SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549







FORM
10-K








x ANNUAL REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES


EXCHANGE
ACT OF 1934





For the
fiscal year ended December 31, 2009





OR





o TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES


EXCHANGE
ACT OF 1934




For the
transition period from to





Commission
File No. 000-32429





GOLDSPRING,
INC.


(Exact
name of registrant as specified in its charter)





Nevada
            
            1081
            
            65-0955118(State
      or other jurisdiction of
              incorporation
      or organization)
            
            (Primary
      Standard Industrial
              Classification
      Code Number)
            
            (I.R.S.
      Employer Identification
              No.)




P.O. Box
1118


Virginia
City, NV 89440


(775)
847-5272


(Address,
including zip code, and telephone number,


including
area code, of registrant's principal executive offices)





Securities
Registered pursuant to Section 12(b) of the Act: None


Securities
Registered pursuant to Section 12(g) of the Act: Common Stock, par value
$.000666 per share




Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.


Yes  ̈  No x




Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.


Yes  ̈  No x




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




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




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




Large
      accelerated filer  ̈
              Accelerated
      filerNon-accelerated
      filer  ̈
              Smaller
      reporting company x




Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).


Yes  ̈  No x




The
aggregate market value of the 3,119,251,058 shares of voting stock held by
non-affiliates of the registrant based on the closing price on the Over the
Counter Bulletin Board on June 30, 2009 was $37,400,000.




Indicate
the number of shares outstanding of each of the registrant’s classes of common
stock, as of the latest practicable date.




Shares
      OutstandingTitle of Class
              April 9, 2010Common
      Stock
              3,782,450,927




DOCUMENTS
INCORPORATED BY REFERENCE




None














TABLE OF
CONTENTS




PART
      IITEM
      1
                
                BUSINESS
                
                3ITEM
      1A
                
                RISK
      FACTORS
                
                5ITEM
      2
                
                PROPERTIES
                
                11ITEM
      3
                
                LEGAL
      PROCEEDINGS
                
                38ITEM
      4
                
                SUBMISSION
      OF MATTERS TO VOTE OF SECURITY HOLDERS
                
                38PART
      IIITEM
      5
                
                MARKET
      FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
      PURCHASES OF EQUITY SECURITIES
                
                38ITEM
      7
                
                MANAGEMENT'S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS
                
                39ITEM
      8
                
                FINANCIAL
      STATEMENTS AND SUPPLEMENTARY DATA
                
                F-1ITEM
      9
                
                CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE
                
                47ITEM
      9A(T)
                
                CONTROLS
      AND PROCEDURES
                
                47ITEM
      9B
                
                OTHER
      INFORMATION
                
                48PART
      IIIITEM
      10
                
                DIRECTORS
      , EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
                
                48ITEM
      11
                
                EXECUTIVE
      COMPENSATION
                
                51ITEM
      12
                
                SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS
                
                54ITEM
      13
                
                CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE
                
                56ITEM
      14
                
                PRINCIPAL
      ACCOUNTANT FEES AND SERVICES
                
                56PART
      IVITEM
      15
                
                EXHIBITS,
      FINANCIAL STATEMENT SCHEDULES
                
                56SIGNATURES
                
                57




2


Statement
Regarding Forward-Looking Statements




The
statements contained in this report on Form 10-K that are not purely historical
are forward-looking statements within the meaning of applicable securities laws.
Forward-looking statements include statements regarding our “expectations,”
“anticipation,” “intentions,” “beliefs,” or “strategies” regarding the future.
Forward looking statements also include statements regarding fluctuations in the
price of gold or certain other commodities, (such as silver, copper, diesel
fuel, and electricity); changes in national and local government legislation,
taxation, controls, regulations and political or economic changes in the United
States or other countries in which we may carry on business in the future;
business opportunities that may be presented to or pursued by us; our ability to
integrate acquisitions successfully; operating or technical difficulties in
connection with exploration or mining activities; the speculative nature of gold
exploration, including risks of diminishing quantities or grades of reserves;
and contests over our title to properties. All forward-looking statements
included in this report are based on information available to us as of the
filing date of this report, and we assume no obligation to update any such
forward-looking statements. Our actual results could differ materially from the
forward-looking statements. Among the factors that could cause actual results to
differ materially are the factors discussed in Item 1A, “Description of Business
- Risk Factors.”




PART
I




Item 1. Business




Overview




GoldSpring,
Inc. is a North American precious metals mining company, headquartered in
Nevada, with significant land holdings in the Comstock Gold-Silver District of
Nevada. GoldSpring was incorporated in Florida in 1999 and redomiciled in Nevada
in 2008.We have located a deposit of
mineralized material in our Comstock holdings, at the Hartford Complex, and have
secured several of the key mining permits required to resume mining. We
completed the first phase of an exploration drilling program in the first
quarter of 2009, and then analyzed the results to define the extent of the
Hartford Deposit, assess other key exploration targets on our large land package
and push the project toward production. The high-grade nature of the Hartford
deposit and its potentially favorable configuration has potentially positioned
us to become a profitable gold and silver producer in the future.




3


We
operated the Billie the Kid pit as a test mine from 2004 to 2006. 16,175 ounces
of gold and 68,514 ounces of silver were recovered from the mined material,
using our heap leach processing facility in American Flat.




In early
2007, we temporarily closed our test mining operation. This shutdown allowed us
to focus on the geology to gain a comprehensive understanding of the
mineralization at the Hartford complex at our Comstock project. We then
commenced a drilling program in December 2007 to further delineate the
mineralized material and to determine the most effective process for mining
operations. Our goal has been to define and map the geology and to prepare
geologic cross sections to be utilized in mine planning and as a result, to be
able to build a new mine model using geostatistics and extensive drill hole
data. There is also ongoing metallurgic testing to attempt to maximize recovery
of the high grade fraction of the material and to determine optimum size to
continue heap leaching.




The
exploration and developmental drilling program commenced at the Comstock project
in mid December 2007 and continued through February 2009. During this program,
we drilled 182 holes at the Lucerne / Hartford Complex at our Comstock Project.
Once the drilling was complete, a mine model was built to evaluate the economic
viability of the deposit. We wrote an in-house report to classify the
mineralized material, based on the Society of Mining Engineers 2007 guidelines.
Based on those favorable results, we made the decision to complete the necessary
studies and return the mine to production.




We are
actively seeking financing to reopen the mine, further expansion of our Comstock
Lode Project and to meet our working capital needs. If we are unable to secure
such financing, we may be unable to continue as a going concern.




The
following table sets forth certain information regarding our current
projects.


Name
              
              Location
              
              TypeComstock
      Lode Gold and Silver Properties
              
              Storey
      and Lyon Counties, Nevada
              
              Gold
      and silver lode claimsSpring
      Valley and Gold Canyon (South Comstock)
              
              Lyon
      County, Nevada
              
              Placer
      and lode gold and silver claimsComo
              
              Lyon
      County, Nevada
              
              Gold
      and silver lode claimsBig
      Mike
              
              Pershing
      County, Nevada
              
              Copper
      lode claims




Our
Comstock Lode exploration project is located between Carson City and Virginia
City, Nevada, about 30 miles southeast of Reno, in an area known as American
Flat. Our Spring Valley and Gold Canyon claims are located in Lyon County,
Nevada, five miles south of our Comstock Lode project. Our Big Mike Copper
property is located approximately two hours east of Reno near Winnemucca,
Nevada.




Our
Comstock exploration activities include open pit gold and silver test mining. As
defined by SEC Industry Guide 7, we have not yet established any proven or
probable reserves at our Comstock Lode Project.. Therefore, all of our
activities are considered test mining and exploratory in nature.




We have
completed only initial exploratory activities on our Spring Valley and Gold
Canyon claims. We have not as yet explored or developed our Como claims, or Big
Mike properties. We have not established reserves on any of these properties.
Therefore, there can be no assurance that we will be able to produce sufficient
gold to cover our investment and operating costs, if any gold at
all.




Employees




We have
14 employees, including our executives, managers, administrative staff,
engineers, geologists, lab technicians, and process operators. We use
consultants with specific skills to assist with various aspects of our
operation, including planning, scheduling, project evaluation, due diligence and
acquisition initiatives.




4


Principal
Markets




We plan
to sell our production on world markets at prices established by market forces.
These prices are not within our control.




Government
Regulation




Mining
operations and exploration activities are subject to various national, state,
and local laws and regulations in the United States, which govern prospecting,
development, mining, production, exports, taxes, labor standards, occupational
health, waste disposal, protection of the environment, mine safety, hazardous
substances, and other matters. We have obtained or have pending applications for
those licenses, permits, and other authorizations currently required to conduct
our exploration and other programs. We believe that we are in compliance in all
material respects with applicable mining, health, safety, and environmental
statutes and regulations.




Reclamation




We are
generally required to mitigate long-term environmental impacts by stabilizing,
contouring, sloping, and vegetating various portions of a site after mining and
mineral processing operations are completed. These reclamation efforts are
conducted in accordance with detailed plans, which must be reviewed and approved
by the appropriate regulatory agencies.




The
Nevada Revised Statutes and regulations promulgated thereunder by the Nevada
State Environmental Commission and the Nevada Division of Environmental
Protection, Bureau of Mining and Reclamation require a surety bond to be posted
for mining projects to assure we will leave the site safe, stable and capable of
providing for a productive post-mining land use. Pursuant to the approved
Reclamation Plan for our Comstock project, we posted a surety bond in the amount
of $1,106,882, of which $776,768 was in the form of a cash deposit and the
balance was secured from a surety agent.




Competition




We
compete with other mineral exploration and mining companies in connection with
the acquisition of gold and other mineral properties. There may be competition
for gold acquisition opportunities, some of which may involve other companies
having substantially greater financial resources than we do.




Financing
Events




·
                In 2009, we financed operations
      through issuance of promissory notes and sales of our common stock, all in
      private placement transactions, which provided us with $3,647,500 in net
      funding.
 ·
              In November 2009, we sold a 0.29%
      net smelter royalty on our Obester Property for $260,000 to Precious
      Royalties, LLC. These funds were used to offset the purchase of the
      Obester Property in December
2009.




Item
1A. Risk
Factors




An
investment in our common stock involves risk. You should carefully consider the
following risk factors, in addition to those discussed elsewhere in this report,
in evaluating our company, its business, and prospects. The following risks
could cause our business, financial condition, and operating results to be
materially and adversely affected.




We
have limited resources and our inability to obtain additional financing could
negatively affect our growth and success.




We have
incurred substantial losses since our inception, and we are currently
experiencing a cash flow deficiency from operations. Our current cash flow and
capital resources are limited, and we will require additional funds to pursue
our business. We may not be able to secure further financing in the future or if
we do, we may not be able to secure financing on favorable terms. If we are not
able to obtain additional financing on reasonable terms, we may not be able to
execute our business strategy, conduct our operations at the level desired, or
even to continue business.




5


If we are not able to obtain
financing, it is unlikely that we will be able to continue as a going
concern.




If we are
unable to raise additional working capital through outside financing, it is
unlikely that the cash generated from our internal operations will suffice as a
primary source of the liquidity necessary for anticipated working capital
requirements, capital expenditure requirements and interest payments associated
with our lease obligations and indebtedness. There is no assurance that the
Company’s initiatives to improve its liquidity and financial position will be
successful. Accordingly, there is substantial risk that the Company will be
unable to continue as a going concern. In the event of insolvency, liquidation,
reorganization, dissolution or other winding up of the Company, the Company’s
creditors would be entitled to payment in full out of the Company’s assets
before stockholders would be entitled to any payment, and it is unlikely that
the value of such assets would exceed the claims on such assets.




We
have received a qualified report from our independent auditors




Our
independent auditors report on our financial statements indicates that our
recurring losses from operations and working capital deficit raise substantial
doubt about our ability to continue as a going concern




Relative
to our cash flows we have substantial indebtedness.




As of
December 31, 2009, we had current indebtedness of $16.1 million in addition to
$4.9 million of current accrued interest payable. For the fiscal year ended
December 31, 2009, we had a deficit of cash flows from operating activities of
$3.6 million. Our substantial indebtedness, and our ability to incur additional
indebtedness, may further negatively affect our cash flow and our ability to
operate our business and react to changes in the economy or our
industry.




Inability
to raise sufficient funds to increase growth




Our
recent financings have only provided capital to continue existing operations but
not to continue significant exploration and growth. Without the ability to
attract sufficient amounts of capital at any one time, it is unlikely that we
can achieve profitability in the foreseeable future, if ever, or to continue
long term operation of the Company.




We have invested capital in high-risk
mineral projects where we have not conducted sufficient exploration and
engineering studies.




We have
invested capital and have otherwise been involved in various mineral properties
and projects in Nevada where we may not have conducted sufficient exploration
and engineering studies to minimize the risk of project failure to the extent
that is typical in the mining industry or prudent considering our size. Our
mineral projects involve high risks because we have not invested sufficient sums
in the characterization of mineralized material, geologic analysis,
metallurgical testing, mine planning and economic analysis to the same extent
that other mining companies might deem reasonable due to limited resources.
Standard industry practice calls for a mining company to prepare a formal mine
plan and mining schedule and have these documents reviewed by a third party
specialist. We do not have a formal mine plan that has been reviewed by a third
party specialist. Because we have not established proven or probable reserves,
there can be no assurance that we will be able to produce sufficient gold to
recover our investment and operating costs.




6


We
will not be successful unless we recover precious metals and sell them for a
profit.




Our
success depends on our ability to recover precious metals, process them, and
successfully sell them for more than the cost of production. The success of this
process depends on the market prices of metals in relation to our costs of
production. We may not always be able to generate a profit on the sale of gold
or other minerals because we can only maintain a level of control over our costs
and have no ability to control the market prices. The total cash costs of
production at any location are frequently subject to great variation from year
to year as a result of a number of factors, such as the changing composition of
ore grade or mineralized material production, and metallurgy and exploration
activities in response to the physical shape and location of the ore body or
deposit. In addition costs are affected by the price of commodities, such as
fuel and electricity. Such commodities are at times subject to volatile price
movements, including increases that could make production at certain operations
less profitable. A material increase in production costs or a decrease in the
price of gold or other minerals could adversely affect our ability to earn a
profit on the sale of gold or other minerals.




We
do not have proven or probable reserves, and there is no assurance that the
quantities of precious metals we produce will be sufficient to recover our
investment and operating costs.




Our
success depends on our ability to produce sufficient quantities of precious
metals to recover our investment and operating costs. We do not have proven or
probable reserves. There can be no assurance that our exploration activities
will result in the discovery of sufficient quantities of mineralized material to
lead to a commercially successful operation.




The cost of our exploration and
acquisition activities is substantial, and there is no assurance that the
quantities of minerals we discover or acquire will justify commercial operations
or replace reserves established in the future.




Mineral
exploration, particularly for gold and other precious metals, is highly
speculative in nature, involves many risks, and frequently is nonproductive.
There can be no assurance that our exploration and acquisition activities will
be commercially successful. If gold mineralization is discovered, it may take a
number of years from the initial phases of drilling until production is
possible, during which time the economic feasibility of production may change.
Substantial expenditures are required to acquire existing gold properties, to
establish ore reserves through drilling and analysis, to develop metallurgical
processes to extract metal from the ore, and in the case of new properties, to
develop the processing facilities and infrastructure at any site chosen for
mineral exploration. There can be no assurance that any gold reserves or
mineralized material that may be discovered or acquired in the future, if any,
will be in sufficient quantities or of adequate grade to justify commercial
operations or that the funds required for mineral production operation can be
obtained on a timely or reasonable basis. Mineral exploration companies must
continually replace mineralized material or reserves depleted by production.
There can be no assurance that we will be successful in replacing any reserves
or mineralized material acquired or established in the future.




The
price of gold fluctuates on a regular basis and a downturn in price could
negatively impact our operations and cash flow.




Our
operations are significantly affected by changes in the market price of gold.
Gold prices can fluctuate widely and may be affected by numerous factors, such
as expectations for inflation, levels of interest rates, currency exchange
rates, central bank sales, forward selling or other hedging activities, demand
for precious metals, global or regional political and economic crises and
production costs in major gold-producing regions, such as South Africa and the
former Soviet Union. The aggregate effect of these factors, all of which are
beyond our control, is impossible for us to predict. The demand for and supply
of gold affect gold prices, but not necessarily in the same manner as supply and
demand affect the prices of other commodities. The supply of gold consists of a
combination of new mineral production and existing stocks of bullion and
fabricated gold held by governments, public and private financial institutions,
industrial organizations, and private individuals. As the amount produced in any
single year constitutes a small portion of the total potential supply of gold,
normal variations in current production do not have a significant impact on the
supply of gold or on its price. If gold prices decline substantially, it could
adversely affect the realizable value of our assets and potential future results
of operations and cash flow.




7


The use of hedging instruments may
not prevent losses being realized on subsequent price decreases or may prevent
gains being realized from subsequent price increases.




We may
from time to time sell some future production of gold pursuant to hedge
positions. If the gold price rises above the price at which future production
has been committed under these hedge instruments, we will have an opportunity
loss. However, if the gold price falls below that committed price, our revenues
will be protected to the extent of such committed production. In addition, we
may experience losses if a hedge counterparty defaults under a contract when the
contract price exceeds the gold price. As of the date of filing of this report,
we have no open hedge positions.




Since
our business consists of exploring for or acquiring gold prospects, the drop in
the price of gold will negatively affect our asset values, cash flows, potential
revenues and profits.




We plan
to pursue opportunities to acquire properties with gold mineralized material or
reserves with exploration potential. The price that we pay to acquire these
properties will be influenced, in large part, by the price of gold at the time
of the acquisition. Our potential future revenues are expected to be derived
from the production and sale of gold from these properties or from the sale of
some of these properties. The value of any gold reserves and other mineralized
material, and the value of any potential mineral production therefrom, will vary
in direct proportion to variations in those mineral prices. The price of gold
has fluctuated widely as a result of numerous factors beyond our control. The
effect of these factors on the price of gold, and therefore the economic
viability of any of our projects, cannot accurately be predicted. Any drop in
the price of gold would negatively affect our asset values, cash flows,
potential revenues, and profits.




We
compete with other mineral exploration and mining companies




We
compete with other mineral exploration and mining companies or individuals,
including large, established mining companies with substantial capabilities and
financial resources, to acquire rights to mineral properties containing gold and
other minerals. There is a limited supply of desirable mineral lands available
for claim staking, lease, or other acquisition. There can be no assurance that
we will be able to acquire mineral properties against competitors with
substantially greater financial resources than we have.




Our
activities are inherently hazardous and any exposure may exceed our insurance
limits or may not be insurable.




Mineral
exploration and operating activities are inherently hazardous. Operations in
which we have direct or indirect interests will be subject to all the hazards
and risks normally incidental to exploration and production of gold and other
metals, any of which could result in work stoppages, damage to property, and
possible environmental damage. The nature of these risks is such that
liabilities might exceed any liability insurance policy limits. It is also
possible that the liabilities and hazards might not be insurable, or we could
elect not to insure ourselves against such liabilities because of the high
premium costs, in which event, we could incur significant costs that could have
a material adverse effect on our financial condition.




We
do not have proven or probable reserves, and our mineral calculations are only
estimates; any material change may negatively affect the economic viability of
our properties.




Substantial
expenditures are required to acquire existing gold properties with established
reserves or to establish proven or probable reserves through drilling and
analysis. We do anticipate expending sums for additional drilling and analysis
which may or may not establish proven or probable reserves on our properties. We
drill in connection with our mineral exploration activities and not with the
purpose of establishing proven and probable reserves. Therefore, our activity
must be called exploration or test mining. While we estimate the amount of
mineralized material we believe exists on our properties, our calculations are
estimates only, subject to uncertainty due to factors, including the quantity
and grade of ore, metal prices, and recoverability of minerals in the mineral
recovery process. There is a great degree of uncertainty attributable to the
calculation of any mineralized material, particularly where there has not been
significant drilling, mining, and processing. Until the mineralized material
located on our properties is actually mined and processed, the quantity and
quality of the mineralized material must be considered as an estimate only. In
addition, the quantity of mineralized material may vary depending on metal
prices. Any material change in the quantity of mineralized material may
negatively affect the economic viability of our properties. In addition, there
can be no assurance that we will achieve the same recoveries of metals contained
in the mineralized material as in small-scale laboratory tests or that we will
be able to duplicate such results in larger scale tests under on-site conditions
or during production.




8


Our
operations are subject to strict environmental regulations, which result in
added costs of operations and operational delays.




Our
operations are subject to environmental regulations, which could result in
additional costs and operational delays. All phases of our operations are
subject to environmental regulation. Environmental legislation is evolving the
United States generally, and Nevada specifically, in a manner that may require
stricter standards and enforcement, increased fines and penalties for
non-compliance, more stringent environmental assessments of proposed projects,
and a heightened degree of responsibility for companies and their officers,
directors, and employees. There is no assurance that any future changes in
environmental regulation will not negatively affect our projects.




We
have no insurance for environmental problems.




Insurance
against environmental risks, including potential liability for pollution or
other hazards as a result of the disposal of waste products occurring from
exploration and production, has not been available generally in the mining
industry. We have no insurance coverage for most environmental risks. In the
event of a problem, the payment of environmental liabilities and costs would
reduce the funds available to us for future operations. If we are unable to fund
fully the cost of remedying an environmental problem, we might be required to
enter into an interim compliance measure pending completion of the required
remedy.




We
are subject to federal laws that require environmental assessments and the
posting of bonds, which add significant costs to our operations and delays in
our projects.




The
Bureau of Land Management (BLM) requires that mining operations on lands subject
to its regulation obtain an approved plan of operations subject to environmental
impact evaluation under the National Environmental Policy Act. Any significant
modifications to the plan of operations may require the completion of an
environmental assessment or Environmental Impact Statement prior to approval.
Mining companies must post a bond or other surety to guarantee the cost of
post-mining reclamation. These requirements could add significant additional
cost and delays to any mining project undertaken by us. Our mineral exploration
operations are required to be covered by reclamation bonds deemed adequate by
regulators to cover these risks. We believe we currently maintain adequate
reclamation bonds for our operations.




Changes
in Nevada laws, which are already strict and costly, can negatively affect our
operations by becoming stricter and costlier.




At the
state level, mining operations in Nevada are regulated by the Nevada Division of
Environmental Protection, or NDEP. Nevada state law requires our Nevada projects
to hold Nevada Water Pollution Control Permits, which dictate operating controls
and closure and post-closure requirements directed at protecting surface and
ground water. In addition, we are required to hold Nevada Reclamation Permits
required under Nevada law. These permits mandate concurrent and post-mining
reclamation of mines and require the posting of reclamation bonds sufficient to
guarantee the cost of mine reclamation. Other Nevada regulations govern
operating and design standards for the construction and operation of any source
of air contamination and landfill operations. Any changes to these laws and
regulations could have a negative impact on our financial performance and
results of operations by, for example, requiring changes to operating
constraints, technical criteria, fees or surety requirements.




9


Title
claims against our properties could require us to compensate parties, if
successful, and divert management’s time from operations.




There may
be challenges to our title in the properties in which we hold material
interests. If there are title defects with respect to any of our properties, we
might be required to compensate other persons or perhaps reduce our interest in
the effected property. The validity of unpatented mineral claims, which
constitute most of our holdings in the United States, is often uncertain and may
be contested by the federal government and other parties. The validity of an
unpatented mineral claim, in terms of both its location and its maintenance,
depends on strict compliance with a complex body of federal and state statutory
and decisional law. Although we have attempted to acquire satisfactory title to
our properties, we have not obtained title opinions or title insurance with
respect to the acquisition of the unpatented mineral claims. While we have no
pending claims or litigation pending contesting title to any of our properties,
there is nothing to prevent parties from challenging our title to any of our
properties. While we believe we have satisfactory title to our properties, some
risk exists that some titles may be defective or subject to challenge. Also, in
any such case, the investigation and resolution of title issues would divert
management’s time from ongoing exploration programs.




We
have never paid a cash dividend on our common stock and do not expect to pay
cash dividends in the foreseeable future.




We have
never paid cash dividends, and we do not plan to pay cash dividends in the
foreseeable future. Consequently, your only opportunity to achieve a return on
your investment in us will be if the market price of our common stock
appreciates and you sell your shares at a profit. There is no assurance that the
price of our common stock will increase.




Our business depends on a limited
number of key personnel, the loss of whom could negatively affect us.




Each of
our officers and employees is important to our success. If any of them becomes
unable or unwilling to continue in their respective positions and we are unable
to find suitable replacements, our business and financial results could be
materially negatively affected.




If we fail to adequately manage our
growth, we may not be successful in growing our business and becoming
profitable.




We plan
to expand our business and the number of employees over the next 12 months. In
particular, we intend to hire additional operational personnel. Our inability to
hire and retain additional qualified employees could have a negative impact on
our chances of success.




The issuance of securities by us may
not have complied with or violated federal and state securities laws and, as a
result, the holders of these shares and warrants may have rescission
rights.




Securities
issued by us may not have complied with applicable federal and state securities
laws, the result of which is that the holders of these securities may have
rescission rights that could require us to reacquire the
securities.




Outstanding
convertible securities and warrants may result in substantial
dilution.




At
December 31, 2009 we had outstanding 3, 662,067,844 shares of common stock. In
addition, we had outstanding convertible notes and related interest plus various
common stock purchase warrants. At December 31, 2009, these notes, related
interest and warrants were convertible into or exercisable for a total of
approximately 3.8 billion additional shares of our common stock, subject to
further anti-dilution provisions.




10


Our
stock is a penny stock and trading of our stock may be restricted by the SEC’s
penny stock regulations, which may limit a stockholder’s ability to buy and sell
our stock.




Our stock
is a penny stock. The Securities and Exchange Commission has adopted Rule 15g-9,
which generally defines “penny stock” to be any equity security that has a
market price (as defined) less than $5.00 per share or an exercise price of less
than $5.00 per share, subject to certain exceptions. Our securities are covered
by the penny stock rules, which impose additional sales practice requirements on
broker-dealers that sell to persons other than established customers and
“accredited investors.” The term “accredited investor” refers generally to
institutions with assets in excess of $5,000,000 or individuals with a net worth
in excess of $1,000,000 or annual income exceeding $200,000 individually or
$300,000 jointly with their spouse. The penny stock rules require a
broker-dealer, prior to a transaction in a penny stock not otherwise exempt from
the rules, to deliver a standardized risk disclosure document in a form prepared
by the SEC, which provides information about penny stocks and the nature and
level of risks in the penny stock market. The broker-dealer also must provide
the customer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction, and
monthly account statements showing the market value of each penny stock held in
the customer’s account. The bid and offer quotations, and the broker-dealer and
salesperson compensation information, must be given to the customer orally or in
writing prior to effecting the transaction and must be given to the customer in
writing before or with the customer’s confirmation. In addition, the penny stock
rules require that, prior to a transaction in a penny stock not otherwise exempt
from these rules, the broker-dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the
purchaser’s written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor interest
in and limit the marketability of our common stock. The Financial Industry
Regulatory Authority (FINRA) sales practice requirements may also limit a
stockbroker’s ability to buy or sell our stock.




In
addition to the “penny stock” rules promulgated by the Securities and Exchange
Commission, the FINRA has adopted rules that require that in recommending an
investment to a customer, a broker-dealer must have reasonable grounds for
believing that the investment is suitable for that customer. Prior to
recommending speculative low priced securities to their non-institutional
customers, broker-dealers must make reasonable efforts to obtain information
about the customer’s financial status, tax status, investment objectives, and
other information. Under interpretation of these rules, the NASD believes that
there is a high probability that speculative low priced securities will not be
suitable for at least some customers. The FINRA requirements make it more
difficult for broker-dealers to recommend that their customers buy our common
stock, which may limit your ability to buy or sell our stock and have an adverse
effect on the market for our shares.




Item 2.Properties




Comstock
Lode Project




Location,
Access, and Title to the Property




We own or
lease the following mineral exploration projects: The Comstock gold and silver
exploration and test mining project, the Spring Valley and Gold Canyon placers
project, the Como mineral claims, and the Big Mike copper project.




Our
Comstock Lode Project is located in Storey and Lyon Counties, Nevada. The
property is physically situated roughly three (3) miles south of Virginia City,
Nevada. Paved state highways from Reno, Carson City, and Virginia City provide
access to the property.




11


The
Spring Valley and Gold Canyon project (South Comstock) is located in Lyon
County, Nevada, approximately 1.5 miles south of Silver City, Nevada. We have
performed geological reconnaissance and limited sampling on this property.
During 2009, six drill holes were drilled on the property.




The Como
mineral Claims are located in Lyon County, Nevada, approximately 15 miles east
of Carson City. We have performed geological reconnaissance on this property,
but have not drilled or collected any samples.




The Big
Mike copper project is located in Pershing County, Nevada, and has not been
explored or developed by us.


12








13


Comstock
Lode Project




Our
property rights to the mineral estate of the Comstock Lode Project consist of
several mineral leases, numerous unpatented mineral claims, and fee ownership of
real property.




Obester
Property Purchase (2009):




In 2009,
we secured long-term control of eleven patented mining claims in Storey and
Lyons Counties, Nevada, through a purchase agreement from the Obester Group.
This property includes five patented claims in the Lucerne / Billie the Kid
area, representing the focus of our recent drilling program. It also includes
six claims in the Occidental area, which provide a target for future
exploration. The purchase supersedes a mining lease with Claire Obester, dated
January 1, 1997, and a mining lease with Claire Obester, Jim Obester, Alan
Obester, and Julian Smith dated May 1, 2008.




The total
price to be paid to the Obester Group is $1,650,000. A down-payment of $250,000
was accepted, with the balance to be paid in quarterly payments of $250,000 with
an interest rate of 6%. These payments are current as of the date of this
report. The transaction is expected to close through escrow on or before April
15, 2010. Once the transaction is complete, the Obester Group will receive a Net
Smelter Royalty (NSR) of 1% of all future mineral production from the property,
which reduces the our royalty obligation by 80%.




The
purchase of this property was financed, in part, by an agreement to sell a NSR
on the property to Precious Royalties, LLC. Under the agreement, Precious
Royalties can earn up to a 5% NSR for a total price of $4,500,000. The agreement
calls for all funding to be received by March 31, 2010. During 2009, $260,000
has been funded under the agreement, which was used to make the down payment on
the property. As of December 31st, 2009,
the Precious Royalties NSR was 0.29%.




Donovan
Lease:




We have a
mineral exploration and mining lease agreement with the Donovan Silver Hills,
LLC dated September 1, 1999 covering seven patented claims and 13 unpatented
claims located in Storey and Lyon Counties. The lease remains in effect for as
long as exploration, development, mining, or processing operations are conducted
on a continuous basis, without a lapse of activity for more than 180 days. We
pay a royalty to the lessor amounting to the greater of $500 per month or a
royalty percentage of the Net Smelter Returns. The royalty percentage varies
based on the price of gold: 3% if gold is less than $400 per ounce, 4% if gold
is at least $400 per ounce but less than $500 per ounce, and 5% if gold is $500
or greater per ounce. We are also responsible for payment and filing of annual
maintenance fees, if any, and taxes for these claims.




