UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
DC 20549
  FORM
10-Q
  (Mark
One)
  x
              QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934
  For the
quarterly period ended September 30,
2009
   ̈
              TRANSITION REPORT PURSUANT TO
      SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
  For the
transition period from 
to
  Commission
File Number:  000-51203
  Amazon Goldsands
Ltd.
 (Exact
name of registrant as specified in its charter)
  Nevada
              98-0425310(State
      or other jurisdiction of incorporation or organization)
              (I.R.S.
      Employer Identification No.)
 
 Jiron Caracas 2226, Jesus Maria, Lima,
      Peru(Address
      of principal executive offices)(51 1) 989 184 706(Registrant’s
      telephone number, including area code)________________________________________________________________(Former
      name, former address and former fiscal year, if changed since last
      report)
 
 Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the issuer was required to
file such reports), and (2) has been subject to such filing requirements for the
past 90 days.ý
Yes ̈
No
  Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). ý
Yes    ̈ No
  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,” “non-accelerated filer,” and “a smaller reporting company”
in Rule 12b-2 of the Exchange Act.
  Large
accelerated filer  ̈                                                                                                     Accelerated
filer  ̈
 Non-accelerated
filer  ̈  (Do not
check if a smaller reporting
company)                    Smaller
reporting company ý
  Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).  ̈   Yes      ý No
  Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date:
  Class
              
              Outstanding
      at September 30, 2009Common
      Stock, $0.00001 par value
              
              13,103,585
 
 Table of Contents
  
  FORM
      10-Q
                AMAZON
      GOLDSANDS LTD.
                SEPTEMBER
      30, 2009
                TABLE OF CONTENTS
              PagePART I – FINANCIAL INFORMATIONItem
      1.
              Financial Statements.
              4Item
      2.
              Management’s Discussion and Analysis of Financial Condition and
      Results of Operations.
              5Item
      3.
              Quantitative and Qualitative Disclosures About Market
      Risk.
              13Item
      4T.
              Controls and Procedures.
              13PART II – OTHER INFORMATIONItem
      1.
              Legal Proceedings.
              15Item
      1A.
              Risk Factors.
              15Item
      2.
              Unregistered Sales of Equity Securities and Use of
      Proceeds.
              15Item
      3.
              Defaults Upon Senior Securities.
              15Item
      4.
              Submission of Matters to a Vote of Security
      Holders.
              15Item
      5.
              Other Information.
              15Item
      6.
              Exhibits.
              15SignaturesExhibitsCertifications
 
 
 Table of Contents
 
 PART
I - FINANCIAL INFORMATION
 
 Item 1.     Financial
Statements
 
 Our
      unaudited consolidated financial statements included in this Form 10-Q for
      the three and nine months ended September 30, 2009 are as
      follows:F-1
              Unaudited
      Consolidated Balance Sheet as of September 30, 2009.F-2
              Unaudited
      Consolidated Statements of Operations for the three and nine months ended
      September 30, 2009 and 2008 and from inception on September 5, 1997 to
      September 30, 2009.F-3
              Unaudited
      Consolidated Statements of Cash Flows for the three and nine months ended
      September 30, 2009 and 2008 and from inception on September 5, 1997 to
      September 30, 2009.F-4
              Unaudited
      Consolidated Statement of Changes in Stockholders' Equity from
      inception on September 5, 1997 to September 30,
  2009.F-5
              Notes
      to Unaudited Consolidated Financial
Statements.
 
 
 These unaudited consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America for interim financial information and the SEC instructions to Form
10-Q.  In the opinion of management, all adjustments considered
necessary for a fair presentation have been included.  Operating
results for the interim period ended September 30, 2009 are not necessarily
indicative of the results that can be expected for the full year.


Table of Contents





Amazon
Goldsands Ltd.


(formerly
Finmetal Mining Ltd.)


(An
Exploration Stage Company)


Interim
Consolidated Balance Sheets
 (Expressed
in U.S. Dollars)
 (Unaudited
– Prepared by Management)





As
      at
              30
      September
              2009
            
            
            As
      at
              31
      December
              2008
              (Audited)$
            
            
            
            $AssetsCurrentCash
      and cash equivalents (Note 2)
            
            
            3,952
            
            
            
            492,903Taxes
      recoverable
            
            
            -
            
            
            
            4,394Prepaid
      expenses and deposit
            
            
            -
            
            
            
            1,9623,952
            
            
            
            499,259Mineral property interests(Note 4)
            
            
            1,510,000
            
            
            
            875,000Property and equipment(Note 5)
            
            
            19,335
            
            
            
            25,964Website development cost
      (Note 6)
            
            
            14,167
            
            
            
            24,1671,547,454
            
            
            
            1,424,390LiabilitiesCurrentAccounts
      payable and accrued liabilities (Note 3)
            
            
            635,605
            
            
            
            312,804Stockholders’
      equityCommon stock (Note
      7)Authorized200,000,000
      common shares, par value $0.00001 and200,000,000
      blank check preferred shares, par value $0.001Issued
      and outstanding30
      September 2009 – 13,103,585 common shares, par value
    $0.0000131
      December 2008 – 4,191,252 common shares, par value
$0.00001
            
            
            131
            
            
            
            42Share subscriptions received in
      advance(Note 7)
            
            
            -
            
            
            
            613,583Additional
      paid in capital
            
            
            12,809,984
            
            
            
            11,694,408Deficit,
      accumulated during the exploration stage
            
            
            (11,898,266
            )
            
            
            (11,196,447
            )911,849
            
            
            
            1,111,5861,547,454
            
            
            
            1,424,390





Nature, Basis of Presentation and
Continuance of Operations(Note 1), Commitments(Note 9), Contingency (Note
13)  and Subsequent
Events (Note 14)




The
accompanying notes are an integral part of the interim consolidated financial
statements.  F -
1
 Table of Contents


Amazon
Goldsands Ltd.


(formerly
Finmetal Mining Ltd.)


(An
Exploration Stage Company)


Interim
Consolidated Statements of Operations
 (Expressed
in U.S. Dollars)
 (Unaudited
– Prepared by Management)


For
      the period from the date of inception on 5 September 1997 to
              30
      September
              2009
            
            
            For
      the
              three
      month period ended
              30
      September
              2009
            
            
            For
      the
              three
      month
              period
      ended
              30
      September
              2008
            
            
            For
      the
              nine
      month period ended
              30
      September
              2009
            
            
            For
      the
              nine
      month period ended
              30
      September
              2008$
            
            
            
            $
            
            
            
            $
            
            
            
            $
            
            
            
            $ExpensesAmortization
      – property and equipment
            
            
            30,274
            
            
            
            2,210
            
            
            
            2,466
            
            
            
            6,629
            
            
            
            9,208Amortization
      – website development costs
            
            
            25,835
            
            
            
            3,333
            
            
            
            3,333
            
            
            
            10,000
            
            
            
            8,333Bank
      charges and interest (Note 4)
            
            
            10,696
            
            
            
            1,421
            
            
            
            759
            
            
            
            2,616
            
            
            
            2,265Consulting
      and management fees (recovery) (Note 8)
            
            
            4,889,135
            
            
            
            57,013
            
            
            
            142,803
            
            
            
            328,560
            
            
            
            (2,244,105
            )Foreign
      exchange (gain) loss
            
            
            18,636
            
            
            
            1,040
            
            
            
            4,296
            
            
            
            2,253
            
            
            
            (2,878
            )Investor
      communication and promotion
            
            
            618,571
            
            
            
            -
            
            
            
            81,786
            
            
            
            61,347
            
            
            
            161,986Office
      and administrative
            
            
            124,510
            
            
            
            -
            
            
            
            2,603
            
            
            
            1,700
            
            
            
            34,365Professional
      fees
            
            
            551,825
            
            
            
            13,500
            
            
            
            46,272
            
            
            
            115,540
            
            
            
            155,184Rent
            
            
            51,416
            
            
            
            3,000
            
            
            
            2,737
            
            
            
            9,000
            
            
            
            15,807Telephone
            
            
            54,659
            
            
            
            -
            
            
            
            544
            
            
            
            276
            
            
            
            17,257Transfer
      agent and filing fees
            
            
            41,465
            
            
            
            1,140
            
            
            
            380
            
            
            
            4,223
            
            
            
            3,298Travel
      and accommodation
            
            
            377,754
            
            
            
            -
            
            
            
            -
            
            
            
            1,118
            
            
            
            83,813Website
      maintenance
            
            
            63,500
            
            
            
            7,500
            
            
            
            4,500
            
            
            
            22,500
            
            
            
            13,500Mineral
      property acquisition and exploration expenditures
            
            
            5,179,264
            
            
            
            -
            
            
            
            (9,360
            )
            
            
            136,057
            
            
            
            351,170Net
      operating income (loss) before other items
            
            
            (12,037,540
            )
            
            
            (90,157
            )
            
            
            (283,748
            )
            
            
            (701,819
            )
            
            
            1,390,797Other
      itemsForgiveness
      of debt
            
            
            39,000
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Gain
      on sale of oil and gas property
            
            
            10,745
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Interest
      income
            
            
            102,561
            
            
            
            -
            
            
            
            803
            
            
            
            -
            
            
            
            9,148Recovery
      of expenses
            
            
            4,982
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Write-down
      of incorporation cost
            
            
            (12,500
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Write-down
      of assets
            
            
            (5,514
            )
            
            
            
            
            
            
            (5,514
            )
            
            
            
            
            
            
            (5,514
            )Net
      operating income (loss) and comprehensive income (loss) for the
      period
            
            
            (11,898,266
            )
            
            
            (90,157
            )
            
            
            (288,459
            )
            
            
            (701,819
            )
            
            
            1,394,431Basic and diluted income (loss)
      per common share
            
            
            
            (0.01
            )
            
            
            (0.16
            )
            
            
            (0.08
            )
            
            
            0.80Weighted
      average number of common shares
              used
      in per share calculations
            
            
            
            13,103,585
            
            
            
            1,799,855
            
            
            
            9,086,976
            
            
            
            1,740,037







F -
2
 Table of Contents





Amazon
Goldsands Ltd.


(formerly
Finmetal Mining Ltd.)


(An
Exploration Stage Company)


Interim
Consolidated Statements of Cash Flows


(Expressed
in U.S. Dollars)
 (Unaudited
– Prepared by Management)





For
      the period
              from
      the date
              of
      inception
              on
      5 September 1997
              to
      30 September
              2009
            
            
            For
      the three month period ended 30 September
              2009
            
            
            For
      the three month period ended 30 September
              2008
            
            
            For
      the nine
              month
      period ended 30 September 2009
            
            
            For
      the
              nine
      month period ended 30 September 2008$
            
            
            
            $
            
            
            
            $
            
            
            
            $
            
            
            
            $Cash
      flows used in operating activitiesNet
      income (loss) for the period
            
            
            (11,898,266
            )
            
            
            (90,157
            )
            
            
            (288,459
            )
            
            
            (701,819
            )
            
            
            1,394,431Adjustments
      to reconcile income (loss) to net cash used by operating
      activitiesAccrued
      interest (Note 4)
            
            
            1,233
            
            
            
            1,233
            
            
            
            -
            
            
            
            1,233
            
            
            
            -Amortization
      (Notes 5 and 6)
            
            
            56,108
            
            
            
            5,543
            
            
            
            5,798
            
            
            
            16,629
            
            
            
            17,541Consulting
      fees
            
            
            40,200
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Forgiveness
      of debt
            
            
            (24,000
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Gain
      on sale of oil and gas property
            
            
            (10,745
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Mineral
      property acquisition
            
            
            1,816,000
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Stock-based
      compensation (recovery)
            
            
            3,587,000
            
            
            
            -
            
            
            
            86,698
            
            
            
            -
            
            
            
            (2,519,736
            )Write-down
      of assets
            
            
            3,940
            
            
            
            -
            
            
            
            5,514
            
            
            
            -
            
            
            
            5,514Changes
      in operating assets and liabilities(Increase)
      decrease in taxes recoverable
            
            
            -
            
            
            
            -
            
            
            
            (1,967
            )
            
            
            4,394
            
            
            
            16,761Decrease
      in exploration program advances
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            87,600(Increase)
      decrease in prepaid expenses and deposits
            
            
            -
            
            
            
            -
            
            
            
            796
            
            
            
            1,962
            
            
            
            (163
            )Increase
      (decrease) in accounts payable and accrued liabilities
            
            
            634,372
            
            
            
            78,144
            
            
            
            (74,837
            )
            
            
            321,568
            
            
            
            (616,429
            )Decrease
      in advances from related parties
            
            
            -
            
            
            
            -
            
            
            
            (9,685
            )
            
            
            -
            
            
            
            (54,365
            )(5,794,158
            )
            
            
            (5,237
            )
            
            
            (276,142
            )
            
            
            (356,033
            )
            
            
            (1,668,846
            )Cash
      flows from financing activitiesAdvances
            
            
            -
            
            
            
            -
            
            
            
            32,889
            
            
            
            -
            
            
            
            32,889Shares
      subscriptions received in advance
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (613,583
            )
            
            
            -Cost
      of repurchase of common stock
            
            
            (1,000
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Proceeds
      from issuance of common stock, net of share issue costs
            
            
            6,371,915
            
            
            
            -
            
            
            
            -
            
            
            
            730,665
            
            
            
            -6,370,915
            
            
            
            -
            
            
            
            32,889
            
            
            
            117,082
            
            
            
            32,889Cash
      flows from (used in) investing activitiesProceeds
      from sale of oil and gas property
            
            
            46,200
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Oil
      and gas property acquisitions
            
            
            (2,846
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Oil
      and gas exploration
            
            
            (22,609
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Acquisition
      of mineral rights
            
            
            (500,000
            )
            
            
            -
            
            
            
            -
            
            
            
            (250,000
            )
            
            
            -Purchase
      (disposition) of equipment
            
            
            (53,550
            )
            
            
            -
            
            
            
            2,627
            
            
            
            -
            
            
            
            (7,040
            )Website
      development costs
            
            
            (40,000
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (30,000
            )(572,805
            )
            
            
            -
            
            
            
            2,627
            
            
            
            (250,000
            )
            
            
            (37,040
            )Increase
      (decrease) in cash and cash equivalents
            
            
            3,952
            
            
            
            (5,237
            )
            
            
            (240,626
            )
            
            
            (488,951
            )
            
            
            (1,672,997
            )Cash
      and cash equivalents, beginning of period
            
            
            -
            
            
            
            9,189
            
            
            
            525,485
            
            
            
            492,903
            
            
            
            1,957,856Cash
      and cash equivalents, end of period
            
            
            3,952
            
            
            
            3,952
            
            
            
            284,859
            
            
            
            3,952
            
            
            
            284,859





Supplemental
Disclosures with Respect of Cash Flows(Note 11)






F -
3
 Table of Contents





Amazon
Goldsands Ltd.


