U.S. SECURITIES AND EXCHANGE
COMMISSION
 Washington,
D.C. 20549
 
 FORM 10-K
 
 ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
 EXCHANGE
ACT OF 1934
 
 For
the fiscal year ended May 31, 2008
 Commission
file number: 0--32919
 
 PATRIOT
GOLD CORP.
 (Exact
name of registrant as specified in its charter)
 
 Nevada
              
              86-0947048(State
      of incorporation)
              
              (I.R.S.
      Employer Identification No.)
 
 501-1775
Bellevue Ave.
 West Vancouver, B.C. Canada
V7V 1A9
 (Address
of principal executive offices)
 
 (604)
925-5257
 (Registrant’s
telephone number, including area code)
 
 Securities
registered pursuant to Section 12(b) of the Exchange Act:
 None
 
 Securities
registered pursuant to Section 12(g) of the Exchange Act:
 Common
Stock, $0.001 par value
 
 
 Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  ̈ No x
 
 Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  ̈ No x
 
 Indicate
by check mark whether the registrant (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act 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 (§229.405 of this chapter) 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
 
  1
  Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
 Large
      accelerated filer  ̈
              Accelerated
      filer  ̈Non-accelerated
      filer  ̈
                (Do
      not check if a smaller reporting company)
              Smaller
      Reporting Company x
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).  Yes   ̈ No x
 
 The
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the average bid and asked price of such
common equity as November 30, 2007 was approximately $2,022,440.
 
 The
number of shares of the issuer’s common stock issued and outstanding as of
August 28, 2008 was 26,224,400 shares.
 
 Documents
Incorporated By Reference:  None
 
  2
  TABLE OF
CONTENTS
 
 PageGlossary
      of Mining Terms
              4PART
      IItem
      1
              Business
              7Item
      1A
              Risk
      Factors
              11Item
      1B
              Unresolved
      Staff Comments
              14Item
      2
              Properties
              14Item
      3
              Legal
      Proceedings
              51Item
      4
              Submission
      of Matters to a Vote of Security Holders
              51PART
      IIItem
      5
              Market
      for Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities
              51Item
      6
              Selected
      Financial Data
              53Item
      7
              Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
              53Item
      7A
              Quantitative
      and Qualitative Disclosures About Market Risk.
              58Item
      8
              Financial
      Statements and Supplementary Data.
              58Item
      9
              Changes
      in and Disagreements With Accountants on Accounting and Financial
      Disclosure
              59Item
      9A
              Controls
      and ProceduresItem
      9A(T)
              Controls
      and Procedures
              59Item
      9B
              Other
      Information
              59PART
      IIIItem
      10
              Directors,
      Executive Officers and Corporate Governance
              60Item
      11
              Executive
      Compensation
              63Item
      12
              Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
              65Item
      13
              Certain
      Relationships and Related Transactions, and Director
      Independence
              67Item
      14
              Principal
      Accountant Fees and Services
              67PART
      IVItem
      15
              Exhibits,
      Financial Statement Schedules
              68SIGNATURES
 
  3
  Glossary of Mining
Terms
 
 Adularia.A potassium-rich
alteration mineral – a form of orthoclase.
 
 Air track holes.Drill hole
constructed with a small portable drill rig using an air-driven
hammer.
 
 BLEG sampling.Bulk leach
sampling. A large sample of soil or rock that is leached using cyanide to
determine gold and silver content down to a detection limit of as little as 1.0
parts per billion.
 
 CSMT Survey.An
electromagnetic method used to map the variation of the Earth’s resistance to
conduct electricity by measuring naturally occurring electric and magnetic
fields at the Earth’s surface.
 
 Controlled Source Magneto-telluric
Survey.The recording of variations in a generated electrical field using
sophisticated survey methods.
 
 Core holes.A hole in the
ground that is left after the process where a hollow drill bit with diamond chip
teeth is used to drill into the ground. The center of the hollow drill fills
with the core of the rock that is being drilled into, and when the drill is
extracted, a hole is left in the ground.
  Felsic Tertiary Volcanic
Rocks. Quartz-rich rocks derived from volcanoes and deposited between two
and sixty-five million years ago.
  Geochemical sampling.Sample
of soil, rock, silt, water or vegetation analyzed to detect the presence of
valuable metals or other metals which may accompany them. For example, arsenic
may indicate the presence of gold.
  Geochemical Sampling.Sampling
of rocks or soil and determination of the absolute abundances of
elements.
  Geologic mapping.Producing a
plan or sectional map of the rock types, structure and alteration.
 
 Geophysical survey.Electrical, magnetic and other means used to detect features, which may
be associated with mineral deposits
 
 Ground magnetic survey.Recording variations in the earth’s magnetic field and plotting
same.
 
 Ground radiometric survey.A
survey of radioactive minerals on the land surface.
 
 Leaching. Leaching is a cost
effective process where ore is subjected to a chemical liquid that dissolves the
mineral component from the ore, and then the liquid is collected and the metals
extracted from it.
 
 Magnetic lows.An  occurrence that may be indicative of a destruction of
magnetic minerals by later hydrothermal (hot water) fluids that have come up
along these faults. These hydrothermal fluids may in turn have carried and
deposited precious metals such as gold and/or silver.
  4
  Plug.Landform similar to a
dome, but smaller.
 