Fred
Garrett Lease:




We
entered into a mineral exploration and mining lease agreement with the Fred
Garrett et al on April 1, 2008, covering one patented claim located in Storey,
Nevada. The lease remains in effect for as long as exploration, development,
mining, or processing operations are conducted on a continuous basis, without a
lapse of activity for more than 180 days. We pay a royalty to the lessor of $250
per month or a 3% Net Smelter Return, which ever is greater. We are also
responsible for payment and filing of annual maintenance fees, if any, and taxes
for these claims.




James
Obester Lease:




We have a
mineral exploration and mining lease agreement with James Obester dated August
1, 2008, covering ten unpatented claims located in Storey County. The lease
remains in effect for as long as exploration, development, mining, or processing
operations are conducted on a continuous basis, without a lapse of activity for
more than 180 days. We pay a royalty to the lessor amounting to $200 per month
for the first two years increasing to $300 a month for the next three years and
then increasing to $500 per month thereafter, in addition to a royalty
percentage of the Net Smelter Returns. The royalty percentage is a 2% NSR when
gold is $900 or less per ounce and 3% NSR when gold is greater than $900 per
ounce. We are also responsible for payment and filing of annual maintenance
fees, if any, and taxes for these claims.




14





DWC
Resources Letter of Intent:





On August
13, 2008, we entered into a binding letter of intent to purchase certain
property owned by DWC Resources, Inc. in Storey County, Nevada. The purchase
price is $7,500,000, but is subject to adjustment pursuant to the results of a
fairness opinion and/or appraisal to be obtained by us. The purchase price will
be paid through issuance of a $7,500,000 convertible promissory note which shall
bear interest at the rate of 9% per year with quarterly interest payments due
throughout the term of the note which is 5 years. The purchased assets include
patented and unpatented lode mining claims owned by DWC Resources, Inc. in the
Comstock Lode district. The letter of intent also provides for the payment of
royalties ranging from 2% - 6% of “net smelter returns” based upon the price of
gold per ounce and a 1% royalty to be paid to the party which sold the subject
property to DWC Resources in 2007. There is also a commitment by us to expend a
minimum of $250,000 per year on exploration for five years. During 2009, we
satisfied this annual obligation.





Sutro
Tunnel Sublease:





Simultaneously
with the DWC Resources Letter of intent, we entered into a binding letter of
intent to sublease the Sutro Tunnel Lease dated January 1, 2008 between Sutro
Tunnel Co. and John Winfield or his nominee. The purchase price for the sublease
is $2,000,000 (which is subject to adjustment upon receipt of a third party
fairness opinion/appraisal) payable pursuant to the issuance of a $2,000,000
convertible promissory note which shall bear interest at the rate of 9%per year
with quarterly interest payments due throughout the term of the note which is 5
years. The letter of intent also provides for the payment of royalties ranging
from 6% - 8% of “net smelter returns” based upon the price of gold per ounce and
a 1% royalty to be paid to Mr. Winfield if Mr. Winfield provides an acceptable
buyer of the Sutro property. We are also required to fulfill lessee’s
obligations under the Sutro Tunnel Lease with regard to payment of royalties and
exploration expenditures. During 2009, we satisfied this
obligation.





Railroad
& Gold Lease:





We
entered into a mineral exploration and mining lease agreement with the Railroad
and Gold, LLC on October 1, 2009 covering nine patented mining claims and
sixteen unpatented mining claims in Storey County. The lease also includes
rights for nine town lots and a rural parcel in American Flats. The lease is for
an initial term of 15 years, but remains in effect for as long as exploration,
development, mining, or processing operations are conducted on a continuous
basis. We made an initial payment of $25,000 for the lease. We will make annual
advance minimum royalty payments, starting with $30,000 on the first
anniversary, and increasing by $5,000 each year. We pay a royalty to the lessor
of a 4% Net Smelter Return, which will be reduced by the sum of previously-paid
advance minimum royalties. We are also responsible for payment and filing of
annual maintenance fees, if any, and taxes for these claims.





GoldSpring
Unpatented Claims:





In
addition to the mineral leases, we hold 179 unpatented mineral claims in Storey
County, hold eight unpatented mineral claims in Lyon County, and own title to 40
acres of land in Storey County. The W. Hughes Brockbank Living Trust has a lien
against and a security interest in these unpatented mineral claims and the 40
acres of land pursuant to a Deed of Trust dated October 31, 2003, entered into
with W. Hughes Brockbank Living Trust. The Deed of Trust was granted to secure a
promissory note, dated October 31, 2003, in the amount of $1 million for the
balance of the purchase price for the property. The non-interest bearing
promissory note requires ten quarterly payments of $100,000 each. In 2007, Mr.
Winfield’s affiliates, Intergroup Corporation, Santa Fe Financial and Portsmouth
Square, purchased the note from the W. Hughes Brockbank Living Trust.  As
of December 31, 2009, the outstanding balance of the note was
$250,000.




15




Table
of all Comstock Lode Project Owned or Controlled Patented Claims:





Claim
                            Number
                          
                          Claim Name
                          
                          Owner/Lessor
                          
                          Position
                          
                          Acres800-001-009
                          
                          Green
                          
                          GSPG
      (Obester)
                          
                          Fee
                          
                          11.0800-001-11
                          
                          Echo
      Parcel
                          
                          GSPG
      (Obester)
                          
                          Fee
                          
                          7.0800-001-12
                          
                          Lucerne
                          
                          GSPG
      (Obester)
                          
                          Fee
                          
                          8.0800-001-08
                          
                          St.
      Louis Parcels
                          
                          GSPG
      (Obester)
                          
                          Fee
                          
                          7.0800-002-71
                          
                          Billie
      the Kid
                          
                          GSPG
      (Obester)
                          
                          Fee
                          
                          18.0800-001-010
                          
                          North
      Occidental
                          
                          GSPG
      (Obester)
                          
                          Fee
                          
                          7.2800-001-025
                          
                          East
      North Occidental
                          
                          GSPG
      (Obester)
                          
                          Fee
                          
                          12.2800-001-021
                          
                          Dean
      Parcel
                          
                          GSPG
      (Obester)
                          
                          Fee
                          
                          11.0800-001-024
                          
                          South
      Occidental
                          
                          GSPG
      (Obester)
                          
                          Fee
                          
                          20.6800-001-068
                          
                          Occidental
                          
                          GSPG
      (Obester)
                          
                          Fee
                          
                          7.8800-001-026
                          
                          Edwards
                          
                          GSPG
      (Obester)
                          
                          Fee
                          
                          17.8USS
      84
                          
                          Tarto
      Lode
                          
                          Donovan
                          
                          Lease
                          
                          1.0USS
      86
                          
                          Hartford
                          
                          Donovan
                          
                          Lease
                          
                          14.0USS
      1723
                          
                          Succor
      Lode
                          
                          Donovan
                          
                          Lease
                          
                          6.0USS
      3760
                          
                          Olympia
                          
                          Donovan
                          
                          Lease
                          
                          6.0USS
      4728
                          
                          Hardluck
                          
                          Donovan
                          
                          Lease
                          
                          6.0USS
      4728
                          
                          Friendship
                          
                          Donovan
                          
                          Lease
                          
                          7.0USS
      4728
                          
                          Brown
      Lode
                          
                          Donovan
                          
                          Lease
                          
                          8.0USS
      125
                          
                          Niagra
                          
                          Donovan
      / DWC
                          
                          Lease
                          
                          3.0USS
      1066
                          
                          S.
      Comstock
                          
                          Donovan
      / DWC
                          
                          Lease
                          
                          12.038822
                          
                          Bells
      Hill
                          
                          DWC
                          
                          Lease
                          
                          4.033721
                          
                          Black
      Bird
                          
                          DWC
                          
                          Lease
                          
                          11.02438
                          
                          Chonta
      Lode
                          
                          DWC
                          
                          Lease
                          
                          6.46916
                          
                          Cliffhouse
                          
                          DWC
                          
                          Lease
                          
                          16.93704
                          
                          Corey
      Jay Boer
                          
                          DWC
                          
                          Lease
                          
                          7.433733
                          
                          East
      Alamo Ledge
                          
                          DWC
                          
                          Lease
                          
                          11.9USS  49A/B
                          
                          Front
      Lode A/B
                          
                          DWC
                          
                          Lease
                          
                          10.438822
                          
                          German
                          
                          DWC
                          
                          Lease
                          
                          3.616755
                          
                          Holman
                          
                          DWC
                          
                          Lease
                          
                          8.869
                          
                          Justice
                          
                          DWC
                          
                          Lease
                          
                          19.2785
                          
                          Keystone
      Comstock
                          
                          DWC
                          
                          Lease
                          
                          12.11436
                          
                          Memphis
                          
                          DWC
                          
                          Lease
                          
                          14.139507
                          
                          Overland
                          
                          DWC
                          
                          Lease
                          
                          0.538822
                          
                          Sebastopol
                          
                          DWC
                          
                          Lease
                          
                          0.833722
                          
                          South
      Alamo
                          
                          DWC
                          
                          Lease
                          
                          9.439507
                          
                          Wedge
                          
                          DWC
                          
                          Lease
                          
                          1.216696
                          
                          White
      Lode
                          
                          DWC
                          
                          Lease
                          
                          11.8353
                          
                          Woodville
                          
                          DWC
                          
                          Lease
                          
                          5.2USS
      114
                          
                          Pride
      of Washoe
                          
                          Garrett
                          
                          Lease
                          
                          25.3USS
      61
                          
                          Chollar
      Potosi (below Sutro)
                          
                          RR
      & Gold
                          
                          Lease
                          
                          35.2USS
      178
                          
                          Culver
                          
                          RR
      & Gold
                          
                          Lease
                          
                          13.8USS
      142/179
                          
                          Culver
      Addition
                          
                          RR
      & Gold
                          
                          Lease
                          
                          10.6




16




Claim
                  Number
                
                Claim Name
                
                Owner/Lessor
                
                Position
                
                AcresUSS
      357
                
                Frankel
                
                RR
      & Gold
                
                Lease
                
                5.5USS
      126/107
                
                Gibbs
                
                RR
      & Gold
                
                Lease
                
                10.4USS
      39
                
                Knickerbocker
      (N half)
                
                RR
      & Gold
                
                Lease
                
                5.4USS
      215
                
                Rock
      Island
                
                RR
      & Gold
                
                Lease
                
                20.3USS
      63
                
                Savage
      (below Sutro)
                
                RR
      & Gold
                
                Lease
                
                19.4USS
      64
                
                Gould
      & Curry
                
                RR
      &Gold / Sutro
                
                Lease
                
                25.3142
                
                Alpha
                
                Sutro
                
                Lease
                
                8.6USS
      65
                
                Alta
      (Woodville)
                
                Sutro
                
                Lease
                
                24.7128
                
                Bacon
      (USS 58)
                
                Sutro
                
                Lease
                
                1.5129
                
                Bacon
      (USS 59)
                
                Sutro
                
                Lease
                
                0.6Belcher
                
                Sutro
                
                Lease130
                
                Burke
      & Hamilton
                
                Sutro
                
                Lease
                
                1.32611
                
                Capitol
                
                Sutro
                
                Lease
                
                9.2131
                
                Challenge
                
                Sutro
                
                Lease
                
                1.51254
                
                Comstock
      Lode (Bullion)
                
                Sutro
                
                Lease
                
                27.368
                
                Confidence
                
                Sutro
                
                Lease
                
                4.09920
                
                Crown
      Point
                
                Sutro
                
                Lease
                
                3.3149
                
                Empire
      North
                
                Sutro
                
                Lease
                
                1.8150
                
                Empire
      South
                
                Sutro
                
                Lease
                
                0.7216
                
                Exchequer
                
                Sutro
                
                Lease
                
                10.0353
                
                Granville
      (Lady Washington)
                
                Sutro
                
                Lease
                
                5.9USS
      146
                
                Grosh
                
                Sutro
                
                Lease
                
                7.4USS
      147
                
                Grosh
                
                Sutro
                
                Lease
                
                5.33161
                
                Grosh
      Consolidated Mining
                
                Sutro
                
                Lease
                
                15.59919
                
                Imperial
                
                Sutro
                
                Lease
                
                2.6125
                
                Joseph
      Trench
                
                Sutro
                
                Lease
                
                0.7USS
      84
                
                Julia
                
                Sutro
                
                Lease
                
                9.19921
                
                Kentuck
                
                Sutro
                
                Lease
                
                0.99922
                
                Kentuck
      MG.
                
                Sutro
                
                Lease
                
                2.7643
                
                La
      Cata
                
                Sutro
                
                Lease
                
                13.8644
                
                Sara
      Ann
                
                Sutro
                
                Lease
                
                13.8Seg.
      Belcher
                
                Sutro
                
                LeaseUSS
      90
                
                Ward
                
                Sutro
                
                Lease
                
                7.1143
                
                Wm
      Sharon
                
                Sutro
                
                Lease
                
                0.99918
                
                Yellow
      Jacket
                
                Sutro
                
                Lease
                
                7.7




17




Table
of all Comstock Lode Project Owned or Controlled Unpatented Claims:





Serial #
                
                Claim
                  Name
                
                Location
                  Date
                
                Owner /
                  Lessor
                
                Type
                
                Position
                
                Land
                  Source
                
                AcresNMC416049
                
                Big
      Mike
                
                04/07/1987
                
                Donovan
                
                Lode
                
                Lease
                
                BLM
                
                20.0NMC416048
                
                Cliff
      House Fraction
                
                04/07/1987
                
                Donovan
                
                Lode
                
                Lease
                
                BLM
                
                4.0NMC416043
                
                Echo
      St. Louis Fraction
                
                04/07/1987
                
                Donovan
                
                Lode
                
                Lease
                
                BLM
                
                0.3NMC416041
                
                Green
      St. Louis Fraction
                
                03/04/1987
                
                Donovan
                
                Lode
                
                Lease
                
                BLM
                
                7.0NMC676492
                
                Hartford
      Lucerne Fraction
                
                04/07/1987
                
                Donovan
                
                Lode
                
                Lease
                
                BLM
                
                0.9NMC416040
                
                Hartford
      South Extension
                
                04/07/1987
                
                Donovan
                
                Lode
                
                Lease
                
                BLM
                
                3.0NMC416042
                
                Hartford
      St. Louis Fraction
                
                04/07/1987
                
                Donovan
                
                Lode
                
                Lease
                
                BLM
                
                6.5NMC416044
                
                Justice
      Lucerne Fraction
                
                04/07/1987
                
                Donovan
                
                Lode
                
                Lease
                
                BLM
                
                1.7NMC416046
                
                Justice
      Woodville Fraction
                
                04/07/1987
                
                Donovan
                
                Lode
                
                Lease
                
                BLM
                
                3.1NMC416047
                
                New
      Deal Fraction
                
                04/07/1987
                
                Donovan
                
                Lode
                
                Lease
                
                BLM
                
                12.0NMC416045
                
                South
      Comstock St. Louis
                
                04/07/1987
                
                Donovan
                
                Lode
                
                Lease
                
                BLM
                
                1.0NMC416033
                
                Vindicator
      #8
                
                04/06/1987
                
                Donovan
                
                Lode
                
                Lease
                
                BLM
                
                20.7NMC705983
                
                Cook
      & Grey
                
                11/09/1953
                
                DWC
                
                Lode
                
                Fee
                
                BLM
                
                1.8NMC116359
                
                Cumberland
      #2
                
                08/19/1901
                
                DWC
                
                Lode
                
                Fee
                
                BLM
                
                5.4NMC116360
                
                Cumberland
      #3
                
                06/21/1902
                
                DWC
                
                Lode
                
                Fee
                
                BLM
                
                1.0NMC116369
                
                Cumberland
      Frac
                
                09/28/1931
                
                DWC
                
                Lode
                
                Fee
                
                BLM
                
                1.5NMC116356
                
                Flora
      Temple
                
                09/17/1957
                
                DWC
                
                Lode
                
                Fee
                
                BLM
                
                0.2NMC705982
                
                New
      Flora Temple
                
                08/09/1994
                
                DWC
                
                Lode
                
                Fee
                
                BLM
                
                5.1NMC116358
                
                Overland
                
                4/30/1875
                
                DWC
                
                Lode
                
                Fee
                
                BLM
                
                2.7NMC116362
                
                Overlap
                
                10/01/1921
                
                DWC
                
                Lode
                
                Fee
                
                BLM
                
                8.5NMC116363
                
                Overlap
      #1
                
                10/01/1921
                
                DWC
                
                Lode
                
                Fee
                
                BLM
                
                1.3NMC555211
                
                Overlap
      #3
                
                04/24/1989
                
                DWC
                
                Lode
                
                Fee
                
                BLM
                
                5.9NMC116351
                
                Windy
      Fraction
                
                11/09/1953
                
                DWC
                
                Lode
                
                Fee
                
                BLM
                
                0.3NMC705983
                
                Woodville
      Extension
                
                08/10/1994
                
                DWC
                
                Lode
                
                Fee
                
                BLM
                
                10.3NMC275502
                
                Alta
      #5
                
                07/22/1983
                
                J.
      Obester
                
                Lode
                
                Lease
                
                BLM
                
                20.7




18




Serial #
                
                Claim
                  Name
                
                Location
                  Date
                
                Owner /
                  Lessor
                
                Type
                
                Position
                
                Land
                  Source
                
                AcresNMC275503
                
                Alta
      #6
                
                07/22/1983
                
                J.
      Obester
                
                Lode
                
                Lease
                
                BLM
                
                20.7NMC275504
                
                Alta
      #7
                
                07/22/1983
                
                J.
      Obester
                
                Lode
                
                Lease
                
                BLM
                
                20.7NMC275505
                
                Alta
      #8
                
                07/22/1983
                
                J.
      Obester
                
                Lode
                
                Lease
                
                BLM
                
                12.7NMC275506
                
                Alta
      #9
                
                07/22/1983
                
                J.
      Obester
                
                Lode
                
                Lease
                
                BLM
                
                20.7NMC275507
                
                Alta
      #10
                
                07/22/1983
                
                J.
      Obester
                
                Lode
                
                Lease
                
                BLM
                
                20.7NMC276609
                
                Alta
      #12
                
                07/22/1983
                
                J.
      Obester
                
                Lode
                
                Lease
                
                BLM
                
                12.1NMC300858
                
                Brunswick
      #1
                
                12/24/1983
                
                J.
      Obester
                
                Lode
                
                Lease
                
                BLM
                
                20.7NMC300859
                
                Brunswick
      #2
                
                12/24/1983
                
                J.
      Obester
                
                Lode
                
                Lease
                
                BLM
                
                20.7NMC300860
                
                Brunswick
      #4
                
                12/24/1983
                
                J.
      Obester
                
                Lode
                
                Lease
                
                BLM
                
                20.7NMC705397
                
                Alto
      No. 9
                
                09/23/1994
                
                RR
      & Gold
                
                Lode
                
                Lease
                
                BLM
                
                10.7NMC705392
                
                Angels
      East Annex
                
                07/22/1994
                
                RR
      & Gold
                
                Lode
                
                Lease
                
                BLM
                
                7.4NMC705390
                
                Angels
      No. 1
                
                07/21/1994
                
                RR
      & Gold
                
                Lode
                
                Lease
                
                BLM
                
                14.6NMC705391
                
                Angels
      No. 2
                
                09/22/1994
                
                RR
      & Gold
                
                Lode
                
                Lease
                
                BLM
                
                20.7NMC705395
                
                Hawk
                
                09/26/1994
                
                RR
      & Gold
                
                Lode
                
                Lease
                
                BLM
                
                12.9NMC705396
                
                Hawk
      Fraction
                
                09/26/1994
                
                RR
      & Gold
                
                Lode
                
                Lease
                
                BLM
                
                18.8NMC705400
                
                Iona
                
                09/27/1994
                
                RR
      & Gold
                
                Lode
                
                Lease
                
                BLM
                
                12.6NMC705388
                
                Latigo
                
                09/27/1994
                
                RR
      & Gold
                
                Lode
                
                Lease
                
                BLM
                
                18.7NMC705389
                
                Latigo
      2
                
                09/27/1994
                
                RR
      & Gold
                
                Lode
                
                Lease
                
                BLM
                
                22.4NMC705403
                
                Maryland
      Fraction
                
                09/26/1994
                
                RR
      & Gold
                
                Lode
                
                Lease
                
                BLM
                
                20.7NMC705393
                
                Merrilite
                
                09/23/1994
                
                RR
      & Gold
                
                Lode
                
                Lease
                
                BLM
                
                15.6NMC705394
                
                Merrilite
      North Annex
                
                07/22/1994
                
                RR
      & Gold
                
                Lode
                
                Lease
                
                BLM
                
                15.7NMC705401
                
                Oro
      Plato
                
                09/27/1994
                
                RR
      & Gold
                
                Lode
                
                Lease
                
                BLM
                
                14.4NMC705402
                
                Owl
                
                09/26/1994
                
                RR
      & Gold
                
                Lode
                
                Lease
                
                BLM
                
                5.9NMC705398
                
                West
      Nick
                
                07/21/1994
                
                RR
      & Gold
                
                Lode
                
                Lease
                
                BLM
                
                20.7NMC705399
                
                West
      Nick No. 1
                
                09/26/1994
                
                RR
      & Gold
                
                Lode
                
                Lease
                
                BLM
                
                20.7NMC821729
                
                Comstock
      #1
                
                10/16/2000
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC821730
                
                Comstock
      #2
                
                10/16/2000
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC821731
                
                Comstock
      #3
                
                10/16/2000
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7




19




Serial #
                
                Claim
                  Name
                
                Location
                  Date
                
                Owner /
                  Lessor
                
                Type
                
                Position
                
                Land
                  Source
                
                AcresNMC821735
                
                Comstock
      #7
                
                10/16/2000
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC821736
                
                Comstock
      #8
                
                10/16/2000
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC821737
                
                Comstock
      #9
                
                10/16/2000
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC821739
                
                Comstock
      #11
                
                10/16/2000
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC821740
                
                Comstock
      #12
                
                10/16/2000
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.6NMC821741
                
                Comstock
      #13
                
                12/01/2000
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.6NMC821742
                
                Comstock
      #14
                
                10/16/2000
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC821743
                
                Comstock
      #15
                
                10/16/2000
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC821744
                
                Comstock
      #16
                
                10/16/2000
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC821745
                
                Comstock
      #17
                
                12/01/2000
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC821746
                
                Comstock
      #18
                
                12/01/2000
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                13.8NMC821492
                
                Comstock
      #115
                
                04/08/2004
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC821493
                
                Comstock
      #116
                
                04/08/2004
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC821494
                
                Comstock
      #117
                
                04/08/2004
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC821495
                
                Comstock
      #118
                
                04/08/2004
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC821496
                
                Comstock
      #119
                
                04/08/2004
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC821497
                
                Comstock
      #120
                
                04/08/2004
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC821498
                
                Comstock
      #121
                
                04/08/2004
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC821499
                
                Comstock
      #122
                
                04/08/2004
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC821500
                
                Comstock
      #123
                
                04/08/2004
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC821501
                
                Comstock
      #124
                
                04/08/2004
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC821502
                
                Comstock
      #125
                
                04/08/2004
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC821503
                
                Comstock
      #126
                
                04/08/2004
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC821504
                
                Comstock
      #127
                
                04/08/2004
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC821505
                
                Comstock
      #128
                
                04/08/2004
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                13.8NMC821506
                
                Comstock
      #129
                
                07/01/2004
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC821507
                
                Comstock
      #130
                
                07/01/2004
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC821508
                
                Comstock
      #131
                
                07/01/2004
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC821509
                
                Comstock
      #132
                
                07/01/2004
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC821510
                
                Comstock
      #133
                
                07/01/2004
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7




20




Serial #
                
                Claim
                  Name
                
                Location
                  Date
                
                Owner /
                  Lessor
                
                Type
                
                Position
                
                Land
                  Source
                
                AcresNMC821511
                
                Comstock
      #134
                
                07/01/2004
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC821512
                
                Comstock
      #135
                
                07/01/2004
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC821513
                
                Comstock
      #136
                
                07/01/2004
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC821514
                
                Comstock
      #137
                
                07/01/2004
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC821515
                
                Comstock
      #138
                
                07/01/2004
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC821516
                
                Comstock
      #139
                
                07/01/2004
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                14.4NMC821517
                
                Comstock
      #140
                
                07/01/2004
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                18.3NMC821518
                
                Comstock
      #141
                
                07/01/2004
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC821519
                
                Comstock
      #142
                
                07/01/2004
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC983353
                
                Comstock
      Lode 100
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                16.0NMC983354
                
                Comstock
      Lode 101
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                6.1NMC983355
                
                Comstock
      Lode 102
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                5.4NMC983356
                
                Comstock
      Lode 103
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                2.0NMC983357
                
                Comstock
      Lode 104
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                2.2NMC983358
                
                Comstock
      Lode 105
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                1.1NMC983359
                
                Comstock
      Lode 106
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                8.6NMC983360
                
                Comstock
      Lode 107
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                12.7NMC983361
                
                Comstock
      Lode 108
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                1.0NMC983362
                
                Comstock
      Lode 109
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                2.3NMC983363
                
                Comstock
      Lode 110
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                19.2NMC983364
                
                Comstock
      Lode 111
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC983365
                
                Comstock
      Lode 112
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                16.6NMC983366
                
                Comstock
      Lode 113
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                17.1NMC983367
                
                Comstock
      Lode 114
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                1.7NMC983368
                
                Comstock
      Lode 115
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                12.2NMC983369
                
                Comstock
      Lode 116
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.4NMC983370
                
                Comstock
      Lode 117
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.4NMC983371
                
                Comstock
      Lode 118
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.7




21




Serial #
                
                Claim
                  Name
                
                Location
                  Date
                
                Owner /
                  Lessor
                
                Type
                
                Position
                
                Land
                  Source
                
                AcresNMC983372
                
                Comstock
      Lode 119
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC983373
                
                Comstock
      Lode 120
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                1.1NMC983374
                
                Comstock
      Lode 121
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                4.1NMC983375
                
                Comstock
      Lode 122
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC983376
                
                Comstock
      Lode 123
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                4.6NMC983377
                
                Comstock
      Lode 124
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC983378
                
                Comstock
      Lode 125
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                13.5NMC983379
                
                Comstock
      Lode 126
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC983380
                
                Comstock
      Lode 127
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC983381
                
                Comstock
      Lode 128
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC983382
                
                Comstock
      Lode 129
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC983383
                
                Comstock
      Lode 130
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC983384
                
                Comstock
      Lode 131
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC983385
                
                Comstock
      Lode 132
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC983386
                
                Comstock
      Lode 133
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC983387
                
                Comstock
      Lode 134
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC983388
                
                Comstock
      Lode 135
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC983389
                
                Comstock
      Lode 136
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC983390
                
                Comstock
      Lode 137
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC983391
                
                Comstock
      Lode 138
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC983392
                
                Comstock
      Lode 139
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC983393
                
                Comstock
      Lode 140
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC983394
                
                Comstock
      Lode 141
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC983395
                
                Comstock
      Lode 142
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC983396
                
                Comstock
      Lode 143
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC983397
                
                Comstock
      Lode 144
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC983398
                
                Comstock
      Lode 145
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.7




22




Serial #
                
                Claim
                  Name
                
                Location
                  Date
                
                Owner /
                  Lessor
                
                Type
                
                Position
                
                Land
                  Source
                
                AcresNMC983399
                
                Comstock
      Lode 146
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC983400
                
                Comstock
      Lode 147
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC983401
                
                Comstock
      Lode 148
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC983402
                
                Comstock
      Lode 149
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.5NMC983403
                
                Comstock
      Lode 150
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                8.4NMC983404
                
                Comstock
      Lode 151
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                14.5NMC983405
                
                Comstock
      Lode 152
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.1NMC983406
                
                Comstock
      Lode 153
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC983407
                
                Comstock
      Lode 154
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC983408
                
                Comstock
      Lode 155
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC983409
                
                Comstock
      Lode 156
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC983410
                
                Comstock
      Lode 157
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC983411
                
                Comstock
      Lode 158
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC983412
                
                Comstock
      Lode 159
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC983413
                
                Comstock
      Lode 160
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC983414
                
                Comstock
      Lode 161
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                15.6NMC983415
                
                Comstock
      Lode 162
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                19.5NMC983416
                
                Comstock
      Lode 163
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                7.7NMC983417
                
                Comstock
      Lode 164
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                12.8NMC983418
                
                Comstock
      Lode 165
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.5NMC983419
                
                Comstock
      Lode 166
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                6.3NMC983420
                
                Comstock
      Lode 167
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC983421
                
                Comstock
      Lode 168
                
                12/21/2007
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                16.2NMC992973
                
                Comstock
      Lode 169
                
                07/10/2008
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                1.4NMC992974
                
                Comstock
      Lode 172
                
                04/25/2008
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC992975
                
                Comstock
      Lode 173
                
                04/25/2008
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC992976
                
                Comstock
      Lode 174
                
                04/25/2008
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.2




23




Serial #
                
                Claim
                  Name
                
                Location
                  Date
                
                Owner /
                  Lessor
                
                Type
                
                Position
                
                Land
                  Source
                
                AcresNMC992977
                
                Comstock
      Lode 175
                
                04/25/2008
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC992978
                
                Comstock
      Lode 176
                
                04/25/2008
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                15.5NMC992979
                
                Comstock
      Lode 177
                
                04/25/2008
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                19.0NMC992980
                
                Comstock
      Lode 179
                
                04/25/2008
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC992981
                
                Comstock
      Lode 180
                
                04/25/2008
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC992982
                
                Comstock
      Lode 181
                
                04/25/2008
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                20.1NMC992983
                
                Comstock
      Lode 182
                
                04/25/2008
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                10.3NMC992984
                
                Comstock
      Lode 183
                
                04/25/2008
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                19.8NMC992985
                
                Comstock
      Lode 184
                
                04/25/2008
                
                Plum
      Mining
                
                Lode
                
                Fee
                
                BLM
                
                0.0NMC965375
                
                Ghost
      #1
                
                09/30/2007
                
                GSPG
                
                Load
                
                Fee
                
                BLM
                
                20.7NMC965376
                
                Ghost
      #2
                
                09/30/2007
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC965377
                
                Ghost
      #3
                
                09/30/2007
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC965378
                
                Ghost
      #4
                
                09/30/2007
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC965379
                
                Ghost
      #5
                
                09/30/2007
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC965380
                
                Ghost
      #6
                
                09/30/2007
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC965381
                
                Ghost
      #7
                
                09/30/2007
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC965382
                
                Ghost
      #8
                
                09/30/2007
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC965383
                
                Ghost
      #9
                
                09/30/2007
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC965384
                
                Ghost
      #10
                
                09/30/2007
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC965385
                
                Ghost
      #11
                
                09/30/2007
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC810323
                
                Lee
      #2
                
                11/31/1999
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                19.8NMC810324
                
