000,000 in our subsidiary which will own all of
            our
            interest in the Governor Broome tenement. (See “Item 2. Properties,” below.)
            There is no assurance that the $5,000,000 funding of our subsidiary will
            be
            completed. It is anticipated that the Governor Broome subsidiary will be
            listed
            for trading on the London AIM Exchange in the future. Upon completion of
            the
            funding, we anticipate distributing most of our stock in the subsidiary
            to our
            shareholders when such distribution is permitted under applicable rules
            and regulations
            of the various countries in which our shareholders reside. It is presently
            anticipated that our shareholders will be paid cash for fractional shares
            and deminis size blocks of shares due to our shareholders. It is also presently
            anticipated that the subsidiary shares will not be distributed to U.S. residents
            until 2008. If we are successful at receiving funding for the Governor
            Broome project
            on the London AIM Exchange, we will probably seek additional funding
            for other tenements in the same fashion in the future.
 **Employees**
 
 At
            March
            1, 2006, in addition to our President, we employed one person, who was
            an
            employee of our subsidiary, Metal Sands. We presently estimate that this
            number
            of employees should be sufficient for us to complete our planned exploration
            of
            the Metal Sands properties. Additional employees will need to be hired
            if we
            move into the mining stage of development.
 4
 **Table
                of Contents**
 **Index
              to Financial
              Statements**
 **ITEM
                    2.**
                  **PROPERTIES**
 We
            currently maintain an accounting office at 4225 N. Brown Avenue, Scottsdale,
            Arizona 85251 at no cost to us, although the accountant charges us for
            internal
            accounting services provided.
 
 During
            2005, our Metal Sands subsidiary had offices located at 22 Oxford Close,
            Leederville, Western Australia, where it leased approximately 1,300 square
            feet
            of space for a monthly rent of $1,075. These premises were vacated in
            January
            2006.
 Since
            November 2004, Metal Sands has leased a house at 4014 Brockham Highway,
            Karridale, Western Australia,at a weekly rent of $128. This lease has
            been
            extended through August 31, 2006.  This property provides a field office
            for Metal Sands’ employees and consultants while working at the property sites
            in the Scott Coastal Plain.
  **Mining
        Properties**
 
 Our
          subsidiary, Metal Sands, leases its mining properties from the Western
          Australian Department of Industry and Resources (the “DIR”). Mining claims are
          called “tenements” in Western Australia. The DIR issues tenement licenses for
          three categories of mineral leases (in order from most developed to least
          developed): mining leases, exploration licenses, and prospecting licenses.
          The
          DIR license granting process for each category commences with the filing
          of a
          license application. After an application is filed the DIR reviews the
          application and after a period of time grants the application, if no objections
          are made to the application. Any party may file an objection to a license
          application. When an objection is filed, a governmental agent called a
          warden
          conducts a hearing on the objection and makes a ruling in support of or
          against
          the objection. Generally, the DIR follows the warden’s ruling on the objection
          in granting the license application, or modifying the application. If the
          objection is upheld, the applying party may accept the modified license
          application or withdraw its application. A party holding any level tenement
          license, such as a prospecting license on a property preempts any other
          party
          from applying for a higher level license on that property during the license
          term.
  As
          of
          March 1, 2006, we had been granted six exploration licenses and have
          filed 11 exploration license applications and 11 prospecting license
          applications.
 
 **Governor
          Broome Tenement**
 
 At
          present our most promising mining property is the tenement known as the
          Governor
          Broome project. The Governor Broome project is located 21 kilometers
          east-north-east of Augusta, Western Australia in the Scott Coastal Plain.
          Access
          to this property is from the Brockman Highway which is fully paved, and
          15
          kilometers of developed but unpaved Governor Broome Road. Power for future
          mining operations, if any, on this property would come from high tension
          power
          lines crossing the tenement.
 
 The
          Governor Broome tenement has been leased as an exploration license from
          the DIR
          for a term of five years, commencing on January 9, 2002, with a two-year
          extension. The annual rent on this tenement is $3,663, and there is an
          annual expenditure requirement on this tenement as well.
 5
 **Table
                  of Contents**
 **Index
                to Financial
                Statements**
  The
            Governor Broome tenement was previously leased by Kingston Resources
            and Cable
            Sands, Australian mining companies. Three project reports on the Governor
            Broome
            tenement have been previously filed with the DIR.
 
 Our
          subsidiary has performed ground geophysics, including magnetics and radiometrics
          on this tenement; drilled core samples of over 200 core holes; made heavy
          mineral determinations; and performed grain counts and mineralogy. Laboratory
          testing of the core samples leads us to believe, without assurance, that
          a
          commercial grade of titanium ore is present on this tenement.
 
 We
          have
          commenced preliminary engineering studies on the Governor Broome tenement.
          We
          expect to prepare a full feasibility study, including mapping, resource
          and
          reserve studies on this tenement over the next 18 months, at an estimated
          cost
          of $5,000,000, if such working capital can be obtained. Such feasibility
          study
          would satisfy our annual expenditure requirement on this tenement when
          completed.
 
 There
          is
          no mining equipment nor a plant currently located on the Governor Broome
          tenement. A mine, if any, located on this property in the future would
          be an
          open pit mine.
 
 There
          are
          no known mining reserves on the Governor Broome tenement and our planned
          program
          for the tenement is exploratory in nature at the present time.
  **Five
          Other Exploratory Tenements**
 
 We
          currently have been granted five other exploration licenses in the Scott
          Coastal
          Plain from the DIR. There is no mining equipment nor a plant currently
          located
          on any of these five exploratory tenements. A mine, if any, located on
          these
          properties in the future would be an open pit mine. There are no known
          mining
          reserves on these five exploratory tenements and our planned program for
          these
          five licenses is exploratory in nature. We are hopeful, without assurance,
          of
          locating evidence of ores containing titanium on these five exploratory
          tenements during its exploratory work.
 
 The
          location of each of these five exploratory tenements, license information,
          access and power information, prior ownership (if any), prior report information
          (if any) and planned exploration work is set forth below.
 
 The
          exploratory tenement called the Rover Range is located approximately 15
          kilometers north of Augusta, Western Australia. This tenement has been
          leased
          for a term of five years, commencing on November 9, 2001, with a two-year
          extension. The annual rent on this tenement is $1,188, and there is an
          annual
          expenditure requirement on this tenement as well. Access to and power for
          mining
          this tenement would come from Glenarty Road which is paved. This tenement
          was
          previously leased by BHP Minerals and at least one mining report has been
          filed
          on this tenement with the DIR. Metal Sands has completed field work on
          this
          tenement, and presently plans on completing air core drilling on this property
          in the next 12 months, at an estimated cost of $120,000 if such working
          capital
          can be obtained. Such work, when completed, would satisfy our annual expenditure
          requirement on this tenement.
 
 The
          exploratory tenement called Bullant is located approximately 20 kilometers
          north
          of Augusta, Western Australia. This tenement has been leased for two terms
          of
          five years each, commencing on January 9, 2002. The annual rent on this
          tenement
          is $2,772, and there is an annual expenditure requirement on this tenement
          as
          well. Access to and power for mining this tenement would come from McCloud
          Creek
          Road which is paved. This tenement was previously leased by BHP Minerals
          and at
          least one mining report has been filed on this tenement with the DIR. Metal
          Sands has completed field work on this tenement, and presently plans on
          completing air core drilling on this property in the next 12 months, at
          an
          estimated cost of $80,000 if such working capital can be obtained. Such
          work,
          when completed, would satisfy our annual expenditure requirement on this
          tenement.
  6
 **Table
                  of Contents**
 **Index
                to Financial
                Statements**
 The
          exploratory tenement called Witchcliffe East is located approximately 38
          kilometers north of Augusta, Western Australia. This tenement has been
          leased
          for two terms of five years each, commencing on February 17, 2005. The
          annual
          rent on this tenement is $1,782, and there is an annual expenditure requirement
          on this tenement as well. Access to and power for mining this tenement
          would
          come from Brockman Highway which is paved. We have no knowledge that this
          tenement was previously leased from the DIR or of any mining report being
          filed
          on this tenement with the DIR. Metal Sands presently plans on completing
          field
          work and air core drilling on this property in the next 12 months, at an
          estimated cost of $50,000 if such working capital can be obtained. Such
          work,
          when completed, would satisfy the Company’s annual expenditure requirement on
          this tenement.
  The
          exploratory tenement called Witchcliffe South is located approximately
          29
          kilometers north of Augusta, Western Australia. This tenement has been
          leased
          for two terms of five years each, commencing on January 15, 2004. The annual
          rent on this tenement is $990, and there is an annual expenditure requirement
          on
          this tenement as well. Access to and power for mining this tenement would
          come
          from Warner Glen Road which is paved. We have no knowledge that this tenement
          was previously leased from the DIR or of any mining report being filed
          on this
          tenement with the DIR. Metal Sands presently plans on completing field
          work and
          air core drilling on this property in the next 24 months, at an estimated
          cost
          of $200,000 if such working capital can be obtained. Such work, when completed,
          would satisfy our annual expenditure requirement on this tenement.
 The
            exploratory tenement called Regans Ford is located approximately 52 kilometers
            west north-west of GinGin, Western Australia. This tenement has been
            leased for
            two terms of five years each, commencing on January 9, 2005. The annual
            rent on
            this tenement is $1,584, and there is an annual expenditure requirement
            on this
            tenement as well. Access to and power for mining this tenement would
            come from
            Brand Highway which is paved. Portions of this tenement were previously
            leased
            by Hakn. Metal Sands presently plans on completing field work and air
            core
            drilling on this property in the next three years, at an estimated cost
            of
            $400,000 if such working capital can be obtained. Such work, when completed,
            would satisfy our annual expenditure requirement on this tenement.
 
 **11
          Exploration License Applications**
 
 We
          currently have filed with the DIR applications for leasing 11 additional
          exploration tenements in the Scott Coastal Plain region of Western Australia
          and
          at Sea Elephant Bay in Tasmania, which are referred to herein as the
“exploration license applications.”  We can not currently predict when, if
          ever, exploration licenses on these tenements may be granted by the
          DIR.
  The
          tenements for these license applications are all located around Augusta,
          GinGin
          or Eneabba, Western Australia and one license application is located at
          Sea
          Elephant Bay in Tasmania. Access to these 11 properties is from fully paved
          roads. Power for future mining operations, if any, on these properties
          would
          come from these roads. Portions of seven of these 11 exploration tenements
          have
          been leased previously. There is no mining equipment or a plant currently
          located on any of these exploration tenements. A mine, if any, located
          on these
          properties in the future would be an open pit mine. If these exploration
          licenses are granted, of which there is no assurance, we presently plan
          on
          completing field inspection and air core drilling on these tenements over
          the
          next six years, at an estimated cost of $2,000,000 if such working capital
          can
          be obtained. Such work would satisfy our annual expenditure requirement
          on these
          tenements when completed. There are no known mining reserves on these 11
          exploration tenements and our planned program for these 11 exploration
          tenements
          is exploratory in nature.
  7
 **Table
                  of Contents**
 **Index
                to Financial
                Statements**
  We
            are
            hopeful, without assurance, of locating evidence of ores containing titanium
            on
            these 11 exploration tenements during our exploratory
            work.
 
 **11
          Prospecting License Applications**
 
 We
          currently have filed with the DIR applications for leasing 11 prospecting
          tenements in the Scott Coastal Plain region of Western Australia, which
          are
          referred to herein as the “prospecting license applications.” All of these
          prospecting license applications currently have objections filed against
          them.
          We cannot currently predict when, if ever, prospecting licenses may be
          granted
          by the DIR on these prospecting tenements.
 
 The
          prospecting tenements for these license applications are all located within
          32
          to 36 kilometers north from Augusta, Western Australia. Access to these
          11
          properties is from Davis Road which is only partially paved. Power for
          future
          mining operations, if any, on these properties would come from Davis
          Road.
  We
          are
          not aware that any of these 11 prospecting tenements has ever been leased
          previously. There is no mining equipment or a plant currently located on
          any of
          these 11 prospecting tenements. A mine, if any, located on these properties
          in
          the future would be an open pit mine.
 
 If
          these
          prospecting licenses are granted, of which there is no assurance, we presently
          plan on completing a field inspection and air core drilling on these 11
          prospecting tenements over the next three years at an estimated cost of
          $100,000, if such working capital can be obtained. Such work would satisfy
          our
          annual expenditure requirements on these tenements when completed. There
          are no
          known mining reserves on these 11 prospecting tenements and our planned
          program
          for these 11 prospecting tenements is exploratory in nature.
 
