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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K/A-1
                   __________________________________________

[x]   ANNUAL  REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT  OF  1934
      For the fiscal year ended September 30, 2002.
--------------------------------------------------------------------------------
[ ]   TRANSITION  REPORT  PURSUANT  TO  SECTION  13  OR  15(d) OF THE SECURITIES
      EXCHANGE  ACT  OF  1934
      For the transition period from ________ to _______

                         Commission file number 0-25170


                          CADENCE RESOURCES CORPORATION
             (Exact name of Registrant as specified in its charter)

UTAH                                                87-0306609
(STATE OF INCORPORATION)                            (I.R.S. EMPLOYER I.D.#)

                               6 EAST ROSE STREET
                         WALLA WALLA, WASHINGTON   99362
                          Address of principal offices

Registrant's Telephone No.:   (509) 526-3491

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

Securities registered pursuant to Section 12(g) of the Act:    Common Stock, par
                                                               value, $0.01

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


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



As  of  September  30,  2002, the Registrant had 6,866,210 outstanding shares of
common  stock  ($0.01  par  value).
==============================================================================


<PAGE>
<TABLE>
<CAPTION>
                                TABLE OF CONTENTS

ITEM      CAPTION                                                           PAGE
NUMBER                                                                     NUMBER
<S>       <C>                                                              <C>
                                      PART I
ITEM 1.   Business                                                              3
ITEM 2.   Properties                                                           16
ITEM 3.   Legal Proceedings                                                    16
ITEM 4.   Submission of Matters to a Vote of Security Holders                  17
                                      PART II
ITEM 5.   Market for Registrant's Common Equity and Related Stockholder        17
          Matters
ITEM 6.   Selected Financial Data                                              19
ITEM 7.   Management's Discussion and Analysis of Financial Condition and      19
          Results of Operation
ITEM 8.   Financial Statements and Supplementary Data                          21
          Changes in and Disagreements with Accountants on Accounting and      48
ITEM 9.   Financial Disclosure
                                     PART III
ITEM 10.  Directors and Executive Officers of the Company                      48
ITEM 11.  Executive Compensation                                               50
ITEM 12.  Security Ownership of Certain Beneficial Owners and Management       53
ITEM 13.  Certain Relationships and Related Transaction                        54
</TABLE>


                                        2
<PAGE>
PART I

ITEM 1.  DESCRIPTION  OF  BUSINESS.

BACKGROUND

     Cadence  Resources  Corporation,  formerly  Royal  Silver  Mines, Inc. (the
"Company")  is  a start-up oil, gas and mineral exploration company formed under
the  laws  of the State of Utah on July 8, 1969, originally for the sole purpose
of  purchasing, developing and operating mineral properties and leases.  In July
2001  the  Company  underwent  a restructuring and refocused on the acquisition,
exploration and development of oil and gas properties as well, generally through
leases  of  the  prospective  property.  The  Company  is currently earning only
minimal  revenues  and intends to engage in the continued exploration of oil and
gas  leases  it  has  acquired  in  Texas, and to begin to explore leases it has
acquired  in  Michigan  and  Louisiana.  As  of the date hereof, the Company has
generated  a  small  amount of revenue from the sale of oil, and no revenue from
the  sale  of  gas.

     The  Company  changed  its  name  from  Royal Silver Mines, Inc. to Cadence
Resources  Corporation  on  May  2,  2001  upon  obtaining  approval  from  its
shareholders  and amending its articles of incorporation with the State of Utah.

     On  April  23,  2001,  the Board of Directors authorized a 1-for-20 reverse
stock  split  of  the  Company's $0.01 par value common stock which subsequently
also  gained  shareholder approval. All references in the accompanying financial
statements  and  notes to the number of common shares and per-share amounts have
been  restated to reflect the reverse stock split. The Company shareholders also
approved  the  increase  of  its  authorized common stock to 100,000,000 shares.

     Celebration  Mining  Company  ("Celebration"), a wholly owned subsidiary of
the  Company,  was  incorporated  for  the  purpose  of  identifying, acquiring,
exploring  and  developing  mining  properties.  Celebration  was  organized  on
February 17, 1994, as a Washington corporation. Celebration has not yet realized
any  revenues  from  its  planned  operations.  Celebration  holds  most  of the
remaining  mineral  property  interests  of  the  Company  and  which  includes
properties  more  fully  described  below.

EXISTING OIL AND GAS LEASEHOLD INTERESTS

DE SOTO PARISH, LOUISIANA

     Since  September  30,  2001,  the  Company has completed the acquisition of
three  year  "paid  up" leases on over 3000 contiguous acres in five sections in
DeSoto  Parish,  LA.  The  leases were acquired from the landowners of record in
DeSoto  Parish.  The  Company paid approximately $100.00 per acre to acquire the
leases.   The  Company  owns  100%  of  the  working  interest in each lease and
79.25%  of  the  net  revenue interest in each lease.  There is a 18.75% royalty
interest  and  2%  overriding  royalty  on  each  lease.  The  leases  cover the
formations  from  the  surface  to  the  center  of  the  earth.

     Geologically,  the  DeSoto  Parish  properties are located on the southeast
side  of  the Sabine Uplift. The Sabine Uplift has influenced hundreds of square
miles  of  cretaceous  and  younger  rocks  in  northeast  Texas  and Louisiana.


                                        3
<PAGE>
     The  Company  will  be targeting two deeper formations, the Houston and the
Cotton  Valley.  The  Houston  formation  is  a  sand  and  shale  sequence that
demonstrates  tight  gas  bearing  sands  in  thick  intervals.

     The  Company has not begun drilling operations on the Louisiana property as
of  the  date  of  this  document.  It is the intent of the Company to raise the
capital to drill these properties on its own, or to find a joint venture partner
for  the  project that will result in the properties being drilled and explored.
The  earliest  of  the  leases  held  by  the  Company  will expire on or around
September,  2004,  and  other leases will expire soon thereafter. Therefore, the
Company  feels it is imperative that progress be made on these properties during
2003.  The acreage held by the company comprises some five sections of land, and
to the extent that commercial gas production is established by the completion of
one  well  on  each  section, the remainder of the leases in that section can be
held  indefinitely  "by  production",  without  making  further  lease payments.


WILBARGER  COUNTY,  TEXAS

     On October 12, 2001, the Company acquired an Exploration License and Option
to Lease on 640 acres located in Wilbarger County, Texas, located about 13 miles
southeast  of  the  town of Vernon, Texas. The Company acquired the license from
the Waggoner Ranch, one of the largest ranches in the country, a large privately
held  ranching  and farming company that also has oil interests. The Company has
identified  a  number  of  targets  of  opportunity  on  the  acreage based upon
pre-existing  and  recent,  company-generated  seismic  prospecting of the area.

     The Company believes that a number of deeper horizons between 2500 feet and
5000  feet  remain  under-explored on the Ranch. With the aid of new exploration
methods,  better  drilling equipment, and proprietary seismic processing methods
developed  by the geological consultants to the Company, it is believed that the
Company  can  spend  the next several years drilling and completing oil wells on
the  Waggoner  Ranch. The Company will proceed in a step-wise fashion evaluating
additional  prospective  ground  opportunistically  and going to lease on ground
that  looks favorable. There is no assurance that this effort will be successful
however.

     The  primary targets are oil bearing pinnacle reefs in the Canyon limestone
formation,  located  at  about  3800  to  4000 feet. However, numerous "stacked"
oil-bearing  shallower  horizons  are  also  known  to exist which substantially
reduces  the  risks of a dry hole when drilling for a pinnacle reef. These could
be  considered  secondary  targets  of  our  exploration.

     The  geology  of  this  part  of  northeast  Texas  consists of Permian and
Leonardon  shales  and  sands. The major geologic feature is the Red River Arch,
which  is  also  sometimes  known  as  the  Electra  Arch.  This  structure  has
historically produced more than 150,000,000 barrels of oil from several geologic
features,  of  which  the  Canyon  limestone  is  only one. Therefore, this past
production  is not necessarily indicative of future results and in fact may bear
no  relation  to  the  exploration  activities  of  the  Company.

     In  late  December  2001,  the Company exercised its lease option and began
drilling  of  its  initial  test well which was completed in the Company's third
quarter  of  the  fiscal  year.  The  well  encountered four different pay zones
between 2400 feet and 3002 feet that ranged from 4 feet to 16 feet in thickness.


                                        4
<PAGE>
     The  lowest  pay  zone,  which  was encountered between 2984 and 3002 feet,
contained  approximately  15  feet  of  pay  in  the Canyon Limestone formation.
Further  up  the hole, at 2520 feet, a 16-foot thick zone was encountered in the
Lower  Milham  sand  formation.  The  well  is now in continuous production at a
nominal  rate of about 40 barrels per day. This well has been designated "1A" as
it  is  the  first  well  on  the  "A"  lease.

     After  the indicated success of its first well, the Company soon afterwards
drilled  two additional exploratory wells on the Ranch - a first well on its "B"
lease  and a second well on the "A" lease. The "B" well targeted a pinnacle reef
and  encountered  6 different pay zones between the 2430 foot level and the 3101
foot level that ranged from 4 feet to 45 feet in thickness, for total net pay of
69  feet.  This well has been completed and is in production, but only at a rate
of  only  a  few  barrels  per  day. The Company intends to undertake additional
perforations  in  this  well  to  possibly  increase its production. There is no
assurance  that  this  effort  will  be  successful  however.

     The third well, designated "2A", targeted the Milham sand formations (upper
and lower) and encountered a combined total of 19 feet of net pay. This well was
drilled  to  a  total depth of 2600 feet. The Company attempted to complete this
well  but  the  flow  rates  were  not substantial enough to make it commercial.
Instead,  the  Company  chose  to utilize this well as a saltwater disposal well
that  was  a  necessary  facility  for  the  project.

     In July, 2002 the Company signed a lease option on an additional 1000 acres
of  ground  west  of its existing leases. This ground is joint-ventured with the
Waggoner  Ranch  on  a  50/50  basis.  Subsequent to year end, the joint venture
partners  have  shot  and processed 3-D seismic of this ground and identified at
least  four  new  reef  targets  as  well  as  two other structural targets. The
structural  targets  include  a  shallow Dyson sand structure at about 1700 feet
depth  that  has  yielded  an estimated 200,000 barrels of production from wells
drilled  on  its  southwest end. The joint venture may in the future target this
sand  up-dip  from  this  past production. The 3D seismic also revealed a Canyon
limestone  structure  that  is  deeper  but also presents an interesting target.

     The  Company  also  added  additional acreage to its "B" lease and shot and
processed  additional  seismic  on  that  acreage.  Additional  new targets were
identified  on  this  acreage  and  the  Company began another well, the "2B" on
September  16,  2002.  This  well reached a total depth of over 3800 feet and at
least  four  oil-bearing  zones  were  evident  from  the  drilling  logs.

     The  Company  attempted  to  complete  the 2B well in October, 2002 but was
unsuccessful due to large inflows of salt water, believed to be generated from a
heavily  karsted  section  of  the  drill hole below the targeted oil zones. The
Company  still  has  the  opportunity  to attempt completion of two of the upper
zones  and  is evaluating whether to attempt such completion or to write-off the
well  as  a  dryhole.

     In October and November, 2002 the Company, in association with the Waggoner
Ranch,  shot  and processed additional 3D seismic on its 1000 acre joint-venture
property  to  further  delineate possible drill targets. It is expected that the
first  of  several  possible  targets will be drilled in the early part of 2003.


                                        5
<PAGE>
LIMITED  PARTNERSHIP  FUNDING  FACILITY

     In  August,  2002 the Company set up a Limited Partnership Funding Facility
with  funding  to  be  provided  as  agreed by Sunrise Securities, an investment
banking  company  located  in  New  York,  NY.  The facility may be funded for a
maximum  amount of $20,000,000. The Company acts as the General Partner, and may
also  make  contributions to the facility under the same terms and conditions as
the  limited  partners.  The  terms  of  the  partnership  are  that the limited
partner(s)  will provide traunches of funding in $250,000 increments on selected
drilling  targets,  and have the right to accept or reject such targets during a
notice  period.  If  the well is funded through the facility, the partnership is
obligated  to  repay  the limited partner(s) by declaring special dividends from
cash  flow generated by the producing wells, or may pay these dividends by other
means.  These  special dividends shall be paid until the limited partner(s) have
received  dividends  equivalent  to the original amounts invested plus an annual
return of 11%. After such dividends are paid, the limited partner(s) will revert
to  a 10% net royalty from any of the wells drilled via funding from the limited
partnership  facility.

     The  2B  well as well as all of the work and lease payments associated with
the  joint venture acreage referred to above has been funded through the limited
partnership facility. In order to facilitate the initial traunche of $250,000 by
the  limited  partner(s),  the  Company  agreed  to  contribute the cash flow it
receives  from the 1A and 1B well to the partnership, and has pledged certain of
its  fixed  equipment assets located at these wells to the partnership to ensure
payment  of  the  required  special  dividends.  At  the date of this report, no
dividends  have  been  paid  to  the  limited  partner(s).


     ALPENA  COUNTY,  MICHIGAN

     Subsequent  to  the  end  of  this  reporting  period  the Company signed a
participation  agreement  with  Aurora Energy, Ltd., of Traverse City, Michigan.
The  agreement grants the Company participation rights for a twenty five percent
working  interest in potentially as many as 200 shallow natural gas wells in the
Antrim  shale.  The Antrim shale is a well-known productive shale and has hosted
as  many  as  8000  natural  gas wells, a large percentage of which are still in
production.

     The  wells  are projected to be drilled to shallow depths of between 300 to
1000 feet. The average daily production from Antrim wells is typically about 130
mcf,  with  a reserve of about 500,000 mcf. The average life expectancy of these
wells  is  about 30 years, although some Antrim wells have produced commercially
for  in  excess  of  fifty  years.

     The  terms  of  the agreement call for the Company to participate for a 25%
working  interest  by  paying its share of incurred land lease costs, as well as
drilling  and  completion  costs. Prior to receiving payout of the investment in
each  well, Aurora will receive 10% of the Company's working interest, and after
payout, will receive an additional 10%. The Company has the right to participate
in  an  initial 100 well program and if the Company participates in the first 70
of  these  wells, will have the right to participate in an additional 100 wells.

     Aurora  Energy,  Ltd.  currently  has  sufficient  acreage  under  lease in
Michigan  for  an  estimated  250-300 wells and is very actively assessing other
property  with  Antrim  shale  potential.  Subject  to successful funding, it is
expected  that  drilling will begin on the first package of wells located in the
"Black  Bean"  unit  in  the  first  quarter  of  2003.


                                        6
<PAGE>
RETENTION  AND  INDEPENDENCE  OF  EXPERTS

     The  Company's  management has limited expertise in the area of oil and gas
exploration.  Accordingly,  the  Company  has engaged third party geologists and
landmen  who  have  been largely responsible for the evaluation, recommendation,
and  acquisition of the existing leases of the Company. The Company has and will
in  the  future  retain  drilling  contractors, technicians, landmen, additional
geologists,  and  engineers to direct the drilling and completion of oil and gas
wells  on  its  leases,  and  to  aid in the acquisition and evaluation of other
properties.

     Potential  investors and existing shareholders should be aware that some of
these  parties may not be totally independent in advice rendered to the Company.
For  example,  the  Company  management has recently relied upon the opinion and
expertise  of the management of Aurora Energy, Ltd. in assessing and determining
to go forward with its participation in the Michigan Antrim Shale gas wells. The
Board  and  Officers of the Company therefore must assess the reliability of the
advice rendered in light of the total circumstances of any given situation. When
possible,  the  management  of  the Company has a policy of attempting to obtain
independent  appraisals  of each project but may not always be able to do so due
to  time constraints or unavailability of such opinions in a timely and economic
manner.

TECHNIQUES  OF  EVALUATING  PROSPECTIVE  PROPERTIES

     The  Company has undertaken detailed geological surveys and analysis and in
some  instances,  these  have  been  combined  with advanced seismic exploration
techniques  to  identify  its  leases.

     Geological  interpretation  is  based upon data recovered from existing oil
and  gas  wells  in  an area, past seismic data generated by other entities, and
other  sources.  Most  of  this information is either purchased from the company
that generated the data or becomes public knowledge through state agencies after
a  period of years.  Through analysis of rock types, fossils and the electrical,
acoustic, and chemical characteristics of rocks from existing wells, the Company
can construct a picture of rock layers in the area.  The Company may have access
to  the  well  logs and decline curves from existing operating wells.  Well logs
allow  the  Company  to  calculate  an original oil or gas volume in place while
decline  curves from production history allow the Company to calculate remaining
proved  producing  reserves.

     There  are only minimal reserves on the Company leases in Wilbarger County,
Texas  and  which  are  estimated by management. No reserves exist on any of the
Company's  other  properties.  No  independent  third party appraisal or reserve
estimates  of  any  of  the  leases  has  occurred  to  date.

MARKET  FOR  OIL  AND  GAS  PRODUCTION

     The  Company  is  currently  not  producing and therefore not marketing any
natural  gas  production. The Company is selling a small amount of oil resulting
from  production  of its two producing wells, the 1A and 1B located in Wilbarger
County,  Texas.  The  Company,  acting  through  the Waggoner Ranch which is the
designated  operator  of the project, sells its production at approximately spot
rate  to  local  crude  buyers  who  then  truck  transport  the  oil  to nearby
refineries.  On  its  proposed  operations  in  both  Louisiana and Michigan the
Company  intends to use a third party operator and sell its product in a similar
manner,  the  primary  difference  being  that  natural gas will be delivered to
nearby  existing  pipelines  rather  than  trucked.

     The  market  for  oil and gas production is regulated by both the state and
federal  governments.  The  overall  market  is mature and with the exception of
gas, all producers in a producing region will receive the same price.  The major
oil  companies  will  purchase  all  crude  oil offered for sale at posted field


                                        7
<PAGE>
prices.  There  are price adjustments for quality difference from the Benchmark.
Benchmark  is  Saudi  Arabian  light crude oil employed as the standard on which
OPEC  price  changes  have  been  based.  Quality variances from Benchmark crude
results  in  lower  or  higher  prices  being  paid  for  the  variant  oil.

     Oil  sales  are  normally  contracted with a purchaser or gatherer as it is
known  in  the  industry  which  will pick-up the oil at the well site.  In some
instances  there  may be deductions for transportation from the well-head to the
sales  point.  At  this  time the majority of crude oil purchasers do not charge
transportation fees, unless the well is outside their service area.  The service
area  is a geographical area in which the purchaser of crude oil will not charge
a  fee  for  picking  up the oil.  The purchaser or oil gatherer as it is called
within the oil industry, will usually handle all check disbursements to both the
working  interest  and  royalty  owners.

     The Company in most instances will be a working interest owner.  By being a
working  interest  owner,  the  Company  is  responsible  for the payment of its
proportionate  share  of the operating expenses of the well.  Royalty owners and
over-riding  royalty owners receive a percentage of gross oil production for the
particular  lease  and are not obligated in any manner whatsoever to pay for the
costs  of  operating the lease.  Therefore, the Company, in most instances, will
be  paying  the  expenses  for  the oil and gas revenues paid to the royalty and
over-riding  royalty  interests.

     The  gas purchaser will pay the well operator 100% of the sales proceeds on
or  about  the  25th of each and every month for the previous months sales.  The
operator is responsible for all checks and distributions to the working interest
and  royalty owners.  There is no standard price for gas.  Prices will fluctuate
with  the  seasons  and  the  general  market  conditions.  It  is the Company's
intention  to  utilize  this  market  when  ever  possible  in order to maximize
revenues.  The  Company does not anticipate any significant change in the manner
production  is  purchased,  however, no assurance can be given at this time that
such  changes  will  not  occur.

ACQUISITION OF FUTURE OIL AND GAS LEASES

     The  principal activity for the Company in 2003 will be the exploration its
existing  oil  and  gas leases.  It is also likely that the Company will acquire
other  oil  and  gas  interests, if such can be acquired on favorable terms. The
acquisition  process may be lengthy because of the amount of investigation which
will  be  required  prior  to  submitting  a bid to a land owner or oil company.
Currently,  as  of  the  date  of this report, the Company is not engaged in any
bidding processes and does not intend to do so until exploration of its existing
oil  and  gas  leases  has  been  completed.

     In  the  future,  if the Company does proceed with further acquisitions, it
intends  to  do  so  in  the  following  three  phases:

     PHASE  1.  FIELD  IDENTIFICATION.  In some instances the seller will have a
formal  divestiture department that will provide a sales catalog of leases which
will  be available for sale.  Review of the technical filings made to the states
along with a review of the regional geological relationships, released well data
and  the  production  history  for  each  lease will be utilized.  In addition a
review  of  the  proprietary  technical  data  in  the  sellers  office  (if
applicable)will  be  made  prior  to calculation of a bid price for the tract or
field.  Bid  prices are also often determined by the "going rate" in the area at
the  time.

     PHASE  2.  SUBMISSION  OF  BIDS.  In  the  case  of  properties  owned  by
individual  land  owners  the  Company will generally hire a third party landman
familiar  with the local area who will then contact the local land owners of the


                                        8
<PAGE>
prospective  tracts  and  negotiate  leases on each individual property that are
part  of  the  tract.  If  the  tract is owned or under lease by an oil company,
generally a member of management or a consultant to the Company will contact the
oil  company and submit a bid. Some of these tracts are also put up for auction.
At this stage the Company would prefer not to participate in auctions because it
believes  highly  prospective properties may be obtained on better terms outside
of  the  auction  venue,  and  because  of  its  low capital in hand, it is at a
competitive  disadvantage  with  other  prospective  bidders.

     PHASE  3.  CLOSING.  Final price negotiation will take place. Cash transfer
and  issuance  of  title  opinions.  The  property  will  then  be  readied  for
drill-testing  by conducting further exploration which may include added seismic
work  and  other  testing.

     In  connection  with  the acquisition of an oil and gas lease for work-over
operations,  the  Company  may  be  able  to  assume  100%  ownership  of  the
working-interest  and  surface  production  equipment facilities with only minor
expenses.  In exchange for an assignment of the lease, the Company will agree to
assume  the  obligation  to  plug  and abandon the well in the event the Company
determines that reworking operations are either too expensive or will not result
in  production  in  paying quantities.  The cost of plugging a well can run from
$500  to  $15,000,  depending  on  the  condition  of  the  well.

     As  noted above, major oil companies often place oil and gas properties out
for  competitive  bidding.  The  Company  currently  does  not  have  sufficient
revenues  or  funds  available  to  it  to  make a bid for such properties.  The
Company  has not initiated a search for additional leases and does not intend to
do  so  until  it  raises additional capital and completes its evaluation of its
existing  properties.  The  Company  intends to raise additional capital through
loans,  from  cash  flow  from  its  existing  oil and gas leases if they can be
profitably  developed,  or  through  the  sale  of  equity  securities.