                Lee
      #3
                
                11/31/1999
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC810321
                
                Lee
      #5
                
                11/31/1999
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                19.4NMC814553
                
                Lee
      #8
                
                01/29/2000
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                19.5NMC814554
                
                Lee
      #9
                
                01/29/2000
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                19.2NMC1003426
                
                Loring
      1
                
                11/24/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                11.0NMC1003427
                
                Loring
      2
                
                11/24/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                18.8NMC1003428
                
                Loring
      3
                
                11/24/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                18.7NMC1003429
                
                Loring
      4
                
                11/24/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                18.9NMC1003430
                
                Loring
      5
                
                11/24/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                15.6NMC1003431
                
                Loring
      6
                
                11/24/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                9.1NMC1003432
                
                Loring
      7
                
                11/24/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                1.6NMC1003433
                
                Loring
      8
                
                11/24/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                1.7NMC1003434
                
                Loring
      9
                
                11/24/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC1003435
                
                Loring
      10
                
                11/24/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC1003436
                
                Loring
      11
                
                11/24/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC1003437
                
                Loring
      12
                
                11/24/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC1003438
                
                Loring
      13
                
                11/24/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC1003439
                
                Loring
      14
                
                11/24/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC1003440
                
                Loring
      15
                
                11/24/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7




24




Serial #
                
                Claim
                  Name
                
                Location
                  Date
                
                Owner /
                  Lessor
                
                Type
                
                Position
                
                Land
                  Source
                
                AcresNMC1003441
                
                Loring
      16
                
                11/24/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC1003442
                
                Loring
      17
                
                11/24/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.6NMC1003443
                
                Loring
      18
                
                11/24/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC1003444
                
                Loring
      19
                
                11/24/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC1003445
                
                Loring
      20
                
                11/24/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.6NMC1003446
                
                Loring
      21
                
                11/24/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                13.9NMC1003447
                
                Loring
      22
                
                11/24/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                6.6NMC1000122
                
                Omaha
      Fraction #1
                
                10/30/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                7.2NMC1000123
                
                Omaha
      Fraction #2
                
                11/08/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                0.9NMC1000124
                
                Omaha
      Fraction #3
                
                10/30/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                1.6NMC1000125
                
                Omaha
      Fraction #4
                
                10/30/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                0.2NMC1000126
                
                Omaha
      Fraction #5
                
                10/30/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                0.2NMC1000127
                
                Omaha
      Fraction #6
                
                10/30/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                1.8NMC1000128
                
                Omaha
      Fraction #7
                
                10/30/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                2.3NMC1000129
                
                Omaha
      Fraction #8
                
                10/30/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                0.3NMC1000130
                
                Omaha
      Fraction #9
                
                10/30/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                6.5NMC1000131
                
                Omaha
      Fraction #10
                
                10/30/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                0.8NMC1000132
                
                Omaha
      Fraction #11
                
                10/30/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                1.1NMC1000133
                
                Omaha
      Fraction #12
                
                10/30/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                0.4NMC1000134
                
                Omaha
      Fraction #13
                
                10/30/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                1.1NMC1000135
                
                Omaha
      Fraction #14
                
                10/30/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                1.4NMC1000136
                
                Omaha
      Fraction #17
                
                10/30/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                1.6NMC1000137
                
                Omaha
      Fraction #18
                
                10/30/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                1.3NMC1000138
                
                Omaha
      Fraction #19
                
                10/30/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                2.2NMC1000139
                
                Omaha
      Fraction #20
                
                10/30/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                1.0NMC1000140
                
                Omaha
      Fraction #21
                
                10/30/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                1.1NMC1000141
                
                Omaha
      Fraction #22
                
                10/30/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                3.0




25




Serial #
                
                Claim
                  Name
                
                Location
                  Date
                
                Owner /
                  Lessor
                
                Type
                
                Position
                
                Land
                  Source
                
                AcresNMC1000142
                
                Omaha
      Fraction #23
                
                10/30/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                2.3NMC1000143
                
                Omaha
      Fraction #24
                
                10/30/2008
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                2.3NMC704516
                
                Overman
      #1
                
                08/27/1994
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                1.0NMC884216
                
                Plum
                
                11/19/2004
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.4NMC1015613
                
                West
      Lode 59
                
                09/09/2009
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                4.5NMC1015630
                
                West
      Lode 77
                
                09/09/2009
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                2.3NMC1015631
                
                West
      Lode 78
                
                09/09/2009
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                13.3NMC1015632
                
                West
      Lode 79
                
                09/09/2009
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.6NMC1015648
                
                West
      Lode 96
                
                09/09/2009
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                10.2NMC1015649
                
                West
      Lode 97
                
                09/09/2009
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                19.8NMC1015650
                
                West
      Lode 98
                
                09/09/2009
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC1015651
                
                West
      Lode 99
                
                09/09/2009
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC1015666
                
                West
      Lode 115
                
                09/09/2009
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                18.3NMC1015667
                
                West
      Lode 116
                
                09/09/2009
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC1015668
                
                West
      Lode 117
                
                09/09/2009
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC1015669
                
                West
      Lode 118
                
                09/09/2009
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC1015670
                
                West
      Lode 119
                
                09/09/2009
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC1015691
                
                West
      Lode 203
                
                09/10/2009
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                16.3NMC1015692
                
                West
      Lode 204
                
                09/10/2009
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                10.4NMC1015693
                
                West
      Lode 205
                
                09/10/2009
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                4.6NMC1015694
                
                West
      Lode 206
                
                09/10/2009
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                0.2NMC1015696
                
                West
      Lode 223
                
                09/10/2009
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC1015697
                
                West
      Lode 224
                
                09/10/2009
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC1015698
                
                West
      Lode 225
                
                09/10/2009
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC1015699
                
                West
      Lode 226
                
                09/10/2009
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                19.1NMC1015700
                
                West
      Lode 227
                
                09/10/2009
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                13.5NMC1015701
                
                West
      Lode 228
                
                09/10/2009
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                7.6NMC1015702
                
                West
      Lode 229
                
                09/10/2009
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                1.9NMC1015703
                
                West
      Lode 243
                
                09/10/2009
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                15.3




26




Serial #
                
                Claim
                  Name
                
                Location
                  Date
                
                Owner /
                  Lessor
                
                Type
                
                Position
                
                Land
                  Source
                
                AcresNMC1015704
                
                West
      Lode 244
                
                09/10/2009
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                13.6NMC1015705
                
                West
      Lode 245
                
                09/10/2009
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                18.9NMC1015706
                
                West
      Lode 246
                
                09/10/2009
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC1015707
                
                West
      Lode 247
                
                09/10/2009
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC1015708
                
                West
      Lode 248
                
                09/10/2009
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC1015709
                
                West
      Lode 249
                
                09/10/2009
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.5NMC1015710
                
                West
      Lode 250
                
                09/10/2009
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                16.6NMC1015711
                
                West
      Lode 263
                
                09/10/2009
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                12.4NMC1015712
                
                West
      Lode 264
                
                09/10/2009
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                7.2NMC1015713
                
                West
      Lode 265
                
                09/10/2009
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                15.3NMC1015714
                
                West
      Lode 266
                
                09/10/2009
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC1015715
                
                West
      Lode 267
                
                09/10/2009
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC1015716
                
                West
      Lode 268
                
                09/10/2009
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC1015717
                
                West
      Lode 269
                
                09/10/2009
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC1015718
                
                West
      Lode 270
                
                09/10/2009
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC1015719
                
                West
      Lode 301
                
                09/09/2009
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC1015720
                
                West
      Lode 302
                
                09/09/2009
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7NMC1015721
                
                West
      Lode 303
                
                09/09/2009
                
                GSPG
                
                Lode
                
                Fee
                
                BLM
                
                20.7




27









28







29


Present
Condition of Property and Work Performed





We have
completed extensive geological mapping, sampling, and drilling on a portion of
the Comstock Project property, in order to characterize the mineralized
material.  We have performed preliminary metallurgical testing, mine
planning, and economic analysis, and have produced internal reports of our
mineralized material inventory.  However, we have not established
reserves that meet the requirements of SEC Industry Guide 7. Therefore, any
activity we perform on the property is considered exploratory in nature. Part of
our exploration included operating a test mine. The purpose of the test mine was
to determine our capital and operating costs, metallurgical recoveries, and
other mining factors, and determine if we could make a profit over and above our
capital and operating costs.





Description
of Equipment and other Infrastructure Facilities





We own a
mine office building and shop building, a Merrill-Crowe gold precipitation
plant, an agglomerator, crusher, screen, water truck, generators, dozers, cement
silo with a screw feeder, and conveyors.  The Merrill-Crowe gold
precipitation plant and the mineral processing equipment are less than five
years old.  The net book value of these assets and land at December
31, 2009 was $416,189 and $1,885,277 respectively.





Geology, Structure and
Mineralization





Gold and
silver mineralization in the project area is highly dependent on geologic
structural ground preparation over million of years, as it is throughout the
Comstock Mining District.  The heavily-faulted, volcanic-hosted
setting of the Plum Mine area is favorable with respect to the natural
conditions under which gold and silver mineralization occurs.





Mineralization
in the Hartford Complex area is hosted by the northwest striking Silver City
fault zone and is enhanced in volume and grade where intersected by
cross-cutting east-west and northeast striking structures.  Detailed
geologic studies by our geologic staff have identified four sub-parallel
northwest striking faults within the Silver City fault zone.  The
spacing between these faults is about 150 feet, while thicknesses of
mineralization along individual faults range from 40 to 120 feet.





Mineralization
within the project drill area is more gold enriched with silver to gold ratios
of approximately 10:1.  This compares to ratios of silver to gold of
100:1 over the historic Comstock bonanzas.  Drilling has outlined gold
and silver mineralization over a strike distance of nearly one mile, with
in-fill drilling on 50 to 70 foot centers over .6 of a
mile.  Mineralization is open-ended to the north and south along
strike and down-dip to the east.





Mineralized
Material





Based on
the results of the 2007-2009 drilling program, our team of mining industry
professionals drafted a report, compiled in accordance with the Society of
Mining, Metallurgy, and Exploration (SME) 2007 reporting
guidelines.  That report, finalized in June, 2009, estimated that our
deposit of mineralized material contained 22.9 million tons, with an average
grade of 0.028 ounces per ton gold and 0.370 ounces per ton
silver.  The report further estimated a mineable portion of the
mineralized material to be 20.3 million tons, with an average grade of 0.029
ounces per ton gold, and 0.395 ounces per ton silver.  However, we
have not established any proven or probable reserves that meet the requirements
of SEC Industry Guide 7.





Future
Exploration Potential





The
Comstock Mining district is a well-known, historic mining district, with over
150 years of production history.  We have access to extensive reports
and maps on various properties in the district, but to-date, we have only
conducted detailed geologic exploration on approximately 2% of our 5,200 acre
land position.  We are conducting an ongoing exploration program to
locate and test surface mineral targets as well as deep underground bonanza
targets by using historic compilation, geological mapping, geochemical and
geophysical investigations and drilling.


30


Spring
Valley Project (South Comstock)





We own a
100% interest in the 25 federal unpatented placer claims located in Lyon County,
Nevada known as the Gold Canyon and Spring Valley claims. The 25 unpatented
placer claims cover approximately 850 acres and are located about 30 miles
southeast of Reno and six miles south of Virginia City, Nevada.  In
late 2008, we leased seven patented lode mining claims for this project. The
properties are undeveloped and do not contain any open-pit or underground mines.
We have not established any proven or probable reserves on the mineral claims.
All of our activities associated with these properties are exploratory in
nature.  We have no plans to begin test mining operations on these
properties in the near-term.





In 2008,
we conducted geological reconnaissance in this area.  As part of the
2007-2009 drilling program, six reverse circulation drill holes were drilled in
Spring Valley.  While all of these holes encountered anomalous
mineralization, the fifth hole was significant as a “discovery hole”,
encountering 30 feet of mineralized material averaging 0.209 ounces per ton
gold, and 0.992 ounces per ton of silver.  This previously-unknown
mineral occurrence was found beneath just 40 feet of
pediment.  Additional drilling is needed to define the extent of this
material.





Lyon
County Unpatented Placer Claims:


Serial #
            
            Claim Name
            
            Location Date
            
            Owner
            
            Type
            
            Position
            
            Land
              Source
            
            AcresNMC677117
            
            Harlesk
      #1
            
            3/8/1993
            
            GSPG
            
            Placer
            
            Fee
            
            BLM
            
            4.4NMC677118
            
            Harlesk
      #2
            
            3/8/1993
            
            GSPG
            
            Placer
            
            Fee
            
            BLM
            
            19.7NMC677119
            
            Harlesk
      #3
            
            3/8/1993
            
            GSPG
            
            Placer
            
            Fee
            
            BLM
            
            17.8NMC677120
            
            Harlesk
      #4
            
            3/8/1993
            
            GSPG
            
            Placer
            
            Fee
            
            BLM
            
            4.5NMC677121
            
            Harlesk
      #5
            
            3/8/1993
            
            GSPG
            
            Placer
            
            Fee
            
            BLM
            
            20.1NMC677122
            
            Harlesk
      #6
            
            3/8/1993
            
            GSPG
            
            Placer
            
            Fee
            
            BLM
            
            17.7NMC677123
            
            Harlesk
      #7
            
            3/8/1993
            
            GSPG
            
            Placer
            
            Fee
            
            BLM
            
            20.3NMC677124
            
            Harlesk
      #8
            
            3/8/1993
            
            GSPG
            
            Placer
            
            Fee
            
            BLM
            
            17.4NMC677125
            
            Harlesk
      #9
            
            3/8/1993
            
            GSPG
            
            Placer
            
            Fee
            
            BLM
            
            18.9NMC677126
            
            Harlesk
      #10
            
            3/8/1993
            
            GSPG
            
            Placer
            
            Fee
            
            BLM
            
            19.9NMC872176
            
            Harlesk
      #100
            
            4-19-2004
            
            GSPG
            
            Placer
            
            Fee
            
            BLM
            
            21.0NMC872177
            
            Harlesk
      #101
            
            4-19-2004
            
            GSPG
            
            Placer
            
            Fee
            
            BLM
            
            21.2NMC872178
            
            Harlesk
      #102
            
            4-19-2004
            
            GSPG
            
            Placer
            
            Fee
            
            BLM
            
            21.0NMC872179
            
            Harlesk
      #103
            
            4-19-2004
            
            GSPG
            
            Placer
            
            Fee
            
            BLM
            
            20.8NMC99064
            
            SD
      Placer
            
            9/30/1967
            
            GSPG
            
            Placer
            
            Fee
            
            BLM
            
            42.3NMC99065
            
            DS
      Placer
            
            9/30/1967
            
            GSPG
            
            Placer
            
            Fee
            
            BLM
            
            82.1NMC99066
            
            Trio
      Claims
            
            9/30/1967
            
            GSPG
            
            Placer
            
            Fee
            
            BLM
            
            41.5NMC99067
            
            Gold
      Star Placers
            
            7/18/1972
            
            GSPG
            
            Placer
            
            Fee
            
            BLM
            
            81NMC99068
            
            Badger
      Placer
            
            8/13/1966
            
            GSPG
            
            Placer
            
            Fee
            
            BLM
            
            21.0NMC99072
            
            EZ
      Placer
            
            2/6/1970
            
            GSPG
            
            Placer
            
            Fee
            
            BLM
            
            40.2NMC99075
            
            Nugget
      Placer
            
            9/1/1959
            
            GSPG
            
            Placer
            
            Fee
            
            BLM
            
            80.0NMC99076
            
            Star
      Placer
            
            11/12/1966
            
            GSPG
            
            Placer
            
            Fee
            
            BLM
            
            41.1NMC99078
            
            Stans
      Placer
            
            9/2/1969
            
            GSPG
            
            Placer
            
            Fee
            
            BLM
            
            80.3NMC99079
            
            Stangs
      Placer
            
            10/15/169
            
            GSPG
            
            Placer
            
            Fee
            
            BLM
            
            41NMC99074
            
            Mustang
            
            9/6/1969
            
            GSPG
            
            Placer
            
            Fee
            
            BLM
            
            38





MICHAEL
& KATHRYN S. DONDERO LEASE:





On
November 1,  2008 we entered into a mineral exploration and mining
lease agreement with Michael & Kathryn S. Dondero covering seven patented
claims located in Lyon County. The lease remains in effect for as long as
exploration, development, mining, or processing operations are conducted on a
continuous basis, without a lapse of activity for more than 180 days. We pay a
royalty to the lessor amounting to the greater of $1,000 per month or a 3% NSR.
We are also responsible for payment and filing of annual maintenance fees, if
any, and taxes for these claims.  We also have an option to purchase
the land and related patents for $900,000.


31


Dondero
Patented & Town Lots w/mineral rights Claims:


Parcel
      Number
            
            Claim
      Name
            
            Position
            
            Land
      Source
            
            Acres16-121-10
            
            
            
            Lease
            
            Private
      Land
            
            2.916-121-11
            
            
            
            Lease
            
            Private
      Land
            
            1.0416-121-12
            
            
            
            Lease
            
            Private
      Land
            
            .0816-121-22
            
            
            
            Lease
            
            Private
      Land
            
            20.0316-121-23
            
            
            
            Lease
            
            Private
      Land
            
            2016-121-24
            
            
            
            Lease
            
            Private
      Land
            
            2016-121-25
            
            
            
            Lease
            
            Private
      Land
            
            20


32





33


The
Como Project





We own a
100% interest in the 8 unpatented lode mining claims, covering an area of
approximately 168 acres in Lyon County, Nevada, that comprise the Como
Project.  We have conducted geological reconnaissance in this area,
but have not conducted any drilling or sampling programs on this
property.





Unpatented
Como claims:


Serial #
            
            Claim Name
            
            Location Date
            
            Owner
            
            Type
            
            Position
            
            Land
              Source
            
            AcresNMC17092
            
            Como
      Comet 1
            
            8/28/1976
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            21.0NMC17093
            
            Como
      Comet 2
            
            8/28/1976
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            21.0NMC4439
            
            Como
      Comet 3
            
            4/26/1977
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            21.0NMC4440
            
            Como
      Comet 4
            
            4/26/1977
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            21.0NMC6121
            
            Como
      Comet 6
            
            4/30/1977
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            21.0NMC6122
            
            Como
      Comet 7
            
            5/15/1977
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            21.0NMC6123
            
            Como
      Comet 8
            
            5/15/1977
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            21.0NMC6124
            
            Como
      Comet 9
            
            5/15/1977
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            21.0


34





35


Big
Mike Copper Project





We own a
100% interest in the 17 unpatented lode claims and one placer claim, covering a
total of approximately 310 acres in Pershing County, Nevada, that comprise the
Big Mike Copper property. The Big Mike Copper property is located approximately
32 miles south of Winnemucca in Pershing County, Nevada.  Access to
this site is available by way of Grass Valley Road, a county maintained paved
and gravel road, for 30 miles and then two miles on a BLM gravel road. The
property is situated at an elevation of 5,000 to 5,500 feet. We have not
completed any exploration activity or undertaken any geologic, engineering or
economic studies on the Big Mike Copper property. The property includes an open
pit, mineralized material in a stockpile, and waste dumps. As the site was
previously mined, there are also roads and graded areas on the property. Two
cased water wells with rights to two cubic feet per second are also present on
the property.





At the
end of September 2006, we entered into a ten year lease with a local company,
controlled by a former GoldSpring director, for a 10 year lease of all of its
mining claims for our Big Mike copper project. The lessor defaulted on the lease
in 2009, and through his actions allowed a lien to be placed on the property by
a contractor.  We are negotiating to have the lien removed, and
restore our property rights.





Unpatented
Big Mike Claims:


Serial #
            
            Claim Name
            
            Location Date
            
            Owner
            
            Type
            
            Position
            
            Land
              Source
            
            AcresNMC87482
            
            Big
      Mike Lode
            
            6/18/1979
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC87483
            
            Big
      Mike 4 Lode
            
            6/18/1979
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC87484
            
            Big
      Mike 6 Lode
            
            6/18/1979
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC87485
            
            Big
      Mike 7 Lode
            
            6/18/1979
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC87486
            
            Big
      Mike 9 Lode
            
            6/18/1979
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC87487
            
            Big
      Mike 10 Lode
            
            6/18/1979
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC87488
            
            Big
      Mike 11 Lode
            
            6/18/1979
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC87489
            
            Big
      Mike 12 Lode
            
            6/18/1979
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC87490
            
            Big
      Mike 16 Lode
            
            6/18/1979
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC87491
            
            Big
      Mike 20 Lode
            
            6/18/1979
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC87492
            
            Big
      Mike 24 Lode
            
            6/18/1979
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC87493
            
            Big
      Mike 30 Lode
            
            6/18/1979
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC87494
            
            Big
      Mike Extension
            
            7/27/1979
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            17.7NMC87495
            
            Big
      Mike Extension #1
            
            7/27/1979
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            17.7NMC87496
            
            Big
      Mike Extension #2
            
            7/26/1979
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            17.7NMC87497
            
            Brandi
      Placer
            
            6/18/1979
            
            GSPG
            
            Placer
            
            Fee
            
            BLM
            
            20.0NMC510111
            
            Big
      Ron
            
            7/26/1979
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.0NMC510112
            
            Big
      Bruce
            
            7/26/1979
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.0


36





37


Item
3.  Legal Proceedings





From time
to time, we are involved in lawsuits, claims, investigations and proceedings
that arise in the ordinary course of business. There are no matters pending that
we expect to have a material adverse impact on our business, results of
operations, financial condition or cash flows.





Item
4.  Submission of Matters to a Vote of Security Holders





None.





PART
II





Item 5. Market for Registrant’s Common
Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities




PRICE
RANGE OF COMMON STOCK




Our
common stock is currently traded on the OTC Bulletin Board under the symbol
“GSPG.OB”. The following table sets forth, for the periods indicated, the high
and low inter-dealer closing prices per share of our common stock as reported on
the Over The Counter Bulletin Board, without retail mark-up, mark-down or
commission and may not represent actual transactions. As of December 31, 2009,
we had over 11,000 holders of our common stock. That does not include the number
of beneficial holders whose stock is held in the name of broker-dealers or
banks. At December 31, 2009, we had 3,662,067,844, shares of common stock issued
and outstanding.




The
following table sets forth the high and low bid prices for our common stock
since for the last two years.





Year
                      
                      Quarter
                      
                      High
                      
                      
                      Low2008
                      
                      First
                      
                      
                      .0022
                      
                      
                      
                      .0112008
                      
                      Second
                      
                      
                      .0035
                      
                      
                      
                      .0172008
                      
                      Third
                      
                      
                      .006
                      
                      
                      
                      .0182008
                      
                      Fourth
                      
                      
                      .024
                      
                      
                      
                      .0112009
                      
                      First
                      
                      
                      .018
                      
                      
                      
                      .0102009
                      
                      Second
                      
                      
                      .020
                      
                      
                      
                      .0102009
                      
                      Third
                      
                      
                      .015
                      
                      
                      
                      .0062009
                      
                      Fourth
                      
                      
                      .012
                      
                      
                      
                      .007




EQUITY
COMPENSATION PLAN INFORMATION




The
following table sets forth information with respect to our common stock that may
be issued upon the exercise of stock options under our incentive stock option
plans as of December 31, 2009




Plan Category
                              
                              (a)
                                Number of
                                Securities to
                                Be Issued Upon
                                Exercise of
                                Outstanding
                                Options,
                                Warrants, and
                                Rights
                              
                              (b)
                                Weighted-
                                Average
                                Exercise Price
                                of Outstanding
                                Options,
                                Warrants, and
                                Rights
                              
                              (c)
                                Number of
                                Securities
                                Remaining
                                Available for
                                Future Issuance
                                Under Equity
                                Compensation
                                Plans
                                (Excluding
                                Securities
                                Reflected in
                                Column (a))Equity
      Compensation Plans Approved byStockholders
                              
                              90,000,000
                              
                              $
                              0.00963
                              
                              700,000,000Equity
      Compensation Plans Not Approved by Stockholders
                              
                              —
                              
                              
                              —
                              
                              —Equity
      Compensation Plans Non Plan Based
                              
                              80,000,000
                              
                              $
                              0.01119
                              
                              —Total
                              
                              170,000,000
                              
                              $
                              .0.0104
                              
                              700,000,000


38


Dividend
Policy





We have
never declared or paid any dividends on our common stock. We do not anticipate
paying any cash dividends on our common stock in the foreseeable future. We
currently intend to retain future earnings, if any, to finance operations and
the expansion of our business. Any future determination to pay cash dividends
will be at the discretion of the board of directors and will depend upon our
financial condition, operating results, capital requirements and other factors
the board of directors deems relevant. We are restricted from declaring
dividends under the terms of the senior secured convertible
debentures.





Item 7. Management’s Discussion and Analysis
of Financial Condition and Results of Operations





The
following discussion provides information that we believe is relevant to an
assessment and understanding of the consolidated results of operations and
financial condition of our company. It should be read in conjunction with the
Consolidated Financial Statements and accompanying Notes also included in this
10-K.





The
following discussion addresses matters we consider important for an
understanding of our financial condition and results of operations as of and for
the year ended December 31, 2009, as well as our future results.




Overview





GoldSpring,
Inc. is a North American precious metals mining company, focused in Nevada, with
extensive, contiguous property in the Comstock Lode District.  Our
Company acquired two properties in the Comstock Lode in 2003.  We
secured permits, built an infrastructure and brought the exploration project
into test mining production within a year of its acquisition.  We
began consolidating the Comstock Lode in 2005, by acquiring additional
properties in the district, expanding our footprint and creating opportunities
for exploration and mining.





We
produced 16,175 ounces of gold and 68,514 ounces of silver between 2004 and
2006, from our test mining operation.  Our test mining activities were
suspended in 2007, and we began an exploration and drilling program to gather
the detailed information to allow us to restart mining with a high degree of
confidence.





We are
looking to build on our success through the acquisition of other mineral
properties in the Comstock Lode District with significant precious metals
exploration potential.  Our activities during 2009 were focused on
specific objectives: to increase our mineralized material inventory through
exploration, expand our mineral estate footprint in the Comstock, resume mining
with optimized production of gold and silver, and maximize shareholder
value.





Land





During
2009, we worked diligently to expand our mineral estate in the Comstock Lode
mining district.  We focused on accumulating contiguous properties
with high potential as mineral exploration targets, as well as properties with
the surface rights and water rights needed for mining.


39


On August
13, 2008, we entered into a binding letter of intent to purchase certain
property owned by DWC Resources, Inc. in Storey County, Nevada. We
simultaneously entered into a binding letter of intent to sublease the Sutro
Tunnel Lease dated January 1, 2008 between Sutro Tunnel Co. and John Winfield or
his nominee.  During 2009, we continued to meet our obligations under the
DWC and Sutro letters of intent, while negotiations continued to consummate
these transactions.  We expect to finalize the acquisitions during the
first half of 2010.





We
acquired a mining lease for nine patented mining claims and sixteen unpatented
mining claims for our Comstock Lode project from Railroad and Gold,
LLC.  The lease also includes rights for nine town lots and a rural
parcel in American Flats.  These claims added 344 acres to the mineral
estate for the project.  The claims include a number of high quality
exploration targets, including the area of the previously-mined Overman pit, and
the under-exploited Caledonia area, which have been identified through our
ongoing Comstock-wide geologic exploration program.





We
purchased three town lots in Gold Hill, Nevada, totaling 4.79 acres, from Angelo
and Joan Petrini.  The property is adjacent to our northern extension
exploration target.  It provides potential drill locations, as well as
a possible location for surface facilities.  On February 17, 2009, we
purchased these 4.79 acres in the Comstock District for $130,000.  We
partially financed this transaction through a $90,000 first deed of trust that
is interest only for two years and bears interest at 16% per
annum.   The note is due and payable on February 17,
2011.





We
secured long-term control of eleven patented mining claims in Storey and Lyons
Counties, Nevada, though a purchase agreement from the Obester
Group.  This property includes five patented claims in the Lucerne /
Billie the Kid area, which has been the focus of the recent drilling
program.  It also includes six claims in the Occidental area, which
provide a target for future exploration.  The claims have previously
been controlled by GoldSpring and our predecessor organizations through mining
leases.





The total
price to be paid to the Obester Group is $1,650,000.  We made two
initial payments totaling $250,000, with the balance to be paid in quarterly
payments of $250,000 with an interest rate of 6%.  These payments are
current as of the date of this report.  The transaction is expected to
close through escrow on or before April 15, 2010.  Once the
transaction is complete, the Obester Group will receive a Net Smelter Royalty
(NSR) of 1% of all future mineral production from the property.





We also
entered into an agreement in October, 2009 with Precious Royalties, LLC, a
Nevada LLC, to sell a Net Smelter Royalty (NSR) on gold and silver production
from the patented claims purchased from the Obester Group.  The
agreement calls for a maximum NSR of 5%, based on funding of $4,500,000, to be
received by us by March 31, 2010.  If the amount funded is less than
$4,500,000, the NSR percentage will be reduced
proportionately.  $260,000 of this funding was received by us during
2009.  As of the date of this report, a total of $810,000 has been
received from Precious Royalties, which has earned them a 0.95%
NSR.  The purchase agreement and the royalty sale combined to reduce
our royalty obligation by 80% on these claims.





In the
fourth quarter of 2009, we staked 165 lode mining claims in an area we called
the “West Lode”.  This was contiguous to our earlier claims, and
extended the project footprint significantly to the northwest.  Our
claim filings were initially accepted by the BLM and Washoe
County.  However, in the first quarter of 2010, we were notified by
the BLM that a significant portion of this area had been withdrawn from mineral
entry as part of the Washoe County master plan, and thus rendered the
corresponding claims invalid.  The remaining 43 lode mining claims
continue to be recognized as valid claims by the BLM.





During
2009, we chose not to pursue the Drossulis mining lease, for six unpatented
mining claims in Storey County, Nevada, nor the Leda Resources mining lease, for
three unpatented mining claims in Storey and Washoe Counties,
Nevada.  This move allows us to focus our exploration resources on
higher-quality mineral exploration targets.





At the
end of 2009, our mineral estate in our Comstock Lode project includes 78
patented mining claims and 304 unpatented mining claims, totaling 5,200
acres.  We continue to focus on adding strategic properties to our
portfolio in the Comstock, which we believe will provide opportunities to
increase our mineral resources through our ongoing exploration
program.


40


Concluded
Drill Program





The
exploration and developmental drilling program that commenced at the Comstock
project in mid December 2007 was completed during February 2009.  We
drilled 182 reverse circulation (RC) holes at the Lucerne / Hartford Complex,
totaling 92,800’ of drilling.  Each drill hole was sampled on
five-foot intervals, with assays performed by American Assay Labs, a certified,
independent commercial laboratory.  Check assays for certain intervals
were performed by ALS Chemex Laboratories, a second certified, independent
commercial laboratory.