 We
          are
          hopeful, without assurance, of locating evidence of ores containing titanium
          on
          these 11 prospecting tenements during our exploratory work.
 **ITEM
                    3.**
                  **LEGAL
                      PROCEEDINGS**
  The
          Company has had no legal
          proceedings during the past fiscal year.
 **ITEM
                4.**
              **SUBMISSION
                  OF MATTERS TO A VOTE OF SECURITY
                  HOLDERS**
 
 No
        matters were submitted to a vote of
        security holders during the fourth quarter of the Company’s 2005 fiscal
        year.
  On
        March 28, 2005, a majority of the Company’s
        shareholders approved an increase in the Company’s authorized common stock to
        300,000,000 shares.
  8
 **Table
            of Contents**
 **Index
          to Financial Statements**
  **PART
        II**
 
 **ITEM
                  5.**
                **MARKET
                    FOR THE COMPANY’S COMMON EQUITY AND RELATED STOCKHOLDER
                    MATTERS**
 
 **Market
        Information**
 
 There
          was
          no trading of our common stock or any other of our securities in a public
          market
          in 2003 or 2004. Our common stock began trading again on the “Pink Sheets-OTC
          market” in January 2005 under the symbol “ASWT.PK.” In March 2006, our stock was
          delisted from the Pink Sheets-OTC market.  After filing this Form 10-KSB
          with the SEC, we may seek reinstatement on the Pink Sheets-OTC market. 
However, there can be no assurance that such reinstatement can be accomplished
          or that a trading market will develop for our common stock in the
          future.
 **Recent
        Sales of Restricted Securities**
  There
          were no unregistered securities of the Company
          sold in the fourth quarter of 2005.  All prior sales of unregistered
          Company securities were previously reported.
  **Stockholders**
 
 The
        Company has approximately 460
        stockholders of record, including nominee firms for securities dealers as
        of
        March 6, 2006.
 
 **Dividends**
  Declaration
            of dividends on our c ommon
            stock is subject to the discretion of the Board of Directors and will
            depend
            upon a number of
            factors, including our future earnings, capital requirements, and financial
            condition. We have not declared
            dividends on our common stock in the past and the management currently
            anticipates that retained
            earnings, if any, in the future will be applied to our expansion and
            development
            rather than the
            payment of dividends.
 **Common
        Stock**
  During
            2004 our authorized capital stock consisted of 100,000,000 shares of
            common
            stock, par value $0.001 per share. On March 28, 2005, a majority of our
            shareholders approved an increase in our authorized capital to 300,000,000
            shares of common stock, par value $0.001 per share. As of March 6, 2006,
            there
            were 140,295,806 shares of common stock issued and outstanding.
 Holders
            of common stock are entitled to one vote for each share held by them of
            record on the books of the Company on each matter to be acted upon by our
            stockholders. The
            holders of common stock have no preemptive or conversion rights, or the
            right to
            cumulate votes for the election of directors, and are not subjectto
            any
            liability for further calls or assessments. There are no redemption or
            sinking
            fund provisions applicableto
            the
            common stock. All
            shares of common stock issued and outstanding are entitled to receive
            such
            dividends, if any, as may be declared by our Board of Directors, in their
            discretion, out of funds legally available for that purpose, and to participate
            pro rata in any distribution of our assets upon liquidation, dissolution or
            winding up. In
            the
            event of our liquidation or dissolution, all assets available for distribution
            after satisfaction of all debts and other liabilities are distributable
            among
            the holders of our common stock.
  9
 **Table
                    of Contents**
 **Index
                  to Financial
                  Statements**
 **Warrants**
  At
            December 31, 2005, there were no warrants outstanding.
 **Transfer
          Agent**
 The
          transfer agent and registrar for the Company’s common stock and warrants is
          Holladay Stock Transfer,
          Inc., 2939 North 67th Place, Scottsdale, Arizona 85251. Its telephone number
          is
          480-481-3940.
 **ITEM
                  6.**
                **MANAGEMENT’S
                    DISCUSSION AND ANALYSIS OR PLAN OF
                    OPERATION**
  **Year
          Ending December 31, 2005**
 
 **Operations.**
  For
            the
            year ending December 31, 2005, the Company experienced a comprehensive loss
            of
            $1,191,469 which was comprised primarily of its other general and administrative
            costs of $942,537, exploration expenses of $246,618 and net foreign
            currency loss and adjustment of $6,012. In comparison, during the year ending
            December 31, 2004, the Company’s
            comprehensive
            loss was $1,014,429. The increase
            in the comprehensive loss in 2005 primarily resulted from increased legal
            and
            accounting expenses incurred in 2005. The Company expects its exploration
            expenses to increase throughout the remainder of 2006 towards the completion
            of its exploration programs on its properties. (See “Item 2.
            Properties.”)
  **Liquidity
            and Capital Resources.**
  The
            Company raised approximately $590,477 from foreign private placements
            and approximately
            $882,192 of Company accounts payable and notes payable were converted
            to equity during the year ended December 31, 2005. The Company will need
            to
            continue substantial fund raising in 2006 and 2007, because the Company’s
            planned exploration program for its mining properties requires expenditures
            of approximately $8,000,000 over the next 5 years, with approximately
            $5,500,000 of exploration expenditures planned for the next two years. (See
            “Item 2. Properties.”)
  In
            April
            2006, we entered into a non-binding letter of intent with a London-based
            entity
            which will invest $5,000,000 in our subsidiary which will own all of
            our
            interest in the Governor Broome tenement. (See “Item 2. Properties,”
above .)
            There
            is no assurance that the $5,000,000 funding of our subsidiary will
            be
            completed. It is anticipated that the Governor Broome subsidiary will be
            listed
            for trading on the London AIM Exchange in the future. Upon completion of
            the
            funding we anticipate distributing most of our stock in the subsidiary
            to our
            shareholders when such distribution is permitted under applicable rules
            and regulations
            of the various countries in which our shareholders reside. It is presently
            anticipated that our shareholders will be paid cash for fractional shares
            and deminis size blocks of shares due to our shareholders. It is also presently
            anticipated that the subsidiary shares will not be distributed to U.S. residents
            until 2008. If we are successful at receiving funding for the Governor
            Broome project
            on the London AIM Exchange, we will probably seek additional funding
            for other tenements in the same fashion in the future.
 10
 **Table
                    of Contents**
 **Index
                  to Financial
                  Statements**
 Since
            we
            have not generated any revenue, we have included a reference to our ability
            to
            continue as a going concern in connection with our financial statements
            for the
            year ended December 31, 2005. Our accumulated deficit at December 31,
            2005 was
            ($14,877,424). All exploration costs are expensed as
            incurred.
  These
          financial statements have been prepared on the going concern basis, which
          assumes that adequate sources of financing will be obtained as required
          and that
          our assets will be realized, and liabilities settled in the ordinary course
          of
          business. Accordingly, these financial statements do not include any adjustments
          related to the recoverability of assets and classification of assets and
          liabilities that might be necessary should we be unable to continue as
          a going
          concern.
  In
          order
          to continue as a going concern, we require additional financing. There
          can be no
          assurance that additional financing will be available to us when needed
          or, if
          available, that it can be obtained on commercially reasonable terms. If
          we are
          not able to continue as a going concern, we would likely be unable to realize
          the carrying value of our assets reflected in the balances set out in the
          preparation of the financial statements.
  The
          Company currently has no commitment for funding all or a portion of its
          future
          exploration expenses from a third party. There is no assurance the Company
          will
          be able to obtain in the near future all or a portion of its future exploration
          expenses.
  **ITEM
                        7.**
                      **FINANCIAL
                          STATEMENTS**
 
 See
              Financial Statements starting at
              page F-1 for this information.
 11
 **Table
                  of Contents**
 **Index
                to Financial
                Statements**
 **ITEM
                  8.**
                **CHANGES
                    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                    DISCLOSURES**
 
 On
            December 3, 2002, our Board of Directors approved the resignation of
            Ashworth,
            Mitchell Brazelton, PLLC (“AMB”) as our certifying accountant. On September 17,
            2003, our Board of Directors approved the engagement of Shelley International
            CPA (“Shelley”) as our certifying accountant.
 
 AMB
            had
            been our certifying accountant for the fiscal years ending December 31,
            1999,
            2000 and 2001. During such three-year period, AMB’s reports on our
            financial statements contained no adverse opinion or disclaimer of opinion,
            nor
            were their reports modified as to uncertainty, audit scope, or accounting
            principles, except for a fourth explanatory paragraph regarding our “ability to
            continue as a going concern.” We had no disagreements with AMB during such
            three-year period and any subsequent interim period preceding the date of
            dismissal on December 3, 2002 on any matter of accounting principles
            or
            practices, financial statement disclosure, or auditing scope or procedure,
            which
            disagreements, if not resolved to the satisfaction of AMB, would have
            caused AMB to make reference to the subject matter of the disagreements in
            connection with their reports.
 
 We
            made
            the contents of our May 3, 2004 Form 8-K filing with the SEC available
            to AMB
            and requested AMB to furnish a letter to the SEC as to whether they
            agreed or disagreed with, or wished to clarify our expression of their
            views. A
            copy of AMB’s letter to the SEC was included as an exhibit to that
            filing.
 
 We
            did
            not consult with Shelley prior to their engagement regarding the application
            of
            any accounting principles or any type of audit opinion that might be
            rendered by
            them. We made the contents of our Form 8-K filing available to Shelley
            and
            requested Shelley to furnish a letter to the Securities and Exchange
            Commission as to whether they agreed or disagreed with, or wished to
            clarify our expression of their views.
 
 On
            March
            28, 2005, our Board of Directors approved the dismissal of Shelley as
            our
            certifying accountant and approved the engagement of Semple & Cooper, LLP
            (“ S&C” )
            as our
            certifying accountant.
 
 Shelley
            had been our certifying accountant for the fiscal years ending December
            31, 2002
            and 2003. During the such two-year period Shelley’ s
            report
            on our financial statements contained no adverse opinion or disclaimer
            of
            opinion, nor was modified as to uncertainty, audit scope, or accounting
            principles, except for a fourth explanatory paragraph regarding our ability
“to
            continue as a going concern.” We had no disagreements with Shelley during such
            two-year period and any subsequent interim periods preceding the date of
            dismissal on March 28, 2005 on any matter of accounting principles or
            practices,
            financial statement disclosure, or auditing scope or procedure, which
            disagreements, if not resolved to the satisfaction of Shelley, would
            have caused
            them to make reference to the subject matter of the disagreements in
            connection
            with their reports.
  We
            did
            not consult with S&C prior to their engagement regarding the
            application of any accounting principles or any type of audit opinion
            that might
            be rendered by them.
  We
              made
              the contents of our Form 8-K filing available to Shelley and requested
              Shelley
              to furnish a letter to the Securities and Exchange Commission as to
              whether they agreed or disagreed with, or wished to clarify our expression
              of their views. A copy of Shelley’s letter to the SEC was included as an exhibit
              to Amendment No. 1 to such Form 8-K filing.
 12
 **Table
                  of Contents**
 **Index
                to Financial Statements**
 **ITEM
                  8A.**
                **CONTROLS
                    AND PROCEDURES**
 
 Our
        President (Chief Executive Officer)
        and Treasurer (Principal Financial Officer), based on the evaluation of our
        disclosure controls and procedures has concluded that, as of December 31,
        2005,
        our disclosure controls and procedures were ineffective to ensure that the
        information we are required to disclose in reports that we file or submit
        under
        the Securities and Exchange Act of 1934 is recorded, processed, summarized
        and
        reported within the time periods specified in Securities and Exchange Commission
        rules and forms. More specifically, the Company identified a material weakness
        due to a lack of sufficient personnel with appropriate knowledge in U.S.
        GAAP
        and lack of sufficient analysis and documentation of the application of U.S.
        GAAP to transactions, including but not limited to equity transactions. 
Management plans to identify an appropriate service provider to eliminate
        this
        material weakness.  During the fiscal year ended December 31, 2005, there
        was no change in our internal control over financial reporting identified
        in
        connection with the evaluation that has materially affected, or is reasonably
        likely to materially affect, our internal control over financial
        reporting.
  13
 **Table
            of Contents**
 **Index
          to Financial Statements**
  **PART
        III**
 
 **ITEM
                  9.**
                **DIRECTORS,
                    EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
                    WITH SECTION
                    16(a) OF THE EXCHANGE
                    ACT**
 
 The
        directors and executive officers of
        the Company are as follows:
  **Name**
              
              **Age**
              
              **Position**Alan
                Doyle
              
              52
              
              President,
                Treasurer, Secretary & DirectorPeter
                Holsworth
              
              62
              
              Director
  **Alan
          Doyle** - Mr.
          Doyle is a 1978 Economic Geology graduate and received a post-Graduate
          diploma
          in Mineral Economics in 1979 from MacQuarie University, Sydney, Australia.
          He
          worked for and held senior positions with several large international resource
          companies prior to entering the financial services industries in the early
          1980s. Mr. Doyle then worked as a mining analyst and in the corporate division
          for two international stock brokers before setting up his own corporate
          advisory
          firm in 1990. In 1990 he formed the investment banking firm of Turnbull
          Doyle
          Resources Pty Ltd. of Sydney, Australia, which invested in various international
          mining projects. In 1996 Mr. Doyle formed Doyle Capital Partners of Sydney,
          Australia as an investment banking firm. In 2001 Mr. Doyle formed Doyle
          Capital,
          Ltd. of Sydney, Australia as an investment banking firm, of which he has
          been
          Director, majority shareholder and chief executive officer until December
          15,
          2005.  (See next paragraph.)  In 2005, Doyle Capital, Ltd. changed its
          name to Africa Pacific Capital Limited.  Mr. Doyle has been our President,
          Chief Executive Officer, Treasurer, Principal Financial Officer, Secretary
          and a
          director since July 1995.
 In
            December 2005, the High Court of Australia dismissed the appeal of an
            Australian Court of Appeals and lower court civil ruling against Mr. Doyle.
            Mr. Doyle was found to have breached his fiduciary and statutory duty
            to an
            Australian corporation of which Mr. Doyle was an officer and director
            in 1996 as
            a
            result of a conflict of interest involving private placement investors
            in the
            Australian corporation. Mr. Doyle’s investment banking firm at the time had conducted
            the private placement. Mr. Doyle claimed his actions were to protect the
            private placement investors from being defrauded in their investment
            because the
            Australian Stock Exchange changed the terms of the private placement
            offering after
            the
            funds were raised. Mr. Doyle was ordered by the High Court to pay a $30,000AU
            fine, as well as the Australian Securities and Investment Commission’s costs
            of
            the appeal. Mr. Doyle was also prohibited from managing any Australian corporation
            for six months, which period expired on June 14, 2006.
 
