**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-KSB**





(x)
            ANNUAL
                REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES ACT OF
                1934


For
      the fiscal year
      ended   August
      31, 2006





(
                )
            TRANSACTION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934


For
      the transaction
      period from    to





Commission
      File
      number   333-121660





**TYLERSTONE
                VENTURES CORPORATION**(Exact
                name of Company as specified in
                charter)





Delaware
            98-0375406(State
                or other jurisdiction of incorporation or organization)
            (I.R.S.
                Employee I.D. No.)





Suite
                302 - 15015 Victoria Avenue
              White
                Rock, British Columbia, Canada
            V4B
                1G2(Address
                of principal executive officers)
            (Zip
                Code)





Issuer’s
      telephone number  1-604-780-7659





Securities
      registered pursuant to section 12 (b) of the Act:





Title
                of each share:
              Common
            Name
                of each exchange on which registered:
              OTCBB





Securities
      registered pursuant to Section 12 (g) of the Act:





None


(Title
      of
      Class)





Check
      whether the Issuer (1) filed all reports required to be filed by section 13
      or
      15 (d) of the Exchange Act during the past 12 months (or for a shorter period
      that Tylerstone was required to file such reports), and (2) has been subject
      to
      such filing requirements for the past 90 days.





(1)
      Yes
      [X]  No
      [
      ]    (2)  Yes
      [X]
      No [ ]





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B is not contained in this form, and no disclosure will be
      contained, to the best of Tylerstone’s knowledge, in definitive proxy or
      information statements incorporated by reference in Part III of this Form 10-KSB
      or any amendment to this Form 10-KSB. [ ]





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





State
      issuer’s revenues for its most recent fiscal year:  $ -0-





State
      the
      aggregate market value of the voting stock held by nonaffiliates of Tylerstone.
      The aggregate market value shall be computed by reference to the price at which
      the stock was sold, or the average bid and asked prices of such stock, as of
      a
      specific date within the past 60 days.









-1-





As
      at
      August 31, 2006, the aggregate market value of the voting stock held by
      nonaffiliates is undeterminable and is considered to be 0.





**(ISSUER
      INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE LAST FIVE
      YEARS)**





Not
      applicable





**(APPLICABLE
      ONLY TO CORPORATE COMPANYS)**





As
      of
      August 31, 2006, Tylerstone has 2,610,000 shares of common stock issued and
      outstanding.





**DOCUMENTS
      INCORPORATED BY REFERENCE**





Exhibits
      incorporated by reference are referred under Part IV.








-2-








**TABLE
      OF CONTENTS**




PART
      1


Page





ITEM
                1.
            Description
                of Business
            4ITEM
                2.
            Description
                of Property
            12ITEM
                3.
            Legal
                Proceedings
            21ITEM
                4.
            Submission
                of Matters to a Vote of Securities Holders
            21PART
                IIITEM
                5.
            Market
                for Common Equity and Related Stockholder Matters
            21ITEM
                6.
            Management’s
                Discussion and Analysis or Plan of Operation
            22ITEM
                7.
            Financial
                Statements
            24ITEM
                8.
            Changes
                In and Disagreements with Accountants and Accounting andFinancial
                Statement Disclosure
            24ITEM
                8A
            Controls
                and Procedures
            24ITEM
                8B
            Other
                Information
            25PART
                IIIITEM
                9.
            Directors,
                Executive Officers, Promoters and Control Persons; Compliance With
                Section
                16(a) of the Exchange Act.
            25ITEM
                10.
            Executive
                Compensation
            29ITEM
                11.
            Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholder Matters
            31ITEM
                12.
            Certain
                Relationships and Related Transactions
            32PART
                IVITEM
                13.
            Exhibits
            35ITEM
                14
            Principal
                Accountant Fees and Services
            36Signatures
            37











-3-





**PART
      1**




**ITEM
      1. DESCRIPTION OF BUSINESS**




**History
      and Organization**





Tylerstone
      Ventures Corporation (the “Company”) was incorporated on September 24, 1998 and
      has no subsidiaries and no affiliated companies. It has not been in bankruptcy,
      receivership or similar proceedings since its inception. Nor has it been
      involved in any material reclassification, merger, consolidation or purchase
      or
      sale of any significant assets not in the ordinary course of business. The
      Company’s executive offices are located at Suite 302 - 15015 Victoria Avenue,
      White Rock, British Columbia, Canada, V4B 1G2 (Tel: 604-780-7659).





The
      Company is an pre-exploration stage company (being engaged in the search of
      mineral deposits (reserves) which are not in either the development or
      production stage) without any assurance that a commercially viable mineral
      deposit, a reserve, exists on its mineral claim.





The
      Company owns a 100 percent interest in the mineral rights on its mineral
      property in British Columbia, Canada called the Tylerstone claim (the
“Tylerstone”). The Company has already undertaken exploration activities on the
      Tylerstone as more fully described elsewhere in this Form 10K-SB. There is
      no
      assurance the Company will find a commercially viable mineral reserve on the
      Tylerstone regardless of the dollars spent on exploration work on it. Therefore,
      no matter how much exploration work is undertaken, a commercially viable mineral
      reserve might never be found. The Tylerstone is in good standing until February
      24, 2009 at which time assessment work or cash in lieu of assessment work will
      have to be filed with the Ministry of Energy and Mines for the Province of
      British Columbia (the “Ministry”) in the amount of approximately $3,100 to keep
      it in good standing for an additional twelve months.





The
      Company’s shares are qualified for trading on the system of the National
      Association of Securities Dealers, Inc. (“NASD”) known as the OTC Bulletin Board
      (the “OTCBB”). The symbol of the Company’s shares is TYLV.





The
      Company owns the exclusive rights to all minerals on the Tylerstone claim except
      for coal which is under a separate license. It has not obtained the rights
      to
      placer minerals on its claim. There are virtually limited possibilities that
      there is any coal on the Tylerstone claim but there could be placer minerals
      which, if found, will be applied for. The actual land is owned by the Crown
      (the
      Province of British Columbia).





The
      Company has no revenue to date from the exploration of the Tylerstone claim,
      and
      its ability to affect its plans for the future will depend on the availability
      of financing. Such financing will be required to explore the Tylerstone claim
      to
      a stage where a decision can be made by management as to whether an ore reserve
      exists and can be successfully brought into production. The Company anticipates
      obtaining such funds from its directors and officers, financial institutions
      or
      by way of the sale of its capital stock in the future, but there can be no
      assurance the Company will be successful in obtaining additional capital for
      exploration activities from the sale of its capital stock or in otherwise
      raising substantial capital.





In
      addition to be a quoted company on the OTCBB, the Company is required to file
      various forms with the United States Securities and Exchange Commission (the
      “SEC”) such as Form 10-KSB and Form 10-QSB. If it is deficient in its filing of
      these forms it could be halted or de-listed from the OTCBB.






-4-





The
      shareholders may read and copy any material filed by the Company with the SEC
      at
      the SEC’s Public Reference Room at 100 F Street, N.E., Washington, DC, 20549.
      The shareholders may obtain information on the operations of the Public
      Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an
      Internet site that contains reports, proxy and information statements, and
      other
      information which the Company has filed electronically with the SEC by assessing
      the website using the following address: http://www.sec.gov .
      Presently the Company has no website at this time.





**Planned
      Business**





The
      following discussion should be read in conjunction with the information
      contained in the financial statements of the Company and the notes, which form
      an integral part of the financial statements, which are attached
      hereto.





The
      financial statements mentioned above have been prepared in conformity with
      accounting principles generally accepted in the United States of America and
      are
      stated in United States dollars.





The
      Company’s day-to-day operations consist mainly of maintaining the Tylerstone
      claim in good standing and preparing the reports filed with the SEC as required.





The
      Company’s independent accountants have indicated in their opinion dated
      September 28, 2006 that the Company will need additional working capital for
      its
      planned activity and to service its debt, which raises substantial doubt about
      its ability to continue as a going concern. If the Company does not raise
      sufficient funds to meet its debt obligations, there is the distinct possibility
      the Company will not be able to operate as a going concern and the shareholders
      might lose their entire investment.





The
      Company’s ability to raise funds in the future might be limited as more fully
      described under “Risk Factors” below.





**RISK
      FACTORS**





**1.**
            **Loss
                of Total Investment by the Shareholders if the Company is unable
                to Raise
                Sufficient Funds to Carry on
                Operations**





To
      continue as a going concern, the Company is in urgent need of money. Over the
      next twelve months the Company will require approximately $42,011as shown on
      page 23 to maintain operations. Shareholders should be warned there will be
      no
      money available from the sale of gold, silver, lead or zinc from the Tylerstone
      in the foreseeable future or maybe never since there is no ore reserve existing
      on the Tylerstone and there is the distinct possibility there will never be
      an
      ore reserve. Without adequate funds being received, there is a distinct
      possibility that the shareholders might lose their entire investment.





**2.**
            **Because
                the Company has no Revenue, the Company will need Additional Funds
                to
                Continue Operations**





Because
      the Company has no revenue, the minimum period of operations the Company could
      fund, relying on advances from its management, would be six months. In the
      event
      management is unwilling to fund operations, the Company could not operate at
      all. Therefore, the Company will have to seek financing from other sources,
      which, at this time cannot be determined. Therefore, there is a risk
      shareholders may lose their entire investment.






-5-






**3.**
            **Management
                has not Committed to Advancing Further Funds and are not willing
                to Sign
                Personal Guarantees allowing the Company to Borrow from Lending
                Institutions**





If
      no
      money is available, the Company will have to rely upon further advances from
      its
      management. Management has not committed to advancing further money to the
      Company and is not willing to sign personal guarantees allowing the Company
      to
      borrow from a lending institution. Without further advances and if no money
      is
      received, the Company will not have sufficient money to proceed with its planned
      objectives. Shareholders should be aware there is the distinct possibility
      they
      will lose their entire investment due to the Company having a lack of money
      to
      continue as a viable entity.





**4.**
            **Since
                Inception the Company has had Limited Operations and has incurred
                Accumulated Losses of
                $153,638.**





Since
      its
      inception on September 24, 1998, the Company has had limited operations other
      than exploration work to maintain the Tylerstone claim in good standing until
      February 24, 2009 As at August 31, 2005, the Company has incurred accumulated
      losses of $153,638 without realizing any revenue from any source. Without
      increasing its operations, the Company will be considered by the investment
      community to be basically an inactive company without any future potential.
      This
      being the case, the Company will find it extremely difficult to raise money
      from
      future investors thereby resulting in the directors and officers continually
      supplying money to the Company or, if they choice not to do so, allowing the
      Company to eventually lose the rights to the Tylerstone and cease operations
      all
      together.





**5.**
            **Auditors
                have Substantial Doubt as to Whether the Company will continue as
                a Going
                Concern.**





The
      Company’s auditors have stated in their report to the Directors dated September
      28, 2006 that the Company will need additional working capital for its planned
      activities and to service its debt which raises substantial doubt about the
      Company’s ability to continue as a going concern. The underlying assumption, in
      any business entity, is that it exists as a viable concern able to meet its
      current debt obligations and to continue with its planned operations. Unless
      the
      Company is able to obtain additional working capital, the auditors have
      substantial doubt that it will continue as a going concern.





**6.**
            **A
                Material Risk to the Company may be the Lack of Timely Reporting
                with the
                SEC.**





Our
      President is also the president of Douglas Lake Minerals, Inc., a reporting
      company in the United States, which has not been a timely filer of financial
      information with the SEC. For example, Douglas Lake Minerals, Inc. filed its
      Form NT-10Q - Notice of Inability to Timely File - on April 15, 2005 for a
      Form
      10-QSB for the quarter ended February 28, 2005 and then filed the Form 10-QSB
      on
      April 29, 2005 outside the time required for filing. Therefore, it was a late
      filer as defined under Rule 12b-25(b)(2)(ii) since the extension period is
      five
      and not fourteen days. With management not devoting significant time to the
      affairs of our Company, there is the strong possibility the lack of timely
      reporting may be a material risk to the Company in that its shares may be halted
      on the OTC Bulletin Board, either for a period of time or permanently, if it
      is
      consistent in filing late.





**7.**
            **Penny
                Stock Rules may make buying or selling of the Company’s Shares
                Difficult**





Broker-dealer
      practices in connection with transactions in penny stock are regulated by
      certain penny stock rules adopted by the Securities and Exchange Commission
      (the
“SEC”). Penny stocks generally are equity securities with a price of less than
      $5.00 (other than securities registered on certain national securities exchanges
      and quoted on the NASDAQ system). The penny stock rules require a broker-dealer,
      prior to a transaction in a






-6-




penny
      stock not otherwise exempt from the rules, to deliver a standardized risk
      disclosure document that provides information about the penny stocks and the
      nature and level of risks in the penny stock market. The broker-dealer also
      must
      provide the customer with current bid and offer quotations for the penny stock,
      the compensation of the broker-dealer and its salesperson in the transaction,
      and monthly account statements showing the market value of each penny stock
      held
      in the customer’s account. In addition, the broker-dealer must make a special
      written determination that the penny stock is a suitable investment for the
      purchaser and receive the purchaser’s written agreement to the transaction.
      These requirements may have the effect of reducing the level of trading
      activity, if any, in the secondary market for a security that becomes subject
      to
      the penny stock rules. Since the shares sold under the Company’s registration
      statement were at $0.10 per share, the Company’s common shares will be subject
      to the penny stock rules, and the shareholders may find it more difficult to
      sell their shares.