     There  is  no  assurance  that  the Company will ever raise such additional
capital,  or  achieve  revenue  from  its existing properties. If the Company is
unable  to  raise such capital, or achieve profitable production, it may have to
cease  operations.

COMPETITION

     The  oil and gas industry is highly competitive.  The Company's competitors
and  potential competitors include major oil companies and independent producers
of varying sizes of which are engaged in the acquisition of producing properties
and  the  exploration  and  development  of  prospects.  Most  of  the Company's
competitors  have greater financial, personnel and other resources than does the
Company  and  therefore  have  greater  leverage  and a competitive advantage in
acquiring prospects, hiring personnel and marketing oil and gas.  Accordingly, a
high  degree  of  competition  in  these  areas  is  expected  to  continue.

GOVERNMENTAL  REGULATION

     The  production  and sale of oil and gas is subject to regulation by state,
federal  and  local  authorities.  In  most areas there are statutory provisions
regulating  the  production  of  oil  and natural gas under which administrative
agencies  may  set  allowable  rates  of  production  and  promulgate  rules  in
connection  with  the  operation  and  production  of  such wells, ascertain and
determine  the  reasonable  market  demand  of oil and gas, and adjust allowable
rates  with  respect  thereto.


                                        9
<PAGE>
     The sale of liquid hydrocarbons was subject to federal regulation under the
Energy  Policy and Conservation Act of 1975 that amended various acts, including
the  Emergency  Petroleum Allocation Act of 1973. These regulations and controls
included mandatory restrictions upon the prices at which most domestic crude oil
and  various  petroleum  products  could  be  sold.  All  price  controls  and
restrictions on the sale of crude oil at the wellhead have been withdrawn. It is
possible,  however, that such controls may be re-imposed in the future but when,
if  ever,  such  re-imposition might occur and the effect thereof on the Company
cannot  be  predicted.

     The  sale  of  certain  categories of natural gas in interstate commerce is
subject  to  regulation under the Natural Gas Act and the Natural Gas Policy Act
of  1978  ("NGPA").  Under  the  NGPA,  a comprehensive set of statutory ceiling
prices  applies to all first sales of natural gas unless the gas is specifically
exempt  from regulation (i.e., unless the gas is "deregulated").  Administration
and  enforcement  of the NGPA ceiling prices are delegated to the FERC.  In June
1986, the FERC issued Order No. 451, which, in general, is designed to provide a
higher  NGPA  ceiling  price  for  certain vintages of old gas.  It is possible,
though  unlikely, that the Company may in the future acquire significant amounts
of  natural  gas  subject  to  NGPA price regulations and/or FERC Order No. 451.

     The  Company's operations are subject to extensive and continually changing
regulation  because  legislation  affecting  the oil and natural gas industry is
under  constant  review  for  amendment  and  expansion.  Many  departments  and
agencies,  both  federal  and state, are authorized by statute to issue and have
issued rules and regulations binding on the oil and natural gas industry and its
individual  participants.  The failure to comply with such rules and regulations
can  result in large penalties. The regulatory burden on this industry increases
the  Company's cost of doing business and, therefore, affects our profitability.
However, we do not believe that we are affected in a significantly different way
by  these  regulations  than  our  competitors  are  affected.

TRANSPORTATION  AND  PRODUCTION

     TRANSPORTATION  AND SALE OF OIL AND NATURAL GAS. The Company can make sales
of  oil,  natural  gas  and condensate at market prices which are not subject to
price  controls  at  this time. The price that we receive from the sale of these
products  is  affected  by  the  Company's  ability to transport and the cost of
transporting these products to market. Under applicable laws, the Federal Energy
Regulatory  Commission  ("FERC")  regulates:

     -     the  construction  of  natural  gas  pipeline  facilities,  and
     -     the  rates  for  transportation  of  these  products  in  interstate
           commerce.

     The  Company's  possible  future  sales  of natural gas are affected by the
availability, terms and cost of pipeline transportation. The price and terms for
access  to pipeline transportation remain subject to extensive federal and state
regulation.  Several  major regulatory changes have been implemented by Congress
and  the  FERC  from  1985 to the present. These changes affect the economics of
natural  gas  production,  transportation  and  sales.  In addition, the FERC is
continually proposing and implementing new rules and regulations affecting these
segments  of  the  natural  gas  industry  that  remain  subject  to  the FERC's
jurisdiction.  The most notable of these are natural gas transmission companies.

     The  FERC's  more  recent  proposals  may  affect  the  availability  of
interruptible  transportation service on interstate pipelines. These initiatives
may  also affect the intrastate transportation of gas in some cases.  The stated
purpose  of many of these regulatory changes is to promote competition among the


                                       10
<PAGE>
various sectors of the natural gas industry. These initiatives generally reflect
more light-handed regulation of the natural gas industry. The ultimate impact of
the  complex  rules  and  regulations  issued  by  the FERC since 1985 cannot be
predicted.  In  addition, some aspects of these regulatory developments have not
become  final  but  are  still  pending  judicial and FERC final decisions.  The
Company  cannot predict what further action the FERC will take on these matters.
However,  the Company does not believe that any action taken will affect it much
differently  than  it  will  affect  other  natural gas producers, gatherers and
marketers  with  which  the  Company  might  compete  against.

     Effective  as  of  January  1,  1995,  the  FERC  implemented  regulations
establishing  an  indexing  system  for  transportation  rates  for  oil.  These
regulations  could  increase  the cost of transporting oil to the purchaser. The
Company  does  not believe that these regulations will affect it any differently
than  other  oil  producers  and  marketers  with  which  it  competes  with.

     Regulation  of Drilling and Production. The Company's proposed drilling and
production  operations are subject to regulation under a wide range of state and
federal  statutes,  rules,  orders  and  regulations. Among other matters, these
statutes  and  regulations  govern:

     -    the amounts and types of substances and materials that may be released
          into  the  environment,
     -    the  discharge  and  disposition  of  waste  materials,
     -    the  reclamation  and  abandonment  of  wells and facility sites, and
     -    the  remediation  of  contaminated  sites,

and  require:

     -    permits  for  drilling  operations,
     -    drilling  bonds,  and
     -    reports  concerning  operations.

Texas, Michigan and Louisiana law contains:

     -    provisions  for  the  unitization  or  pooling  of oil and natural gas
          properties,
     -    the  establishment of maximum rates of production from oil and natural
          gas  wells,  and
     -    the  regulation  of  the  spacing, plugging and abandonment of wells.

ENVIRONMENTAL REGULATIONS

     GENERAL.  The Company's operations are affected by the various state, local
and  federal  environmental  laws  and  regulations,  including  the:

     -    Clean  Air  Act,
     -    Oil  Pollution  Act  of  1990,
     -    Federal  Water  Pollution  Control  Act,
     -    Resource  Conservation  and  Recovery  Act  ("RCRA"),
     -    Toxic  Substances  Control  Act,  and
     -    Comprehensive  Environmental  Response, Compensation and Liability Act
          ("CERCLA").


                                       11
<PAGE>
     These  laws  and  regulations  govern  the  discharge of materials into the
environment  or  the  disposal  of  waste  materials, or otherwise relate to the
protection  of  the  environment.  In  particular,  the following activities are
subject  to  stringent  environmental  regulations:

     -    drilling,
     -    development  and  production  operations,
     -    activities  in  connection  with storage and transportation of oil and
          other  liquid  hydrocarbons,  and
     -    use  of  facilities  for  treating,  processing  or otherwise handling
          hydrocarbons  and  wastes.

     Violations  are  subject  to  reporting  requirements,  civil penalties and
criminal  sanctions.  As  with  the industry generally, compliance with existing
regulations  increases  our overall cost of business. The increased costs cannot
be  easily  determined.  Such  areas  affected  include:

     -    unit  production  expenses  primarily  related  to  the  control  and
          limitation  of  air  emissions  and  the  disposal  of produced water,
     -    capital  costs  to  drill  exploration and development wells resulting
          from  expenses  primarily  related  to  the management and disposal of
          drilling  fluids and other oil and natural gas exploration wastes, and
     -    capital  costs  to  construct,  maintain  and  upgrade  equipment  and
          facilities  and  remediate,  plug  and abandon inactive well sites and
          pits.

     Environmental regulations historically have been subject to frequent change
by  regulatory  authorities.  Therefore,  the  Company  is unable to predict the
ongoing  cost of compliance with these laws and regulations or the future impact
of  such  regulations  on  its operations. However, the Company does not believe
that changes to these regulations will have a significant negative affect on its
operations.

     A  discharge  of  hydrocarbons or hazardous substances into the environment
could  subject us to substantial expense, including both the cost to comply with
applicable  regulations  pertaining  to  the  clean  up of releases of hazardous
substances  into  the  environment  and  claims  by
neighboring  landowners and other third parties for personal injury and property
damage.  The Company does not maintain insurance for  protection against certain
types  of  environmental  liabilities.

     The  Clean  Air  Act requires or will require most industrial operations in
the  United  States  to incur capital expenditures in order to meet air emission
control  standards  developed  by  the  EPA  and  state  environmental agencies.
Although  no  assurances  can  be  given, the Company believes the Clean Air Act
requirements  will not have a material adverse effect on our financial condition
or  results  of  operations.

     RCRA  is the principal federal statute governing the treatment, storage and
disposal of hazardous wastes. RCRA imposes stringent operating requirements, and
liability  for  failure  to  meet  such requirements, on a person who is either:

     -    a "generator" or "transporter" of hazardous waste, or
     -    an  "owner"  or  "operator" of a hazardous waste treatment, storage or
          disposal  facility.

At  present, RCRA includes a statutory exemption that allows oil and natural gas
exploration  and production wastes to be classified as non-hazardous waste. As a
result,  the  Company will not be subject to many of RCRA's requirements because
its  operations  will  probably generate minimal quantities of hazardous wastes.


                                       12
<PAGE>
     CERCLA,  also  known  as  "Superfund", imposes liability, without regard to
fault  or  the  legality of the original act, on certain classes of persons that
contributed  to  the  release  of  a "hazardous substance" into the environment.
These  persons  include:

     -    the  "owner" or "operator" of the site where hazardous substances have
          been  released,  and
     -    companies  that disposed or arranged for the disposal of the hazardous
          substances  found  at  the  site.

     CERCLA also authorizes the EPA and, in some instances, third parties to act
in  response  to  threats to the public health or the environment and to seek to
recover  from  the  responsible  classes of persons the costs they incur. In the
course  of  our  ordinary  operations, the Company could generate waste that may
fall  within  CERCLA's  definition  of a "hazardous substance". As a result, the
Company may be liable under CERCLA or under analogous state laws for all or part
of the costs required to clean up sites at which such wastes have been disposed.

     Under  such  law  the  Company  could  be  required  to:
     -    remove  or  remediate  previously  disposed  wastes,  including wastes
          disposed  of  or  released  by  prior  owners  or  operators,
     -    clean up contaminated property, including contaminated groundwater, or
     -    perform remedial plugging operations to prevent future contamination.

     The  Company  could  also be subject to other damage claims by governmental
authorities  or  third  parties  related  to  such  contamination.

     While the foregoing regulations appear extensive, the Company believes that
because it will initially be drilling and operating a small number of oil or gas
wells,  compliance  with  the  foregoing  regulations will not have any material
adverse  affect  upon  the  Company.  Further, the Company believes it will only
spend  minimal  amounts  of  money  to  comply  therewith in connection with its
proposed  wells.

MINERAL  PROPERTY  INTERESTS

UTAH  PROPERTY
--------------

The  Company has retained a 25% interest in the Vipont Mine located in Northwest
Utah.  This  property  was  acquired in October 1994 when Celebration and United
Silver  Mine,  Inc.,  (United)  entered  into a joint venture agreement, whereby
Celebration could acquire up to an 80% interest in the property. Under the terms
of  the  agreement,  United was to contribute real properties for an initial 75%
interest  in  the  joint  venture,  and  Celebration  was  to  remove  all liens
associated  with  the real properties by paying $175,000 to a bank which was the
primary  lien  holder  for  its initial 25% interest in the venture. Celebration
expended  $175,000  to purchase the aforementioned promissory note. The property
was  auctioned  in  a  public auction in May 1995 and by virtue of Celebration's
first position lien, Celebration was able to successfully bid the full amount of
the  underlying  promissory  note.

     Although  additional  expenditures  have  been made on the property through
September  30,  1998,  no  further  funds  towards  the  joint venture have been


                                       13
<PAGE>
expended by Celebration, which owns an undivided 25% interest in the property at
the  time  of  this  report. However, the above joint venture agreement has been
effectively  dissolved  and has ceased existence as a result of litigation which
was  initiated  by  Thomas  Miller,  a  principal  of  United.  The  Company
counterclaimed  against  Miller  et. al. This litigation is more fully described
below.  See  Item  3,  "Legal  Proceedings".

IDAHO  PROPERTIES
-----------------

The Company has retained several groups of unpatented mining claims in the Coeur
d'Alene  Mining District of North Idaho.  The Coeur d'Alene Mining District is a
historic  mining  area  and  is known for its century long production of silver,
lead,  zinc  and other minerals. The District is the most prolific silver mining
district  in  North America and is also a leading district in production of lead
and zinc. The management of the Company believes it to be prudent to continue to
hold  its  properties  in  this  district,  and  opportunistically to add to its
holdings  there.

The  Company,  directly  and  through its subsidiary Celebration Mining Company,
currently  holds  unpatented  mining  claims in three distinct groups called the
South Galena Group, Moe group, Rock Creek Group and Palisades Group. The Company
has  undertaken  only  minimal  exploration  and  development  work  on  these
properties,  such  as  general  geological  reconnaissance  and  claim-staking
activities.

On  October  31,  2001, the Company sold two of its claims groups, the Kil Group
and  West Mullan Group, to Caledonia Silver-Lead Mines, Inc. ("Caledonia"), in a
transaction that is not considered arms-length because officers and directors of
the  Company  are  also  officers  and directors of Caledonia. By virtue of this
transaction  the  Company  became  the  largest  single shareholder of Caledonia
holding  about  33%  of  the  issued  and  outstanding  stock.


South Galena Group
------------------

     This  group  of  nine unpatented mining claims has been held by the Company
since  1996.  The  claims  lie nearly due south from the Galena Mine which is an
active  silver  mine  owned and operated by Coeur d'Alene Mines Corporation. The
claims  of  the  Company also lie within one mile of the City of Wallace, Idaho.
The  claims  are  accessed from several different directions by good dirt roads.

     The  Galena  Mine  is a deep, high-grade silver mine and has been a leading
producer  of  silver  for  more  than  thirty  years. Although the claims of the
Company  have  not  been  explored  at  the  depths  at which the Galena Mine is
extracting  ore,  the same favorable rock groups and other geologic features are
indicated  to  be  present  on  the  property  of  the  Company. The Company has
conducted only minimal claim staking and surveying activities on its properties.
At  this  time,  however, there are no indicated mineral resources on the claims
controlled  by  the  Company.

Palisades  Group
----------------

The  property lies on the very western edge of the Coeur d'Alene Mining District
near  Pinehurst,  Idaho.  The  property  is  reached by well-maintained dirt and
gravel  roads,  either  from  Pinehurst  or  from  the  Town  of Cataldo, Idaho.


                                       14
<PAGE>
     In  September,  2000  the  Company,  through  its  wholly  owned subsidiary
Celebration  Mining  Company,  entered  into a five-year lease agreement with an
affiliated  company,  Oxford  Metallurgical,  Inc. on seven of the claims in the
Palisades  Group  property. The lease calls for a semi-annual payment of $3,000,
or  alternatively,  the semi-annual payment of 10,000 shares of the common stock
of  Oxford. Oxford has the right to explore and potentially develop the property
under  certain  conditions.  Oxford  is  an  affiliated company by virtue of its
common  officers  and  directors.

     During  2002  the  Company  acquired  additional  mining  claims around the
Palisades  Group  that  are not part of the lease with Oxford. This consisted of
the  staking  of  an additional thirty-two unpatented claims. The Company may in
the  future  sell  or  lease  such claims to Oxford, or to a third party, or may
choose  to  explore  such  claims  on  its  own.

     During  2002  the  Company commissioned a study of the Palisades area by an
independent  professional  geologist, Dr. Dwight Juras, who is considered one of
the  foremost  experts on the geology and structural ore controls of deposits of
the  Coeur  d'Alene  District. In response to this report, the Company increased
its  land  holdings  in  the  area  (as  noted above) and is studying additional
exploratory work that may be done on the Palisades Group during the field season
of  2003.  The  summary  section  of  his  report  is  excerpted  below:

     "The  veins  within  the Palisade mine prospect indicates that the property
     geologically  is  part  of  the Coeur d'Alene Mining District. The Palisade
     mine  prospect  contains  the same major vein types that have been prolific
     for silver and base metal ore in the Coeur d'Alene Mining District. Some of
     the  veins  may  actually be the extensions of the same veins in the Silver
     Belt.  The  veins in the Palisade mine prospect also lie in the Precambrian
     St.  Regis  Formation,  possibly  even  the  transition  zone of the Revett
     Formation,  which  have  been  the most prolific rocks of the Coeur d'Alene
     Mining  District.  At  depth  the veins zones will enter the more favorable
     massive quartzites, which dominate the 1800-foot thickness of the shallowly
     dipping  Revett  formation  below.

     The  distribution of the veins (vein density) on the property is as high or
     higher  than  many  major  mines  in the Coeur d'Alene Mining District. The
     siderite  veins  that  outcrop on the property are predominantly steeply to
     vertical  dipping,  Sunshine (WNW to EW-striking) and Jersey (ENE-striking)
     type  veins  that  have  been  the most prolific veins of the Coeur d'Alene
     Mining  District  for lead (galena) and silver (tetrahedrite). In addition,
     Bluebird  (NW-striking)  and  Cross (N-striking) type veins, which are also
     prolific  veins  of  the  Coeur  d'Alene  Mining District are also present.
     Although  the  veins  are  not within the silver-bearing tetrahedrite depth
     zone  at  the  surface,  high  silver/lead ratios suggests that some of the
     veins  will  have  those  characteristics  within a relatively short depth.

     Because  of  vein  characteristics,  the  type  of veins, vein density, and
     evidence  for silver-bearing tetrahedrite below, the Palisade mine prospect
     should be explored to the tetrahedrite depth zone in the Revett formation."

     At  this  time,  however,  there  are no indicated mineral resources on the
claims  controlled  by  the  Company.


                                       15
<PAGE>
Rock Creek and Moe Groups
-------------------------

     During 2002 the Company also staked a block of ten unpatented mining claims
which  is  called the Moe Group located about two miles southwest of the Town of
Mullan  Idaho. The Company also staked a block of eight unpatented mining claims
which  is called the Rock Group and which is located about two miles east of the
Town  of  Wallace,  Idaho.  Both  of these claim groups are accessible by easily
passable  dirt  and  gravel roads extending from a major interstate freeway. The
Company has conducted only minimal claim staking and surveying activities on its
properties.  At  this time, however, there are no indicated mineral resources on
the  claims  controlled  by  the  Company.

MINERAL PROPERTY FUTURE PLANS

     The  additional claim staking activities of the Company were in response to
a renewed interest in precious metals that has occurred in the year 2002. In the
Company's  judgment,  the Coeur d'Alene Mining District is an attractive area to
hold  mining claims, particularly in a rising silver price market, and since the
----
costs  of holding such claims is considered minimal in relation to the potential
value  of  such  claims.  However, it should be noted that there is no assurance
that  rising metal markets will be sustained, or that any minerals of commercial
importance  will  ever  be  found  on  the properties controlled by the Company.

     The  Company  believes  that  all  of  the  claims it holds warrant further
exploration  activity,  in  particular the Palisades mine prospect. However, the
Company  has  no  firm  plans  to undertake any of this work in the near future.

     The Company's future mining activities, if any, will be subject to laws and
regulations  controlling  not  only  the  exploration  and  mining  of  mineral
properties,  but  also  the  effect  of  such  activities  on  the  environment.
Compliance  with  such  laws  and regulations may necessitate additional capital
outlays,  affect  the economics of a project, and cause changes or delays in the
Company's  activities.  The  sections  above titled "Competition", "Governmental
Regulation" and "Environmental Regulations" are equally relevant to the minerals
industry  and  investors  are  encouraged  to  carefully  review these sections.

COMPANY'S  OFFICE

     The  Company's  office  is  located  at 6 East Rose Street, Walla Walla, WA
99362.  The  Company  leases  the  space  from Coldwell Banker Commercial at the
monthly  lease  rate  of  $400.  The Company signed a three-year lease agreement
commencing  June,  2001.

EMPLOYEES

     The  Company  is a development stage company and currently has no employees
other  than  its  Officers  and  Directors.  It  employs a number of third party
independent  contractors  on  an  "as-needed"  basis.  It  currently provides no
medical  or  retirement  benefits  to  its  Officers  and Directors, or to those
engaged  as  consultants.


                                       16
<PAGE>
RISK  FACTORS

NOTE:  THESE  RISK  FACTORS ARE PRIMARILY FOCUSED ON THE OIL & GAS ACTIVITIES OF
THE COMPANY, SINCE THAT IS TO BE THE PRIMARY FOCUS OF THE COMPANY IN THE FUTURE.
HOWEVER,  MOST OF THE RISK FACTORS DISCUSSED BELOW ARE APPLICABLE TO THE MINERAL
INDUSTRY  AS  WELL SINCE BOTH INDUSTRIES ARE OF AN EXTRACTIVE NATURE AND INVOLVE
SIMILAR  STEPS  OF  EXPLORATION,  DISCOVERY,  FACILITIES  CONSTRUCTION,  AND
PRODUCTION.

     1.  THE  COMPANY  IS  AN EXPLORATION STAGE COMPANY AND MINIMAL OIL RESERVES
AND  NO  GAS  RESERVES.  The  Company  is  currently  incurring  losses  in  its
operations  and  may  continue  to sustain losses and accumulate deficits in the
future.

     2.  THE  COMPANY MAY NOT DISCOVER A SIGNIFICANT AMOUNT OF OIL OR GAS ON ITS
PROPERTY.  The  search for oil and gas is risky.  The Company will not know what
is  underground until it drills a well.  Although the Company has discovered oil
on its leases in Wilbarger County, Texas, the amount of oil discovered is only a
small amount relative to its competitors and their reserves. The Company has not
initiated  exploration  of  its  Louisiana  or  Michigan  properties and may not
discover  any  oil  or  gas  there.  Accordingly, the Company may never discover
substantial  enough  oil  or gas resources to be a significant competitor in its
industry,  or  to  produce  enough  revenues  that  it  may  stay  in  business.