 **Peter
          Holsworth** - Since
          1999 Mr. Holsworth has been a director of numerous private companies in
          Australia. They have been involved in new product development, commodity
          trading, telecommunications and real estate development. During his business
          career Mr. Holsworth has owned and managed several businesses both in Australia
          and overseas. He is a member of the Institute of Chartered Accountants
          of
          Australia. Mr. Holsworth has been a director of the Company since June
          2000.
 
 **Committees;
          Code Of Ethics**
 
 We
          do not
          currently have any standing committees. Our Board of Directors serves as
          our
          Audit Committee, because we are too small to have an Audit Committee at
          this
          time. We do not have an audit committee financial expert because no one
          on the
          Board of Directors is so qualified.
 14
 **Table
            of Contents**
 **Index
          to Financial Statements**
  We
          have
          not adopted a code of ethics for any of our officers, because we have been
          advised by counsel that any such code of ethics may be materially different
          than
          existing state and federal law, and, if so, may subject our officers to
          personal
          liability in addition to and different from liability under current state
          and
          federal law.
 **Section
        16(a) Beneficial Ownership Reporting Compliance**
 
 Section
        16(a) of the Securities
        Exchange Act of 1934, as amended requires our directors, executive officers
        and
        persons who own more than 10% of our Common Stock to file reports of ownership
        and changes in ownership of our Common Stock. Reporting persons are required
        by
        Securities and Exchange Commission regulations to furnish us with copies
        of all
        Section 16(a) reports they file.  Our officers and directors made all
        required filings during the 2005 fiscal year.
  **ITEM
                  10.**
                **EXECUTIVE
                    COMPENSATION**
 
 The
        following table sets forth for the
        fiscal years ended December 31, 2005, 2004 and 2003, compensation awarded
        or
        paid to the Company’s executive officers and directors. Other than as indicated
        in the table below, no executive officer or director of the Company received
        any
        annual compensation in the years ended December 31, 2005, 2004 or
        2003.
  **Annual
                    Compensation**
                ****
                **Long-Term
                    Compensation**
                ****
                ********
                ****
                ****
                ****
                ****
                ****
                ****
                ****
                ****
                ****
                ****
                ****
                **Securities**
                ****
                ****
                ****
                ****All
                    Other********
                ****
                ****
                ****
                
                
                
                
                **Other
                      Annual**
                
                **Restricted**
                
                **Underlying**
                
                
                
                **Annual****Name
                    and**
                
                
                
                
                
                
                
                **Compensation**
                
                **Stock**
                
                **Options/SARs**
                
                **LTIP**
                
                **Compensation****Principal
                    Position**
                ****
                **Year**
                
                **Salary
                    ($)**
                
                **Bonus
                    ($)**
                
                **($)**
                
                **Awards
                    ($)**
                
                **($)**
                
                **Payouts
                    ($)**
                
                **($)**Alan
                  Doyle
                
                2005
                
                0
                
                0
                
                0
                
                0
                
                0
                
                0
                
                0President,
                  Secretary,
                
                2004
                
                0
                
                0
                
                0
                
                0
                
                0
                
                0
                
                0Treasurer,
                  Director
                
                2003
                
                0
                
                0
                
                0
                
                0
                
                0
                
                0
                
                0Peter
                  Holsworth
                
                2005
                
                0
                
                0
                
                0
                
                0
                
                0
                
                0
                
                0Director
                
                2004
                
                0
                
                0
                
                0
                
                0
                
                0
                
                0
                
                02003
                
                0
                
                0
                
                0
                
                0
                
                0
                
                0
                
                0
 During
          the fiscal year ended December 31, 2005, the Company did not issue any
          warrants
          to any executive officer of the Company. During the fiscal year ended December
          31, 2004, warrants were issued to Doyle Capital, Ltd., an Australian entity
          now
          known as Africa Pacific Capital Limited (“APC”), of which Mr. Doyle is an
          officer, director and principal shareholder, as compensation for APC’s efforts
          in completing the Metals Sands acquisition (the “APC Warrants”).  The APC
          Warrants had an exercise price of $0.04 per share and an expiration date
          of
          December 31, 2007.  The APC Warrants were exercised effective September 30,
          2005 in conversion of $600,000 of debt.
 15
 **Table
            of Contents**
 **Index
          to Financial Statements**
  The
        following table sets forth information concerning each exercise of stock
        options
        and the value of unexercised options (with stock appreciation rights) at
        December 31, 2005, for the Company’s chief executive officer and each other
        officer.
  **Number
                  of Securities**
              
              **Value
                  of****Underlying
                  Unexercised**
              
              **Unexercised
                  In-the-Money****Shares
                  Acquired**
              
              
              
              **Options/SARs
                  At FY-End(#)**
              
              **Options/SARs
                  at FY-End($)****Name**
              
              **On
                  Exercise (#)**
              
              **Value
                  Realized ($)**
              
              **Exercisable/Unexercisable**
              
              **Exercisable/Unexercisable**Alan
                  Doyle
              
              15,000,000
              
              $0.00
                  (1)
              
              0
                  /
                  0
              
              $0
                  / $0
 ______________
  (1)
                  Based
                      on a December 31, 2005 trading price of $0.04 per
                      share.
 The
            Company currently has no pension,
            retirement, annuity, savings or similar benefit plan which provides compensation
            to its executive officers or directors.
  The
              following table sets forth certain
              information concerning equity compensation plans approved by the Company’s
              shareholders and not approved by the Company’s shareholders at December 31,
              2005.
  **Number
                          of**
                      
                      
                      
                      **Number
                          of****Shares
                          to be**
                      
                      **Weighted**
                      
                      **Shares
                          to be****Issued
                          for**
                      
                      **Average
                          Exercise**
                      
                      **Issued
                          for Other****Plan
                          Category**
                      
                      **Compensation**
                      
                      **Price**
                      
                      **Compensation**Approved
                          by Shareholders
                      
                      0
                      
                      0
                      
                      0Not
                        Approved by Shareholders
                      
                      0
                      
                      0
                      
                      0
  16
 **Table
                      of Contents**
 **Index
                    to Financial
                    Statements**
 **ITEM
                11.**
              **SECURITY
                  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
                  STOCKHOLDER MATTERS**
 
 The
        following table sets forth
        information regarding the beneficial ownership of the Company’s Common Stock as
        of March 6, 2006, by (i) all those known by the Company to be the beneficial
        owners of more than 5% of its Common Stock, (ii) each of the Company’s directors
        and officers, and (iii) all of the Company’s directors and executive officers as
        a group.
  **Name
                    of**
                
                **Amount
                    of**
                
                
                **Percent****Beneficial
                    Owner**
                
                **Beneficial
                    Ownership**
                
                
                **of
                    Class**Alan
                    Doyle, President and Director
                
                17,998,001
                    shares
                
                
                12.8%Peter
                  Holsworth, Director
                
                0
                    shares
                
                
                0.0%All
                  officers and directors as a group
                
                17,998,001
                    shares
                
                
                12.8%
 
 
 **ITEM
                12.**
              **CERTAIN
                  RELATIONSHIPS AND RELATED
                  TRANSACTIONS**
 
 On
            September 25, 2000, Doyle Capital, Ltd., an Australian entity now known
            as
            Africa Pacific Capital Limited (“APC”), of which Mr. Alan Doyle, our President,
            is an officer, director and principal shareholder, acquired 700,000 shares
            of
            our common stock and 700,000 warrants exercisable through June 30, 2004
            at an
            exercise price of $0.10 per share. The purchase price of such securities
            was
            $0.10 per share. These securities were sold to APC on the same terms
            as sold to
            other investors at that time.
 
 On
            September 25, 2000, an Australian entity of which Mr. Peter Holsworth,
            one of
            our directors, is an officer, director and principal shareholder, acquired
            500,000 shares of our common stock and 500,000 warrants exercisable through
            June
            30, 2004 at an exercise price of $0.10 per share. The purchase price
            of such
            securities was $0.10 per share. These securities were sold to Mr. Holsworth’s
            company on the same terms as sold to other investors at that time. On
            September
            29, 2000, 2,000,000 warrants, exercisable through June 30, 2004 at an
            exercise
            price of $0.10 per share, were issued to Mr. Holsworth’s company as compensation
            for the services of Mr. Holsworth. We placed no value on these warrants
            for
            financial statement purposes since our last sale of common stock had
            been at
            $0.10 per share, the same price as the exercise price of these
            warrants.
  On
            June
            27, 2002, APC acquired 400,000 shares of our common stock and 400,0000
            warrants
            exercisable through June 30, 2004 at an exercise price of $0.10 per share.
            The
            purchase price of such securities was $0.05 per share. These securities
            were
            sold to APC on the same terms as sold to other investors at that
            time.
 17
 **Table
                  of Contents**
 **Index
                to Financial
                Statements**
  On
            June
            27, 2002, Mr. Doyle acquired 1,000,000 shares of our common stock and
            1,000,0000
            warrants exercisable through June 30, 2004 at an exercise price of $0.10
            per
            share. The purchase price of these securities was $0.05 per share. These
            securities were sold to Mr. Doyle on the same terms as sold to other
            investors
            at that time.
 