(formerly
Finmetal Mining Ltd.)


(An
Exploration Stage Company)


Interim
Consolidated Statements of Changes in Stockholders’ Equity
(Deficiency)


(Expressed
in U.S. Dollars)


(Unaudited
– Prepared by Management)





Number
      of
              shares
              issued
            
            
            Share
              capital
            
            
            Additional
              paid-in
              capital
            
            
            Deferred
              stock-based
      compensation
            
            
            Share
      subscriptions received
            
            
            Deficit,
              accumulated
              during
      the
              exploration
              stage
            
            
            Total
              stockholders’
              equity
              (deficiency)$
            
            
            
            $
            
            
            
            $
            
            
            
            $
            
            
            
            $
            
            
            
            $Balance
      at 5 September 1997 (inception)
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Common
      shares issued for cash ($0.25 per share)
            
            
            4,000
            
            
            
            1
            
            
            
            999
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            1,000Net
      loss for the period
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (2,522
            )
            
            
            (2,522
            )Balance
      at 30 September 1997
            
            
            4,000
            
            
            
            1
            
            
            
            999
            
            
            
            -
            
            
            
            -
            
            
            
            (2,522
            )
            
            
            (1,522
            )Common
      shares issued for acquisition of oil and gas properties ($25 per
      share)
            
            
            400
            
            
            
            -
            
            
            
            10,000
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            10,000Common
      shares issued for cash ($0.25 per share)
            
            
            4,000
            
            
            
            1
            
            
            
            999
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            1,000Net
      loss for the year
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (1,246
            )
            
            
            (1,246
            )Balance
      at 30 September 1998
            
            
            8,400
            
            
            
            2
            
            
            
            11,998
            
            
            
            -
            
            
            
            -
            
            
            
            (3,768
            )
            
            
            8,232Common
      shares issued for cash ($25 per share)
            
            
            4,000
            
            
            
            1
            
            
            
            99,999
            
            
            
            -
            
            
            
            -
            
            
            
            
            
            
            
            100,000Common
      shares repurchased for cash ($0.25 per share)
            
            
            (4,000
            )
            
            
            (1
            )
            
            
            (999
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (1,000
            )Net
      loss for the year
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (9,569
            )
            
            
            (9,569
            )Balance
      at 30 September 1999
            
            
            8,400
            
            
            
            2
            
            
            
            110,998
            
            
            
            -
            
            
            
            -
            
            
            
            (13,337
            )
            
            
            97,663Net
      loss for the year
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (34,290
            )
            
            
            (34,290
            )Balance
      at 30 September 2000
            
            
            8,400
            
            
            
            2
            
            
            
            110,998
            
            
            
            -
            
            
            
            -
            
            
            
            (47,627
            )
            
            
            63,373Net
      loss for the year
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (14,296
            )
            
            
            (14,296
            )Balance
      at 30 September 2001
            
            
            8,400
            
            
            
            2
            
            
            
            110,998
            
            
            
            -
            
            
            
            -
            
            
            
            (61,923
            )
            
            
            49,077Net
      income for the year
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            10,954
            
            
            
            10,954Balance
      at 30 September 2002
            
            
            8,400
            
            
            
            2
            
            
            
            110,998
            
            
            
            -
            
            
            
            -
            
            
            
            (50,969
            )
            
            
            60,031Net
      income for the year
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            2,387
            
            
            
            2,387Balance
      at 30 September 2003
            
            
            8,400
            
            
            
            2
            
            
            
            110,998
            
            
            
            -
            
            
            
            -
            
            
            
            (48,582
            )
            
            
            62,418Common
      shares issued for cash ($1.50 per share) and for services ($6 per
      share)
            
            
            8,569
            
            
            
            1
            
            
            
            62,699
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            62,700Donated
      capital
            
            
            -
            
            
            
            -
            
            
            
            5,000
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            5,000Net
      loss for the year
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (64,175
            )
            
            
            (64,175
            )Balance
      at 30 September 2004
            
            
            16,969
            
            
            
            3
            
            
            
            178,697
            
            
            
            -
            
            
            
            -
            
            
            
            (112,757
            )
            
            
            65,943Donated
      capital
            
            
            -
            
            
            
            -
            
            
            
            3,000
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            3,000Net
      loss for the period
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (7,750
            )
            
            
            (7,750
            )Balance
      at 31 December 2004
            
            
            16,969
            
            
            
            3
            
            
            
            181,697
            
            
            
            -
            
            
            
            -
            
            
            
            (120,507
            )
            
            
            61,193Common
      shares repurchased ($0.25 per share)
            
            
            (4,000
            )
            
            
            (1
            )
            
            
            (999
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (1,000
            )Donated
      capital
            
            
            -
            
            
            
            -
            
            
            
            8,200
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            8,200Net
      loss for the year
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (40,652
            )
            
            
            (40,652
            )Balance
      at 31 December 2005
            
            
            12,969
            
            
            
            2
            
            
            
            188,898
            
            
            
            -
            
            
            
            -
            
            
            
            (161,159
            )
            
            
            27,741








F -
4
 Table of Contents





Amazon
Goldsands Ltd.


(formerly
Finmetal Mining Ltd.)


(An
Exploration Stage Company)


Interim
Consolidated Statements of Changes in Stockholders’ Equity
(Deficiency)


(Expressed
in U.S. Dollars)


(Unaudited
– Prepared by Management)




Number
      of
                shares
                issued
              
              
              Share
                capital
              
              
              Additional
                paid-in
                capital
              
              
              Deferred
                stock-based
      compensation
              
              
              Share
                subscriptions
                received
              
              
              Deficit,
                accumulated
                during
      the
                exploration
                stage
              
              
              Total
                stockholders’
                equity
                (deficiency)$
              
              
              
              $
              
              
              
              $
              
              
              
              $
              
              
              
              $
              
              
              
              $Balance
      at 31 December 2005
              
              
              12,969
              
              
              
              2
              
              
              
              188,898
              
              
              
              -
              
              
              
              -
              
              
              
              (161,159
              )
              
              
              27,741Common
      shares issued for cash ($0.125 per share)
              
              
              1,200,000
              
              
              
              12
              
              
              
              149,988
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              150,000Common
      shares cancelled
              
              
              (8,467
              )
              
              
              (1
              )
              
              
              1
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Common
      shares issued for purchase of Finmetal OY (deemed at $25.60 per
      share)
              
              
              50,000
              
              
              
              1
              
              
              
              1,279,999
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              1,280,000Common
      shares issued as stock-based compensation (deemed at $24.80 per
      share)
              
              
              97,500
              
              
              
              1
              
              
              
              2,417,999
              
              
              
              (2,321,280
              )
              
              
              -
              
              
              
              -
              
              
              
              96,720Common
      shares issued for cash ($10 per share)
              
              
              279,950
              
              
              
              2
              
              
              
              2,799,498
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              2,799,500Share
      issue costs
              
              
              
              
              
              
              -
              
              
              
              (254,500
              )
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (254,500
              )Net
      loss for the year
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (2,506,896
              )
              
              
              (2,506,896
              )Balance
      at 31 December 2006
              
              
              1,631,952
              
              
              
              17
              
              
              
              6,581,883
              
              
              
              (2,321,280
              )
              
              
              -
              
              
              
              (2,668,055
              )
              
              
              1,592,565Common
      shares issued for cash ($25 per unit) (Note 7)
              
              
              121,800
              
              
              
              1
              
              
              
              2,944,578
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              2,944,579Share
      issue costs
              
              
              -
              
              
              
              -
              
              
              
              (212,450
              )
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (212,450
              )Warrants
      issued (Note 7)
              
              
              -
              
              
              
              -
              
              
              
              100,421
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              100,421Common
      shares issued as stock-based compensation (deemed at $29 per share) (Note
      7)
              
              
              46,250
              
              
              
              1
              
              
              
              1,341,249
              
              
              
              (1,341,250
              )
              
              
              -
              
              
              
              -
              
              
              
              -Common
      shares issued for finder’s fee for mineral interests (deemed at
      $26.80)  per share (Note 7)
              
              
              20,000
              
              
              
              1
              
              
              
              535,999
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              536,000Stock-based
      compensation
              
              
              -
              
              
              
              -
              
              
              
              3,023,282
              
              
              
              2,936,734
              
              
              
              -
              
              
              
              -
              
              
              
              5,960,016Stock
      awards cancelled
              
              
              (97,500
              )
              
              
              (1
              )
              
              
              1
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Net
      loss for the year
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (9,511,457
              )
              
              
              (9,511,457
              )Balance
      at 31 December 2007
              
              
              1,722,502
              
              
              
              18
              
              
              
              14,314,964
              
              
              
              (725,796
              )
              
              
              -
              
              
              
              (12,179,512
              )
              
              
              1,409,674Stock-based
      compensation (Note 7)
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              725,796
              
              
              
              -
              
              
              
              -
              
              
              
              725,796Stock
      awards cancelled (Note 7)
              
              
              (31,250
              )
              
              
              (1
              )
              
              
              1
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Stock
      options forfeited (Note 7)
              
              
              -
              
              
              
              -
              
              
              
              (3,245,532
              )
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (3,245,532
              )Common
      shares issued for acquisition of mineral rights ($0.25 per share) (Note
      7)
              
              
              2,500,000
              
              
              
              25
              
              
              
              624,975
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              625,000Share
      subscriptions received in advance
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              613,583
              
              
              
              -
              
              
              
              613,583Net
      income for the year
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              
              
              
              
              983,065
              
              
              
              983,065Balance
      at 31 December 2008
              
              
              4,191,252
              
              
              
              42
              
              
              
              11,694,408
              
              
              
              -
              
              
              
              613,583
              
              
              
              (11,196,447
              )
              
              
              1,111,586Common
      shares issued for cash ($0.15 per unit) (Note 7)
              
              
              5,412,333
              
              
              
              54
              
              
              
              811,796
              
              
              
              -
              
              
              
              (613,583
              )
              
              
              -
              
              
              
              198,267Share
      issue costs
              
              
              -
              
              
              
              -
              
              
              
              (81,185
              )
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (81,185
              )Common
      shares issued for acquisition of mineral rights ($0.11 per share) (Note
      7)
              
              
              3,500,000
              
              
              
              35
              
              
              
              384,965
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              385,000Net
      loss for the period
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (701,819
              )
              
              
              (701,819
              )Balance
      at 30 September 2009
              
              
              13,103,585
              
              
              
              131
              
              
              
              12,809,984
              
              
              
              -
              
              
              
              -
              
              
              
              (11,898,266
              )
              
              
              911,849






F -
5
 Table of Contents




Amazon
Goldsands Ltd.


(formerly
Finmetal Mining Ltd.)


(An
Exploration Stage Company)


Notes to
Interim Consolidated Financial Statements


(Expressed
in U.S. Dollars)


(Unaudited
– Prepared by Management)


30
September 2009





1.
            Nature,
      Basis of Presentation and Continuance of
  Operations





Amazon
Goldsands Ltd. (the “Company”) was incorporated under the laws of the State of
Nevada, U.S.A. under the name “Gondwana Energy, Ltd.” on 5 September
1997.  On 23 January 2007, the Company changed its name to “FinMetal
Mining Ltd.”.  On 27 November 2006, the Company completed the
acquisition of 100% of the shares of Finmetal Mining OY (“Finmetal OY”), a
company incorporated under the laws of Finland.  During the fiscal
year ended 31 December 2006, the Company changed its operational focus from
development of oil and gas properties, to acquisition of, exploration for and
development of mineral properties in Finland.  On 22 May 2008, the
Company changed its name to “Amazon Goldsands Ltd.” and on 18 September 2008,
the Company entered into a Mineral Rights Option Agreement and concurrently
re-focused on the acquisition of, exploration for and development of mineral
properties located in Peru. The Company is currently in the exploration
stage.





The
accompanying interim consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiary, Finmetal OY, a company incorporated
under the laws of Finland, since its date of acquisition on 27 November
2006.





The
Company is an exploration stage enterprise, as defined in Statement of Financial
Accounting Standards (“SFAS”) No. 7. The Company is devoting all of its present
efforts in securing and establishing a new business, and its planned principle
operations have not commenced, and, accordingly, no revenue has been derived
during the organization period.





The
interim consolidated financial statements of the Company have been prepared in
accordance with accounting principles generally accepted in the United States of
America (“GAAP”) applicable to exploration stage enterprises, and are expressed
in U.S. dollars.  The Company’s fiscal year end is 31
December.





The
Company’s interim consolidated financial statements as at 30 September 2009 and
for the nine month period then ended have been prepared on a going concern
basis, which contemplates the realization of assets and the settlement of
liabilities and commitments in the normal course of business.  The
Company had a loss of $701,819 for the nine month period ended 30 September 2009
(30 September 2008 – income of $1,394,431) and has a working capital deficit of
$631,653 at 30 September 2009 (31 December 2008 – working capital of
$186,455).