**8.**
            **The
                Company has only one Mineral Claim which might impair its Ability
                to
                Attract Capital to Acquire Further Mineral
                Properties**





The
      Company currently holds the mineral rights to only one mineral claim: the
      Tylerstone. The Company, in the future, may be unable to raise sufficient
      capital to acquire other mineral properties in the event that the Tylerstone
      is
      without merit which would result in the Company having no future exploration
      prospects.





**9.**
            **Messrs.
                Stephenson and Skoda are the only Directors who have had any Exploration
                Experience since Ms. Murphy has had no Involvement in the Past with
                an
                Exploration Companies.**





Laurence
      Stephenson, President, and Edward Skoda, Director, have experience in the
      exploration industry but Louise Murphy has been involved in an exploration
      company. Louise Murphy’s background is in the accounting and administration of
      professional firms. In the event, Messrs. Stephenson and Skoda were unable
      to
      assist the Company in its exploration activities due to terminating their
      involvement with the Company, Louis Murphy would not have the experience
      necessary to manage an exploration program on the Tylerstone claim. Therefore,
      consultants would have to be hired to assist in the exploration activities
      on
      the Tylerstone and to make the decisions as to further exploration work thereon.
      The Board of Directors would not have an individual whom had knowledge of the
      exploration industry and could advise it as to the future approach to be taken.





**10.**
            **The
                Directors have other Business Interests which might result in their
                not
                Devoting a Significant amount of Time to the Affairs of the Company.**





The
      majority of directors and officers are all involved with other business
      interests and presently only spend 5 to 10 hours a month individually on the
      affairs of the Company. Laurence Stephenson is the president and director of
      Armitage Mining Corp., Douglas Lake Minerals, Inc. and Sutcliffe Resources
      Ltd.;
      the first company has filed a Form SB-2 with the SEC, the second company is
      quoted on the OTC Bulletin Board and the third company is quoted on the Toronto
      Venture Exchange. Edward Skoda is a director of Zeo Tech Enviro Corp. and Quinto
      Technologies Inc., both companies quoted on the Toronto Venture Exchange. Their
      work commitments to each of these other companies might have an impact on the
      amount of time they can devote to the affairs of the Company. Presently, Louise
      Murphy spends approximately 5 hours, Edward Skoda spends approximately 10 hours
      and Laurence Stephenson spends approximately 10 hours.






-7-






**11.**
            **If
                the Company fails to Maintain Market Makers it will Affect the Liquidity
                of the Shares Purchased by New
                Investors.**





If
      the
      Company is unable to maintain at least one National Association of Securities
      Dealers, Inc. member broker/dealer as market maker, the liquidity of the common
      shares could be impaired, not only in the number of shares of common stock
      which
      could be bought and sold, but also through possible delays in the timing of
      transactions, and lower prices for the common stock than might otherwise
      prevail. Furthermore, the lack of market makers could result in persons being
      unable to buy or sell shares of the Company’s common stock on any secondary
      market.





**12.**
            **The
                Company’s Ability to Operate will depend on it Ability to Face all the
                Challenges of a New
                Business.**





The
      Company expects to face many new challenges in the start-up of its business.
      First, the Company will be required to raise capital to provide sufficient
      working capital to enable it to continue as a going concern. Second, it will
      have to undertake exploration programs to determine whether the Tylerstone
      actually has a viable ore reserve thereon and if not to evaluate the
      possibilities of identifying other mineral claims of merit. Third, it will
      have
      to attract individuals who have knowledge in exploration and in assisting the
      directors to develop the Company in the direction envisioned by the directors;
      that of becoming a mineral exploration company. Fourth, it will have to meet
      all
      the requirements of communicating on a regular basis with its shareholders
      and
      in maintaining it status as a public quoted company.





If
      the
      Company does not address all or any of the above challenges associated with
      the
      starting up of a new business enterprise, there is the distinct possibility
      it
      will not succeed and will eventually cease operations resulting in the total
      loss of their investments by all its present shareholders and any new
      investors.





**13.**
            **Management
                is under no Contractual Obligations to remain with the Company and
                their
                Departure could cause the Company’s Business to
                Fail.**





None
      of
      the directors or officers has signed a written employment agreement to ensure
      that they will remain with the Company. In the event any of the directors or
      officers decided to resign from the Company, the Company may be unable to
      attract other qualified officers and directors since it does not have the funds
      to do so.





**14.**
            **If
                the Company does not maintain the Tylerstone in Good Standing on
                or before
                February 24, 2009, it will lose its Interest to the Mineral Rights
                Thereon.**





If
      the
      Company is unable to maintain the Tylerstone in good standing on or before
      February 24, 2009 by not completing either assessment work or paying $3,100
      in
      cash to the Ministry, it will lose its interest in the minerals rights on the
      Tylerstone. If this occurs, the Company will no longer have any interest in
      any
      mineral properties and, therefore, will have no assets to assist in its future
      development. This situation might result in the Company no longer being a going
      concern and money invested by shareholders would be lost without any opportunity
      of recovery.





**15.**
            **There
                may be wild Fluctuations in the Share Price of the Company’s Shares which
                Management has no Control
                Over.**





If
      a
      market for the Company’s common stock develops, the Company’s stock price may be
      volatile with wide fluctuations in response to several factors,
      including:






-8-






(a)
            Actual
                or anticipated variations in the Company’s results of
                operations;


(b)
            The
                Company’s ability or inability to generate new
                revenues;


(c)
            Increased
                competition; and


(d)
            Conditions
                and trends in the mineral exploration
                industry.





Further,
      since the Company’s common stock is traded on the OTC Bulletin Board, its stock
      price may be impacted by factors that are unrelated or disproportionate to
      the
      Company’s operating performance. These market fluctuations, as well as general
      economic, political and market conditions, such as recessions, interest rates
      or
      international currency fluctuations may adversely affect the market price of
      the
      Company’s common stock. .





**16.**
            **The
                Company does not Anticipate Paying any Dividends to its Shareholders
                in
                the Foreseeable Future.**





The
      Company will not pay any dividends in the foreseeable future since it
      anticipates not making any revenue from the Tylerstone for many years to come
      and, when and if it does, which is extremely unlikely, it will retain the funds
      to explore other mineral properties or expand its activities on the Tylerstone.
      A new investor who is interested in income from his/her investment should
      consider another form of investment since the Company will never, in the
      immediate future, pay any dividends to its shareholders.





**17.**
            **Spending
                Money on Exploration Activities might not result in a Commercially
                Viable
                Ore Reserve ever being
                identified.**





There
      is
      no certainty any money spent on exploration of Tylerstone will result in the
      identification of commercial quantities of ore. Even if millions of dollars
      were
      spent over a period of years, an ore reserve might never be found and even
      if
      one were found it might not be profitable to extract such ores. Very few mineral
      claims ever become properties with commercially viable reserves thereon. An
      investor should not invest in this Company if they are expecting that money
      spent on the Tylerstone will result in an ore reserve of merit being discovered
      since the chances of any reserve being on the Tylerstone is extremely
      remote.





**18.**
            **Title
                to the Tylerstone is Unsure since no Survey has been undertaken to
                Determine the Boundaries of the
                Claim.**





While
      the
      Company has obtained geological reports and confirmation from the Ministry
      with
      respect to the Tylerstone as to the mineral rights thereon, the exact boundaries
      of the claim itself have not been verified by survey. The Company will not
      verify the boundaries of the Tylerstone by survey in the near future and might
      never undertake a survey. Therefore, the title and the precise location and
      area
      of the Tylerstone may be in doubt. The Tylerstone may be subject to prior
      unregistered agreements, transfers or native land claims, and title may be
      affected by undetected defects. To resolve any dispute over the boundaries
      of
      the Tylerstone might incur substantial legal costs for the Company and result
      in
      the Company losing its rights to the mineral on the Tylerstone.





**19.**
            **Positive
                results during Exploration does not Guarantee Commercial Production
                due to
                certain Environmental
                Regulations**





If
      the
      results of the Company’s geological exploration program indicates commercially
      exploitable reserves, of which there is no assurance that this will ever be
      the
      case, and the Company determines to pursue commercial production of the
      Tylerstone, the Company may be subject to an environmental review process under
      environmental assessment legislation in the Province of British Columbia.
      Compliance with an environmental






-9-




review
      process may be costly and may delay commercial production. Furthermore, there
      is
      the possibility that the Company would not be able to proceed with commercial
      production upon completion of the environmental review process if government
      authorities did not approve the Company’s program or if the costs of compliance
      with government regulation adversely affected the commercial viability of the
      proposed program. At this time the Company does not have any idea what the
      cost
      will be to undertake an environmental review. Without knowing the cost impact
      of
      the environmental review process, future investors might be wise to consider
      not
      investing in our common shares.





**20.**
            **The
                Company will be Subject to Intense Competition from other Exploration
                Companies.**





In
      Canada
      and the United States, there are numerous exploration companies varying in
      size
      from small to extremely large. All of these exploration companies are constantly
      searching for mineral properties of merit and funds from either private or
      public sources to further their exploration activities. The competition is
      extremely heavy and being a small exploration company in its initial stage
      of
      exploration will make it extremely difficult for the Company to attract funding
      for its exploration activities. This is due to many other companies competing
      for properties and capital either having a known name in the industry or a
      proven track record of successful exploration activities. If the Company is
      unable to attract capital for the Tylerstone, it might either have to find
      a
      joint venture partner to participate in its exploration programs or suffer
      the
      loss of the Tylerstone by not being able to maintain it in good standing.





**21.**  **Access
      to the Tylerstone is Difficult and Expensive**





The
      Tylerstone has no suitable road for easy access to it. Unless the exploration
      crew is prepared to endure the hardships of crossing ravines and scaling steep
      slopes, the only way to access the claim is by helicopter. Helicopter time
      is
      expensive especially since the source of helicopters is located in Pemberton,
      28
      miles from the Tylerstone. Before even flying the exploration crew to the
      Tylerstone, the helicopter would have to fly from Pemberton to Gold Bridge
      and
      subsequently return there. All helicopter time in the air would be chargeable
      to
      the Company. Supplies would have to be delivered to the Tylerstone by way of
      helicopter since any exploration crew would not want to have to manually carry
      in the supplies from Gold Bridge. If the crew had to carry the supplies it
      might
      prove difficult to attract an exploration crew. The difficulty of access to
      the
      Tylerstone claim and the cost of transporting an exploration crew to the claim
      might affect the eventual profitability of the Company.





**22.**
            **Mineral
                on the Tylerstone may not be of Commercial
                Value**





The
      Company does not know if the Tylerstone contains commercially exploitable
      reserves of marketable minerals since the claim is in the pre-exploration stage.
      It is extremely rare for a mineral property to ever find reserves of commercial
      value. Even though previous exploration activities have occurred on the
      Tylerstone by other exploration companies, none of these companies have found
      any indications that minerals on the Tylerstone are of commercial quantity
      and
      grade. Both the quantity of tons of ore to be extracted and its grade, being
      the
      number of ounces per ton, are instrumental in determining whether the minerals
      are of commercial value. If the number of tons is low, it will not be profitable
      for the Company to extract minerals from the Tylerstone. If the grade is low,
      smelter costs would not make it economically feasible to recover the minerals
      therein.





**23.**
            **Unknown
                Hazards will increase the Risk of Exploration for which the Company
                does
                not have the Funds available to Protect its Exploration Crew or Insure
                against Injuries.**





An
      exploration program on the Tylerstone will incur risk since the claim itself
      is
      located in a mountainous area of British Columbia with deep ravines and steep
      cliffs. The exploration crew will have to combat weather conditions which at
      times could be extremely wet or subject to snow conditions. The ground,
      comprising of sharp rock surfaces and fallen trees will be slippery which might
      result in injuries to the crew. The Tylerstone has an old






-10-




adit
      on
      it which, if explored to determine why it was originally dug, might collapse
      causing injuries to the crew. Hazards, such as mentioned above, might result
      in
      the Company being unable to continue exploration due to personnel not wishing
      to
      explore the Tylerstone unless safer conditions are present. Presently, the
      Company does not have the funds available to ensure that its exploration crew
      will adequately be protected from injuries at all times. Any injuries might
      result in lawsuits which the Company has not insured against.





**24.**
            **The
                Location and Access of Smelting Facilities might restrict the Refining
                of
                any Ore Extracted from the
                Tylerstone.**





Even
      if
      the Company is successful in its search for commercially exploitable reserves
      of
      marketable minerals on the Tylerstone, the Company may not be able to extract
      the minerals from the Tylerstone due to smelting facilities not being available
      within economic distance. Even though there is a smelter located in the town
      of
      Gold Bridge, within 10 miles of the Tylerstone, it is private and in March
      2004
      commenced to process ore from its own claims. Therefore, there may be no
      opportunity to use these facilities if and when the Company is able to extract
      minerals from the Tylerstone. Other smelter facilities would have to be used
      and
      this would result in significant costs of hauling ore great distances which
      might prove to be uneconomical for the Company. The cost of haulage of ore
      might
      result in the Company being unable to achieve its goals and eventually ceasing
      to exist as a viable operation, which might result in the total loss of funds
      invested by all our shareholders.