 On
            June
            30, 2004, as part of the acquisition of Metals Sands, we converted all
            of our
            outstanding warrants to shares of common stock on the basis of six warrants
            becoming one share of common stock. As part of this warrant conversion, Mr.
            Doyle received 166,667 shares of our common stock in conversion of 1,000,000
            warrants. As part of this warrant conversion, Doyle Resources Capital
            Pty, Ltd.,
            an Australian entity of which Mr. Doyle is an officer, director and principal
            shareholder, received 116,667 shares of our common stock in conversion
            of
            700,000 warrants. As part of this warrant conversion, P.S.G. Doyle Capital,
            Ltd., an Australian entity of which Mr. Doyle is an officer, director
            and
            principal shareholder, received 66,667 shares of our common stock in
            conversion
            of 400,000 warrants. As part of this warrant conversion the Australian
            entity of
            which Mr. Holsworth was an officer, director and principal shareholder,
            received
            416,667 shares of our common stock in conversion of 2,500,000 warrants.
            These
            shares of common stock were issued to Mr. Doyle, Mr. Holsworth and their
            affiliates on the same terms as issued to other warrant holders at that
            time.
  Effective
              September 30, 2005, we terminated the
              management agreement with APC. In connection with the termination, APC
              exercised 15,000,000 warrants to purchase our common stock in exchange
              for the
              forgiveness of all outstanding debt owed to APC. As of September 30,
              2005, the
              Company owed APC $600,000.
 18
 **Table
                  of Contents**
 **Index
                to Financial
                Statements**
 **ITEM
                    13.**
                **EXHIBITS**
 **Exhibit**
                    **Number**
                  ****
                  **Description**3.1(a)(1)
                  
                  Certificate
                    of Incorporation and Certificate and Articles of Merger of Cordon
                    Corporation3.1(b)(2)
                  
                  Certificate
                    of Amendment to Certificate of Incorporation (Name change to
                    Ameriserv
                    Financial Corporation)3.1(c)(3)
                  
                  Certificate
                    of Amendment to Certificate of Incorporation (Name change to
                    Nambian
                    Copper Mines, Inc. - 7/28/95)3.1(d)(4)
                  
                  Certificate
                    of Amendment to Certificate of Incorporation (Name change to
                    American
                    Southwest Holdings, Inc. - 6/9/2000)3.1(e)(5)
                  
                  Certificate
                    of Amendment to Certificate of Incorporation (Increase in authorized
                    capital)3.1(f)(6)
                  
                  Certificate
                    of Amendment to Certificate of Incorporation (Increase in authorized
                    capital)3.2(7)
                  
                  Bylaws4.1(8)
                  
                  Specimen Certificate for
                    Common Stock10.1(9)
                  
                  Heads
                    of Agreement between the Company and Metal Sands Limited dated
                    September
                    15, 2003, together with Amendment dated October 3, 2004, Addendum
                    dated
                    November 12, 2003 and Addendum dated February 9, 200410.2(a)(10)
                  
                  Consulting
                    Agreement between the Company and Doyle Capital Limited, dated
                    August 18,
                    200310.2(b)(11)
                  
                  Update
                    to Consulting Agreement between the Company and Doyle Capital
                    Limited,
                    dated March 1, 200431*
                  
                  Certification
                      pursuant to Section 302 of the Sarbanes-Oxley Act of
                      200232*
                  
                  Certification
                      pursuant to Section 906 of the Sarbanes-Oxley Act of
                      2002
 *
                    Filed
                        herewith.
 (1)
                      Incorporated
                          by reference to Exhibit 3(I) to Form SB-2 Registration Statement
                          #333-49104 filed November 1,
                          2000
 (2)
                          Incorporated
                              by reference to Exhibit 3.1(b) to  Form SB-2 Registration
                              Statement #333-127530 on August 15,
                              2005
 (3)
                  Incorporated
                      by reference to Exhibit 3.1(c) to  Form SB-2 Registration
                      Statement #333-127530 on August 15,
                      2005
 (4)
                  Incorporated
                      by reference to Exhibit 3.1(d) to  Form SB-2 Registration
                      Statement #333-127530 on August 15,
                      2005
 (5)
                  Incorporated
                      by reference to Exhibit 3.1(e) to  Form SB-2 Registration
                      Statement #333-127530 on August 15,
                      2005
 (6)
                  Incorporated
                      by reference to Exhibit 3.1(f) to  Form SB-2 Registration
                      Statement #333-127530 on August 15,
                      2005
 (7)
                    Incorporated
                          by reference to Exhibit 3(II) to Form SB-2 Registration Statement
                          #333-49104 filed November 1,
                          2000
 (8)
                  Incorporated
                    by reference to Exhibit 4.1 to  Form SB-2 Registration
                    Statement #333-127530 on August 15, 2005 (9)
                  Incorporated
                      by reference to Exhibit 2.01 to Form 8-K filed December 17,
                      2004
 (10)
                  Incorporated
                      by reference to Exhibit 10.1 to Form 10-KSB for the Fiscal Year Ended
                      December 31, 2004, filed June 3,
                      2005
 (11)
                  Incorporated
                      by reference to Exhibit 10.2 to Form 10-KSB for the Fiscal
                      Year Ended
                      December 31, 2004, filed June 3,
                      2005
 
 **ITEM
                  14.**
                **PRINCIPAL
                    ACCOUNTANT FEES AND
                    SERVICES**
 
 In
        the fiscal year ended December
        31, 2005, the Company paid $41,700 to its auditor for auditing services,
        $7,800
        for audit-related services, and $0 for tax services. In the fiscal year ended
        December 31, 2004, the Company paid $10,000 to its auditor for auditing
        services, $0 for audit-related services, and $0 for tax services.
  19
 **Table
            of Contents**
 **Index
          to Financial
          Statements**
 **SIGNATURES**
 
 Pursuant
        to the requirements of
        Sections 13 or 15(d) of the Securities and Exchange Act of 1934, the Company
        has
        duly caused this Report to be signed on its behalf by the undersigned, thereunto
        duly authorized.
 
 **AMERICAN
                  SOUTHWEST HOLDINGS, INC.**Date: 
                  June 27, 2006
                By:
                /s/ Alan
                  DoyleAlan
                  DoylePresident
                    (Chief Executive Officer), Treasurer
                  (Principal
                    Financial Officer) and
                    Director
  Date:  June
                  27, 2006
                By:
                /s/ Peter
                  HolsworthPeter
                  HolsworthDirector
 20
 **Table
              of Contents**
 **Index
              to Financial Statements**
  **AMERICAN
            SOUTHWEST HOLDINGS, INC.**
 
 **INDEX
            TO FINANCIAL STATEMENTS**
  PageReport
                        of Semple & Cooper, LLP, Independent Registered
                        Public Accounting Firm
                      F-2Report
                        of BDO Chartered Accountants, Independent
                        Registered Public Accounting Firm
                      F-3Consolidated
                            Balance Sheets
                      F-4Consolidated
                            Statements of Operations and Comprehensive
                            Loss
                      F-5Consolidated
                        Statements of Stockholders’ (Deficit)
                      F-6Consolidated
                        Statements of Cash
                        Flows
                      F-10Notes
                          to Consolidated Financial
                          Statements
                      F-11
 F-1
 **Table
              of Contents**
 **Index
            to Financial
            Statements**






**REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
   Board
          of
          Directors
 American
          Southwest Holdings, Inc.
  We
          have
          audited the accompanying consolidated balance sheets of American Southwest
          Holdings, Inc. as of December 31, 2005 and 2004, and the related consolidated
          statements of operations and comprehensive loss, stockholders’ equity, and cash
          flows for the years then ended and the cumulative period from inception
          (October
          20, 1989) through December 31, 2005. These financial statements are the
          responsibility of the Company’s management. Our responsibility is to express an
          opinion on these financial statements based on our audits. We did not audit
          the
          financial statements of one foreign subsidiary, which statements reflect
          total
          assets of $6,921 as of December 31, 2005, and total revenues of $0 for
          the year
          then ended. Those statements were audited by other auditors whose report
          has
          been furnished to us, and our opinion, insofar as it relates to the amounts
          included for such subsidiary, is based solely on the report of the other
          auditors.
  We
          conducted our audits in accordance with the standards of the Public Company
          Accounting Oversight Board (United States). Those standards require that
          we plan
          and perform the audit to obtain reasonable assurance about whether the
          financial
          statements are free of material misstatement. The Company is not required
          to
          have, nor were we engaged to perform, an audit of its internal control
          over
          financial reporting. Our audit included consideration of internal control
          over
          financial reporting as a basis for designing audit procedures that are
          appropriate in the circumstances, but not for the purpose of expressing
          an
          opinion on the effectiveness of the Company’s internal control over financial
          reporting. Accordingly, we express no such opinion. An audit includes examining,
          on a test basis, evidence supporting the amounts and disclosures in the
          financial statements and schedules. An audit also includes assessing the
          accounting principles used and significant estimates made by management,
          as well
          as evaluating the overall financial statement presentation. We believe
          that our
          audits provide a reasonable basis for our opinion.
  In
          our
          opinion, based on our audits and the report of other auditors for 2005,
          the
          consolidated financial statements referred to above present fairly, in
          all
          material respects, the financial position of American Southwest Holdings,
          Inc.
          at December 31, 2005 and 2004, and the results of its operations and its
          cash
          flows for the years then ended and the cumulative period from inception
          (October
          20, 1989) through December 31, 2005, in conformity with accounting principles
          generally accepted in the United States of America.
  The
          accompanying financial statements have been prepared assuming that the
          Company
          will continue as a going concern. As discussed in Note 1 to the financial
          statements, the Company is in the exploration stage, has incurred losses
          from
          operations, and requires additional funds for further exploratory activity
          prior
          to attaining a revenue generating status. In addition, the Company may
          not find
          sufficient ore reserves to be commercially mined. These conditions raise
          substantial doubt about its ability to continue as a going concern. The
          financial statements do not include any adjustments that might result from
          the
          outcome of these uncertainties.
 
 
 /s/
          Semple & Cooper, LLP
 
 Phoenix,
          Arizona
 May
          15,
          2006




F-2
 **Table
              of Contents**
 **Index
            to Financial Statements**




BDO
              
              Chartered
                  Accountants
                &
                  Advisers
              
              Level
                  8, 256
                  St George’s Terrace Perth WA 6000
                PO
                  Box 7426 Cloisters Square Perth WA 6850
                Tel:
                  (61-8)
                  9360 4200
                Fax:
                  (61-8)
                  9481 2524
                Email:
                  bdo@bdowa.com.au
                **www.bdo.com.au**
   **REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
   **METAL
        SANDS PTY LTD**
  We
        have
        audited the accompanying balance sheets of Metal Sands Pty Ltd as of December
        31, 2005 and December 31, 2004, and the related statements of operations,
        stockholders’
        equity, and cash flows for the years ended December 31, 2005 and December
        31
        2004. These financial statements are the responsibility of the Company's
        management. Our responsibility is to express an opinion on these financial
        statements based on our audits.
  We
        conducted our audits in accordance with the standards of the Public Company
        Accounting Oversight Board (United States). Those standards require that
        we plan
        and perform the audit to obtain reasonable assurance about whether the financial
        statements are free of material misstatement. The Company is not required
        to
        have, nor were we engaged to perform, an audit of its internal control over
        financial reporting. Our audits included consideration of internal control
        over
        financial reporting as a basis for designing audit procedures that are
        appropriate in the circumstances, but not for the purpose of expressing an
        opinion on the effectiveness of the Company’s internal control over financial
        reporting. Accordingly, we express no such opinion. An audit also includes
        examining, on a test basis, evidence supporting the amounts and disclosures
        in
        the financial statements, assessing the accounting principles used and
        significant estimates made by management, as well as evaluating the overall
        financial statement presentation. We believe that our audits provide a
        reasonable basis for our opinion.
  The
        accompanying financial statements have been prepared assuming that the Company
        will continue as a going concern. The Company has suffered recurring losses
        from
        operations and as discussed in Note 1(b)(i)(a) to the financial statements,
        the
        ability of the company to continue as a going concern is dependent upon
        continued financial support from the ultimate holding company, American South
        West Holdings Incorporated. The financial statements do not include any
        adjustments that might result from the outcome of this uncertainty.
  In
        our
        opinion, the financial statements referred to above present fairly, in all
        material respects, the financial position of the Company as at December 31,
        2005
        and December 31, 2004, and the results of its operations and its cash flows
        for
        the years ended December 31, 2005 and December 31, 2004, in conformity with
        United States of America generally accepted accounting principles.
   B.
        McVeigh
 BDO
 **Chartered
        Accountants**
  Perth
        Western Australia
 June
        26,
        2006






F-3
 **Table
            of Contents**
 **Index
          to Financial Statements**


**AMERICAN
                SOUTHWEST HOLDINGS, INC. AND
                SUBSIDIARY****(An
                Exploration Stage Company)****Consolidated
                Balance Sheets****December
                31,****2005**
            
            **2004****ASSETS**Cash
                & cash equivalents
            
            $
            70,422
            
            $
            205,493Receivables
            
            
            2,030
            
            
            3,065Total
                current assets
            
            
            72,452
            
            
            208,558Property
                and equipment, net
            
            
            2,865
            
            
            4,202Mining
                rights
            
            
            33,100
            
            
            33,100Total
                assets
            
            $
            108,417
            
            $
            245,860**LIABILITIES
                AND SHAREHOLDERS’ EQUITY**Accounts
                payable and accrued liabilities
            
            $
            105,503
            
            $
            147,937Due
                to related parties
            
            
            —
            
            
            334,714Loans
                payable to related parties
            
            
            —
            
            
            41,495Total
                current liabilities
            
            
            105,503
            
            
            524,146Common
                stock$.001
                par value, 300,000,000 shares authorized,119,845,806
                and 82,150,806 shares issued andoutstanding
                at December 31, 2005 and 2004,respectively
            
            
            119,846
            
            
            82,151Paid
                in capital
            
            
            14,736,286
            
            
            13,234,217Common
                stock subscribed
            
            
            —
            
            
            67,095Deficit
                accumulated during development stage
            
            
            (14,877,424
            )
            
            (13,655,871
            )Foreign
                currency translation adjustment
            
            
            24,206
            
            
            (5,878
            )Total
                shareholders’ equity
            
            
            2,914
            
            
            (278,286
            )Total
                liabilities and shareholders’ equity
            
            $
            108,417
            
            $
            245,860





The
      accompanying notes are an integral part of the financial
      statements.