Management
cannot provide assurance that the Company will ultimately achieve profitable
operations or become cash flow positive, or raise additional debt and/or equity
capital.  Management believes that the Company’s capital resources
should be adequate to continue operating and maintaining its business strategy
during the fiscal year ending 31 December 2009.  However, if the
Company is unable to raise additional capital in the near future, due to the
Company’s liquidity problems, management expects that the Company will need to
curtail operations, liquidate assets, seek additional capital on less favorable
terms and/or pursue other remedial measures.  These interim
consolidated financial statements do not include any adjustments related to the
recoverability and classification of assets or the amounts and classification of
liabilities that might be necessary should the Company be unable to continue as
a going concern.








F -
6
 Table of Contents





Amazon
Goldsands Ltd.


(formerly
Finmetal Mining Ltd.)


(An
Exploration Stage Company)


Notes to
Interim Consolidated Financial Statements


(Expressed
in U.S. Dollars)


(Unaudited
– Prepared by Management)


30
September 2009





2.
            Significant
      Accounting Policies





The
following is a summary of significant accounting policies used in the
preparation of these interim consolidated financial statements.





Principles
of consolidation





All
inter-company balances and transactions have been eliminated in these interim
consolidated financial statements.





Cash
and cash equivalents





The
Company considers all highly liquid instruments with a maturity of three months
or less at the time of issuance to be cash equivalents. As at 30 September 2009,
the Company has cash and cash equivalents in the amount of $3,952 (31 December
2008 – $492,903).





Website
and software development costs





The
Company recognizes the costs incurred in the development of the Company’s
website in accordance with Emerging Issues Task Force (“EITF”) 00-2, “Accounting for Website Development
Costs” and, with the provisions of American Institute of Certified Public
Accountants (“AICPA”) Statement of Position No. 98-1, “Accounting for the Costs of
Computer Software Developed or Obtained for Internal
Use”.  Accordingly, direct costs incurred during the
application stage of development are capitalized and amortized over the
estimated useful life of three years on a straight line basis.  Fees
incurred for website hosting are expensed over the period of the
benefit.  Costs of operating a website are expensed as
incurred.





Property
and equipment





Furniture
and office and computer equipment is carried at cost and is amortized over its
estimated useful life at rates of 20 to 30% per year.  The property
and equipment is written down to its net realizable value if it is determined
that its carrying value exceeds estimated future benefits to the
Company.





Mineral
property costs





Mineral
property acquisition costs are initially capitalized as tangible assets when
purchased in accordance with Emerging Issues Task Force (“EITF”) 04-2, “Whether Mineral Rights Are Tangible
or Intangible Assets”. At the end of each fiscal quarter end, the Company
assesses the carrying costs for impairment.  If proven and probable
reserves are established for a property and it has been determined that a
mineral property can be economically developed, costs will be amortized using
the units-of-production method over the estimated life of the probable
reserve.





Mineral
property exploration costs are expensed as incurred.








F -
7
 Table of Contents





Amazon
Goldsands Ltd.


(formerly
Finmetal Mining Ltd.)


(An
Exploration Stage Company)


Notes to
Interim Consolidated Financial Statements


(Expressed
in U.S. Dollars)


(Unaudited
– Prepared by Management)


30
September 2009





Estimated
future removal and site restoration costs, when determinable are provided over
the life of proven reserves on a units-of-production basis.  Costs,
which include production equipment removal and environmental remediation, are
estimated each period by management based on current regulations, actual
expenses incurred, and technology and industry standards.  Any charge
is included in exploration expense or the provision for depletion and
depreciation during the period and the actual restoration expenditures are
charged to the accumulated provision amounts as incurred.





As of the
date of these interim consolidated financial statements, the Company has not
established any proven or probable reserves on its mineral properties and
incurred only acquisition and exploration costs.





Although
the Company has taken steps to verify title to mineral properties in which it
has an interest, according to the usual industry standards for the stage of
exploration of such properties, these procedures do not guarantee the Company’s
title.  Such properties may be subject to prior agreements or
transfers and title may be affected by undetected defects.





Environmental
costs





Environmental
expenditures that related to current operations are charged to operations or
capitalized as appropriate.  Expenditures that relate to an existing
condition caused by past operations, and which do not contribute to current or
future revenue generation, are charged to operations.  Liabilities are
recorded when environmental assessments and/or remedial efforts are probable,
and the cost can be reasonably estimated.  Generally, the timing of
these accruals coincides with the earlier of completion of a feasibility study
or the Company’s commitments to plan of action based on the then known
facts.





Comprehensive
loss





SFAS No.
130, “Reporting Comprehensive
Income”, establishes standards for the reporting and display of
comprehensive loss and its components in the financial statements.  As
at 30 September 2009, the Company has no items that represent a comprehensive
loss and, therefore, has not included a schedule of comprehensive loss in the
interim consolidated financial statements.





Foreign
currency translation





The
Company’s functional and reporting currency is U.S. dollars.  The
consolidated financial statements of the Company are translated to U.S. dollars
in accordance with SFAS No. 52, “Foreign Currency
Translation.”  Monetary assets and liabilities denominated in
foreign currencies are translated using the exchange rate prevailing at the
balance sheet date.  Gains and losses arising on translation or
settlement of foreign currency denominated transactions or balances are included
in the determination of income.  The Company has not, to the date of
these interim consolidated financial statements, entered into derivative
instruments to offset the impact of foreign currency fluctuations.





F -
8
 Table of Contents





Amazon
Goldsands Ltd.


(formerly
Finmetal Mining Ltd.)


(An
Exploration Stage Company)


Notes to
Interim Consolidated Financial Statements


(Expressed
in U.S. Dollars)


(Unaudited
– Prepared by Management)


30
September 2009





Stock-based
compensation





Effective
1 January 2006, the Company adopted the provisions of SFAS No. 123(R), “Share-Based Payment”, which
establishes accounting for equity instruments exchanged for employee services.
Under the provisions of SFAS No.123(R), stock-based compensation cost is
measured at the grant date, based on the calculated fair value of the award, and
is recognized as an expense over the employees’ requisite service period
(generally the vesting period of the equity grant). Before 1 January 2006, the
Company accounted for stock-based compensation to employees in accordance with
Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to
Employees,” and complied with the disclosure requirements of SFAS No.
123, “Accounting for
Stock-Based Compensation”.  The Company adopted SFAS No. 123(R)
using the modified prospective method, which requires the Company to record
compensation expense over the vesting period for all awards granted after the
date of adoption, and for the unvested portion of previously granted awards that
remain outstanding at the date of adoption.  Accordingly, financial
statements for the periods prior to 1 January 2006 have not been restated
to


reflect
the fair value method of expensing share-based compensation.





The
adoption of SFAS No. 123(R) does not change the way the Company accounts for
share-based payments to non-employees, with guidance provided by SFAS No. 123
(as originally issued) and EITF No. 96-18, “Accounting for Equity Instruments
That Are Issued to Other Than Employees for Acquiring, or in Conjunction with
Selling, Goods or Services”.





Basic
and diluted net loss per share





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





Income
taxes





Deferred
income taxes are reported for timing differences between items of income or
expense reported in the financial statements and those reported for income tax
purposes in accordance with SFAS No. 109, “Accounting for Income Taxes”,
which requires the use of the asset/liability method of accounting for income
taxes.  Deferred income taxes and tax benefits are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases, and for tax losses and credit
carry-forwards.  Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or
settled.  The Company provides for deferred taxes for the estimated
future tax effects attributable to temporary differences and carry-forwards when
realization is more likely than not.








F -
9
 Table of Contents





Amazon
Goldsands Ltd.


(formerly
Finmetal Mining Ltd.)


(An
Exploration Stage Company)


Notes to
Interim Consolidated Financial Statements


(Expressed
in U.S. Dollars)


(Unaudited
– Prepared by Management)


30
September 2009





Long-lived
assets impairment





Long-term
assets of the Company are reviewed for impairment whenever events or
circumstances indicate that the carrying amount of assets may not be
recoverable, pursuant to guidance established in SFAS No. 144, “Accounting for the Impairment or
Disposal of Long-Lived Assets”.





Management
considers assets to be impaired if the carrying value exceeds the future
projected cash flows from related operations (undiscounted and without interest
charges). If impairment is deemed to exist, the assets will be written down to
fair value. Fair value is generally determined using a discounted cash flow
analysis.





Asset
retirement obligations





The
Company has adopted SFAS No. 143, “Accounting for Assets Retirement
Obligations”, which requires that the fair value of a liability for an
asset retirement obligation be recognized in the period in which it is incurred.
SFAS No. 143 requires the Company to record a liability for the present value of
the estimated site restoration costs with corresponding increase to the carrying
amount of the related long-lived assets. The liability will be accreted and the
asset will be depreciated over the life of the related assets. Adjustments for
changes resulting from the passage of time and changes to either the timing or
amount of the original present value estimate underlying the obligation will be
made. As at 30 September 2009, the Company does not have any asset retirement
obligations.





Accounting
for derivative instruments and hedging activities





The
Financial Accounting Standards Board (“FASB”) issued SFAS No. 133, “Accounting for Derivative
Instruments and Hedging Activities”. SFAS No. 133 requires companies to
recognize all derivatives contracts as either assets or liabilities in the
balance sheet and to measure them at fair value. If certain conditions are met,
a derivative may be specifically designated as a hedge, the objective of which
is to match the timing of gain or loss recognition on the hedging derivative
with the recognition of (i) the changes in the fair value of the hedged asset or
liability that are attributable to the hedged risk or (ii) as a hedging
instrument, the gain or loss is recognized in income in the period of
change.





The
Company has not, to the date of these interim consolidated financial statements,
entered into derivative instruments to offset the impact of foreign currency
fluctuations.





Use
of estimates





The
preparation of financial statements in conformity with U.S. GAAP requires
management to make estimates and assumptions that affect the reported amount of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amount of revenues and
expenses during the period. Actual results may differ from those
estimates.








F -
10
 Table of Contents





Amazon
Goldsands Ltd.


(formerly
Finmetal Mining Ltd.)


(An
Exploration Stage Company)


Notes to
Interim Consolidated Financial Statements


(Expressed
in U.S. Dollars)


(Unaudited
– Prepared by Management)


30
September 2009





Financial
instruments





The
carrying value of cash and cash equivalents and accounts payable and accrued
liabilities approximates their fair value because of the short maturity of these
instruments.  The Company’s operations are in Canada and virtually all
of its assets and liabilities are giving rise to significant exposure to market
risks from changes in foreign currency rates.  The Company’s financial
risk is the risk that arises from fluctuations in foreign exchange rates and the
degree of volatility of these rates.  Currently, the Company does not
use derivative instruments to reduce its exposure to foreign currency
risk.





Comparative
figures





Certain
comparative figures have been adjusted to conform to the current period’s
presentation.





International
Financial Reporting Standards





In
November 2008, the Securities and Exchange Commission (“SEC”) issued for comment
a proposed roadmap regarding potential use of financial statements prepared in
accordance with International Financial Reporting Standards (“IFRS”) as issued
by the International Accounting Standards Board.  Under the proposed
roadmap, the Company would be required to prepare financial statements in
accordance with IFRS in fiscal year 2014, including comparative information also
prepared under IFRS for fiscal 2013 and 2012.  The Company is
currently assessing the potential impact of IFRS on its consolidated financial
statements and will continue to follow the proposed roadmap for future
developments.





Changes
in accounting policies




In June
2009, the Financial Accounting Standards Board (“FASB”) issued Statement of
Financial Accounting Standards No. 168, “The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principle – a
replacement of FASB Statement No. 162” (the “Codification”or
“ASC”).  The Codification reorganized existing U.S. accounting and
reporting standards issued by the FASB and other related private sector standard
setter into a single source of authoritative accounting principles arranged by
topic.  The Codification supersedes all existing U.S. accounting
standards; all other accounting literature not included in the Codification
(other than Securities and Exchange Commission guidance for publicly-traded
companies) is considered non-authoritative.  The Codification was
effective on a prospective basis for interim and annual reporting periods ending
after 15 September 2009.  The adoption of the Codification changed the
Company’s references to U.S. GAAP accounting standards but did not impact the
Company’s results of operations, financial position or liquidity.
 
 In May
2009, the FASB issued new guidance for accounting for subsequent
events.  The new guidance, which is now part of ASC 855, “Subsequent Events” is
intended to establish general standards of accounting for and disclosure of
events that occur after the balance sheet date, but before financial statements
are issued or are available to be issued.  It requires the disclosure
of the date through which an entity has evaluated subsequent events and the
basis for that date.  This disclosure should alert all users of
financial statements that an entity has not evaluated subsequent events after
that date in the set of financial statements being presented.  The new
guidance was effective on a prospective basis for interim or annual reporting
periods ending after 15 June 2009.  The adoption of this guidance did
not have a material impact on the Company’s consolidated financial
statements.




F -
11
 Table of Contents





Amazon
Goldsands Ltd.


(formerly
Finmetal Mining Ltd.)


(An
Exploration Stage Company)


Notes to
Interim Consolidated Financial Statements


(Expressed
in U.S. Dollars)


(Unaudited
– Prepared by Management)


30
September 2009





In May
2008, the FASB issued new guidance for accounting for convertible debt
instruments that may be settled in cash.  The new guidance, which is
now part of ASC 470-20, “Debt
with Conversion and Other Options” requires the liability and equity
components to be separately accounted for in a manner that will reflect the
entity’s nonconvertible debt borrowing rate.  The Company will
allocate a portion of the proceeds received from the issuance of convertible
notes between a liability and equity component by determining the fair value of
the liability component using the Company’s nonconvertible debt borrowing
rate.  The difference between the proceeds of the notes and the fair
value of the liability component will be recorded as a discount on the debt with
a corresponding offset to paid-in capital.  The resulting discount
will be accreted by recording additional non-cash interest expense over the
expected life of the convertible notes using the effective interest rate
method.  The new guidance was to be applied retrospectively to all
periods presented upon those fiscal years.  The adoption of this
guidance did not have a material impact on the Company’s consolidated financial
statements.
 