Part of
the 2007-2009 drilling program included six reverse circulation drill holes in
Spring Valley.  While all of these holes encountered anomalous
mineralization, the fifth hole was significant as a “discovery hole”,
encountering 30 feet of mineralized material averaging 0.209 ounces per ton
gold, and 0.992 ounces per ton of silver.  This previously-unknown
mineral occurrence was found beneath just 40 feet of
pediment.  Additional drilling is needed to define the extent of this
material.





Completed
Geological Model and Mine Plan





Once the
2007-2009 drilling program was complete, we worked with Techbase International,
of Morrison, Colorado, to develop a three dimensional model of the
mineralization in the Hartford Complex.  The model used the assay
information from the 182 newly-drilled drill holes, plus 514 holes drilled by
previous operators.  The Techbase software was used to
geostatistically estimate gold and silver grades into a set of 10x10x10’ cubes,
in a project volume of 4,110’ E-W, 4,510’ N-S, and 1,200’
vertically.  This computerized definition of the mineralized material
was used to develop a mine plan, and estimate the economics for a proposed
mining and processing operation.





The
GoldSpring team of mining industry professionals then drafted an internal
report, compiled in accordance with the Society of Mining, Metallurgy, and
Exploration (SME) 2007 reporting guidelines.  That report, finalized
in June, 2009, estimated that our deposit of mineralized material contained 22.9
million tons, with an average grade of 0.028 ounces per ton gold and 0.370
ounces per ton silver.  The report further estimated the mineable
portion of the mineralized material to be 20.3 million tons, with an average
grade of 0.029 ounces per ton gold, and 0.395 ounces per ton
silver.  Based on this favorable result, the GoldSpring Board of
Directors made a commitment to proceed with the steps necessary to resume mining
and processing by early 2011.





A
third-party review of the SME-based report, and its geostatistical modeling was
completed by Robert Cameron, PhD, in September, 2009.  Dr. Cameron is
an authority on computerized mineral resource and reserve calculations and
methodology.  He visited the site and reviewed the project data, and
interviewed the professional team.  He re-ran portions of the analysis
using the Techbase software.  His report was favorable, and concluded
that our estimation of the mineralized material was reasonable.





In
December, 2009, we engaged Behre Dolbear, a mining consulting firm based in
Denver, Colorado, to review our mine model, and to produce a technical report
compliant with the Canadian NI 43-101 standard. The 43-101 standard is not
recognized by SEC Guide 7, but this report is expected to help us attract
international mining investors, who are accustomed to evaluating projects
through this standard.  The report is expected to be complete in the
second quarter of 2010.





Permits





In March,
2009, we submitted a major modification application to our Water Pollution
Control Permit, to the Nevada Division of Environmental Protection
(NDEP).  The modified permit was approved by the NDEP in
November.  The modifications to the permit include:


41


·
            Installation
      of a new three-stage crushing
system;


·
            Construction
      and operation of two new crushed-material storage
  areas;


·
            Implementation
      of a high-grade milling circuit in a contained
  area;


·
            Increasing
      the capacity of the leach solution pumping
  system;


·
            Construction
      of a new pregnant solution pond;
and


·
            Doubling
      the Merrill-Crowe processing plant
capacity.





The
milling circuit is a key factor in improving the economics of the project, once
mining resumes.  We estimate that the addition of the mill will
improve gold recovery from 65% to approximately 95%.  The improved
crushing system will produce more-uniform crushed material, which will improve
the recovery from heap leach processing.





We last
modified our Reclamation Permit in mid-2008.  No further modifications
to the Reclamation Permit were required in 2009.  We have maintained
all of our Federal, State, and Local permits in good standing throughout the
year. We did not have any liability associated with reclamation in
2009.





We expect
to submit an application for a major modification to our Air Quality Permit and
an application for a new Mercury Emissions Permit in April
2010.  These permits are required before mining and processing can
begin.  Dennis Anderson, Professional Mine Engineer, leads the mine
permitting efforts and is supported by the engineering consultants at Telesto
Nevada, LLC, and Enviroscientists, Inc, both of Reno Nevada.





Organizational
Changes





In
October, Robert Reseigh was appointed to serve as interim Chief Executive
Officer (CEO).  In this role, Mr. Reseigh oversees all activities of
the company, focusing on the resumption of mine production for our Comstock Lode
project and the search for a permanent Chief Executive Officer.  Mr.
Reseigh has served as a Director of the Company since 2008, and is a recognized
expert and independent consultant for tunnel, shaft, and mine development
projects.  He has over 40 years of experience in the mining and
underground construction industries.





Financial





One of
our primary goals is to resume mine production at our Comstock Lode project,
which will require a significant capital investment.  In November, we
retained Moelis & Company to serve as our exclusive financial
advisor.  Moelis & Company is a global investment bank that
provides financial advisory services and capital raising solutions to a broad
client base, through its offices in New York, Boston, Chicago, Los Angeles,
London, and Sydney.  We are confident that the relationship will
improve the likelihood that we will be able to finance our Comstock Lode project
on favorable terms.





In
December, we entered into a definitive agreement to obtain $4.5 million in new
debt financing for our Comstock Lode project.  The financing is being
provided through a consortium led by an existing shareholder, who is an
accredited investor.  The funding will be provided through convertible
debentures, in six monthly increments of $750,000, which commenced December
10th,
2009.  Each debenture has a term of three years, carries an interest
rate of 8%, and is convertible to restricted common stock, at $.01 per share
through maturity.  The debentures also include warrants for 50% of the
face amount, exercisable at $.0175, a 100% premium to the current stock price,
for three years.





Strategic
Plan





We
engaged Symmetry Advisors Inc. to guide our senior management through a planning
process to build a detailed and optimized plan to further explore our Comstock
Lode properties, return the mine to production, and unlock the maximum value of
the project for our shareholders.  Symmetry Advisors, based in
Cleveland, Ohio, is a management firm that directly enables organizational
transformation, restructuring and performance improvements toward achieving an
organization’s stated goal.


42





Starting
in November, 2009, Symmetry worked with our Directors, senior management, and
technical team to establish a united goal for the company, draft a detailed
strategic plan, backed up with detailed schedules and spending estimates
required for achieving the goal.  The plan was finalized in the first
quarter of 2010, and presented to the Board of Directors for
approval.  The goal includes the resumption of mining by January,
2011, and the validation of mineralized material containing over 3 million
gold-equivalent ounces within three years.





Early
2010 Developments





Our
strategic plan calls for additional infill drilling and metallurgical testing
prior to the resumption of mining.  Two drilling programs are
scheduled to begin during the first quarter, 2010.  These drilling
programs will be managed by Larry Martin, CPG, our Chief Geologist.





The first
program is a reverse circulation drilling program, to provide additional
information for a detailed mine design.  It includes 52 infill holes
in the Lucerne pit area, and another 12 condemnation holes in the areas
designated for waste dumps and processing facilities.  The drilling
will initially be performed using two drilling rigs and crews supplied by George
DeLong Construction, Inc., of Winnemucca, Nevada.  Additional drilling
rigs may be added later to accelerate the program.





The
second drilling program will drill six core holes, using a diamond drilling rig
and crews supplied by KB Drilling, of Moundhouse, Nevada.  The core
will be used for metallurgical testing, needed for final design of the
processing flow sheet, and also for geotechnical testing, needed to finalize the
slope stability calculations for the open pit walls.





The
information from these drill programs will be used to develop a detailed mine
design for reopening the mine, and to fine-tune our mineral processing
procedures to maximize gold and silver recovery.  We continue to take
all needed steps needed to resume production.





The
Company has prepared an application for a major modification to our Air Quality
Permit and an application for a new Mercury Emissions Permit in the first
quarter of 2010, under the direction of Dennis Anderson, PE, our Senior
Engineer.  These permits, to be issued by the Nevada Division of
Environmental Protection (NDEP), are required before mining and processing can
begin.





Additional
activities planned for 2010:





A
drilling program to evaluate what we have designated as the “northern extension”
mineralization has been designed.  This additional drilling will begin
once the first program of infill and condemnation holes has been
completed.  Our strategic plan also calls for a program of exploration
drilling on the 36 exploration targets already identified by our geologic team,
throughout our extensive land holdings in the Comstock Lode
district.





We will
continue to increase our footprint in the Comstock Lode district by staking or
leasing mining claims with potential for exploration success.  We
consider the historic Comstock Lode central to our growth strategy. We work
collaboratively with Federal, State, and local regulatory agencies to ensure
that we obtain all remaining permits needed resume mining.





The
Company will accelerate out program to catalog and digitize our library of
historic mining maps and reports, so that our team can leverage the knowledge
accumulated by over 150 years of mining experience in the Comstock
Lode.


43


Comparative
Financial Information





Twelve Months
                  ended
                  December 31,
                  2009
                
                
                Twelve Months
                  ended
                  December 31,
                  2008
                
                
                DifferenceRevenue
                
                $
                0
                
                
                $
                0
                
                
                $
                0Depreciation,
      depletion & amortization
                
                
                154,683
                
                
                
                148,466
                
                
                
                (6,217
                )Reclamation,
      Exploration and Test Mining Expenses
                
                
                2,864,854
                
                
                
                3,896,931
                
                
                
                1,032,077Consulting
      and professional
                
                
                244,610
                
                
                
                213,507
                
                
                
                (31,103
                )General
      and administrative
                
                
                1,303,939
                
                
                
                3,882,372
                
                
                
                2,578,433Gain
      Extinguishment of debt
                
                
                -
                
                
                
                (1,348,199
                )
                
                
                (1,348,199
                )Change
      in fair value of warrant and embedded liability, net
                
                
                (2,829,446
                )
                
                
                31,965
                
                
                
                2,861,411Other,
      net
                
                
                (22,000
                )
                
                
                393,314
                
                
                
                (415,314
                )Interest
      Expense
                
                
                4,348,029
                
                
                
                9,268,367
                
                
                
                4,921,298Net
      Loss
                
                $
                (6,064,669
                )
                
                $
                (16,487,683
                )
                
                $
                10,423,014





In years
presented, we did not produce or sell any gold or silver at our Comstock project
in Nevada.  In February 2007, we suspended mining activity to focus on
geology and exploration / developmental drilling and have not yet resumed
mining.





Reclamation,
Exploration and Test Mining Expenses were $ 1,032,077 less for the year ended
December 31, 2009 compared to the year ended December 31, 2008. The variance
reflects the completion of our phase 1 Comstock Project exploration and
developing drill program in the first quarter 2009.  The Phase 1 drill
program commenced in December 2007 and ended in February 2009.





Consulting
and professional expenses for 2009 were $244,610 compared to $213,507 for 2008,
amounting to a $31,103 year over year increase.  This negative
variance stems from higher auditing and related fees in 2009.





2009
General and administrative expenses decreased by $2,578,433 from
2008.  The decrease reflects $2.6 million of stock based compensation
expense realized in 2008 from the issuance of stock options and stock
grants.  Total stock based compensation in 2009, which reflects stock
grants issued to two employees,   totaled $67,250.





In 2008
we recorded a Gain on Extinguishment of Debt of $1,348,199 which resulted from a
modification of a conversion feature in two convertible notes.





Derivative
change in Fair Value decreased in 2009 by $2,861,411 from 2008. This favorable
variance reflects the year over year fair value calculation change for
beneficial features (embedded derivatives) and detachable instrument (warrants)
contained in various notes at the end of 2009.





The year
over year negative variance of $415,314 of Other Expense primarily reflects an
accrual adjustment to liquidated damages in 2008 resulting from the
extinguishment of debt and financing costs.





Interest
expense decreased in 2009 by $4,921,298 from 2008. This favorable variance
reflects $5.4 million year over year decrease from the recognition of fair value
calculation for convertible features (embedded derivatives) contained in various
notes in 2009.


44


Our
Company is an Exploration Stage enterprise as defined by SEC Industry Guide 7,
and, in accordance with SEC Industry Guide 7, infrastructure expenditures such
as haul roads, leach pads and start-up costs and all drilling were
expensed.





Quarter ended
                  December 31,
                  2009
                
                
                Quarter ended
                  December 31,
                  2008
                
                
                DifferenceRevenue
                
                $
                0
                
                
                $
                0
                
                
                $
                0Reclamation,
      Exploration and Test Mining Expenses
                
                
                287,033
                
                
                
                1,481,100
                
                
                
                1,194,067Consulting
      and professional
                
                
                67,000
                
                
                
                71,522
                
                
                
                4,522General
      and administrative
                
                
                281,269
                
                
                
                2,349,598
                
                
                
                2,068,329Gain
      Extinguishment of debt
                
                
                0
                
                
                
                (1,348,199
                )
                
                
                (1,348,199
                )Change
      in fair value of warrant and embedded derivative liability,
      net
                
                
                (4,808,784
                )
                
                
                1,030,581
                
                
                
                5,839,365Other,
      net
                
                
                0
                
                
                
                (183,999
                )
                
                
                (183,999
                )Interest
      Expense
                
                
                1,051,884
                
                
                
                7,216,319
                
                
                
                6,164,435Net
      Loss
                
                $
                3,080,988
                
                
                $
                (10,585,388
                )
                
                $
                13,666,376





In the
fourth quarter 2009 and the fourth quarter 2008, we did not produce or sell any
gold or silver at our Comstock project in Nevada.  In February 2007,
we suspended mining activity to focus on geology and exploration / developmental
drilling and have not yet resumed mining.





Reclamation,
Exploration and Test Mining Expenses were $287,033 for the fourth quarter 2009
compared to $1,481,100 for the fourth quart quarter 2008.  The
$2,068,329 reduction in reclamation, exploration and test mining expenses
reflects the completion of our Comstock Project exploration and developing drill
program, which commenced in December 2007 and finished in the first quarter of
2009.





Fourth
quarter 2009 General and administrative expenses decreased by $2,068,329
compared to the fourth quarter of 2008.  The decrease reflects $1.8
million of stock based compensation expense realized in 2008 from the issuance
of stock options and stock grants, and increased labor costs in 2008 from the
hiring of additional employees in 2008 as part of our Comstock Project
exploration drill program that ended in the first quarter 2009.





The Gain
on Extinguishment of Debt of $1,348,199 in 2008 arises out of modification of a
conversion feature in two convertible note resulting in debt extinguishment
accounting guidance to be applied.





Derivative
change in Fair Value decreased in the fourth quarter 2009 by $5,839,365 from the
fourth quarter 2008. This favorable variance reflects the quarter over quarter
fair value calculation change for beneficial features (embedded derivatives) and
detachable instrument (warrants) contained in various notes at the end of
2009.





Interest
expense for the fourth quarter 2009 was $1,051,884 compared to $7,216,319 in the
fourth quarter 2008.  The decrease in interest expenses of $6,164,435
primarily represents the 2008 $6.3 million fair value calculation for
convertible features (embedded derivatives) and detachable instruments
(warrants) contained in various notes.


45


Our
Company is an Exploration Stage enterprise as defined by SEC Industry Guide 7,
and, in accordance with SEC Industry Guide 7, infrastructure expenditures such
as haul roads, leach pads and start-up costs and all drilling were
expensed




Liquidity
and Capital Resources




Our cash
resources are limited. Our continued existence and plans for mining production
depend on our ability to obtain the capital necessary to operate, through the
issuance of additional debt, royalty financing or equity. If we are unable to
raise additional working capital through outside financing, it is unlikely that
the cash generated from our internal operations will suffice as a primary source
of the liquidity necessary for anticipated working capital requirements, capital
expenditure requirements and interest payments associated with our lease
obligations and indebtedness.  For a further discussion of risks that
can impact our liquidity, see Item 1A. “Risk Factors,”





During
2009, we secured $3,647,500 in net financing. Specifically, we raised net
$902,500 through private placements of our common stock during the first fiscal
quarter of 2009, $2 million through the issuance of convertible notes and
$750,000 in December 2009, through the issuance of convertible
notes.  The December financing included a commitment of an additional
$3.75 million which should be in monthly tranches of $750,000 through May of
2010. While this additional funding may meet our immediate working capital
needs, if we are not able to generate sufficient revenues and cash flows or
obtain additional or alternative funding, we will be unable to continue as a
going concern. See “Risk Factors -- If we are not able to obtain financing, it
is unlikely that we will be able  to continue as a going
concern.”   We have yet to realize an operating profit at our
Company. As disclosed herein, our independent registered public accounting firm
raises substantial doubt about our ability to continue as a going concern due to
our recurring losses and negative cash flow.





As of
December 31, 2009, the Company was in default of the terms on several
outstanding notes payable with John V.  Winfiled and affiliates (“the
Winfield Group’) totaling $13,369,987 of principal and $4,170,756 of
interest.  The Winfield Group consists of Mr. Winfield, Sante Fe
Financial Corporation, Portsmouth Square and InterGroup Corporation, Combined,
the Winfield Group represent the Company’s largest creditor and a significant
stockholder.  Mr. Winfield is affiliated with these Companies through
a direct controlling interest and/or as their Chairman of the
Board.  Because we are in default, the entire note balances of the
defaulted notes have been recorded as current liabilities.




Mr.
Winfield and his affiliates held various notes and debentures issued by the
Company that are reported in several different liabilities accounts that are in
default as of December 31, 2009.  The notes are as
follows:





Principal
                  
                  
                  InterestConvertible
      Debentures Payable – Investors (Note 8)
                  
                  $
                  687,929
                  
                  
                  $
                  58,410Convertible
      Debentures Payable - Mandatory Redemption payment (Note 8)
                  
                  
                  4,412,058
                  
                  
                  
                  980,338Convertible
      Notes Payable - 2006 & 2007 (Note 8)
                  
                  
                  1,620,000
                  
                  
                  
                  932,658Promissory
      Notes – July 2005 Financing (Note 9)
                  
                  
                  1,200,000
                  
                  
                  
                  1,345,878Promissory
      Notes – Plum Mine (Note 9)
                  
                  
                  250,000
                  
                  
                  
                  56,250Promissory
      Notes Payable – December 2007 (Note 9)
                  
                  
                  600,000
                  
                  
                  
                  155,579Promissory
      Notes Payable – February 2008 (Note 9)
                  
                  
                  600,000
                  
                  
                  
                  142,189Convertible
      Notes Payable – 2008 (Note 8)
                  
                  
                  2,500,000
                  
                  
                  
                  390,897Convertible
      Notes Payable – December 2008 (Note 8)
                  
                  
                  500,000
                  
                  
                  
                  61,609Convertible
      Notes Payable – 2009 (Note 8)
                  
                  
                  1,000.000
                  
                  
                  
                  46,948$
                  13,369,987
                  
                  
                  $
                  4,170,756





The
Winfield Group consists of Mr. Winfield and Santa Fe Financial Corporation,
Portsmouth Square and InterGroup Corporation, and combined, represent the
Company’s largest creditor and a significant stockholder.  Mr.
Winfield is affiliated with these Companies through a direct controlling
interest and/or as their Chairman of their respective board of
directors.  As of December 31, 2009, the Company is in technical
default of the terms on several outstanding notes payable and accordingly the
entire note balances of the defaulted notes have been recorded as current
liabilities.


46


Item 8. Financial Statements and
Supplementary Data




CONSOLIDATED
FINANCIAL STATEMENTS


DECEMBER
31, 2009 AND 2008




PageReport
      of Independent Registered Public Accounting Firm
              F-1Consolidated
      Balance Sheets
              F-2Consolidated
      Statements of Operations
              F-4Consolidated
      Statements of Changes in Stockholders’ Deficiency
              F-5Consolidated
      Statements of Changes in Cash Flows
              F-6Notes
      to Consolidated Financial Statements
              F-8




Report of
Independent Registered Public Accounting Firm




To the
board of directors and shareholders of


GoldSpring,
Inc.





We have
audited the accompanying consolidated balance sheets of GoldSpring, Inc. as of
December 31, 2009 and 2008 and the related consolidated statements of
operations, changes in stockholders’ deficiency and cash flows for the years
ended December 31, 2009 and 2008. These consolidated 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 audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial statement
presentation. We believe that our audits provided a reasonable basis for our
opinion.





In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the consolidated financial position of GoldSpring,
Inc. as of December 31, 2009 and 2008, and the consolidated results of its
operations and its cash flows for the years then ended 2009 and 2008 in
conformity with accounting principles generally accepted in the United
States.





These
consolidated financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 2 to the consolidated
financial statements, the Company has operating and liquidity concerns and, has
incurred historical net losses approximating $56,000,000 as of December 31,
2009. The Company also used cash in operating activities of $3,564,779 in 2009.
These factors raise substantial doubt about the ability of the Company to
continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of these uncertainties. In this
regard, Management is proposing to raise any necessary additional funds through
loans and additional sales of its common stock. There is no assurance that the
Company will be successful in raising additional capital.





/s/ Jewett, Schwartz, Wolfe &
      AssociatesJewett,
      Schwartz, Wolfe & AssociatesHollywood,
      Florida
                April
      2, 2010


F-1


GOLDSPRING,
INC.


CONSOLIDATED
BALANCE SHEETS





December 31,
                        2009
                      
                      
                      December 31,
                        2008ASSETSCURRENT
      ASSETSCash
      and cash equivalents
                      
                      $
                      246,214
                      
                      
                      $
                      322,938Total
      Current Assets
                      
                      
                      246,214
                      
                      
                      
                      322,938MINERAL
      RIGHTS, PLANT AND EQUIPMENTMineral
      rights
                      
                      
                      1,270,547
                      
                      
                      
                      1,530,547Plant
      and equipment, net
                      
                      
                      2,301,466
                      
                      
                      
                      489,236Total
      Mineral Rights, Plant and Equipment
                      
                      
                      3,572,013
                      
                      
                      
                      2,019,783RECLAMATION
      BOND DEPOSIT
                      
                      
                      766,768
                      
                      
                      
                      766,768LONG-LIVED
      DEFERRED RECLAMATION EXPENSE
                      
                      
                      340,159
                      
                      
                      
                      408,190TOTAL
      ASSETS
                      
                      $
                      4,925,154
                      
                      
                      $
                      3,517,679





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


F-2


GOLDSPRING,
INC.


CONSOLIDATED
BALANCE SHEETS (Continued)





December 31,
                      2009
                    
                    
                    December 31,
                      2008LIABILITIES AND STOCKHOLDERS’
      DEFICIENCYCURRENT
      LIABILITIESAccounts
      payable
                    
                    $
                    1,608,493
                    
                    
                    $
                    1,222,933Accrued
      expenses
                    
                    
                    271,054
                    
                    
                    
                    121,750Accrued
      interest payable
                    
                    
                    4,870,713
                    
                    
                    
                    3,458,734Convertible
      debentures – current portion
                    
                    
                    12,495,698
                    
                    
                    
                    10,187,966Debt
      obligation – current portion
                    
                    
                    3,650,000
                    
                    
                    
                    2,660,565Total
      Current Liabilities
                    
                    
                    22,895,958
                    
                    
                    
                    17,651,948LONG-TERM
      DEBT AND OTHER LONG-TERM LIABILITIESConvertible
      debentures
                    
                    
                    3,025,325
                    
                    
                    
                    3,282,563Debt
      obligation
                    
                    
                    490,000
                    
                    
                    
                    -Warrant
      and embedded derivative liability
                    
                    
                    4,500,189
                    
                    
                    
                    5,368,333Long-term
      reclamation liability
                    
                    
                    1,186,966
                    
                    
                    
                    1,105,342Total
      Long-Term Debt and Other Long-Term Liabilities
                    
                    
                    9,202,480
                    
                    
                    
                    9,756,238Total
      Liabilities
                    
                    
                    32,098,438
                    
                    
                    
                    27,408,186STOCKHOLDERS’
      DEFICIENCYCommon
      stock, $.000666 par value 3,950,000,000 shares authorized, shares issued
      and outstanding were 3,662,067,844 (2009) and 3,380,948,371
      (2008)
                    
                    
                    2,438,937
                    
                    
                    
                    2,251,712Additional
      paid-in capital
                    
                    
                    25,316,171
                    
                    
                    
                    22,721,504Accumulated
      deficit
                    
                    
                    (54,928,392
                    )
                    
                    
                    (48,863,723
                    )Total
      Stockholders’ Deficiency
                    
                    
                    (27,173,284
                    )
                    
                    
                    (23,890,507
                    )TOTAL
      LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
                    
                    $
                    4,925,154
                    
                    
                    $
                    3,517,679





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


F-3


GOLDSPRING,
INC.


CONSOLIDATED
STATEMENTS OF OPERATIONS




Years Ended December 31,2009
                  
                  
                  2008REVENUE
      FROM GOLD SALES, Net
                  
                  $
                  —
                  
                  
                  $
                  —COST
      AND EXPENSESDepletion,
      depreciation and amortization
                  
                  
                  154,683
                  
                  
                  
                  148,466Reclamation,
      exploration and test mining expenses
                  
                  
                  2,864,854
                  
                  
                  
                  3,896,931General
      and administrative
                  
                  
                  1,303,939
                  
                  
                  
                  3,882,372Consultants
      and professional fees
                  
                  
                  244,610
                  
                  
                  
                  213,507Total
      Cost and Expenses
                  
                  
                  4,568.086
                  
                  
                  
                  8,141,276LOSS
      FROM OPERATIONS
                  
                  
                  (4,568,086
                  )
                  
                  
                  (8,141,276
                  )OTHER
      INCOME (EXPENSE)Gain
      on extinguishment of debt
                  
                  
                  —
                  
                  
                  
                  1,348,199Change
      in Fair Value of warrant and embedded derivative liability
                  
                  
                  2,829,446
                  
                  
                  
                  (31,965
                  )Other,
      net
                  
                  
                  22,000
                  
                  
                  
                  (393.314
                  )Interest
      expense
                  
                  
                  (4,348,029
                  )
                  
                  
                  (9,269,327
                  )Total
      Other Expense
                  
                  
                  (1,496,583
                  )
                  
                  
                  (8,346,407
                  )NET
      LOSS
                  
                  $
                  (6,064,669
                  )
                  
                  $
                  (16,487,683
                  )Net
      loss per common share - basic
                  
                  $
                  (0.01
                  )
                  
                  $
                  (0.01
                  )Basic
      weighted average common shares outstanding
                  
                  
                  3,549,673,689
                  
                  
                  
                  3,142,593,304





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


F-4


GOLDSPRING,
INC.


STATEMENT
OF CHANGES IN STOCKHOLDERS’ DEFICIENCY


For
the Years Ended December 31, 2009 and 2008





(Common
Stock Par value, $.000666 per share; 3,950,000,000 shares
authorized


Preferred
Stock Par Value, per share; 50,000,000 shares authorized)





Common
                          Shares Issued
                        
                        
                        Par value
                          $.000666
                          per share
                        
                        
                        Additional
                          Paid-in
                          Capital
                        
                        
                        Accumulated
                          Deficit
                        
                        
                        TotalDecember
      31, 2007 (Restated)
                        
                        
                        2,743,508,248
                        
                        
                        $
                        1,827,177
                        
                        
                        $
                        12,969,210
                        
                        
                        $
                        (32,376,040
                        )
                        
                        $
                        (17,579,653
                        )Common
      stock issued for:Debenture
      principal
                        
                        
                        196,155,028
                        
                        
                        
                        130,639
                        
                        
                        
                        1,949,634
                        
                        
                        
                        —
                        
                        
                        
                        2,080,273Debenture
      interest
                        
                        
                        151,961,857
                        
                        
                        
                        101,207
                        
                        
                        
                        1,456,497
                        
                        
                        
                        —
                        
                        
                        
                        1,557,704Mineral
      rights
                        
                        
                        3,866,667
                        
                        
                        
                        2,575
                        
                        
                        
                        76,983
                        
                        
                        
                        —
                        
                        
                        
                        79,558Consulting
      services
                        
                        
                        7,166,704
                        
                        
                        
                        4,773
                        
                        
                        
                        106,323
                        
                        
                        
                        —
                        
                        
                        
                        111,096Mining
      software
                        
                        
                        2,434,892
                        
                        
                        
                        1,622
                        
                        
                        
                        8,118
                        
                        
                        
                        —
                        
                        
                        
                        9,740Directors
                        
                        
                        20,000,000
                        
                        
                        
                        13,320
                        
                        
                        
                        221,080
                        
                        
                        
                        —
                        
                        
                        
                        234,400Employees
                        
                        
                        10,665,714
                        
                        
                        
                        7,103
                        
                        
                        
                        132,787
                        
                        
                        
                        —
                        
                        
                        
                        139,890Private
      placement
                        
                        
                        137,000,000
                        
                        
                        
                        91,242
                        
                        
                        
                        1,428,758
                        
                        
                        
                        —
                        
                        
                        
                        1,520,000529,250,862
                        
                        
                        
                        352,481
                        
                        
                        
                        5,380,180
                        
                        
                        
                        —
                        
                        
                        
                        5,732,661Warrant
      cost and stock based option compensation
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        3,434,323
                        
                        
                        
                        —
                        
                        
                        
                        3,434,323Liquidated
      damages
                        
                        
                        108,189,261
                        
                        
                        
                        72,054
                        
                        
                        
                        937,791
                        
                        
                        
                        —
                        
                        
                        
                        1,009,845Net
      loss
                        
                        
                        —
                        
                        
                        
                        —
                        
                        
                        
                        —
                        
                        
                        
                        (16,487,683
                        )
                        
                        
                        (16,487,683
                        )December
      31, 2008
                        
                        
                        3,380,948,371
                        
                        
                        $
                        2,251,712
                        
                        
                        $
                        22,721,504
                        
                        
                        $
                        (48,863,723
                        )
                        
                        $
                        (23,890,507
                        )Common
      stock issued for:Debenture
      principal
                        
                        
                        26,652,890
                        
                        
                        
                        17,751
                        
                        
                        
                        174,517
                        
                        
                        
                        —
                        
                        
                        
                        192,268Debenture
      interest
                        
                        
                        150,366,583
                        
                        
                        
                        100,144
                        
                        
                        
                        1,377,453
                        
                        
                        
                        —
                        
                        
                        
                        1,477,597Employees
                        
                        
                        5,500,000
                        
                        
                        
                        3,663
                        
                        
                        
                        63,587
                        
                        
                        
                        —
                        
                        
                        
                        67,250Private
      placement
                        
                        
                        98,600,000
                        
                        
                        
                        65,667
                        
                        
                        
                        836,833
                        
                        
                        
                        —
                        
                        
                        
                        902,500281,119,473
                        
                        
                        
                        187,255
                        
                        
                        
                        2,452,390
                        
                        
                        
                        —
                        
                        
                        
                        2,639,284Stock
      based option compensation
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        142,277
                        
                        
                        
                        —
                        
                        
                        
                        142,277Net
      loss
                        
                        
                        —
                        
                        
                        
                        —
                        
                        
                        
                        —
                        
                        
                        
                        (6,064,669
                        )
                        
                        
                        (6,895,001
                        )December
      31, 2009
                        
                        
                        3,662,067,844
                        
                        
                        $
                        2,438,937
                        
                        
                        $
                        25,316,171
                        
                        
                        $
                        (54,928,392
                        )
                        
                        $
                        (27,173,284
                        )





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


F-5


GOLDSPRING,
INC.