F-4
 **Table
          of Contents**


**Index
        to Financial Statements**





**AMERICAN
                SOUTHWEST HOLDINGS, INC. AND
                SUBSIDIARY****(An
                Exploration Stage Company)****Consolidated
                Statements of Operations and Comprehensive Loss****For
                the year ended December 31,**
            
            **Cumulative
                since****2005**
            
            **2004**
            
            **inception,
                10/20/1989**Revenue
                misc. (including interest)
            
            $
            —
            
            $
            —
            
            $
            83,938Other
                general & administrative costs
            
            
            942,537
            
            
            446,324
            
            
            6,302,504Depreciation
            
            
            1,337
            
            
            50
            
            
            1,387Organizational
                costs
            
            
            —
            
            
            —
            
            
            120,000Write
                off of Hiab project
            
            
            —
            
            
            —
            
            
            7,697,615Exploration
                expenses
            
            
            246,618
            
            
            210,015
            
            
            456,633Acquisition
                fee - related party
            
            
            —
            
            
            300,000
            
            
            300,000Costs
                for acquisition of mining rights
            
            
            —
            
            
            61,275
            
            
            61,275General
                & administrative costs
            
            
            1,190,492
            
            
            1,017,664
            
            
            14,939,414Operating
                loss
            
            
            (1,190,492
            )
            
            (1,017,664
            )
            
            (14,855,476
            )Other
                income:Foreign
                currency (loss) gain
            
            
            (36,096
            )
            
            9,113
            
            
            (26,983
            )Other
            
            
            5,035
            
            
            —
            
            
            5,035Loss
                before income taxes
            
            
            (1,221,553
            )
            
            (1,008,551
            )
            
            (14,877,424
            )Provision
                for income taxes
            
            
            —
            
            
            —
            
            
            —Net
                loss
            
            $
            (1,221,553
            )
            $
            (1,008,551
            )
            $
            (14,877,424
            )Foreign
                currency translation adjustment
            
            
            30,084
            
            
            (5,878
            )
            
            24,206Comprehensive
                loss
            
            $
            (1,191,469
            )
            $
            (1,014,429
            )
            $
            (14,853,218
            )Net
                loss per share - basic & diluted
            
            $
            (0.01
            )
            $
            (0.03
            )Weighted
                average shares outstanding
            
            
            96,616,474
            
            
            37,585,590





The
      accompanying notes are an integral part of the financial
      statements.





F-5
 **Table
          of Contents**


**Index
        to Financial
        Statements**


**AMERICAN
            SOUTHWEST HOLDINGS, INC. AND
            SUBSIDIARY**
 **(An
          Exploration Stage Company)**


**Consolidated
      Statements of Stockholders’ (Deficit)**




**Accumulated**
              
              ********
              
              ****
              
              ****
              
              ****
              
              ****
              
              ****
              
              **Other**
              
              ******Common
                  Stock**
              
              **Paid
                  in**
              
              **Stock**
              
              **Accumulated**
              
              **Comprehensive**
              
              **Total******
              
              **Shares**
              
              **Amount**
              
              **Capital**
              
              **Subscribed**
              
              **Deficit**
              
              **Income**
              
              **Equity**Balance,
                  July 28, 1995
              
              
              30,367
              
              $
              30
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              30Shares
                  issued for services
              
              
              2,000,000
              
              
              2,000
              
              
              74,202
              
              
              —
              
              
              —
              
              
              —
              
              
              76,202Shares
                  issued for cash
              
              
              2,967,493
              
              
              2,967
              
              
              441,747
              
              
              —
              
              
              —
              
              
              —
              
              
              444,714Shares
                  subscribed,145,000
                  shares at $3.50 per share
              
              
              —
              
              
              —
              
              
              —
              
              
              507,500
              
              
              —
              
              
              —
              
              
              507,500Net
                  (Loss)
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (879,868
              )
              
              —
              
              
              (879,868
              )Balance,
                  December 31, 1995
              
              
              4,997,860
              
              
              4,997
              
              
              515,949
              
              
              507,500
              
              
              (879,868
              )
              
              —
              
              
              148,578Issuance
                  of subscribed shares
              
              
              145,000
              
              
              145
              
              
              507,355
              
              
              (507,500
              )
              
              —
              
              
              —
              
              
              —Shares
                  issued for cash, $3.50 per share
              
              
              604,900
              
              
              605
              
              
              2,116,545
              
              
              —
              
              
              —
              
              
              —
              
              
              2,117,150Shares
                  issued for cash, $5.00 per share
              
              
              490,200
              
              
              491
              
              
              2,450,509
              
              
              —
              
              
              —
              
              
              —
              
              
              2,451,000Shares
                  subscribed,85,000
                  shares at $3.50 per share
              
              
              —
              
              
              —
              
              
              —
              
              
              297,500
              
              
              —
              
              
              —
              
              
              297,500Shares
                  issued for mining properties, 1,000,000 shares at $3.50 per
                  share
              
              
              —
              
              
              —
              
              
              —
              
              
              3,500,000
              
              
              —
              
              
              —
              
              
              3,500,000Net
                  (Loss)
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (2,327,161
              )
              
              —
              
              
              (2,327,161
              )Balance,
                  December 31, 1996
              
              
              6,237,960
              
              
              6,238
              
              
              5,590,358
              
              
              3,797,500
              
              
              (3,207,029
              )
              
              —
              
              
              6,187,067Issuance
                  of subscribed shares
              
              
              1,085,000
              
              
              1,085
              
              
              3,796,415
              
              
              (3,797,500
              )
              
              —
              
              
              —
              
              
              —Shares
                  issued for cash, $2.50 per share
              
              
              370,000
              
              
              370
              
              
              924,630
              
              
              —
              
              
              —
              
              
              —
              
              
              925,000Shares
                  issued for services, $0.93 per share
              
              
              498,000
              
              
              498
              
              
              463,182
              
              
              —
              
              
              —
              
              
              —
              
              
              463,680Net
                  (Loss)
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (6,391,554
              )
              
              —
              
              
              (6,391,554
              )Balance,
                  December 31, 1997
              
              
              8,190,960
              
              
              8,191
              
              
              10,774,585
              
              
              —
              
              
              (9,598,583
              )
              
              —
              
              
              1,184,193
 The
        accompanying notes are an integral part of the financial
        statements.
 F-6
 **Table
                of Contents**
 **Index
              to Financial Statements**
 **AMERICAN
              SOUTHWEST HOLDINGS, INC. AND
              SUBSIDIARY**
 **(An
            Exploration Stage Company)**
 **Consolidated
        Statements of Stockholders’ (Deficit)**
 (Continued)
  **Accumulated**
                
                ********
                
                ****
                
                ****
                
                ****
                
                ****
                
                ****
                
                **Other**
                
                ******Common
                    Stock**
                
                **Paid
                    in**
                
                **Stock**
                
                **Accumulated**
                
                **Comprehensive**
                
                **Total******
                
                **Shares**
                
                **Amount**
                
                **Capital**
                
                **Subscribed**
                
                **Deficit**
                
                **Income**
                
                **Equity**Issuance
                    of shares for conversion of debt at $0.44 per share
                
                
                1,072,990
                
                
                1,073
                
                
                468,897
                
                
                —
                
                
                —
                
                
                —
                
                
                469,970Net
                    (Loss)
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                (1,700,877
                )
                
                —
                
                
                (1,700,877
                )Balance,
                    December 31, 1998
                
                
                9,263,950
                
                
                9,264
                
                
                11,243,482
                
                
                —
                
                
                (11,299,460
                )
                
                —
                
                
                (46,714
                )Shares
                    issued for cash, $0.02 per share
                
                
                900,000
                
                
                900
                
                
                17,100
                
                
                —
                
                
                —
                
                
                —
                
                
                18,000Shares
                    issued for services, $0.02 per share
                
                
                100,000
                
                
                100
                
                
                1,900
                
                
                —
                
                
                —
                
                
                —
                
                
                2,000Shares
                    issued for cash, $0.10 per share
                
                
                680,000
                
                
                680
                
                
                67,320
                
                
                —
                
                
                —
                
                
                —
                
                
                68,000Net
                    (Loss)
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                (146,604
                )
                
                —
                
                
                (146,604
                )Balance,
                  December 31, 1999
                
                
                10,943,950
                
                
                10,944
                
                
                11,329,802
                
                
                —
                
                
                (11,446,064
                )
                
                —
                
                
                (105,318
                )Shares
                    issued for services,900,000
                    shares at $0.10 per share
                
                
                900,000
                
                
                900
                
                
                89,100
                
                
                —
                
                
                —
                
                
                —
                
                
                90,000Shares
                    issued for cash with warrants attached at $0.09 per share
                
                
                2,400,000
                
                
                2,400
                
                
                213,600
                
                
                —
                
                
                —
                
                
                —
                
                
                216,000Warrants
                
                
                —
                
                
                —
                
                
                24,000
                
                
                —
                
                
                —
                
                
                —
                
                
                24,000Shares
                    issued for services,1,500,000
                    shares at $0.15 per share
                
                
                1,500,000
                
                
                1,500
                
                
                223,500
                
                
                —
                
                
                —
                
                
                —
                
                
                225,000Shares
                    issued for cash with warrants attached,1,600,000
                    shares at $0.09 per share
                
                
                1,600,000
                
                
                1,600
                
                
                142,400
                
                
                —
                
                
                —
                
                
                —
                
                
                144,000Warrants
                
                
                —
                
                
                —
                
                
                16,000
                
                
                —
                
                
                —
                
                
                —
                
                
                16,000Shares
                    issued for cash,1,520,000
                    shares at $0.10 per share
                
                
                1,520,000
                
                
                1,520
                
                
                150,480
                
                
                —
                
                
                —
                
                
                —
                
                
                152,000Warrants
                    issued for services rendered,5,750,000
                    warrants with value of $0.01 per warrant
                
                
                —
                
                
                —
                
                
                57,500
                
                
                —
                
                
                —
                
                
                —
                
                
                57,500Net
                    (Loss)
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                (945,964
                )
                
                —
                
                
                (945,964
                )Balance,
                    December 31, 2000
                
                
                18,863,950
                
                
                18,864
                
                
                12,246,382
                
                
                —
                
                
                (12,392,028
                )
                
                —
                
                
                (126,782
                )
 The
          accompanying notes are an integral part of the financial statements. F-7
 **Table
                of Contents**
 **Index
              to Financial
              Statements**
 **AMERICAN
              SOUTHWEST HOLDINGS, INC. AND
              SUBSIDIARY**
 **(An
              Exploration Stage Company)**
 **Consolidated
          Statements of Stockholders’ (Deficit)**
 (Continued)
  **Accumulated**
                
                ********
                
                ****
                
                ****
                
                ****
                
                ****
                
                ****
                
                **Other**
                
                ******Common
                    Stock**
                
                **Paid
                    in**
                
                **Stock**
                
                **Accumulated**
                
                **Comprehensive**
                
                **Total******
                
                **Shares**
                
                **Amount**
                
                **Capital**
                
                **Subscribed**
                
                **Deficit**
                
                **Income**
                
                **Equity**Net
                    (Loss)
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                (60,608
                )
                
                —
                
                
                (60,608
                )Balance,
                  December 31, 2001
                
                
                18,863,950
                
                
                18,864
                
                
                12,246,382
                
                
                —
                
                
                (12,452,636
                )
                
                —
                
                
                (187,390
                )Shares
                    issued for cash,400,000
                    shares at $0.04 per share
                
                
                400,000
                
                
                400
                
                
                15,600
                
                
                —
                
                
                —
                
                
                —
                
                
                16,000Warrants
                    issued with stock,400,000
                    warrants at $0.01 per warrant
                
                
                —
                
                
                —
                
                
                4,000
                
                
                —
                
                
                —
                
                
                —
                
                
                4,000Shares
                    issued for debt at $0.04 per share
                
                
                2,900,000
                
                
                2,900
                
                
                113,100
                
                
                —
                
                
                —
                
                
                —
                
                
                116,00029,000
                    warrants issued at $0.01 per warrant
                
                
                —
                
                
                —
                
                
                29,000
                
                
                —
                
                
                —
                
                
                —
                
                
                29,000Net
                    (Loss)
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                (57,298
                )
                
                —
                
                
                (57,298
                )Balance,
                    December 31, 2002
                
                
                22,163,950
                
                
                22,164
                
                
                12,408,082
                
                
                —
                
                
                (12,509,934
                )
                
                —
                
                
                (79,688
                )Shares
                    issued for services at $0.01 per share
                
                
                6,000,000
                
                
                6,000
                
                
                56,092
                
                
                —
                
                
                —
                
                
                —
                
                
                62,092Net
                    (Loss)
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                (137,386
                )
                