 In April
2008, the FASB issued new guidance for determining the useful life of an
intangible assets.  The new guidance, which is now part of ASC 350,
“Intangibles – Goodwill and
Other”.  In determining the useful life of intangible assets,
ASC 350 removes the requirement to consider whether an intangible asset can be
renewed without substantial cost of material modifications to the existing terms
and conditions and, instead, requires an entity to consider its own historical
experience in renewing similar arrangements.  ASC 350 also requires
expanded disclosure related to the determination of intangible asset useful
lives.  The new guidance was effective for financial statements issued
for fiscal years beginning after 15 December 2008.  The adoption of
this guidance did not have a material impact on the company’s consolidated
financial statements.
 
 In March
2008, the FASB issued new guidance on the disclosure of derivative instruments
and hedging activities.  The new guidance, which is now part of ASC
815, “Derivatives and Hedging
Activities” requires qualitative disclosures about objectives and
strategies for using derivatives, quantitative disclosures about fair value
amounts of, and gains and losses on, derivative instruments, and disclosures
about credit-risk-related contingent features in derivative
agreements.  The new guidance was effective prospectively for
financial statements issued for fiscal years beginning after 15 November 2008,
with early application encouraged.  The adoption of this guidance did
not have a significant impact on the Company’s consolidated financial
statements.




F -
12
 Table of Contents





Amazon
Goldsands Ltd.


(formerly
Finmetal Mining Ltd.)


(An
Exploration Stage Company)


Notes to
Interim Consolidated Financial Statements


(Expressed
in U.S. Dollars)


(Unaudited
– Prepared by Management)


30
September 2009





In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements – an amendment of Accounting Research Bulletin
No. 51”.  SFAS No. 160 establishes accounting and reporting
standards for ownership interests in subsidiaries held by parties other than the
parent, the amount of consolidated net income attributable and to the
noncontrolling interest, changes in a parent’s ownership interest, and the
valuation of retained noncontrolling equity investments when a subsidiary is
deconsolidated.  SFAS No. 160 also establishes disclosure requirements
that clearly identify and distinguish between the interests of the parent and
the interests of the noncontrolling owners.  SFAS No. 160 is effective
for fiscal years beginning after 15 December 2008.  The adoption of
SFAS No. 160 did not have a material impact on the Company’s interim
consolidated financial statements.





In
December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations”. SFAS
No. 141(R) establishes principles and requirements for how an acquirer
recognizes and measures in its financial statements the identifiable assets
acquired, the liabilities assumed, any noncontrolling interest in the acquiree
and the goodwill acquired. SFAS No. 141(R) also establishes disclosure
requirements to enable the evaluation of the nature and financial effects of the
business combination. SFAS No. 141(R) is effective for fiscal years beginning
after 15 December 2008.  The adoption of SFAS No. 141(R) did not have
a material impact on the Company’s interim consolidated financial
statements.





Recent
accounting pronouncements




In June
2009, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No.
167, “Amendments to FASB
Interpretation No. 46(R)”.  SFAS No. 167, which amends ASC
810-10, “Consolidation”, prescribes a
qualitative model for identifying whether a company has a controlling financial
interest in a variable interest entity (“VIE”) and eliminates the quantitative
model.  The new model identifies two primary characteristics of a
controlling financial interest: (1) provides a company with the power to direct
significant activities of the VIE, and (2) obligates a company to absorb losses
of and/or provides rights to receive benefits from the VIE.  SFAS 167
requires a company to reassess on an ongoing basis whether it holds a
controlling financial interest in a VIE.  A company that holds a
controlling financial interest is deemed to be the primary beneficiary of the
VIE and is required to consolidate the VIE.  SFAS No. 167, which is
referenced in ASC 105-10-65, has not yet been adopted into the Codification and
remains authoritative.  SFAS No. 167 is effective 1 January
2010.  The Company does not expect that the adoption of SFAS No. 167
will have a material impact on its consolidated financial
statements.











F -
13
 Table of Contents





Amazon
Goldsands Ltd.


(formerly
Finmetal Mining Ltd.)


(An
Exploration Stage Company)


Notes to
Interim Consolidated Financial Statements


(Expressed
in U.S. Dollars)


(Unaudited
– Prepared by Management)


30
September 2009





In June
2009, the FASB issued SFAS No. 166, “Accounting for Transfer of Financial
Assets – an amendment of FASB Statement”.  SFAS No. 166 removes
the concept of a qualifying special-purpose entity from ASC 860-10, “Transfers and Servicing”, and
removes the exception from applying ASC 810-10, “Consolidation”. This
statements also clarifies the requirements for isolation and limitations on
portions of financial assets that are eligible for sale
acconting.  SFAS No. 166, which is referenced in ASC 105-10-65, has
not yet been adopted into the Codification and remains
authoritative.  This statement is effective 1 January
2010.  The Company does not expect that the adoption of SFAS No. 166
will have a material impact on its consolidated financial
statements.
 
 In August
2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-05, “Fair Value Measurement and
Disclosure (Topic 820) – Measuring Liabilities at Fair Value”, which
provides valuation techniques to measure fair value in circumstances in which a
quoted price in an active market for the identical liability is not
available.  The guidance provided in this update is effective 1
January 2010.  The Company does not expect that the adoption of this
guidance will have a material impact on its consolidated financial
statements.
 not
expect that the adoption of SFAS No. 167 will have a material impact on its
consolidated financial statements.
 
 3.
              Accounts
      Payable and Accrued Liabilities
 
 Included
in accounts payable and accrued liabilities as at 30 September 2009 are amounts
due to a director and officer of the Company of $58,435 (31 December 2008 –
$Nil).  The amount is non-interest bearing, unsecured and due on
demand.
 
 Included
in accounts payable and accrued liabilities as at 30 September 2009 is an
advance received from a former  officer of the Company of $28,084 (31
December 2008 – $28,084).  The amount is non-interest bearing,
unsecured and has no fixed terms of repayment.


4.
            Mineral
      Property Interests





31
      December 2008
              (Audited)
            
            
            Acquisition
              costs
            
            
            Write-off
      to operations
            
            
            30
      September 2009$
            
            
            
            $
            
            
            
            $
            
            
            
            $Temasek
      Propeties
            
            
            875,000
            
            
            
            635,000
            
            
            
            -
            
            
            
            1,510,000Apofas
      Properties
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Magnus
      Properties
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -875,000
            
            
            
            635,000
            
            
            
            -
            
            
            
            1,510,000





The
Temasek Properties





Effective
18 September 2008 (the “Effective Date”), the Company entered into a Mineral
Right Option Agreement with Temasek Investments Inc. (“Temasek”), a company
incorporated under the laws of Panama  (the “Temasek
Agreement”).








F -
14
 Table of Contents





Amazon
Goldsands Ltd.


(formerly
Finmetal Mining Ltd.)


(An
Exploration Stage Company)


Notes to
Interim Consolidated Financial Statements


(Expressed
in U.S. Dollars)


(Unaudited
– Prepared by Management)


30
September 2009





Pursuant
to the Temasek Agreement, the Company acquired four separate options from
Temasek, each providing for the acquisition of a 25% interest in certain mineral
rights in Peru potentially resulting in the acquisition of 100% of the mineral
rights (the “Mineral Rights”).  The Mineral Rights are owned by Rio
Santiago Minerales S.A.C. (“Rio Santiago”).  Beardmore Holdings, Inc.
(“Beardmore”), a wholly-owned subsidiary of Temasek, owns 999 shares of the
1,000 shares of Rio Santiago that are issued and outstanding.  Temasek
owns the single remaining share of Rio Santiago.  The acquisition of
each 25% interest in the Mineral Rights will occur through the transfer to the
Company of 25% of the outstanding shares of Beardmore.





The
Company may exercise the initial 25% option to acquire a 25% interest in the
Mineral Rights after fulfilling the following conditions:





·
            Pay
      $250,000 (paid) to Temasek on the date the Agreement is
      executed;


·
            Issue
      2,500,000 common shares of the Company to Temasek within five business
      days from the Effective Date (issued) (Note 7);
  and


·
            Pay
      an additional $250,000 (paid) to Temasek within ninety days of the
      Effective Date.




The
Company entered into an amending agreement dated 12 May 2009 with Temasek
related to the Temasek Properties (the “Amending Temasek
Agreement”).  Under the Amending Temasek Agreement, the Company may
now exercise the second 25% option resulting in the acquision of a 50% interest
in the Mineral Rights by fulfilling the following conditions as set out in the
Amending Temasek Agreement within six months from the Effective Date or as soon
as practicable thereafter (Note 13):





·
            Exercise
      and complete the initial 25% option
(completed);


·
            Issue
      3,500,000 additional common shares of the Company to Temasek (issued)
      (Note 7); and


·
            Pay
      an additional $750,000 to Temasek by 18 September 2009 (not
      paid).


·
            The
      Company must also pay interest on any unpaid amount of the option payment
      of $750,000 at 5% per annum accruing from 12 May 2009 to the date that
      payment is made (Note 11).




The
Company may exercise the third 25% option resulting in the acquisition of a 75%
interest in the Mineral Rights after fulfilling the following conditions by 18
September 2009 (Note 13):





·
            Exercise
      and complete the initial and second 25% options (not
      completed);


·
            Pay
      an additional $1,250,000 to Temasek (not paid);
  and


·
            Issue
      4,500,000 additional common shares of the Company to Temasek (not
      issued).





The
Company may exercise the fourth and final 25% option resulting in the
acquisition of a 100% interest in the Mineral Rights after fulfilling the
following conditions by 18 March 2010:





·
            Exercise
      and complete the initial, second and third 25%
  options;


·
            Pay
      an additional $2,500,000 to Temasek;
and


·
            Issue
      5,500,000 additional common shares of the Company to
    Temasek.








F -
15
 Table of Contents





Amazon
Goldsands Ltd.


(formerly
Finmetal Mining Ltd.)


(An
Exploration Stage Company)


Notes to
Interim Consolidated Financial Statements


(Expressed
in U.S. Dollars)


(Unaudited
– Prepared by Management)


30
September 2009





Upon the
acquisition of a 100% interest in the Mineral Rights, Temasek will hold its
single share of Rio Santiago in trust for the Company’s sole benefit and hold
the share strictly in accordance with the Company’s
instructions.  Upon the Company’s acquisition of a 100% interest in
the Mineral Rights, Temasek is entitled to an annual 2.5% net returns
royalty.  However, if the Company pays Temasek $2,000,000 within
ninety days of the acquisition of a 100% interest in the Mineral Rights, Temasek
will only be entitled to an annual 1% net returns royalty.





If the
Company exercises the second 25% option, resulting in the Company’s acquisition
of a 50% interest in the Mineral Rights, and fails to acquire a 100% interest in
the Mineral Rights, the Company and Temasek will form a joint venture in which
the Company will be wholly responsible for developing a feasible mining project
and all necessary facilities and Temasek shall retain a carried free interest in
the mining rights.  If the Company does not develop a feasible mining
project within three years from the Effective Date, the Company will be
responsible to pay Temasek an advance minimum mining royalty of $500,000 per
year, which will be deducted from Temasek's net return royalty.





Temasek
became a significant shareholder of the Company through the issuance of the
2,500,000 common shares on exercise of the option to acquire the initial 25%
interest in the Mineral Rights and an additional 3,500,000 common shares on
exercise of the partial payment toward the exercise of the option to acquire the
second 25% interest.





The
Apofas Properties





Pursuant
to an agreement dated 22 January 2007, the Company had the option to acquire a
100% interest in five mineral concessions, known as the Poronmannikko and
Sarkiahonkangas projects, located in Finland (the “Apofas Agreement”). Under the
terms of the Apofas Agreement, the Company had the right to acquire a 100%
interest in two projects by making cash payments totalling
€1,000,000:





·  Initial
payment of €150,000 due on or before 1 April 2007 (paid);


·  Second
payment of €150,000 due on or before 1 April 2008 (extended by agreement to 30
April 2008);


·  Third
payment of €300,000 due on or before 1 April 2009; and


·  Final
payment of €400,000 due on or before 1 April 2010.





Concurrent
with ratification of the Apofas Agreement on 4 May 2007, the Company issued
20,000 common shares as a finder’s fee. The mineral concessions were subject to
a 2% gross proceeds royalty.  The Apofas Agreement was signed with a
company controlled by a former president of the Company. During the year ended
31 December 2008, the Company determined not to proceed with the option to
acquire these projects.








F -
16
 Table of Contents





Amazon
Goldsands Ltd.


(formerly
Finmetal Mining Ltd.)


(An
Exploration Stage Company)


Notes to
Interim Consolidated Financial Statements


(Expressed
in U.S. Dollars)


(Unaudited
– Prepared by Management)


30
September 2009





The
Magnus Properties





Pursuant
to an agreement dated 6 October 2006 with Magnus Minerals Oy (“Magnus”), a
company in which the Company’s former president has an ownership interest, the
Company had the option to acquire a 100% interest in four different mineral
properties (Petrovaara, Poskijarvi-Kokka, Rautavaara and Tainiovaara) by paying
option payments for a total of €1,000,000 in cash for each property over a
period of four years (the “Magnus Agreement”).  The option payments
were to be paid annually at the beginning of each year as follows: first year of
€100,000 (paid); second year of €100,000; third year of €300,000; and fourth
year of €500,000 per property for a total of €4,000,000 if all 4 properties are
acquired fully; and by making a work commitment of €1,000,000 on each property,
of which 25% must be conducted annually.  All properties were subject
to a 2% net smelter return.