     3.  VOLATILITY OF OIL AND GAS MARKETS.  In the past few years, the price of
oil  and gas has been volatile and is likely to remain so.  During the last five
years  the  price  of  oil has fluctuated from a low of approximately $11.00 per
barrel  to  a  high  of  approximately  $36.00 per barrel.  The price of gas has
fluctuated  from  a low of approximately $1.80 per 1,000 cubic feet to a high of
approximately  $9.00 per 1,000 cubic feet.  At the present time the price of oil
is  over  $30.00  per  barrel.  The price of natural gas is near $5.00 per 1,000
cubic  feet.   There  is  no assurance that in the future prices for oil and gas
production  will  stabilize at current rates and not be much lower. Lower prices
may  make  the  Company  projects  described  herein  unprofitable, either on an
operating  basis, a capital cost basis, or both.  Higher prices rend to drive up
drilling  and  other  exploration  costs  and  make  prospective properties more
expensive  to  acquire.

     4.  AVAILABILITY  OF  SUITABLE  PROSPECTS  OR  PRODUCING  PROPERTIES.
Competition for prospects and producing properties is intense.  The Company will
be  competing  with  a  number  of  other  potential purchasers of prospects and
producing  properties,  most of which will have greater financial resources than
the  Company.  The  state of the oil and gas industry, the bidding for prospects
has  become  particularly  intense  with  different bidders evaluating potential
acquisitions  with  different product pricing parameters and other criteria that
result  in  widely  divergent  bid  prices.  See  "Business - Competition."  The
presence  in  the  market  of  bidders  willing  to  pay  prices higher than are
supported  by  the Company's evaluation criteria could further limit the ability
of  the  Company to acquire prospects and low or uncertain prices for properties
can  cause potential sellers to withhold or withdraw properties from the market.
In  this  environment, there can be no assurance that there will be a sufficient
number  of  suitable prospects available for acquisition by the Company, or that
the  Company  can  sell  its  current  prospects, or that the Company can obtain
financing  for or find participants to join in the development of its prospects.

     5.  TITLE  TO PROPERTIES.  It is customary in the oil and gas industry that
upon  acquiring  an  interest  in  a  property,  that  only  a preliminary title
investigation  be done at that time.  The Company intends to follow this custom.
If  the  title  to the prospects should prove to be defective, the Company could
lose  the  costs  of  acquisition, or incur substantial costs for curative title
work.


                                       17
<PAGE>
     6.  SHUT-IN  WELLS  AND CURTAILED PRODUCTION.  Production from gas wells in
many  geographic  areas  of  the United States has been curtailed or shut-in for
considerable  periods  of  time  due  to  a  lack  of  market  demand,  and such
curtailments  may  continue  for  a  considerable  period of time in the future.
There  may  be  an  excess supply of gas in areas where the Company's operations
will  be  conducted.  In such event, it is possible that there will be no market
or  a  very limited market for the Company's prospects.  It is customary in many
portions  of  Louisiana  and Texas to shut-in gas wells in the spring and summer
when  there  is  not  sufficient  demand  for  gas.

     7.  OPERATING AND ENVIRONMENTAL HAZARDS.  Hazards incident to the operation
of  oil  and gas properties, such as accidental leakage of petroleum liquids and
other  unforeseen  conditions,  may  be  encountered  by  the  Company  if  it
participates  in  developing a well and, on occasion, substantial liabilities to
third  parties  or  governmental entities may be incurred.  The Company could be
subject  to  liability  for  pollution and other damages or may lose substantial
portions  of  prospects  or  producing properties due to hazards which cannot be
insured  against  or  which  have  not  been  insured against due to prohibitive
premium costs or for other reasons.  The Company currently does not maintain any
insurance  for  environmental  damages.  Governmental  regulations  relating  to
environmental  matters could also increase the cost of doing business or require
alteration  or  cessation  of  operations  in  certain  areas.  See  "Business -
Government  Regulations."

     8.  LACK OF INSURANCE.  The Company does not maintain any insurance against
losses or liabilities which may arise from operations. The Company also does not
have  a  "key  man"  life  insurance  policy  in  place, or Errors and Omissions
coverage.  The  Company will likely add these insurances if and when it achieves
profitable  cash  flow  from  its  projects  if such insurance is available at a
reasonable  cost.

     9.  FEDERAL  AND  STATE TAXATION.  Federal and state income tax laws are of
particular  significance  to  the  oil and gas industry.  Recent legislation has
eroded  previous  benefits  to  oil  and  gas  producers,  and  any  subsequent
legislation  may  continue  this  trend.  The  states  in  which the Company may
conduct  oil and gas activities also impose taxes upon the production of oil and
gas  located  within  such  states.  There can be no assurance that the tax laws
will  not  be  changed  or interpreted in the future in a manner which adversely
affects  the  Company.

     10.  GOVERNMENT  REGULATION.  The  oil  and  gas  business  is  subject  to
substantial  governmental  regulation, including the power to limit the rates at
which  oil  and  gas are produced and to fix the prices at which oil and gas are
sold.  It  cannot  be  accurately  predicted  whether
additional  legislation  or  regulation will be enacted or become effective. See
"Business  -  Governmental  Regulations."

     11.  BECAUSE  THE  COMPANY'S COMMON STOCK IS A "PENNY STOCK," INVESTORS MAY
NOT  BE  ABLE  TO RESELL THEIR SHARES AND MAY HAVE LIMITED ACCESS TO INFORMATION
ABOUT  THE  COMPANY.  The  Company's common stock is defined as a "penny stock,"
under the Securities Exchange Act of 1934, and its rules.  Because the Company's
common stock is a "penny stock," investors may be unable to resell their shares.
This  is  because  the Securities Exchange Act of 1934 and the penny stock rules
impose  additional  sales practice and disclosure requirements on broker-dealers
who  sell  the  Company's securities to persons other than accredited investors.
As  a result, fewer broker-dealers are willing to make a market in the Company's
common stock and investors may not be able to resell their shares. Further, news
and  analyst  coverage  regarding  penny  stock  is  extremely  limited,  if
non-existent.  As  a  result, investors may find that the only information about
the  Company  will  be  from  reports  filed  with  the  Securities and Exchange
Commission.  See "Market Price for Common Equity and Other Shareholder Matters."


                                       18
<PAGE>
     12.  WRITE-DOWNS AND LIMITS ON ACCURACY OF RESERVE ESTIMATES.  Although the
Company  currently  has  no  reserves,  if  it  develops or acquires such in the
future,  investors  are  cautioned  that  oil  and  gas  reserve  estimates  are
necessarily  inexact and involve matters of subjective engineering judgment.  In
addition,  any  estimates  of  future net revenues and the present value of such
revenues are based on the price and costs at the effective date of the estimate.
These  estimates  may not prove to have been correct over time.  Declines and/or
swings in oil and gas prices may also require the Company to adjust, write-down,
or  write-off the value of oil and gas reserves it may develop or acquire in the
future.

     13.  NEED  FOR  ADDITIONAL  KEY  PERSONNEL.  At  the  present,  the Company
employs  no  full  time  employees.  Aside  from  its  Officers, the Company has
retained  one  geologist on a full-time consulting contract. At the present time
the Company has insufficient revenues to hire additional geologists or engineers
on  a  permanent  basis and must rely on consultants paid on a daily rate basis.
There  is no assurance that it will be able to hire and retain such personnel in
the  future.  If  the  Company  is  unable  to  engage  and retain the necessary
personnel,  its  business  could  be  materially  and  adversely  affected.

     14.  RELIANCE  UPON  DIRECTORS  AND  OFFICERS.   The  Company  is  wholly
dependent,  at  the present time, upon the personal efforts and abilities of its
President  and  Chairman,  Howard  Crosby;  its  Director,  Kevin  Stulp,  its
Secretary/Treasurer  and  Director,  John  Ryan,  and  its  primary  consulting
geologist,  Lucius  Geer.  The  loss of any one of the foregoing could adversely
effect the Company's operations.  While the foregoing will exercise control over
the  day  to day affairs of the Company, they will also be devoting limited time
to  the  Company's  activities, approximately 50% of their active work time. The
Company  does  not  have  employment  agreements  with  any  of its officers and
directors, nor does the Company maintain key-person insurance for any officer or
director.  Accordingly,  while  the  Company  may  solicit  business through its
Officers,  there can be no assurance as to the volume of business, if any, which
the  Company  may  succeed  in  obtaining, nor that its proposed operations will
prove  to  be  profitable.  As of the date hereof, the Company does not have any
commitments regarding its proposed operations and there can be no assurance that
any  commitments  will  be  forthcoming.

     15.  NEED  FOR  SUBSEQUENT  FUNDING.  The Company has an immediate need for
additional  funds  in  order  to  finance  its proposed business operations. The
Company  believes that it has adequate funds available to drill and complete one
additional  well  on  its  lease  in  Texas. It will need other funding to drill
further  wells  in  Texas,  Michigan  and  in Louisiana. The Company's continued
operations  therefore  depend upon its ability to raise additional funds through
bank borrowings, cash flow from production (if successful in its exploration) or
equity or debt financing. There is no assurance that the Company will be able to
obtain  additional  funding when needed, or that such funding, if available, can
be  obtained  on  terms acceptable to the Company.  If the Company cannot obtain
needed  funds,  it  may  be  forced  to  curtail  or  cease  its  activities.

     16.  NON-ARMS'S  LENGTH  TRANSACTION.  The  purchase  price  of some of the
stock  issued  to  the Company's officers and directors was not at arm's length,
but  was  determined  by  the Company's board of directors to be enough money to
continue  to fund the Company on a quarter-to-quarter basis. Subsequent sales of
shares  were  arm's  length and were intended to raise enough capital to acquire
its current leases, drill and complete wells, and fund other requirements of the
Company.  See  "Principal  Shareholders."

     17.  INDEMNIFICATION  OF OFFICERS AND DIRECTORS FOR SECURITIES LIABILITIES.
The  Articles  and  Bylaws of the Company provide that the Company may indemnify
any  Director,  Officer,  agent  and/or  employee as to those liabilities and on


                                       19
<PAGE>
those  terms  and  conditions  as are specified in the Utah Business Corporation
Act.  Further,  the Company may purchase and maintain insurance on behalf of any
such  persons  whether  or not the corporation would have the power to indemnify
such  person  against the liability insured against.  The foregoing could result
in  substantial  expenditures  by the Company and prevent any recovery from such
Officers,  Directors, agents and employees for losses incurred by the Company as
a  result  of  their actions.  Further, the Company has been advised that in the
opinion  of  the  Securities and Exchange Commission, indemnification is against
public  policy  as  expressed in the Securities Act of 1933, as amended, and is,
therefore,  unenforceable.

     18.  PUBLIC  MARKET  FOR SECURITIES.   There is a limited public market for
the  Company's  common  stock.  The  Company's  common stock is owned by several
thousand  persons  and is well distributed.  However, the Company's common stock
is  not  traded  on  a  national listed market or on the NASDAQ NMS or Small Cap
market.  Instead,  it  trades on the OTC Bulletin Board under the symbol "CDNR".
The  OTC  Bulletin  Board  is  operated  by  the  NASD  but  is  a  thin  market
characterized by large spreads and lacks the liquidity with which many investors
may  be  more  familiar.

     19.  NO  CUMULATIVE  VOTING  OR PREEMPTIVE RIGHTS.  There are no preemptive
rights  in  connection  with the Company's Common Stock and cumulative voting in
the  election  of  Directors is not provided for.  Accordingly, the holders of a
majority  of  the shares of common stock, present in person or by proxy, will be
able  to  elect  all  of the Company's Board of Directors. Cumulative voting, in
some  cases,  will  allow a minority group to elect at least one director to the
board.  Because  there  is  no provision for cumulative voting, a minority group
will  not  be able to elect any directors.  See "Description of the Securities."

     20.  NO  DIVIDENDS  ANTICIPATED.  At  the present time the Company does not
anticipate  paying  dividends,  cash  or  otherwise,  on its Common Stock in the
foreseeable  future.  Future  dividends  will depend on earnings, if any, of the
Company,  its financial requirements and other factors. Investors who anticipate
the  need  of  an immediate income from their investment in the Company's Common
Stock  should  refrain  from  the  purchase  of  the  securities.  See "Dividend
Policy."

     21.  LACK  OF  EXPERTISE  AND  RELIANCE  UPON  EXPERTS.     The  Company's
management  has  limited  expertise  in  the  area  of  oil and gas exploration.
Accordingly, the Company has engaged third party geologists and landmen who have
been  largely responsible for the evaluation, recommendation, and acquisition of
the  existing  leases  of  the  Company.  The Company has and will in the future
retain  drilling  contractors,  technicians, landmen, additional geologists, and
engineers  to  direct  the  drilling  and completion of oil and gas wells on its
leases,  and  to  aid  in  the  acquisition  and evaluation of other properties.

     Potential  investors and existing shareholders should be aware that some of
these  parties may not be totally independent in advice rendered to the Company.
For  example,  the  Company  management has recently relied upon the opinion and
expertise  of the management of Aurora Energy, Ltd. in assessing and determining
to  go  forward  with  its participation in the Michigan Antrim Shale gas wells.
Aurora  Energy  was  interested  in  obtaining the Company as a working interest
partner  on  this  project. The Board and Officers of the Company therefore must
assess  the  reliability  of  the  advice  rendered  in  light  of  the  total
circumstances  of  any  given  situation.  When  possible, the management of the
Company  has  a  policy  of  attempting to obtain independent appraisals of each
project  but  may  not always be able to do so due to time constraints, cost, or
outright  unavailability  of  such  opinions.


                                       20
<PAGE>
ITEM  2.   DESCRIPTION  OF  PROPERTIES.

     The  Company's  oil  and  gas  leasehold properties, as well as its mineral
properties  are  described  above in Item 1. The Company rents office space at 6
East  Rose  Street,  Walla Walla, WA at the rate of $400 per month. Its lease on
that  office  space  expires  June,  2004.

ITEM  3.   LEGAL  PROCEEDINGS.

     The  Company  is not a party to any pending or threatened litigation except
that  described below. To its knowledge, no action, suit or proceedings has been
threatened  against  its  officers  and  its  directors.

VIPONT  MINE

     The  Company  was a defendant in a lawsuit alleging that the Company failed
to  transfer  common  stock  in exchange for a mining property interest. In June
1999,  Box  Elder County Superior Court rejected the plaintiff's lawsuit and let
stand  the Company's countersuit alleging fraudulent misrepresentation. Although
the plaintiff filed an appeal (regarding the originally filed lawsuit), the Utah
Supreme  Court  rejected the appeal in a judgment rendered on July 31, 2001.  In
its  countersuit,  the  Company  sought full title to the aforementioned mineral
property,  compensatory  damages  as  well  as punitive damages. In a jury trial
conducted  in October, 2002, the Company's countersuit was rejected by the jury.
Although  the  Company  has  filed  a  motion  to have the verdict set aside, it
expects  the  jury  verdict  will  stand.  As a result, the Company has and will
continue  to  hold  an  undivided  25%  interest in the subject mining property.

SETTLEMENT  AGREEMENTS

CRESCENT  MINE

      In July 1998, the Company filed an action in Federal Court in Boise, Idaho
for  declaratory  judgment  regarding  the validity of its Crescent Mine mineral
lease.  Defendants  in  the  action  included  the U.S. Environmental Protection
Agency, Shoshone County, and Fausett International. In 1999, the Company elected
to write off its interest in the Crescent Mine mineral lease. A final settlement
of this matter was reached on June 12, 2001 whereby the Company relinquished any
claims  it  may  have  to  the Crescent Mine under its mineral lease. In return,
Fausett International agreed to return common shares it received pursuant to the
lease  which  were then cancelled by the Company. The Company received a release
and  discharge  of  any  claims  related to the Crescent Mine from both Shoshone
County  and  the  United  States  Environmental  Protection  Agency.

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

None.

                                     PART II

ITEM  5.     MARKET  FOR  REGISTRANT'S  COMMON  EQUITY  AND RELATED STOCKHOLDERS
MATTERS.


                                       21
<PAGE>
     The  Company's common shares are traded on the OTC Bulletin Board  Operated
by the National Association of Securities Dealers, Inc. Prior to the name change
to  Cadence  Resources  Corporation  the  shares traded under the symbol "RSMI."
Since the name change was made effective in May, 2001 the stock has traded under
the  symbol  "CDNR".

     The  prices  listed  below  were  obtained from the National Association of
Securities  Dealers,  Inc.,  and are the highest and lowest bids reported during
each  fiscal  quarter  for  the period September 30, 1999, through September 30,
2002.  These  bid  prices  are  over-the-counter  market  quotations  based  on
inter-dealer  bid  prices,  without  markup, markdown, or commission and may not
necessarily  represent  actual  transactions:

<TABLE>
<CAPTION>
FISCAL QUARTER ENDED  HIGH BID($)  LOW BID ($)
--------------------  -----------  -----------
<S>                   <C>          <C>
September 30, 1999
December 31, 1999            2.40         1.80
March 31, 2000               1.80         1.00
June 30, 2000                2.00         1.20
September 30, 2000           2.40         1.60
December 31, 2000            1.80         1.00
March 31, 2001               1.20         0.40
June 30, 2001                0.60         0.40
September 30, 2001           0.70         0.20
December 31, 2001            1.05         0.38
March 31, 2002               1.02         0.55
June 30, 2002                0.97         0.65
September 30, 2002           1.30         0.67
                             1.60         0.85
</TABLE>

     On  January  9, 2003, the average of the high bid and low ask quotation for
the  Company's  common shares as quoted on the Bulletin Board was $1.63.     The
approximate  number  of holders of common stock of record on January 9, 2003 was
392. A large number of additional shareholders hold their stock in "street name"
at  their  brokerage  account. Therefore, the Company is unable to ascertain the
exact  number  of  such  shareholders  in  many  instances  with  any  degree of
reliability.

DIVIDENDS

     We  have not declared any cash dividends, nor do we intend to do so. We are
not  subject  to  any  legal  restrictions  respecting the payment of dividends,
except that they may not be paid to render us insolvent. Dividend policy will be
based on our cash resources and needs and it is anticipated that all available
cash will be needed for our operations in the foreseeable future.

SEC  RULE  15G

     The  Company's  shares  are covered by Section 15g of the Securities Act of
1933,  as  amended  that  imposes  additional  sales  practice  requirements  on


                                       22
<PAGE>
broker/dealers who sell such securities to persons other than established
customers and accredited investors (generally institutions with assets in excess
of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual
income exceeding $200,000 or $300,000 jointly with their spouses). For
transactions covered by the Rule, the broker/dealer must make a special
suitability determination for the purchase and have received the purchaser's
written agreement to the transaction prior to the sale. Consequently, the Rule
may affect the ability of broker/dealers to sell the Company's securities and
also may affect the ability of purchasers to sell their shares in the secondary
market.

     Section 15g also imposes additional sales practice requirements on
broker/dealers who sell penny securities. These rules require a one page summary
of certain essential items. The items include the risk of investing in penny
stocks in both public offerings and secondary marketing; terms important to
understanding of the function of the penny stock market, such as "bid" and
"offer" quotes, a dealers "spread" and broker/dealer compensation; the
broker/dealer compensation, the broker/dealers duties to its customers,
including the disclosures required by any other penny stock disclosure rules;
the customers rights and remedies in causes of fraud in penny stock
transactions; and, the NASD's toll free telephone number and the central number
of the North American Administrators Association, for information on the
disciplinary history of broker/dealers and their associated persons.

ITEM  6.  SELECTED  FINANCIAL  DATA

The  selected  financial  data included in the following table have been derived
from  and  should be read in conjunction with and are qualified by the Company's
financial  statements and notes set forth  elsewhere in this report.  Historical
financial  data for certain periods may be derived from financial statements not
included  herein.

<TABLE>
<CAPTION>
                         09/30/02     09/30/01    09/30/00     09/30/99      09/30/98
                        (AUDITED)    (AUDITED)    (AUDITED)   (AUDITED)     (AUDITED)
<S>                    <C>           <C>         <C>         <C>           <C>
STATEMENT OF
OPERATIONS AND
ACCUMULATED DEFICIT
DATA:
---------------------  ------------  ----------  ----------  ------------  ------------
Revenues                    56,608           0   $       0   $         0   $         0
Operating Expenses       1,513,638     326,084   $ 142,801   $   351,522   $ 1,063,715
Net loss               $(1,145,451)  $(875,215)  $(428,320)  $(2,991,050)  $(2,637,568)
Net Loss per share     $     (0.23)  $   (0.55)  $   (0.40)  $     (1.60)  $     (3.20)
---------------------  ------------  ----------  ----------  ------------  ------------
BALANCE SHEET DATA:
---------------------  ------------  ----------  ----------  ------------  ------------
Work Capital
(Deficit)              $  (102,523)  $  (5,704)  $ (78,422)  $   (93,456)  $   303,600
Total Assets           $ 1,291,768   $ 664,639   $ 969,254   $ 1,296,126   $ 3,982,592
Long-term Debt         $         0   $ 135,000   $       0   $         0   $         0
Stockholders' Equity   $ 1,066,065   $ 312,551   $ 860,139   $ 1,174,523   $ 3,913,777
</TABLE>

ITEM  7.   MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OR  PLAN  OF  OPERATION.

     The  Company  has had only minimal revenues from operations during the last
two  years.


                                       23
<PAGE>
     The Company intends to spend its existing cash on exploration on its
existing oil and gas lease in Texas. The Company does not intend to acquire any
additional oil and gas leases until it completes exploration operations on its
existing leases in Texas, Michigan and Louisiana. The Company intends to drill
at least one well in Texas in the first calendar quarter of 2003. The Company
also intends to fund drilling activities in Michigan during the same period,
depending on availability of funding. Our drilling time schedule is dependent
upon raising sufficient capital to fund its drilling and completion of
successful wells, if any. Currently, the Company does not have adequate funds to
commence all of drilling operations it contemplates.

     The Company will need additional capital to drill wells. The amount of
capital required is dependant on the success it has on its earliest wells
because the Company anticipates funding some future drilling of wells from cash
flow out of these earlier wells if they are commercially successful. Further,
drilling success typically facilitates raising of additional capital, although
that may not always be the case. The Company hopes to reduce its dependence on
new finances by completing sufficient wells and establishing sufficient revenues
to fund its operating costs as well as provide capital for new wells. That is,
because the Company maintains a small overhead it intends to deploy a majority
of the income from the sale of oil or gas to drill and complete other wells.
There is no assurance, however, the Company's proposed and planned drilling
operations will prove successful. If it does not prove successful, the Company
will have to rely upon future new finances from outside funding sources in order
to continue its operations.

     The Company may sell a portion of the working interest in each well to
investors in order to raise the capital to drill the well. In this way the
Company may be able to drill the well from capital raised from outside investors
and thus the "dry hole risk" to the Company is reduced if not totally
eliminated. The major disadvantage is that the Company will give up a percentage
of its future cash flow to the working interest investors which will reduce
Company revenues and profits in the future from successful wells. Because of the
overall advantages and benefits of "working interest financing", the Board chose
to make use of such technique on its initial two wells, and may continue to use
this tool on a broad scale in the future.