**25.**
            **Access
                to Supplies and Exploration Crew Personnel might prove to be Difficult
                and
                Result in Additional Costs and
                Expenditures.**





The
      Tylerstone is located 10 miles east of the township of Gold Bridge, British
      Columbia and therefore supplies and personnel are available there but with
      the
      smelter now operating near Gold Bridge and other mineral claims currently being
      explored in the surrounding areas by other exploration companies, it might
      be
      difficult to obtain supplies and crews as required. Such supplies as wood
      products, dynamite, bulldozers and people might not be available as needed
      resulting in delays in exploring the Tylerstone. Supplies might have to be
      transported from Vancouver which will increase the exploration cost and time
      for
      the completion of the exploration program. Even if crews are available in Gold
      Bridge, they may not have the training required to explore the Tylerstone and
      the Company will incur additional expenses training the crews which otherwise
      might not have been the case. Not having the supplies and crew personnel
      available when needed or having to pay increased costs for such supplies and
      crew personnel might result in exceeding the exploration budget. With the
      possibilities of increased costs due to lack of supplies and adequately trained
      personnel, new investors in our Company should consider the material effect
      such
      factors may have on the Company’s exploration program.





**26.**  **The
      Company does not carry Key Man Insurance.**





The
      Company does not carry key-man insurance and in the event of a loss of any
      of
      the directors and officers, especially Messrs. Stephenson and Skoda, the Company
      will not have the funds available to seek out and compensate other individuals
      of similar qualifications. Even if the Company does have funds in the future,
      the board of directors may decide not to use the funds to attract an individual
      with the required qualifications. The inability to compensate or retain
      qualified directors and officers will have a material adverse effect on the
      Company.








-11-








**ITEM
      2. DESCRIPTION OF PROPERTY**




**History
      of the Tylerstone claim**





The
      Company was incorporated in the State of Delaware on September 24, 1998. On
      February 24, 1999, the Company "staked" the Tylerstone near Gold Bridge, British
      Columbia and has undertaken exploration programs on the Tylerstone to meet
      the
      assessment requirements to maintain the Tylerstone in good standing during
      the
      last five years, other than in 2004, due to snow conditions in the area and
      paid
      the Ministry $3,081, to maintain the Tylerstone in good standing until February
      24, 2006.





The
      Ministry has granted to the Company the exclusive rights to the minerals on
      the
      Tylerstone from the date the Company first “staked” the Tylerstone. In order to
      keep these rights, each year the Company is required to spend money on the
      Tylerstone; either by way of assessment work (being the physical exploration
      work on the property) or by paying cash in lieu. If the latter happens, the
      Company pays the money directly to the Ministry. Each year the Company must
      pay
      $155 per unit. Since there are 20 units comprising the Tylerstone, the Company
      will have to pay approximately $3,100 in either physical work or cash in lieu
      of
      work not done to maintain the Tylerstone in good standing for a further twelve
      month period. In the event the Company does more assessment work than required
      for the year, the residual balance can be carried forward and applied to future
      years as it did in the winter of 2005. Due to this fact, the Tylerstone claim
      is
      in good standing until February 24, 2009.




The
      Company is in the pre-exploration stage and will be in the pre-exploration
      stage
      until it commences significant exploration activities. The Company will continue
      to be in the exploration stage until it achieves significant revenues from
      operations. In an exploration stage company, management devotes most of its
      activities exploring its mineral properties. There is no assurance that a
      commercially viable mineral deposit exists on the Tylerstone or any other
      mineral property acquired by the Company in the future. Further exploration
      will
      be required before a final evaluation as to the economic and legal feasibility
      is determined for the Tylerstone. The Company’s ability to emerge from the
      exploration stage with respect to its planned principal business activity is
      dependent upon its ability to attain profitable operations. There is no
      guarantee the Company will be able to identify, acquire or develop mineral
      properties that will produce profitability. Moreover, if a potential mineral
      property is identified which warrants acquisition or participation, additional
      funds may be required to complete the acquisition or participation, and the
      Company may not be able to obtain such financing on terms which are satisfactory
      to it. There is substantial doubt regarding the Company’s ability to continue as
      a going concern. The Company's plans for its continuation as a going concern
      include financing its operations through sales of its common stock but no
      decision as to number or price of shares to be issued has been determined.




The
      Company has the rights to certain minerals on the Tylerstone but does not have
      the rights to any placer minerals (being mineral contained in the overburden
      which is above the hard rock) or to coal. The placer rights could be staked
      by
      the Company but management feels with limited overburden on the majority of
      the
      Tylerstone there is no need to do so at the present time. If, during the
      exploration program, placer minerals are found to be of value, the Company
      will
      immediately stake the Tylerstone for placer. Presently, no other parties have
      the rights to placer on the Tylerstone. In the Gold River area, there are no
      coal bearing properties. The land itself is not owned by the Company. The
      Company has only the mineral rights thereon. The land is owned by the Crown;
      being the Province of British Columbia.






-12-





**Distribution
      Methods**





The
      Company has given no consideration to the method or methods of distribution
      to
      be used if it is able to discover a viable ore reserve on the Tylerstone. When
      and if this occurs the Company will engage the services of consultants who
      are
      experts in the distribution of minerals to determine the most efficient method
      available to it.





**Competitive
      Business Conditions and the Company’s Position in the Mining
      Industry**





Vast
      areas of Western Canada and the United States Pacific Northwest have been
      explored. Over the years, extensive literature has been prepared on numerous
      areas of mineralization thereby allowing a company to have an understanding
      of
      an area prior to obtaining the mineral rights. This allows a junior exploration
      Company to seek out and be competitive with other mining companies in obtaining
      properties subject to grass roots exploration.





Nevertheless,
      the Company is at a competitive disadvantage compared to established mineral
      exploration companies when it comes to being able to complete extensive
      exploration programs on the Tylerstone. In the future, if the Company is unable
      to raise further funds to carry on its exploration program, it might be forced
      to enter into a joint venture with another better financed company which will
      result in the Company’s interest in the Tylerstone being substantially
      diluted.





**Sources
      and Availability of Supplies and Raw Materials**





Supplies
      required during the pre-exploration stage, being posts for marking areas on
      the
      claim, link chain for measuring out the grid on the claim, ribbon for marking
      the intersections and shovels and picks can all be obtained from Gold Bridge
      which is within 10 miles of the Tylerstone. At this stage, the Company does
      not
      require a source of raw materials since it is in the pre-exploration stage,
      being mainly in exploring and establishing geochemical grids on the Tylerstone,
      whereas once a trenching and drilling program is decided upon the Company will
      require such raw materials as cement for establishing a drill site, wood for
      the
      platform supporting the drill and for the base for the tent camp.





**Dependence
      on One or a Few Major Customers**





The
      Company does not have any customers and may never have any customers if the
      Tylerstone does not have a viable ore reserve of commercial value on
      it.





**Amount
      Spent on Research and Development**





The
      Company has not spent any money on research and development since its
      inception.





**Requirements
      of Governmental Approvals and Mining Regulations**





During
      the Company initial exploration program under Phase I, it was required to seek
      approvals from the Ministry. Nevertheless, it did file with the Ministry a
      “Statement of Work, Cash Payment, Rental” when it completed its
      exploration.





This
      will
      be similar during Phase II but during Phase III the Company will be required
      to
      apply for a “Reclamation Permit” and “Safekeeping Agreement” which guarantees
      the Tylerstone will be left, after Phase III, is a condition similar to what
      it
      was prior to Phase III. The Company will be required to file a deposit with
      the
      Ministry ranging from $2,700 to $3,850 depending upon the determination of
      the
      Inspector of Mines for the Province of British Columbia. In the event the
      Company does not leave the Tylerstone in a similar state as prior to the
      exploration, the Ministry will undertake the work on behalf of the Company
      at a
      cost of between $0.55 to $0.77 per cubic meter of earth, trees and material
      moved.






-13-





The
      Company will have to adhere to certain section of the Mineral Act and other
      Acts
      as follows:





●
            
            “Mineral
                Explorations Code - Part II Health, Safety and Reclamation Code for
                Mines”
                which assists in the protection of employees and other persons who
                are
                exploring the Tylerstone;●
            
            “Fire
                Prevention and Suppression Regulations of the Forest Practices Code
                of
                British Columbia” which set guidelines for the camp fires and use of
                explosives during exploration; and●
            
            “License
                to Cut” will be required in event that trees need to be removed from
                Tylerstone.





In
      addition to the above, the Company will require an employee on the Tylerstone
      who has a First Aid Certificate and carries a First Aid Kit at all
      times.





Laurence
      Stephenson, the President of the Company, has extensive exploration experience
      and is familiar with the regulations respecting the initial acquisition and
      early exploration of mining claims in British Columbia.





**Environmental
      Requirement in British Columbia**





The
      Company’s exploration activities on the Tylerstone are subject to environmental
      regulations. Environmental legislation in Canada is working in a manner which
      may require structure standards and enforcement, increased fines and penalties
      for non-compliance, more stringent environmental assessments of proposed
      projects and a heightened degree of responsibility for companies and their
      officers, directors and employees.





1.  Environmental
      Regulations - Federal





Within
      Canada most of the environmental regulations in force are under the Provincial
      rather than the Federal government. As a result, federal legislation and
      regulations do not materially affect the Company’s operations.





2.  Provincial
      Environmental Regulations





Environmental
      requirements in the Province of British Columbia are under the direction of
      the
      Provincial Government since both the local and Federal governments do not take
      an active part in administering the requirements of Bill 57 - *Environmental
      Management Act* (the
      “Environmental Act”) ** which
      was
      passed after the third reading on October 21, 2003 and received Royal Assent
      on
      October 23, 2003.





The
      basic
      principle under the above Environmental Act is that an individual or company
      should bear the cost of returning the land to its original state if they are
      responsible for the disturbance. This Environmental Act incorporates the idea
      that whoever benefits financially from the activities on a piece of property
      and
      contributes to its contamination should be liable for its clean-up. If an
      individual or company benefits they should not be unfairly
      enriched.





The
      Company will secure all necessary permits for exploration, if required, and
      will
      file final plans of operation prior to the commencement of any exploration
      other
      than the establishment of a sampling grid. At the present time, the Company
      anticipates no endangered species will be disturbed. Re-contouring and
      re-vegetation of disturbed surface areas will be completed pursuant to the
      law.
      There will be no discharge of water into active streams, creeks, rivers or
      lakes
      and any other body of water regulated by the environmental law or regulation.
      Any portals, adits or shafts will be sealed.






-14-






Although
      compliance with such laws is not presently a significant factor in the Company’s
      operations, it is possible that compliance with future changes in environmental
      regulations, if any, will adversely affect its operations.





**Facilities
      During Pre-Exploration and Drilling Program**





During
      the further pre-exploration and future drilling program, the Company will not
      build facilities to house the exploration and drilling crew since both the
      Company and the drilling company will provide tent facilities while the crews
      are located on the Tylerstone. Even though the town of Gold Bridge is within
      a
      short distance from the Tylerstone, the time to travel would have to be done
      by
      helicopter and the Company does not wish to incur this expense on a daily basis.
      Tent and camping equipment can easily be either rented or purchased from
      Vancouver and transported by helicopter to the site.





**Staking
      of the Tylerstone**





The
      Tylerstone claim was “staked” by Edward Skoda, Director of the Company, on its
      behalf on February 24, 1999. “Staking” of a claim was the method used by the
      Ministry in verifying title to the minerals on Crown property. The individual
      staking a claim, known as the “staker,” inserts a post or stake into the ground
      of unstaked property and defines this post as the corner post or
“identification” post. A serial pre-numbered tag, purchased from the Gold
      Commissioner’s office (a division of the Ministry), is affixed to the post and
      the date and time of inserting the post into the ground is recorded on it as
      well as the proposed name of the claim. The staker is required to walk a line
      in
      one direction from the stake and another line at 90-degree angle from the
      original walk starting at the corner post. The lines are walked for
      approximately 1,500 feet. Upon completion of these two walks, the staker records
      the number of units being staked upon the metal tag on the corner post. This
      information is recorded on a 4-foot Post Mineral Claim form and filed with
      the
      Ministry in Vancouver, British Columbia.





As
      at
      January 15, 2005, the Ministry no longer required physical staking as noted
      above but allowed claims to be obtained over the Ministry’s website thereby
      eliminating the need to travel to the claim and insert post and walk the
      required distance.





**Hiring
      an Exploration Crew**





Due
      to
      the hardship of the Tylerstone in accessing it by foot, the Company might find
      it difficult to hire an exploration crew when it is needed. In the event the
      Company does not wish to incur the cost of using helicopters to transport the
      crew and supplies to the Tylerstone, only certain exploration workers would
      be
      suitable to climb the wooded mountain side to the Tylerstone while packing
      in
      supplies and tent facilities. These individuals would have to be in good
      physical shape and willing to endure hardships in traveling to and from the
      Tylerstone. This fact will limit the number of available men in the town of
      Gold
      Bridge which would result in the Company having to seek exploration workers
      in
      other areas of British Columbia. There is the distinct possibility the Company
      would have to pay above normal wages for these workers to be convinced to
      explore the Tylerstone. This being the case, it will have a financial impact
      on
      the Company since its costs associated with hiring these exploration workers
      would substantially increase.





**Other
      Mineral Properties**





The
      Company has not identified any other mineral properties for staking and,
      therefore, has only the mineral rights on the Tylerstone. It has not dedicated
      any resources to identifying other mineral properties.






-15-





**Employees**





The
      Company does not currently have any full time employees.





**Title
      to the Tylerstone**





The
      claim
      is recorded in the name of Laurence Stephenson, Principal Executive Officer,
      President and Director of the Company. This was done to save the Company from
      having to obtain a Free Miners License from the Ministry. A Free Miners License
      has to be held by either a company or an individual before any work can be
      undertaken on a mineral claim. To obtain a Free Miners License, the Company
      would have to incorporate extra-provincially since a company incorporated
      outside of British Columbia cannot hold the rights to mineral claims unless
      it
      is registered in the Province.