The first
year payments for all 4 properties totaling $523,400 (€400,000) were paid during
the year ended 31 December
2006.  The due date of the second option payment of €100,000 with
respect to the Rautavaara Property was extended pursuant to an amendment
agreement to 30 April 2008 in consideration of a €10,000 extension payment
(paid) and payment of applicable government and landowner payments according to
Finnish law (paid). The due date for the first year work commitment of €250,000
with respect to the Rautavaara Property was extended to 31 August 2008 and the
first year work commitment of €250,000 with respect to the
Tainiovarra.





The
Property was extended to 31 May 2008.  During the year ended 31
December 2008, the Company determined not to proceed with the option to acquire
this Property.





On 11
June 2007, the Company entered into an Option Agreement with Magnus (the “Option
Agreement”), pursuant to which the Company entered into a joint venture to
explore the “Enonkoski area” in Finland primarily for nickel-copper-platinum
group elements.





Under the
terms of the Option Agreement, the Company had the right to acquire ownership
from Magnus of up to a 51% interest in certain claim reservations, and pending
claims comprising the Property as more particularly set forth in the Option
Agreement.





It was
intended that the Company be the operator of the joint venture and can earn a
51% interest in the Property by fulfilling $10,000,000 in work commitments and
€3,000,000 in option payments.





In order
to exercise the option, the Company was required to spend $10,000,000 in work
commitments with minimum expenditures as follows: $1,800,000 by 30 November
2008; $2,200,000 by 30 November 2009; $2,800,000 by 30 November 2010; and
$3,200,000 by 30 November 2011.





In
addition, the Company was required to make a total of €3,000,000 in option
payments to Magnus over four years as follows: €30,000 by 22 May 2007 (paid);
€270,000 upon execution of the Option Agreement (paid); €600,000 by 30 November
2008; €900,000 by 30 November 2009; and €1,200,000 by 30 November
2010.





During
the year ended 31 December 2008, the Company decided not to exercise the option
with respect to this Property.





F -
17
 Table of Contents





Amazon
Goldsands Ltd.


(formerly
Finmetal Mining Ltd.)


(An
Exploration Stage Company)


Notes to
Interim Consolidated Financial Statements


(Expressed
in U.S. Dollars)


(Unaudited
– Prepared by Management)


30
September 2009





5.
            Property
      and Equipment





Net
      Book ValueCost
            
            
            Accumulated
              amortization
            
            
            30
      September 2009
            
            
            31
      December 2008
              (Audited)$
            
            
            
            $
            
            
            
            $
            
            
            
            $Furniture,
      computer and office equipment
            
            
            38,505
            
            
            
            19,545
            
            
            
            18,960
            
            
            
            24,464Computer
      software
            
            
            8,928
            
            
            
            8,553
            
            
            
            375
            
            
            
            1,50047,433
            
            
            
            28,098
            
            
            
            19,335
            
            
            
            25,964





During
the nine month period ended 30 September 2009, total additions to property and
equipment were $Nil  (30 September 2008 - $7,040).





6.
            Website
      Development Cost





Net
      Book ValueCost
            
            
            Accumulated
              amortization
            
            
            30
      September 2009
            
            
            31
      December 2008
              (Audited)$
            
            
            
            $
            
            
            
            $
            
            
            
            $Website
      development
            
            
            40,000
            
            
            
            25,833
            
            
            
            14,167
            
            
            
            24,167





During
the nine month period ended 30 September 2009, total additions to website
development were $Nil (30 September 2008 - $30,000).





7.
            Common
      Stock





Authorized





The total
authorized capital consists of





·
            200,000,000
      of common shares with par value of
$0.00001


·
            200,000,000
      of blank check preferred shares with par value of
  $0.001





Issued
and outstanding





As at 30
September 2009, the total issued and outstanding capital stock is 13,103,585
common shares with a par value of $0.00001 per share.




F -
18
 Table of Contents





Amazon
Goldsands Ltd.


(formerly
Finmetal Mining Ltd.)


(An
Exploration Stage Company)


Notes to
Interim Consolidated Financial Statements


(Expressed
in U.S. Dollars)


(Unaudited
– Prepared by Management)


30
September 2009





On 23
June 2009, the Company issued 3,500,000 common shares valued at a $385,000
($0.11 per common share) pursuant to the Temasek Agreement (Note
4).  The fair value is equal to the market price of the Company’s
stock on the date of the transaction.





On 8 May
2009, the Company issued 140,000 common shares for total proceeds of $18,900
($0.15 per common share), net of share issue costs of $2,100.





On 31
March 2009, the Company issued 5,272,333 common shares for total proceeds of
$711,765 ($0.15 per common share), net of share issue costs of
$79,085.





During
the year ended 31 December 2008, a total of 167,500 stock options
expired.





During
the year ended 31 December 2008, the Company issued 2,500,000 common shares
valued at $625,000 ($0.25 per common share) pursuant to the Temasek Agreement
(Note 4).  The fair value is equal to the market price of the
Company’s stock on the date of the transaction.





During
the year ended 31 December 2008, the Company completed a one new for twenty old
share reverse stock split.  The Company’s share transactions,
including the weighted average number of common shares outstanding calculation
for purposes of determining earnings per share, have been restated retroactively
to reflect all of the


above
corporate capital transactions in these interim consolidated financial
statements.





During
the year ended 31 December 2007, the Company issued 121,800 units at a price of
$25 per share for proceeds of $2,832,550, net of share issue costs of
$212,450.  Each unit consists of one share of common stock with par
value $0.00001 and one-half share purchase warrant. Each full share purchase
warrant entitles the holder to purchase one common share at a price of $35 up to
17 April 2008.  As at 31 December 2007, all of the related share
purchase warrants in this series remain outstanding.





During
the year ended 31 December 2007, the Company granted 37,500 restricted shares at
a deemed price of $29 per share to officers and directors of the
Company.  The deemed price is equal to the market price of the
Company’s stock on the date of the transaction.  During the year ended
31 December 2008, 30,000 restricted shares were cancelled and returned to
treasury.  Fifty percent of the remaining 7,500 shares vested during
the year ended 31 December 2008 and the balance have been deemed to have
vested.  The related stock-based compensation of $705,365 has been
recorded in the consolidated statement of operations during the year ended 31
December 2008.





During
the year ended 31 December 2007, the Company granted 8,750 restricted shares at
a deemed price of $3.60 per share to consultants of the Company. The deemed
price is equal to the market price of the Company’s stock as of 31 December
2007.  During the year ended 31 December 2008, 1,250 restricted shares
were cancelled and returned to treasury.  Fifty percent of the
remaining shares vested during the year ended 31 December 2008 and the balance
have been deemed to have vested.  The related stock-based compensation
of $20,431 has been recorded in the consolidated statement of operations during
the year ended 31 December 2008.





F -
19
 Table of Contents





Amazon
Goldsands Ltd.


(formerly
Finmetal Mining Ltd.)


(An
Exploration Stage Company)


Notes to
Interim Consolidated Financial Statements


(Expressed
in U.S. Dollars)


(Unaudited
– Prepared by Management)


30
September 2009





Stock
options





As at 30 September 2009, there are Nil
incentive stock options outstanding (31 December 2008 – Nil).





During
the year ended 31 December 2007, the Company granted 167,500 incentive stock
options to officers, directors and consultants of the Company to purchase common
stock of the Company at a price of $25 per common share on or before 17 April
2017 and vesting as to one-quarter of the common shares under the stock option
on 17 April 2007 and one-quarter every six months thereafter in accordance with
the terms and conditions of the Company’s Stock Incentive Plan (the
“Plan”).  As at 31 December 2007, all of the related stock options in
this series remain outstanding.  During the year ended 31 December
2008, all of the related stock options in this series were
forfeited.





During
the year ended 31 December 2007, the Company adopted the Plan, which provides
for the grant of incentive stock options, non-qualified stock options, stock
appreciation rights, restricted stock, performance shares and performance units,
and stock awards to officers, directors or employees of, as well as advisers and
consultants to, the Company.





All stock
options and rights are to vest over a period determined by the Board of
Directors and expire not more than ten years from the date
granted.  Pursuant to the Plan, the maximum aggregate number of shares
that may be issued for awards is 500,000 and the maximum aggregate number of
shares that may be issued for incentive stock options is 500,000.





The
following is a summary of option activities during the nine month periods ended
30 September 2009 and 2008:





Number
      of options
            
            
            Weighted
      average exercise price$Outstanding
      and exercisable at 1 January 2009
            
            
            -
            
            
            
            -Granted
            
            
            -
            
            
            
            -Exercised
            
            
            -
            
            
            
            -Expired
            
            
            -
            
            
            
            -Outstanding
      and exercisable at 30 September 2009
            
            
            -
            
            
            
            -Weighted
      average fair value of options granted during the period
            
            
            
            
            
            
            -








F -
20
 Table of Contents





Amazon Goldsands
Ltd.


(formerly
Finmetal Mining Ltd.)


(An
Exploration Stage Company)


Notes to
Interim Consolidated Financial Statements


(Expressed
in U.S. Dollars)


(Unaudited
– Prepared by Management)


30
September 2009





Number
      of options
            
            
            Weighted
      average exercise price$Outstanding
      and exercisable at 1 January 2008
            
            
            167,500
            
            
            
            24.47Granted
            
            
            -
            
            
            
            -Exercised
            
            
            -
            
            
            
            -Expired
            
            
            (167,500
            )
            
            
            (24.47
            )Outstanding
      and exercisable at 30 September 2008
            
            
            -
            
            
            
            -Weighted
      average fair value of options granted during the period
            
            
            
            
            
            
            -





Warrants





As at 30
September 2009, there are Nil warrants outstanding (31 December 2008 –
Nil).





During
the year ended 31 December 2007, as part of the 121,800 unit private placement,
the Company issued 60,900 share purchase warrants.  Each share
purchase warrant entitles the holder to purchase one common share at a price of
$35 up to 17 April 2008.  As at 31 December 2007, all of the related
share purchase warrants in this series remain outstanding.  During the
nine months ended 30 September 2008, all of the related share purchase warrants
in this series expired.





During
the year ended 31 December 2007, the Company issued 8,358 agent compensation
warrants for services rendered by a private placement agent.  Each
warrant entitles the holder to purchase one common share at a price of $35 up to
17 April 2008.  As at 31 December 2007, all of the related share
purchase warrants in this series remain outstanding.  During the nine
months ended 30 September 2008, all of the related share purchase warrants in
this series expired.














F -
21
 Table of Contents





Amazon
Goldsands Ltd.


(formerly
Finmetal Mining Ltd.)


(An
Exploration Stage Company)


Notes to
Interim Consolidated Financial Statements


(Expressed
in U.S. Dollars)


(Unaudited
– Prepared by Management)


30
September 2009





The
following is a summary of warrant activities during the nine month periods ended
30 September 2009 and 2008:





Number
      of warrants
            
            
            Weighted
      average exercise price$Outstanding
      and exercisable at 1 January 2009
            
            
            -
            
            
            
            -Granted
            
            
            -
            
            
            
            -Exercised
            
            
            -
            
            
            
            -Expired
            
            
            -
            
            
            
            -Outstanding
      and exercisable at 30 September 2009
            
            
            -
            
            
            
            -





Outstanding
      and exercisable at 1 January 2008
            
            
            69,258
            
            
            
            35.00Granted
            
            
            -
            
            
            
            -Exercised
            
            
            -
            
            
            
            -Expired
            
            
            (69,258
            )
            
            
            (35.00
            )Outstanding
      and exercisable at 30 September 2008
            
            
            -
            
            
            
            -





8.
            Related
      Party Transactions





During
the nine month period ended 30 September 2009, the Company paid or accrued
$58,435 (30 September 2008 – $236,350) for consulting and management fees to
officers and directors of the Company.





During
the nine month period ended 30 September 2009, the Company paid or accrued
$6,169 (2008 – $25,486) for consulting fees included in mineral property
exploration expenditures, to a company controlled by an officer of the
Company.








F -
22
 Table of Contents





Amazon
Goldsands Ltd.


(formerly
Finmetal Mining Ltd.)


(An
Exploration Stage Company)


Notes to
Interim Consolidated Financial Statements


(Expressed
in U.S. Dollars)


(Unaudited
– Prepared by Management)


30
September 2009





9.
            Commitments





a.
            During
      the year ended 31 December 2008, the Company entered into a one-year
      contract for consulting services, commencing 1 December 2008, with a party
      to provide consulting services at 10% on all costs incurred related to
      providing exploration management and mineral property development services
      for the Company’s mineral project in Peru, as well as a one time fee of
      $125,000 due within sixty days of execution of the agreement
      (paid).





b.
            During
      the year ended 31 December 2008, the Company entered into a one-year
      contract for consulting services, commencing 1 November 2008, with a firm
      to provide website maintenance services for a monthly payment of
      $2,500.





c.
            During
      the year ended 31 December 2008, the Company entered into a one-year
      contract for consulting services, commencing 1 October 2008, with a party
      to provide investor relation services for a monthly payment of
      $10,000.  This contract was terminated effective 31 May
      2009.





d.
            During
      the year ended 31 December 2008, the Company entered into a one-year
      contract for consulting services, commencing 1 June 2008, with a party to
      provide investor relations services for a monthly payment of $10,000. This
      contract was terminated effective 30 June
2009.





e.
            During
      the year ended 31 December 2008, the Company entered into a two-year
      contract for consulting services, commencing 1 April 2008, with a party to
      provide management services in Europe for a monthly payment of
      $5,000.