CONSOLIDATED
STATEMENTS OF CASH FLOWS





Years Ended December
                  31,2009
                
                
                2008OPERATING
      ACTIVITIES:Net
      loss
                
                $
                (6,064,669
                )
                
                $
                (16,487,683
                )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Depreciation
      and amortization
                
                
                154,683
                
                
                
                148,466Stock
      warrants and stock based compensation and note accretion
                
                
                209,527
                
                
                
                3,681,113Interest
      and liquidated damages paid through the issuance of stock
                
                
                1,477,597
                
                
                
                2,567,549Interest
      from derivatives
                
                
                1,535,686
                
                
                
                6,512,462Other
                
                
                5,000
                
                
                
                120,836Extinguishment
      of debt
                
                
                ―
                
                
                
                (1,348,199
                )Net
      change in derivative fair value
                
                
                (2,829,446
                )
                
                
                31,965Net
      loss adjusted for non-cash operating activities
                
                
                (5,511,622
                )
                
                
                (4,773,491
                )Changes
      in operating assets and liabilities:Prepaid
      and other current assets
                
                
                ―
                
                
                
                185,417Other
      current assets
                
                
                ―
                
                
                
                ―Accounts
      payable
                
                
                385,560
                
                
                
                917,296Accrued
      expenses
                
                
                1,561,283
                
                
                
                (711,186
                )Other
      operating assets and liabilities
                
                
                ―
                
                
                
                ―Other
                
                
                ―
                
                
                
                (130,052
                )NET
      CASH USED IN OPERATING ACTIVITIES
                
                
                (3,564,779
                )
                
                
                (4,512,016
                )INVESTING
      ACTIVITIES:Reclamation
      bond deposit
                
                
                ―
                
                
                
                (389,599
                )Mineral
      claims
                
                
                260,000
                
                
                
                (161,152
                )Purchase
      of land, plant and equipment
                
                
                (378,880
                )
                
                
                (158,630
                )NET
      CASH USED IN INVESTING ACTIVITIES
                
                
                (118,880
                )
                
                
                (709,381
                )FINANCING
      ACTIVITIES:Principal
      payments on Note Payable
                
                
                (40,565
                )
                
                
                (55,105
                )Net
      proceeds from the issuance of company stock
                
                
                902,500
                
                
                
                1,501,500Proceeds
      from the issuance of note payable to related party
                
                
                2,745,000
                
                
                
                3,922,944NET
      CASH PROVIDED BY FINANCING ACIVITIES
                
                
                3,606,935
                
                
                
                5,369,339INCREASE
      IN CASH AND CASH EQUIVALANTS
                
                
                (76,724
                )
                
                
                147,942CASH
      AND CASH EQUIVALENTS, BEGINNING OF YEAR
                
                
                322,938
                
                
                
                174,996CASH
      AND CASH EQUIVALENTS, END OF YEAR
                
                $
                246,214
                
                
                $
                322,938SUPPLEMENTAL
      CASH FLOW INFORMATION:INCOME
      TAXES
                
                $
                ―
                
                
                $
                ―INTEREST
      PAID
                
                $
                ―
                
                
                $
                ―


F-6


GOLDSPRING,
INC.


CONSOLIDATED
STATEMENTS OF CASH FLOWS (Continued)





Supplemental
      disclosure of non-cash investing and financing activities:Issuance
      of company stock for interest
                
                $
                1,477,597
                
                
                $
                1,557,704Issuance
      of company stock for liquidated damages
                
                $
                ―
                
                
                $
                1,009,845Conversion
      of debt principal into company’s common shares
                
                $
                192,268
                
                
                $
                2,080,273Issuance
      of company stock to employees
                
                $
                67,250
                
                
                $
                139,890Issuance
      of company stock for directors’ fees
                
                $
                ―
                
                
                $
                234,400Issuance
      of company stock for software
                
                $
                ―
                
                
                $
                9,740Issuance
      of company stock for consulting services
                
                $
                ―
                
                
                $
                111,096Issuance
      of company shares for acquisition of mineral claims
                
                $
                ―
                
                
                $
                79,558Seller
      notes for acquisition of land
                
                $
                1,520,000
                
                
                $
                ―Issuance
      of company stock for financing fees
                
                $
                36,000
                
                
                $
                ―





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


F-7


GOLDSPRING,
INC.


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


For the
years ended December 31, 2009 and 2008





Note
1 — Nature of Business




We are a
North American precious metals mining company with an operating gold and silver
test mine in northern Nevada. Our Company refocused as a mining company, when we
acquired the Plum property in November 2003. In our relatively short history, we
secured permits, built an infrastructure and brought the Plum exploration
project into test mining production. Beginning in 2005, we started acquiring
additional properties around the Plum project in Northern Nevada, expanding our
footprint and creating opportunities for exploration. We are an emerging company
operating test mine, looking to build on our success through the acquisition of
other mineral properties in North America with reserves and exploration
potential that can be efficiently put into near-term production. Our objectives
are to increase production; increase reserves through exploration and
acquisitions; expand our footprint at the Plum Mine; and maximize value for our
shareholders.




Note
2 — Going Concern




The
accompanying consolidated financial statements have been prepared in conformity
with accounting principles generally accepted in the United States of America
which contemplate continuation of the Company as a going concern. However, the
Company has net losses from operations and had no revenues from operations in
either 2009 or 2008. For the year ended December 31, 2009 the Company incurred a
net loss of $6,064,699 and used cash in operations of approximately $3,565,000.
Further, the Company has inadequate working capital to maintain or develop its
operations, and is dependent upon funds from private investors and the support
of certain stockholders.





These
factors raise substantial doubt about the ability of the Company to continue as
a going concern. The financial statements do not include any adjustments that
might result from the outcome of these uncertainties. In this regard, Management
is proposing to raise any necessary additional funds through loans and
additional sales of its common stock. There is no assurance that the Company
will be successful in raising additional capital.




Note
3 — Summary of Significant Accounting Policies




Terms
and Definitions




Company
              GoldSpring,
      Inc. and SubsidiariesASC
              Accounting
      Standards CodificationASU
              Accounting
      Standards UpdateEITF
              Emerging
      Issues Task ForceFASB
              Financial
      Accounting Standards BoardFSP
              FASB
      Staff PositionPlum
      LLC
              Plum
      Mining Company, LLCSAB
              SEC
      Staff Accounting BulletinSEC
              Securities
      Exchange CommissionSFAS
      or FAS
              Statement
      of Financial Accounting StandardsSOP
              Statement
      of Position


F-8


Summarized
below are the significant accounting policies of GoldSpring, Inc.




Principles
of Consolidation




The
consolidated financial statements include the accounts of our company and its
wholly owned subsidiaries: GoldSpring, LLC, Ecovat Copper Nevada, LLC, The Plum
Mining Company, LLC, and the Plum Mine Special Purpose Company LLC. All material
inter-company transactions and balances have been eliminated in
consolidation.  Certain reclassifications have been made in the 2008
results to conform to the presentation used in 2009.




Cash
and Cash Equivalents




We
consider all highly liquid debt securities purchased with original or remaining
maturities of three months or less to be cash equivalents. The carrying value of
cash equivalents approximates fair value.




Fair
Value of Financial Instruments




The
carrying amounts of cash and cash equivalents, accounts payable, and accrued
expenses approximate fair market value because of the short maturity of those
instruments. Furthermore, convertible debenture and other notes payable amounts
approximate fair value at December 31, 2009 and 2008.




Credit
Risk




It is our
practice to place our cash equivalents in high-quality money market securities
with a major banking institution. Certain amounts of such funds are not insured
by the Federal Deposit Insurance Corporation. However, we consider our credit
risk associated with cash and cash equivalents to be minimal.


F-9


Impairment
of Long Lived Assets and Long Lived Assets to be Disposed Of




The
Company accounts for impairment and disposal of long-lived assets in accordance
with ASC 360 Property, Plant, and Equipment. This ASC establishes the accounting
model for long-lived assets to be disposed of by sale and applies to all
long-lived assets, including discontinued operations. This statement requires
those long-lived assets be measured at the lower of carrying amount or fair
value less cost to sell, whether reported in continuing operations or
discontinued operations.





We
implemented ASC 360 in our evaluation of the fair value of certain assets
described in Notes 4 and 5.




Revenue
Recognition




The
Company recognizes revenue in accordance with the provisions of ASC 600 Revenue,
which states that revenue is realized or realizable and earned when all of the
following four criteria are met:





1)
            Persuasive evidence of an
      arrangement exists,


2)
            Delivery has occurred or services
      have been rendered,


3)
            The seller’s price to the buyer
      is fixed or determinable,
and


4)
            Collectability is reasonably
      assured.





Specifically,
when we are in operational status, sales of gold and silver dore are recorded
when we issue a sales order to our refiner, Johnson Matthey, to sell a specified
quantity of metals.  Sales orders are typically executed within 48
hours of receipt.  Upon receipt of the sale order, Johnson-Matthey
confirms quantities available and executes the sale at the current market price
of the metals on the day and time of the sales order.  We record
revenues on the day the sales order is issued based on the confirmed quantity of
metal at the confirmed market price.  Proceeds from the sale of metals
are typically wired to our bank within twenty-four hours.




Stock
Issued For Services




We base
the value of stock issued for services on the market value of our common stock
at the date of issue or our estimate of the fair value of the services received,
whichever is more reliably measurable.




Plant
and Equipment




We state
plant and equipment at cost. We provide depreciation and amortization in amounts
sufficient to relate the cost of depreciable assets to operations over their
estimated service lives or productive value.




We
capitalize expenditures for renewals and improvements that significantly extend
the useful life of an asset. We charge expenditures for maintenance and repairs
to operations when incurred. When assets are sold or retired, the cost of the
asset and the related accumulated depreciation are removed from the accounts and
any gain or loss is recognized at such time. We use the straight-line method of
depreciation for financial reporting purposes, depreciating assets over useful
lives ranging from 3 to 10 years.




We review
the carrying value of our plant and equipment assets on a quarterly basis. Where
information and conditions suggest impairment, we write-down these assets to net
recoverable amount, based on estimated future cash flows that may be attained
from them.




Mineral
Rights




We defer
acquisition costs until we determine the viability of the property. Since we do
not have proven and probable reserves as defined by SEC Industry Guide 7,
exploration expenditures are expensed as incurred.




We
expense holding costs to maintain a property on a care and maintenance basis as
incurred.  Also, we were not in mining in 2009 and thus we did not
amortize any of our mineral rights.


F-10




We review
the carrying value of our interest in each mineral claim on a quarterly basis to
determine whether impairment has incurred in accordance with ASC 360 (formerly
SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived
Assets.”)




Where
information and conditions suggest impairment, we write-down these properties to
net recoverable amount, based on estimated discounted future cash flows. Our
estimate of gold price, mineralized materials, operating capital, and
reclamation costs are subject to risks and uncertainties affecting the
recoverability of our investment in property, plant, and equipment. Although we
have made our best estimate of these factors based on current conditions, it is
possible that changes could occur in the near term that could adversely affect
our estimate of net cash flows expected to be generated from our operating
properties and the need for possible asset impairment write-downs.




Where
estimates of future net operating cash flows are not available and where other
conditions suggest impairment, we assess if carrying value can be recovered from
net cash flows generated by the sale of the asset or other means.




Reclamation
Liabilities and Asset Retirement Obligations




Minimum
standards for site reclamation and closure have been established by various
government agencies that affect certain of our operations. We calculate our
estimates of reclamation liability based on current laws and regulations and the
expected undiscounted future cash flows to be incurred in reclaiming, restoring,
and closing our operating mine sites. When we incur reclamation liabilities that
are not related to asset retirements we recognize the obligations in accordance
with ASC 410.30 (formerly SOP No. 96-1).




The
Company accounts for its reclamation liabilities and asset retirement
obligations in accordance with ASC 410 Asset Retirement and Environmental
Obligations (ASC 410). The ASC requires that the fair value of a liability for
an asset retirement obligation be recognized in the period in which it is
incurred. ASC 410 requires us to record a liability for the present value of our
estimated environmental remediation costs and the related asset created with it
when a recoverable asset (long-lived asset) can be realized.




Share
Based Compensation




The
Company accounts for share based compensation in accordance with ASC 718
Compensation – Stock Compensation.  Accordingly, the Company measures
the cost of employee services received in exchange for an award of equity
instruments based on the grant date fair value of the award and recognizes cost
over the requisite service period.




Earnings
Per Common Share




In
calculating earnings per common share, we compute basic earnings per share by
dividing net loss by the weighted average number of common shares outstanding,
excluding the dilutive effects of common stock equivalents. For the years ended
December 31, 2009 and 2008, we had net losses for which the affect of common
stock equivalents would be anti-dilutive. Accordingly only basic and dilutive
loss per share is presented.




Use
of Estimates




In
preparing financial statements in conformity with generally accepted accounting
principles, we are required to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the financial statements and revenues and
expenditures during the reported periods. Actual results could differ materially
from those estimates. Estimates may include those pertaining to the estimated
useful lives and valuation of property and equipment, software and mineral
rights determining the estimated net realizable value of receivables, and the
realization of deferred tax assets.


F-11


Risks and
Uncertainties


We
regularly evaluate risks and uncertainties and, when probable that a loss or
expense will be incurred, record a charge to current period
operations.


Income
Taxes




We
recognize deferred tax assets and liabilities based on differences between the
consolidated financial statement carrying amounts and tax bases of assets and
liabilities (using the applicable enacted tax rates and laws). We provide a
valuation allowance for deferred tax assets for which we do not consider
realization of such deferred tax assets to be likely.


Recent
Authoritative Pronouncements




Recent
accounting pronouncements that the Company has adopted or will be required to
adopt in the future are summarized below.


Recent
Authoritative Pronouncements


In
June 2009, FASB issued its final SFAS No. 168,“The FASB Accounting
Standards Codification and the Hierarchy of Generally Accepted Accounting
Principles a Replacement of FASB StatementNo. 162”, codified
as ASC 105. ASC 105 made the FASB Accounting Standards Codification (the
Codification) the single source of U.S. GAAP used by nongovernmental
entities in the preparation of financial statements, except for rules and
interpretive releases of the SEC under authority of federal securities laws,
which are sources of authoritative accounting guidance for SEC registrants. The
Codification is meant to simplify user access to all authoritative accounting
guidance by reorganizing U.S. GAAP pronouncements into roughly 90
accounting topics within a consistent structure; its purpose is not to create
new accounting and reporting guidance. The Codification supersedes all existing
non-SEC accounting and reporting standards and was effective for the Company
beginning July 1, 2009. Following ASC 105, the FASB will not issue new
standards in the form of Statements, FASB Staff Positions, or Emerging Issues
Task Force Abstracts; instead, it will issue ASU. The FASB will not consider
ASUs as authoritative in their own right; these updates will serve only to
update the Codification, provide background information about the guidance, and
provide the bases for conclusions on the change(s) in the
Codification.


In August
2009, the FASB issued ASU 2009-05 which includes amendments to Subtopic 820-10,
“Fair Value Measurements and Disclosures—Overall”. The update provides
clarification that in circumstances, in which a quoted price in an active market
for the identical liability is not available, a reporting entity is required to
measure fair value using one or more of the techniques provided for in this
update. The amendments in this ASU clarify that a reporting entity is not
required to include a separate input or adjustment to other inputs relating to
the existence of a restriction that prevents the transfer of the liability and
also clarifies  that both a quoted price in an active market for the
identical liability at the measurement date and the quoted price for the
identical liability when traded as an asset in an active market when no
adjustments to the quoted price of the asset are required are Level 1 fair value
measurements. The guidance provided in this ASU is effective for the first
reporting period, including interim periods, beginning after
issuance.  The adoption of this standard did not have a material
impact on the Company’s (consolidated) financial position and results of
operations.




Other
ASUs, not effective until after December 31, 2009, are not expected to have a
significant effect on the Company’s consolidated financial position or results
of operations.


F-12


Note
4 — Mineral Rights




Mineral
rights at December 31, 2009 and 2008 consisted of the following:





2009
                    
                    
                    2008Comstock
      Placer Claims
                    
                    $
                    100,000
                    
                    
                    $
                    100,000Big
      Mike Copper Claims
                    
                    
                    69,138
                    
                    
                    
                    69,138Comstock
      Lode Claims
                    
                    
                    1,011,409
                    
                    
                    
                    1,271,409Water
      rights
                    
                    
                    90,000
                    
                    
                    
                    90,000$
                    1,270,547
                    
                    
                    $
                    1,530,547




In
November 2009, we sold a 0.29% net smelter royalty on our Obester Property for
$260,000 to Precious Royalties, LLC.  These funds were used to offset
the purchase of the Obester Property in December 2009.




Note
5 — Property and Equipment, net




Plant and
equipment at December 31, 2009 and 2008, consisted of the
following:




2009
                  
                  
                  2008Land
      and Building
                  
                  $
                  2,327,443
                  
                  
                  $
                  547,166Vehicle
      and Equipment
                  
                  
                  302,094
                  
                  
                  
                  302,094Processing
      and Lab
                  
                  
                  704,528
                  
                  
                  
                  585,924Furniture
      and Fixtures
                  
                  
                  49,390
                  
                  
                  
                  49,3903,383,455
                  
                  
                  
                  1,484,574Less
      accumulated depreciation
                  
                  
                  (1,081,989
                  )
                  
                  
                  (995,338
                  )$
                  2,301,466
                  
                  
                  $
                  489,236





During
2009, we purchased the Obester Property for $1,650,000 and the Petrini Property
for $130,000.  These have been included under land and
buildings.





Depreciation
expense for the years ended December 31, 2009 and 2008 was $86,651 and $80,434,
respectively.





We use
the straight-line method of depreciation for financial reporting purposes,
depreciating buildings over 15 years and other assets over useful lives ranging
from 3 to 10 years.





Note
6 – Reclamation Bond Deposit





We are
generally required to mitigate long-term environmental impacts by stabilizing,
contouring, resloping, and revegetating various portions of a site after mining
and mineral processing operations are completed. These reclamation efforts are
conducted in accordance with detailed plans, which must be reviewed and approved
by the appropriate regulatory agencies.




The
Nevada Revised Statutes and regulations promulgated thereunder by the Nevada
State Environmental Commission and the Nevada Division of Environmental
Protection, Bureau of Mining and Reclamation require a bond to be posted for
mining projects to assure we will leave the site safe, stable and capable of
providing for a productive post-mining land use. Pursuant to the approved
Reclamation Plans we secured a $1,106,882 mine reclamation financial assurance
instrument through the Nevada Division of Minerals' Bond Pool
Program.  As required by the bond pool program, a cash deposit of
$766,768 was made.


F-13


Note
7 — Long-term Reclamation Liability and Deferred Reclamation
Expense





We have
an accrued a long-term liability of $1,186,966 and $1,105,342 as of December 31,
2009 and 2008 respectively, with regard to our obligations to reclaim our
Comstock Mine facility based on our reclamation plan submitted and approved by
the Nevada State Environmental Commission and Division of Environmental
Protection.  In conjunction with recording the reclamation liability
we recorded a deferred reclamation expense of which the value is being amortized
over the period of the anticipated land disturbance.  Costs of future
expenditures for environmental remediation are discounted to their present
value. Such costs are based on management’s current estimate of amounts expected
to be incurred when the remediation work is performed within current laws and
regulations. It is reasonably possible that, due to uncertainties associated
with the application of laws and regulations by regulatory authorities and
changes in reclamation or remediation technology, the ultimate cost of
reclamation and remediation could change in the future. We periodically review
accrued liabilities for such reclamation and remediation costs as evidence
becomes available indicating that our liabilities have potentially
changed.  The reclamation liability accretion expense for 2009 was
$81,624 and the amortization of long-lived deferred reclamation expense was
$68,031 for 2009.





Following
is a reconciliation of the aggregate retirement liability associated with our
reclamation plan for our Comstock Project:




2009
                      
                      
                      2008Long-term
      reclamation obligation 1/1/
                      
                      $
                      1,105,342
                      
                      
                      $
                      553,190Additional
      obligations incurred
                      
                      
                      ―
                      
                      
                      
                      476,222Liabilities
      settled during the period
                      
                      
                      ―
                      
                      
                      
                      ―Increase
      in present value of the reclamation obligation (accretion
      expense)
                      
                      
                      81,624
                      
                      
                      
                      75,930Long-term
      asset retirement obligation 12/31/
                      
                      $
                      1,186,966
                      
                      
                      $
                      1,105,342





Following
is a reconciliation of the aggregate long-lived deferred reclamation expense
associated with on our reclamation plan for our Comstock Project:




2009
                      
                      
                      2008Net
      long-lived deferred reclamation expense 1/1/
                      
                      $
                      408,190
                      
                      
                      $
                      —Additional
      obligations incurred
                      
                      
                      ―
                      
                      
                      
                      476,222Amortization
      of deferred reclamation expense
                      
                      
                      (68,031
                      )
                      
                      
                      (68,032
                      )Long-term
      asset retirement obligation 12/31/
                      
                      $
                      340,159
                      
                      
                      $
                      408,190




Note
8 - Convertible Debentures




The
following is a summary of the Convertible debentures as of December 31, 2009 and
2008. :





2009
                  
                  
                  2008Convertible
      Debentures Payable – Investors
                  
                  $
                  1,105,908
                  
                  
                  $
                  1,105,908Convertible
      Debentures Payable - Mandatory Redemption payment
                  
                  
                  4,412,058
                  
                  
                  
                  4,412,058Convertible
      Notes Payable - 2006 & 2007
                  
                  
                  2,170,000
                  
                  
                  
                  2,170,000Convertible
      Notes Payable:  June – November 2008
                  
                  
                  2,500,000
                  
                  
                  
                  2,500,000Convertible
      Notes Payable – July 2008 Longview Amended and Restated
    Note)
                  
                  
                  2,782,563
                  
                  
                  
                  2,782,563Convertible
      Notes Payable – December 2008
                  
                  
                  500,000
                  
                  
                  
                  500,000Convertible
      Notes Payable – May – August 2009
                  
                  
                  1,807,732
                  
                  
                  
                  ―Convertible
      Notes Payable – December 2009, net
                  
                  
                  242,762
                  
                  
                  
                  ―Subtotal
                  
                  
                  15,521,023
                  
                  
                  
                  13,470,529Less
      current portion of convertible debentures
                  
                  
                  (12,495,698
                  )
                  
                  
                  (10,187,966
                  )Long
      term portion of convertible debentures
                  
                  $
                  3,025,325
                  
                  
                  $
                  3,282,563





The terms
of the convertible debentures included above are as follows:


F-14


Convertible Debentures
Payable  – Investors


During
March 2004, we completed a private placement of securities transaction (the
“March Offering”), which generated $10 million in gross proceeds from a group of
accredited institutional and individual investors.   On
November 30, 2004, we restructured the March Offering and entered into a
new agreement (the “Subscription Agreement”)  whereby we exchanged
21,739,129 shares of common stock and 21,739,129 warrants issued for 8%
convertible notes, with the following terms;





ConvertibleLoan
      Amount:
              $11.1
      million, which includes the initial $10 million investment and
      approximately $1.1 million in accrued penalties resulting from the delay
      in the registration of common stock held by investors.  Since
      initial funding, approximately $10 million has been paid or refinanced
      leaving a balance of approximately $1.1 million.Interest
      Rate:
              15%,
      payable in arrears in cash or stock at the lender’s
  optionConversion:
              The
      conversion price shall is equal to the lesser of: (i) eighty-five percent
      (85%) of the average of the five (5) lowest closing bid prices of the
      common stock as reported by Bloomberg L.P. for the twenty (20) trading
      days preceding the date the Company was obligated to pay the debenture; or
      (ii) eighty-five percent (85%) of the average of the five (5) lowest
      closing bid prices of the common stock as reported by Bloomberg L.P. for
      the twenty (20) trading days preceding the date of any such
      conversion.  In no event shall the conversion price be higher
      than $.01, as noted below.Term:
              Note
      is currently due and in
default





As a
result of the Company completing other financing arrangements at a lower
conversion price, the reset provision clause was triggered and established a new
fixed maximum conversion rate of $0.01 in February 2008.




Convertible Debentures
Payable  – Mandatory Redemption Payment





John V.
Winfield, a major shareholder and note holder, and his affiliates elected to
convert approximately $3.3 million of their convertible debentures under the
November 30, 2004 Subscription Agreement into common stock .  In March
2005, because we did not deliver the share certificates within the period
required in the November 30, 2004 subscription agreement, John V. Winfield and
his affiliates, a major shareholder and note holder elected to demand payment of
approximately $6.9 million pursuant to the mandatory redemption payment
provisions of the November 30, 2004 subscription agreement and consequently
forfeited his right to receive shares in lieu of payment.


The
Company did not have sufficient funds to meet this obligation. On March 31,
2005, Mr. Winfield and his affiliates entered into a Settlement Agreement with
the Company whereby he agreed to convert the $6.9million obligation into
Convertible Debentures (“the Debentures”).


F-15


The terms
of the Debentures are noted below:





ConvertibleLoan
      Amount:
              $6.9
      million, of which approximately $2.5 million has been paid or refinanced
      since initial funding leaving a remaining balance of approximately $4.4
      million.Interest
      Rate:
              18%,
      payable in arrears in cash or stock at the lender’s
  optionPayments:
              Monthly
      installments of principal and interest over a 24 month period with the
      remaining entire balance of unpaid principal and interest due on March 31,
      2007Conversion:
              The
      Debentures are convertible, in all or in part, into shares of our common
      stock (“Conversion Shares”) at any time. The conversion price shall is
      equal to the lesser of: (i) eighty-five percent (85%) of the average of
      the five (5) lowest closing bid prices of the common stock as reported by
      Bloomberg L.P. for the twenty (20) trading days preceding the date the
      Company was obligated to pay the mandatory redemption Payment; or (ii)
      eighty-five percent (85%) of the average of the five (5) lowest closing
      bid prices of the common stock as reported by Bloomberg L.P. for the
      twenty (20) trading days preceding the date of any such
      conversion.  In no event shall the conversion price be higher
      than $.01Term:
              Note
      is currently due and in defaultSecurity
      interest:
              Pursuant
      to the terms of the Settlement Agreement, the Debentures are granted a
      priority collateralized position, second only to our note payable to the
      Brockbank Trust (See Note 7) in substantially all of our
      assets.




As a
result of the Company completing other financing arrangements at a lower
conversion price, the reset provision clause was triggered and established a new
fixed conversion rate of $0.01 in February 2008.


Convertible Notes Payable –
2006 & 2007


The
convertible notes payable as of December 31, 2009 and 2008 are as
follows:


Face amountWinfield
      Group Debentures Payable
                  
                  $
                  1,620,000Longview
      Debentures Payable
                  
                  
                  550,000$
                  2,170,000




The terms
of the agreement are as follows:




ConvertibleLoan
      Amount:
              $2,170,000Interest
      Rate:
              18%,
      payable in arrears in cash or stock at the lender’s
  optionConversion:
              The
      principal amount of the Note and interest is convertible into GoldSpring
      Common Stock at the lesser of (A) $.01 per share, or (B) .85 multiplied by
      the “Volume Weighted Average Price” for the Borrower’s Common Stock for
      the five trading days immediately prior to the Conversion
      Date.Term:
              Note
      is currently due and in defaultWarrants:
              20,000,000Security:
              Secured
      by a lien on the assets of GoldSpring, Inc. and a pledge of all of the
      interests in Plum Mine Special Purpose, LLC, which owns the Plum Mine
      operation




F-16


In
February 2008, as a result of the Company completing other financing
arrangements at a lower conversion price, the reset provision clause was
triggered and established a new fixed conversion rate of $0.01.


Convertible Notes Payable:
June – November 2008


In June
2008, the Company entered into a Loan Agreement with John Winfield and
affiliates (“Winfield”) pursuant to which Winfield has agreed to loan the
Company $2,500,000 no later than December 31, 2008 through issuance of a series
of secured notes (“Notes”). In each month, during the five months ended December
2008, Winfield lent the Company $500,000 pursuant to the Loan
Agreement. These notes have been in default since late 2008 because we had
failed to make any monthly payment on the notes.  Pursuant to the
terms and conditions of the loan agreement, the notes become immediately payable
upon default and thus the note balance has been recorded as a current
liability.


The terms
of the agreement are as follows:




Convertible
      Loan Amount:
              $2,500,000Interest
      Rate:
              9%,
      payable in arrears in cash or stock at the lender’s
  optionConversion:
              The
      principal amount of the Note and interest is convertible into GoldSpring
      Common Stock at the lesser of (A) $.01 per share, or (B) .85 multiplied by
      the “Volume Weighted Average Price” for the Borrower’s Common Stock for
      the five trading days immediately prior to the Conversion
      Date.Term:
              Three
      YearsWarrants:
              50%
      Stock warrant coverage (Maximum warrants: 80,000,000) with an exercise
      price of $0.02 and a term of four (4) yearsSecurity:
              Security
      interest in all of the Company’s assets,  pari passu with the
      existing security interests





On
December 22, 2008, as a result of the Company completing other financing
arrangements at a lower conversion price, the reset provision clause was
triggered and established a new fixed conversion rate of $0.01.





Convertible Notes Payable –
July 2008 (Longview Amended and Restated Note)




On July
10, 2008, the Company amended $2,175,000 principal amount of unsecured
promissory notes issued to Longview Fund, L.P. through the issuance of an
Amended and Restated Promissory Note issued by the Company in favor of Longview
Fund, L.P. The amended terms are as follows:




ConvertibleLoan
      Amount:
                $2,782,563
      (Includes an initial principal amount of $2,175,000 and accrued interest
      of $607,563)Expiration
      Date:
                July
      10, 2011Interest
      Rate:
                11%,
      payable per annumConversion:
                The
      principal amount of the Note and interest is convertible into GoldSpring
      Common Stock at the lesser of (A) $.01 per share, or (B) .85 multiplied by
      the “Volume Weighted Average Price” for the Borrower’s Common Stock for
      the five trading days immediately prior to the Conversion
      Date.Term:
                Three
      Years




F-17


The
Amended and Restated Promissory Note, in the aggregate, totals $2,782,563,
$2,175,000 was outstanding principal and $607,563 was related outstanding
interest.


On
December 22, 2008, as a result of the Company completing other financing
arrangements at a lower conversion price, the reset provision clause was
triggered and established a new fixed conversion rate of
$0.01.