     The Company's auditors have issued a going concern opinion. This means that
the Company's auditors believe there is substantial doubt that it can continue
as an on-going business for the next twelve months unless it obtains additional
capital. This is because the Company has generated only minimal revenues from
its oil and gas operations and no additional revenues are assured until it
successfully completes more oil or gas wells. Accordingly, the Company must
raise cash from sources other than the sale of oil or gas found on its property.
That cash must be raised from other sources. The Company's only other source for
cash at this time are investments or loans by others in the Company.

     The Company has inadequate cash to maintain operations during the next
twelve months. In order to meet its cash requirements the Company will have to
raise additional capital through the sale of securities or loans. As of the date
hereof, the Company has not made sales of additional securities and there is no
assurance that it will be able to raise additional capital through the sale of
securities in the future. Further, the Company has not initiated any
negotiations for loans to the Company and there is no assurance that the Company
will be able to raise additional capital in the future through loans. In the
event that the Company is unable to raise additional capital, it may have to
suspend or cease operations.


                                       24
<PAGE>
     The Company does not intend to expend any funds exploring or developing its
mineral properties unless metal prices advance dramatically and funding sources
to conduct such exploration and/or development become readily available. The
Company will expend the small amount of funds necessary to hold its existing
mineral properties and will opportunistically explore possible leasing
arrangements or joint ventures with other parties should they arise. The Company
may also sell its mineral properties if deemed advisable by the Board of
Directors of the Company. Further, the Company may also opportunistically add to
its mineral holdings in accordance with the directives of its Board.

     The Company does not intend to conduct any research or development during
the next twelve months other than as described herein. See "Business."

     The Company does not intend to purchase a plant or significant equipment,
except that required to complete its oil or gas wells, or hook-up such to
existing pipelines. The Company will hire employees on an as needed basis,
however, the Company does not expect any significant changes in the number of
employees.


ITEM  8.   FINANCIAL  STATEMENTS.

     See  attached  statements  below.


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

     There have been no disagreements on accounting and financial disclosures
from the inception of the Company through the date of this Annual Report.


                                    PART III

ITEM  10.    DIRECTORS  AND  EXECUTIVE  OFFICERS  OF  THE  COMPANY

     The following table sets forth the name, age and position of each Officer
and Director of the Company:

<TABLE>
<CAPTION>
NAME              AGE     POSITION
<S>               <C>  <C>
Howard M. Crosby   50  President, Treasurer and a member of the Board of Directors
John Ryan          40  Vice President, Secretary and a member of the Board of Directors
Kevin Stulp        45  Member of the Board of Directors
Guma Aquiar        25  Vice President and a member of the Board of Directors
</TABLE>

     The  authorized  number  of  directors of the Company is presently fixed at
ten.  Each  director serves for a term of one year that expires at the following
annual  shareholders' meeting.  Each officer serves at the pleasure of the Board
of  Directors and until a successor has been qualified and appointed.  There are


                                       25
<PAGE>
no  family  relationships,  or  other  arrangements or understandings between or
among any of the directors, executive officers or other person pursuant to which
such  person  was  selected  to  serve  as  a  director  or  officer.

     The  Company  did  not conduct an annual meeting in 2002 which, had it been
scheduled,  would  have  occurred  in  April.  Therefore, the Board of Directors
continues  to  serve  beyond  their  elected  term  under provisions of the Utah
Revised  Business Corporation Act providing that the existing Directors continue
to  serve  until  their  successor  is  elected or appointed. Set forth below is
certain  biographical  information regarding each director and executive officer
of  the  Company:

HOWARD  M. CROSBY - PRESIDENT, TREASURER AND A MEMBER OF THE BOARD OF DIRECTORS.

     Since  February 1994, Mr. Crosby is the President and a member of the Board
of  Directors  and  since  January  1998,  Mr.  Crosby has been the Treasurer of
Company.  Since 1989, Mr. Crosby has been president of Crosby Enterprises, Inc.,
a family-owned business advisory and public relations firm.  From September 1992
to  May 1993, Mr. Crosby was employed by Digitran Systems, Inc., of Logan, Utah,
in  the  marketing  department.  Mr.  Crosby  received  a  B.A.  degree from the
University  of  Idaho  in  1974.  Mr.  Crosby is also an Officer and Director of
Western  Goldfields,  Inc.  a  publicly  traded gold mining exploration company.

JOHN  RYAN  -  VICE PRESIDENT, SECRETARY AND A MEMBER OF THE BOARD OF DIRECTORS.

     Mr.  Ryan has been a member of the Board of Directors since April 1997, has
been  Vice  President of Corporate Development since September 1996 and has been
Secretary  since October 1998.  Mr. Ryan is a professional mining engineer.  Mr.
Ryan  has  a  broad  frame  of  reference  in  the  management  and financing of
development  stage  natural  resource  companies,  including past positions with
Metalline  Mining  Company  and  Grand  Central Silver Mines. He presently holds
positions  with  Trend Mining Company, a publicly traded mineral exploration and
development  company,  Western  Goldfields,  Inc.  a publicly traded gold mining
exploration  company,  as well as several other private and public venture stage
companies.  Other Companies with which Mr. Ryan holds an officer and/or director
position  include  Bio-Quant,  Inc.,  Oxford  Metallurgical,  Inc.,  Caledonia
Silver-Lead  Mines  Company,  Great  Wall  Minerals,  Ltd.,  Continental  Timber
Company,  Inc., Rio Grande Resources, Inc., and Dotson Exploration Company. Many
of these companies have only minimal activity and require only a small amount of
Mr.  Ryan's time. Mr. Ryan is a former U.S. Naval Officer and obtained a B.S. in
Mining  Engineering  from the University of Idaho and a Juris Doctor from Boston
College  Law  School.

KEVIN  STULP  -  MEMBER  OF  THE  BOARD  OF  DIRECTORS

     Mr.  Stulp  was  appointed  to  the Board of Directors in early 1997. Since
August  1995,  Mr.  Stulp  has  been  an independent consultant in the fields of
volume  electronics  and  manufacturing,  general  business consulting, business
strategy,  business  use  of  the  Internet,  automation and integration through
computers,  and  financial  analysis. From July 1994 to July 1995, Mr. Stulp was
Director  of  Manufacturing  Reengineering  for  Compaq  Computer  Corporation,
Houston,  Texas.  From  September  1992  to June 1994, Mr. Stulp was Director of
Manufacturing for Compaq Computer Corporation.  From September 1986 to September
1992,  Mr.  Stulp  was  PCA  Operations Manager for Compaq Computer Corporation.
From  December  1983  to  September  1986, Mr. Stulp held various positions with
Compaq Computer Corporation, including industrial engineer, new products planner
and  manufacturing  manager.  From  July  1980 to December 1983, Mr. Stulp was a
financial  planner  with Texas Instruments, Houston, Texas.  Mr. Stulp holds the


                                       26
<PAGE>
degree  of  Masters  in  Business  Administration  and the degree of Bachelor of
Science  Mechanical  Engineering,  both from the University of Michigan, and the
degree  of  Bachelor  of  Science  from  Calvin College, Grand Rapids, Michigan.

GUMA  AQUIAR  -  MEMBER  OF  THE BOARD OF DIRECTORS AND VICE-PRESIDENT CORPORATE
DEVELOPMENT

     Mr.  Aguiar  joined the in July, 2002 as a Member of the Board of Directors
and  Vice-President  of Corporate Development.  Mr. Aguiar currently manages the
Lillian  Jean  Kaplan  Foundation, a charitable organization that contributes to
deserving  causes  in  the  South  Florida  area. Prior to this appointment, Mr.
Aguiar  was most recently employed at Prudential Securities focusing on managing
the  accounts  of  high  net  worth  individual  investors.  Mr. Aguiar also has
experience  trading  commodities  gained  from  employment at several major Wall
Street  firms. Mr. Aguiar attended Clemson University on an athletic scholarship
and  focused  his  studies on Business Marketing and Management. Mr. Aguiar is a
professional  tennis player and has won numerous awards and tournaments. He is a
member  of the U.S. Professional Tennis Association and has been a tennis pro at
several  distinctive  tennis  clubs.  He  currently also serves as a Director of
Western  Goldfields,  Inc.,  a  publicly traded gold mining exploration company.

Set forth below is certain biographical information about the primary geological
consultants  to  the  Company.

LUCIUS  C.  GEER

Mr. Geer has been an independent geological consultant since 1971. Prior to that
he  held  positions  as  Chief  of  Exploration for Texas Crude, Inc., a private
Houston  based oil and gas company. From 1966-69 he was the Division Exploration
Manager for Signal Oil & Gas based in Los Angeles. From 1957-66 he was the Chief
Geophysicist  for  Union  Oil  of  California  (UNOCAL). Mr. Geer has an M.S. in
Geology  from  the University of Houston and a B.S. in Geology from Mississippi.

OLAN  ADAMS

Mr.  Adams  has been an independent geophysical consultant since 1993. He worked
for  Continental Oil Company (CONOCO) from 1954-93, primarily as a geophysicist,
finishing  his  career  as Area Geophysicist, Exploration and Production for all
North America. Mr. Adams is familiar with and has conducted exploration in every
major  oil  basin in the United States, Canada, and Alaska. He received his B.S.
in  Geology  from  Southwestern State University, and undertook and completed an
MBA  curriculum  jointly  from  Oklahoma  State University and the University of
Colorado.

AL  WADSWORTH

Mr.  Wadsworth  has  over  forty years of experience as an independent petroleum
geological  consultant  working  with numerous major and mid-size oil companies.
Prior  to  entering the consulting field, Mr. Wadsworth worked as an exploration
geologist  for Texaco and for the United States Geological Survey. Mr. Wadsworth
has  extensive experience in the basins of Texas and Louisiana and received both
his  B.S.  and  M.S.  in  Geology  from  the  University  of  Texas.


                                       27
<PAGE>
INDEMNIFICATION.

     The Company's Bylaws provide that the Company's directors and officers will
be  indemnified  to  the  fullest extent permitted by the Utah Corporation Code,
however, such indemnification shall not apply to acts of intentional misconduct;
a  knowing  violation  of  law; or, any transaction where an officer or director
personally  received  a  benefit in money, property, or services to which to the
director  was  not  legally  entitled.

     The  Company  has  been  advised  that in the opinion of the Securities and
Exchange Commission indemnification is against public policy as expressed in the
Securities  Act  of  1933,  as  amended,  and  is,  therefore,  unenforceable.

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934.

     Section  16(a)  of the Securities and Exchange Act of 1934 requires certain
defined  persons  to  file  reports  of and changes in beneficial ownership of a
registered security with the Securities and Exchange Commission and the National
Association  of  Securities Dealers in accordance with the rules and regulations
promulgated  by the Commission to implement the provisions of Section 16.  Under
the regulatory procedure, officers, directors, and persons who own more than ten
percent of a registered class of a company's equity securities are also required
to  furnish  the  Company  with  copies  of  all  Section 16(a) forms they file.

     Based  solely on review of the copies of Forms 3, 4, and 5 furnished to the
Company  for  transactions  occurring  between October 1, 2001 and September 30,
2002,  Messrs  Crosby  and  Ryan  may  have  failed to file timely file Form 4's
reflecting  their  acquisition  or  disposal  of shares of common stock.  Messrs
Crosby  and  Ryan are in the process of preparing and filing a Form 5 to correct
these  deficiencies,  if  any.

ITEM  11.  EXECUTIVE  COMPENSATION

COMPENSATION.

     The  following table sets forth the salary compensation paid by the Company
during  each  of  the last three fiscal years to its Chief Executive Officer and
Vice  Presidents.  Additionally,  each  officer  receives an award of restricted
common  stock  of  5,000  shares  per  quarter, the deemed value of which is NOT
included  in  the  table  below.  Further,  each  officer who is also a director
receives and award of an additional 15,000 shares of restricted common stock per
quarter,  the  deemed  value  of  which  is  NOT  included  in  the table below.


                                       28
<PAGE>
<TABLE>
<CAPTION>
CASH  SALARY  COMPENSATION  TABLE.

                 PRINCIPAL
     ANNUAL COMPENSATION
NAME              POSITION       YEAR     SALARY ($)
<S>            <C>             <C>        <C>
Howard Crosby  President            2002  $   60,000  [5]
                                    2001  $   30,250  [3]
                                    2000  $   22,000  [2]
                                    1999  $   41,500  [1]

John Ryan      Vice President       2002  $   60,000  [4]
                                    2001  $   30,250  [3]
                                    2000  $   22,000  [2]
                                    1999  $   41,500  [2]

Guma Aquiar    Vice President       2002  $   60,000  [6]
<FN>

[1]  Mr.  Crosby  received  salary  in  cash totaling $19,500 and the balance in
     Common  Stock.

[2]  All  compensation paid in 1999 and 2000 was taken in shares of the Company,
     or  shares  in  two  dormant  corporations  in  which  the  Company  had
     shareholdings.  These  were  shares of Summit Silver Mines, Inc. and Tintic
     Coalition  Mines  Corporation.  Compensation  may  also  have been taken by
     accepting  surplus  used  equipment  held  by  the  Company.

[3]  These salaries were approved by the Board but were deferred and not paid in
     fiscal  year  2001.  Thereafter  they  were  paid  with  stock.

[4]  Mr.  Ryan  took  $45,000  of  his  salary in cash and deferred the balance.

[5]  Mr.  Crosby  deferred  the entire amount of his salary in fiscal year 2002.

[6]  Mr.  Aquiar  was  appointed  an officer of the Company in July, 2002 at the
     rate  of  $5,000  per  month  and  received  $15,000  in  fiscal year 2002.
</TABLE>

     Other  than  the Company's option/warrant awards described below, there are
no retirement, pension, or profit sharing plans for the benefit of the Company's
officers  and  directors.

OPTION/SAR  GRANTS.

     In January 1992, the shareholders of Royal approved a 1992 Stock Option and
Stock  Award  Plan  under  which up to ten percent of the issued and outstanding
shares  of  the  Company's  common stock could be awarded based on merit of work
performed.  As  of  September  30,  2001,  638  shares of common stock have been
awarded  under  this Plan. The Company is preparing a new Stock Option and Stock
Award  Plan that will be proposed to be approved by the shareholders at the next
annual  meeting.

     Absent  an  approved qualified plan, the Board has chosen to make option or
warrant  awards  to  select  officers,  directors,  consultants,  or
shareholder/investors  in  order  to  induce  them  to  assist  the  Company  in
implementing  its  business  plan and to provide long term additional incentive.
These  options  or warrants, as awarded, are not awarded pursuant to a qualified
plan  but  are  specific individual awards with varying terms and conditions. In


                                       29
<PAGE>
some  instances,  the  Board  has  reserved the right to cancel these awards for
non-performance or other reasons, or has established a vesting schedule pursuant
to  which  the  award  is  earned.

     During  fiscal  year  2002  the  Board  of Directors approved the following
options and warrants for Officers, Directors, and Consultants to the Company:

<TABLE>
<CAPTION>
Name                Position          Number of      Exercise Price      Expires
                                   Options/Warrants
-------------  ------------------  ----------------  ---------------  --------------
<S>            <C>                 <C>               <C>              <C>
Kevin Stulp    Director                     200,000  $          0.75  March 1, 2007
-------------  ------------------  ----------------  ---------------  --------------
Lucius Geer    Consultant                   200,000  $          0.75  March 1, 2007
-------------  ------------------  ----------------  ---------------  --------------
Guma Aguiar    Officer & Director           200,000  $          1.50  June 21, 2005
-------------  ------------------  ----------------  ---------------  --------------
J.A. Neel      Consultant                   100,000  $          1.35  July 8, 2007
-------------  ------------------  ----------------  ---------------  --------------
David Nahmias  Consultant                    50,000  $          1.50  August 1, 2005
-------------  ------------------  ----------------  ---------------  --------------
</TABLE>


LONG-TERM  INCENTIVE  PLAN  AWARDS.

     As noted, the Company does not have any formalized long-term incentive plan
(excluding  restricted  stock,  stock  option  and  SAR  plans)  that  provides
compensation  intended  to  serve  as  incentive for performance to occur over a
period  longer  than  one  fiscal  year, whether such performance is measured by
reference to financial performance of the Company or an affiliate, the Company's
stock  price,  or  any  other  measure.

COMPENSATION  OF  DIRECTORS.

     Directors  receive  for  their services a retainer fee payable in shares of
the  Company's  Common Stock, currently at the rate of 15,000 shares per quarter
of  completed  service.  In  addition,  the  Board  members may be granted stock
options  pursuant  to  Board  recommendation  and  approval.

     During  Fiscal  2002,  195,000  shares  were  awarded  to  directors  as
compensation,  with 90,000 of these shares being still unissued at September 30,
2002.  The  Board  has  also  awarded  options  to  some members of the Board of
Directors.  See  above  section  titled  "Option/SAR  Grants".  There  are  no
contractual  arrangements  with  any  member  of  the  Board  of  Directors.

COMPENSATION  COMMITTEE  INTERLOCKS  AND  INSIDER  PARTICIPATION.

     There  are  no  compensation  committee interlocks. With respect to insider
participation,  Howard  Crosby,  Kevin  Stulp,  and  John  Ryan, participated in
deliberations of the Company's Board of Directors during Fiscal 2002, concerning
executive  officer  and  director  compensation.

BOARD  OF  DIRECTORS  REPORT  ON  EXECUTIVE  COMPENSATION.

     The following is a summary of the Board of Directors Report:

     It  is  the Board's responsibility to review and set compensation levels of
the  executive  officers  of the Company, evaluate the performance of management
and  consider  management  appointments  and  related matters. All decisions are


                                       30
<PAGE>
decisions of the full Board.  The Board considers the performance of the Company
and  how  compensation paid by the Company compares to compensation generally in
the  mining  industry  and  among  similar companies.  In establishing executive
compensation,  the  Board  bases  its  decisions,  in  part,  on achievement and
performance  regarding  broad-based  objectives  and  targets  relating  to  the
continued  acquisition  of  favorable  resource  properties  and the progress of
exploration  and  development  of  such  properties,  as  well  as the Company's
financial  performance.

     For  Fiscal  2002,  as in prior years, the Company's executive compensation
policy  consisted  of  two  elements:  base salary and stock awards.  The policy
factors  which  determine the setting of these compensation elements are largely
aimed  at  attracting  and  retaining  executives  considered  essential  to the
Company's  long-term success.  The granting of stock is designed as an incentive
for  executives  to  keep  management's  interests  in  close alignment with the
interests of shareholders.  The Company's executive compensation policy seeks to
engender  committed  leadership  to  favorably posture the Company for continued
growth,  stability  and  strength  of  shareholder  equity.

     The  Board  approved  salaries  to  its  officers for the fiscal year ended
September  30,  2002  as  follows:

Howard  Crosby     President          $  60,000  yearly
--------------     --------------     -----------------
John  Ryan         Vice President     $  60,000  yearly
--------------     --------------     -----------------
Guma  Aguiar       Vice President     $  60,000  yearly
--------------     --------------     -----------------

     These  amounts  were  approved  by the Board in recognition of the work and
efforts  prior  to  the  end  of  fiscal  2002.

STOCK  AWARD  PLAN

     With  respect  to  stock  awards  during fiscal 2002 the Board of Directors
approved  the  issuance  of 15,000 shares per quarter and which each Director is
entitled  to  receive  as  compensation  for service to the Company. Further, in
addition  to  the salaried compensation outlined above, each officer was awarded
5,000  shares  per quarter for services rendered. In summary the share component
of  officer  compensation  resulted  in the authorization of 45,000 shares to be
issued  in  fiscal  year 2002. Of these, 25,000 shares remain to be issued as of
September  30,  2002.

     The  Board  believes  that  stock  awards  during fiscal 2002 substantially
reflects  the  Company's  compensation policy and the Board anticipates awarding
similar stock awards during the fiscal year ending September 30, 2003. As noted,
certain of the officers of the Company deferred some or all of their cash salary
in  2002 until a time when the Company is more able to fully pay these salaries.
These  amounts  may  also  be  converted into common stock of the Company at the
election  of  the  respective Officer. Further, executive compensation in fiscal
year  2003  will  continue to be reviewed by the Board for possible increases or
decreases  depending  on  the  progress  made  on  the  Company's business plan.

ITEM  12.     SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL OWNERS AND MANAGEMENT


                                       31
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The  following  table  sets  forth,  as of January 8, 2002, the outstanding
Common  Stock  of the Company owned of record or beneficially by each person who
owned  of  record, or was known by the Company to own beneficially, more than 5%
of  the  Company's  Common Stock, and the name and shareholdings of each Officer
and Director and all Officers and Directors as a group.  At January 8, 2003, the
number  of  shares  of  common  stock  of the Company issued and outstanding was
8,908,726.  The amounts shown do not include options or warrants owned which may
be  exercisable  within  sixty days, or shares that are owed as of that date but
unissued.

<TABLE>
<CAPTION>
                                                 PERCENTAGE OF COMMON
NAME                           SHARES  OF OWNED       STOCK OWNED
-----------------------------  ----------------  ---------------------
<S>                            <C>               <C>
Howard Crosby [1]                       877,475                  9.85%
PO Box 2056
Walla Walla, WA 99362
-----------------------------  ----------------  ---------------------
John Ryan [2]                           753,050                  8.45%
1519 Main Street #169
Hilton Head, SC 29926
-----------------------------  ----------------  ---------------------
Kevin Stulp                              95,250                  1.01%
27740 Desert Place
Castaic, CA 91384
-----------------------------  ----------------  ---------------------
Guma Aquiar                              43,500                     *
901 Cypress Grove Drive #201
Pompano Beach, FL 33069

-----------------------------  ----------------  ---------------------
ALL OFFICERS AND                      1,769,275                 19.86%
DIRECTORS AS A GROUP
(FOUR INDIVIDUALS)
-----------------------------  ----------------  ---------------------
Thomas Kaplan [3]                     2,290,992                 25.72%
-----------------------------  ----------------  ---------------------
Nathan Low [4]                        1,990,992                 22.35%
-----------------------------  ----------------  ---------------------
ALL OFFICERS,                         6,051,259                 67.93%
DIRECTORS, AND 5%
HOLDERS AS A GROUP
<FN>

[1]  Held in the name of Howard Crosby and Crosby Enterprises, Inc.

[2]  Includes  190,750  shares  held  in  the  name of Nancy Martin-Ryan; 45,000
     shares  held  in  the  name  of Karen Ryan, Nancy Martin-Ryan as Custodian;
     45,000  shares  held  in  the  name  of  Patrick Ryan, Nancy Martin-Ryan as
     custodian;  150,000  shares held in the name of J.P. Ryan Company Inc.; and
     87,500  shares  held  in  the  name  of  Andover  Capital  Corporation.

[3]  Includes  shares  held  by  LCM  Holdings LDC; Electrum Resources, LLC; and
     Electrum  Capital,  LLC

[4]  Held in the name of the Nathan A. Low Roth IRA
</TABLE>


                                       32
<PAGE>
     All shares listed in the table are held beneficially and of record and each
record  shareholder  has  sole  voting  and  investment  power.

ITEM  13.  CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS

RELATIONSHIPS  AND  TRANSACTIONS  PERTAINING  TO  THE  COMPANY, SUBSIDIARIES AND
AFFILIATED  COMPANIES.