10.
            Geographic
      Areas





Prior to
the operations of acquisition and exploration of mineral properties, the
Company’s areas of operations were primarily in Canada.  Since the
commencement of acquisition and exploration of mineral properties, during the
year ended 31 December 2006, the Company’s principal mineral property activities
have been in Finland.  During the year ended 31 December 2008, the
Company re-focused its acquisition and exploration of mineral properties
operations to Peru. As at 30 September 2009, the Company does not have any
material assets outside of North America.








F -
23
 Table of Contents





Amazon
Goldsands Ltd.


(formerly
Finmetal Mining Ltd.)


(An
Exploration Stage Company)


Notes to
Interim Consolidated Financial Statements


(Expressed
in U.S. Dollars)


(Unaudited
– Prepared by Management)


30
September 2009





11.
            Supplemental Disclosures with
      Respect to Cash Flows




For
      the
                period
      from
                the
      date of inception on
                5
      September 1997 to 30 September 2009
              
              
              For
                the
      three
                month
                period
      ended
                30
                September
                2009
              
              
              For
                the
      three
                month
                period
      ended
                30
                September
                2009
              
              
              For
                the
      nine
                month
                period
      ended
                30
                September
                2009
              
              
              For
                the
      nine
                month
      period ended
                30
                September
                2008$
              
              
              
              $
              
              
              
              $
              
              
              
              $
              
              
              
              $Supplemental
      cash flows informationInterest
      expense
              
              
              3,139
              
              
              
              1,233
              
              
              
              -
              
              
              
              1,233
              
              
              
              -Foreign
      exchange (gain) loss
              
              
              17,559
              
              
              
              1,250
              
              
              
              1,299
              
              
              
              1,213
              
              
              
              (7,804
              )Supplemental
      disclosure of non-cash investing and financingCommon
      shares issued for oil and gas property ($25 per share)
              
              
              10,000
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Common
      shares issued for services ($6 per share)
              
              
              50,000
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Donated
      consulting services
              
              
              16,200
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Common
      shares cancelled and returned
              
              
              (2
              )
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Common
      shares issued for equity acquisition of Finmetal ($25.60 per
      share)
              
              
              1,280,000
              
              
              
              .-
              
              
              
              -
              
              
              
              -
              
              
              
              -Restricted
      shares issued ($24.80 per share)
              
              
              2,418,000
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Common
      shares issued for finder’s fee ($10 per unit)
              
              
              254,500
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Warrants
      issued
              
              
              100,421
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Common
      shares issued for finder’s fee for mineral property interests ($26.80 per
      share)
              
              
              536,000
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Common
      shares issued for acquisition of mineral rights (deemed at $0.25 per
      share)
              
              
              625,000
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Common
      shares issued for acquisition of mineral rights (deemed at $0.11 per
      share)
              
              
              385,000
              
              
              
              -
              
              
              
              -
              
              
              
              385,000
              
              
              
              -





F -
24
 Table of Contents





Amazon
Goldsands Ltd.


(formerly
Finmetal Mining Ltd.)


(An
Exploration Stage Company)


Notes to
Interim Consolidated Financial Statements


(Expressed
in U.S. Dollars)


(Unaudited
– Prepared by Management)


30
September 2009





During
the nine month period ended 30 September 2009, the Company accrued interest
expense of $1,233 related to unpaid amount of the Temasek option payment (Note
4).





12.
            Income
      Taxes





The
Company has losses carried forward for income tax purposes to 30 September
2009.  There are no current or deferred tax expenses for the period
ended 30 September 2009 due to the Company’s loss position.  The
Company has fully reserved for any benefits of these losses.  The
deferred tax consequences of temporary differences in reporting items for
financial statement and income tax purposes are recognized, as appropriate.
Realization of the future tax benefits related to the deferred tax assets is
dependent on many factors, including the Company’s ability to generate taxable
income within the net operating loss carry-forward period.  Management
has considered these factors in reaching its conclusion as to the valuation
allowance for financial reporting purposes.





The
provision for refundable federal income tax consists of the
following:





For
      the nine month period ended 30 September 2009
            
            
            For
      the nine month period ended 30 September 2008$
            
            
            
            $Refundable
      federal tax asset (liability) attributable to:Current
      operations
            
            
            238,618
            
            
            
            (474,106
            )Contributions
      to capital by related parties
            
            
            -Less:
      Change in valuation allowance
            
            
            (238,618
            )
            
            
            474,106Net
      refundable amount
            
            
            -
            
            
            
            -








F -
25
 Table of Contents





Amazon
Goldsands Ltd.


(formerly
Finmetal Mining Ltd.)


(An
Exploration Stage Company)


Notes to
Interim Consolidated Financial Statements


(Expressed
in U.S. Dollars)


(Unaudited
– Prepared by Management)


30
September 2009





The
composition of the Company’s deferred tax assets as at 30 September 2009 and 31
December 2008 are as follows:





As
      at 30
              September
      2009
            
            
            As
      at 31 December 2008 (Audited)$
            
            
            
            $Net
      income tax operating loss carryforward
            
            
            5,169,247
            
            
            
            4,467,428Statutory
      federal income tax rate
            
            
            34
            %
            
            
            26%
      - 34
            %Deferred
      tax asset
            
            
            1,757,544
            
            
            
            2,506,592Less:
      Valuation allowance
            
            
            (1,757,544
            )
            
            
            (2,506,592
            )Net
      deferred tax asset
            
            
            -
            
            
            
            -





The
potential income tax benefit of these losses has been offset by a full valuation
allowance.





As at 30
September 2009, the Company has an unused net operating loss carry-forward
balance of approximately $5,169,247 that is available to offset future taxable
income.  This unused net operating loss carry-forward balance expires
between 2024 and 2029.





13.
            Contingency





The
Company is in default of certain terms related to its mineral property
agreements and is in the process of renegotiating the terms of the agreements
(Note 4).





14.
            Subsequent
      Events





There are
no subsequent events from the date of the period ended 30 September 2009 to the
date the interim consolidated financial statements were available to be issued
on 9 November 2009.


F -
26
 Table of Contents
  Item 2. Management’s
Discussion and Analysis of Financial Condition and Results of
Operations.
 
 This
Quarterly Report on Form 10-Q contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. The words “believe,” “expect,” “anticipate,”
“intend,” “estimate,” “may,” “should,” “could,” “will,” “plan,” “future,”
“continue,” and other expressions that are predictions of or indicate future
events and trends and that do not relate to historical matters identify
forward-looking statements. These forward-looking statements are based largely
on our expectations or forecasts of future events, can be affected by inaccurate
assumptions, and are subject to various business risks and known and unknown
uncertainties, a number of which are beyond our control. Therefore, actual
results could differ materially from the forward-looking statements contained in
this document, and readers are cautioned not to place undue reliance on such
forward-looking statements. We undertake no obligation to publicly update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise. A wide variety of factors could cause or contribute
to such differences and could adversely impact revenues, profitability, cash
flows and capital needs. There can be no assurance that the forward-looking
statements contained in this document will, in fact, transpire or prove to be
accurate.
 
 Factors
that could cause or contribute to our actual results differing materially from
those discussed herein or for our stock price to be adversely affected include,
but are not limited to: (i) our short operating history; (ii) our ability to
manage business expansion; (iii) risks and uncertainties relating to the
interpretation of drill results, the geology, grade and continuity of mineral
deposits; (iv) results of initial feasibility, pre-feasibility and feasibility
studies, and the possibility that future exploration, development or mining
results will not be consistent with our expectations; (v) mining and development
risks, including risks related to accidents, equipment breakdowns, labor
disputes or other unanticipated difficulties with or interruptions in
production; (vi) the potential for delays in exploration or development
activities or the completion of feasibility studies; (vii) risks related to the
inherent uncertainty of production and cost estimates and the potential for
unexpected costs and expenses; (viii) risks related to commodity price
fluctuations; (ix) the uncertainty of profitability based upon our history of
losses; (x) risks related to failure to obtain adequate financing on a timely
basis and on acceptable terms for our planned exploration and development
projects; (xi) risks related to environmental regulation and liability; (xii)
risks that the amounts reserved or allocated for environmental compliance,
reclamation, post-closure control measures, monitoring and on-going maintenance
may not be sufficient to cover such costs; (xiii) risks related to tax
assessments; (xiv) political and regulatory risks associated with mining
development and exploration; (xv) other risks and uncertainties related to our
prospects, properties and business strategy; (xvi) potential that shareholders
may lose all or part of their investment if we are unable to compete in our
industry; (xvii) our dependence on key personnel; (xvii) sale of substantial
amounts of our common stock that may have a depressive effect on the market
price of the outstanding shares of our common stock; (xviii) possible issuance
of common stock subject to options and warrants that may dilute the interest of
shareholders; (xix) our ability to comply with Sarbanes-Oxley Act of 2002
Section 404; (xx) our nonpayment of dividends and lack of plans to pay dividends
in the future; (xxi) future sale of a substantial number of shares of our common
stock that could depress the trading price of our common stock, lower our value
and make it more difficult for us to raise capital; (xxii) our additional
securities available for issuance, which, if issued, could adversely affect the
rights of the holders of our common stock; (xxiii) our stock price which is
likely to be highly volatile because of several factors, including a relatively
limited public float; and (xxiv) indemnification of our officers and
directors.
 
 As used
in this Quarterly Report, the terms “we,” “us,” “our,” and “Amazon” mean Amazon
Goldsands Ltd. and our subsidiaries unless otherwise indicated.
 
  - 4
-
 Table of Contents
  Overview
 
 We were
incorporated in the state of Nevada under the name Gondwana Energy, Ltd. on
September 5, 1997, and previously operated under the name Finmetal Mining
Ltd.  We were previously focused on the acquisition and development of
our interests in the mineral rights on properties located in
Finland.
 
 In
September 2008, we reorganized our operations and our current focus is on the
acquisition and development of our interests in the mineral rights on properties
located in northeastern Peru.  Effective June 6, 2008, we merged with
our wholly-owned subsidiary, Amazon Goldsands Ltd., pursuant to Articles of
Merger that we filed with the Nevada Secretary of State.  We decided
to change our name to "Amazon Goldsands Ltd." to better reflect our current
focus on the acquisition and development of the mineral and mining rights
underlying properties located in South America.
 
 We are
considered an exploration or exploratory stage company because we are involved
in the examination and investigation of land that we believe may contain
valuable minerals, for the purpose of discovering the presence of ore, if any,
and its extent.  There is no assurance that a commercially viable
mineral deposit exists on any of the properties underlying any of our mineral
property interests, and a great deal of further exploration will be required
before a final evaluation as to the economic and legal feasibility for our
future exploration is determined.  We have no known reserves of any
type of mineral.  To date, we have not discovered an economically
viable mineral deposit on any of the properties underlying our mineral property
interests, and there is no assurance that we will discover one.  If we
cannot acquire or locate mineral deposits, or if it is not economical to recover
any mineral deposits that we do find, our business and operations will be
materially and adversely affected.
 
 We no
longer have any interest in any properties located in Finland and have allowed
our options on these properties to lapse and revert back to the optionors so
that we can pursue the development of our interests in the mineral rights on
properties located in northeastern Peru.  As a result of our decision
to not pursue the development of any interests in properties located in Finland,
we dissolved our wholly-owned subsidiary, FinMetal OY, a corporation organized
under the laws of Finland, effective July 17, 2009.  A description of
each of our options to acquire the mineral and mining rights underlying
properties located in Peru and the conditions that we must meet in order to
exercise these options is set forth below.
 
 The
Peru Property
 
 Our properties are located in
northeastern Peru are in the exploration stage.  These properties are
without known reserves and the proposed plan of exploration detailed below is
exploratory in nature.  These properties are described
below.
 
 On September 18, 2008 (the "Effective
Date"), we entered into a Mineral Right Option Agreement (the "Temasek Option
Agreement") with Temasek Investments Inc. ("Temasek"), a company incorporated
under the laws of Panama.  Pursuant to the Temasek Option Agreement,
we acquired four separate options from Temasek, each providing for the
acquisition of a twenty-five percent interest in certain mineral rights (the
"Mineral Rights") in certain properties in Peru (the “Peru Property”),
potentially resulting in our acquisition of one hundred percent of the Mineral
Rights.  The Mineral Rights are owned by Rio Santiago Minerales S.A.C.
("Rio Santiago").  Beardmore Holdings, Inc. ("Beardmore"), a
wholly-owned subsidiary of Temasek, owns 999 shares of the 1,000 shares of Rio
Santiago that are issued and outstanding.  Temasek owns the single
remaining share of Rio Santiago.  The acquisition of each 25% interest
in the Mineral Rights will occur through the transfer to us of twenty-five
percent of the outstanding shares of Beardmore.
 
  - 5
-
 Table of Contents
  A
description of the Mineral Rights is set forth below:
 
 Name
              Area
      (ha)
              Code
              Title
      No
              OwnerBianka
      1
              1000
              01-03905-08
              00074599
              Rio
      Santiago Minerales SACBianka
      2
              1000
              01-03878-08
              00074599
              Rio
      Santiago Minerales SACBianka
      3
              900
              01-03879-08
              00074599
              Rio
      Santiago Minerales SACBianka
      4
              1000
              01-03883-08
              00074599
              Rio
      Santiago Minerales SACBianka
      6
              1000
              01-03881-08
              00074599
              Rio
      Santiago Minerales SACBianka
      7
              1000
              01-03888-08
              00074599
              Rio
      Santiago Minerales SACDalma
      1
              1000
              01-03859-08
              00074599
              Rio
      Santiago Minerales SACDalma
      2
              1000
              01-03863-08
              00074599
              Rio
      Santiago Minerales SACDalma
      3
              1000
              01-03857-08
              00074599
              Rio
      Santiago Minerales SACDalma
      4
              800
              01-03865-08
              00074599
              Rio
      Santiago Minerales SACDalma
      5
              500
              01-03866-08
              00074599
              Rio
      Santiago Minerales SACDorotea
      1
              1000
              01-03909-08
              00074599
              Rio
      Santiago Minerales SACDorotea
      2
              900
              01-03906-08
              00074599
              Rio
      Santiago Minerales SACDorotea
      3
              1000
              01-03904-08
              00074599
              Rio
      Santiago Minerales SACDorotea
      4
              800
              01-03908-08
              00074599
              Rio
      Santiago Minerales SACDorotea
      5
              1000
              01-03910-08
              00074599
              Rio
      Santiago Minerales SACDorotea
      6
              1000
              01-03901-08
              00074599
              Rio
      Santiago Minerales SACDorotea
      7
              1000
              01-03899-08
              00074599
              Rio
      Santiago Minerales SAC
 
 In
December 2008, we fulfilled the following conditions, resulting in our exercise
of the initial option to acquire a twenty-five percent interest in the Mineral
Rights:
  ·
              Payment
      of $250,000 to Temasek on the date the Temasek Option Agreement was
      executed;
 ·
              Issuance
      of 2,500,000 shares of Common Stock to Temasek within five business days
      from the Effective Date; and
 ·
              Payment
      of an additional amount of $250,000 to Temasek within ninety days of the
      Effective Date.
 