**Property
      Description, Location and Access**





The
      Tylerstone is located within the Lode Mineral Property near the town of Gold
      Bridge. The legal corner post (the “LCP”) of the Tylerstone claim has been
      established through the witness post staking procedure. The LCP is located
      on
      the northern shore, of the largest of three ponds, at the headwaters of Truax
      Creek. The claim can be accessed by snowmobile and snowshoes from either Sheep
      Creek Access Road or the Truax Creek access road. Both of these roads can be
      accessed from the village of Gold Bridge.





Tylerstone
      is located approximately 80 air-miles north-northeast of Vancouver, British
      Columbia, Canada. The property is approximately 1.25 miles north-northwest
      of
      Truax Mountain.





Access
      to
      Tylerstone is by helicopter from Pemberton, British Columbia or from Lillooet,
      British Columbia. Pemberton is 28 air-miles south-southwest of the property
      and
      Lillooet is 28 air-miles east-southeast of the property.





**Claim
      Status**





Tylerstone
      consists of a single ode mineral claim in the Lillooet Mining Division of
      British Columbia, covering an area of 1,235 acres. Claim information was
      obtained from the office of the Ministry as follows.





Claim
                Name
            Tenure
                No.
            Units
            Expiry
                DateTylerstone
            367927
            20
            February
                24, 2009





Over
      the
      years, the Company has undertaken certain work programs on the Tylerstone which
      are more fully described below. This has allowed the claim to be maintained
      in
      good standing since its original staking.





**Lack
      of a Viable Mineral Reserve**





The
      Company is in the pre-exploration stage, being engaged in the search of mineral
      deposits (reserves), without any assurance that a commercial viable mineral
      deposit or reserve exists on the Tylerstone. A reserve is defined as that part
      of a mineral deposit which could be economically and legally extracted or
      produced at the time of the reserve determination. Reserves are customarily
      stated in terms of “ore” (a natural occurance of one or more minerals that may
      be mined and sold at a profit or from which some part may be profitably
      separated) when dealing with metalliferous minerals (metal bearing ore).
      Reserves are either “proven” or “probable” and are defined as
      follows:






-16-







Proven
      (Measured) Reserves: Reserves for which (a) quantity is computed from dimensions
      revealed in outcrops, trenches, workings or drill holes; grade and/or quality
      are computed from the results of detailed sampling and (b) the sites for
      inspection, sampling and measurement are spaced so closely and the geologic
      character is so well defined that size, shape, depth and mineral content of
      reserves is well-established.





Probable
      (Indicated) Reserves: Reserves for which quantity and grade and/or quality
      are
      computed from information similar to that used in proven (measured) reserves,
      but the sites for inspection, sampling, and measurement are farther apart or
      are
      otherwise less adequately spaced. The degree of assurance, although lower than
      that for proven (measured) reserves, is high enough to assume continuity between
      points of observation.





**Geology**





It
      should
      be noted the Ministry has posted an extremely detailed publication on the
      metallurgy of the Bridge River area on their website:





( www.em.gov.vc.ca/mining/geosurv/minfile/mapareas/bridge.htm )





Tylerstone
      area is rugged and in areas below tree line, forest cover is dense with thick
      undergrowth. These factors, combined with poor access, appear to have
      discouraged the intense prospecting which took place in other parts of the
      Bridge River area. Modern geological and geochemical exploration techniques
      followed up by excavator trenching allow effective exploration
      today.





**Climate
      in the Tylerstone Area**





The
      winters can be harsh with many inches of snow during the months of October
      through to the end of March. Access to the Tylerstone during these months is
      extremely difficult and at some times impossible. During the months of April
      and
      May and again in September the climate is a mixture of rain and sleet. The
      rain
      can be heavy in the spring months thereby again making access to the Tylerstone
      difficult. The summers are normally hot and dry with a chance of forest closures
      by the Ministry of Forestry.





**Area
      and Local Mineralization**




The
      style
      of mineralization in the Bridge River area is similar to the Mother Lode camp
      of
      California. The two camps have similarities in ore, vein mineralogy, wall rock
      alterations (being the rock forming the walls of a drill hole) and wall rocks,
      and are similar in the association of the ore veins with the major fault along
      a
      belt of elongate serpentine bodies (having the qualities of being greasy or
      silky luster which feels slightly soapy) that flank the margins of granite
      batholiths (a large generally discordant plutonic mass comprising a course-
      grained igneous rock composed of greater than 20% quartz and feldspar that
      has
      more than 40 square miles of surface exposure and no known floor).





An
      extensive fracture system (a general term for any break in a rock, whether
      or
      not it causes displacement, due to mechanical failure by stress) in the Bridge
      River have provided abundant channel ways for vein-forming solutions. It is
      speculated that the stresses caused by the intrusion of the granitic plutons
      (a
      medium coarse grained rock formed by solidification of molten material that
      originates within the Earth) resulted in shearing (a deformation resulting
      from
      stresses that cause or tend to cause contiguous parts of the body to slide
      relatively to each other in a direction parallel to the plane of contact) and
      led to the development of veins (a mineral which fills a fault or other fracture
      in the host rock, in tabular or sheet like form, often associated with
      replacement of the host rock).






-17-





**Conclusion
      and Recommendations**




Tylerstone
      warrants a modest Phase I exploration program ($16,500) of data acquisition,
      aerial photograph interpretation, base map preparation, prospecting and report
      writing. Contingent upon the success of this Phase I program, Phase II program
      ($66,000) of geochemical sampling, geological mapping, rock sampling and report
      writing is recommended. A Phase III program ($165,000) of trenching and/or
      diamond drilling and report writing is recommended, contingent upon the success
      of the Phase II program. A breakdown of the exploration steps under each Phase
      is indicated below.





Phase
      1 -
      Estimated Cost: $16,500 (partially done in the fall of 2005)





-Acquisition
      of all property data on the Tylerstone and surrounding area and aerial
      photographs;


-Aerial
      photographic interpretation and base map preparation;


-Prospecting
      and the continuation of the existing grid system on the Tylerstone;


-Submission
      to a geological laboratory samples, both soil and rock, obtained from the
      Tylerstone for assaying for gold, silver and other minerals;


-A
      geological report prepared by an independent geologist on the findings and
      work
      undertaken on Phase I and recommendation regarding Phase II which will be
      presented to Laurence Stephenson for his review and presentation to the Board
      of
      Directors; and


-Preparation
      of assessment report to be filed with the Ministry.





Phase
      I
      is expected to take 10 working days including preparation of the assessment
      report.





Phase
      II (Contingent Upon the Success of Phase I) -
      Estimated Cost: $66,000





-Geochemical
      soil within the established grid system, where applicable;


-Geological
      mapping and rock sampling in various areas of the Tylerstone;


-Sample
      analysis for gold, silver and pathfinder elements (being the means which will
      lead the exploration crew to a deposit of a desired substance);


-Preparation
      of geological report on the exploration activities of Phase II for submission
      to
      Laurence Stephenson for review and discussion with the Board of Directors;
      and


-Preparation
      of assessment report to be filed with the Ministry.





Phase
      II
      is expected to take 25 working days including preparation of the assessment
      report.





Phase
      III (Contingent Upon the Success of Phase II) -
      Estimated Cost: $165,000





-Trenching
      of defined targets which were identified under Phase II, where
      applicable;


-Diamond
      drilling in areas of interest (at this time the exact footage to be drilled
      is
      unknown);


-Sample
      analysis for gold and silver - will be done by fire assay at a recognized
      laboratory in Vancouver;


-Preparation
      of a geological report by an independent geologist based on the finding under
      Phase III and recommendation for consideration by Laurence Stephenson and the
      Board of Directors; and


-Preparation
      of assessment report to be filed with the Ministry.





Phase
      III
      is expected to take 30 working days including preparation of the assessment
      report.





The
      total
      cost of completing Phase I to III inclusive is approximately
      $247,500.






-18-





The
      Company is considered to be in the pre-exploration stage and will be in this
      stage until it has completed Phases I to III. The Company’s work program is
      designed on a progressive basis whereby the results of earlier Phases determine
      the detail of the next Phase. The final decision to proceed to a further Phase
      will be the responsibility of Laurence Stephenson, in conjunction with the
      Board
      of Directors’ approval, after the Company has received analysis and
      recommendations from its independent consulting geologist for the last completed
      Phase. The factors which will determine whether Phase II is undertaken will
      be
      the gold and silver content from soil and rock samples under Phase I. If there
      is an indication of the presence of gold, even in lesser grades than would
      make
      it economic to recover, the Company would consider Phase II since it would
      allow
      the Company to further investigate and obtain geological information on the
      area
      where the gold grades were identified. Initially, gold grades of one tenth
      of an
      ounce per ton would be encouraging. By the end of Phase III, the Company will
      have a better understanding of the potential of the Tylerstone. Whether or
      not
      the Company can identify economic tonnage and grades by the end of Phase III
      is
      uncertain and maybe unlikely. The total number of days, as determined above,
      would be 65 but there will have to be time in between each Phase to assess
      the
      results and to organize the required personnel for the next Phase. Therefore,
      conservatively, the completion of Phases I to III inclusive would be
      approximately 90 to 100 days from the commencement of Phase I. After the entire
      exploration program has been completed, the Company will no longer be considered
      to be a pre-exploration company since sufficient exploration work would have
      been done on the Tylerstone.





Recent
      Exploration Work on Tylerstone





Exploration
      - February 2000





The
      Company did not perform any exploration work on the Tylerstone during this
      season but paid cash in lieu of work performed in the amount of $1,466 (being
      approximately $73 per unit for each of the 20 units) which maintained the claim
      in good standing until February 24, 2001.





During
      the first three years, the assessment charge is Cdn. $100 per unit or US $73
      per
      unit. In year four, the assessment value is doubled to Cdn. $200.00 per unit
      or
      US $155.





Exploration
      - February 2001





The
      objective of this physical work program was to orient a grid system over the
      adit zone, saddle zone and east ridge zone. A total of $1,503 was spent on
      this
      exploration work as follows:





(1)
            
            The
                prospector assessed the Tylerstone by helicopter from the town of
                Lillooet.(2)
            
            One
                of the objectives during the initial exploration program was to establish
                a grid system whereby future soil and rock samples could be obtained
                for
                assaying. No prospecting activities were undertaken due to the snow
                conditions.





A
      general
      topographical reconnaissance was carried out to determine the best grid layout
      due to the extreme topography. A total of 3,432 feet of baseline and 1,452
      feet
      of X - lines were established as follow:





The
      old
      exploration adit (a previous tunnel driven by the old prospectors following
      a
      vein structure) and three trenches were located for future
      exploration.





Exploration
      - February 2002





The
      objective of this physical work program was to extend a grid system in
      preparation for a geochemical soil sampling program. A total of $1,416 was
      expended to establish 12,535 feet of sampling grid.








-19-





Exploration
      - February 2003





The
      objective of the physical work program for 2003 was to extend the grid system
      established in 2002 and 2003. A total of $2,816 was expended establishing 21,285
      feet of sampling grid.




Exploration
      - February 2004





Due
      to
      heavy snow conditions in January and February 2004 on the Tylerstone, the
      Company could not access the claim. Therefore, it was required to pay cash
      in
      lieu of exploration for work not done in the amount of $3,081. This amount
      was
      paid to the Ministry and maintained the Tylerstone in good standing until
      February 24, 2005.





Exploration
      - February 2005





On
      February 22, 2005, the Company filed a Statement of Work, Cash Payment, Rental
      form with the Ministry indicating the Company has incurred exploration costs
      in
      the amount of $3,414 to maintain the Tylerstone in good standing until February
      24, 2006. The assessment work undertaken was detailed geological mapping and
      geotechnical sampling (thin section cutting of sample rocks).





Exploration
      - February 2006





Air
      photo
      interpretations with follow-up reconnaissance prospecting determined the adit
      and Saddle Zones should be explored by ground geophysics to penetrate the
      glacial till and marine deposits. This type of overburden masks the ground
      geochemical signature that the sampling density would be insufficient to
      properly delineate any of the potential mineralized zones.





The
      Adit
      Zone was located and found to be caved in. The portal was mucked out safely
      to
      bedrock but the back and face kept sloughing in with frozen talus rock. Two
      floors samples were cut on the vein.





The
      two
      Saddle Zone trenches were located, cleaned out and sampled.





A
      general
      reconnaissance was conducted to locate the East Ridge Zone and any other old
      workings in the immediate area. No workings or showings were found.





Rusty
      gossan float was noted sporadically throughout the marine deposit. There did
      not
      appear to be any concentrated gossan trains or zones.





Magnetic
      field and VLF data was collected simultaneously during the ground survey. Data
      was collected using two CSM-19 field units capable of taking both magnetic
      field
      and VLF readings. One unite was used as a base station magnetometer, Series
      No.
      69567, the other as a mobile unit, Series No. 9229, both using Hawaii
      frequency.





The
      base
      station and the field magnetometers are synchronized on the basis of time and
      computer software is used to correct the field data during diurnal
      variations.





The
      VLF
      method uses powerful radio transmitters set up in different parts of the world
      (ie., Hawaii). Signals from these powerful transmitters induce electric currents
      in conductive bodies. Induced currents produce secondary magnetic fields that
      can be detected at surface through deviations on the normal VLF
      field.








-20-





**Company’s
      Main Product**





The
      Company does not currently have and may never have a main product if the Company
      is unsuccessful in its exploration of the Tylerstone. The Company’s main product
      may be the sale of gold and silver that can be extracted from the Tylerstone
      when, and if ever, a commercially viable ore reserve is discovered. There is
      no
      assurance a commercially viable ore reserve will ever be identified and whether,
      if identified, it will be of the size and grade to be economically
      feasible.