                —
                
                
                (137,386
                )Balance,
                    December 31, 2003
                
                
                28,163,950
                
                
                28,164
                
                
                12,464,174
                
                
                —
                
                
                (12,647,320
                )
                
                —
                
                
                (154,982
                )Shares
                    and warrants issued for cash, net of costs of $7,168
                
                
                15,750,000
                
                
                15,750
                
                
                397,880
                
                
                —
                
                
                —
                
                
                —
                
                
                413,630Shares
                    issued for services
                
                
                961,851
                
                
                962
                
                
                18,275
                
                
                —
                
                
                —
                
                
                —
                
                
                19,237Issuance
                    of stock for cancellation of warrants
                
                
                2,175,005
                
                
                2,175
                
                
                35,888
                
                
                —
                
                
                —
                
                
                —
                
                
                38,063Shares
                    issued for debt at $0.01 per share
                
                
                2,000,000
                
                
                2,000
                
                
                18,000
                
                
                —
                
                
                —
                
                
                —
                
                
                20,000Shares
                    issued in connection with acquisition of Metal Sands
                    Limited
                
                
                33,100,000
                
                
                33,100
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                33,100Warrants
                    issued to related party for facilitation of acquisition
                
                
                —
                
                
                —
                
                
                300,000
                
                
                —
                
                
                —
                
                
                —
                
                
                300,000Common
                    stock subscribed
                
                
                —
                
                
                —
                
                
                —
                
                
                67,095
                
                
                —
                
                
                —
                
                
                67,095Currency
                    translation
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                (5,878
                )
                
                (5,878
                )Net
                    (Loss)
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                (1,008,551
                )
                
                —
                
                
                (1,008,551
                )Balance,
                    December 31, 2004
                
                
                82,150,806
                
                $
                82,151
                
                $
                13,234,217
                
                $
                67,095
                
                $
                (13,655,871
                )
                $
                (5,878
                )
                $
                (278,286
                )
 The
          accompanying notes are an integral part of the financial statements. F-8
 **Table
                of Contents**
 **Index
              to Financial
              Statements**
  **AMERICAN
              SOUTHWEST HOLDINGS, INC. AND
              SUBSIDIARY**
 (An
              Exploration Stage Company)
 **Consolidated
              Statements of Stockholders’ (Deficit)**
 (Continued)
  **Accumulated**
                  
                  ********
                  
                  ****
                  
                  ****
                  
                  ****
                  
                  ****
                  
                  ****
                  
                  **Other**
                  
                  ******Common
                      Stock**
                  
                  **Paid
                      in**
                  
                  **Stock**
                  
                  **Accumulated**
                  
                  **Comprehensive**
                  
                  **Total******
                  
                  **Shares**
                  
                  **Amount**
                  
                  **Capital**
                  
                  **Subscribed**
                  
                  **Deficit**
                  
                  **Income**
                  
                  **Equity**Shares
                      issued for cash and exercise of warrants, net of costs of
                      $20,613
                  
                  
                  15,870,000
                  
                  
                  15,870
                  
                  
                  641,702
                  
                  
                  (67,095
                  )
                  
                  —
                  
                  
                  —
                  
                  
                  590,477Shares
                      issued in connection with termination of APC agreement and
                      exercise of
                      warrants
                  
                  
                  15,000,000
                  
                  
                  15,000
                  
                  
                  585,000
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  600,000Shares
                      issued for debt at $0.04 per share
                  
                  
                  6,825,000
                  
                  
                  6,825
                  
                  
                  275,367
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  282,192Currency
                      Translation
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  30,084
                  
                  
                  30,084Net
                      (Loss)
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  —
                  
                  
                  (1,221,553
                  )
                  
                  —
                  
                  
                  (1,221,553
                  )Balance,
                      December 31, 2005
                  
                  
                  119,845,806
                  
                  $
                  119,846
                  
                  $
                  14,736,286
                  
                  $
                  —
                  
                  $
                  (14,877,424
                  )
                  $
                  24,206
                  
                  $
                  2,914
 The
            accompanying notes are an integral part of the financial statements. F-9
 **Table
                  of Contents**
 **Index
                to Financial
                Statements**





**AMERICAN
                SOUTHWEST HOLDINGS, INC. AND
                SUBSIDIARY****(An
                Exploration Stage Company)****Consolidated
                Statements of Cash Flows****For
                the year ended December 31,**
            ****
            **Cumulative
                since**
            ********
            ****
            **2005**
            ****
            **2004**
            ****
            **inception,
                10/20/1989**Cash
                flows from operating activities net of Metal Sands
                acquisition:Reconciliation
                of net loss to net cashused
                by operating activities:Net
                loss:
            
            $
            (1,221,553
            )
            $
            (1,008,551
            )
            $
            (14,877,424
            )Adjustments
                to reconcile net loss to net cashused
                by operating activities:Depreciation
            
            
            1,337
            
            
            50
            
            
            1,387Stock
                and warrants issued in exchange for services
            
            
            —
            
            
            361,275
            
            
            707,867Stock
                issued for cancellation of warrants
            
            
            —
            
            
            38,063
            
            
            38,063Changes
                in Operating Assets and Liabilities:Accounts
                receivable
            
            
            1,035
            
            
            179
            
            
            1,214Accounts
                payable and accrued liabilities
            
            
            239,758
            
            
            (16,294
            )
            
            383,025Due
                to related parties
            
            
            223,791
            
            
            316,876
            
            
            540,667Net
                cash used by operating activities
            
            
            (755,632
            )
            
            (308,402
            )
            
            (13,205,201
            )Cash
                flows from investing activities:Purchase
                of property and equipment
            
            
            —
            
            
            (172
            )
            
            (172
            )Costs
                related to acquisition of Metal Sands Limited
            
            
            —
            
            
            (24,038
            )
            
            (24,038
            )Cash
                received from acquisition of Metal Sands
            
            
            —
            
            
            169,601
            
            
            169,601Amounts
                lent to Metal Sands prior to acquisition
            
            
            —
            
            
            (117,437
            )
            
            (117,437
            )Net
                cash provided by investing activities
            
            
            —
            
            
            27,954
            
            
            27,954Cash
                flows from financing activities:Sale
                of stock and warrants
            
            
            590,477
            
            
            420,828
            
            
            13,157,051Net
                borrowings from related parties
            
            
            —
            
            
            4,515
            
            
            4,515Stock
                issue costs
            
            
            —
            
            
            (5,198
            )
            
            (5,198
            )Stock
                subscription deposits
            
            
            —
            
            
            67,095
            
            
            67,095Net
                cash provided by financing activities
            
            
            590,477
            
            
            487,240
            
            
            13,223,463Effect
                of exchange rate on cash
            
            
            30,084
            
            
            (5,878
            )
            
            24,206Net
                (decrease) increase in cash
            
            
            (135,071
            )
            
            200,914
            
            
            70,422Cash
                and cash equivalents at beginning of period
            
            
            205,493
            
            
            4,579
            
            
            —Cash
                and cash equivalents at end of period
            
            $
            70,422
            
            $
            205,493
            
            $
            70,422




The
      accompanying notes are an integral part of the financial
      statements.





F-10
 **Table
                of Contents**
 **Index
                  to Financial Statements**
 **AMERICAN
            SOUTHWEST HOLDINGS, INC. AND
            SUBSIDIARY**
 **(An
            Exploration Stage Company)**
 **Notes
            to Consolidated Financial Statements**


**1.**
              **Summary
                  of Significant Accounting Policies and Use of Estimates:**


*Nature
      of the Corporation:*


American
      Southwest Holdings, Inc. (formerly Namibian Copper Mines, Inc.) is a mineral
      development company. It has previously investigated and initially invested
      in
      the Hiab Copper Project. The fund raising for this project was unsuccessful
      and
      all initial investment was lost and written off. Currently, the Company is
      investigating projects in Australia. In accordance with SFAS 7 the Company
      is
      considered an exploration stage company.





The
      Company was incorporated in the state of Delaware on October 20, 1989, under
      the
      name of Cordon Corporation and subsequently changed its name to Ameriserv
      Financial Corporation (Ameriserv). On April 19, 1994, bankruptcy proceedings
      for
      Ameriserv finalized in the US Bankruptcy Court, Northern District of Texas.
      Under the terms of the bankruptcy, the Company was forced to liquidate all
      of
      its assets. The proceeds were then distributed among the creditors, thereby
      satisfying all of the Company’s outstanding debts. The Company halted operations
      and ceased to do business at the conclusion of the bankruptcy proceedings.
      The
      Company utilized fresh-start accounting in its reorganization effective July
      28,
      1995.





On
      July
      28, 1995 the name was changed to Namibian Copper Mines, Inc. and the Company
      invested in the feasibility study of the Hiab Copper Project Namibia. Funds
      were
      raised through private placement and the Company earned an interest in this
      project. As a result of falling copper prices, the project became marginal
      and
      the Company made the decision to withdraw from the project.




On
      June
      9, 2000 the name was changed to American Southwest Holdings, Inc.





During
      the year ended December 31, 2004, the Company acquired Metal Sands Limited
      (“MSL”) (See Note 7). MSL is a mineral sands development company incorporated in
      Australia, with mineral sands tenements held in South West of Western Australia.
      MSL was incorporated in Australia on September, 8, 2000, as Rainbow Nominees
      Pty
      Ltd. MSL changed its name to Metal Sands Pty Limited on May 28, 2001, and to
      Metal Sands Pty Ltd on May 12, 2002. On June 21, 2002, MSL converted to an
      Australian public liability company, Metal Sands Limited. Metal Sands Limited
      had de minimus operations from December 15, 2004, the date of acquisition,
      through December 31, 2004.





*Basis
      of Presentation and Going Concern*


The
      accompanying statements have been prepared following accounting standards
      generally accepted in the United States of America. The statements have been
      prepared assuming that the Company will continue as a going concern. The
      financial statements do not include any adjustments relating to the
      recoverability and classification of recorded asset amounts or the amounts
      and
      classification of liabilities that might be necessary should the Company be
      unable to continue as a going concern (See Note 2).





In
      the
      opinion of management, the accompanying financial statements reflect all
      adjustments (which include only normal recurring adjustments) and
      reclassifications for comparability necessary to present fairly the financial
      position and results of operations of the Company. These statements are based
      upon information currently available to management. F-11
 **Table
                of Contents**
 **Index
                  to Financial Statements**
 **AMERICAN
            SOUTHWEST HOLDINGS, INC. AND SUBSIDIARY**
 **(An
            Exploration Stage Company)**
 **Notes
            to Consolidated Financial Statements (continued)**


**1.**
              **Summary
                  of Significant Accounting Policies and Use of Estimates (continued):**


*Accounting
      Estimates:*


The
      preparation of financial statements in conformity with generally accepted
      accounting principles 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.





*Principles
      of Consolidation* :


The
      accompanying consolidated financial statements include the accounts of the
      Company and its wholly owned subsidiary, Metal Sands Limited, from the date
      of acquisition, December 15, 2004. MSL has adopted the Australian
      dollar as its reporting currency for its financial statements as the Australian
      dollar is the primary economic environment in which the Company conducts its
      business and is considered the appropriate functional currency for its
      operations. For purposes of consolidation, all assets and liabilities figures
      for MSL have been converted to United States Currency with the exchange rate
      as
      of the end of the period. All equity figures are converted based on the
      historical conversion rates for the balance sheet date first report. All
      Statement of Operations figures have been converted using the average exchange
      rate for the period.





Intercompany
      transactions and balances have been eliminated in consolidation.





*Environmental
      and Reclamation Costs:*


The
      operations of the Company have been and may be in the future be affected from
      time to time in varying degrees by changes in environmental regulations,
      including those for future removal and site restoration costs. The likelihood
      of
      new regulations and their overall effect upon the Company are not predictable.
      The Company will provide for any reclamation costs in accordance with Financial
      Accounting Standard No. 143,”Accounting for Asset Retirement
      Obligations”.





*Mineral
      Properties:*


In
      accordance with U.S. GAAP, exploration, mineral property evaluation, holding
      costs, option payments and related acquisition costs for mineral properties
      acquired under an option agreement are expensed as incurred. When proven and
      probable reserves are determined for a property and a bankable feasibility
      study
      is completed, then subsequent exploration and development costs on the property
      would be capitalized. Total capitalized cost of such properties is measured
      for
      recoverability of carrying value under SFAS No. 144, “Accounting for the
      Impairment or Disposal of Long-Lived Assets”.





*Cash
      and Cash Equivalents:*


For
      purposes of balance sheet classification and the statements of cash flows,
      the
      Company considers all highly liquid investments purchased with an original
      maturity of three months or less to be cash equivalents.