 The
Temasek Option Agreement provided that we may exercise the second twenty-five
percent option, resulting in our acquisition of a fifty percent interest in the
Mineral Rights, after fulfilling the following conditions within six months of
the Effective Date (September 18, 2008):
 
 ·
              Payment
      of an additional amount of $750,000 to Temasek,
  and
 ·
              Issuance
      of 3,500,000 additional shares of Common Stock to
  Temasek.
 
 On May
12, 2009, we entered into an agreement with Temasek to amend the Temasek Option
Agreement (the “Amended Option Agreement”) in order to revise the conditions
required for us to exercise the second twenty-five percent
option.  Under the terms of the Amended Option Agreement, we may
exercise the second twenty-five percent option, resulting in our acquisition of
a fifty percent interest in the Mineral Rights, after fulfilling the following
conditions:
 
 ·
              Issuance
      of 3,500,000 additional shares of our common stock to Temasek within 6
      months from the Effective Date (September 18, 2008) or as soon as
      practicable thereafter, and
 ·
              Payment
      within 12 months from the Effective Date (September 18, 2008) of an
      additional $750,000 to Temasek plus interest at a rate of 5% per annum
      accruing from the date of the Amended Option Agreement to the date that
      payment is made.
 
  - 6
-
 Table of Contents
  On June
23, 2009, we issued 3,500,000 shares of our common stock to Temasek and its
designees as partial consideration for the exercise of the second twenty-five
percent option to acquire an aggregate fifty percent interest in the Mineral
Rights.Under the
terms of the Amended Option Agreement, we were required to pay Temasek on or
before September 18, 2009 the sum of $750,000, plus interest at a rate of 5% per
annum accruing from May 12, 2009, the date of the Amended Option Agreement, to
the date that such payment is made.  If we have made such payment, we
would have exercised the second twenty-five percent option, resulting in our
acquisition of an aggregate fifty percent interest in the Mineral
Rights.  However, such payment has not been made as of September 30
2009 and we have not exercised the second twenty-five percent
option.
 
 The
Temasek Option Agreement provides that we may exercise the third twenty-five
percent option, resulting in our acquisition of a seventy-five percent interest
in the Mineral Rights, after fulfilling the following conditions within twelve
months of the Effective Date (September 18, 2009):
 
 ·
              Exercise
      and complete the initial and second twenty-five percent
      options;
 ·
              Payment
      of an additional amount $1,250,000 to Temasek;
  and
 ·
              Issuance
      of 4,500,000 additional shares of Common Stock to
  Temasek.
 
 As of the
date of this report, we have not had sufficient financing to be able to make the
required cash payment to exercise of the second twenty-five percent option and
we have not paid any of the consideration required to exercise the third
twenty-five percent option.  As a result, we are in default of the
Temasek Option Agreement, as amended.  We have not received any notice
of default from Temasek, but we would have thirty calendar days to cure the
default if we were to receive a notice of default.  We are currently
seeking additional financing in the form of equity financing from the sale of
our common stock in order to cure this default and to fund our planned
exploration program.  We may also seek to enter into another amendment
to the Temasek Option Agreement in order provide us with additional time to
secure the required financing for us to exercise the second, third and fourth
twenty-five percent options.  There can be no assurance that we will
be successful in amending the Temasek Option Agreement or securing the necessary
funding to exercise the second, third or fourth twenty-five percent
options.  In the event that we failed to cure the default within
thirty calendar days of being provided with such notice, we could lose our
options to acquire the second, third and fourth twenty-five percent options to
acquire an aggregate fifty, seventy-five and one hundred percent interest in the
Mineral Rights, respectively, and not be entitled to recover the 3,500,000
shares of our common stock issued as partial consideration for the exercise of
the second twenty-five percent option.  In the event that Temasek were
to terminate the Temasek Option Agreement, as amended, resulting from our
default, our ownership interest in the Mineral
Rights may be limited to our twenty-five percent interest currently held by the
Company.
 
 We may
exercise the fourth twenty-five percent option, resulting in our acquisition of
a one hundred percent interest in the Mineral Rights, after fulfilling the
following conditions by March 18, 2010, which is within eighteen months of the
Effective Date (September 18, 2008):
 
 ·
              Exercise
      and complete the initial, second and third twenty-five percent
      options;
 ·
              Payment
      of an additional amount $2,500,000 to Temasek,
  and
 ·
              Issuance
      of 5,500,000 additional shares of Common Stock to
  Temasek.
  We will require additional financing in order to be able
to exercise the fourth twenty-five percent option.  There can be no
assurance that we will be successful in securing the necessary funding to
exercise the fourth twenty-five percent option.  Provided we are
successful in securing additional financing, we intend to exercise the fourth
twenty-five percent option.  In the event that we have exercised the
third twenty-five percent option, but are unable to secure sufficient financing
in order to be able to exercise the fourth twenty-five percent option in the
time frame set forth above, our ownership interest in the Mineral Rights may be
limited to a seventy-five percent interest.
   - 7
-
 Table of Contents
  If we are
able to complete the acquisition of a one hundred percent interest in the
Mineral Rights, Temasek will hold its single share of Rio Santiago in trust for
our sole benefit and hold the share strictly in accordance with our
instructions.
  If we are
able to complete the acquisition of a one hundred percent interest in the
Mineral Rights, Temasek will be entitled to an annual 2.5% net returns
royalty.  However, if we pay Temasek $2,000,000 within ninety days of
our acquisition of a one hundred percent interest in the Mineral Rights, Temasek
will only be entitled to an annual 1.5% net returns royalty.
  If we
exercise the second twenty-five percent option, resulting in our acquisition of
a fifty percent interest in the Mineral Rights, but fail to acquire a one
hundred percent interest in the Mineral Rights, the Temasek Option Agreement
provides that we and Temasek will form a joint venture for the purpose of
placing the Peru Property into commercial production.  In the event
that this condition is satisfied and we enter into a joint venture with Temasek,
our responsibilities under the joint venture would include developing a feasible
mining project and all necessary facilities and Temasek shall retain a carried
free interest in the mining rights.  If we enter into a joint venture
with Temasek, but do not develop a feasible mining project within three years of
the Effective Date, (or by September 18, 2011), we will be required to pay
Temasek an advance minimum mining royalty of $500,000 per year, which will be
deducted from Temasek's net return royalty .
  Planned
Exploration Program
 
 An
exploration base is being set up in the town of Saramiriza, which is located in
the center of the Manseriche alluvial camp on the western bank of the
Marañón.
 
 Provided
we are successful in securing additional financing,we intend to
conduct a seismic survey along selected lines across the Marañón gravels in
order to define the gravel-bedrock contact.  This information is
needed to plan a drilling program and to assist with locating drill collar
positions.  The selection of seismic lines will made on the basis of
interpretation of aerial photos and satellite images, as well as from
reconnaissance-scale mapping of sedimentary features.  Scout drilling
utilizing churn drills will be undertaken on favorable areas, and anomalous
zones will be followed up with reverse circulation drilling (Becker) in order to
fully develop resources and reserves.
 
 Provided
we are successful in securing additional financing andbefore
implementing the drilling plan, we intend to identify the landowners of the
plots on which the mines are located so as to determine who the legal owners or
current occupants are and/or the kind of tenancy or tenancy claim over the
surface of the land, as well as the location of Native or Creole communities
within the project’s area of influence.  This process has commenced,
but cannot be completed without securing additional financing.
  An Environmental Impact Report will
also be required to be drafted so as to obtain the Environmental Impact
Declaration from the Peruvian Mining Authorities, which is an essential
requirement for any kind of exploration in Peru.
  We intend to collect by backhoe and
excavator a number of bulk samples for metallurgical testing, and to confirm
drill results.  At the same time, mine development planning, process
design, and other engineering studies will be conducted with a view to
completing a feasibility study within an eighteen month
period.  Permitting work will be initiated as early in the exploration
and development cycle as possible, so that trial or pilot dredging can be
started as soon as feasibility has been established.  Provided we are successful in securing additional
financing,we anticipate that shortly thereafter we will commence
the mapping and geophysics with the initial drilling to follow.
 
 - 8
-
 Table of Contents
 
 Our
current cash on hand is insufficient to complete any of the activities set forth
in our planned exploration program and we are currently in default of the
Temasek Option Agreement, as amended.  If we are unable to secure additional financing in the
near future, we will be forced to postpone the commencement of our exploration
and development program.Provided we are able to secure
additional financing through private equity
offerings,we anticipate that we will incur the following costs for
the next twelve months:
 
 
 Activity
              
              USD
      000sMINERAL
      PROPERTY COSTS:Annual
      Fee
              
              
              50Surface
      Rights Access
              
              
              15EXPLORATIONMapping
              
              
              45Geophysics
      – Seismic
              
              
              130DRILLINGChurn
      Drilling
              
              
              500TECHNICAL
      SERVICESConsultants
              
              
              180Personnel
              
              
              230CAMP
      AND FIELD EXPENSESCamp
              
              
              180Field
              
              
              150TRANSPORT
      AND LOGISTICSAir
      Transport
              
              
              180Water
      Transport
              
              
              80Ground
      Transport
              
              
              50EQUIPMENT
      & PERMITTING
              
              
              110COMMUNITY
      OUTREACH
              
              
              50ADMINISTRATION
                NEW
      BUSINESS
              
              
              150TOTAL
              
              
              2,100
 
 We also, as part of new business
activities, intend to focus on seeking additional mining opportunities, some of
which may be mineral deposits that are fully defined and have already completed
the feasibility stage of development and are ready to produce.  In
other cases, the mineral deposits we may seek to acquire may have a significant
amount of proven and probable resources with what we believe to be excellent
potential for expansion.  We may also seek to acquire other
drill-ready exploration projects that contain little or no proven resources, as
with the options we currently hold to acquire existing mining projects in Peru,
but that are strategically positioned to offer what we perceive as exceptional
potential at a comparatively minimal expense.  In order to acquire any
additional mining properties or exploration projects, we will need to secure
additional financing.  We have not made any progress in indentifying
any such properties due to our current financial position and require additional
financing to perform the requisite due diligence and complete the acquisition of
any property interest.
 
 Due to the extensive and expensive
development programs required to prove mineral resources and reserves, as is
typical in the mining business, companies such as ours sometimes are able to
acquire deposits at significant discounts of the known in-the-ground value of
the gold, silver, or other minerals.  In the event that we do locate a
commercially exploitable mineral deposits, we may determine that it is
commercially advantageous to sell our property interests rather than enter into
production of any commercially mineral deposits on the property
ourselves.
 
  - 9
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  Results
of Operations
 
 We have
not generated any revenues from our operations in either of the past two fiscal
years.
 
 We
reported operating expenses in the amount of $90,157 for the three months ended
September 30, 2009, compared to operating expenses of $283,748 for the three
months ended September 30, 2008.  The decrease in our operating
expenses for the three months ended September 30, 2009, as compared to the three
months ended September 30, 2008, relates to a significant decrease in consulting
and management fees, investor communication and promotion expenditures and
professional fees.  Our management determine that a decrease in these
expenditures was prudent and in the company’s best interest in light of our lack
of sufficient financing to be able to make our planned exploration expenditures
and pay for our general administrative expenses over the next twelve
months.
 
 We
reported total expenses in the amount of $701,819 for the nine months ended
September 30, 2009, compared to a credit balance in operating expenses of
$1,390,797 for the nine months ended September 30, 2008.  The decrease
in reported expenses was attributable to stock-based compensation being credited
to operations in the amount of $2,244,105 for the nine months ended September
30, 2008 as a result of the expiration and cancellation of stock options during
the these period.
 
 We
reported no other expenses or income for the three months ended September 30,
2009 compared to other expenses of $4,711 for the three months ended September
30, 2008.  Other expenses for the three months ended September 30,
2008 consisted primarily of a write-down of certain assets.  We
reported no other expenses or income for the nine months ended September 30,
2009 compared to other income of $3,634 for the nine months ended September 30,
2008.  Other income for the nine months ended September 30, 2008
consisted primarily of interest income.
 
 We had
net loss of $90,157 for the three months ended September 30, 2009, as compared
to a net loss of $288,459 for the three months ended September 30,
2008.  This decrease in net loss is attributable to a decrease in
discretionary expenditures relating to consulting and management fees, investor
communication and promotion expenditures and professional fees.  We
had net loss of $701,819 for the nine months ended September 30, 2009, as
compared to a net gain of $1,394,431 for the nine months ended September 30,
2008.  This decrease in net gain for the nine months ended September
30, 2009 to a net loss for the nine months ended September 30, 2009 was
primarily attributable to stock-based compensation being credited to operations
as a result of the expiration and cancellation of stock options during three and
nine months ended September 30, 2008.
 