     Certain  of  the  directors  and/or  officers  of the Company also serve as
directors  and/or  officers  of  other  companies  involved  in natural resource
exploration  and development and, consequently, there exists the possibility for
such  directors  and  officers  to  be  in a position of conflict. Recently, the
Company  completed  a  transaction  with  Caledonia  Silver-Lead  Mines, Inc., a
corporation  whose  board  of directors is comprised of the Company's directors.
Further,  the Company has loaned monies to Dotson Exploration Company, a private
company  controlled  by  two of the Officers and Directors of the Company. These
loans  are  payable  on  demand  but  are  unsecured  signature  loans.

     Mr.  Crosby  and  Mr.  Ryan  are  also  Directors  and  Officers of Western
Goldfields,  Inc.,  and  Mr.  Ryan  is  a  Director  and Officer of Trend Mining
Company. Caledonia, Trend, and Western are all mineral exploration companies and
share  some  of the business goals as Cadence. Therefore, there are inherent and
material  conflicts  of interest that exist by virtue of the common officers and
directors  of  these  companies.

     Any  decision made by such directors and officers involving the Company, as
the  case may be, will be made in accordance with their duties and obligation to
deal  fairly  and  in  good faith with the Company and such other companies.  In
addition,  such  directors and officers are required to declare and refrain from
voting on any matter in which such directors and officers may have a conflict of
interest.  Please  review the biographical information above of each Officer and
Director for further information about other companies with which the respective
officer  and/or  director  may  also  be  providing  services.


                                       33
<PAGE>
                                   SIGNATURES

     Pursuant  to  the requirements of Section 12 of the Securities Exchange Act
of  1934,  the  registrant  has  duly  caused this Form 10-K to be signed on its
behalf  by the undersigned, hereunto duly authorized, in Spokane, Washington, on
this  9th  day  of  January,  2003.

                                      CADENCE RESOURCES CORPORATION

                                      BY:    /s/  Howard M. Crosby
                                             Howard M. Crosby, President

     KNOW  ALL  MEN  BY  THESE PRESENT, that each person whose signature appears
below  constitutes  and  appoints  Howard  M.  Crosby,  as  true  and  lawful
attorney-in-fact  and agent, with full power of substitution, for his and in his
name, place and stead, in any and all capacities, to sign any and all amendments
to  this  Form  10K,  and  to  file the same, therewith, with the Securities and
Exchange  Commission,  and  to make any and all state securities law or blue sky
filings, granting unto said attorney-in-fact and agent, full power and authority
to do and perform each and every act and thing requisite or necessary to be done
in about the premises, as fully to all intents and purposes as he might or could
do in person, hereby ratifying the confirming all that said attorney-in-fact and
agent,  or any substitute or substitutes, may lawfully do or cause to be done by
virtue  hereof.

     Pursuant  to  the requirements of the Securities Exchange Act of 1934, this
Form  10-K has been signed by the following persons in the capacities and on the
dates  indicated:

<TABLE>
<CAPTION>
SIGNATURE                            TITLE                     DATE
<S>                    <C>                                <C>
/s/ Howard  M. Crosby  President, Treasurer and a member  January 9, 2003
Howard M. Crosby       of the Board of Directors

/s/ John Ryan          Vice President, Secretary and a    January 9, 2003
John Ryan              member of the Board of Directors

/s/ Kevin Stulp        Member of the Board of Directors   January 9, 2003
Kevin Stulp

/s/ Guma Aguiar        Vice President and a member of     January 9, 2003
Guma Aguiar            the Board of Directors
</TABLE>


          CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED
            PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In  connection with the accompanying 10-KSB of Cadence Resources Corporation for
the  period  beginning October 01, 2001 and ending September 30, 2002, Howard M.
Crosby,  Chief  Executive  Officer, and John P. Ryan, Chief Financial Officer of
Cadence  Resources  Corporation,  hereby  certify  pursuant to 18 U.S.C. Section
1350,  as  adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to
my  knowledge,  that:

     (1)  such  Form  10-KSB  of  Cadence  Resources Corporation, for the period
          beginning  October  01,  2001  and  ending  September  30, 2002, fully
          complies  with  the  requirements  of  section  13(a)  or 15(d) of the
          Securities  Exchange  Act  of  1934;  and

     (2)  the  information  contained  in  such Form 10-KSB of Cadence Resources
          Corporation  for  the  period  beginning  October  01, 2001 and ending
          September  30,  2002,  fairly  presents, in all material respects, the
          financial  condition  and  results  of operations of Cadence Resources
          Corporation.

            /s/ Howard M. Crosby                    /s/ John P. Ryan
            --------------------                    ----------------
            Howard M. Crosby                        John P. Ryan
            Chief Executive Officer                 Chief Financial Officer


                                       34
<PAGE>



                          CADENCE RESOURCES CORPORATION
                       (FORMERLY ROYAL SILVER MINES, INC.)

                              FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2002





<PAGE>
                          CADENCE RESOURCES CORPORATION
                       (FORMERLY ROYAL SILVER MINES, INC.)

                                 C O N T E N T S




Independent  Auditor's Report..................................................1

Balance Sheets.................................................................2

Statements of Operations.......................................................4

Statement of Stockholders' Equity..............................................5

Statements of Cash Flows.......................................................6

Notes to the Financial Statements..............................................8



<PAGE>

The Board of Directors
Cadence Resources Corporation
Walla Walla, Washington


                          INDEPENDENT AUDITOR'S REPORT


We have audited the accompanying balance sheets of Cadence Resources Corporation
(formerly Royal Silver Mines, Inc.) as of September 30, 2002, 2001 and 2000, and
the  related  statements of operations, stockholders' equity, and cash flows for
the  years then ended.  These financial statements are the responsibility of the
Company's  management.  Our  responsibility  is  to  express an opinion on these
financial  statements  based  on  our  audits.

We conducted our audits in accordance with auditing standards generally accepted
in  the  United  States  of  America.  Those  standards require that we plan and
perform  the  audits  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
financial  statement  presentation.  We  believe  that  our  audits  provide  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 Cadence Resources Corporation
(formerly Royal Silver Mines, Inc.) as of September 30, 2002, 2001 and 2000, and
the  results  of  its  operations  and  cash  flows  for the years then ended in
conformity with accounting principles generally accepted in the United States of
America.

The  accompanying  financial  statements  have  been  prepared assuming that the
Company  will  continue  as  a  going  concern.  As  discussed  in Note 2 to the
financial  statements,  the  Company's  significant  operating  losses  raise
substantial  doubt  about  its  ability  to  continue  as  a going concern.  The
consolidated  financial  statements  do  not  include any adjustments that might
result  from  the  outcome  of  this  uncertainty.

As  discussed  in Note 18 to the financial statements, an error resulting in the
understatement  of  previously  reported net losses as of September 30, 2002 was
discovered  by  management  of  the  Company  in  January, 2003. Accordingly, an
adjustment  has  been  made  to  the  accompanying  financial  statements  as of
September 30, 2002 to correct the error.


Williams & Webster, P.S.
Certified Public Accountants
Spokane, Washington
January 9, 2003 except for Notes 8 and 18 which are dated January 20, 2003.



<PAGE>
<TABLE>
<CAPTION>
                                    CADENCE RESOURCES CORPORATION
                                 (FORMERLY ROYAL SILVER MINES, INC.)
                                            BALANCE SHEETS


                                                                   September 30,
                                                -----------------------------------------------------
                                                     2002              2001               2000
                                                ---------------  -----------------  -----------------
<S>                                             <C>              <C>                <C>
ASSETS

  CURRENT ASSETS
    Cash                                        $       40,011   $        191,684   $         15,915
    Oil & gas revenue receivable                        26,123                  -                  -
    Receivable from working interest owners             16,037                  -                  -
    Notes receivable                                    13,078             18,000             14,628
    Prepaid expenses                                    27,500              1,275                  -
    Other current assets                                   431                425                150
                                                ---------------  -----------------  -----------------
      TOTAL CURRENT ASSETS                             123,180            293,539             30,693
                                                ---------------  -----------------  -----------------

  OIL AND GAS PROPERTIES, USING
    SUCCESSFUL EFFORTS ACCOUNTING
    Proved properties                                   48,694                  -                  -
    Unproved properties                                 78,997                  -                  -
    Wells and related equipment and facilities          67,374                  -                  -
    Support equipment and facilities                   105,108                  -                  -
    Prepaid mineral leases                             177,177             82,155                  -
    Less accumulated depreciation, depletion,
      amortization and impairment                       (4,312)                 -                  -
                                                ---------------  -----------------  -----------------
      TOTAL OIL AND GAS PROPERTIES                     473,038             82,155                  -
                                                ---------------  -----------------  -----------------

  PROPERTY AND EQUIPMENT
    Furniture and equipment                              1,440              1,440              1,440
    Less accumulated depreciation                       (1,440)            (1,440)            (1,404)
                                                ---------------  -----------------  -----------------
      TOTAL PROPERTY AND EQUIPMENT                           -                  -                 36
                                                ---------------  -----------------  -----------------

  OTHER ASSETS
    Investments                                        448,793            104,343            236,428
                                                ---------------  -----------------  -----------------

  NONCURRENT ASSETS
    Net assets of discontinued operations              246,757            266,757            702,097
                                                ---------------  -----------------  -----------------

  TOTAL ASSETS                                  $    1,291,768   $        664,639   $        969,254
                                                ===============  =================  =================
</TABLE>



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


                                        2
<PAGE>

<TABLE>
<CAPTION>
                                        CADENCE RESOURCES CORPORATION
                                     (FORMERLY ROYAL SILVER MINES, INC.)
                                                BALANCE SHEETS


                                                                          September 30,
                                                    ---------------------------------------------------------
                                                          2002                2001                2000
                                                    -----------------  ------------------  ------------------
<S>                                                 <C>                <C>                 <C>
LIABILITIES AND STOCKHOLDERS' EQUITY

  CURRENT LIABILITIES
    Accounts payable                                $        119,923   $         158,857   $         109,115
    Revenue distribution payable                              14,835                   -                   -
    Payable to related party                                   2,500               8,231                   -
    Deferred working interest                                 22,184                   -                   -
    Accrued compensation                                      66,261              50,000                   -
                                                    -----------------  ------------------  ------------------
      TOTAL CURRENT LIABILITIES                              225,703             217,088             109,115
                                                    -----------------  ------------------  ------------------

  LONG-TERM DEBT
    Notes payable - related parties                                -             135,000                   -
                                                    -----------------  ------------------  ------------------

  COMMITMENTS AND CONTINGENCIES                                    -                   -                   -
                                                    -----------------  ------------------  ------------------

  STOCKHOLDERS' EQUITY
    Preferred stock, $0.01 par value; 20,000,000
      shares authorized, -0- shares issued and
      outstanding                                                  -                   -                   -
    Common stock, $0.01 par value; 100,000,000
      shares authorized, 6,866,210; 2,453,890
      and 1,199,607 shares issued and outstanding,
      respectively                                            68,662              24,539              11,996
    Additional paid-in capital                            13,291,965          12,198,855          11,767,998
    Stock options                                            626,790                   -                   -
    Stock warrants                                           233,334                   -                   -
    Accumulated deficit                                  (12,906,132)        (11,760,681)        (10,885,466)
    Accumulated other comprehensive loss                    (248,554)           (150,162)            (34,389)
                                                    -----------------  ------------------  ------------------
      TOTAL STOCKHOLDERS' EQUITY                           1,066,065             312,551             860,139
                                                    -----------------  ------------------  ------------------

  TOTAL LIABILITIES AND STOCKHOLDERS'
    EQUITY                                          $      1,291,768   $         664,639   $         969,254
                                                    =================  ==================  ==================
</TABLE>


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


                                        3
<PAGE>
<TABLE>
<CAPTION>
                                        CADENCE RESOURCES CORPORATION
                                     (FORMERLY ROYAL SILVER MINES, INC.)
                               STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS


                                                                  Years Ended September 30,
                                                 ------------------------------------------------------------
                                                        2002                2001                 2000
                                                 ------------------  -------------------  -------------------
<S>                                              <C>                 <C>                  <C>
REVENUES
  Oil and gas sales net of production taxes      $          56,608   $                -   $                -
                                                 ------------------  -------------------  -------------------

GENERAL AND ADMINISTRATIVE EXPENSES
  Depreciation, depletion and amortization                   4,312                  402                8,440
  Officers' and directors' compensation                    152,510               80,250               22,000
  Consulting                                               934,254                    -                    -
  Oil and gas lease expenses                               131,812                    -                    -
  Exploration and drilling                                 134,279                    -                    -
  Lease operating expenses                                  12,279                    -                    -
  Other general and administrative                         144,192              245,432              112,361
                                                 ------------------  -------------------  -------------------
    Total Expenses                                       1,513,638              326,084              142,801
                                                 ------------------  -------------------  -------------------

OPERATING LOSS FROM OPERATIONS                          (1,457,030)            (326,084)            (142,801)
                                                 ------------------  -------------------  -------------------

OTHER INCOME (EXPENSE)
  Interest income                                            1,034                  100                  324
  Interest expense                                          (5,872)             (25,711)                   -
  Management fees                                           10,000                    -                    -
  Gain on debt forgiveness                                   6,109                    -                    -
  Loss on disposition and impairment of assets             (29,890)             (82,482)             (23,714)
                                                 ------------------  -------------------  -------------------
    Total Other Income (Expense)                           (18,619)            (108,093)             (23,390)
                                                 ------------------  -------------------  -------------------

LOSS BEFORE TAXES                                       (1,475,649)            (434,177)            (166,191)

INCOME TAXES BENEFIT                                        66,040                    -                    -
                                                 ------------------  -------------------  -------------------

LOSS FROM CONTINUING OPERATIONS                         (1,409,609)            (434,177)            (166,191)

GAIN (LOSS) FROM DISCONTINUED OPERATIONS
  Gain (loss) from mining operations (net of
    income taxes)                                          264,158             (441,038)            (262,129)
                                                 ------------------  -------------------  -------------------

NET LOSS                                                (1,145,451)            (875,215)            (428,320)

OTHER COMPREHENSIVE INCOME (LOSS)
  Unrealized gain (loss) on market value of
    investments                                            (98,392)            (115,773)             (34,389)
                                                 ------------------  -------------------  -------------------

COMPREHENSIVE LOSS                               $      (1,243,843)  $         (990,988)  $         (462,709)
                                                 ==================  ===================  ===================

LOSS PER COMMON SHARE BASIC AND DILUTED:
  Net loss from continuing operations            $           (0.28)  $            (0.27)  $            (0.15)
  Net gain (loss) from discontinued operations                0.05                (0.28)               (0.25)
                                                 ------------------  -------------------  -------------------
NET LOSS PER COMMON SHARE                        $           (0.23)  $            (0.55)  $            (0.40)
                                                 ==================  ===================  ===================

WEIGHTED AVERAGE NUMBER OF
  COMMON SHARES OUTSTANDING,
  BASIC AND DILUTED                                      4,965,179            1,548,785            1,060,558
                                                 ==================  ===================  ===================
</TABLE>


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


                                        4
<PAGE>
<TABLE>
<CAPTION>
                                                    CADENCE RESOURCES CORPORATION
                                                 (FORMERLY ROYAL SILVER MINES, INC.)
                                            STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

                                              Common Stock
                                        -------------------------      Additional
                                         Number       Paid-in             Stock           Stock     Accumulated    Comprehensive
                                        of Shares      Amount            Capital         Options      Warrants        Deficit
                                        ---------  --------------  -------------------  ----------  -------------  ---------------
<S>                                     <C>        <C>             <C>                  <C>         <C>           <C>
Balance, September 30, 1999             1,014,982  $       10,150  $       11,621,519   $        -  $          -  $  (10,457,146)

Shares issued to consultants
  for services at $1.00
  per share                                 3,125              31               3,094            -             -               -

Shares issued to officers for
  debt at $0.80 per share                 110,000           1,100              86,900            -             -               -

Shares issued to officers for
  investment at $0.80 per share            71,500             715              56,485            -             -               -

Net loss for the year ended
  September 30, 2000                            -               -                   -            -             -        (428,320)
                                        ---------  --------------  -------------------  ----------  -------------  ---------------

Balance,
  September 30, 2000                    1,199,607          11,996          11,767,998            -             -     (10,885,466)

Shares issued to consultants and
  others for services at prices
  varying from $0.30 to $1.40
  per share                               174,375           1,744              95,656            -             -               -

Shares issued to officers for
  investments at $0.40 per share          310,000           3,100             120,900            -             -               -

Shares issued to officers for
  investment and cash at $0.25
  per share                               160,000           1,600              38,400            -             -               -

Shares issued to officers and
  directors for services at $0.25
  to $0.30 per share                      110,000           1,100              29,150            -             -               -

Adjustment for fractional shares
  issued                                    4,074              41                 (41)           -             -               -

Shares issued for loan consideration
  at $0.30 per share                       62,500             625              18,125            -             -               -

Shares issued for cash at $0.30
  per share                               393,334           3,933             114,067            -             -               -

Shares issued for marketing services
  at $0.30 per share                       40,000             400              14,600            -             -               -

Net loss for year ended
  September 30, 2001                            -               -                   -            -             -        (875,215)

Unrealized loss on market value
  of investments                                -               -                   -            -             -               -
                                        ---------  --------------  -------------------  ----------  -------------  ---------------

Balance,
  September 30, 2001                    2,453,890          24,539          12,198,855            -             -     (11,760,681)

Shares issued for cash at $0.24
  to $0.50 per share                      783,000           7,830             234,070            -             -               -

Shares issued to officer for debt
  at $0.30 per share                      300,000           3,000              87,000            -             -               -

Shares issued to officers, consultants
  and others for services, accrued
  compensation and prepaid
  expenses at $0.30 to $0.38 per
  share                                   589,184           5,892             205,775            -             -               -

Shares issued for cash with warrants
  attached at $0.30 per share           2,333,336          23,333             443,333            -       233,334               -

Shares issued to officer for
  reimbursement of expenses
  paid for Company at $1.03
  per share                                 6,800              68               6,932            -             -               -

Shares issued for investment at
  $0.30 per share                         400,000           4,000             116,000            -             -               -

Options issued to directors and
  consultants for services                      -               -                   -      626,790             -               -

Net loss for the period ended
  September 30, 2002                            -               -                   -            -             -      (1,145,451)

Unrealized loss on market value
  of investments                                -               -                   -            -             -               -
                                        ---------  --------------  -------------------  ----------  -------------  --------------

Balance
  September 30, 2002                    6,866,210  $       68,662  $       13,291,965   $  626,790  $    233,334   $ (12,906,132)
                                        =========  ==============  ===================  ==========  =============  ==============


                                          Accumulated
                                             Other              Total
                                         Comprehensive      Stockholders'
                                             Loss              Equity
                                        ---------------  ------------------
<S>                                     <C>              <C>
Balance, September 30, 1999             $            -   $       1,174,523

Shares issued to consultants
  for services at $1.00
  per share                                          -               3,125

Shares issued to officers for
  debt at $0.80 per share                            -              88,000

Shares issued to officers for
  investment at $0.80 per share                      -              57,200

Net loss for the year ended
  September 30, 2000                           (34,389)           (462,709)
                                        ---------------  ------------------

Balance,
  September 30, 2000                           (34,389)            860,139

Shares issued to consultants and
  others for services at prices
  varying from $0.30 to $1.40
  per share                                          -              97,400

Shares issued to officers for
  investments at $0.40 per share                     -             124,000

Shares issued to officers for
  investment and cash at $0.25
  per share                                          -              40,000

Shares issued to officers and
  directors for services at $0.25
  to $0.30 per share                                 -              30,250

Adjustment for fractional shares
  issued                                             -                   -

Shares issued for loan consideration
  at $0.30 per share                                 -              18,750

Shares issued for cash at $0.30
  per share                                          -             118,000

Shares issued for marketing services
  at $0.30 per share                                 -              15,000

Net loss for year ended
  September 30, 2001                                 -            (875,215)

Unrealized loss on market value
  of investments                              (115,773)           (115,773)
                                        ---------------  ------------------

Balance,
  September 30, 2001                          (150,162)            312,551

Shares issued for cash at $0.24
  to $0.50 per share                                 -             241,900

Shares issued to officer for debt
  at $0.30 per share                                 -              90,000

Shares issued to officers, consultants
  and others for services, accrued
  compensation and prepaid
  expenses at $0.30 to $0.38 per
  share                                              -             211,667

Shares issued for cash with warrants
  attached at $0.30 per share                        -             700,000

Shares issued to officer for
  reimbursement of expenses
  paid for Company at $1.03
  per share                                          -               7,000

Shares issued for investment at
  $0.30 per share                                    -             120,000

Options issued to directors and
  consultants for services                           -             626,790

Net loss for the period ended
  September 30, 2002                                 -          (1,145,451)

Unrealized loss on market value
  of investments                               (98,392)            (98,392)
                                        ---------------  ------------------

Balance
  September 30, 2002                    $     (248,554)  $       1,066,065
                                        ===============  ==================
</TABLE>

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


                                        5
<PAGE>
<TABLE>
<CAPTION>
                                CADENCE RESOURCES CORPORATION
                             (FORMERLY ROYAL SILVER MINES, INC.)
                                   STATEMENTS OF CASH FLOWS

                                                                      Year Ended
                                                                     September 30,
                                                      ---------------------------------------
                                                          2002           2001         2000
                                                      -------------  ------------  ----------
<S>                                                   <C>            <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss                                            $ (1,145,451)  $  (875,215)  $(428,320)
  Adjustments to reconcile net loss to net cash
    used by operating activities:
      Investment given for officers' compensation                -             -       5,000
      Loss (gain) on sale of equipment                           -          (115)     86,284
      Loss on sale of investments                          (29,890)       85,446           -
      Loss (gain) from mining operations                  (330,198)      441,038     251,947
      Equipment traded for services                              -             -       4,137
      Depreciation, depletion and amortization               4,312           402       8,440
      Issuance of common stock for services                211,667       142,650       3,125
      Issuance of common stock for
            reimbursement of expenses                        7,000             -           -
      Issuance of common stock for loan
            consideration                                        -        18,750           -
      Issuance of stock options for
            consulting fees                                626,790             -           -
      Loss on devaluation of investments                         -         8,000           -
  Changes in assets and liabilities:
      Oil & gas revenue receivable                         (26,123)            -           -
      Receivable from working interest owners              (16,037)            -           -
      Notes receivable                                     (30,000)      (15,000)    (14,628)
      Other current assets                                      (6)         (275)       (150)
      Prepaid expenses                                     (26,225)      (83,430)          -
      Prepaid mineral leases                               (95,022)            -           -
      Accounts payable                                     (38,934)       49,742      31,512
      Revenue distribution payable                          14,835             -           -
      Deferred working interest                             22,184             -           -
      Accrued expenses                                      50,261        50,000           -
      Payable to related parties                                 -         8,231      44,000
                                                      -------------  ------------  ----------
    Net cash provided (used) by operating activities      (800,837)     (169,776)     (8,653)
                                                      -------------  ------------  ----------