*Accounts
      Receivable:*


Included
      in accounts receivable are receivables that represent expense reimbursements
      due
      to MSL from third parties. F-12
 **Table
                of Contents**
 **Index
                  to Financial Statements**
 **AMERICAN
            SOUTHWEST HOLDINGS, INC. AND SUBSIDIARY**
 **(An
            Exploration Stage Company)**
 **Notes
            to Consolidated Financial Statements (continued)**


**1.**
              **Summary
                  of Significant Accounting Policies and Use of Estimates (continued):**


*Property
      and Equipment:*


Property
      and equipment are stated at the lower of cost or net realizable value.
      Depreciation is provided by the straight-line method over the estimated service
      lives of the respective assets, which range from 5 to 15 years.





*Valuation
      of Long-lived Assets:*


In
      accordance with SFAS No. 144, long-lived assets such as property, plant and
      equipment are reviewed for impairment whenever events or changes in
      circumstances indicate that the carrying amount of an asset may not be
      recoverable. Recoverability of assets to be held and used is measured by a
      comparison of the carrying amount of an asset to estimated undiscounted future
      cash flows expected to be generated by the asset. If the carrying value of
      an
      asset exceeds its estimated future cash flows, an impairment charge is
      recognized for the amount by which the carrying amount of the asset exceeds
      the
      fair value of the asset. Assets to be disposed of would be separately presented
      in the balance sheet and reported at the lower of the carrying amount or fair
      value less costs to sell, and are no longer depreciated.





*Net
      Loss per Share:*


The
      Company computes and discloses earnings and loss per share in accordance with
      SFAS No. 128, “Earnings Per Share”, which requires dual presentation of basic
      earnings per share and diluted earnings per share on the face of all income
      statements presented for all entities with complex capital structures. Basic
      earnings per share is computed as net income divided by weighted average number
      of ordinary shares outstanding for the period. Diluted earnings per share
      reflects the potential dilution that could occur from ordinary shares issuable
      through share options. Since all of the Company’s share options are antidilutive
      for all periods presented, there is no difference between basic earnings per
      share and diluted earnings per share. As of December 31, 2004, the Company
      had
      potentially dilutive securities of 19,000,000. As of December 31, 2005, the
      Company has no potentially dilutive securities outstanding.




*Fair
      Value of Financial Instruments:*


The
      carrying amount reported in the balance sheets for receivables, accounts payable
      and accrued expenses and notes payable approximate fair value because of the
      immediate or short term maturity of these financial instruments.





*Stock
      Based Compensation:*


The
      Company accounts for its stock based compensation based upon provisions in
      SFAS
      No. 123, *Accounting
      for Stock-Based Compensation* .
      In this
      statement stock based compensation is based on the fair value method for the
      valuation of its securities given as compensation to employees.




SFAS
      123
      provides that stock compensation paid to non employees be recorded with a value
      which is based upon the fair value of the services rendered or the stock given,
      whichever is more reliable. The common stock paid to non-employees was valued
      on
      the fair value of the services rendered.


F-13
 **Table
                of Contents**
 **Index
                  to Financial Statements**
 **AMERICAN
            SOUTHWEST HOLDINGS, INC. AND SUBSIDIARY**
 **(An
            Exploration Stage Company)**
 **Notes
            to Consolidated Financial Statements (continued)**


**1.**
              **Summary
                  of Significant Accounting Policies and Use of Estimates (continued):**





Mining
        Rights:
 Mining
        Rights represents the Company’s purchase price of the mining rights held by MSL.
        The Company has the right to mine various mineral sands tenements held in
        the
        South West territory of Western Australia. The mining rights will be amortized
        on a units of production basis. As of December 31, 2005, the total units
        of
        production have not been determined and no amortization has been recorded. 
The
        Company does not believe that any impairment of value adjustment is required
        as
        of December 31, 2005.
  *Recent
        Accounting Pronouncements:*


Below
      is
      a listing of the most recent United States of America accounting standards
      and
      their affect on the Company.




*SFAS
      150 - Accounting for Certain Financial Instruments with Characteristics of
      both
      Liabilities and Equity* .
      SFAS
      150 establishes standards for how an issuer classifies and measures certain
      financial instruments with characteristics of both liabilities and equity.
      It
      requires that an issuer classify a financial instrument that is within its
      scope
      as a liability (or an asset in some circumstances). Many of those instruments
      were previously classified as equity. SFAS 150 is effective for financial
      instruments entered into or modified after May 31, 2003, and is otherwise
      effective at the beginning of the first interim period beginning after June
      15,
      2003, except for mandatorily redeemable financial instruments of nonpublic
      entities. It is to be implemented by reporting the cumulative effect of a change
      in an accounting principle for financial instruments created before the issuance
      date of the Statement and still existing at the beginning of the interim period
      of adoption. Restatement is not permitted. The Company’s adoption of this
      statement did not have a material financial affect.





*SFAS
      153 - Exchanges of Nonmonetary Assets.* This
      statement amends the guidance in APB No. 29, “Accounting for Nonmonetary
      Assets.” APB No. 29 was based on the principle that exchanges of nonmonetary
      assets should be measured on the fair value of the assets exchanged. SFAS 153
      amends APB No. 29 to eliminate the exception for nonmonetary exchanges of
      similar productive assets and replaces it with a general exception for exchanges
      of nonmonetary assets that do not have commercial substance if the future cash
      flows of the entity are expected to change significantly as a result of the
      exchange. SFAS 153 is effective for financial statements issued for fiscal
      years
      beginning after June 15, 2005. Management does not anticipate any financial
      effect of adopting this statement on the Company’s financial position or results
      of operations. F-14
 **Table
                of Contents**
 **Index
                  to Financial Statements**
 **AMERICAN
            SOUTHWEST HOLDINGS, INC. AND SUBSIDIARY**
 **(An
            Exploration Stage Company)**
 **Notes
            to Consolidated Financial Statements (continued)**





**1.**
            **Summary
                of Significant Accounting Policies and Use of Estimates (continued):**





*Recent
      Accounting Pronouncements (continued):*





*SFAS
      154 - Accounting Changes and Error Corrections.* This
      statement is a replacement of APB Opinion No. 20, “Accounting Changes” and FASB
      Statement No. 3, “Reporting Accounting Changes in Interim Financial Statements.”
SFAS 154 Applies to all voluntary changes in accounting principle and changes
      the requirements for accounting for and reporting a change in accounting
      principle. SFAS 154 requires the retrospective application to prior periods’
financial statements of the direct effect of a voluntary change in accounting
      principle unless it is impracticable. APB No. 20 required that most voluntary
      changes in accounting principle be recognized by including in net income of
      the period of the change the cumulative effect of changing to the new
      principle. FASB stated that SFAS 154 improves financial reporting because its
      requirements enhance the consistency of financial information between periods.
      The Company has elected early adoption of SFAS 154.




*SFAS
      123(R) - Accounting for Stock-Based Compensation.* This
      statement established standards for the accounting for transactions in which
      an
      entity exchanges its equity instruments for goods or services and focuses
      primarily on accounting for transactions in which an entity obtains employee
      services in share-based payment transactions. It does not change the accounting
      guidance for share-based payment transactions with parties other than employees.
      For public entities that file as small business issuers, the revisions to SFAS
      123(R) are effective as of the beginning of the first interim or annual
      reporting period that begins after December 15, 2005. For non-public entities,
      the revisions to SFAS 123 are effective as of the beginning of the first annual
      reporting period that begins after December 15, 2005. Management has not yet
      determined the effects of adopting the revisions to SFAS 123 on the Company’s
      financial position or results of operations.




**2.**
            **Financial
                Condition and Ability to Continue as a Going
                Concern:**





The
      Company has had no revenues from operations since inception and has a deficit
      from expenditures since inception to December 31, 2005 in the amount of
      $14,877,424. The Company has relied to date, and will continue to rely on its
      ability to raise equity to fund working capital requirements and fund
      exploration expenditures. Management will continue to control expenditures
      in
      line with its ability to raise equity working capital.





The
      ability of the Company to obtain financing and adequately manage its expenses,
      and thus maintain solvency, is dependent on equity market conditions, the
      ability to find a joint venture partner, the market for precious metals, and
      the
      willingness of other parties to lend the Company money. While the Company has
      been successful at certain of these efforts in the past, there can be no
      assurance that current efforts will be successful. These financial statements
      do
      not reflect the outcome of these uncertainties. F-15
 **Table
                of Contents**
 **Index
                  to Financial Statements**
 **AMERICAN
            SOUTHWEST HOLDINGS, INC. AND SUBSIDIARY**
 **(An
            Exploration Stage Company)**
 **Notes
            to Consolidated Financial Statements (continued)**


**3.**
            **Property
                & Equipment:**





At
      December 31, 2005 and 2004, property and equipment consists of:





**2005**
            
            **2004**Sundry
                equipment
            
            $
            2,514
            
            $
            2,514Furniture
                & fittings
            
            
            3,404
            
            
            3,404Property
                & equipment
            
            
            5,918
            
            
            5,918Less:
                Accumulated depreciation
            
            
            (3,053
            )
            
            (1,716
            )Property
                & Equipment, net
            
            $
            2,865
            
            $
            4,202





Depreciation
      expense was $1,337 and $50, during the years ended December 31, 2005 and 2004,
      respectively.





**4.**
            **Income
                Taxes:**





The
      Company provides for income taxes under Statement of Financial Accounting
      Standards No. 109, *Accounting
      for Income Taxes* .
      SFAS
      No. 109 requires the use of an asset and liability approach in accounting for
      income taxes. Deferred tax assets and liabilities are recorded based on the
      differences between the financial statement and tax bases of assets and
      liabilities and the tax rates in effect when these differences are expected
      to
      reverse.





SFAS
      No.
      109 requires the reduction of deferred tax assets by a valuation allowance
      if,
      based on the weight of available evidence, it is more likely than not that
      some
      or all of the deferred tax assets will not be realized. In the Company’s
      opinion, it is uncertain whether they will generate sufficient taxable income
      in
      the future to fully utilize the net deferred tax asset. Accordingly, a valuation
      allowance equal to the deferred tax asset has been recorded.





*Income
      taxes for American Southwest Holdings, Inc.:*


The
      total
      deferred tax asset is $1,880,000, which is calculated by multiplying a 15%
      estimated tax rate by the cumulative NOL of $12,533,000. The total valuation
      allowance is a comparable $1,880,000.




F-16
 **Table
                of Contents**
 **Index
                  to Financial Statements**
 **AMERICAN
            SOUTHWEST HOLDINGS, INC. AND SUBSIDIARY**
 **(An
            Exploration Stage Company)**
 **Notes
            to Consolidated Financial Statements (continued)**





**4.**
            **Income
                Taxes (continued):**


The
        provision for income taxes is comprised of the net change in deferred taxes
        less
        the valuation account plus the current taxes payable as shown in the chart
        below.
 
 **2005**
              ****
              **2004**Net
                  change in deferred taxes since inception
              
              
              1,880,000
              
              
              1,756,000Valuation
                  account by year
              
              
              (1,880,000
              )
              
              (1,756,000
              )Current
                  taxes payable
              
              
              —
              
              
              —Provision
                  for income taxes
              
              
              —
              
              
              —


Below
      is
      a chart showing the estimated United States federal net operating losses and
      the
      years in which they will expire.


**Year**
              
              **Amount**
              
              **Expiration**1996
              
              $
              2,327,161
              
              
              20161997
              
              
              6,286,760
              
              
              20171998
              
              
              1,700,877
              
              
              20181999
              
              
              237,400
              
              
              20192000
              
              
              1,201
              
              
              20202001
              
              
              0
              
              
              20212002
              
              
              4,540
              
              
              20222003
              
              
              137,386
              
              
              20232004
              
              
              1,008,551
              
              
              20242005
              
              
              829,444
              
              
              2025Total
                  NOL
              
              $
              12,533,320
 Major
        items causing the Company’s tax rate to differ from the statutory rate are as
        follows:





**12/31/2005**
            
            **12/31/2004**Income
                tax benefit at statutory rate
            
            $
            124,000
            
            $
            151,701Less
                change in valuation allowance
            
            
            (124,000
            )
            
            (151,701
            )Income
                tax expense
            
            $
            —
            
            $
            —




F-17
 **Table
                of Contents**
 **Index
                  to Financial Statements**
 **AMERICAN
            SOUTHWEST HOLDINGS, INC. AND SUBSIDIARY**
 **(An
            Exploration Stage Company)**
 **Notes
            to Consolidated Financial Statements (continued)**





**4.**
            **Income
                Taxes (continued):**





*Income
      taxes for MSL:*





For
      Australian tax reporting purposes, MSL has future tax assets which have arisen
      principally from net operating loss carry forwards and exploration expenditures
      incurred and deductible for income tax purposes at an Australian tax rate of
      30%. As management of the Company does not currently believe that it is more
      likely than not that the Company will receive the benefit of this asset, a
      valuation allowance equal to the future tax benefit has been established at
      the
      period end.