 As a
result of the above, the basic and diluted loss per common share was $0.01 for
the three months ended September 30, 2009 and $0.16 for the nine months ended
September 30, 2009, as compared to basic and diluted loss per common share of
$0.08 for the three months ended September 30, 2008 and basic and diluted income
per common share of $0.80 for the nine months ended September 30,
2008.
  Liquidity
and Capital Resources
 
 At
September 30, 2009, we had cash and cash equivalents of $3,952 at September 30,
2009 and a working capital deficit of $631,653.  Our proposed plan of
exploration anticipates that we will incur exploration related expenditures of
$2,100,000 over the next twelve months.  Over the next twelve months,
we will be required to make a payment of $750,000 if we elect to increase our
ownership interest in the Mineral Rights from a twenty-five percent interest to
a fifty percent interest and a payment of $1,250,000 if we elect to further
increase our interest in the Mineral Rights from a fifty percent interest to a
seventy-five percent interest.  We anticipate spending approximately
$50,000 in ongoing general and administrative expenses per month for the next
twelve months, for a total anticipated expenditure of $600,000 over the next
twelve months.  The general and administrative expenses for the year
will consist primarily of professional fees for the audit and legal work
relating to our regulatory filings throughout the year, as well as transfer
agent fees and general office expenses.
  - 10
-
 Table of Contents
  Our current cash on hand is insufficient to be able to make our planned
exploration expenditures and to pay for our general administrative expenses over
the next twelve months.  Accordingly, we must obtain additional
financing in order to complete the landowner studies and environmental report
and commence the mapping and geophysics and initial drilling program described
above.  We believe that debt financing will not be an alternative for
funding additional phases of exploration as we do not have limited tangible
assets to secure any debt financing.  We anticipate that additional
funding will be in the form of equity financing from the sale of our common
stock.  We are currently seeking additional funding in the form of
equity financing from the sale of our common stock, but cannot provide investors
with any assurance that we will be able to raise sufficient funding from the
sale of our common stock to fund our complete exploration program.  In
the absence of such financing, we will not be able to pursue our exploration
program and cure our default of the Temasek Option Agreement, as
amended.  If we do not fulfill the terms of our outstanding option
agreements according to our business plan, then our ability to commence or
continue operations could be materially limited.  We also may be
forced to abandon our mineral property interests.  We are currently
experiencing liquidity problems.  If we are unable to raise additional
capital in the near future, management expects that we will need to further
curtail operations, liquidate assets, seek additional capital on less favorable
terms and/or pursue other remedial measures and potentially cease
operations.
 
 If we are able to locate an appropriate
partner, we may consider entering into a joint venture arrangement to provide
the required funding to explore the properties underlying our mineral property
interests. We have not undertaken any efforts to locate a joint venture
participant. Even if we determine to pursue a joint venture participant, there
is no assurance that any third party would enter into a joint venture agreement
with us in order to fund exploration of the properties underlying our mineral
property interests. If we enter into a joint venture arrangement, we would
likely have to assign a percentage of our interest in our mineral property
interests to the joint venture participant.
 
 Cash
Used in Operating Activities
 
 Operating
activities in the nine months ended September 30, 2009 and 2008 used cash of
$356,033 and $1,668,846, respectively, which reflect our recurring operating
losses.  Our net loss of $701,819 for the nine months ended September
30, 2009 was the primary reason for our negative operating cash
flow.
 
 Cash
Used in Investing Activities
 
 For the
nine months ended September 30, 2009, we used $250,000 in investing activities,
as compared to $37,040 used in investing activities during the nine months ended
September 30, 2008.  For the nine months ended September 30, 2009, we
paid Temasek $250,000 for the acquisition of mineral rights pursuant to the
Temasek Option Agreement.
 
 Cash
from Financing Activities
 
 As we
have had no revenues since inception, we have financed our operations primarily
by using existing capital reserves and through private placements of our
stock.  Net cash flows provided by financing activities for the nine
months ended September 30, 2009 was $117,082, as compared to $32,889 provided by
financing activities during the nine months ended September 30,
2008.  There was no cash flows provided by financing activities for
nine months ended September 30, 2008.  Net cash flows provided by
financing activities for the nine months ended September 30, 2009 related to
proceeds received from the issuance of common stock.
 
 Off
Balance Sheet Arrangements
 
 We do not
have any off-balance sheet debt nor did we have any transactions, arrangements,
obligations (including contingent obligations) or other relationships with any
unconsolidated entities or other persons that may have material current or
future effect on financial conditions, changes in the financial conditions,
results of operations, liquidity, capital expenditures, capital resources, or
significant components of revenue or expenses.
  - 11
-
 Table of Contents
  
 Going
Concern
 
 We have
incurred net losses for the period from inception on September 5, 1997 to
September 30, 2009 of $11,898,266 and have no source of revenue.  The
continuity of our future operations is dependent on our ability to obtain
financing and upon future acquisition, exploration and development of profitable
operations from our mineral properties.  These conditions raise
substantial doubt about our ability to continue as a going concern.
 
 Critical
Accounting Policies
 
 In
December 2001, the SEC requested that all registrants list their most “critical
accounting polices” in the Management Discussion and Analysis.  The
SEC indicated that a “critical accounting policy” is one which is both important
to the portrayal of a company’s financial condition and results, and requires
management’s most difficult, subjective or complex judgments, often as a result
of the need to make estimates about the effect of matters that are inherently
uncertain.  We believe the following critical accounting estimates
affect our more significant judgments and estimates used in the preparation of
our consolidated financial statements:
 
 Mineral
Claim Payments and Exploration Expenditures
 
 Mineral property acquisition costs are
initially capitalized as tangible assets when purchased in accordance with
Emerging Issues Task Force (“EITF”) 04-2, “Whether Mineral Rights Are Tangible
or Intangible Assets”. At the end of each fiscal quarter end, we assess
the carrying costs for impairment.  If proven and probable reserves
are established for a property and it has been determined that a mineral
property can be economically developed, costs will be amortized using the
units-of-production method over the estimated life of the probable
reserve.
 
 Mineral property exploration costs are
expensed as incurred.  Estimated future removal and site restoration
costs, when determinable are provided over the life of proven reserves on a
units-of-production basis.  Costs, which include production equipment
removal and environmental remediation, are estimated each period by management
based on current regulations, actual expenses incurred, and technology and
industry standards.  Any charge is included in exploration expense or
the provision for depletion and depreciation during the period and the actual
restoration expenditures are charged to the accumulated provision amounts as
incurred.
 
 As of the date of these interim
consolidated financial statements, we had not established any proven or probable
reserves on its mineral properties and incurred only acquisition and exploration
costs.
 
 Although we have taken steps to verify
title to mineral properties in which we have an interest, according to the usual
industry standards for the stage of exploration of such properties, these
procedures do not guarantee our title.  Such properties may be subject
to prior agreements or transfers and title may be affected by undetected
defects.
 
 Environmental
Costs
 
 Environmental expenditures that related
to current operations are charged to operations or capitalized as
appropriate.  Expenditures that relate to an existing condition caused
by past operations, and which do not contribute to current or future revenue
generation, are charged to operations.  Liabilities are recorded when
environmental assessments and/or remedial efforts are probable, and the cost can
be reasonably estimated.  Generally, the timing of these accruals
coincides with the earlier of completion of a feasibility study or our
commitments to plan of action based on the then known facts.
 
  - 12
-
 Table of Contents
  Stock-Based
Compensation
 
 Effective January 1, 2006, we adopted
the provisions of SFAS No. 123(R), “Share-Based Payment”, which
establishes accounting for equity instruments exchanged for employee
services.  Under the provisions of SFAS No.123(R), stock-based
compensation cost is measured at the grant date, based on the calculated fair
value of the award, and is recognized as an expense over the employees’
requisite service period (generally the vesting period of the equity
grant).  Before January 1, 2006, we accounted for stock-based
compensation to employees in accordance with Accounting Principles Board Opinion
No. 25, “Accounting for Stock
Issued to Employees,” and complied with the disclosure requirements of
SFAS No. 123, “Accounting for
Stock-Based Compensation”.  We adopted SFAS No. 123(R) using
the modified prospective method, which requires us to record compensation
expense over the vesting period for all awards granted after the date of
adoption, and for the unvested portion of previously granted awards that remain
outstanding at the date of adoption.  Accordingly, financial statements for
the periods prior to January 1, 2006 have not been restated to reflect the fair
value method of expensing share-based compensation.
 
 The adoption of SFAS No. 123(R) does
not change the way we account for share-based payments to non-employees, with
guidance provided by SFAS No. 123 (as originally issued) and EITF No. 96-18,
“Accounting for Equity
Instruments That Are Issued to Other Than Employees for Acquiring, or in
Conjunction with Selling, Goods or Services”.
 
 Foreign
Currency Translation
 
 Our functional and reporting currency
is U.S. dollars.  The consolidated financial statements of the Company
are translated to U.S. dollars in accordance with SFAS No. 52, “Foreign Currency
Translation.”  Monetary assets and liabilities denominated in
foreign currencies are translated using the exchange rate prevailing at the
balance sheet date.  Gains and losses arising on translation or
settlement of foreign currency denominated transactions or balances are included
in the determination of income.  We have not, to the date of these
interim consolidated financial statements, entered into derivative instruments
to offset the impact of foreign currency fluctuations.
 
 Item 3.   Quantitative and Qualitative
Disclosures About Market Risk
 
 Not
Applicable.
 
 Item 4T. Controls and Procedures.
 
 Evaluation
of Disclosure Controls and Procedures
 
 We
carried out an evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) as of September 30, 2009.  This evaluation
was carried out under the supervision and with the participation of our former
Chief Executive Officer, Mr. Hector Ponte, and former Chief Financial Officer,
Mr. Gustavo Janeiro.  Based upon that evaluation, our former Chief
Executive Officer and former Chief Financial Officer concluded that, as of
September 30, 2009, our disclosure controls and procedures are
effective.
 
 Disclosure
controls and procedures are controls and other procedures that are designed to
ensure that information required to be disclosed in our reports filed or
submitted under the Exchange Act are recorded, processed, summarized and
reported, within the time periods specified in the SEC's rules and
forms.  Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information required
to be disclosed in our reports filed under the Exchange Act is accumulated and
communicated to management, including our Chief Executive Officer and Chief
Financial Officer, to allow timely decisions regarding required
disclosure.
  - 13
-
 Table of Contents
 
 
 Limitations on the
Effectiveness of Internal Controls
 
 Our
management does not expect that our disclosure controls and procedures or our
internal control over financial reporting will necessarily prevent all fraud and
material error. Our disclosure controls and procedures are designed to provide
reasonable assurance of achieving our objectives and our Chief Executive Officer
and Chief Financial Officer concluded that our disclosure controls and
procedures are effective at that reasonable assurance level.  Further,
the design of a control system must reflect the fact that there are resource
constraints, and the benefits of controls must be considered relative to their
costs.  Because of the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, within our company have been
detected.  These inherent limitations include the realities that
judgments in decision-making can be faulty, and that breakdowns can occur
because of simple error or mistake. Additionally, controls can be circumvented
by the individual acts of some persons, by collusion of two or more people, or
by management override of the internal control.  The design of any
system of controls also is based in part upon certain assumptions about the
likelihood of future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future
conditions.  Over time, control may become inadequate because of
changes in conditions, or the degree of compliance with the policies or
procedures may deteriorate.
 
 Changes in Internal Control
Over Financial Reporting
 
 There
have been no changes in our internal controls over financial reporting during
the quarter ended September 30, 2009 that have materially affected or are
reasonably likely to materially affect such controls.
 
  - 14
-
 Table of Contents
  PART
II – OTHER INFORMATION
 
 Item 1.     Legal
Proceedings.
 
 We are
not a party to any pending legal proceeding.  We are not aware of any
pending legal proceeding to which any of our officers, directors, or any
beneficial holders of five percent or more of our voting securities are adverse
to us or have a material interest adverse to us.
 
 Item 1A.    Risk Factors.
 
 Not
Applicable.
 
 Item 2. Unregistered
Sales of Equity Securities and Use of Proceeds.
 
 None.
 
 Item 3.   Defaults upon
Senior Securities.
 
 None.
 
 Item 4.   Submission of
Matters to a Vote of Security Holders.
 
 No
matters have been submitted to our security holders for a vote, through the
solicitation of proxies or otherwise, during the quarterly period ended
September 30, 2009.
 
 Item 5.    Other
Information.
 
 None.
 
 Item 6.     
Exhibits.
 
 See the
Exhibit Index following the signatures page of this report, which is
incorporated herein by reference.
  - 15
-
 Table of Contents
  SIGNATURES
 
 Pursuant
to the requirements 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.
 
 Amazon
      Goldsands Ltd.Date:
              November
      23, 2009By:
      /s/ Kenneth
      Phillippe
                Kenneth
      Phillippe
                Title:Chief
      Executive Officer and
                Chief
      Financial Officer
 
  - 16
-
 Table of Contents
  AMAZON
GOLDSANDS LTD.
 (the
“Registrant”)
 (Commission
File No. 000-51203)
 Exhibit Index
 to
 Quarterly
Report on Form 10-Q
 for
the Quarter Ended September 30, 2009
 
 Exhibit
                No.
              Description
              Incorporated
      Herein by
                Reference
      to
              Filed
                Herewith31.1
              Certification of Chief Executive Officer pursuant to 18
      U.S.C. Section 1350, as adopted pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002
              
              X31.2
              Certification of Chief Financial Officer pursuant to 18
      U.S.C. Section 1350, as adopted pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002
              
              X32.1
              Certification of Chief Executive Officer and Chief
      Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
      to Section 906 of the Sarbanes-Oxley Act of 2002
              
              X
 
  .
   - 17
-