CASH FLOWS FROM INVESTING ACTIVITIES
  Purchase of investments                                  (33,889)       (7,908)   (152,752)
  Purchase and development of proved and
    unproved properties                                   (127,691)            -           -
  Purchase of fixed assets                                (172,482)            -           -
  Sale of fixed assets                                           -         3,000           -
  Sale of investments                                       86,326        92,453     149,173
                                                      -------------  ------------  ----------
    Net cash provided (used) by investing activities      (247,736)       87,545      (3,579)
                                                      -------------  ------------  ----------

CASH FLOWS FROM FINANCING ACTIVITIES
  Issuance of common stock for cash                        708,566       123,000           -
  Issuance of warrants for cash                            233,334             -           -
  Proceeds from notes payable - related parties                  -       135,000           -
  Payments of notes payable                                (45,000)            -           -
                                                      -------------  ------------  ----------
    Net cash provided by financing activities              896,900       258,000           -
                                                      -------------  ------------  ----------
    Net increase (decrease) in cash                   $   (151,673)  $   175,769   $ (12,232)
                                                      -------------  ------------  ----------
</TABLE>


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


                                        6
<PAGE>
<TABLE>
<CAPTION>
                           CADENCE RESOURCES CORPORATION
                        (FORMERLY ROYAL SILVER MINES, INC.)
                             STATEMENTS OF CASH FLOWS

                                                              Year Ended
                                                             September 30,
                                                   -------------------------------
                                                      2002       2001      2000
                                                   ----------  --------  ---------
<S>                                                <C>         <C>       <C>
Net increase (decrease) in cash (balance forward)  $(151,673)  $175,769  $(12,232)

Cash, beginning of period                            191,684     15,915    28,147

                                                   ----------  --------  ---------
Cash, end of period                                $  40,011   $191,684  $ 15,915
                                                   ==========  ========  =========

SUPPLEMENTAL CASH FLOW DISCLOSURE:

  Income taxes paid                                $       -   $      -  $      -
  Interest paid                                    $       -   $      -  $      -

NON-CASH INVESTING AND FINANCING
  ACTIVITIES:

  Common stock issued for services rendered,
    accrued compensation and prepaid expenses      $ 211,667   $142,650  $  5,000
  Common stock issued for exchange of debt         $  90,000   $      -  $      -
  Common stock issued in exchange for
    investments                                    $ 120,000   $159,000  $      -
  Common stock issued for payment to
    related party                                  $       -   $      -  $ 88,000
  Common stock issued for reimbursement of
    expenses paid                                  $   7,000   $      -  $      -
  Common stock issued for loan consideration       $       -   $ 18,750  $      -
  Stock options issued for services                $ 410,200   $      -  $      -
</TABLE>

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


                                        7
<PAGE>
                          CADENCE RESOURCES CORPORATION
                       (FORMERLY ROYAL SILVER MINES, INC.)
                        NOTES TO THE FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2002


NOTE  1  -  ORGANIZATION  AND  DESCRIPTION  OF  BUSINESS

Cadence  Resources  Corporation  (formerly Royal Silver Mines, Inc.) hereinafter
("Cadence" or "the Company") was incorporated in April of 1969 under the laws of
the  State of Utah primarily for the purpose of acquiring and developing mineral
properties.  The  Company  changed  its  name  from  Royal Silver Mines, Inc. to
Cadence  Resources  Corporation  on May 2, 2001 upon obtaining approval from its
shareholders  and  filing  an  amendment  to its articles of incorporation.  The
Company  shall  be  referred  to as "Cadence" or "Cadence Resources Corporation"
even  though the events described may have occurred while the Company's name was
"Royal  Silver  Mines,  Inc."    The  Company  has elected a September 30 fiscal
year-end.

On  July  1,  2001,  Cadence  developed  a plan for acquisition, exploration and
development  of  oil  and gas properties and accordingly began a new exploration
stage  as  an  energy  project  development  company.  Prior  to  this,  Cadence
conducted  its  business as a "junior" mineral resource company, meaning that it
intended  to receive income from property sales or joint ventures of its mineral
projects  with  larger companies.  The Company continues to hold several mineral
properties,  which  are  described  in  Note  3.

Celebration  Mining Company ("Celebration"), currently a wholly owned subsidiary
of  Cadence,  was  incorporated  for  the  purpose  of  identifying,  acquiring,
exploring  and  developing  mining  properties.  Celebration  was  organized  on
February 17, 1994 as a Washington corporation.  Celebration has not yet realized
any  revenues  from  its  planned  operations.

On  August  8,  1995, Cadence and Celebration completed an agreement and plan of
reorganization whereby the Company issued 207,188 shares of its common stock and
72,750  warrants  in  exchange  for  all  of  the  outstanding  common  stock of
Celebration.  Pursuant  to  the  reorganization,  the  name  of  the Company was
changed to Royal Silver Mines, Inc.  Immediately prior to the agreement and plan
of reorganization, the Company had 118,773 common shares issued and outstanding.

The  acquisition  was  accounted  for  as  a purchase by Celebration of Cadence,
because  the  shareholders  of  Celebration  controlled  the  Company  after the
acquisition.  Therefore,  Celebration is treated as the acquiring entity.  There
was  no adjustment to the carrying value of the assets or liabilities of Cadence
in  the  exchange  as  the  market  value  approximated  the net carrying value.
Cadence  is  the  acquiring  entity  for  legal  purposes and Celebration is the
surviving  entity  for  accounting  purposes.


                                        8
<PAGE>
                          CADENCE RESOURCES CORPORATION
                       (FORMERLY ROYAL SILVER MINES, INC.)
                        NOTES TO THE FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2002


NOTE  1  -  ORGANIZATION  AND  DESCRIPTION  OF  BUSINESS  (CONTINUED)

As  a  result  of  the  Company's  entering a new exploration stage as an energy
project  development company on July 1, 2001, the Company has elected to dispose
of  its  mineral  properties  and has accordingly reclassified these properties,
which  total  $246,757  at  September  30,  2002,  as net assets of discontinued
operations.

The  Company  has  not  determined  whether these mineral exploration properties
contain ore reserves that are economically recoverable. The ultimate realization
of  the  Company's  investment  in these properties cannot be determined at this
time  and,  accordingly,  no  provision
for  any  asset  impairment  that  may  result  in  the event the Company is not
successful  in  developing  these  properties  has been made in the accompanying
financial  statements.  See  Note  3.

The  $177,177 and $82,155, respectively, cost of prepaid mineral leases included
in the accompanying balance sheets as of September 30, 2002 and 2001 are related
to  natural  gas  properties.  The  Company  has  not  determined  whether  the
properties  contain  economically  recoverable  gas  reserves.  The  ultimate
realization  of  the Company's investment in oil and gas properties is dependent
upon  finding  and  developing economically recoverable reserves, the ability of
the  Company  to obtain financing or make other arrangements for development and
upon  future  profitable  production.  The ultimate realization of the Company's
investment  in  oil  and  gas  properties cannot be determined at this time and,
accordingly,  no provision for any asset impairment that may result in the event
the  Company  is not successful in developing these properties, has been made in
the  accompanying  financial  statements.

The  Company  was  in  the  exploration stage through June 30, 2002.  During the
fourth  quarter of the year ended September 30, 2002, the Company entered a very
brief  development  stage  and  is  now  considered  an  operating  Company.

The  Company  is  seeking  additional capital through a private placement of its
stock, or debt.  Management plans to use the majority of such financing proceeds
for landhold acquisition, and on drilling and possible completion of an oil well
project  in  Texas.  Management also plans to conduct a second financing, larger
than  the first, the proceeds of which will be used for drilling of wells on the
Company's  leased  oil  and  gas  property  in  Louisiana,  as well as its newly
acquired  working interest participation in gas wells in Michigan.  See Note 17.

Management  believes  that  such  financing  proceeds will enable the Company to
continue  its  operations.  However,  there  are  inherent uncertainties in fund
raising  and  in  the  sales  of  excess  assets  and  management cannot provide
assurances  that  it  will  be  successful  in  these  endeavors.


                                        9
<PAGE>
                          CADENCE RESOURCES CORPORATION
                       (FORMERLY ROYAL SILVER MINES, INC.)
                        NOTES TO THE FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2002


NOTE  2  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

This summary of significant accounting policies of Cadence Resources Corporation
is presented to assist in understanding the Company's financial statements.  The
financial  statements and notes are representations of the Company's management,
which  is  responsible  for  their  integrity  and objectivity. These accounting
policies  conform  to  accounting  principles  generally  accepted in the United
States  of  America and have been consistently applied in the preparation of the
financial  statements.

Accounting  Method
------------------
The  Company's  financial  statements  are  prepared using the accrual method of
accounting.

Exploration  Stage
------------------
The  Company began a new exploration stage concerning the exploration of oil and
gas leases on July 1, 2001, which ended during July 2002 with the commenced sale
of  oil  and  gas  products.

Estimates
---------
The  process  of  preparing  financial  statements in conformity with accounting
principles  generally  accepted in the United States of America requires the use
of  estimates  and  assumptions  regarding certain types of assets, liabilities,
revenues,  and  expenses.  Such  estimates  primarily  relate  to  unsettled
transactions  and  events  as  of  the  date  of  the  financial  statements.
Accordingly,  upon settlement, actual results may differ from estimated amounts.

Loss  Per  Share
----------------
Loss  per  share  was  computed by dividing the net loss by the weighted average
number  of  shares  outstanding during the year.  The weighted average number of
shares  was  calculated by taking the number of shares outstanding and weighting
them by the amount of time they were outstanding.  Outstanding warrants were not
included in the computation of diluted loss per share because the exercise price
of  the  outstanding  warrants  is  higher  than  the market price of the stock,
thereby  causing  the  warrants  to  be  antidilutive.

Cash  Equivalents
-----------------
The  Company  considers  all  highly liquid investments with a maturity of three
months  or  less  when  purchased  to  be  cash  equivalents.

Mineral Properties
------------------
Costs  of acquiring, exploring and developing mineral properties are capitalized
by  project  area.  Costs to maintain the mineral rights and leases are expensed
as  incurred.  When  a  property  reaches  the  production  state,  the  related
capitalized costs will be amortized, using the units of production method on the
basis  of  periodic  estimates of ore reserves.  At September 30, 2002 and 2001,
the  cost  of  the  Company's  mineral  properties  is included in net assets of
discontinued operations in the accompanying financial statements, as the Company
has  changed  its  focus  from  minerals  exploration  to  oil  and  gas.


                                       10
<PAGE>
                          CADENCE RESOURCES CORPORATION
                       (FORMERLY ROYAL SILVER MINES, INC.)
                        NOTES TO THE FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2002


NOTE  2  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

Mineral  properties  are  periodically  assessed for impairment of value and any
losses  are  charged  to  operations  at  the  time  of  impairment.

Should a property be abandoned, its capitalized costs are charged to operations.
The  Company  charges  to  operations the allocable portion of capitalized costs
attributable  to properties sold.  Capitalized costs are allocated to properties
sold  based  on the proportion of claims sold to the claims remaining within the
project  area.

Oil  and  Gas  Properties
-------------------------
The  Company  uses  the  successful efforts method of accounting for oil and gas
producing  activities.  Costs  to  acquire  mineral  interests  in  oil  and gas
properties,  to drill and equip exploratory wells that find proved reserves, and
to  drill  and  equip  development  wells  are  capitalized.  Costs  to  drill
exploratory  wells  that do not find proved reserves, geological and geophysical
costs,  and  costs  of  carrying and retaining unproved properties are expensed.

Unproved  oil  and  gas  properties  that  are  individually  significant  are
periodically  assessed  for impairment of value, and a loss is recognized at the
time  of  impairment  by  providing  an  impairment  allowance.  Other  unproved
properties  are  amortized  based  on  the  Company's  experience  of successful
drilling and average holding period.  Capitalized costs of producing oil and gas
properties,  after considering estimated dismantlement and abandonment costs and
estimated salvage values, are depreciated and depleted by the unit-of-production
method.  Support equipment and other property and equipment are depreciated over
their  estimated  useful  lives.  Property  leases are expensed ratably over the
life  of  the  lease.

On  the sale or retirement of a complete unit of a proven property, the cost and
related  accumulated  depreciation,  depletion,  and amortization are eliminated
from  the  property  accounts, and the resultant gain or loss is recognized.  On
the retirement or sale of a partial unit of proven property, the cost is charged
to  accumulated  depreciation, depletion, and amortization with a resulting gain
or  loss  recognized  in  income.

On  the  sale  of  an  entire  interest in an unproved property for cash or cash
equivalent,  gain  or  loss on the sale is recognized, taking into consideration
the  amount  of  any  unrecorded  impairment  if  the property had been assessed
individually.  If a partial interest in an unproved property is sold, the amount
received  is  treated  as  a  reduction  of  the  cost of the interest retained.

Provision  For  Taxes
---------------------
Income taxes are provided based upon the liability method of accounting pursuant
to  SFAS  No.  109 "Accounting for Income Taxes."  Under this approach, deferred
income  taxes  are  recorded  to reflect the tax consequences in future years of
differences  between the tax basis of assets and liabilities and their financial
reporting  amounts  at each year-end.  A valuation allowance is recorded against
deferred tax assets if management does not believe the Company has met the "more
likely  than  not" standard imposed by SFAS No. 109 to allow recognition of such
an  asset.


                                       11
<PAGE>
                          CADENCE RESOURCES CORPORATION
                       (FORMERLY ROYAL SILVER MINES, INC.)
                        NOTES TO THE FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2002


NOTE  2  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

At  September 30, 2002, the Company had net deferred tax assets of approximately
$1,440,000, principally arising from net operating loss carryforwards for income
tax  purposes.  During  the year ending September 30, 2002, the Company utilized
$66,040  of  the  net  deferred  taxes from previous net operating losses in the
offset  of  the gain associated with the sale of mining property.  As management
of the Company cannot determine that it is more likely than not that the Company
will  realize  the  benefit of the net deferred tax asset, a valuation allowance
equal  to the net deferred tax asset has been established at September 30, 2002.

Provision  For  Taxes  (Continued)
----------------------------------
At  September  30,  2002,  the  Company  has net operating loss carryforwards of
approximately  $7,200,000,  which  expire  in  the  years  2002  through  2022.
Additionally,  the  Company  has  capital  loss  carryovers  of  approximately
$4,840,000.

Environmental  Remediation  and  Compliance
-------------------------------------------
Expenditures  for  ongoing compliance with environmental regulations that relate
to  current operations are expensed or capitalized as appropriate.  Expenditures
resulting  from the remediation of existing conditions caused by past operations
that  do not contribute to future revenue generations are expensed.  Liabilities
are  recognized when environmental assessments indicate that remediation efforts
are  probable  and  the  costs  can  be reasonably estimated.  Estimates of such
liabilities  are  based  upon currently available facts, existing technology and
presently  enacted  laws  and  regulations  taking into consideration the likely
effects  of  inflation  and  other  societal  and  economic factors, and include
estimates  of  associated  legal  costs.  These  amounts  also  reflect  prior
experience  in  remediating  contaminated  sites,  other  companies'  clean-up
experience  and  data  released  by The Environmental Protection Agency (EPA) or
other organizations.     Such estimates are by their nature imprecise and can be
expected  to  be revised over time because of changes in government regulations,
operations,  technology and inflation.  Recoveries are evaluated separately from
the  liability and, when recovery is assured, the Company records and reports an
asset  separately  from  the  associated  liability.  At September 30, 2002, the
Company  had  no  accrued  liabilities  for  compliance  with  environmental
regulations.

Investments
-----------
Investments,  principally  consist  of  equity  securities  of private and small
public  companies,  which  are  stated  at  current  market  value.

Revenue  Recognition
--------------------
Cadence  began producing revenues during July 2002.  Sales are recognized at the
point  of  passage  of  title  specified  in  the  underlying  contract.

Impaired  Asset  Policy
-----------------------
The  Company  adopted financial Accounting Standard Board statement SFAS No. 121
titled "Accounting for Impairment of Long-Lived Assets," which has been replaced
by  SFAS  No. 144, "Accounting for Impairment of Disposal of Long-Lived Assets."
In  complying  with  this  standard,  the  Company reviews its long-lived assets
quarterly  to  determine  if  any  events  or


                                       12
<PAGE>
                          CADENCE RESOURCES CORPORATION
                       (FORMERLY ROYAL SILVER MINES, INC.)
                        NOTES TO THE FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2002


NOTE  2  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

changes  in circumstances have transpired which indicate that the carrying value
of  its  assets  may  not  be recoverable.  The Company determines impairment by
comparing  the  undiscounted  future cash flows estimated to be generated by its
assets  to  their  respective  carrying  amount  whenever  events  or changes in
circumstances  indicate  that  an  asset  may  not  be  recoverable.  Because of
write-downs and write-offs taken in fiscal years 2000 and 2001, the Company does
not  believe  any  further  adjustments  are needed to the carrying value of its
assets  at  September  30,  2002.  See  Note  3.

Fair  Value  Standards
----------------------
The  Company  has  adopted  the  fair  value  accounting  rules  to  record  all
transactions  in  equity  instruments  for  goods  or  services.

Principles  of  Consolidation
-----------------------------
The  financial statements include those of the Cadence Resources Corporation and
Celebration  Mining  Company.  All  significant  inter-company  accounts  and
transactions  have been eliminated.  The financial statements are not considered
consolidated statements since Cadence Resources Corporation was the successor by
merger  to  Celebration  Mining  Company.

Reclassifications
-----------------
Certain  amounts  from  prior periods have been reclassified to conform with the
current  period  presentation.  This reclassification has resulted in no changes
to  the  Company's  accumulated  deficit  and  net  losses  presented.

Fair Value of Financial Instruments
-----------------------------------
The  carrying  amounts  for  cash, receivables, deposits, payables, and advances
from  related  parties  approximate  their  fair  value.

Derivative  Instruments
-----------------------
The  Financial  Accounting  Standards  Board  issued  Statement  of  Financial
Accounting  Standards  ("SFAS")  No. 133, "Accounting for Derivative Instruments
and  Hedging Activities," as amended by SFAS No. 137, "Accounting for Derivative
Instruments  and Hedging Activities - Deferral of the Effective Date of FASB No.
133",  and  SFAS  No.  138,  "Accounting  for Certain Derivative Instruments and
Certain Hedging Activities", which is effective for the Company as of January 1,
2001.  This  standard  establishes  accounting  and  reporting  standards  for
derivative  instruments,  including  certain  derivative instruments embedded in
other  contracts,  and  for  hedging  activities.  It  requires  that  an entity
recognize  all  derivatives as either assets or liabilities in the balance sheet
and  measure  those  instruments  at  fair  value.

If  certain conditions are met, a derivative may be specifically designated as a
hedge, the objective of which is to match the timing of gain or loss recognition
on  the  hedging  derivative with the recognition of (i) the changes in the fair
value  of the hedged asset or liability that are attributable to the hedged risk
or  (ii)  the  earnings  effect  of  the  hedged  forecasted  transaction.  For


                                       13
<PAGE>
                          CADENCE RESOURCES CORPORATION
                       (FORMERLY ROYAL SILVER MINES, INC.)
                        NOTES TO THE FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2002


NOTE  2  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

a  derivative  not  designated  as  a  hedging  instrument,  the gain or loss is
recognized  in  income  in  the  period  of  change.

Historically,  the  Company  has not entered into derivatives contracts to hedge
existing  risks  or  for  speculative  purposes.

At  September  30,  2002,  the  Company has not engaged in any transactions that
would  be  considered  derivative  instruments  or  hedging  activities.

Accounting Pronouncements
-------------------------
In  June  2002,  the  Financial  Accounting  Standards Board issued Statement of
Financial  Accounting  Standards  No. 146," Accounting for Costs Associated with
Exit  or  Disposal  Activities  ("SFAS  No.  146").  SFAS  No.  146  addresses
significant  issues  regarding  the  recognition,  measurement, and reporting of
costs  associated  with  exit  and  disposal activities, including restructuring
activities.  SFAS No. 146 also addresses recognition of certain costs related to
terminating  a  contract  that  is  not  a  capital  lease, costs to consolidate
facilities or relocate employees, and termination benefits provided to employees
that  are  involuntarily  terminated  under  the  terms  of  a  one-time benefit
arrangement  that  is  not  an  ongoing  benefit  arrangement  or  an individual
deferred-compensation contract.  SFAS No. 146 was issued in June 2002, effective
December  31,  2002 with early adoption encouraged.  The impact on the Company's
financial  position  or results of operations from adopting SFAS No. 146 has not
been  determined.

In  April  2002,  the  Financial  Accounting Standards Board issued Statement of
Financial Accounting Standards No. 145, "Rescission of FASB Statements No. 44, 4
and  64,  Amendment  of FASB Statement No. 13, and Technical Corrections", which
updates,  clarifies and simplifies existing accounting pronouncements.  FASB No.
4,  which  required  all  gains and losses from the extinguishment of debt to be
aggregated and, if material, classified as an extraordinary item, net of related
tax  effect  was  rescinded.  As  a  result,  FASB 64, which amended FASB 4, was
rescinded as it was no longer necessary.  SFAS No. 44, Accounting for intangible
Assets  of  Motor  Carriers,  established  the  accounting  requirements for the
effects of transition to the provisions of the Motor Carrier Act of 1980.  Since
the  transition  has  been completed, SFAS No. 44 is no longer necessary and has
been  rescinded.  SFAS No. 145 amended SFAS No. 13 to eliminate an inconsistency
between the required accounting for sale-leaseback transactions and the required
accounting  for  certain lease modifications that have economic effects that are
similar  to  sale-leaseback transactions.  Management has not yet determined the
effects  of  adopting  this  Statement  on  the financial position or results of
operations,  except  for  the need to reclassify debt extinguishments previously
reported  as  extraordinary.

In  October  2001,  the Financial Accounting Standards Board issued Statement of
Financial  Accounting  Standards  No.  144,  "Accounting  for  the Impairment or
Disposal  of  Long-Lived  Assets"  (SFAS  No. 144).  SFAS 144 replaces SFAS 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be  Disposed  of."  This  new  standard


                                       14
<PAGE>
                          CADENCE RESOURCES CORPORATION
                       (FORMERLY ROYAL SILVER MINES, INC.)
                        NOTES TO THE FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2002


NOTE  2  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

establishes a single accounting model for long-lived assets to be disposed of by
sale, including discontinued operations. SFAS 144 requires that these long-lived
assets  be  measured  at the lower of carrying amount or fair value less cost to
sell,  whether  reported  in  continuing  operations or discontinued operations.
This  statement is effective beginning for fiscal years after December 15, 2001,
with  earlier  application  encouraged.  The  Company  adopted  SFAS 144 and the
adoption  did  not  have  a  material  impact on the financial statements of the
Company  at  September  30,  2002.