**Investment
      Policy**





The
      Company is not limited on the percentage of assets which may be invested in
      any
      one investment or mineral property. A disposal of a major asset would result
      in
      the Board of Directors seeking shareholder approval since this would ensure
      no
      subsequent shareholder action could be brought against the Company and its
      directors and officers. The Company’s policy is to acquire assets, being mainly
      mineral properties, primarily for income in the future rather than capital
      gains. It is the intention of the Company to explore and develop, if warranted,
      the Tylerstone in hopes of eventually developing it into income producing
      property from the sale of the minerals contained thereon.







**ITEM
      3. LEGAL PROCEEDINGS**




There
      are
      no legal proceedings to which the Company is a party or to which its property
      is
      subject, nor to the best of management’s knowledge are any material legal
      proceedings contemplated.







**ITEM
      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS**




There
      has
      been no Annual General Meeting of Stockholders within the last fiscal year.







**ITEM
      5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
      MATTERS**




There
      has
      been no established trading market for the Company’s common stock since it has
      been quoted on the OTCBB. Since its inception, the Company has not paid any
      dividends on its common stock, and the Company does not anticipate that it
      will
      pay dividends in the foreseeable future. As at August 31, 2006 the Company
      had
      52 shareholders; three of these shareholders are officers and directors of
      the
      Company.





There
      are
      no securities authorized for issuance under outstanding stock options, warrants
      or rights. There are no employee benefit plans entered into between the Company
      and its director, officers, consultants or other non-employees. The Company
      is
      considering adopting an incentive stock option plan for officers, directors,
      employees and consultants in order to attract personnel who will assist in
      the
      development of the Company. Once the incentive stock option plan has been
      structured it will be presented at the Annual Meeting for shareholders’
approval.








-21-







**ITEM
      6. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
      OPERATION**




**OVERVIEW**





The
      Company was incorporated on September 24, 1998 under the laws of the State
      of
      Delaware. The Company's Articles of Incorporation currently provide that the
      Company is authorized to issue 25,000,000 shares of common stock, par value
      $0.001 per share. As at August 31, 2006, there were 2,610,000 shares
      outstanding. Under its prospectus which became effective on September 9, 2005,
      the Company issued 490,000 common shares at a price of $0.10 per share.





**LIQUIDITY
      AND CAPITAL RESOURCES**





There
      is
      limited historical financial information about the Company upon which to base
      an
      evaluation of its performance. The Company is a pre-exploration stage company
      and has not generated any revenues from operations.





The
      Company’s continued existence and plans for future growth depend on its ability
      to obtain the capital necessary to operate, through the generation of revenue
      and the issuance of additional debt or equity. The Company will need to raise
      capital to fund normal operating costs and exploration efforts. If the Company
      is not able to generate sufficient revenues and cash flows or obtain alternative
      funding, it will be unable to continue as a going concern. As disclosed in
      the
      report of the independent auditors on the Company’s financial statements
      provided elsewhere in this Form 10K-SB, its recurring losses and negative cash
      flows from operations raises substantial doubt about the Company’s ability to
      continue as a going concern. The Company’s working capital deficiency as at
      August 31, 2006 is $48,588 with accumulated losses from the date of inception
      of
      $153,638. During the year the Company settled debts by way of forgiveness by
      its
      creditors in the amount of $50,744 and by way of a reduction in accounts payable
      of $5,553. At present time, there are no alternative sources of funds other
      than
      the issuance of shares in the future. The directors have not, at this time,
      given any consideration to advancing additional funds or obtaining debt
      financing from institutional lenders supported by their personal guarantees.
      If
      the Company does not receive sufficient funds to settle amounts owed to third
      party creditors and pay future expenses, there is the possibility that the
      Company might cease operations and no longer be quoted on the OTC Bulletin
      Board
      which would result in all shareholders losing their investment in the
      Company.





As
      at
      August 31, 2006, the Company had only cash of $896 as its only asset, and
      $49,484 of liabilities of which $21,632 were due to the related parties. Amounts
      owed to related parties have no specific terms of repayment and bear no
      interest. The following schedule shows the minimum amount of capital necessary
      for the Company to finance planned operations for a period of not less than
      twelve months from the date of this Form 10-KSB.








-22-







******Expenditure**
            
            **Estimated**
              **Expenses**
            **Accounts**
              **Payable**
              **Aug.
                31, 2006**
            **Estimated**
              **Cash**
              **Required**Accounting
                and audit
            i
            $
                7,500
            $
                21,775
            $
                29,275Annual
                General Meeting
            ii
            500
            -
            500Bank
                charges
            
            100
            -
            100Edgar
                filings
            iii
            1,100
            -
            1,100Filing
                fees and franchise taxes
            iv
            259
            -
            259Legal
            v
            1,000
            5,778
            6,778Office
            
            500
            299
            799Shareholders’
                communication
            vi
            2,000
            -
            2,000Transfer
                agent's fees
            vii
            1,200
            -
            1,200Total
                expenses
            
            $14,159
            $27,852
            $42,011





i.
            
            The
                Company will have Madsen & Associates, CPA’s Inc., review its 10-QSBs
                and examine its Form 10-KSB. In addition, the Company has an internal
                accountant prepare the working papers for the various financial statements
                to be sent to Madsen & Associates.ii.
            
            The
                Directors have approved the holding of an Annual General Meeting
                of
                Stockholders. No date has been set for the Meeting at this time.
                The above
                cost relates to the preparation of the Information Circular and Proxy,
                mailing and tabulating the votes received from the
                shareholders.iii.
            
            The
                various Forms 10-KSB and 10-QSB will have to be edgarized for submission
                to the SEC.iv.
            
            The
                Company has paid annual filing fees to The Company Corporation of
                $199.
                Franchise taxes were paid to the State of Delaware in the amount
                of
                $60.v.
            
            The
                Company will have to use the services of its attorney during the
                year for
                various matters such as preparation of news releases and review of
                the
                filing documents with the SEC.vi.
            
            Now
                that the Company is quoted on the OTCBB, it will have to correspond
                periodically with its shareholders and investing public in general.
                Certain documents, such as new releases, annual meetings, responses
                to
                enquires, etc., will have to be attended to. The above noted cost
                is an
                estimated since management has never performed this function
                before.vii.
            
            The
                transfer agent is Nevada Agency & Trust Company who charges $1,200 per
                year to act as such.





Off-Balance
      Sheet Arrangements





As
      of
      August 31, 2006, the Company does not have any off-balance sheet arrangements.





Offices





The
      Company’s executive offices are located in Suite 302 - 15015 Victoria Avenue,
      White Rock, British Columbia. The office is located in the personal residence
      of
      Laurence Stephenson. There is no charge to the Company by Mr. Stevenson but
      the
      Company has accrued donated rent expense in its accounts. Presently, the Company
      is not anticipating incurring any actual expense for an office until such time
      as management feels the Company has significant activity to warrant an office
      and the funds are available.






-23-





Incorporation
      in the State of Delaware





The
      Company incorporated in the State of Delaware rather than British Columbia
      for
      tax reasons. For example, both the Federal and Provincial Governments impose
      tax
      on any profits made. This corporate tax could range as high as 51% of net
      income. In addition, the Province of British Columbia has an annual capital
      tax
      based on the number of shares outstanding. By having a Delaware-based company,
      the Company, if it ex-provincially incorporates in British Columbia, will only
      be subject to a 15% withholding tax as set forth in the Canada/US Tax
      Treaty.





Purchase
      of Assets





The
      Company does not expect to purchase or sell any plant or significant equipment
      during the next year.





Increase
      in Number of Employees





The
      Company does not expect any significant changes in the number of
      employees.




**ITEM
      7. FINANCIAL STATEMENTS**




The
      financial statements of the Company are included following the signature page
      to
      this Form 10-KSB.




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




During
      the fiscal year ended August 31, 2006 and through the subsequent period to,
      to
      the best of the Company's knowledge, there have been no disagreements with
      Madsen & Associates, CPA's Inc. on any matters of accounting principles or
      practices, financial statement disclosure, or audit scope procedures, which
      disagreement if not resolved to the satisfaction of Madsen & Associates,
      CPA's Inc. would have caused them to make a reference in connection with its
      report on the financial statements for the year.




**ITEM
      8A - CONTROLS AND PROCEDURES**




(a)  Evaluation
      of Disclosure Controls and Procedures





Our
      Chief
      Executive Officer and our Chief Financial Officer, after evaluating the
      effectiveness of Tylerstone’s controls and procedures (as defined in the
      Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e) as of the end
      of
      the period covered by this annual report on Form 10-KSB (the “Evaluation Date”),
      have concluded that as of the Evaluation Date, Tylerstone’s disclosure controls
      and procedures were adequate and effective to ensure that material information
      relating to it would be made known to it by others, particularly during the
      period in which this annual report on Form 10-KSB was being
      prepared.






-24-




(b)  Changes
      in Internal Controls





There
      were no changes in Tylerstone’s internal controls or in other factors that could
      affect its disclosure controls and procedures subsequent to the Evaluation
      Date,
      nor any deficiencies or material weaknesses in such disclosure controls and
      procedures requiring corrective actions.




**ITEM
      8B - OTHER INFORMATION**




There
      is
      no other information required to be disclosed in this report on Form 8-K during
      the fourth quarter of the August 31, 2006 which is not covered elsewhere in
      this
      Form 10-KSB.


**PART
      111**




**ITEM
      9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS; COMPLIANCE
      WITH SECTION 16 (a) OF THE EXCHANGE ACT**




The
      name,
      municipality of residence, position held within the Company, age and the year
      the individual was first elected or appointed as a director or executive officer
      of the Company are set forth in the following table. Each director is to serve
      until the Annual Meeting of Shareholders or until his or her successor is
      elected or appointed. The work experience of each of the directors and officers
      is indicated in their individual biographies set forth below.





**Name
                and**
              **Municipality
                of**
              **Residence**
            **Position
                or Office within the**
              **Registrant**
            **Age**
            **Year**
              **Became**
              **A
                Director**Laurence
                Stephenson
              White
                Rock, B.C.
              Canada
            Chairman
                of the Board,
              Principal
                Executive Officer
              President
                andDirector
                (1)
            57
            2004Louise
                Murphy
              Coquitlam,
                B.C.,Canada
            Principal
                Financial Officer, Secretary
              Treasurer
                and Director
                (2)
            56
            2004Edward
                Skoda
              Chapaloa,Jalisco,
                Mexico
            Director
                (3)
            58
            1998
                to
              2001
                and2003





(1)
            
            Laurence
                Stephenson became a director on May 18, 2004 and was appointed on
                the same
                day as Principal Executive Officer and President. Mr. Stephenson
                serves as
                Chairman of the Board of Directors.(2)
            
            Louise
                Murphy became a director on May 18, 2004 and was appointed on the
                same day
                as Principal Financial Officer and Secretary Treasurer.(3)
            
            Edward
                Skoda was the founding director of the Company and became President
                on
                October 5, 1998 and resigned on April 2, 2001 as President and Director
                due to other business matters requiring his attention. He was again
                appointed a Director on April 15,
                2003.






-25-




**Audit
      Committee**





The
      Audit
      Committee of the Company currently consists of Laurence Stephenson, Principal
      Executive Officer, Louise Murphy, Principal Financial Officer, and Edward Skoda,
      Director. The general function of the audit committee is to review the overall
      audit plan and the Company’s system of internal control, to review the results
      of the external audit, and to resolve any potential dispute with the Company’s
      auditors. The percentage of common shares beneficially owned, directly and
      indirectly by the officers and directors, collectively, is 29 percent of the
      total issued and outstanding shares.





**Biographies**





The
      following are biographies of the directors and officers of the
      Company.





LAURENCE
      STEPHENSON has a Bachelor of Science in geology (1975) from Carleton University
      in Ottawa, Ontario, Canada and a Master of Business Administration (1985) from
      York University in Toronto, Canada. During the majority of his working life,
      starting from 1967, Mr. Stephenson has been involved in planning and budgeting
      for mineral exploration in various parts of Canada as well as consulting in
      geological and offering business advice to the exploration industry. He has
      been
      a director of various companies associated with mineral exploration such as
      Glencairn Explorations Ltd. (listed on the former Calgary Exchange), Strike
      Minerals Ltd. (listed on the over-the-counter in Toronto), Barkhor Resources
      Inc., Golden Chief Resources Ltd., Golden Hemlock Exploration Ltd., and Kokanee
      Exploration Ltd. (all three listed on the former Vancouver Stock Exchange)
      and
      Sutcliffe Resources Ltd. (previously listed on the Toronto Stock Exchange).
      As a
      director his duties included hiring and evaluation staff, negotiating with
      the
      provincial government to secure prospects and permits, assisting with joint
      ventures arrangements and applicable financing, preparing profiles for
      submission to mining journals, organizing re-activation reports and overseeing
      the various exploration programs undertaken by the companies he was a director.
      At the same time, Mr. Stephenson has his own private consulting firm called
      GeoFin Inc. where he offered business advise to the mining community, designing
      and implication of various exploration programs to be used in both Mexico and
      South America and assisting in financing various ventures. Presently, Mr.
      Stephenson is the president and a director of Armitage Mining Corp. (a company
      which has submitted in 2005 to the SEC a Form SB-2), Douglas Lake Minerals,
      Inc.
      (a reporting company trading on the OTC Bulletin Board) and Sutcliffe Resources
      Ltd.(a company quoted on the Toronto Venture Exchange).