Convertible Notes Payable
–December 2008


On
December 8, 2008, we completed a financing transaction with Mr. Winfield and his
affiliates which provided us with $500,000 in funding. Pursuant to the terms and
conditions of the note agreement, the notes become immediately payable upon
default and thus the note balance has been recorded as a current liability as of
December 31, 2009





The terms
of the agreement are as follows:




Convertible
      Loan Amount:
              $500,000Interest
      Rate:
              11%,
      payable quarterly in cash or stock at the Company’s
  optionConversion:
              The
      principal amount of the Note and interest is convertible into GoldSpring
      Common Stock at the lesser of (A) $.01 per share, or (B) .85 multiplied by
      the “Volume Weighted Average Price” for the Borrower’s Common Stock for
      the five trading days immediately prior to the Conversion
      Date.Term:
              Note
      is currently in defaultWarrants:
              12,500,000Security:
              Security
      interest in all of the Company’s assets,  pari passu with the
      existing security interests




Convertible Notes Payable –
May 2009- August 2009


On May 1,
2009 the Company secured a $2,000,000 commitment for additional convertible debt
financing.  The agreement upon 30 days prior written notice, permitted
the Company to request financing in tranches between $250,000 and $500,000 per
request.  Funding requests were permitted at any time between May 1,
2009 and August 28, 2009.   The Company requested and received
$2,000,000 from this financing. The notes are in default because we do not have
sufficient authorized shares.  Pursuant to the terms and conditions of
the loan agreement, the notes become immediately payable upon default and thus
the note balance has been recorded as a current liability.


F-18


The terms
of the agreement are as follows:




ConvertibleLoan
      Amount:
                $2,000,000Interest
      Rate:
                9%,
      payable in arrears in cash or stock at the lender’s
  optionConversion:
                The
      principal amount of the Note and interest is convertible into GoldSpring
      Common Stock at the lesser of (A) $.0125 per share, or (B) .85 multiplied
      by the “Volume Weighted Average Price” for the Borrower’s Common Stock for
      the five trading days immediately prior to the Conversion
      Date.Term:
                Note
      is currently in defaultWarrants:
                50%
      Stock warrant coverage (Maximum warrants: 80,000,000) with an exercise
      price of $0.02 and a term of four (4) yearsSecurity:
                Security
      interest in all of the Company’s assets,  pari passu with the
      existing security
interests




NoteBalanceBalances
      @ January 1, 2009
                            
                            $
                            —Convertible
      Note
                            
                            
                            2,000,000Principal
      Payments
                            
                            
                            (192,268
                            )Balances
      @ December 31, 2009
                            
                            
                            1,807,732




The
Convertible Loan Agreement Payable –May through August 23 2009 contained both an
embedded beneficial conversion feature and detachable warrants at the commitment
dates.  Accordingly, we applied the accounting guidance of ASC 470-20
which covers convertible instruments with beneficial conversion features to
determine the fair value of these items.  Specifically, it states that
when an instrument contains both a detachable instrument (warrants) and an
embedded beneficial conversion feature, the proceeds of issuance should be
allocated among the detachable instrument and the convertible instrument based
on their relative fair values.  Accordingly, we applied 470-20-35 to
determine the amount allocated to the convertible instrument.




Regarding
the freestanding warrants, applied the guidance of ASC 815-40.  These
warrants are cashless and only require settlement in shares, not cash or
transfer of assets, and there is no obligation for the Company to repurchase the
shares.  The warrants are indexed solely to our own
stock.  We determined that the warrants were not within the scope of
ASC 480-10-25-15.  The value of the warrants was determined to be
$545,404.  In general, the fair value of the warrants is recorded as a
debt discount and amortized over the term of the note, but since we were in
default, the entire amount has been recognized as interest expense in
2009.   The fair value of the convertible feature, based on the
intrinsic value methodology, was $897,867 and has been recognized as interest
expense in 2009.




Because
we do not have sufficient authorized shares to physically settle all outstanding
potential conversions, should they occur, we may not be able to deliver the
required shares.  The guidance offered in ASC 815-40, indicates that
“if share settlement is not
within the control of the Company an asset or liability classification is
required.”  Consequently, we finally classified its warrants as
liabilities and began to measure them at fair value in each subsequent reporting
period.


F-19


The
following summarizes the activity for Convertible Notes Payable – May 2009 –
August 2009





Note Principal
                      
                      Debt Discount
                        (*)
                      
                      
                      Conversion
                        Price per
                        Share
                      
                      
                      Number of
                        Shares
                        Underlying
                        Convertible
                        Note
                      
                      
                      Effective
                        Interest Rate
                      
                      
                      Earnings per
                        Share Impact$
                      2,000,000
                      
                      
                      1,443,271
                      
                      
                      $
                      0.0125
                      
                      
                      
                      160,000,000
                      
                      
                      
                      33.1
                      %
                      
                      
                      0.01





(*)
-  The debt was in default and immediately due payable, therefore the
entire unamortized debt discount was recognized as interest expense in
2009.  The unamortized debt discount that was included in interest
expense consists of  the fair value of the warrants of $545,404 and
the convertible feature of $897,867, for a total of $1,443,271.




Convertible Notes Payable–
December 2009


On
December 10, 2009, we secured $4,500,000 commitment for additional convertible
debt financing.  The agreement provided initial funding of $750,000
and on each 30th day
thereafter another tranche of $750,000 through May 2010.  As of
December 31, 2009, we have received $750,000 from this
financing.


The terms
of the agreement are as follows:




ConvertibleLoan
      Amount:
                $4,500,000
      total commitment, of which  $750,000 was funded
      throughDecember
      31, 2009Interest
      Rate:
                8%,
      payable in arrears in cash or stock at the lender’s
  optionConversion:
                The
      principal amount of the Note and interest is convertible into GoldSpring
      Common Stock at the lesser of (A) $.01 per share, or (B) .85 multiplied by
      the “Volume Weighted Average Price” for the Borrower’s Common Stock for
      the five trading days immediately prior to the Conversion
      Date.Term:
                Three
      YearsWarrants:
                50%
      Stock warrant coverage (Maximum warrants: 257,142,857) with an exercise
      price of $0.0175 and a term of three (3) yearsSecurity:
                Security
      interest in all of the Company’s assets,  subject to(a) Seller
      Note – plum Mine; (b) certain lenders (the “Additional
      Lenders”) as of March 31, 2005, July 15, 2005, September 26, 2005,
      December 12, 2007, June 27, 2008, December 8, 2008, May 1, 2009 and May
      13, 2009.





The
Convertible Loan Agreement Payable –December  2009 contained both an
embedded beneficial conversion feature and detachable warrants at the commitment
dates.  Accordingly, we applied the accounting guidance of ASC 470-20
which covers convertible instruments with beneficial conversion features to
determine the fair value of these items.  Specifically, it states that
when an instrument contains both a detachable instrument (warrants) and an
embedded beneficial conversion feature, the proceeds of issuance should be
allocated among the detachable instrument and the convertible instrument based
on their relative fair values.  Accordingly, we applied 470-20-35 to
determine the amount allocated to the convertible instrument.




Regarding
the freestanding warrants, applied the guidance of ASC 815-40.  These
warrants are cashless and only require settlement in shares, not cash or
transfer of assets, and there is no obligation for the Company to repurchase the
shares.  The warrants are indexed solely to our own
stock.  We determined that the warrants were not within the scope of
ASC 480-10-25-15.  The value of the warrants was determined to be
$201,428.  The fair value of the warrants is recorded as a debt
discount and amortized over the term of the note.  In December 2009,
$4,196 of the fair value of the warrants was recognized as interest expense. The
fair value of the convertible feature, based on the intrinsic value methodology,
was $316,602.  The value of the conversion option is recorded as a
debt discount and amortized over the term of the note.  In December
2009, $6,596 of the fair value of the convertible feature was recognized as
interest expense


F-20


Because
we do not have sufficient authorized shares to physically settle all outstanding
potential conversions, should they occur, we may not be able to deliver the
required shares.  The guidance offered in ASC 815-40, indicates that
“if share settlement is not
within the control of the Company an asset or liability classification is
required.”  Consequently, we finally classified its warrants as
liabilities and began to measure them at fair value in each subsequent reporting
period.




The
following summarizes the activity for Convertible Notes Payable – May 2009 –
August 2009




Note BalanceBalances
      @ January 1, 2009
                    
                    $
                    —Convertible
      Note
                    
                    
                    750,000Debt
      Discount
                    
                    
                    (507,238
                    )Balances
      @ December 31, 2009
                    
                    
                    242,762





Note Principal
                      
                      Debt Discount
                      
                      
                      Conversion
                        Price per
                        Share
                      
                      
                      Number of
                        Shares
                        Underlying
                        Convertible
                        Note
                      
                      
                      Effective
                        Interest Rate
                      
                      
                      Earnings per
                        Share Impact$
                      750,000
                      
                      $
                      518,030
                      
                      
                      $
                      0.01
                      
                      
                      
                      75,000,000
                      
                      
                      
                      31.0
                      %
                      
                      
                      0.01





The debt
discount consists of  the fair value of the warrants of $201,428 and
the convertible feature of $316,602, for a total of $507,238.





Debt
Discount at December 31, 2009:




2009Debt
      discount beginning balance – Jan. 1, 2009
                
                $
                —Debt
      discount – embedded conversion feature
                
                
                (316,602
                )Debt
      discount – detachable warrants
                
                
                (201,428
                )Less
      amortization of debt discount
                
                
                10,792Unamortized
      debt discount
                
                $
                (507,238
                )




Note
9 —Debt Obligation




Our debt
obligations as of December 31, 2009 and 2008 include the following:




2009
                
                
                2008Promissory
      Notes Payable - 2005 through 2008
                
                $
                2,400,000
                
                
                $
                2,400,000Debt
      –Note (Plum Mine)
                
                
                250,000
                
                
                
                250,000Debt
      –Note (Obester Property)
                
                
                1,400,000
                
                
                
                —Debt  -
      Note (Petrini)
                
                
                90,000
                
                
                
                —Equipment
      Financing
                
                
                —
                
                
                
                10,565Subtotal
                
                
                4,140,000
                
                
                
                2,660,565Less
      current portion
                
                
                (3,650,000
                )
                
                
                (2,660,565
                )Long
      term portion of debt obligations
                
                $
                490,000
                
                
                $
                —


F-21


The terms
of the debt obligations listed above are as follows;




Promissory Notes Payable
–2005 through 2008





The
Company has the following promissory notes payable as of  December 31,
2009 and 2008:




2009
                
                
                2008Promissory
      Notes Payable-July 2005 Financing
                
                $
                1,200,000
                
                
                $
                1,200,000Promissory
      Notes Payable-December 2007 Financing
                
                
                600,000
                
                
                
                600,000Promissory
      Notes Payable-January 2008 Financing
                
                
                600,000
                
                
                
                600,000$
                2,400,000
                
                
                $
                2,400,000




Promissory
Notes Payable - July 2005 Financing




In July
of 2005, we borrowed $1.2 million from companies controlled by John V. Winfield,
a major investor. Proceeds from the notes were reduced by a 33.3% original issue
discount and other origination fees. Net proceeds received by the Company from
the borrowing were $740,000. The notes currently accrue interest at 17% per
annum and are payable in monthly installments of principal and interest over a
24 month period with the remaining entire balance of unpaid principal and
interest due on July 15, 2007.  The notes are collateralized by
substantially all of the Company’s assets subject to the security interest of
the Brockbank Trust (See Note 7). We had failed to make any payments on the
notes;  hence, they are in default and the original issue discount is
fully amortized as of December 31, 2009.


Promissory
Notes Payable – December 2007 Financing




In
December 2007, we completed a financing transaction with Mr. Winfield and his
affiliates which provided us with $500,000 in funding. In consideration for the
financing, we issued promissory notes with a face value of $600,000, reflecting
an original discount of sixteen and seventeen hundreds (16.17%) percent. The
notes evidencing the loan bear interest at the rate of 18% per annum, payable on
or prior to the one year anniversary of the respective loan date. We had failed
to make any payments on the notes;  hence, they are in default and the
original issue discount is fully amortized as of December 31,
2009.




Promissory
Notes Payable – January 2008 Financing




On
January 31, 2008, we completed a financing transaction with Mr. Winfield and his
affiliates which provided us with $500,000 in funding. In consideration for the
financing, we issued promissory notes with a face value of $600,000, reflecting
an original discount of sixteen and seventeen hundreds (16.17%) percent. The
notes evidencing the loan bear interest at the rate of 18% per annum, payable on
or prior to the one year anniversary of the respective loan date.  We had
failed to make any payments on the notes;  hence, they are in default
and the original issue discount is fully amortized as of December 31,
2009.




Debt – Note (Plum
Mine)




We have a
5% bearing note payable note related to our purchase of the Plum Mining
property. The note was payable on June 2006 and we are in default on this note.
As of December 31, 2009 and 2008, we still had a $250,000 note balance
due.  There is a first security interest on the assets of Plum Mining
Property for this note.


Debt - Note (Obester
Property)




In
December 2009, we purchased mineral properties, which we had been leasing, from
Claire Obester, Jim Obester, Alan Obester, and Julian Smith (“sellers”) for
$1,650,000 plus a 1% royalty.  Pursuant to the purchase agreement, we
made initial payments of $250,000 and we issued a note to the “sellers” for
$1,400,000.  The note bears interest of six percent (6%) per annum.
Interest and principal payments shall be made in quarterly installments of
$250,000 with the first payment due on April 1, 2010 and continuing on the same
day of each consecutive quarter, until July 1, 2011, when the then unpaid
principal and accrued interest is due and payable.


F-22


Debt - Note (Petrini
Property)




On
February 17, 2009 we purchased 4.79 acres in the Comstock District for
$130,000.  We paid $40,000 in cash and financed the balance of $90,000
through a first deed of trust.  The note is interest only for two
years and bears interest at 16% per annum.   The note is due and
payable on February 17, 2011.





Equipment
Financing




During
2004, we purchased certain equipment and financed our purchases through GMAC and
Ford Motor Company credit agencies. Aggregated principal and interest due
pursuant to the financings is due monthly in equal installments of $1,054, at an
average interest rate of 7.2%.  In 2009, final principal of $10,565
plus unpaid interest payments were made on these notes.





Note
10 - Debt Concentration





Mr.
Winfield and his affiliates are the largest lenders to the
Company.  At December 31,  2009, we had approximately
$19,661,000 of outstanding note principal of which $13,619,987 or 69%, was held
by Mr. Winfield and his affiliates.  In addition, of the $13,619,987
total debt principal held by Mr. Winfield and his associates, $13,441,000
represented convertible note principal and related interest due.  Had
Mr. Winfield converted all of his convertible holdings into our common stock at
December 31, 2009, we would have been obligated to issue Mr. Winfield
2,134,000,000 shares representing 37% of our outstanding common
shares.   The amounts listed below have been reflected in the
schedules presented in Note 8 and Note 9.





DebtPositionwithMr.WinfieldandhisAffilatesAtDeecember31,2009NoteDescriptions(Mr.Winfieldandaffiliates)
                                  
                                  Principal
                                  
                                  
                                  Unpaid
                                    Interest
                                  
                                  
                                  TotalConvertible
      Notes Payable - Investors
                                  
                                  $
                                  687,929
                                  
                                  
                                  $
                                  58,410
                                  
                                  
                                  $
                                  746,339Convertible
      Debentures Payable - Mandatory Redemption Payment
                                  
                                  
                                  4,412,058
                                  
                                  
                                  
                                  980,338
                                  
                                  
                                  
                                  5,392,396Convertible
      Notes Payable - 2006 - 2007
                                  
                                  
                                  1,620,000
                                  
                                  
                                  
                                  932,658
                                  
                                  
                                  
                                  2,552,658Convertible
      Notes Payable - June - November 2008
                                  
                                  
                                  2,500,000
                                  
                                  
                                  
                                  390,897
                                  
                                  
                                  
                                  2,890,897Convertible
      Notes Payable - December 2008
                                  
                                  
                                  500,000
                                  
                                  
                                  
                                  61,609
                                  
                                  
                                  
                                  561,609Convertible
      Notes Payable - May - August 2009
                                  
                                  
                                  1,000,000
                                  
                                  
                                  
                                  46,948
                                  
                                  
                                  
                                  1,046,948Convertible
      Notes Payable - December 2009
                                  
                                  
                                  250,000
                                  
                                  
                                  
                                  556
                                  
                                  
                                  
                                  250,556Promissory
      Note Payable - July 2005
                                  
                                  
                                  1,200,000
                                  
                                  
                                  
                                  1,345,878
                                  
                                  
                                  
                                  2,545,878Promissory
      Note Payable - December 2007 Financing
                                  
                                  
                                  600,000
                                  
                                  
                                  
                                  155,579
                                  
                                  
                                  
                                  755,579Promissory
      Note Payable - January 2008 Financing
                                  
                                  
                                  600,000
                                  
                                  
                                  
                                  142,189
                                  
                                  
                                  
                                  742,189Debt
      Seller Note (Plum Mine)
                                  
                                  
                                  250,000
                                  
                                  
                                  
                                  56,250
                                  
                                  
                                  
                                  306,250Total
      at December 31, 2009
                                  
                                  $
                                  13,619,987
                                  
                                  
                                  $
                                  4,171,312
                                  
                                  
                                  $
                                  17,791,299





Note
11 – Financial Instruments





The
Company issues various note instruments with various terms but they are
typically convertible into the Company’s common stock and issued with detachable
warrants.  The following sections discuss in general those conversion
features and warrants.


F-23


Conversion
Features





The terms
of the conversion feature of our debt instruments will differ between specific
notes but their typical terms contain the following
characteristics.  Specific terms for each note are discussed in Notes
8 – 11 as appropriate.





·
            The
      conversion feature is an embedded beneficial conversion feature, where by
      debt is convertible into Goldspring’s common stock at approximately 85% of
      market price (based on a “lookback”
formula),


·
            The
      embedded beneficial conversion feature is immediately
      exercisable,


·
            Exercising
      the embedded beneficial conversion feature is not contingent on a future
      event,


·
            Exercising
      the embedded beneficial conversion feature may be converted into cash or
      stock at the discretion of the issuer
  (Goldspring),


·
            The
      conversion price is a fixed discount, there is no stated price floor or
      shares issued cap to the potential number of shares that can be converted
      to satisfy the conversion feature





Although
such conversion features are typically considered equity instruments, because
the conversion feature is a fixed discount from our traded stock price without a
limit to the number of shares that may be issued, the Company cannot be assured
that it has sufficient authorized shares to execute the conversion if
presented.  Accordingly, the Company is not “in control” of the
conversion and recognition of the value of the conversion feature is deemed a
liability for financial reporting purposes under the guidance offered in FAS
150.  As liabilities related to financial instruments, we therefore
apply fair value measurement to each conversion feature liability at each
reporting period.  See Note 13 for a discussion of fair value
measurement.





Warrants





The terms
of the warrants attached to our debt instruments will differ between specific
notes but their typical terms contain the following
characteristics.  Specific terms for each note are discussed in Notes
8 – 11 as appropriate.





·
            Detachable
      warrants are included with the debt offering, as debt “sweetener”, that
      generally provide for conversion at a fixed
  price,


·
            There
      is no active trading market for our
warrants


·
            Goldspring
      lacks sufficient authorized shares to satisfy all conversion options if
      presented.





Although
such warrants are typically considered equity instruments, because the Company
cannot be assured that it has sufficient authorized shares to execute the
conversion if presented.  Accordingly, the Company is not “in control”
of the conversion and recognition of the value of the conversion feature is
deemed a liability for financial reporting purposes under the guidance offered
in FAS 150.  In addition, the guidance offered in ASC 815, indicates
that “if share settlement is
not within the control of the Company an asset or liability classification is
required.”  Consequently, we classified our warrants as
liabilities and began to measure them at fair value in each subsequent reporting
period.  See Note 13 for a discussion of fair value
measurement.


F-24


Note
12 – Fair Value Measurements





As
discussed in Note 3, ACS 820 provides a framework for measuring fair value under
GAAP





ASC 820
defines fair value as the price that would be received upon sale of an asset or
paid upon transfer of a liability in an orderly transaction between market
participants at the measurement date and in principal or most advantageous
market for that asset or liability.  The fair value should be
calculated based on assumptions that market participants would use in pricing
the asset or liability, not on assumptions specific to the entity.  In
addition, the fair value of liabilities should include consideration of
non-performance risk, including the Company’s own credit risk.





In
addition to defining fair value, ASC 820 expands the disclosure requirements
around fair value and establishes a fair value hierarchy for valuation
inputs.  The hierarchy prioritizes the inputs into three levels based
on the extent to which inputs used in measuring fair value are observable in the
market.  Each fair value measurement is reported in one of three
levels, which is determined by the lowest level input that is significant to the
fair value measurement in its entirety.  These levels
are:





·
            Level
      1 – inputs are based upon unadjusted quoted prices for identical
      instruments traded in active
markets.


·
            Level
      2 – inputs are based upon quoted prices for similar instruments in active
      markets, quoted prices for identical or similar instruments in markets
      that are not active, and model-based valuation techniques for which all
      significant assumptions are observable in the market or can be
      corroborated by observable market data for substantially the full term of
      the assets or liabilities.


·
            Level
      3 – inputs are generally unobservable and typically reflect management’s
      estimates of assumptions that market participants would use in pricing the
      asset or liability.  The fair values are therefore determined
      using model-based techniques that include option pricing models,
      discontinued cash flow models, and similar
  techniques.





The
following describes the valuation methodologies the Company uses to measure
financial assets and liabilities at fair value.





Liabilities Measured at Fair
Value on a Recurring Basis





The
following table presents our liabilities at December 31, 2009 and December 31,
2008, which are measured at fair value on a recurring basis:





Fair Value Measurements at December 31, 2009Total
                        
                        
                        Level 1
                        
                        
                        Level 2
                        
                        
                        Level 3Liabilities:Convertible
      features and warrants
                        
                        $
                        4,500,189
                        
                        
                        $
                        —
                        
                        
                        $
                        —
                        
                        
                        $
                        4,500,189Total
      Liabilities
                        
                        $
                        4,500,189
                        
                        
                        $
                        —
                        
                        
                        $
                        —
                        
                        
                        $
                        4,500,189




Fair
      Value Measurements at December 31, 2008Total
                      
                      
                      Level 1
                      
                      
                      Level 2
                      
                      
                      Level 3Liabilities:Convertible
      features and warrants
                      
                      $
                      5,368,333
                      
                      
                      $
                      —
                      
                      
                      $
                      —
                      
                      
                      $
                      5,368,333Total
      Liabilities
                      
                      $
                      5,368,333
                      
                      
                      $
                      —
                      
                      
                      $
                      —
                      
                      
                      $
                      5,368,333




F-25





As
discussed in Note 12, conversion feature liability represents the discount on
convertible notes proceeds associated with the fair value of the embedded
conversion features of our notes.  Warrant liabilities represent
detachable warrants issued in association with various notes
payable.





The fair
values for the conversion feature and warrant liabilities included in Level 3
are estimated using industry standard valuation models, such as the
Black-Scholes-Merton model.  Level 3 derivative liabilities primarily
include certain over-the-counter options.





Gains
(losses) from changes in fair values of the conversion feature and warrant
liabilities that are not designated as hedges are recognized in other income
(expense).   The amounts recognized during the year ended
December 31, 2009 and December 31, 2008 are as follows:





LiabilitiesAs of December 31,2009
                              
                              As of December31, 2008Balance Sheet
                                Location
                              
                              Fair Value
                              
                              Balance Sheet
                                Location
                              
                              Fair ValueDerivative not designated as
      hedging Instruments under ASC 815Convertible features and
      warrants
                              
                              Long-term
    Debt
                              
                              $
                              4,500,189
                              
                              Long-term
    Debt
                              
                              $
                              5,368,333Total Instruments not designated
      as hedging instruments under ASC 815
                              
                              
                              
                              $
                              4,500,189
                              
                              
                              
                              $
                              5,368,333




AmountofLossRecognizedinIncomeon
                                              DerivativeDerivativesNot
                                              DesignatedasHedging
                                              InstrumentsunderASC
                                              815
                                            
                                            LocationofLoss
                                              Recognizedinincomeon
                                              Derivative
                                            
                                            Fortheyearended
                                              December31,2009
                                            
                                            
                                            Fortheyearended
                                              December31,2009Convertible
      features and warrants
                                            
                                            Interest Expense
                                            
                                            $
                                            1,454,063
                                            
                                            
                                            $
                                            4,594,948Total:
                                            
                                            
                                            
                                            $
                                            1,454,063
                                            
                                            
                                            $
                                            4,594,948




F-26





The
following table indicates the changes in fair value of the
instruments:





Convertible
                      Featuresand
                      WarrantsBalances @ January 1,
      2008
                    
                    $
                    776,835Additions
                    
                    
                    4,591,498ReductionsBalances @ December 31,
      2008
                    
                    
                    5,368,333Additions
                    
                    
                    1,961,302Reductions
                    
                    
                    (2,829,446
                    )Balances @ December 31,
      2009
                    
                    $
                    4,500,189





Note
13 — Stockholders’ Equity




Common
stock was issued during the year ended December 31, 2009 and December 31, 2008
for the following purposes:




2009 Share
                    Issuances
                  
                  
                  Share Value
                  
                  
                  2008 Share
                    Issuances
                  
                  
                  Share ValueDebenture
      principal
                  
                  
                  26,652,890
                  
                  
                  $
                  192,268
                  
                  
                  
                  196,155,028
                  
                  
                  $
                  2,080,273Debenture
      Interest
                  
                  
                  150,366,583
                  
                  
                  
                  1,477,597
                  
                  
                  
                  151,961,857
                  
                  
                  
                  1,557,704Liquidated
      damages
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  108,189,261
                  
                  
                  
                  1,009,845Private
      placements
                  
                  
                  98,600,000
                  
                  
                  
                  986,000
                  
                  
                  
                  137,000,000
                  
                  
                  
                  1,520,000Mineral
      claims
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  3,866,667
                  
                  
                  
                  79,558Mining
      software
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  2,434,892
                  
                  
                  
                  9,740Consulting
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  7,166,704
                  
                  
                  
                  111,096Employees
      and directors
                  
                  
                  5,500,000
                  
                  
                  
                  67,250
                  
                  
                  
                  30,665,714
                  
                  
                  
                  374,290Total
                  
                  
                  281,119,473
                  
                  
                  $
                  2,723,115
                  
                  
                  
                  637,440,123
                  
                  
                  $
                  6,742,506





The following schedules provide
additional detail on the summary listed above.





Debenture Principal,
Debenture Interest and Liquidated Damages for 2009





The
following represents principal and interest payments on debt, made in 2009 with
the issuance of our common stock.  The shares were valued in accordance
with each respective convertible note's term as disclosed in Note
8.




Note Description
                          
                          Principal
                            Payment
                            Number of
                            Shares
                          
                          
                          Value of
                            Shares
                          
                          
                          Interest
                            Payment
                            Number of
                            shares
                          
                          
                          Value of
                            SharesConvertible
      Debentures Payable-Investors
                          
                          
                          —
                          
                          
                          $
                          —
                          
                          
                          
                          29,373,214
                          
                          
                          $
                          257,618Convertible
      Debentures Payable- Mandatory Redemption payment
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          99,000,000
                          
                          
                          
                          990,000Long-Term
      Convertible Notes – July 2008 (Longview Amended and Restated
      Note)
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          21,993,369
                          
                          
                          
                          229,979Convertible
      Notes:  May 2009 – Aug. 2009
                          
                          
                          26,652,890
                          
                          
                          
                          192,268
                          
                          
                          
                          —
                          
                          
                          
                          —26,652,890
                          
                          
                          $
                          192,268
                          
                          
                          
                          150,366,583
                          
                          
                          $
                          1,477,597




F-27





Debenture Principal,
Debenture Interest and Liquidated Damages





The
following represents principal and interest payments on debt, made in 2008 with
the issuance of our common stock.




Note Description
                      
                      Principal
                        Payment
                        Number of
                        Shares
                      
                      
                      Value of
                        Shares
                      
                      
                      Interest
                        Payment
                        Number of
                        shares
                      
                      
                      Value of
                        SharesConvertible
      Debentures Payable-Investors
                      
                      
                      47,587,404
                      
                      
                      $
                      464,329
                      
                      
                      
                      20,880,311
                      
                      
                      $
                      193,339Convertible
      Debentures Payable- Mandatory Redemption payment
                      
                      
                      134,001,185
                      
                      
                      
                      1,325,000
                      
                      
                      
                      116,849,523
                      
                      
                      
                      1,113,785Convertible
      Debentures Payable- Failure to Deliver Shares
                      
                      
                      9,258,584
                      
                      
                      
                      90,944
                      
                      
                      
                      6,815,961
                      
                      
                      
                      66,942Long-Term
      Convertible Notes – July 2008 (Longview Amended and Restated
      Note)
                      
                      
                      —
                      
                      
                      
                      —
                      
                      
                      
                      4,329,541
                      
                      
                      
                      67,338Promissory
      Notes Payable-December 2005 Financing
                      
                      
                      5,307,855
                      
                      
                      
                      200,000
                      
                      
                      
                      3,086,521
                      
                      
                      
                      116,300196,155,028
                      
                      
                      $
                      2,080,273
                      
                      
                      
                      151,961,857
                      
                      
                      $
                      1,557,704





Liquidated
Damages





The
following represents liquidated damage payments on debt, made during 2008 with
the issuance of our common stock.  There were no liquidated damages
incurred or paid out during 2009.





Note Description
                      
                      Liquidated
                        Damage
                        Payment
                        Number of
                        Shares
                      
                      
                      Value of
                        Shares
                      
                      
                      Total Shares
                        Issued
                      
                      
                      Total Value
                        of SharesConvertible
      DebenturesPayable-Investors
                      
                      
                      18,799,801
                      
                      
                      $
                      166,509
                      
                      
                      
                      87,267,516
                      
                      
                      $
                      824,177Convertible
      Debentures Payable- Mandatory Redemption payment
                      
                      
                      87,686,922
                      
                      
                      
                      826,618
                      
                      
                      
                      338,537,630
                      
                      
                      
                      3,265,403Convertible
      Debentures Payable- Failure to Deliver Shares
                      
                      
                      1,702,538
                      
                      
                      
                      16,718
                      
                      
                      
                      17,777,083
                      
                      
                      
                      174,604Longview
      Amended and Restated Note - 2008
                      
                      
                      —
                      
                      
                      
                      —
                      
                      
                      
                      4,329,541
                      
                      
                      
                      67,338Promissory
      Notes Payable-December 2005 Financing
                      
                      
                      —
                      
                      
                      
                      —
                      
                      
                      
                      8,394,376
                      
                      
                      
                      316,300Total
                      
                      
                      108,189,261
                      
                      
                      $
                      1,009,845
                      
                      
                      
                      456,306,146
                      
                      
                      $
                      4,647,822




F-28


Private
Placements





The
following 2009 private placement transactions raised a gross total of $986,000
in exchange for 98,600,000 shares of our unregistered Common stock, placed with
accredited investors.  In general, the proceeds were used to fund
exploratory drilling and for general working capital.





·
            During the first quarter 2009,
      $986,000 for 98,600,000 shares at $0.01 per share and 95,000.000
      warrants.  The warrants have an exercise price of $.015 and a term of
      six years. .