Accounting Pronouncements (Continued)
-------------------------------------
In  September  2000,  the FASB issued SFAS No. 140 "Accounting for Transfers and
Servicing  of  Financial  Assets  and  Extinguishment  of  Liabilities."  This
statement  provides  accounting  and  reporting  standards  for  transfers  and
servicing  of  financial  assets  and  extinguishment  of  liabilities  and also
provides  consistent  standards for distinguishing transfers of financial assets
that  are  sales  from  transfers  that are secured borrowings.  SFAS No. 140 is
effective for recognition and reclassification of collateral and for disclosures
relating  to  securitization transactions and collateral for fiscal years ending
after  December  15,  2000,  and  is  effective  for  transfers and servicing of
financial  assets  and  extinguishments of liabilities occurring after March 31,
2001.  The  adoption  of  this  standard  did  not have a material effect on the
Company's  results  of  operations  or  financial  position.

In  October  2001,  the Financial Accounting Standards Board issued Statement of
Financial  Accounting  Standards  No.  143,  "Accounting  for  Asset  Retirement
Obligations" (SFAS No. 143).  SFAS No. 143 establishes guidelines related to the
retirement  of  tangible  long-lived  assets  of  the Company and the associated
retirement  costs.  This  statement  requires that the fair value of a liability
for  an  asset  retirement obligation be recognized in the period in which it is
incurred  if  a  reasonable  estimate of fair value can be made.  The associated
asset  retirement  costs  are  capitalized as part of the carrying amount of the
long-lived  assets.  This statement is effective for financial statements issued
for  the fiscal years beginning after June 15, 2002 and with earlier application
encouraged.  The  Company  adopted  SFAS No. 143 and the adoption did not have a
material  impact  on  the  financial  statements of the Company at September 30,
2002.

In June 2001, the FASB issued SFAS No. 141, "Business Combinations" and SFAS No.
142,  "Goodwill  and  Other  Intangible  Assets".  SFAS No. 141 provides for the
elimination  of  the  pooling-of-interests  method  of  accounting  for business
combinations  with  an  acquisition  date of July 1, 2001 or later. SFAS No. 142
prohibits  the  amortization  of  goodwill  and  other  intangible  assets  with
indefinite  lives  and requires periodic reassessment of the underlying value of
such assets for impairment. SFAS No. 142 is effective for fiscal years beginning
after  December  15, 2001. An early adoption provision exists for companies with
fiscal years beginning after March 15, 2001. The adoption of these standards did
not  have  any  material  effect  on  the  Company's  financial  statements.


                                       15
<PAGE>
                          CADENCE RESOURCES CORPORATION
                       (FORMERLY ROYAL SILVER MINES, INC.)
                        NOTES TO THE FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2002


NOTE  2  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

Going  Concern
--------------
As  shown  in the accompanying financial statement, the Company has no revenues,
has incurred a net loss of $1,145,451 for the year ended September 30, 2002, and
has  an  accumulated  deficit  of  $12,906,132.  These factors indicate that the
Company  may be unable to continue in existence. The financial statements do not
include  any  adjustments  related  to  the recoverability and classification of
recorded  assets, or the amounts and classification of liabilities that might be
necessary  in  the  event  the  Company  cannot  continue  in  existence.

The  Company's  management  has  strong  beliefs  that  significant and imminent
private  placements will generate sufficient cash for the Company to operate for
the  next  few years.  The Company also believes that the occasional sale of its
equity  investments  will  provide  cash  as  needed  for  operations.


NOTE 3 - MINERAL PROPERTIES

The  Company's  mineral  properties  have  been  written  down  as  discontinued
operations  pursuant to the Company's adoption of the plan for a new exploration
stage  concerning  natural  resource properties on July 1, 2001.  In the future,
the  Company's  management  may  elect  to begin a new focus on mineral property
development  if  conditions  are  warranted.

Utah Property
-------------
The  Company has elected to retain its 25% undivided interest in the Vipont Mine
located  in  northwest Utah, which is carried on the Company's books at $246,757
as  assets  of  discontinued  operations.  Although  this  property has been the
subject  of  litigation, the Company has and will continue to hold its undivided
25%  interest  in  this  property.  See  Note.  12.

Mineral  Properties  in  North  Idaho
-------------------------------------
The  Company,  directly  and through its subsidiary, Celebration Mining Company,
holds  forty-three unpatented mining claims in the Coeur d'Alene Mining District
in  four  distinct  groups  called the South Galena Group, Moe Group, Rock Creek
Group  and Palisades Group.  The Company has undertaken only minimal exploration
and  development  work  on  these  properties,  such  as  general  geological
reconnaissance  and claim-staking activities.  The majority of these claims were
written  off  as  permanently  impaired  at  September  30,  2001.

In  September 2000, the Company, through its wholly owned subsidiary Celebration
Mining  Company,  entered  into  a  five-year lease agreement with an affiliated
company, Oxford Metallurgical, Inc. on its eight-claim Palisades Group property.
This  lease  was  rescinded  during the year ended September 30, 2002. The lease
called  for  a  semi-annual payment of $3,000, or alternatively, the semi-annual
payment of 10,000 shares of the common stock of Oxford.  Oxford had the right to
explore  and  potentially  develop  the  property  under  certain  conditions.


                                       16
<PAGE>
                          CADENCE RESOURCES CORPORATION
                       (FORMERLY ROYAL SILVER MINES, INC.)
                        NOTES TO THE FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2002


NOTE 3 - MINERAL PROPERTIES (CONTINUED)

In  October  1994  the  Company  entered  into  a  lease  agreement with Fausett
International,  Inc.  ("Fausett") covering the Crescent Mine located in Shoshone
County,  Idaho.  The  validity  of  this  lease  was  challenged  by  both  the
Environmental  Protection  Agency  and  Shoshone  County  who claimed to have an
ownership  interest  in the property.  After considerable legal deliberation, in
June  2001,  the  Company  delivered  a  quitclaim  deed to the Crescent Mine to
Fausett,  which  disposed  of  its  interest  in  the  mine.  See  Note  14.

Other  Domestic  Properties
---------------------------
In  the fourth quarter of the year ended September 30, 2001, the Company elected
to  write  off  all of its interests in mineral properties except for the ViPont
Mine,  Kil  Group  Claims  and West Mullan Group Claims.  The net effect of this
write  down was to record a loss on asset impairment of $432,090 during the year
ended  September  30,  2001.

On October 31, 2001, the Company sold its Kil Group and West Mullan Group claims
to  Caledonia Silver-Lead Mines, Inc., an affiliated company.  The combined sale
price  for  these  claims was 3,501,980 shares of the common stock of Caledonia,
having an estimated market value of $0.10 per share and valued at $350,198.  The
net  effect  of  the  transaction  was  a  gain  of  $330,198.  See  Note  5.

NOTE  4  -  PROPERTY  AND  EQUIPMENT

Property  and  equipment are recorded at cost.  Major additions and improvements
are  capitalized.  Minor  replacements,  maintenance  and  repairs  that  do not
increase  the  useful life of the assets are expensed as incurred.  Depreciation
of  property and equipment is determined using the straight-line method over the
expected useful lives of the assets of five years.  Depreciation expense for the
years  ended  September  30,  2002,  2001  and 2000 was $4,312, $402 and $7,948,
respectively.

NOTE  5  -  INVESTMENTS

The  Company's  securities  investments  are  classified  as  available for sale
securities which are recorded at fair value on the balance sheet as investments.
The  change  in  fair  value  during  the  period  is excluded from earnings and
recorded  net  of tax as a component of other comprehensive income.  The Company
has  no  securities  which  are  classified  as  trading  securities.

At  September  30,  2002  and  2001,  the  market  values of investments were as
follows:

                                           2002      2001
                                         --------  --------
     Elite Logistics, Inc.               $  2,950  $ 35,632
     Integrated Pharmaceuticals, Inc.           -     4,444
     Ashington Mining Company               5,709     7,200
     Oxford Metallurgical, Inc.                 -       600
     Sterling Mining Co.                    4,859     6,300
     Cadence Resources Corporation
         Limited Partnership               15,200         -


                                       17
<PAGE>
                          CADENCE RESOURCES CORPORATION
                       (FORMERLY ROYAL SILVER MINES, INC.)
                        NOTES TO THE FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2002


NOTE 5 - INVESTMENTS (CONTINUED)

   Exhaust Technology                       2,244         -
   Enerphaze Corporation                    5,400         -
   Caledonia Silver-Lead Mines, Inc.      350,198         -
   Western Goldfields                         866         -
   Williams Companies                       6,800         -
   Trend Mining Company                    54,567    50,167
                                         --------  --------
                                         $448,793  $104,343
                                         ========  ========

Other information regarding the Company's investments follows:

Enerphaze  Corporation
----------------------
During  October 2001, the Company received 8,000 shares of Enerphaze Corporation
common  stock  in  payment  of  a  $15,000  note receivable.  During January and
February  2002,  the  Company  received  65,000  shares of Enerphaze Corporation
common  stock  in exchange for 400,000 shares of the Company's common stock.  No
gain  or  loss  was  recognized  on  these  transactions.

Caledonia  Silver-Lead  Mines,  Inc.
------------------------------------
The Company on October 31, 2001 received 3,501,980 shares of the $0.10 par value
common  stock  of  Caledonia  Silver-Lead Mines, Inc. (an affiliated company) in
exchange for its Kil Group and West Mullan Group claims.  The stock received was
recorded  at  its  par  value  of  $350,198 which, in the opinion of management,
approximates  its  fair  value.  The  carrying  value  of  these  shares will be
reevaluated  at  each  reporting period and adjustments, if appropriate, will be
made  to  the  carrying  value  of  these  securities.  The  net  effect  of the
transaction  resulted  in  a  gain  of  $330,198.  See  Note  3.

Cadence  Resources  Corporation  Limited  Partnership
-----------------------------------------------------
On  August  1,  2002,  the  Company formed a limited partnership in the state of
Washington  whereby  the  Company  became  the  managing  general partner and an
outside  individual  investor  became  the initial limited partner.  The entity,
Cadence  Resources  Corporation Limited Partnership (hereinafter "CRCLP" or "the
Partnership")  was  formed  to  invest  in  oil  and gas properties in Texas and
Louisiana.

In  connection  with  the  formation  of  the Partnership, the Company agreed to
contribute $12,500 and its leasehold interest in an oil well ("2B") in Wilbarger
County,  Texas  and  the  limited  partner  contributed $250,000 in cash.  Other
provisions  of  the  Partnership  are  described  in  Notes  11,  12  and  15.

NOTE  6  -  COMMON  STOCK

During  the  year ended September 30, 2001, the Company issued 284,375 shares of
common  stock  to  officers,  directors, consultants and others for services and
532,500  shares  of  common


                                       18
<PAGE>
                          CADENCE RESOURCES CORPORATION
                       (FORMERLY ROYAL SILVER MINES, INC.)
                        NOTES TO THE FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2002


NOTE  6  -  COMMON  STOCK  (CONTINUED)

stock were issued to officers for loan consideration, investments and cash.  The
Company  also  issued  40,000  shares of its common stock pursuant to terms of a
consulting  agreement  (Note 12) and sold 393,334 shares of its common stock for
cash.  The  shares  were  valued  at  their  fair  market  value  at the date of
issuance,  which  ranged  from  $0.25  to  $1.40.

On  April  23,  2001,  the  Company's  board  of directors authorized a 1-for-20
reverse  stock  split  of  the  Company's  $0.01  par  value  common stock.  All
references  in  the accompanying financial statements and notes to the number of
common  shares  and  per-share amounts have been restated to reflect the reverse
stock  split.  The  Company  also  approved  an  increase  in  the number of its
authorized  common  stock  shares  to  100,000,000.

During  the  year ended September 30, 2002, the Company issued 589,184 shares of
its  common  stock  to officers, consultants and others for services and prepaid
expenses  valued at $211,667, and also issued 400,000 shares of its common stock
for  an  investment  and  300,000  shares  of  its common stock to an officer in
payment  of a note payable.  These transactions were valued in accordance with a
plan  for  stock  issuance  previously  approved by the board of directors.  The
Company  also  sold  783,000  shares  of  its  common  stock  for  $241,900.

During  the  year  ended  September  30,  2002,  the Company also sold 2,333,336
"units"  to  investors,  two  officers  of  the Company and another entity under
common  control at $0.30 per unit in a private placement.  Each unit consists of
one  share of common stock and one warrant exercisable at $0.30 per common share
for  five years.  Sales of these units generated cash proceeds of $700,000.  Two
officers of the Company and another entity under common control invested $50,000
in  these  common  stock  units.  (See  Note  9.)


NOTE  7  -  PREFERRED  STOCK

On April 23, 2001, the Company's board of directors authorized 20,000,000 shares
of  preferred  stock  with  a  par  value  of  $0.01  per  share  and rights and
preferences  to  be  determined.  No  shares  were  issued and outstanding as of
September 30, 2002.  Subsequent to the end of the fiscal year the Company issued
15,000 shares of its preferred stock to investors at $2.00 per share.  The share
bear  a  preferred dividend of 15% per annum and are convertible to common stock
at  a price of $2.00 per share under certain terms and conditions.  See Note 18.


NOTE  8  -  COMMON  STOCK  OPTION  AND  AWARD  PLAN

In  January  1992,  the shareholders of Cadence approved a 1992 Stock Option and
Stock  Award  Plan  under  which up to ten percent of the issued and outstanding
shares  of  the  Company's  common stock could be awarded based on merit or work
performed.  As  of  June  30,  2002,  only  638  shares of common stock had been
awarded  under  the  Plan.


                                       19
<PAGE>
                          CADENCE RESOURCES CORPORATION
                       (FORMERLY ROYAL SILVER MINES, INC.)
                        NOTES TO THE FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2002


NOTE 8 - COMMON STOCK OPTION AND AWARD PLAN (CONTINUED)

The  Company  has a stock-based compensation plan whereby the Company's board of
directors  may  grant common stock to its employees and directors.  At September
30,  2001,  a  total  of  72,750 options have been granted under the plan. These
options have been forfeited and none have been exercised through the year ending
September  30,  2002.  The  old existing options are attributed to the merger of
Celebration  Mining  Company  with  Royal  in  August  1995.


During the year ended September 30, 2002, the Company's board of directors chose
to  make  option  awards  to  select  officers,  directors,  consultants  and
shareholder/investors.  These  options  were not awarded pursuant to a qualified
plan  and  carry  various  terms and conditions.  The Company granted a total of
750,000  options at an average exercise price of $1.08 per share.  These options
were exercisable immediately.  The Company's board of directors has reserved the
right to cancel these awards for non-performance or other reasons.

The  fair  value  of each option granted during fiscal 2002 was estimated on the
grant  date  using  the  Black-Scholes  Option Price Calculation.  The following
assumptions  were  made  in  estimating  fair  value:  risk-free interest of 5%,
volatility  of  100%,  expected life of 3 to 5 years, and no expected dividends.
The  value  of these options in the amount of $626,790 was included in operating
expense  in  the  financial  statements.

Following is a summary of the stock options during the years ended September 30,
2002,  2001  and  2000.

                                                                   Weighted
                                                         Number     Average
                                                           of      Exercise
                                                        Options      Price
                                                       ----------  ---------
Outstanding at 10/1/1999                                  72,750   $   20.60
Granted                                                        -           -
Exercised                                                      -           -
Forfeited                                                (12,750)      20.00
                                                       ----------  ---------
Outstanding at 9/30/2000                                  60,000   $   18.60
                                                       ==========  =========

Options exercisable at 9/30/2000                          60,000   $   18.60
                                                       ==========  =========
Weighted average fair value of options granted during
   the year ended 9/30/2000                            $       -
                                                       ==========
Outstanding at 10/1/2000                                  60,000   $   18.60
Granted                                                        -           -
Exercised                                                      -           -
Expired or forfeited                                           -           -
                                                       ----------  ---------
Outstanding at 9/30/2001                                  60,000   $   18.60
                                                       ----------  ---------

Options exercisable at 9/30/2001                          60,000   $   18.60
                                                       ----------  ---------
Weighted average fair value of options granted during
   the year ended 9/30/2001                            $       -
                                                       ==========

Outstanding at 10/1/2001                                  60,000   $   18.60
Granted                                                  750,000        1.08
 Exercised                                                     -           -
 Expired or forfeited                                     60,000       18.60
                                                       ----------  ---------
 Outstanding at 9/30/2002                                750,000   $    1.08
                                                       ==========  =========
Options exercisable at 9/30/2002                         750,000   $    1.08
                                                       ==========  =========
Weighted average fair value of options granted
   during the period ended 9/30/2002                   $    0.55
                                                       ==========


                                       20
<PAGE>
                          CADENCE RESOURCES CORPORATION
                       (FORMERLY ROYAL SILVER MINES, INC.)
                        NOTES TO THE FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2002


NOTE 8 - COMMON STOCK OPTION AND AWARD PLAN (CONTINUED)

                                                      Weighted Average
       Exercise Date                Number of Shares  Price per Share
       ---------------------------  ----------------  ----------------
       On or before June 21, 2005            200,000  $           1.50
       On of before August 1, 2005            50,000  $           1.50
       On or before March 1, 2007            400,000  $           0.75
       On or before July 8, 2007             100,000  $           1.35

Prior  to  April  2001,  a  total of 72,750 options were granted by the board to
officers, directors and other consultants.  As shown above, all of these options
have  been forfeited with none exercised through the period ending September 30,
2002.

Stock  Award  Plan
------------------
During  the  year  ended  September  30,  2001, the Company's board of directors
approved the issuance of 15,000 shares of the Company's common stock per quarter
to  each  entitled director as compensation for service to the Company and 5,000
shares  of  the  Company's  common  stock per quarter to officers in addition to
their  salaried  compensation  for  services.


NOTE  9  -  WARRANTS

During the year ended September 30, 2002, the Company issued 2,333,336 shares of
stock  with 2,333,336 warrants attached.  These warrants were valued at $233,334
using  the  Black-Scholes  Option  Price Calculation.  The following assumptions
were  made  in  estimating  fair value:  risk free interest is 5%, volatility is
100%  and  expected  life  is  5  years.  These warrants may be used to purchase
2,333,336 shares of the Company's common stock at $0.30 per share.  The warrants
remain  exercisable through April 15, 2007.  Subsequent to the end of the fiscal
year,  2,166,668  of  these  warrants  were  exercised.  As of the date of these
financial  statements,  166,668  of  these  warrants  remain  outstanding  and
unexercised.  See  Note  17.


NOTE  10  -  OIL  AND  GAS  PROPERTIES

The  Company's  oil  and  gas  producing  activities  are  subject  to  laws and
regulations controlling not only their exploration and development, but also the
effect  of  such  activities  on the environment.  Compliance with such laws and
regulations  may necessitate additional capital outlays, affect the economics of
a  project,  and  cause  changes  or  delays  in  the Company's activities.  The
Company's  oil  and  gas  properties  are  valued  at  the  lower of cost or net
realizable  value.


                                       21
<PAGE>
                          CADENCE RESOURCES CORPORATION
                       (FORMERLY ROYAL SILVER MINES, INC.)
                        NOTES TO THE FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2002


NOTE 10 - OIL AND GAS PROPERTIES (CONTINUED)

Louisiana
---------
During  the  fourth  quarter  of  the year ended September 30, 2001, the Company
began  leasing  acreage  in a natural gas field in Desoto Parish, Louisiana.  At
least  51  drilled  wells  were  previously  commercially successful in adjacent
acreage.  As  of the dates of these financial statements, the Company has leased
over  3,000  acres.  At  September  30,  2002  and  2001,  $169,077 and $82,155,
respectively,  of  leases  in  Louisiana  are included in the attached financial
statements  as  prepaid  mineral  leases.  Management  has  estimated  a cost of
$1,250,000  to  drill  the  initial  test  well  on  this  property.

Texas
-----
Subsequent  to  the  year  ended  September  30,  2001,  the Company acquired an
exploration  permit  and  lease  option  agreement  for  an  oil well project in
Wilbarger  County,  Texas known as Pinnacle Reef.  During the period ended March
31,  2002,  the  Company drilled its initial test well to a total depth of 4,237
feet  and  encountered  four pay zones.  The two lowest pay zones were completed
and initial drill stem tests and flow tests were run.  At March 31, the decision
had  been  made to run electricity to the site, install a pump jack and commence
commercial  production.  At  June  30,  2002, $8,100 is included in the attached
financial  statements  as  prepaid  mineral  leases  relating to Texas property.

During  the  year  ended September 30, 2002, the Company sold 40% of the working
interest  in  this  initial  well  to  private investors and two officers of the
Company for $210,000.  The Company's initial cost in the portion of the prospect
sold  totaled  $3,200.  Because the Company has received proceeds from the sales
of  the  working  interests  in  excess  of  exploration  and  development costs
attributable  to  those  working  interests, the Company has recorded a deferred
credit  of $22,184.  As exploration and development costs of $197,476 during the
year  ended September 30, 2002 were incurred on this prospect, they were charged
against  the  deferred  credit.  At  September  30, 2002, the Company recorded a
receivable from working interest owners in the amount of $16,037 to reflect some
sales  of  the  prospect's partial interest, which were collected by the Company
subsequent  to  September  30, 2002.  This initial well was placed in production
during  July  2002.

Two  additional  exploratory  wells  have  been drilled on the property with the
Company  retaining  100%  of  the working interest.  One of these wells has been
placed  in production subsequent to the date of these financial statements.  The
other  well  was  converted  to  a  salt-water  disposal  well.

NOTE 11 - OIL AND GAS PRODUCING ACTIVITIES

During  September  2002, the Company began exploratory well "2B" which is funded
through  CDCLP.  The  Company  acts as the managing general partner and may make
contributions  to  this  well under the same terms and conditions as the limited
partner.  Terms  of  the  partnership  provide  funding  traunches  in  $250,000
increments by the limited partner on selected drilling projects.  LP has not yet
determined whether well "2B" has recoverable reserves and has expended $219,558.
See  Notes  5,  12  and  15.


                                       22
<PAGE>
                          CADENCE RESOURCES CORPORATION
                       (FORMERLY ROYAL SILVER MINES, INC.)
                        NOTES TO THE FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2002


NOTE 11 - OIL AND GAS PRODUCING ACTIVITIES (CONTINUED)

The  Securities  and  Exchange Commission defines proved oil and gas reserves as
those  estimated  quantities  of crude oil, natural gas, and natural gas liquids
which  geological  and engineering data demonstrate with reasonable certainty to
be  recovered  in future years from known reservoirs under existing economic and
operating  conditions.  Proved  developed oil and gas reserves are reserves that
can  be  expected to be recovered through existing wells with existing equipment
and  operating  methods.

The  Company  has  not  retained  the  services  of  an independent geologist to
estimate  its oil and gas reserves.  Natural gas reserves and petroleum reserves
are  estimated  by  management.  The estimates include reserves in which Cadence
holds  an  economic  interest  under  lease  and  operating  agreements.