LOUISE
      MURPHY has an extensive background in administration in both the medical and
      legal office environment and holds a degree as a Certified Management Accountant
      (1989). Her duties included organizing the accounting, computer and office
      procedures as well as undertaking job costing, budget preparation and variance
      reporting. In addition, she has been responsible for making decisions regarding
      scheme, format, frequency and type of advertising required by various firms
      she
      has been employed with. Since 2001 to the present time, Ms Murphy became
      self-employed offering her services to various law firms and being “on call” to
      the Vancouver School Board for various accounting assignments. On May 18, 2004,
      she became a Director and was appointed Chief Financial Officer, Chief
      Accounting Officer and Secretary Treasurer of the Company. Ms. Murphy does
      not
      hold a directorship in any other reporting company.





EDWARD
      SKODA attended the Haileybury School of Mines in Haileybury, Ontario where
      he
      obtained a diploma in mining engineering technology (1971). After graduation
      he
      was employed by Kaiser Engineering Inc and assigned to their Hammerstay Iron
      Project in Australia as a civic inspector for the construction of a railway
      bed.
      In 1973, he was employed by Newmont Mining Ltd. of Vancouver, B.C. as an
      underground mining ventilation technologist in their Granduc Mine in northern
      British Columbia. During 1976 to 1991, Mr. Skoda worked for such companies
      as
      Tara Mines in Ireland






-26-






and
      the
      Northwest Territories, Echo Bay Mines at Port Radium near Great Bear Lake,
      Ange
      Gold Ltd. of Vancouver, Canadian Mining Services Ltd. and Bechtel Corporation
      of
      San Francisco, California where his jobs comprised over this period of time
      security manager, warehouse manager, underground shift boss and project manager.
      These positions involved control of explosives, overseeing supplies and shipping
      of concentrate, mine development including rehabilitation of old adits,
      underground exploration, drilling blasting in order to extend the adits and
      assisting with preparation of budgets. In 1991, Mr. Skoda became a director
      of
      Lornex Exploration Inc. and became the project manager with the objective of
      mining the old Churchill Copper Project and Davis Keyes Copper Project both
      in
      north B.C. near Nelson. In 1992, he became self employed by staking claims
      for
      various companies in Downsville and Forest Hills area of California, Anyox,
      Princeton and Bralorne located in B.C. and other claims in Mexico, Nevada and
      Arizona. In the past, Mr. Skoda was a director, until 1999, of Mandalay Capital
      Corp. (now called Save the World Air, Inc.) which trades on the OTC Bulletin
      Board and was a director of The Bralorne Mining Company (a reporting company
      in
      the United States which does not trade on any public exchange) until he resigned
      in the spring of 2004. In addition, Mr. Skoda is a director and secretary
      treasurer of Colossus Ventures, Inc. which filed in November 2004 a Form SB-2
      with the SEC.





Mr.
      Skoda
      served as President and Principal Executive Officer of the Company from its
      inception to April 2, 2001 and on April 15, 2003 was again appointed to the
      Board of Directors. Currently, Mr. Skoda is a director of two public industrial
      mineral companies listed on the Toronto Venture Exchange in Toronto, Ontario:
      one: Zeo Tech Enviro Corp (6 years as a director) - a producer of zeolite
      product for the oil and gas industry and two: Quinto Technologies Inc. (8 years
      as a director) - exploring for graphite nickel and iron ore.





Although
      Laurence Stephenson, Louise Murphy and Edward Skoda do not work full time for
      the Company, they plan to devote whatever time is required as the Company
      advances in its exploration program. Once the Tylerstone is ready for exploring,
      both Laurence Stephenson and Edward Skoda will devote the required time to
      ensure the exploration program is completed within budget. It is estimated
      Laurence Stephensen will spend 40 hours a month overseeing the exploration
      whereas Edward Skoda worked full time on the Tylerstone during the exploration
      period. It is expected Louise Murphy will be required to spend at least 15
      hours
      a month accounting for the expenses during the exploration program and preparing
      an analysis of actual to budgeted costs. If the Tylerstone is proven to have
      an
      ore reserve on it, the time required by the directors and officers will increase
      significantly.





**Significant
      Employees**





Other
      than the officers of the Company, the Company does not currently have any
      significant employees. The Company might have to engage the services of certain
      consultants, who are not employees, to assist in the exploration of the
      Tylerstone, if either Laurence Stephenson or Edward Skoda are unavailable at
      the
      time the exploration work will take place. If consultants are required, they
      will be an integral part to the operations of the Company for the period they
      are so engaged. At the present time, the Company has not yet identified any
      prospective consultants.





**Family
      Relationships**





There
      are
      no family relationships among directors, executive officers, or persons
      nominated or chosen by the Company to become directors or executive
      officers.





**Involvement
      in Certain Legal Proceedings**





To
      the
      knowledge of management, during the past five years, no present director,
      executive officer or person nominated to become a director or an executive
      officer of the Company:






-27-







(1)
            filed
                a petition under the Federal bankruptcy laws or any state insolvency
                law,
                nor had a receiver, fiscal agent or similar officer appointed by
                the court
                for the business or property of such person, or any partnership in
                which
                he was a general partner at or within two years before the time of
                such
                filings, or any corporation or business association of which he was
                an
                executive officer at or within ten years before the time of such
                filing;





(2)
            was
                convicted in a criminal proceeding or named subject of a pending
                criminal
                proceeding (excluding traffic violations and other minor
                offenses);





(3)
            was
                the subject of any order, judgment or decree, not subsequently reversed,
                suspended or vacated, of any court of competent jurisdiction, permanently
                or temporarily enjoining him from or otherwise limiting, the following
                activities:





(i)
            acting
                as a futures commission merchant, introducing broker, commodity trading
                advisor, commodity pool operator, floor broker, leverage transaction
                merchant, any other person regulated by the Commodity Futures Trading
                Commission or an associated person of any of the foregoing, or as
                an
                investment advisor, underwriter, broker or dealer in securities,
                or as an
                affiliate person, director or employee of any investment company,
                or
                engaging in or continuing any conduct or practice in connection with
                such
                activity;





(ii)  engaging
      in any type of business practice; or





(iii)
            engaging
                in any activities in connection with the purchase or sale of any
                security
                or commodity or in connection with any violation of Federal or State
                securities laws or Federal commodities
                laws;





(4)
            was
                the subject of any order, judgment, or decree, not subsequently reversed,
                suspended, or vacated, of any Federal or State authority barring,
                suspending or otherwise limiting for more than 60 days the right
                of such
                person to engage in any activity described above under this subsection
                (3)(i) above, or to be associated with persons engaged in any such
                activities;





(5)
            was
                found by a court of competent jurisdiction in a civil action or by
                the
                Commission to have violated any Federal or State securities law,
                and the
                judgment in such civil action or finding by the Commission has not
                been
                subsequently reversed, suspended or
                vacated.





(6)
            was
                found by a court of competent jurisdiction in a civil action or by
                the
                Commodity Futures Trading Commission to have violated any Federal
                commodities law, and the judgment in such civil action or finding
                by the
                Commodity Futures Trading Commission has not been subsequently reversed,
                suspended or vacated.





**Compliance
      with Section 16 (a) of the Exchange Act**





The
      Company knows of no director, officer, beneficial owner of more than ten percent
      of any class of equity securities of the Company registered pursuant to Section
      12 (“Reporting Person”) that filed any reports required to be furnished pursuant
      to Section 16(a) other than Louise Murphy. Other than those disclosed below,
      the
      Company knows of no Reporting Person that failed to file the required reports
      during the most recent fiscal year.





The
      following table sets forth as at August 31, 2006, the name and position of
      each
      Reporting Person that filed any reports required pursuant to Section 16 (a)
      during the most recent fiscal year.








-28-





Name
            Position
            Form
            Date
                Report FiledLouise
                Murphy
            Chief
                Financial Officer, ChiefAccounting
                Officer and Director
            3
            September
                19, 2005




**ITEM
      10. EXECUTIVE COMPENSATION**




**Cash
      Compensation**





The
      following table sets forth compensation paid or accrued by the Company for
      the
      last four years ended August 31, 2006 to directors and officers:




**Summary
      Compensation Table ( 2003, 2004, 2005 and 2006)**





Long
      Term Compensation (US Dollars)


**** **** Annual
      Compensation    Awards   Payouts


(a)
            (b)
            (c)
            (e)
            (f)
            (g)
            (h)
            (i)Name
                andPrincipal
                position
            Year
            Salary
            Other
              Annual
              Comp.
              ($)
            Restricted
              Stock
              awards
              ($)
            Options/
              SAR
              (#)
            LTIP
              payouts
              ($)
            All
                other
              compen-
              sation
              ($)Laurence
                Stephenson
              President,
                and
              Director
            2004
              2005
              2006
            -0-
              -0-
              4,500
            -0-
              -0-
              -0-
            -0-
              -0-
              -0-
            -0-
              -0-
              -0-
            -0-
              -0-
              -0-
            -0-
              -0-
              -0-Louise
                Murphy
              Secretary
                Treasurer and Director
            2004
              2005
              2006
            -0-
              -0-
              -0-
            -0-
              -0-
              -0-
            -0-
              -0-
              -0-
            -0-
              -0-
              -0-
            -0-
              -0-
              -0-
            -0-
              -0-
              -0-Edward
                Skoda
              Director
            2003
              2004
              2005
              2006
            1,575
              2,000
              6,000
              4,600
            -0-
              -0-
              -0-
              -0-
            -0-
              -0-
              -0-
              -0-
            -0-
              -0-
              -0-
              -0-
            -0-
              -0-
              -0-
              -0-
            -0-
              -0-
              -0-
              -0-Fred
                Hawkins
              Former
                President
              Current
                Director
            2003
              2004
              2005
            -0-
              -0-
              -0-
            -0-
              -0-
              -0-
            -0-
              -0-
              -0-
            -0-
              -0-
              -0-
            -0-
              -0-
              -0-
            -0-
              -0-
              -0-Robin
                Brine
              Former
                Director
            2004
              2003
            -0-
              -0-
            -0-
              -0-
            -0-
              -0-
            -0-
              -0-
            -0-
              -0-
            -0-
              -0-Gerald
                Hardy
              Former
                Director
            2003
              2004
            -0-
              -0-
            -0-
              -0-
            -0-
              -0-
            -0-
              -0-
            -0-
              -0-
            -0-
              -0-





Other
      than Edward Skoda who received $500 per month in compensation from the date
      of
      inception to March 31, 2001 for a total of $15,500 at which time no other
      director received any other form of compensation. During the current year Edward
      Skoda received $1,500 as management fees and Laurence Stephenson received
      $4,500. In addition Edward Skoda received $3,100 for work performed on the
      Tylerstone claim in late 2005.




-29-





There
      are no
      stock options outstanding as at September 30, 2006 and no options have been
      granted in 2006, but it is contemplated in the future the Company may issue
      stock options in the future to officers, directors, advisers and future
      employees.





No
      director or officer is indebted to the Company and none have borrowed any funds
      from the Company.





The
      Company has no defined benefit pension plan or any long-term incentive plan
      that
      provides annual benefits to any directors and officers.





Except
      for the payment of the management fee to Edward Skoda, the Company has not
      entered into any employment plan or arrangement, including payments to be
      received from the Company either currently or in the future as a result of
      resignation, retirement or any other termination of the Company’s officers and
      directors.





There
      exist no plans or arrangements for a change-in-control of the
      Company.





**Bonuses
      and Deferred Compensation**





None





**Compensation
      Pursuant to Plans**





None


**Pension
      Table**





None





**Other
      Compensation**





Other
      than the compensation noted above, the only other compensation paid to a
      director was to Edward Skoda in the amount of approximately $3,100 (Cdn $3,400)
      for work undertaken in the fall of 2005 on the Tylerstone claim.





**Compensation
      of Directors**





As
      noted
      elsewhere in this Form 10-KSB.





**Termination
      of Employment**





There
      are
      no compensatory plans or arrangements, including payments to be received from
      the Company, with respect to any person named in Cash Consideration set out
      above which would in any way result in payments to any such person because
      of
      his resignation, retirement, or other termination of such person’s employment
      with the Company or its subsidiaries, or any change in control of the Company,
      or a change in the person’s responsibilities following a change in control of
      the Company.








-30-







**ITEM
      11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
      MANAGEMENT**




The
      following table sets forth information regarding the beneficial ownership of
      shares of the Company’s common stock as of September 30, 2006 (2,610,000 shares
      issued and outstanding) by (1) all stockholders known to the Company to be
      beneficial owners of more than 5 percent of the outstanding common stock; and
      (2) all directors and executive officers of the Company, individually and
      collectively as a group. The table also reflects such ownership assuming the
      maximum shares sold for the offering is reached.





**Title
                or**
              ******Class**
            **Name
                and Address of**
              **Beneficial
                Owner****(1)**
            **Amount
                of****Beneficial**
              ******Ownership (2)**
            **Percent
                of****Class**Common
              Stock
            Laurence
                Stephenson
              302-15015
                Victoria Ave.
              White
                Rock, B.C.,Canada,
                V4B 1G2
            250,000
                (3)
            9.58%Common
              Stock
            Louise
                M. Murphy
              #42
                - 2951 Panorama Dr.
              Coquitlam,
                B.C.,Canada,
                V3E 2W3
            250,000
                (3)
            9.58%Common
              Stock
            Fred
                Hawkins
              13028
                98A Avenue
              Surrey,
                British Columbia,Canada,
                V3T 1C6
            450,000(3)(4)
            17.24%Common
              Stock
            Edward
                Skoda
              Apdo
                Postal No. 379
              Chapala,
                Jalisco,Mexico,
                CP 45900
            250,000
                (3)
            9.58%Common
              Stock
            Ownership
                of all directors
              and
                officers as a group
            750,000
            28.74%





(1)
            As
                of September 30, 2006, there were 2,610,000 common shares issued
                and
                outstanding. Unless otherwise noted, the security ownership disclosed
                in
                this table is of record and
                beneficial.