The
following 2008 private placement transactions raised a total of $1,520,000 in
exchange for 137,000,000 shares of our unregistered Common stock, were place
with accredited investors.  In general, the proceeds were used to fund
exploratory drilling and for general working capital.





·
            In the first quarter 2008,
      $500,000 for 40,000,000 shares at $0.015 per
  share.





·
            During the second quarter 2008,
      $500,000 for 40,000,000 shares at $0.0125 per share and 40,000.000
      warrants.  The warrants have an exercise price of $.02 and a term of
      six years. .





·
            On July 18, 2008, $150,000 for
      10,000,000 shares at $0.015 per
share.





·
            In December 2008, $370,000 for
      37,000,000 shares at $0.01 per share and 32,000.000 warrants.  The
      warrants have an exercise price of $.015 and a term of six
      years.





Mineral
Claims





In 2008,
3,866,667 unregistered common shares, valued at $79,558 or an average of $0.021
per share, were issued for the acquisition of mining claims in the Comstock Lode
District.





Computer
Software





Pursuant
to an agreement in late 2007, a vendor in March 2008 was issued 2,434,892 shares
valued at $9,740 or $0.004 per share, for computer modeling
software.





Consultants





During
2008, the following shares were issued to consultants for services
performed:





·
            In May 2008, a consultant was
      issued 5.53 million shares valued at $88,480 or $0.016 per share, for
      services.





·
            In August 2008, a consultant was
      issued 136,704 shares valued at $2,616 or $0.019 per share, for
      services





·
            In October 2008, a consultant was
      issued 500,000 shares valued at $10,000 or $0.02 per share, for
      services.





Employees and
directors





During
2009, the following share grants were issued to employees:


F-29





·
            Mr. Larry Martin, our Chief
      Geologist, pursuant to his employee contract, received three million
      (3,000,000) of our unregistered common shares. The value of the common
      shares at the time of issuance was $37,250, averaging $0.0124 per
      share.  Shares are valued at the closing market price on date of
      issue.





·
            In April 2009, Dennis Anderson,
      the Company’s senior engineer, pursuant to his employment arrangement, was
      issued a total of two million five hundred thousand (2,500,000) of our
      unregistered common shares.  The value of the common shares at
      the time of issuance was $30,000, averaging $0.012 per share.  Shares
      are valued at the closing market price on date of
      issue.





During
2008, the following share grants were issued to employees and Company
directors:





·
            In January 2008, our two outside
      directors were issued, in aggregate, twenty million shares of our
      unregistered common stock as director compensation. The value of the
      common shares at the time of issuance was $234,400, averaging $0.012 per
      share.





·
            In March 2008, Dennis Anderson,
      our senior engineer, was issued a total of one million of our unregistered
      shares, valued at $18,690 or $0.01869 per share, for services
      performed.  In August 2008, Mr. Anderson, pursuant his employee
      agreement, was awarded 1.5 million unregistered shares valued at $24,900
      or $0.0167 per share for achieving various
    milestones.





·
            In August 2008, Mr. James Golden,
      the Chief Operating Officer, exercised 10,000,000 stock options at a price
      of $0.0525.  Mr. Golden elected the cashless exercise method and
      thus received a total of 8,165,714 unregistered shares of our common
      stock.  As of the date of this report, Mr. Golden has not sold
      any of these shares.




Note
14 - Earnings Per Share




Basic
earnings per share is computed by dividing net loss, after deducting preferred
stock dividends accumulated during the period, by the weighted average number of
shares of common stock outstanding. Diluted earnings per share is computed by
dividing net income, after deducting preferred stock dividends accumulated
during the period, by the weighted average number of shares of common stock and
dilutive common stock equivalent shares outstanding.   For the
years ended December 31, 2009 and December 31, 2008, there were approximately
3,777 million and 1,770 million, respectively, of common stock equivalent shares
excluded from the dilutive earnings per share calculation because they were
anti-dilutive. The following is a reconciliation of the number of shares used in
the basic and diluted computation of net income per share (in
millions):





For the Year Ended
                      December 312009
                    
                    
                    2008Weighted
      average number of common shares outstanding – basic
                    
                    3,550
                    
                    
                    
                    3,143Dilution
      from convertible debt, stock options and warrants
                    
                    3,777
                    
                    
                    
                    1,770Weighted
      average number of common shares outstanding – diluted
                    
                    7,327
                    
                    
                    
                    4,913




F-30





Note
15- Share Based Compensation





Effective
2006, the Company adopted a stock option and incentive plan (“2006 Plan”), which
provided for a maximum of 800,000,000 shares of common stock to be
issued.  Under the plan, stock options generally vest over three and
expire in ten years from the date of the grant.  Options are granted
to employees and non-employee directors at exercise prices equal to the fair
market value at the date of the grant.




As of
December 31, 2009 and 2008, the Company had 182,000,000 outstanding Standard
Employee and Director Options to acquire company shares, of which 176,000,000 of
these derivatives were vested and exercisable. During the period ended December
31, 2009, there were no additional options issued and none had been
exercised.




The
Company recognizes stock based compensation expense over the requisite service
period of the individual grant, which generally equals the vesting
period.  The plan entitles the holder to shares of common stock when
the award vests.   Awards generally vest ratably over three
years.  The fair value of the award is based upon the market price of
the underlying common stock as of the date of the grant and is amortized over
the applicable vesting period using the straight-line method.  The
Company uses newly issued shares of common stock to satisfy option exercises and
stock awards




The fair
value of each grant was estimated at the date of the grant using the
Black-Scholes-Merton option pricing model.  Black-Scholes-Merton
utilizes assumptions related to volatility, the risk free interest rate, the
dividend yield (which is assumed to be zero, as the Company has not paid, nor
anticipates paying any, cash dividends and employee exercise
behavior.  Expected volatilities utilized in the model are based
mainly on the historical volatility of the Company’s stock price and other
factors.




The
following is a summary of the assumptions used and the weighted average
grant-date fair value of the stock options granted during the fiscal years ended
December 31, 2009 and 2008.




2009
                
                
                2008Expected
      volatility (No options were issued in 2009)
                
                
                —
                %
                
                
                199
                %Expected
      term (years)
                
                
                —
                
                
                
                5.14Risk
      free rate
                
                
                —
                %
                
                
                3.09
                %Dividend
      Yield
                
                
                0.0
                %
                
                
                0.0
                %Weighted
      average grant date fair value
                
                $
                0.0
                
                
                $
                0.01





Compensation
expense for stock options is recognized using the fair value when the stock
options are granted and is amortized over the options' vesting period. During
the 12 month ended December 31, 2009, $142,277 was recognized as compensation
expense in the consolidated statements of operations. .   As of
December 31, 2009, the remaining unrecognized compensation costs related to
unvested options was $106,708.





A summary
of the option activity under the Company’s share based compensation plan for the
fiscal years ended December 31, 2009 and 2008 is as follows:




2009 Options
                
                
                2009
                  Weighted
                  Average
                  Exercise
                  Price
                
                
                2008
                  Options
                
                
                2008
                  Weighted
                  Average
                  Exercise
                  PriceBalance,
      Beginning of year
                
                
                182,000,000
                
                
                $
                0.011
                
                
                
                10,000,000
                
                
                $
                0.00963Granted
                
                
                —
                
                
                
                —
                
                
                
                182,000,000
                
                
                
                0.00963Exercised
                
                
                —
                
                
                
                —
                
                
                
                10,000,000
                
                
                
                0.00963Forfeited
                
                
                —
                
                
                
                —
                
                
                
                0
                
                
                
                —Balance,
      end of year
                
                
                182,000,000
                
                
                
                0.011
                
                
                
                182,000,000
                
                
                
                0.011Exercisable
      at December 31,
                
                
                176,000,000
                
                
                $
                0.0107
                
                
                
                170,000,000
                
                
                $
                0.0104




F-31


The
following table sets forth stock options outstanding at December 31,
2009.




Total
      Outstanding Options:
                                                                      
                                                                      
                                                                      182,000,000
                                                                      
                                                                      Total
      "in-the-money" Outstanding Options:
                                                                      
                                                                      
                                                                      0Average
      Price of Outstanding Options:
                                                                      
                                                                      $
                                                                      0.0110
                                                                      
                                                                      Average
      Price of "in-the-money" Outstanding Options:
                                                                      
                                                                      $
                                                                      —Total
      Vested Options:
                                                                      
                                                                      
                                                                      176,000,000
                                                                      
                                                                      Total
      "in-the-money" Vested Options:
                                                                      
                                                                      
                                                                      0Average
      Price of Vested Options:
                                                                      
                                                                      $
                                                                      0.0107
                                                                      
                                                                      Average
      Price of "in-the-money" Vested Options:
                                                                      
                                                                      $
                                                                      —Total
      Unvested Options:
                                                                      
                                                                      
                                                                      6,000,000
                                                                      
                                                                      Total
      "in-the-money" UN-Vested Options:
                                                                      
                                                                      
                                                                      0





Options Breakdown by Range as at 12/31/2009Outstanding
                
                
                VestedRange
                
                Outstanding Options
                
                
                Remaining
                  Contractual Life
                
                
                WA
                  Outstanding
                  Strike Price
                
                
                Vested Options
                
                
                Remaining Vested
                  Contractual Life
                
                
                WA Vested
                  Strike Price$0.000
      to $0.040
                
                
                182,000,000
                
                
                
                8.3819
                
                
                $
                0.0110
                
                
                
                176,000,000
                
                
                
                8.3692
                
                
                $
                0.0107$0.050
      to $0.090
                
                
                0
                
                
                
                0.0000
                
                
                $
                0.0000
                
                
                
                0
                
                
                
                0.0000
                
                
                $
                0.0000$0.100
      to $0.140
                
                
                0
                
                
                
                0.0000
                
                
                $
                0.0000
                
                
                
                0
                
                
                
                0.0000
                
                
                $
                0.0000$0.150
      to $0.190
                
                
                0
                
                
                
                0.0000
                
                
                $
                0.0000
                
                
                
                0
                
                
                
                0.0000
                
                
                $
                0.0000$0.200
      to $0.250
                
                
                0
                
                
                
                0.0000
                
                
                $
                0.0000
                
                
                
                0
                
                
                
                0.0000
                
                
                $
                0.0000$0.000 to $0.250
                
                
                182,000,000
                
                
                
                8.3819
                
                
                $
                0.0110
                
                
                
                176,000,000
                
                
                
                8.3692
                
                
                $
                0.0107





The total
options outstanding at December 31, 2009 had a weighted average remaining life
of 8.3 years and an average intrinsic value of $0 based upon the closing price
of the Company’s common stock of March 21, 2009.  The total options
exercisable at December 31, 2008 had a weighted average remaining life of 9.3
years and an average intrinsic value of $0 based upon the closing price of the
Company’s common stock of March 20, 2009.  The options exercised in
2008 were “cashless options”.  Because the Company maintained a full
valuation allowance on our deferred tax assets, it did not recognize any tax
benefit related to stock based compensation expense for the year ended December
31, 2009.





Note
16- Stock Warrants





As of
January 1, 2009, GoldSpring Inc. had 104,200,000 outstanding warrants to acquire
company shares, all of which were vested and exercisable. During 2009, the
Company issued 197,928,571 of warrants associated with convertible debt
issuances.    During the period ended December 31, 2009,
none of these were exercised. Warrants outstanding at December 31, 2009 were
302,128,571. No warrants expired during the fiscal year ended December 31,
2009.




The
Company recognizes warrant compensation expense over the requisite service
period of the individual grant, which generally equals the vesting
period.  The plan entitles the holder to shares of common stock when
the award vests.   Awards generally vest ratably over five
years.  The fair value of the award is based upon the market price of
the underlying common stock as of the date of the grant and is amortized over
the applicable vesting period using the straight-line method.  The
Company uses newly issued shares of common stock to satisfy warrant exercises
and stock awards.




The fair
value of each grant was estimated at the date of the grant using the
Black-Scholes-Merton option pricing model.  Black-Scholes-Merton
utilizes assumptions related to volatility, the risk free interest rate, the
dividend yield (which is assumed to be zero, as the Company has not paid, nor
anticipates paying any, cash dividends and employee exercise
behavior.  Expected volatilities utilized in the model are based
mainly on the historical volatility of the Company’s stock price and other
factors.





F-32






2009
                    
                    
                    2008Weighted
      Average volatility
                    
                    
                    148
                    %
                    
                    
                    149
                    %Expected
      term (years)
                    
                    
                    4.43
                    
                    
                    
                    4.12Risk
      free rate
                    
                    
                    0.86
                    %
                    
                    
                    3.09
                    %Dividend
      Yield
                    
                    
                    0.0
                    %
                    
                    
                    0.0
                    %Weighted
      average grant date fair value
                    
                    $
                    0.01
                    
                    
                    $
                    0.01





Stock
warrant issuance is recognized using the fair value when granted and are
amortized over the warrants' vesting period. During the year ended December 31,
2009, $549,600 was recognized as interest expense in the consolidated statements
of operations.





A summary
of the warrant activity for the fiscal years ended December 31, 2009 and 2008 is
as follows:




2009
                                      Warrants
                                    
                                    
                                    2009
                                      Weighted
                                      Average
                                      Exercise
                                      Price
                                    
                                    
                                    2008
                                      Warrants
                                    
                                    
                                    2008
                                      Weighted
                                      Average
                                      Exercise
                                      PriceBalance,
      Beginning of year
                                    
                                    
                                    104,200,000
                                    
                                    
                                    $
                                    0.1440
                                    
                                    
                                    
                                    47,800,000
                                    
                                    
                                    $
                                    0.144Granted
                                    
                                    
                                    197,928,571
                                    
                                    
                                    $
                                    0.0173
                                    
                                    
                                    
                                    84,200,000
                                    
                                    
                                    $
                                    0.0173Exercised
                                    
                                    
                                    —
                                    
                                    
                                    
                                    —
                                    
                                    
                                    
                                    —
                                    
                                    
                                    
                                    —Forfeited
                                    
                                    
                                    —
                                    
                                    
                                    $
                                    0.20
                                    
                                    
                                    
                                    (27,800,000
                                    )
                                    
                                    
                                    0.20Balance,
      end of year
                                    
                                    
                                    302,128,571
                                    
                                    
                                    $
                                    0.0169
                                    
                                    
                                    
                                    104,200,000
                                    
                                    
                                    $
                                    0.169Exercisable
      at December 31,
                                    
                                    
                                    302,128,571
                                    
                                    
                                    $
                                    0.0169
                                    
                                    
                                    
                                    104,200,000
                                    
                                    
                                    $
                                    0.169





A summary
of outstanding warrant issuances at December 31, 2009 is as
follows:




Note Description
                          
                          Issue Date
                          
                          
                          Number of
                            Warrants
                          
                          Original
                            Term
                          
                          Exercise
                            PriceConvertible
      Notes 2006 & 2007
                          
                          May 06
      –
                            June 07
                          
                          
                          
                          20,000,000
                          
                          5
      years
                          
                          Variable
                            Exercise PricePrivate
      Placement Q2 2008
                          
                          
                          Q2
      2008
                          
                          
                          
                          40,000,000
                          
                          6
      years
                          
                          $
                          0.02Private
      Placement Q4 2008
                          
                          
                          Q4
      2008
                          
                          
                          
                          44,200,000
                          
                          6
      years
                          
                          
                          0.015Private
      Placement Q1 2009
                          
                          
                          Q1
      2009
                          
                          
                          
                          95,000,000
                          
                          6
      years
                          
                          
                          0.015Convertible
      Notes May 09 – Aug 09
                          
                          
                          Q2
      2009 – Q3 2009
                          
                          
                          
                          80,000,000
                          
                          4
      years
                          
                          
                          0.02Convertible Notes Dec. 2009
                          
                          Dec.
      2009
                          
                          
                          
                          22,928,571
                          
                          3
      years
                          
                          
                          0.0175Total
                          
                          
                          
                          
                          
                          
                          302,128,571





Variable Exercise
Price – The exercise price is equal to eighty-five percent (85%) of the
average of the five (5) lowest closing bid prices of the common stock as
reported by Bloomberg L.P. for the twenty (20) trading days upon day the
warrants are exercise.  These warrants have a "Cashless
Exercise".





The
following table sets forth warrants outstanding at December 31,
2009.




Total
      Outstanding Warrants:
                                                          
                                                          
                                                          302,628,571
                                                          
                                                          Total
      "in-the-money" Outstanding Warrants:
                                                          
                                                          
                                                          20,000,000Average
      Price of Outstanding Warrants:
                                                          
                                                          $
                                                          0.0169
                                                          
                                                          Average
      Price of "in-the-money" Outstanding Warrants:
                                                          
                                                          $
                                                          0.0063Total
      Vested Warrants:
                                                          
                                                          
                                                          302,628,571
                                                          
                                                          Total
      "in-the-money" Vested Warrants:
                                                          
                                                          
                                                          20,000,000Average
      Price of Vested Warrants:
                                                          
                                                          $
                                                          0.0169
                                                          
                                                          Average
      Price of "in-the-money" Vested Options:
                                                          
                                                          $
                                                          0.00063Total
      Unvested Options:
                                                          
                                                          
                                                          0
                                                          
                                                          Total
      "in-the-money" Unvested Options:
                                                          
                                                          
                                                          0






F-33





Warrants Breakdown by Range as at 12/31/2008Outstanding
                                    
                                    
                                    VestedRange
                                    
                                    Outstanding
                                      Warrants
                                    
                                    
                                    Remaining
                                      Contractual
                                      Life
                                    
                                    
                                    WA
                                      Outstanding
                                      Strike Price
                                    
                                    
                                    Vested
                                      Warrants
                                    
                                    
                                    Remaining
                                      Vested
                                      Contractual Life
                                    
                                    
                                    WA Vested
                                      Strike Price$0.000
      to$0.040
                                    
                                    
                                    302,628,571
                                    
                                    
                                    
                                    4,3354
                                    
                                    
                                    $
                                    0.0169
                                    
                                    
                                    
                                    302,628,571
                                    
                                    
                                    
                                    4.3354
                                    
                                    
                                    $
                                    0.0169$0.050
      to $0.090
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0.0000
                                    
                                    
                                    $
                                    0.0000
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0.0000
                                    
                                    
                                    $
                                    0.0000$0.100
      to $0.140
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0.0000
                                    
                                    
                                    $
                                    0.0000
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0.0000
                                    
                                    
                                    $
                                    0.0000$0.150
      to $0.190
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0.0000
                                    
                                    
                                    $
                                    0.0000
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0.0000
                                    
                                    
                                    $
                                    0.0000$0.200
      to $0.250
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0.0000
                                    
                                    
                                    $
                                    0.0000
                                    
                                    
                                    
                                    0
                                    
                                    
                                    
                                    0.0000
                                    
                                    
                                    $
                                    0.0000$0.000
      to $0.250
                                    
                                    
                                    302,628,571
                                    
                                    
                                    
                                    4.3354
                                    
                                    
                                    $
                                    0.0169
                                    
                                    
                                    
                                    302,628,571
                                    
                                    
                                    
                                    4.3354
                                    
                                    
                                    $
                                    0.0169




Note
17 – Extinguishment of Debt





The
following represents the reported gain from debt extinguishment resulting from a
change in an embedded conversion option or an amendment and restatement of a
note accounted for in accordance with the guidance offered in ASC
470-50.




For the Year Ended
                                December 312009
                              
                              2008Convertible
      Notes Payable - 2006 & 2007
                              $
                              —
                              
                              $
                              127,647Long-Term
      Convertible Notes – July 2008 (Longview Amended and Restated
      Note)
                              
                              —
                              
                              
                              1,220,552Gain
      – Debt Extinguishment
                              $
                              —
                              
                              $
                              1,348,199




Extinguishment
of Debt - Overview





In 2008,
we performed an analysis to determine whether the change in an embedded
conversion option and the amendment and restatement of a note would be recorded
as an extinguishment of debt or a modification of debt.  Based on our
analysis, it was determined that the above change in an
embedded  conversion option and the amendment and restatement of a
note qualified as debt extinguishment under ASC 470-50-40, and we recorded a
gain of $1,348,199 in the fourth quarter of fiscal 2008.





Convertible
Notes Payable - 2006 & 2007





On
February 20, 2008, as a result of the Company completing other financing
arrangements, a “favored nations” clause was triggered in the 2006 and 2007
convertible notes, which changed the terms of the embedded conversion option and
effectively established a fixed conversion rate of $0.01.  Our
analysis indicated that the change in the embedded conversion option qualified
as a substantial modification, and accordingly extinguishment of debt accounting
should be applied.





Upon
issuance, the embedded conversion option was “in the money”.  We
recorded the note in accordance with ASC 470-20 regarding accounting for a
beneficial conversion feature.  Our calculation of the intrinsic value
of the new embedded conversion option was
$2,380,000.  However,  ASC 470-20 limits the allocation of
proceeds to the conversion feature, to the face value of the note, therefore we
recorded the value of the embedded conversion option at the face value of the
note, which was $2,170,000.





Since the
modified notes provide for immediate conversion, subject to a 4.9% “blocking
feature”, the entire debt discount has been charged to interest expense in
accordance with the guidance offered in ASC 470-20. Debt discount results from
the allocation of note proceeds to the intrinsic value of the embedded
conversion option.


F-34


A gain on
Debt extinguishment of $127,647 was recorded as a result of the reduction in the
recorded value of the embedded conversion option prior to the change, compared
to the value of the embedded conversion option after the change.





The
following summarizes the convertible note;




Note Principal
                              
                              Unamortized
                                Debt Discount
                              
                              
                              Conversion
                                Price per Share
                              
                              
                              Number of
                                Shares
                                Underlying
                                Convertible
                                Note
                              
                              
                              Interest
                                Expense$
                              2,170,000
                              
                              
                              —
                              
                              
                              $
                              0.01
                              
                              
                              
                              217,000,000
                              
                              
                              $
                              2,170,000




Long-Term
Convertible Notes – July 2008 (Longview Amended and Restated Note)





Debt
Extinguishment July 10, 2008





On July
10, 2008, the Company amended the terms of $2,175,000 of unsecured promissory
notes issued to Longview Fund, L.P. to (a) refinance the outstanding accrued
interest of $607,563 by adding it to the note balance, (b) extend the terms and
(c) to add a conversion feature.  The new debt instrument contained a
fixed rate conversion feature of $0.0175 per share which did not previously
exist in the group of original notes being restated.  Our analysis
indicated that the change in the terms along with the change in the embedded
conversion option qualified as a substantial modification, and accordingly
extinguishment of debt accounting should be applied.  We recorded the
note in accordance with ASC 470-20 pertaining to the beneficial conversion
feature.  Our calculation of the intrinsic value of the new embedded
conversion option was $2,305,552.  Since the amended and restated
convertible note provide for immediate conversion, subject to a 4.9% “blocking
feature”, the entire debt discount has been charged to interest expense in
accordance with the guidance offered in ASC 470-20. Debt discount results from
the allocation of note proceeds to the intrinsic value of the embedded
conversion option.




The
following summarizes the convertible note;




Note Principal
                              
                              Unamortized
                                Debt Discount
                              
                              
                              Conversion
                                Price per Share
                              
                              
                              Number of
                                Shares
                                Underlying
                                Convertible
                                Note
                              
                              
                              Interest
                                Expense$
                              2,782,563
                              
                              
                              —
                              
                              
                              $
                              0.0175
                              
                              
                              
                              159,003,600
                              
                              
                              $
                              2,305,552




No gain
or loss on extinguishment was recorded.





Debt
Extinguishment December 22, 2008





The
Longview Amended and Restated Note discussed above included a “full
ratchet” provision which resets the stated conversion rate for all subsequent
stock issuances that are less then the conversion price that would be in effect
at that time.  On December 22, 2008, as a result of the Company
completing other financing arrangements at a lower conversion price, the reset
provision clause was triggered and established a new fixed conversion rate of
$0.01. Our analysis indicated that the change in the terms along with the change
in the embedded conversion option qualified as a substantial modification, and
accordingly extinguishment of debt accounting should be applied. The intrinsic
value of the convertible feature was determined to be
$1,085,000.    In accordance with accounting guidance for
extinguishment of debt, we recorded a gain of $1,220,552, representing the
difference between the July 10, 2008 valuation of the convertible feature and
the December 10, 2008 valuation of the convertible feature.


F-35




The
following table summarizes the Gain on Extinguishment of debt arising from the
Long-Term Convertible Notes – July 2008 (Longview Amended and Restated
Note)


Long-Term
      Convertible Notes – July 2008 (Longview Amended and Restated Note) –
      Valuation of convertible feature at July 10, 2008
                      
                      $
                      2,305,552Long-Term
      Convertible Notes – July 2008 (Longview Amended and Restated Note) –
      Valuation of convertible feature at December 22, 2008
                      
                      
                      1,085,000Gain
      – Debt Extinguishment
                      
                      $
                      1,220,552





The
following summarizes the convertible note after the Change in the conversion
amount;




Note Principal
                              
                              Unamortized Debt
                                Discount
                              
                              
                              Conversion Price
                                per Share
                              
                              
                              Number of Shares
                                Underlying
                                Convertible Note$
                              2,782,563
                              
                              
                              —
                              
                              
                              $
                              0.01
                              
                              
                              
                              278,256,300




Note 18 — Income Taxes




The
provision (benefit) for income taxes from continued operations for the years
ended December 31, 2009 and 2008 consist of the following:




2009
                      
                      
                      2008Current:Federal
                      
                      $
                      —
                      
                      
                      
                      —Deferred:
                      
                      
                      —
                      
                      
                      
                      —Federal
                      
                      
                      (2,384,000
                      )
                      
                      
                      (5,771,000
                      )Increase
      in valuation allowance
                      
                      
                      2,384,000
                      
                      
                      
                      5,771,000Benefit
      for income taxes, net
                      
                      $
                      —
                      
                      
                      
                      —




December 31,2009 and 2008Statutory
      federal income tax rate
                  
                  
                  35.0
                  %Increase
      in valuation allowance
                  
                  
                  (35.0
                  )%Effective
      tax rate
                  
                  
                  —
                  %





Deferred
income taxes result from temporary differences in the recognition of income and
expenses for the financial reporting purposes and for tax purposes. The tax
effect of these temporary differences representing deferred tax asset and
liabilities result principally from the following:




Deferred
      tax assetsNet
      operating loss carry-forwards
                                
                                
                                19,500,000
                                
                                
                                
                                17,100,000Stock-based
      compensation
                                
                                
                                23,500
                                
                                
                                
                                170,00019,523,500
                                
                                
                                
                                17,270,000Valuation
      allowance
                                
                                
                                (19,523,500
                                )
                                
                                
                                (17,270,000
                                )Total
      deferred tax assets, net of valuation allowance
                                
                                
                                —
                                
                                
                                
                                —
 
 The
valuation allowance increased $2,253,500 from December 31, 2008 to December 31,
2009.





At
December 31, 2009 and 2008 the Company has a net operating loss carry-forward of
approximately $55.8 million and $48.9 million
respectively.   These operating loss carry-forwards begin to
expire in 2024 and can offset future taxable income, subject to certain
limitations under section 382 of the Internal Revenue Code of 1986, as amended
and other limitations under state tax laws.


F-36





Note
19 - Subsequent Events





On
January 13, 2010, we amended our Royalty Sale and Option Agreement dated October
15, 2009 with Precious Royalties, LLC.  The amended agreement allows
Precious Royalties until March 31, 2010 to purchase a 5% net smelter royalty on
our Obester Property for $4,500,000 less the $260,000 already paid by Precious
Royalties in 2009.  Precious Royalties, in the event the entire
$4,500,000 is not paid, will receive a net smelter royalty on a pro rata
basis.  In January 2010, Precious Royalties paid $550,000 increasing
their total net smelter royalty purchase amount to $810,000 ($260,000 from 2009
plus $550,000 from 2010).  As of the date of this report, Precious
Royalties has purchased a 0.95% net smelter royalty on our Obester Property for
$810,000.





We filed
a definitive Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 on March 24, 2010. This Statement, which is being mailed to
shareholders on or about March 29, 2010, is furnished in accordance with the
requirements of Regulation 14A promulgated under the Securities Exchange Act of
1934, as amended. Notice was given that the holders of a majority of the shares
outstanding shares of the Company’s Common Stock (as of March 1, 2010) may act
by written consent to approve a reverse stock split of the Company’s issued and
outstanding Common Stock, as determined by the Company’s Board of Directors in a
ratio of 1:200.


.


In the
fourth quarter of 2009, we staked 165 lode mining claims in an area we called
the “West Lode”.  This was contiguous to our earlier claims, and
extended the project footprint significantly to the northwest.  Our
claim filings were initially accepted by the BLM and Washoe
County.  However, in the first quarter of 2010, we were notified by
the BLM that a significant portion of this area had been withdrawn from mineral
entry as part of the Washoe County master plan, and thus rendered the
corresponding claims invalid.  The remaining 43 lode mining claims
continue to be recognized as valid claims by the BLM.





Item 9. Changes and Disagreements with
Accountants on Accounting and Financial Disclosure




Not
applicable.




ITEM
9A (T). CONTROLS AND PROCEDURES.





Evaluation
of Disclosure Controls and Procedures




As of the
end of the period covered by this Annual Report on Form 10-K, management
performed, with the participation of our Principal Executive Officer and
Principal Accounting Officer, an evaluation of the effectiveness of our
disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e)
of the Exchange Act. Our disclosure controls and procedures are designed to
ensure that information required to be disclosed in the report we file or submit
under the Exchange Act is recorded, processed, summarized, and reported within
the time periods specified in the SEC’s forms, and that such information is
accumulated and communicated to our management including our Principal Executive
Officer and our Principal Accounting Officer, to allow timely decisions
regarding required disclosures. Our Principal Executive Officer and our
Principal Accounting Officer concluded that, as of December 31, 2009, our
disclosure controls and procedures were effective.





Management's
Annual Report on Internal Control Over Financial Reporting.





Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting for the company in accordance with and as
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal
control over financial reporting is designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted
accounting principles. Our internal control over financial reporting includes
those policies and procedures that:


47


(i)
pertain to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of our assets;





(ii)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements; and





(iii)
provide reasonable assurance regarding prevention or timely detection of
unauthorized transactions.




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




Management
has evaluated the effectiveness of the Company's internal control over financial
reporting as of December 31, 2009. Management based its assessment on the
framework set forth in COSO’s Internal Control – Integrated Framework (1992) in
conjunction with Securities and Exchange Commission Release No. 33-8820 entitled
"Commission Guidance Regarding Management’s Report on Internal Control Over
Financial Reporting Under Section 13(a) or 15(d) of the Securities and Exchange
Commission".





We
believe that internal control over financial reporting is effective as of
December 31, 2009. This annual report does not include an attestation report of
the company's registered public accounting firm regarding internal control over
financial reporting. Management's report was not subject to attestation by the
Company's registered public accounting firm pursuant to temporary rules of the
SEC that permit the Company to provide only management's report in this annual
report.