**12/31/2005**Loss
                for tax purposes
            
            $
            356,013





As
      of
      December 31, 2005, the Company had net operating loss carry forwards available
      to reduce taxable income in future years in accordance with Australian income
      tax legislation amounting to $851,270. In accordance with Australian tax
      legislation, no expiration date attaches to carry forward losses, but the
      benefit of such issues will be obtained if:





(a)
            future
                assessable income is derived of a nature and of an amount sufficient
                to
                enable the benefits from the deduction for the losses to be
                realized.


(b)
            The
                conditions for deductibility imposed by tax legislation continue
                to be
                complied with.


(c)
            No
                changes in tax legislation or future transactions adversely affect
                the
                company realizing the benefit from the deductions or
                losses.





Major
      items causing the Corporation’s tax rate to differ from the statutory rate are
      as follows:





Income
                tax benefit at statutory rate
            
            $
            106,804Less
                change in valuation allowance
            
            
            (106,804
            )Income
                tax expense
            
            $
            —


F-18
 **Table
                of Contents**
 **Index
                  to Financial Statements**
 **AMERICAN
            SOUTHWEST HOLDINGS, INC. AND SUBSIDIARY**
 **(An
            Exploration Stage Company)**
 **Notes
            to Consolidated Financial Statements (continued)**


**5.**
            **Leases
                and Other Commitments:**





In
      connection with the acquisition of MSL, the Company has been granted exploration
      licenses, exploration license applications, and prospecting license applications
      in conjunction with their mining venture in Southwestern Australia.





*Exploration:*


In
      order
      to maintain rights of tenure to mineral tenements MSL is required to pay holding
      costs and perform minimum exploration work to meet the minimum expenditure
      requirements specified by the Western Australia Department of Industry and
      Resources. These obligations are subject to renegotiation and are not provided
      for in the financial report.





As
      of
      December 31, 2005, the total obligations assuming all applications are approved
      and no ground is relinquished:





Not
                later than one year
            
            
            $
                367,381Later
                than one year but not later than two years
            
            
            $
                385,725Later
                than two years but not later than five years
            
            
            $
                405,017





*Native
      Title:*


MSL’s
      mining tenements may be subject to native title applications in the future.
      At
      this stage it is not possible to quantify the impact (if any) that native titles
      may have on the operations of MSL.





*Office
      Equipment Rental Agreement:*


Under
      the
      terms of a lease agreement, which has an effective date of January 1, 2004,
      MSL
      rents office equipment including furniture and business machines, from Elsinor
      Nominees Pty Ltd for $504 per month plus applicable taxes. The term of the
      agreement is 36 months with an option to purchase the equipment after 36
      installments. As of December 31, 2005, the total obligation remaining under
      this
      rental agreement is $6,048. F-19
 **Table
                of Contents**
 **Index
                  to Financial Statements**
 **AMERICAN
            SOUTHWEST HOLDINGS, INC. AND SUBSIDIARY**
 **(An
            Exploration Stage Company)**
 **Notes
            to Consolidated Financial Statements (continued)**


**6.**
            **Related
                Party Transactions:**





*Amounts
      Due to Related Parties:*


As
      of
      December 31, 2004, the Company owed $246,694, to another company owned by the
      Company’s President and $50,000 to a director of the Company. During the year
      ended December 31, 2005, these amounts were paid through the issuance of the
      Company’s common stock.





*Consulting
      Agreement:*


In
      September 2003, the Company entered into a consulting agreement with Doyle
      Capital, Ltd (DCL). Under the terms of the agreement DCL was paid a $15,000
      monthly retainer. In March 2004, the agreement was amended, increasing the
      monthly retainer to $20,000. Additionally, DCL received a 6% fee on all equity
      raised. DCL waived this fee for 2004. The consulting agreement was to expire
      on
      December 31, 2007.





Effective
      September 30, 2005, the Company terminated its consulting agreement with DCL,
      now known as Africa Pacific Capital Limited (“APC”). In connection with the
      termination, APC has exercised 15,000,000 warrants to purchase the Company’s
      common stock in exchange for the forgiveness of all outstanding debt owed to
      APC, or $600,000.





*Office
      Space:*


The
      Company neither owns nor leases any real or personal property. Office services
      are provided without charge by the officer of the Company. Such costs are
      immaterial to the financial statements and accordingly, have not been reflected
      therein. The officers and directors of the Company are involved in other
      business activities and may, in the future, become involved in other business
      opportunities. If a specific business opportunity becomes available, such
      persons may face a conflict of interest. The Company has not formulated a policy
      for the resolution of such conflicts.




In
      September 2004, the Company entered into a License Agreement for the provision
      of office space with Cazaly Resources Ltd for which a director of MSL also
      acts
      as director. The Agreement expired September 30, 2005.





*MSL
      Stock Options:*


Prior
      to
      the Company’s acquisition of MSL, MSL issued options to purchase MSL’s common
      stock to various related parties. These options expired on December 31,
      2004. F-20
 **Table
                of Contents**
 **Index
                  to Financial Statements**
 **AMERICAN
            SOUTHWEST HOLDINGS, INC. AND SUBSIDIARY**
 **(An
            Exploration Stage Company)**
 **Notes
            to Consolidated Financial Statements (continued)**


**6.**
            **Related
                Party Transactions
                (continued):**





*Stock
      Warrants:*


During
      the year ended December 31, 2004, 15,000,000 warrants to purchase the Company’s
      common stock were issued to DCL for their part in securing and facilitating
      the
      MSL acquisition. DCL is 100% owned by the President of the Company. The warrants
      are exercisable at $0.04 per warrant and expire December 31, 2007.





During
      the year ended December 31, 2005, the warrants referenced above were exercised
      in connection with the termination of the Company’s agreement with APC as
      discussed under related party transactions under *Consulting
      Agreement* above.





**7.**
            **Acquisition
                of Metal Sands Limited:**




During
      the year ended December 31, 2004, the Company purchased Metal Sands Limited
      in
      exchange for 33,100,000 shares of the Company’s common stock, valued at $33,100
      and incurred $61,275 in professional fees in connection with the acquisition.
      The Company assumed net liabilities relating to cash advances made to Metal
      Sands prior to the asset acquisition of $194,999 which were expensed as
      exploration costs and recorded Mining Rights in the amount of $33,100.




In
      addition, 15,000,000 warrants to purchase the Company’s common stock were issued
      to Doyle Capital Ltd. (DCL) for their part in securing and facilitating the
      MSL
      acquisition. DCL is principally owned by the President of the Company. The
      warrants are exercisable at $0.04 per warrant, expire December 31, 2007, and
      were valued at $300,000 using the Black Scholes option-pricing model with the
      following weighted average assumptions for all grants: expected life of options
      of three (3) years, risk free interest rate of five percent (5%), volatility
      of
      fifty-eight percent (58%) and a zero percent dividend yield.




**8.**
              **Stockholders’
                  Equity:**
 
 *Common
        Stock:*
 On
        July
        28, 1995 the shareholders agreed to a 50 to 1 reverse stock split. This stock
        split has been applied in the presentation of all issued and outstanding
        shares
        in the accompanying financial statements.
 
 During
        the year ended December 31, 2005, the Company issued shares of its common
        stock
        as follows:
  ·
              2,630,000
                  shares in connection with common stock subscriptions issued in
                  the prior
                  year in the amount of $67,095
 ·
              13,240,000
                  shares for cash in the amount of $611,090 and through the exercise
                  of
                  4,000,000 common stock warrants
 ·
              6,825,000
                  shares valued at $282,192 in payment of debt to various non-related
                  parties
 ·
                15,000,000
                    shares valued at $600,000 in payment of debt to APC and through
                    the
                    exercise of 15,000,000 common stock
                    warrants


F-21
 **Table
                of Contents**
 **Index
                  to Financial Statements**
 **AMERICAN
            SOUTHWEST HOLDINGS, INC. AND SUBSIDIARY**
 **(An
            Exploration Stage Company)**
 **Notes
            to Consolidated Financial Statements (continued)**




**8.**
            **Stockholders’
                Equity (continued):**





The
      Company realized costs in the amount of $20,613 in connection with its equity
      activity.





During
      the year ended December 31, 2004, the Company issued shares of its common stock
      as follows:




·
            15,750,000
                shares for cash in the amount of
                $420,798


·
            961,851
                shares valued $19,237, in exchange for
                services


·
            2,175,005
                shares valued at $38,063 in exchange for the cancellation of 13,050,000
                common stock warrants


·
                2,000,000
                      shares valued at $20,000, in payment of
                      debt
 ·
                  33,100,000
                        shares valued at $33,100 in connection with the acquisition
                        of MSL (See
                        Note 7)


The
      Company realized costs in the amount of $7,168 in connection with issuing these
      shares of common stock.





*Warrants:*


The
      following table summarizes the common stock warrant activity for the
      company.





**Options**
            ****
            **Weighted
                Average Exercise Price**Warrants
                outstanding at 12/31/2003
            
            
            13,050,000
            
            $
            0.115Cancelled
            
            
            (13,050,000
            )
            $
            0.115Granted
            
            
            19,000,000
            
            $
            0.04Warrants
                outstanding at 12/31/2004
            
            
            19,000,000
            
            $
            0.04Exercised
            
            
            (19,000,000
            )
            $
            0.04Warrants
                outstanding at 12/31/2005
            
            
            —
            
            
            —





During
      the year ended December 31, 2004, 4,000,000 warrants to purchase the Company’s
      common stock were issued for financing raised to stockholders of MSL. The
      warrants were exercised during the year ended December 31, 2005. F-22
 **Table
                of Contents**
 **Index
                  to Financial Statements**
 **AMERICAN
            SOUTHWEST HOLDINGS, INC. AND SUBSIDIARY**
 **(An
            Exploration Stage Company)**
 **Notes
            to Consolidated Financial Statements (continued)**




**9.**
            **Statements
                of Cash Flows:**





During
      the years ended December 31, 2005 and 2004, and for the cumulative period from
      the Company’s inception on October 20, 1989 through December 31, 2005, the
      Company paid no income taxes. During these periods, the Company neither received
      nor paid any interest.





*Disclosure
      of non-cash activities:*


The
      Company recognized operating, investing and financing activities that affected
      assets, liabilities, and equity, but did not result in cash receipts or
      payments. These non-cash activities are as follows:





During
      the year ended December 31, 2005, the Company issued 6,825,000 shares of its
      common stock, valued at $282,192, in payment of debt to various non-related
      parties.


During
        the year ended December 31, 2005, the Company issued 2,630,000 shares of
        its
        common stock for common stock subscription deposits of $67,095 in the prior
        year.
  During
        the year ended December 31, 2005, the Company issued 15,000,000 shares of
        its
        common stock, valued at $600,000, in exchange for 15,000,000 common stock
        warrants and as payment of debt to APC.





During
      the year ended December 31, 2004, the Company issued 961,851 shares of its
      Common Stock in exchange for services in the amount of $19,237 and 2,000,000
      shares of its common stock for the payment of debt.





During
      the year ended December 31, 2004, the Company issued 33,100,000 shares of its
      Common Stock, valued at $33,100, 15,000,000 common stock warrants, valued at
      $300,000, in payment of fees related to the MSL acquisition and incurred
      $61,275 in professional fees in connection with the acquisition of Metal Sands
      Limited. In connection with this purchase, the Company assumed net
      liabilities relating to cash advances made to Metal Sands prior to the asset
      acquisition of $194,999 and Mining Rights valued
      at $33,100.





During
      the year ended December 31, 2004, the Company issued 2,175,005 shares of its
      common stock, valued at $38,063, for the cancellation of 13,050,000 common
      stock
      warrants.





In
      addition to the items listed above, during the cumulative period from the
      Company’s inception on October 20, 1989 through December 31, 2005, the Company
      issued 10,500,000 shares of its Common Stock in exchange for services valued
      at
      $455,294, 1,000,000 Common Stock Subscriptions in exchange for mining properties
      valued at $3,500,000, 1,072,990 shares of its Common Stock in exchange for
      the
      cancellation of debt in the amount of $469,970 and 5,750,000 Common Stock
      warrants in exchange for services valued at $57,500.





**10.**
            **Subsequent
                events:**





Subsequent
      to December 31, 2005, MSL entered into an agreement with another Australian
      company, Image Resources, NL (“IR”) whereby IR will have the right to earn an
      interest in one of MSL’s mining tenements, E70/2636 Cooljarloo. The terms of the
      agreement allow IR to earn a 51% interest by the sole funding expenditure of
      $365,045 within four years of the grant date of the tenement and an additional
      19% interest by the sole funding expenditure of $219,027 within an additional
      two years. IR may withdraw at anytime after expending a minimum of $51,106
      and
      providing MSL one months written notice.


F-23