(2)
            Under
                Rule 13-d under the Exchange Act, shares not outstanding but subject
                to
                options, warrants, rights, conversion privileges pursuant to which
                such
                shares may be acquired in the next 60 days are deemed to be outstanding
                for the purpose of computing the percentage of outstanding shares
                owned by
                the persons having such rights, but are not deemed outstanding for
                the
                purpose of computing the percentage for such other
                persons.






-31-







(3)
            These
                shares are restricted since they were issued in compliance with the
                exemption from registration provided by Section 4(2) of the Securities
                Act
                of 1933, as amended. After these shares have been held for one year,
                the
                Directors and Officers of the Company could sell 1% of the outstanding
                stock in the Company every three months. Therefore, this stock can
                be sold
                after the expiration of one year in compliance with the provisions
                of Rule
                144. There are “stock transfer” instructions placed against these
                certificates and a legend has been imprinted on the stock certificates
                themselves.





(4)
            Includes
                shares issued to Fred Hawkins, a former director of the Company,
                wife and
                daughter who reside in the same
                house.





Other
      than Laurence Stephenson, Louise Murphy, Fred Hawkins and Edward Skoda, the
      Company does not know of any other shareholder who has more than 5 percent
      of
      the issued shares prior to the subscriptions being accepted under this
      offering.





The
      number of shares that could presently be sold under Rule 144 is 750,000; being
      the above noted shares held by the Directors and Officers.





There
      are
      no voting trusts or similar arrangements known to the Company whereby voting
      power is held by another party not named herein. The Company knows of no trusts,
      proxies, power of attorney, pooling arrangements, direct or indirect, or any
      other contract arrangement or device with the purpose or effect of divesting
      such person or persons of beneficial ownership of the Company’s common shares or
      preventing the vesting of such beneficial ownership.




**ITEM
      12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**




**Transactions
      with Management and Others**





Prior
      to
      the effectivness of our prospectus, the Company had never filed a prospectus
      as
      specified under Section 10(a) of the Securities Act of 1933. Initially, the
      Company raised funds from its officers and directors, relatives, friends and
      business associates as more fully described below.





On
      February 1, 1999, Edward Skoda, former President, subscribed for 100,000 shares
      at $0.001 per share. On February 10, 1999, Judith Mide, Secretary Treasurer,
      subscribed for 10,000 shares at $0.01 per share. In both cases, the
      consideration paid was cash. Upon the resignation as the Secretary Treasurer
      and
      Director, Judith Mide sold her shares to a third party who was not or has not
      been an officer or director of the Company. Upon the resignation of Edward
      Skoda, he sold his shares to a third party who was not an officer or director
      of
      the Company or ever has been. Upon the appointment of Fred Hawkins as the
      Principal Executive Officer and Director of the Company in April 1, 2002, he
      purchased 100,000 common shares from a former shareholder of the Company who
      was
      not an officer or director.





In
      April
      2, 2001, with the appointment of Robin Brine as Secretary Treasurer and
      Director, she purchased 10,000 shares at a price of $0.01 per share for cash
      consideration from a former shareholder. At the same time, Gerald Hardy, a
      former Director, acquired 100,000 shares at a price of $0.001 per share for
      cash
      consideration from a former shareholder.





In
      October, 2001, the Company issued an additional 900,000 shares to Fred Hawkins
      for a consideration of $0.001 per share. The consideration paid by Fred Hawkins
      was cash.





In
      June
      2004, Fred Hawkins gifted 750,000 restricted shares to his three directors,
      Laurence Stephenson, Louis Murphy and Edward Skoda, which resulted in each
      of
      them acquiring 250,000 shares.




-32-




The
      business purpose for gifting the shares to the above noted directors was to
      induce them to become members of the Board of Directors since they possess
      certain knowledge, being able to manage an exploration company and general
      office procedures, which Mr. Hawkins does not have. As mentioned elsewhere
      in
      this prospectus, Messrs. Stephenson and Skoda have been in the exploration
      industry for a number of years and for the majority of her working life Ms.
      Murphy has been involved with accounting and office procedures. There are no
      formal agreements or informal understandings that Mr. Hawkins would receive
      shares or other compensation from Tylerstone or any of the other directors
      in
      return for this transfer of shares.





All
      of
      the above share issuances were restricted since they were issued in compliance
      with the exemption from registration provided by Section 4(2) of the Securities
      Act of 1933, as amended. After the shares have been held for one year, the
      holders of these shares could sell a percentage of their shares every three
      months based on 1% of the outstanding stock in the Company. Therefore, the
      shares could be sold after the expiration of one year in compliance with the
      provisions of Rule 144. There are “stop transfer” instructions placed against
      these shares and a legend is imprinted on each stock certificate.





Some
      of
      the Directors of the Company are directors and officers of other companies.
      Therefore, conflicts of interest may arise between their duties as directors
      of
      the Company and as directors and officers of other companies. All such possible
      conflicts will be disclosed and the directors concerned will govern themselves
      in respect thereof to the best of their ability in accordance with the
      obligations imposed on them under the laws of the State of
      Delaware.





All
      officers and the director are aware of their fiduciary responsibilities under
      corporate law, especially insofar as taking advantage, directly or indirectly,
      of information or opportunities acquired in their capacities as officers and
      directors of the Company. Any transaction with officers or directors will only
      be on terms consistent with industry standards and sound business practice
      in
      accordance with the fiduciary duties of those persons to the Company, and
      depending upon the magnitude of the transactions and the absence of any
      disinterested Board members, the transactions may be submitted to the
      shareholders for their approval in the absence of any independent Board
      members.





All
      the
      directors and officers, including Fred Hawkins, have advanced money to the
      Company over the last several years in the aggregate amount of $21,632 as
      follows:





**Advances**
            **Edward**
              **Skoda**
            **Fred**
              **Hawkins**
            **Louise**
              **Murphy**
            **Laurence**
              **Stephenson**
            **Total**
              ******Advances**August
                31, 1999:Management
                fees (i)
            $
                6,000
            $
                -
            $
                -
            $
                -
            $
                6,000August
                31, 2000:Management
                fees
            6,000
            -
            -
            -
            6,000Cash
                advance to Company
            2,000
            -
            -
            -
            2,000August
                31, 2001:Management
                fees
            3,500
            -
            -
            -
            3,500Cash
                advance to Company
            -
            230
            -
            -
            230August
                31, 2002:Cash
                advance to Company
            -
            2,030
            -
            -
            2,030August
                31, 2003:Exploration
                fees unpaid
            1,575
            -
            -
            -
            1,575Cash
                advance to Company
            -
            1,240
            -
            -
            1,240August
                31, 2004:Management
                fees
            2,000
            -
            -
            -
            2,000Advance
                for exploration
            -
            3,185
            -
            -
            3,185August
                31, 2005Management
                fees
            6,000
            -
            -
            -
            6,000Cash
                advances to Company
            9,005
            -
            3,858
            609
            13,472August
                31, 2006Management
                fees
            1,500
            -
            -
            4,500
            6,000Cash
                advances to Company
            -
            -
            952
            26
            978Forgiveness
                of debt
            (30,500)
            -
            -
            -
            (30,500)Payment
                on account
            (
                2,078)
            -
            -
            -
            (
                2,078)Total
                advances by Directors
            $
                5,002
            $6,685
            $4,810
            $5,135
            $21,632






-33-





(i)  Edward
      Skoda has not been paid for management fees charged to the Company.





The
      above
      noted advances have no specific terms of repayment and bear no interest. If
      an
      annual compound interest rate of 5% had been used, the amount of interest due
      and payable would have been approximately $8,132.





The
      Company has not entered into any transactions with a related party other than
      a
      monthly management fee of $500 payable to Edward Skoda for three months and
      for
      the balance of the year to Laurence Stephenson. Management does not know of
      any
      other transaction it will be entering into with related parties. It is the
      intention of the Company to deal with third parties in all its acquisitions
      of
      exploration claims in the future.





The
      Company has had no transactions with any promoter or promoters since its
      inception. Nothing of value, including money, property, contracts, options
      or
      rights of any kind has been received or will be received by a promoter, director
      or indirectly from the Company which is not disclosed in this
      prospectus.




There
      were no material transactions, or series of similar transactions, since
      inception of the Company and during its current fiscal period, or any currently
      proposed transactions, or series of similar transactions, to which the Company
      was or is to be a party, in which the amount involved exceeds $60,000, and
      in
      which any director or executive officer, or any security holder who is known
      by
      the Company to own of record or beneficially more than 5% of any class of the
      Company’s common stock, or any member of the immediate family of any of the
      foregoing persons, has an interest.








-34-







**PART
      IV**




**ITEM
      13. EXHIBITS AND REPORTS ON FORM 8-K**




(a)
      (1)   **Financial
      Statements.**





The
      following financial statements are included in this report:





Title
                of Document
            PageReport
                of Madsen & Associates, CPA’s Inc.
            38Balance
                Sheet as at August 31, 2006
            39Statement
                of Operations for the year ended August 31, 2006 and 2005 and forthe
                period from September 24, 1998 (Date of Inception) to August 31,
                2006
            40Statement
                of Changes in Stockholders’ Equity for the period from September 24, 1998(Date
                of Inception) to August 31, 2006
            41Statement
                of Cash Flows for the year ended August 31, 2006 and 2005 and for
                thePeriod
                from September 24, 1998 (Date of Inception) to August 31,
                2006
            42Notes
                to the Financial Statements
            43





(a)
      (2) **Financial
      Statement Schedules**





The
      following financial statement schedules are included as part of this
      report:





None.





(a)
      (3) **Exhibits**





The
      following exhibits are included as part of this report by
      reference:





1.
            Certificate
                of Incorporation, Articles of Incorporation and
                By-laws:





1.1
            Certificate
                of Incorporation (incorporated by reference from Tylerstone’s Registration
                Statement on Form SB-2 filed on December 27,
                2005)





1.2
            Articles
                of Incorporation (incorporated by reference from Tylerstone’s Registration
                Statement on Form SB-2 filed on December 27,
                2005)





1.3
            By-laws
                (incorporated by reference from Tylerstone’s Registration Statement on
                Form SB-2 filed on December 27,
                2005)





99.1
            Certificate
                Pursuant to Section 301(a) of the Sarbanes-Oxley Act of 2002 (Chief
                Executive Officer)





99.2
            Certification
                of the Chief Executive Officer Pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002








-35-





99.3
            Certificate
                Pursuant to Section 301(a) of the Sarbanes-Oxley Act of 2002 (Chief
                Financial Officer)





99.4
            Certification
                of the Chief Financial Officer Pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002




(b)  Reports
      on Form 8-K





None




**ITEM
      14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**




(1)  Audit
      Fees





The
      aggregate fees billed by the independent accountants for the last two fiscal
      years for professional services for the audit of the Company’s annual financial
      statements and the review of quarterly financial statements services that are
      normally provided by the accountants in connection with statutory and regulatory
      filings or engagements for those fiscal years were $7,880.





(2)  Audit-Related
      Fees





The
      aggregate fees billed in each of the last two fiscal years for assurance and
      related services by the principal accountants that are reasonably related to
      the
      performance of the audit or review of the Company’s financial statements and are
      not reported under Item 9 (e)(1) of Schedule 14A was NIL.





(3)  Tax
      Fees





The
      aggregate fees billed in each of the last two fiscal years for professional
      services rendered by the principal accountants for tax compliance, tax advise,
      and tax planning was NIL.





(4)  All
      Other Fees





During
      the last two fiscal years there were no other fees charged by the principal
      accountants other than those disclosed in (1) and (3) above.





(5)  Audit
      Committee’s Pre-approval Policies





At
      the
      present time, there are not sufficient directors, officers and employees
      involved with the Company to make any pre-approval policies meaningful. Once
      the
      Company has elected more directors and appointed directors and non-directors
      to
      the Audit Committee it will have meetings and function in a meaningful
      manner.





(6)  Audit
      hours incurred





The
      principal accountants did not spend greater than 50 percent of the hours spent
      on the accounting by the Company’s internal accountant.








-36-










**SIGNATURES**







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





**TYLERSTONE
      VENTURES CORPORATION**


**** (Registrant)











Date:
      October 2, 2006      By:
      LAURENCE STEPHENSON


Laurence
      Stephenson


Chief
      Executive Officer,


President
      and Director








Date:
      October 2, 2006      By:  LOUISE
      MURPHY


Louise
      Murphy


Chief
      Accounting Officer,


Chief
      Financial Officer and Director








-37-










**MADSEN
      & ASSOCIATES, CPA’s INC.**   684
      East Vine Street,
      #3


Certificate
      Public Accountants and Business Consultants Board      Murray,
      Utah,
      84107


Telephone (801) 268-2632


Fax
      (801)
      262-3978





Board
      of
      Directors


Tylerstone
      Ventures Corporation


Vancouver
      B. C. Canada





**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**





We
      have
      audited the accompanying balance sheet of Tylerstone Ventures Corporation
      (pre-exploration stage company) at August 31, 2006, and the related statements
      of operations, stockholders' equity, and cash flows for the years ended August
      31, 2006 and 2005 and the period September 24, 1998 (date of inception) to
      August 31, 2006. These financial statements are the responsibility of the
      Company's management. Our responsibility is to express an opinion on these
      financial statements based on our audit.