There
have been no changes during the quarter ended December 31, 2009 in our Company's
internal control over financial reporting identified in connection with the
evaluation required by Exchange Act Rules 13a-15(d) and 15d-15(d) that have
material affected, or are reasonably likely to materially affect, our internal
controls over our financial reporting.




Item9B. Other Information




Not
applicable.




Item 10. Directors, Executive Officers and
Corporate Governance




Our board of directors directs the
management of the business and affairs of our Company as provided in our
certificate of incorporation, our by-laws and the Corporation Law ofNevada. Members of our board of directors keep
informed about our business through discussions with senior management, by
reviewing analyses and reports sent to them, and by participating in board and
committee meetings.





Board Leadership Structure and Risk
Oversight; Diversity





Our Company is led by Bill Nance, who
has served as our chairman of the board since 2007.  The board has
three standing committees – audit, compensation and governance.  Given
our size, we do not have standing committees with meet independence requirements
although that is our intention as we continue to grow, and the Board is
responsible for overseeing risk management, and our full board receives periodic
reports from management.





Our board leadership structure is used
by other smaller public companies in the Unites States, and we believe that this
leadership structure is effective for the Company.  We believe that
having a separate Chairman and President is the correct form of leadership for
our Company.  We have two leaders for our Company and oversight of
Company operations by experienced directors.  We believe that our
directors provide effective oversight of the risk management function,
especially through dialogue between the full board and our
management.


48





The
Company does not currently consider diversity in identifying nominees for
director.  Due to the small size of the Company, the priority has been
in attracting qualified directors, and issues such as diversity have not yet
been considered.





The
following table sets forth certain information regarding our directors and
officers:




Name
              
              Age
              
              PositionWilliam
      J. Nance
              
              65
              
              DirectorRobert
      A. Reseigh
              
              64
              
              Director,
      Interim Chief Executive OfficerScott
      H. Jolcover
              
              59
              
              DirectorRobert
      T. Faber
              
              50
              
              Director
      , President and CFOJames
      Golden
              
              51
              
              COO




William J. Nance has been a
director of our Company since October 2005. Mr. Nance is a Certified Public
Accountant and private consultant to the real estate and banking industries. He
is also President of Century Plaza Printers, Inc. Mr. Nance is also a Director
of Intergroup Corporation, Santa Fe and Portsmouth.  Mr. Nance
provides financial and business expertise to the enterprise.  The
Company has determined that Mr. Nance should serve as a director due to his long
history with the Company.





Scott H. Jolcover has served
as an independent director since January 2008. Mr. Jolcover served as Manager of
the Plum Mine prior to and after it was acquired by GoldSpring in November 2003.
Since leaving GoldSpring in 2006, Mr. Jolcover has worked as a
consultant.  Mr. Jolcover’s 25 year mining background and his network
of contacts in the industry provides knowledge to the board. The Company has
determined that Mr. Jolcover should serve as a director due to his extensive
mining experience and history with the Company.





Executive
Officers





Robert Reseigh, Interim
Chief Executive Officer and Director


Mr.
Reseigh was appointed as the Interim Chief Executive Officer in October 2009 and
had been an independent director of the Company since September
2008.  Mr. Reseigh has over 35 years of experience in the mining and
underground construction industries. Mr. Reseigh, who holds an Engineer of Mines
degree from the Colorado School of Mines, is a mining and civil engineering
executive who has overseen over $1 billion in civil and mine construction
projects during his career. Mr. Reseigh spent nearly 20 years with the Peter
Kiewit organization, which is a recognized world leader in the mining industry.
He held several positions there, including Vice President and Area Manager for
Precious Metals Mine Projects. Mr. Reseigh also served as Executive Vice
President of Atkinson Construction Company, a subsidiary of Clark Construction,
where he directed all construction projects performed by the corporation. Mr.
Reseigh is a frequent speaker at mining and construction industry conferences
and has published several industry-specific papers. Mr. Reseigh has also been
appointed as a member of the Moles Association and the Beavers Association, East
Coast- and West Coast- based associations of prominent individuals in the heavy
construction industry.





The
Company has determined that Mr. Reseigh should serve as a director due to his
extensive experience in the mining industry.


49





Robert T. Faber,
CPA*President and Chief
Financial Officer


Mr. Faber
is an executive with 20 years of diverse senior financial and operational
management, business and acquisition experience, including 10 years of
international business experience. Mr. Faber was named Chief Executive Officer
and President of GoldSpring in September 2004. Prior to his appointment, he had
served as Chief Financial Officer since June 2003.  Prior to joining
GoldSpring, Inc., Mr. Faber served as Vice President of United Site Services,
Inc., from 2002 until 2003, a privately held service consolidator in the waste
service industry. Additionally, Mr. Faber served as an executive with Allied
Waste Industries from 2001 until 2002, overseeing a $1.2 billion multi-state
area and served as Chief Financial Officer with Frontier Waste Services, LLC
from 1999 until 2001. Prior to Frontier Waste, Mr. Faber spent 17 years with
Waste Management, Inc., a publicly traded environmental services company, during
which time he served in senior positions both internationally and domestically.
Mr. Faber’s positions included Director of Finance of Waste Management’s $1.4
billion multi-country International operations based in London, England and Vice
President and Controller for several $100 million plus multi-state market areas.
)  The Company has determined that Mr. Faber should serve as a
director due to his long history with the Company and his finance and accounting
expertise.


(*License
inactive)





Jim Golden, Chief Operating
Officer


Mr.
Golden is a mining engineer with over twenty-five years of experience in the
mining industry before joining us in 2006.  Mr. Golden’s mining
experience includes ten years with Peter Kiewit's mining division, where he was
a district manager. A graduate of Montana Tech, Mr. Golden has owned his own
consulting firm since 1990, where he has provided consulting services throughout
the world for over 50 mining companies.





Information
Relating to Corporate Governance and the Board of Directors




Our Board
of Directors has determined, after considering all the relevant facts and
circumstances, that Mr. each of Bob Reseigh  and  Scott
Jolcover is an independent director, as “independence” is defined by Nasdaq,
because they have no relationship with us that would interfere with their
exercise of independent judgment.  Mr. Nance is not independent due to
his working relationship with John Winfield.




Our Board
of Directors had established three standing committees: an Audit Committee, a
Compensation Committee, and a Nominations and Corporate Governance Committee.
Due to the fact that Mr. Nance, who is not independent, was the sole Director
during most of 2007 and 2008, those Committees had been
inactive.  However, the committees were revived effective January 1,
2009. Mr. Nance qualifies as an audit committee financial expert as defined
in Item 407(d)(5) of Regulation S-K, but is not independent as previously
stated The following is a summary of the members of each of the
committees:





Audit
Committee:


William
Nance – Chairperson


Robert
Reseigh





Compensation
Committee:


William
Nance – Chairperson


Scott
Jolcover





Corporate
Governance and Nomination Committee


Robert
Faber – Chairperson


Scott
Jolcover





The
Company has adopted a code of ethics that applies to Company’s principal
executive officer, principal financial officer and principal accounting
officer.  The code of ethics may be found on the Company’s website at
www.GoldSpring.us.





Section
16(a) Beneficial Ownership Reporting Compliance





Based
solely upon a review of Forms 3,  4 and 5 and amendments thereto
furnished to the Company during 2009, the Company has no knowledge of any person
who, at any time during the fiscal year, was a director, officer, beneficial
owner of more than ten percent of any class of equity securities of the Company,
or any other person subject to section 16 of the Exchange Act with respect to
the Company that failed to file on a timely basis, as disclosed in the above
Forms, reports required by section 16(a) of the Exchange Act during
2009.


50





Item
11. Executive Compensation





The
following table sets forth, for the periods indicated, the total compensation
for services provided to us in all capacities by all executives who received
aggregate compensation exceeding $100,000 during 2009.




SUMMARY
COMPENSATION TABLE




Annual Compensation
                                                    
                                                    Long-Term
                                                      Compensation
                                                      Awards
                                                      Securities
                                                    
                                                    Stock GrantName and Principal
                                                      Position
                                                    
                                                    Year
                                                    
                                                    Salary
                                                      ($)
                                                    
                                                    Bonus
                                                      ($)
                                                    
                                                    Underlying
                                                      Options (#)
                                                    
                                                    Compensation
                                                      ($)
                                                    
                                                    TOTALRobert
      A. Reseigh,  Interim CEO(8)
      (9)
                                                    
                                                    2009
                                                    
                                                    $
                                                    42,000
                                                    
                                                    
                                                    
                                                    $
                                                    —
                                                    
                                                    $
                                                    —
                                                    
                                                    $
                                                    42,000Robert
      T. Faber(1)(2)
                                                    
                                                    2009
                                                    
                                                    
                                                    180,000
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    180,000Robert
      T. Faber(1)(2)
                                                    
                                                    2008
                                                    
                                                    
                                                    180,000
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    80,000,000
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    180,000Robert
      T. Faber(1)(2)
                                                    
                                                    2007
                                                    
                                                    
                                                    180,000
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    180,000Jim
      Golden, COO(3)
                                                    
                                                    2009
                                                    
                                                    
                                                    150,000
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    150,000Jim
      Golden, COO(3)
                                                    
                                                    2008
                                                    
                                                    
                                                    150,000
                                                    
                                                    
                                                    69,949
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    219,949Jim
      Golden, COO(3)
                                                    
                                                    2007
                                                    
                                                    
                                                    150,000
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    100,000,000
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    150,000Dennis
      Anderson, Senior Engineer (4) (5)(7)
                                                    
                                                    2009
                                                    
                                                    
                                                    92,400
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    30,000
                                                    
                                                    
                                                    122,400Dennis
      Anderson, Senior Engineer (4) (5) (7)
                                                    
                                                    2008
                                                    
                                                    
                                                    76,300
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    —
                                                    
                                                    
                                                    43,760
                                                    
                                                    
                                                    120,060Larry
      Martin, Chief Geologist (6) (7)
                                                    
                                                    2009
                                                    
                                                    $
                                                    116,308
                                                    
                                                    $
                                                    —
                                                    
                                                    
                                                    
                                                    
                                                    $
                                                    40,650
                                                    
                                                    $
                                                    156,958




(1)
            Mr.
      Faber serves as the President and Chief Financial Officer.  Mr.
      Faber served as President and Chief Executive Officer from September 2004
      through October 6, 2009 and Chief Financial Officer since June
      2003.





(2)
            $103,000
      of Mr. Faber’s 2005 - 2009 salary has not yet been paid. We intend to pay
      this amount in 2010.





(3)
            Mr.
      Golden has served as Chief Operating Officer since October 2006. Prior to
      October 2006, Mr. Golden served as a consultant to our
    Company





(4)
            Mr.
      Anderson is a part-time employee who dedicates 70% of his time to
      GoldSpring.





(5)
            Mr.
      Anderson, as part of his employment arrangement, was granted a 5,000,000
      share grant of which 2,500,000 shares were issued in 2008 and 2,500,000
      were issued in 2009.





(6)
            Mr.
      Martin, pursuant to his employment agreement, was issued stock grants
      totaling 3,500,000 shares during
2009.





(7)
            We
      base the value of stock grants at the market value of our common stock at
      the date of issue.





(8)
            Mr.
      Reseigh was appointed as Chief Executive Officer on October 6,
      2009.





(9)
            Mr.
      Reseigh does not draw a salary.  Mr. Reseigh invoices us at a
      rate of $1,000 per day.


51





Stock
Options




During
2009, we did not issue stock options to any employee, officer or director. There
were, however, shares of common stock underlying unexercised stock options at
December 31, 2009. This information is summarized herein below.





Compensation
expense for stock options is recognized using the fair value when the stock
options are granted and is amortized over the options' vesting period. During
the 12 month ended December 31, 2009, $144,277 was recognized as compensation
expense in the consolidated statements of loss with a corresponding increase in
contributed deficit. As at December 31, 2009, 176,000,000 stock options were
exercisable and the weighted average years to expiration were 8.3
years.





A summary
of the option activity under the Company’s share base compensation plan for the
fiscal years ended December 31, 2009 and 2008 is as follows:




2009 Options
                    
                    2009
                      Weighted
                      Average
                      Exercise
                      Price
                    
                    2008
                      Options
                    
                    2008
                      Weighted
                      Average
                      Exercise
                      PriceBalance,
      Beginning of year
                    
                    182,000,000
                    
                    $
                    0.01
                    
                    10,000,000
                    
                    $
                    0.01Granted
                    
                    —
                    
                    
                    —
                    
                    182,000,000
                    
                    
                    0,.01Exercised
                    
                    —
                    
                    
                    —
                    
                    (10,000,000
                    )
                    
                    0.01Forfeited
                    
                    —
                    
                    
                    —
                    
                    0
                    
                    
                    —Balance,
      end of year
                    
                    182,000,000
                    
                    $
                    0.01
                    
                    182,000,000
                    
                    $
                    0.01Exercisable
      at December 31, 2009
                    
                    176,000,000
                    
                    $
                    0.01
                    
                    170,000,000
                    
                    $
                    0.01




OUTSTANDING
STOCK OPTION AWARDS FISCAL YEAR END FOR 2009





Option Awards
                
                Stock AwardsName
                  and
                  Principal
                  Position
                
                Number of
                  Securities
                  Underlying
                  Unexercised
                  Options (#)
                  Exercisable
                
                Number of
                  Securities
                  Underlying
                  Unexercised
                  Options (#)
                  Unexercisable
                
                Number of
                  Securities
                  Underlying
                  Unexercised
                  Unearned
                  Options (#)
                
                Option
                  Exercise
                  Price
                
                Option
                  Expiration
                  Date
                
                Number
                  of
                  Shares
                  or Units
                  of
                  Stock
                  That
                  Have
                  Not
                  Vested
                
                Market
                  Value
                  of
                  Shares
                  or
                  Units
                  of
                  Stock
                  That
                  Have
                  Not
                  Vested
                
                Number
                  of
                  Unearned
                  Shares or
                  Other
                  Rights
                  That
                  Have
                  Not
                  Vested
                
                Market
                  Value or
                  Payout
                  Value of
                  Unearned
                  Shares,
                  Units or
                  Other
                  Rights
                  That
                  Have Not
                  VestedRobert
      T. Faber
                
                
                80,000,000
                
                —
                
                
                —
                
                .01119
                
                
                01/09/18
                
                —
                
                
                —
                
                —
                
                
                —Jim
      Golden
                
                
                90,000,000
                
                —
                
                
                —
                
                .00963
                
                
                12/13/17
                
                —
                
                
                —
                
                —
                
                
                —William
      Nance
                
                
                1,500,000
                
                
                
                
                1,500,000
                
                .02
                
                
                9/30/18Robert
      Reseigh
                
                
                1,500,000
                
                
                
                
                1,500,000
                
                .02
                
                
                9/30/18Jonathan
      Jaffrey
                
                
                1,500,000
                
                
                
                
                1,500,000
                
                .02
                
                
                9/30/18Scott
      Jolcover
                
                
                1,500,000
                
                
                
                
                1,500,000
                
                .02
                
                
                9/30/18




52





Option AwardsName
                                        and
                                        Principal
                                        Position
                                      
                                      Number of
                                        Securities
                                        Underlying
                                        Unexercised
                                        Options (#)
                                        Exercisable
                                      
                                      Number of
                                        Securities
                                        Underlying
                                        Unexercised
                                        Options (#)
                                        Unexercisable
                                      
                                      Number of
                                        Securities
                                        Underlying
                                        Unexercised
                                        Unearned
                                        Options (#)
                                      
                                      Option
                                        Exercise
                                        Price
                                      
                                      Option
                                        Expiration
                                        Date
                                      
                                      
                                      Fair Value of
                                        Options at
                                        December 31,
                                        2009Robert
      T. Faber
                                      
                                      80,000,000
                                      
                                      —
                                      
                                      —
                                      
                                      .01119
                                      
                                      01/09/18
                                      
                                      $
                                      560,000Jim
      Golden
                                      
                                      90,000,000
                                      
                                      —
                                      
                                      —
                                      
                                      .00963
                                      
                                      12/13/17
                                      
                                      
                                      629,000William
      Nance
                                      
                                      2,000,000
                                      
                                      —
                                      
                                      1,000,000
                                      
                                      .02
                                      
                                      9/30/18
                                      
                                      
                                      14,000Robert
      Reseigh
                                      
                                      2,000,000
                                      
                                      —
                                      
                                      1,000,000
                                      
                                      .02
                                      
                                      9/30/18
                                      
                                      
                                      14,000Scott
      Jolcover
                                      
                                      2,000,000
                                      
                                      —
                                      
                                      1,000,000
                                      
                                      .02
                                      
                                      9/30/18
                                      
                                      
                                      14,000Dennis
      Anderson
                                      
                                      —
                                      
                                      —
                                      
                                      —
                                      
                                      —
                                      
                                      —
                                      
                                      
                                      —Larry
      Martin
                                      
                                      —
                                      
                                      —
                                      
                                      —
                                      
                                      —
                                      
                                      —
                                      
                                      
                                      —TOTAL
                                      
                                      176,000,000
                                      
                                      
                                      
                                      3,000,000
                                      
                                      
                                      
                                      
                                      
                                      $
                                      1,231,000





The fair
value of each grant was estimated at December 31, 2009 using the
Black-Scholes-Merton option pricing model.  Black-Scholes-Merton
utilizes assumptions related to volatility, the risk free interest rate, the
dividend yield (which is assumed to be zero, as the Company has not paid, nor
anticipates paying any, cash dividends and employee exercise
behavior.  Expected volatilities utilized in the model are based
mainly on the historical volatility of the Company’s stock price and other
factors.





The
following is a summary of the assumptions used and the weighted average
grant-date fair value of the stock options.





2009
                  
                  
                  2008Expected
      volatility
                  
                  
                  233
                  %
                  
                  
                  199
                  %Expected
      term (years)
                  
                  
                  5.14
                  
                  
                  
                  5.14Risk
      free rate
                  
                  
                  2.23
                  %
                  
                  
                  3.09
                  %Dividend
      Yield
                  
                  
                  0.0
                  %
                  
                  
                  0.0
                  %Weighted
      average grant date fair value
                  
                  $
                  0.01
                  
                  
                  $
                  0.01





OUTSTANDING
STOCK GRANT AWARDS AT FISCAL YEAR END FOR 2009





Stock AwardsName
                            and
                            Principal
                            Position
                          
                          Number
                            of
                            Shares
                            or Units
                            of
                            Stock
                            That
                            Have
                            Not
                            Vested
                          
                          Market
                            Value
                            of
                            Shares
                            or
                            Units
                            of
                            Stock
                            That
                            Have
                            Not
                            Vested
                          
                          Number
                            of
                            Unearned
                            Shares or
                            Other
                            Rights
                            That
                            Have
                            Not
                            Vested
                          
                          Market
                            Value or
                            Payout
                            Value of
                            Unearned
                            Shares,
                            Units or
                            Other
                            Rights
                            That
                            Have Not
                            VestedDennis
      Anderson
                          
                          —
                          
                          
                          —
                          
                          —
                          
                          
                          —Jim
      Golden
                          
                          —
                          
                          
                          —
                          
                          —
                          
                          
                          —William
      Nance
                          
                          —
                          
                          
                          —
                          
                          —
                          
                          
                          —Robert
      Reseigh
                          
                          —
                          
                          
                          —
                          
                          —
                          
                          
                          —Scott
      Jolcover
                          
                          —
                          
                          
                          —
                          
                          —
                          
                          
                          —Dennis
      Anderson
                          
                          —
                          
                          
                          —
                          
                          —
                          
                          
                          —Larry
      Martin
                          
                          1,500,000
                          
                          $
                          11,100
                          
                          —
                          
                          $
                          —




53





Compensation
of Directors




The
following table summarizes any compensation given in 2009 and 2008:





DIRECTOR
COMPENSATION TABLE





Name
                                            
                                            Year
                                            
                                            Fees
                                              Paid in
                                              Cash (1)
                                            
                                            Stock
                                              Awards
                                            
                                            Fair Value
                                              of Stock Grant
                                              at
                                              Issue Date
                                            
                                            Option
                                              Awards
                                            
                                            Fair Value
                                              of Options
                                              At Grant
                                              Date
                                            
                                            All Other
                                              Compensation
                                            
                                            TotalWilliam
      Nance
                                            
                                            2009
                                            
                                            $
                                            18,750
                                            
                                            —
                                            
                                            $
                                            —
                                            
                                            —
                                            
                                            $
                                            —
                                            $
                                            —
                                            
                                            $
                                            18,750William
      Nance
                                            
                                            2008
                                            
                                            
                                            7,500
                                            
                                            15,000,000
                                            
                                            
                                            167,850
                                            
                                            3,000,000
                                            
                                            
                                            71,139
                                            
                                            —
                                            
                                            
                                            246,489Robert
      Reseigh
                                            
                                            2009
                                            
                                            
                                            12,088
                                            
                                            —
                                            
                                            
                                            —
                                            
                                            —
                                            
                                            
                                            —
                                            
                                            —
                                            
                                            
                                            12,088Robert
      Reseigh
                                            
                                            2008
                                            
                                            
                                            4,834
                                            
                                            —
                                            
                                            
                                            —
                                            
                                            3,000,000
                                            
                                            
                                            71,139
                                            
                                            —
                                            
                                            
                                            75,973Jonathan
      Jaffrey (2)
                                            
                                            2009
                                            
                                            
                                            14,667
                                            
                                            —
                                            
                                            
                                            —
                                            
                                            
                                            
                                            
                                            
                                            
                                            —
                                            
                                            
                                            14,667Jonathan
      Jaffrey
                                            
                                            2008
                                            
                                            
                                            5,667
                                            
                                            —
                                            
                                            
                                            —
                                            
                                            3,000,000
                                            
                                            
                                            71,139
                                            
                                            —
                                            
                                            
                                            76,806Scott
      Jolcover
                                            
                                            2009
                                            
                                            
                                            12,088
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            —
                                            
                                            
                                            12,088Scott
      Jolcover
                                            
                                            2008
                                            
                                            
                                            4,834
                                            
                                            5,000,000
                                            
                                            
                                            66,550
                                            
                                            3,000,000
                                            
                                            
                                            71,139
                                            
                                            —
                                            
                                            
                                            142,523Robert
      Faber
                                            
                                            2009
                                            
                                            
                                            —
                                            
                                            —
                                            
                                            
                                            —
                                            
                                            
                                            
                                            
                                            
                                            
                                            —
                                            
                                            
                                            —Robert
      Faber
                                            
                                            2008
                                            
                                            
                                            —
                                            
                                            —
                                            
                                            $
                                            —
                                            
                                            —
                                            
                                            $
                                            
                                            $
                                            —
                                            
                                            $
                                            —





(1)
            As
      of January 31, 2010, unpaid director fees totaled $129,000.  We
      intend to pay this during 2010.





(2)
            On
      November 9, 2009, Mr. Jaffrey resigned from the board of
      directors.





DIRECTOR
COMPENSATION TABLE





Name
                
                Fees
                  Earned
                  or
                  Paid in
                  Cash
                
                Stock
                  Awards
                
                Option
                  Awards
                
                Non-Equity
                  Incentive Plan
                  Compensation
                
                Nonqualified
                  Deferred
                  Compensation
                  Earnings
                
                All Other
                  Compensation
                
                TotalWilliam
      Nance
                
                $
                7,500
                
                15,000,000
                
                
                3,000,000
                
                —
                
                
                —
                
                —
                
                
                —Robert
      Reseigh
                
                
                4,834
                
                —
                
                
                3,000,000
                
                —
                
                
                —
                
                —
                
                
                —Jonathan
      Jaffrey
                
                
                5,667
                
                —
                
                
                3,000,000Scott
      Jolcover
                
                
                4,834
                
                5,000,000
                
                
                3,000,000Robert
      Faber
                
                $
                —
                
                —
                
                
                —




Item 12. Security Ownership of Certain
Beneficial Owners and Management and Related Stockholder
Matters




The
following table sets forth certain information regarding the beneficial
ownership of our common stock as of December 31, 2009 by (1) each person who is
known by us to be the beneficial owner of more than five percent of our issued
and outstanding shares of common stock, (2) each of our directors and executive
officers, and (3) all directors and officers as a group.


54





Title of Class Owned or into
                              Which Warrants / Options are Convertible
                            
                            Name and Address of Beneficial
                              Owner (and Title for Employees,
                              Officers and Directors)
                            
                            Amount and
                              Nature of Beneficial
                              Ownership(1)
                            
                            
                            Percent of
                              Class(2)Officers
      and DirectorsCommon
      Stock
                            
                            Robert
      A. Reseigh – Director & CEO
                              PO
      BOX 1118
                              1200
      American Flat Road
                              Virginia
      City, NV 89440
                            
                            
                            1,875,000
                            
                            
                            
                            0.1
                            %Common
      Stock
                            
                            Robert
      T. Faber – Director, President & CFO
                              PO
      BOX 1118
                              1200
      American Flat Road
                              Virginia
      City, NV 89440
                            
                            
                            80,180,000
                            
                            
                            
                            2.1
                            %Common
      Stock
                            
                            James
      Golden-COO
                              PO
      BOX 1118
                              1200
      American Flat Road
                              Virginia
      City, NV 89440
                            
                            
                            98,265,714
                            
                            
                            
                            2.6
                            %Common
      Stock
                            
                            William
      Nance – Director
                              2025
      Avenue of the Stars
                              Los
      Angeles, CA 90067
                            
                            
                            17,000,000
                            
                            
                            
                            0.5
                            %Common
      Stock
                            
                            Scott
      Jolcover – Director
                              PO
      Box 1298
                              Carson
      City, NV 89702
                            
                            
                            23,923,904
                            
                            
                            
                            0.7
                            %All
      Officers and Directors as a Group
                            
                            
                            
                            
                            221,369,618
                            
                            
                            
                            6.1
                            %Other
      5% HoldersCommon
      Stock
                            
                            None





(1)
            Includes, when applicable, shares
      owned of record by such person’s minor children and spouse and by other
      related individuals and entities over whose shares of common stock such
      person has custody, voting control, or power of disposition. Also includes
      shares of common stock that the identified person had the right to acquire
      within 60 days of December 31, 2008 by the exercise of vested stock
      options.





(2)
            The percentages shown include the
      shares of common stock that the person will have the right to acquire
      within 60 days of December 31, 2008. In calculating the percentage of
      ownership, all shares of common stock which the identified person will
      have the right to acquire within 60 days of December 31, 2008 upon the
      conversion of convertible notes or the exercise of warrants or stock
      options are deemed to be outstanding for the purpose of computing the
      percentage of shares of common stock owned by such person, but are not
      deemed to be outstanding for the purpose of computing the percentage of
      shares of common stock owned by any other
  person.


55





EQUITY
COMPENSATION PLAN INFORMATION





See Part
II Item 5





Item 13. Certain Relationships and Related
Transactions, and Director Independence




There
were no related party transactions as described in Item 404 of Regulation S-K
during the fiscal years 2009 and 2008.





Item 14. Principal Accountants Fees and
Services




The
aggregate fees billed to our company by Jewett Schwartz, for the fiscal years
ended December 31, 2009 and December 31, 2008, are as follows:




2008
                
                
                2007Audit
      fees
                
                $
                40,000
                
                
                $
                52,500Audit-related
      fees
                
                $
                12,000
                
                
                $
                10,000Tax
      fees
                
                $
                10,000
                
                
                $
                10,000All
      other fees
                
                $
                0
                
                
                $
                0




Audit
Committee Pre-Approval Policies




The
charter of our Audit Committee provides that the duties and responsibilities of
our Audit Committee include the pre-approval of all audits, audit-related, tax,
and other services permitted by law or applicable SEC regulations (including fee
and cost ranges) to be performed by our independent auditor. Any pre-approved
services that will involve fees or costs exceeding pre-approved levels will also
require specific pre-approval by the Audit Committee. Unless otherwise specified
by the Audit Committee in pre-approving a service, the pre-approval will be
effective for the 12-month period following pre-approval. The Audit Committee
will not approve any non-audit services prohibited by applicable SEC regulations
or any services in connection with a transaction initially recommended by the
independent auditor, the purpose of which may be tax avoidance and the tax
treatment of which may not be supported by the Internal Revenue Code and related
regulations.




To the
extent deemed appropriate, the Audit Committee may delegate pre-approval
authority to the Chairman of the Audit Committee or any one or more other
members of the Audit Committee provided that any member of the Audit Committee
who has exercised any such delegation must report any such pre-approval decision
to the Audit Committee at its next scheduled meeting. The Audit Committee will
not delegate to management the pre-approval of services to be performed by the
independent auditor.





Our Audit Committee
requires that our independent auditor, in conjunction with our Chief Financial
Officer, be responsible for seeking pre-approval for providing services to us
and that any request for pre-approval must inform the Audit Committee about each
service to be provided and must provide detail as to the particular service to
be provided. Our Audit Committee Chair and Audit Committee Financial Expert is
William Nance.





Item 15. Exhibits Financial Statement
Schedules.




(a)
            The following documents are filed
      as part of this Report:




(1)
            Financial statements filed as
      part of this Report:




Report
      of Independent Registered Public Accounting Firm
                    
                    F -
      1Consolidated
      Balance Sheet
                    
                    F -
      2Consolidated
      Statements of Operations
                    
                    F -
      4Consolidated
      Statements of Changes in Stockholders' Deficiency
                    
                    F -
      5Consolidated
      Statements of Cash Flows
                    
                    F -
      6Notes
      to Consolidated Financial Statements




(2)
            Exhibits filed as part of this
      Report:


56




Exhibit
                  Number
                
                Exhibit23.1
                
                Consent
      of Jewett, Schwartz Wolfe & Associates31.1
                
                Certification
      of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a),
      promulgated under the Securities Exchange Act of 1934, as
      amended.31.2
                
                Certification
      of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a),
      promulgated under the Securities Exchange Act of 1934, as
      amended.32.1
                
                Certification
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
      the Sarbanes-Oxley Act of 200232.2
                
                Certification
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
      the Sarbanes-Oxley Act of
2002





SIGNATURES





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





SIGNATURES




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





GoldSpring,
      Inc./s/ Robert T. FaberRobert
      T. FaberPresident,
      and
                  Director
                  (Principal
      Financial Officer)Date
      April 9, 2010





Pursuant
to the requirements of Section 12 of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.




Signature
              
              Title
              
              Date/s/  ROBERT
      T. FABER
              
              President,
      Chief Financial Officer and Director
              
              April 9,
      2010Robert
      T. Faber
              
              (Principal
      Financial Officer)/s/  scott
      h. jolCover
              
              Director
              
              April
      9, 2010Scott
      H. Jolcover/s/  William
      Nance
              
              Chairman
      of the Board and Director
              
              April
      9, 2010William
      Nance/s/  Robert
      a. reseigh
              
              Director,
      Interim Chief Executive Officer
              
              April
      9, 2010Robert
      A. Reseigh
              
              (Principal
      Executive Officer)




57