Proved  reserves  do  not  include  amounts  that  may result from extensions of
currently  proved  areas  or from application of enhanced recovery processes not
yet  determined  to  be  commercial  in  specific  reservoirs.

Cadence  has  no  supply  contracts  to  purchase  petroleum or natural gas from
foreign  governments.

The Company had no proven reserves at September 30, 2001.  The changes in proved
reserves  for  the year ended September 30, 2002 were as follows as estimated by
the  management  of  Cadence:

                                Petroleum Liquids    Natural Gas
                                    (barrels)        (cubic feet)
                                  United States     United States
                                ------------------  --------------
Reserves at October 1, 2001                     -                -
Purchases                                 100,485                -
Sales                                      (3,755)               -
                                ------------------  --------------
Reserves at September 30, 2002             96,730                -
                                ==================  ==============

The  aggregate  amounts  of  capitalized costs relating to oil and gas producing
activities  and the related accumulated depreciation, depletion and amortization
as  of  September  30,  2002  and  2001  were  as  follows:

                                        September 30,   September 30,
                                            2002             2001
                                       ---------------  --------------

       Proved properties               $       48,694   $            -
       Unproved properties                     78,997                -
       Wells and related equipment
          and facilities                       67,374                -


                                       23
<PAGE>
                          CADENCE RESOURCES CORPORATION
                       (FORMERLY ROYAL SILVER MINES, INC.)
                        NOTES TO THE FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2002


NOTE 11 - OIL AND GAS PRODUCING  ACTIVITIES (CONTINUED)

       Support equipment and
          facilities                          105,108                -
     Prepaid mineral leases                   177,177           82,155
     Accumulated depreciation,
          depletion and amortization           (4,312)               -
                                       ---------------  --------------
       Total capitalized costs         $      473,038   $       82,155
                                       ===============  ==============

Costs  both  capitalized  and  expensed,  which  were  incurred  in  oil  and
gas-producing  activities during the years ended September 30, 2002 and 2001 are
set  forth  below.  Property  acquisition  costs  represent  costs  incurred  to
purchase  or  lease  oil and gas properties.  Exploration costs include costs of
geological and geophysical activity and drilling exploratory wells.  Development
costs include costs of drilling and equipping development wells and construction
of  production  facilities  to  extract,  treat  and  store  oil  and  gas.

                                  September 30,   September 30,
                                       2002            2001
                                  --------------  --------------
     Property acquisition costs:
       Proved properties          $        8,000  $            -
       Unproved properties               245,483          84,503
     Exploration costs                   456,086               -
     Development costs                   306,761               -
     Operating expenses                   12,279               -
                                  --------------  --------------
     Total expenditures           $    1,028,609  $       84,503
                                  ==============  ==============

There  were  no  results  of  operations  for  oil  and gas producing activities
(including  operating  overhead)  for  the  year  ended September 30, 2001 since
exploration  and development activities had not commenced.  Results of operation
for  oil  and  gas  activities (including operating overhead) for the year ended
September  30,  2002  were  as  follows:

             Revenues                     $     56,608
             Exploration and
               development costs              (571,985)
             Depreciation, depletion
               and amortization                 (4,312)
             Other operating expenses          (12,279)
                                          -------------
             Results before income taxes      (531,968)
             Income tax expense                      -
                                          -------------
             Results of operation from
               oil and gas producing
               activities                 $   (531,968)
                                          =============


                                       24
<PAGE>
                          CADENCE RESOURCES CORPORATION
                       (FORMERLY ROYAL SILVER MINES, INC.)
                        NOTES TO THE FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2002


NOTE 11 - OIL AND GAS PRODUCING ACTIVITIES (CONTINUED)

The  standardized  measure of discounted estimated future net cash flows related
to  proved  oil  and  gas  reserves  at  September  30,  2002  was  as  follows:

             Future cash flows                        $1,748,439
             Future development and production costs   1,100,000
             Future income tax expense                         -
                                                      ----------
             Future net cash flows                       648,439
             10% annual discount                         303,832
                                                      ----------
             Standardized measure of discounted
               future net cash flows                  $  344,607
                                                      ==========

Future  net  cash  flows were computed using year-end prices and gas to year-end
quantities  of proved reserves.  Future price changes are considered only to the
extent  provided  by contractual arrangements.  Estimated future development and
production costs are determined by estimating the expenditures to be incurred in
developing and producing the proved oil and gas reserves at the end of the year,
based  on  year-end  costs  and  assuming  continuation  of  existing  economic
conditions.  Estimated  future  income  tax  expense  is  normally calculated by
applying  year-end  statutory  tax rates (adjusted for permanent differences and
tax credits) to estimated future pretax net cash flows related to proved oil and
gas  reserves,  less  the  tax  basis  of  the  properties  involved.

These  estimates are furnished and calculated in accordance with requirements of
the  Financial  Accounting Standards Board and the SEC.  Estimates of future net
cash  flows  presented  do  not  represent  management's  assessment  of  future
profitability  or  future  cash  flows to Cadence.  Management's investments and
operating  decisions are based on reserve estimated that include proved reserves
prescribed  by  the SEC as well as probable reserves, and on different price and
cost  assumptions  from  those  used  here.

It  should  be  recognized  that  applying  current  costs  and prices and a 10%
standard  discount  rate does not convey absolute value.  The discounted amounts
arrived  at  are  only  one  measure  of  the  value  of  proved  reserves.

NOTE  12  -  COMMITMENTS  AND  CONTINGENCIES

Litigation
----------
The  Company  was  a  defendant in a lawsuit alleging that the Company failed to
transfer common stock in exchange for a mining property interest.  In June 1999,
Box  Elder  County Superior Court rejected the plaintiff's lawsuit and let stand
the  Company's  countersuit alleging fraudulent misrepresentation.  Although the
plaintiff  filed  an  appeal  (regarding the originally filed lawsuit), the Utah
Supreme  Court  rejected  the  appeal  in  a judgment rendered on July 31, 2001.

The  Company's  counter-suit, which sought both full title to the aforementioned
mineral  property  and  compensatory  damages  as  well as punitive damages, was
rejected  in  a  jury  trial  in October 2002.  Although the Company has filed a
motion  to  have  the  verdict  set  aside,  it  expects  the  jury


                                       25
<PAGE>
                          CADENCE RESOURCES CORPORATION
                       (FORMERLY ROYAL SILVER MINES, INC.)
                        NOTES TO THE FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2002


NOTE  12  -  COMMITMENTS  AND  CONTINGENCIES  (CONTINUED)

verdict  will  stand.  As a result, the Company has and will continue to hold an
undivided  25%  interest  in  the  Vipont  Mine.  See  Notes  3  and  17.

Environmental  Issues
---------------------
The  Company  is  engaged  in  oil and gas exploration and may become subject to
certain  liabilities  as  they  relate to environmental cleanup of well sites or
other environmental restoration procedures as they relate to the drilling of oil
and  gas  wells  and  the  operation  thereof.  In  the Company's acquisition of
existing  or previously drilled well bores, the Company may not be aware of what
environmental  safeguards  were  taken  at  the  time such wells were drilled or
during  such  time  the  wells  were  operated.

The  Company was previously engaged in exploration of mineral properties.  These
properties  are  classified  as  assets  from  discontinued  operations  or were
previously  written  off  as  permanently  impaired.  Although  the  Company has
discontinued  the exploration of mineral properties, the possibility exists that
environmental cleanup or other environmental restoration procedures could remain
to  be  completed  or  be  mandated by law, causing unpredictable and unexpected
liabilities  to  arise.  At the date of this report, the Company is not aware of
any  environmental  issues  related  to  any  of  its  assets  from discontinued
operations.

Capital Commitments
-------------------
At  June  30, 2002, the Company has estimated capital and investment commitments
of  $1,100,000  to  drill  its initial test well in Louisiana.  In Texas, future
capital  commitments  are  dependent upon the Company's decision to proceed with
additional  well  development.  See  Note 10.  No accruals have been made in the
accompanying  financial  statements  for  these  amounts.

Lease  Commitments
------------------
The  Company  leased  office facilities in Walla Walla, Washington from Coldwell
Banker  Commercial  commencing  in  June  2001.    The agreement is a three-year
lease  with  monthly  payments  of  $400.  Total rent paid for this office space
during  the  period  ended  September  30,  2002  was  $4,800.

Cadence  Resources  Corporation  Limited  Partnership
-----------------------------------------------------
On  August  1,  2002,  the  Company formed a limited partnership in the State of
Washington  whereby  the  Company  became  the  managing  general partner and an
outside  individual  investor  became  the initial limited partner.  The entity,
Cadence Resources Corporation Limited Partnership ("CRCLP" or "the Partnership")
was  formed  to  invest  in  oil and gas properties in Texas and Louisiana.  See
Notes  5  and  10.

In  connection  with  the  formation  of  the Partnership, the Company agreed to
contribute  $12,500  in cash and its leasehold interest in an oil well ("2B") in
Wilbarger  County,  Texas  and the limited partner contributed $250,000 in cash.


                                       26
<PAGE>
                          CADENCE RESOURCES CORPORATION
                       (FORMERLY ROYAL SILVER MINES, INC.)
                        NOTES TO THE FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2002


NOTE  12  -  COMMITMENTS  AND  CONTINGENCIES  (CONTINUED)

The  terms  of  the  Partnership  agreement  provide  that  99%  of drilling and
operating  expenses  will  be  initially  allocated  to  the limited partner and
further  provide  that after the limited partner's receipt of funds invested and
an  11% return on his investment, subsequent Partnership profits and losses will
be  allocated  90%  to  the  limited partner and 10% to the general partner.  In
order  to  ensure  repayment  of  the  limited partner's investment, Cadence has
agreed  to grant to the limited partner a security interest in the equipment and
fixtures  affixed to wells 1A and 1B in Wilbarger County and the Company's share
of  the  cash  flows  it receives from these two wells.  The Company holds a 60%
working  interest  in well 1A and a 100% working interest in well 1B.  See Notes
5,  11  and  15.

Other  Commitments
------------------
During  September  2001,  the  Company  entered into a consulting agreement with
American  Financial  Group  for promotion to investors.  The agreement calls for
monthly payments of $2,000 to cover all expenses, 20,000 shares of the Company's
common  stock  (which  were  issued  in October 2001) and an override of 2.5% of
monies  raised  in  private  placements  from  referrals  or  directed business.

In  June  2002,  the  Company  entered  into a consultant agreement with Memphis
Consulting  Group  (Memphis)  for  financial  consulting  and  public  relations
services beginning on August 1, 2002 through August 1, 2003. The agreement calls
for  $3,000  per  month, and an initial 50,000 stock options exercisable through
August  1,  2005  at  $1.50  per share. See note 8. Other terms of the agreement
provide that Memphis will be awarded an additional 25,000 stock options with the
same  terms  for  every  three-month  period  after  November  1,  2002 that the
agreement  remains  in effect through November 1, 2003. If the agreement remains
in  effect  after November 1, 2003, Memphis will be awarded 25,000 stock options
up to a maximum of 100,000 stock options exercisable through November 1, 2006 at
$2.50  per  share.  If  the  agreement  remains in effect for a 27-month period,
Memphis  shall  receive  150,000  stock options exercisable at $1.50 and 100,000
stock  options  exercisable  at  $2.50.

The  Company entered into an exploration agreement with the W.T. Waggoner Estate
(Waggoner)  and  its  trustees  on  August  1,  2002.  This  agreement calls for
exploration of the West Electra Lake Project located in Wilbarger County, Texas.

On  August  13,  2002,  the  Company  entered  into  a public relations retainer
agreement  for one year whereby the Company agreed to issue 60,000 shares of its
common  stock.  The  agreement also calls for reimbursement of expenses incurred
pursuant  to  terms  of  this  agreement.


                                       27
<PAGE>
                          CADENCE RESOURCES CORPORATION
                       (FORMERLY ROYAL SILVER MINES, INC.)
                        NOTES TO THE FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2002


NOTE  13  -  NOTES  PAYABLE

The Company had no outstanding notes payable at September 30, 2002. At September
30,  2001,  notes  payable  consisted  of  the  following:

Creditor and Conditions                        2001
-----------------------                      --------
Howard Crosby, (an officer and shareholder
of the Company), unsecured, interest at 6%,
due on January 1, 2003.                      $125,000

Dotson Exploration, (a related party),
unsecured, interest at 6%, due on
January 1, 2003.                               10,000
                                             --------

Total                                        $135,000
                                             ========

NOTE  14  -  SETTLEMENT  AGREEMENT

Fausett  International,  Inc.
-----------------------------
During  June  2001,  the Company entered into a settlement agreement wherein the
Company  relinquished  all  claims  to  the  Crescent  Mine (located in Shoshone
County,  Idaho)  under  a previously executed lease and delivered to counsel for
Fausett  International,  Inc.  (hereinafter  "Fausett"), a quitclaim deed to the
Crescent  Mine.  Upon  receipt  of  the  quitclaim deed, Fausett transferred all
interest  in  the  Crescent Mine to Shoshone County and delivered to the Company
for  cancellation  certificates  for  8,600 shares of the Company's common stock
held  by  Fausett  and an officer of Fausett.  The settlement agreement released
the  Company  from  further  obligations  under  the  lease  agreement.  It also
contained  a  general  release  in  favor  of the Company from the Environmental
Protection  Agency  and  from  Shoshone  County.

NOTE  15  -  RELATED  PARTY  TRANSACTIONS

The  Company  sublet  office  space  on  a  month-to-month basis from one of its
officers  in Walla Walla, Washington for $400 per month through May 2001.  Total
rent  paid  for  this office space during the years ended September 30, 2001 and
2000  was  $3,200  and  $1,200  respectively.

The  Company  entered  into a mineral lease agreement with Oxford Metallurgical,
Inc.  for  the five-year period ending September 1, 2005.  Under this agreement,
Oxford  receives  a  leasehold interest in certain mining properties in Kootenai
County,  Idaho  in  exchange  for  semi-annual  lease  payments  of $300 and the
maintenance  of  property  and  liability  insurance  on  the  lease properties.

During  the  year  ended  September  30,  2002, the Company sold several mineral
properties  located  in  Shoshone  County, Idaho to Caledonia Silver-Lead Mines,
Inc.  See  Note  5.


                                       28
<PAGE>
                          CADENCE RESOURCES CORPORATION
                       (FORMERLY ROYAL SILVER MINES, INC.)
                        NOTES TO THE FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2002


NOTE  15  -  RELATED  PARTY  TRANSACTIONS  (CONTINUED)

During  the  year ended September 30, 2002, the Company loaned $35,000 to Dotson
Exploration  Company,  a  related  party.  The Company also repaid the amount of
$10,000  due  to  Dotson  pursuant to a loan made to the Company by Dotson.  See
Notes  13 and 18.  Dotson repaid $33,380 of this loan by transferring marketable
securities  to  the Company value at that amount.  At September 30, 2002, Dotson
Exploration  owed  the  Company  $1,620  which  is  payable  on demand and bears
interest  at  10%  per  annum.

Subsequent  to  September  30,  2002,  the  Company loaned Dotson the additional
amount  of  $20,000 which is payable on demand and bears interest at the rate of
10%  per  annum.  See  Note  17.

Because  Dotson  Exploration  Company,  Oxford Metallurgical, Inc. and Caledonia
Silver-Lead are controlled by two officers of Cadence, these transactions cannot
be  considered  to  be  the  product  of  an  arms-length  negotiation.

On  August 1, 2002, the Company formed a limited partnership whereby the Company
became  the  managing  general partner and an outside individual investor became
the  initial  limited  partner.  In  connection  with  the  formation  of  the
Partnership,  the  Company  contributed $12,500 and its leasehold interest in an
oil  well  ("2B")  in  Wilbarger  County,  Texas.  See  Notes  5,  11  and  12.

Other related party transactions are disclosed in Notes 5, 6, 11 and 13.


NOTE  16  -  GAIN  ON  DEBT  FORGIVENESS

During  the  period  ended  June  30,  2002, an accounts payable vendor chose to
reverse  interest  charges on its delinquent account.  This transaction resulted
in  the  recognition  of  other  income  of  $6,109.

NOTE  17  -  SUBSEQUENT  EVENTS

Oil  and  Gas  Leases
---------------------
The Company has completed drilling a second well in north Texas, which was fully
funded from Company resources.  This well was placed in production subsequent to
the  date  of  these  financial  statements.

Michigan  Property  Acquisition
-------------------------------
In December 2002, the Company acquired for cash, fractional working interests in
certain  gas  wells  in  Michigan.  See  Note  1.


                                       29
<PAGE>
                          CADENCE RESOURCES CORPORATION
                       (FORMERLY ROYAL SILVER MINES, INC.)
                        NOTES TO THE FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2002


NOTE  17  -  SUBSEQUENT  EVENTS  (CONTINUED)

Preferred  Stock  Issuance
--------------------------
In  October  2002,  the  Company  sold 15,000 shares of preferred stock for cash
proceeds  of  $30,000.  See  Note  7.

Exercise  of  Warrants
----------------------
In  October  2002, several of the Company's warrant holders exercised a total of
2,166,666  warrants  in  exchange  for  the  Company's  common stock see Note 9.

Related  Party  Loan
--------------------
In  October  2002,  the  Company loaned $20,000 to Dotson Exploration Company, a
related  party,  thereby  bringing  the  total  of the receivable from Dotson to
$21,620.  See  Note  15.

Litigation
----------
In  October  2002,  the  Company's  countersuit  involving  the  Vipont Mine was
rejected  in  a  jury  trial.  See  Note  12.


                                       30
<PAGE>

                          CADENCE RESOURCES CORPORATION
                       (FORMERLY ROYAL SILVER MINES, INC.)
                        NOTES TO THE FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2002



NOTE 18 - CORRECTION OF AN ERROR

The  accompanying financial statements for September 30, 2002 have been restated
to  correct an error in the valuation of common stock options granted during the
current fiscal year.  The effect of the restatement was to increase the net loss
and  accumulated  deficit  at  September 30, 2002 by $216,590 ($0.04 per share).
See  Note  8.



                                       31

<PAGE>
January 23, 2003



Williams & Webster, P.S.
601 W. Riverside, Suite 1940
Spokane, WA 99201

We  are providing this letter in connection with your audit of the balance sheet
of  Cadence  Resources  Corporation  as  of  September 30, 2002, and the related
statements  of  operations,  stockholders'  equity and cash flows for the period
then  ended for the purpose of expressing an opinion as to whether the financial
statements  present  fairly,  in  all material respects, the financial position,
results  of  operations,  and  cash  flows  of  Cadence Resources Corporation in
conformity with accounting principles generally accepted in the United States of
America.  We  confirm  that  we are responsible for the fair presentation in the
financial  statements  of  financial  position,  results of operations, and cash
flows  in conformity with accounting principles generally accepted in the United
States  of  America.  We  are  also  responsible  for  adopting sound accounting
policies,  establishing  and  maintaining  internal  control, and preventing and
detecting  fraud.  This  letter is related to the restated financial statements,
with  a report dated January 9, 2003, except for Notes 8 and 18, which are dated
January  20,  2003.  The  financial statements have been reissued to reflect the
correction  of  the  error  related  to  the  valuation  of  options.

Certain representations in this letter are described as being limited to matters
that  are  material.  Items are considered material, regardless of size, if they
involve  an omission or misstatement of accounting information that, in light of
surrounding  circumstances,  makes it probable that the judgment of a reasonable
person relying on the information would be changed or influenced by the omission
or  misstatement.

We  confirm,  to  the  best  of  our  knowledge  and  belief,  the  following
representation  made  to  you  during  your  audit.

1.   The  financial  statements  referred  to  above  are  fairly  presented  in
     conformity  with  accounting  principles  generally  accepted in the United
     States  of  America.

2.   We  have  made  available  to  you  all  -

     A.   Financial  records  and  related  data.

     B.   Minutes  of the meetings of stockholders, directors, and committees of
          directors,  or  summaries  of  actions  or  recent  meetings for which
          minutes  have  not  yet  been  prepared.


<PAGE>
Williams & Webster, P.S.
January 23, 2003
Page 2 of 3


3.   There  have  been  no  communications  from  regulatory agencies concerning
     noncompliance  with,  or  deficiencies  in,  financial reporting practices.

4.   There  are no material transactions that have not been properly recorded in
     the  accounting  records  underlying  the  financial  statements.

5.   There  has  been  no:

     A.   Fraud  involving management or employees who have significant roles in
          internal  control.

     B.   Fraud  involving  others  that  could  have  a  material effect on the
          financial  statements.

6.   We  have  no  plans  or  intentions that may materially affect the carrying
     value or classification of assets and liabilities. The Company has assessed
     all  assets  and  has  properly  recorded  any  impairments.

7.   The  following  have  been  properly recorded or disclosed in the financial
     statements:

     A.   Related party transactions and related accounts receivable or payable,
          including  sales,  purchases,  loans, transfers, leasing arrangements,
          and  guarantees.

     B.   Guarantees,  whether  written  or  oral,  under  which  the company is
          contingently  liable.

     C.   Options,  granted  to  officers,  directors  and  consultants.

8.   There are no estimates that may be subject to a material change in the near
     term  that have not been properly disclosed in the financial statements. We
     understand  that  near term means the period within one year of the date of
     the  financial  statements.  In  addition,  we  have  no  knowledge  of
     concentrations  existing  at the date of the financial statements that make
     the  company  vulnerable  to  the  risk of severe impact that have not been
     properly  disclosed  in  the  financial  statements.

9.   There  are  no:

     A.   Violations  or possible violations of laws or regulations whose effect
          should  be considered for disclosure in the financial statements or as
          a  basis  for  recording  a  loss  contingency.

     B.   Unasserted  claims  or  assessments that our lawyer has advised us are
          probable  of  assertion  and  must  be  disclosed  in  accordance with
          Statement  of  Financial  Accounting  Standards  No.  5.

     C.   Other  liabilities  or gain or loss contingencies that are required to
          be accrued or disclosed by Statement of Financial Accounting Standards
          No.  5.

<PAGE>
Williams & Webster, P.S.
January 23, 2003
Page 3 of 3


10.  The  company  has  satisfactory title to all owned assets, and there are no
     liens  or  encumbrances  on  such  assets  nor  has any asset been pledged.

11.  We have complied with all aspects of contractual agreements that would have
     a  material  effect  on  the  financial  statements  in  the  event  of
     noncompliance.

12.  We have disclosed to you all transactions relating to the Company's capital
     transactions  and  assure  you that such transactions are fairly stated and
     properly  disclosed.

13.  Any  uncorrected  misstatements in the financial statements are immaterial,
     individually  and  in  the  aggregate.

14.  No  events  have  occurred subsequent to the balance sheet date and through
     the date of this letter that would require adjustment to, or disclosure in,
     the  financial  statements  that  have  not  been  disclosed.




Signature:
                -----------------------------------------
Name and Title:
                -----------------------------------------
Date:
                -----------------------------------------


<PAGE>