We
      conducted our audit in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. An audit includes examining,
      on a
      test basis, evidence supporting the amounts and disclosures in the financial
      statements. An audit also includes assessing the accounting principles used
      and
      significant estimates made by management as well as evaluating the overall
      balance sheet presentation. We believe that our audit provides a reasonable
      basis for our opinion.





In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the financial position of Tylerstone Ventures Corporation
      at
      August 31, 2006, and the related statements of operations, stockholders' equity
      and cash flows for the years ended August 31, 2006 and 2005 and the period
      September 24, 1998 (date of inception) to August 31, 2006, in conformity with
      accounting principles generally accepted in the United States of America.





The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern. The Company will need additional working
      capital for its planned activity and to service its debt, which raises
      substantial doubt about its ability to continue as a going concern. Management's
      plans in regard to these matters are described in the notes to the financial
      statements. These financial statements do not include any adjustments that
      might
      result from the outcome of this uncertainty.








Salt
      Lake
      City, Utah     */s/
      “Madsen & Associates, CPA's Inc."*


September
      28, 2006








-38-







**TYLERSTONE
      VENTURES CORPORATION**


(Pre-Exploration
      Stage Company)


**BALANCE
      SHEET**


August
      31, 2006





**ASSETS****CURRENT
                ASSETS**Bank
            **$****896**Total
                assets
            **$****896****LIABILITIES****CURRENT
                LIABILITIES AND STOCKHOLDER’ DEFICIENCY****CURRENT
                LIABILITIES**Accounts
                payable - related party
            **$21,632**Accounts
                payable
            **27,852****49,484****STOCKHOLDERS’
                DEFICIENCY**Common
                stock25,000,000
                shares authorized, at $0.001 parvalue,
                2,610,000 shares issued and outstanding
            **2,610**Capital
                in excess of par value
            **102,440**Deficit
                accumulated during the pre-exploration stage
            **(153,638)**Total
                Stockholders’ Deficiency
            **(48,588)****$****896**





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








-39-







**TYLERSTONE
      VENTURES CORPORATION**


(Pre-Exploration
      Stage Company)





**STATEMENT
      OF OPERATIONS**





For
      the
      years ended August 31, 2006 and 2005 and


the
      period September 24, 1998 (Date of Inception) to August 31, 2006





**August
                31,**
              **2006**
            **August
                31,**
              **2005**
            **Date
                of**
              **Inception**
              **to**
              **August
                31,**
              **2006****SALES**
            **$****-**
            **$****-**
            **$****-****EXPENSES:****Exploration**
            **11,738**
            **3,411**
            **25,813****General**
            **29,119**********
            **40,085**
            **178,569********Net
                loss from operations**
            **(40,857)**
            **(43,496)**
            **(204,382)****Settlement
                of debt**
            **_50,744**
            **-**
            **50,744****NET
                INCOME (LOSS)**
            **$****9,887**
            **$
                (****43,496)**
            **$(****153,638)****NET
                INCOME (LOSS) PER****COMMON
                SHARE**Basic
            **$****0.00**
            **$(0.02)****AVERAGE
                OUTSTANDING****SHARES**Basic
            **2,401,918**
            **2,120,000**







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








-40-







**TYLERSTONE
      VENTURES CORPORATION**


(Pre-Exploration
      Stage Company)





**STATEMENT
      OF CASH FLOWS**





For
      the
      years ended August 31, 2006 and 2005 and


period
      September 24, 1998 (Date of Inception) to August 31, 2006





**August
                31,**
              **2006**
            **August
                31,**
              **2005**
            **Date
                of Inception**
              **To**
              **August
                31,**
              **2006****CASH
                FLOWS FROM****OPERATING
                ACTIVITIES:**Net
                income (loss)
            **$
                9,887**
            **$(43,496)**
            **$(153,638)**Adjustments
                to reconcile net loss to
              Net
                cash provided by operating activities:Changes
                in assets and liabilities:Changes
                in accounts payable
            **(38,991)**
            **17,424**
            **27,852**Capital
                contributions - expenses
            **6,600**
            **6,600**
            **51,500**Net
                Change in Cash from Operations
            **(22,504)**
            **(19,472)**
            **(74,286)****CASH
                FLOWS FROM****FINANCING
                ACTIVITIES:**Accounts
                payable - related parties
            **(25,600)**
            **19,472**
            **21,632**Proceeds
                from issuance of common stock
            **49,000**
            **-**
            **53,550****23,400**
            **19,472**
            **75,182**Net
                Increase (Decrease) in Cash
            **896**
            **-**
            **896**Cash
                at Beginning of Period
            **-**
            **-**
            **-********CASH
                AT END OF PERIOD**
            **$****896**
            **$****-**
            **$****896**





**SCHEDULE
                OF NONCASH OPERATING ACTIVITIES**Contribution
                to capital - expenses - 1999 to 2006
            **$****51,500**








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







-41-







**TYLERSTONE
      VENTURES CORPORATION**


(Pre-Exploration
      Stage Company)


**STATEMENT
      OF CHANGES IN STOCKHOLDERS' EQUITY**


Period
      September 24, 1998 (Date of Inception) to August 31, 2006


**Common**
              ******Shares**
            **Stock**
              ******Amount**
            **Capital
                in**
              **Excess
                of**
              **Par
                Value**
            **Accumulated**
              **Deficit****Balance,
                September 24, 1998**
              (date
                of inception)
            -
            $
                -
            $
                -
            $
                -Issuance
                of common stock for cash
              at
                $0.001 per share - April 2, 1999
            950,000
            950
            -
            -Issuance
                of common stock for cash
              at
                $0.01 per share - April 9, 1999
            270,000
            270
            2,430
            -Capital
                contributions - expenses
            -
            -
            6,600
            -Net
                operating loss for the period endedAugust
                31, 1999
            -
            -
            -
            (17,815)Capital
                contributions - expenses
            -
            -
            2,200
            -Net
                operating loss for the year endedAugust
                31, 2000
            -
            -
            -
            (18,943)Capital
                contributions - expenses
            -
            -
            2,500
            -Net
                operating loss for the year ended August
                31, 2001
            -
            -
            -
            (18,558)Issuance
                of common stock for cash at$0.001
                per share - October, 2001
            900,000
            900
            -
            -Capital
                contributions - expenses
            -
            -
            6,000
            -Net
                operating loss for the year ended August
                31, 2002
            -
            -
            -
            (18,683)Capital
                contributions - expenses
            -
            -
            10,400
            -Net
                operating loss for the year endedAugust
                31, 2003
            -
            -
            -
            (20,160)Capital
                contributions - expenses
            -
            -
            10,600
            -Net
                operating loss for the year endedAugust
                31, 2004
            -
            -
            -
            (25,870)Capital
                contribution - expenses
            -
            -
            6,600
            -Net
                operating loss for the year endedAugust
                31, 2005
            -
            -
            -
            (43,496)Issuance
                of common stock for cash at$0.10
                per share - February 2, 2006
            490,000
            490
            48,510Capital
                contributions - expenses
            -
            -
            6,600Net
                operating income for the year endedAugust
                31, 2006
            -
            -
            -
            9,887**Balance
                as at August 31, 2006**
            ******2,610,000**
            **$****2,610**
            **$****102,440**
            **$
                (****153,638)**


The
      accompanying notes are an integral part of these financial
      statements






-42-





**TYLERSTONE
      VENTURES CORPORATION**


(Pre-Exploration
      Stage Company)





**NOTES
      TO FINANCIAL STATEMENTS**


August
      31, 2006





**1.**  **ORGANIZATION**





The
      Company was incorporated under the laws of the State of Delaware on September
      24, 1998 with the authorized common stock of 25,000,000 shares at $0.001 par
      value.





The
      Company was organized for the purpose of acquiring and developing mineral
      properties. At the balance sheet date mineral claims, with unknown reserves,
      had
      been acquired. The Company has not established the existence of a commercially
      minable ore deposit and has not reached the development stage and is considered
      to be in the pre-exploration stage.





Since
      its
      inception the Company has completed private placement offerings of 2,120,000
      shares for $4,550. In February 2006, the Company issued 490,000 common shares
      for a consideration of $49,000 under an effective registration statement filed
      with the United States Securities and Exchange Commission.





**2.**  **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES**





Accounting
      Methods





The
      Company recognizes income and expenses based on the accrual method of
      accounting.





Dividend
      Policy





The
      Company has not yet adopted a policy regarding payment of
      dividends.





Earnings
      (Loss) Per Share





Basic
      net
      income (loss) per share amounts are computed based on the weighted average
      number of shares actually outstanding. Diluted net income (loss) per share
      amounts are computed using the weighted average number of common and common
      equivalent shares outstanding as if the shares had been issued on the exercise
      of the common share rights unless the exercise becomes antidilutive and then
      only the basic per share amounts are shown in the report.





Estimates
      and Assumptions





Management
      uses estimates and assumptions in preparing financial statements in accordance
      with generally accepted accounting principles. These estimates and assumptions
      affect the reported amounts of the assets and liabilities, the disclosure of
      contingent assets and liabilities, and the reported revenues and expenses.
      Actual results could vary from the estimates that were assumed in preparing
      these financial statements.








-43-







**TYLERSTONE
      VENTURES CORPORATION**


(Pre-Exploration
      Stage Company)





**NOTES
      TO FINANCIAL STATEMENTS**


August
      31, 2006





**2.**
            **SUMMARY
                OF SIGNIFICANT ACCOUNTING POLICIES -
                Continued**





Financial
      Instruments





The
      carrying amounts of financial instruments are considered by management to be
      their estimated fair value due to their short term maturities.





Income
      Taxes




The
      Company utilizes the liability method of accounting for income taxes. Under
      the
      liability method deferred tax assets and liabilities are determined based on
      differences between financial reporting and the tax bases of the assets and
      liabilities and are measured using the enacted tax  rates
      and
      laws that will be in effect when the differences are expected to be reversed.
      An
      allowance against deferred tax assets is recorded, when it is more likely than
      not, that such tax benefits will be realized.





On
      August
      31, 2006 the Company had a net operating loss carry forward of $153,638. The
      tax
      benefit of approximately $46,000 from the loss carry forward has been fully
      offset by a valuation reserve because the use of the future tax benefit is
      doubtful since the Company has no operations. The loss carry forward will expire
      in 2019 through 2026.





**Unproven
      Mineral Claim Costs**





Cost
      of
      acquisition, exploration, carrying and retaining unproven properties are
      expensed as incurred.





**Environmental
      Requirements**





At
      the
      report date environmental requirements related to the mineral claim acquired
      are
      unknown and therefore any estimate of any future cost cannot be
      made.





Financial
      and Concentration Risk





The
      Company does not have any concentration or related financial credit
      risk.





Revenue
      Recognition





Revenue
      is recognized on the sale and delivery of product or the completion of services
      provided when and if revenue is received. There can be no assurance that any
      revenue will be received.





Advertising
      and Market Development





The
      Company will expense any advertising and market development costs as
      incurred.







-44-





**TYLERSTONE
      VENTURES CORPORATION**


(Pre-Exploration
      Stage Company)





**NOTES
      TO FINANCIAL STATEMENTS**


August
      31, 2006





**2.**
            **SUMMARY
                OF SIGNIFICANT ACCOUNTING POLICIES -
                Continued**





Recent
      Accounting Pronouncements





The
      Company does not expect that the adoption of other recent accounting
      pronouncements will have a material impact on its financial
      statements.





**3.**
            **SIGNIFICANT
                TRANSACTIONS WITH RELATED PARTY**





Officers-directors
                have acquired 29% of the outstanding common stock and have made demand,
                no
                interest loans to the Company of $21,632 and contributions to capital
                of
                $51,500 by the payment of Company expenses. During the period, one
                director forgave money due to him in the amount of
                $30,500.





**4.**  **AQUISITION
      OF UNPROVEN MINERAL CLAIM**





The
                Company acquired a single mineral claim of 1,235 acres known as the
                Tylerstone claim situated within the Lillooet Mining Division of
                British
                Columbia. The property is located approximately 80 air-miles
                north-northwest of Vancouver, British Columbia. The expiration date
                of the
                claim is February 24, 2009. The renewal cost of these claims is $3,411
                Canadian. The costs of acquiring, staking and filing have been
                expensed.




**5.**
            **CAPITAL
                STOCK**





Since
                its inception the Company has completed private placement offerings
                of
                2,120,000 common shares for $4,550 and under an effective registration
                statements issued a further 490,000 common shares at a price of $0.10
                per
                share for a total consideration of $49,000 in February
                2006.





**6.**
            **SETTLEMENT
                OF DEBT**





During
                the period certain creditors agreed to reduce the amount owed to
                them in
                the amount of $20,244. In addition, a director agreed to forgive
                $30,500
                in amounts owed to him.





**7.**
            **GOING
                CONCERN**


The
                Company intends to explore its mineral claims and to seek business
                opportunities that will provide a profit. However, the Company does
                not
                have the working capital necessary to be successful in this effort
                and to
                service its debt, which raises substantial doubt about its ability
                to
                continue as a going concern.


Continuation
                of the Company as a going concern is dependent upon obtaining additional
                working capital and the management of the Company has developed a
                strategy, which it believes will accomplish this objective through
                additional loans from related parties, and equity funding, which
                will
                enable the Company to operate for the coming
                year.








-45-