 Quartz Monzonite.A coarsely
crystalline rock composed primarily of the minerals quartz, plagioclase and
orthoclase.
 
 Quartz Stockworks.A
multi-directional quartz veinlets.
 
 RC holes.Short form for
Reverse Circulation Drill holes. These are holes left after the process of
Reverse Circulation Drilling.
 
 Resource.An estimate of the
total tons and grade of a mineral deposit.
 
 Reverse circulation drilling.A less expensive form of drilling that does not allow for the recovery of
a tube or core of rock. The material is brought up from depth as a series of
small chips of rock that are then bagged and sent in for analysis. This is a
quicker and cheaper method of drilling, but does not give as much information
about the underlying rocks.
 
 Rhyolite plug dome.A domal
feature formed by the extrusion of viscous quartz-rich volcanic
rocks.
 
 Scintillometer survey.A
survey of radioactive minerals using a scintillometer, a hand-held, highly
accurate measuring device.
 
 Scoping Study.A detailed
study of the various possible methods to mine a deposit.
 
 Silicic dome.A convex
landform created by extruding quartz-rich volcanic rocks
 
 Tertiary.That portion of
geologic time that includes abundant volcanism in the western U.S.
 
 Trenching.A cost effective
way of examining the structure and nature of mineral ores just beneath the
surface. It involves digging long usually shallow trenches in carefully selected
areas to expose unweathered rock and allow sampling.
 
 Volcanic center.Origin of
major volcanic activity
 
 Volcanoclastic.Coarse,
unsorted sedimentary rock formed from volcanic rocks.
 
  5
  Forward-Looking
Statements
 
 This
Annual Report on Form 10-K contains forward-looking information. Forward-looking
information includes statements relating to future actions, prospective
products, future performance or results of current or anticipated products,
sales and marketing efforts, costs and expenses, interest rates, outcome of
contingencies, financial condition, results of operations, liquidity, business
strategies, cost savings, objectives of management of Patriot Gold Corp. (the
“Company” or “we”) and other matters. Forward-looking information may be
included in this Annual Report on Form 10-K or may be incorporated by reference
from other documents filed with the Securities and Exchange Commission (the
“SEC”) by the Company. One can find many of these statements by looking for
words including, for example, “believes,” “expects,” “anticipates,” “estimates”
or similar expressions in this Annual Report on Form 10-K or in documents
incorporated by reference in this Annual Report on Form 10-K. The Company
undertakes no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information or future
events.
 
 The
Company has based the forward-looking statements relating to the Company’s
operations on management’s current expectations, estimates and projections about
the Company and the industry in which it operates. These statements are not
guarantees of future performance and involve risks, uncertainties and
assumptions that we cannot predict. In particular, we have based many of these
forward-looking statements on assumptions about future events that may prove to
be inaccurate. Accordingly, the Company’s actual results may differ materially
from those contemplated by these forward-looking statements. Any differences
could result from a variety of factors, including, but not limited to general
economic and business conditions, competition, and other factors.
 
 
  6
  PART
I
 Item
1.                      Description
of Business.
 
 We are
engaged in natural resource exploration and anticipate acquiring, exploring, and
if warranted and feasible, developing natural resource properties. Currently we
are in the exploration state and are undertaking exploration programs in Arizona
and Nevada.
 
 History
 
 We were
incorporated in the State of Nevada on November 30, 1998. We were originally
organized to engage in the business of breeding, raising and marketing
ostriches, ostrich meat and ostrich by-products to the wholesale and retail
markets. We operated from November 30, 1998 through approximately May 31, 2000
when we ceased all operations due to lack of capital.
 
 Mr.
Manfred Schultz and Mr. Gerald Hinkley were our sole officers and directors from
inception in November 1998, until they resigned on October 31, 2002. During such
time, Messrs. Schultz and Hinkley were responsible for maintaining the Company
in compliance with all SEC and other rules and regulations and for finding a
suitable business opportunity to acquire or merge with the Company. On October
20, 2002, Mr. Bruce Johnstone was appointed to the board of directors and as an
officer. On October 31, 2002, Mr. Manfred Schultz and Mr. Gerald Hinkley
resigned as directors and officers of the Company. The resignations were offered
for personal reasons and not for any disagreement with management of the Company
or its policies. Both resigning directors and the Company parted ways on good
terms.
 
 On or
about May 1, 2001, the directors determined that it was in the best interest of
our stockholders to become active again and we began seeking potential operating
businesses and business opportunities with the intent to acquire or merge with
such businesses. In June 2003, we filed an Amended and Restated Articles of
Incorporation with the Secretary of State of the State of Nevada changing the
name of our Company and authorizing the issuance of preferred
stock.
 
 On June
12, 2003, we issued 13,500,000 Series A 7% Redeemable Preferred Shares to Mr.
Bruce Johnstone, our director and officer, in consideration for his services;
this issuance having been previously approved by a vote of both the Board of
Directors and the majority stockholders. Each Series A 7% Redeemable Preferred
Share had the right to vote with the common shares on all matters requiring
stockholder vote, including without limitation the election of directors. Mr.
Johnstone received the shares in lieu of cash compensation for the services he
provided to us. These services included, without limitation, the determination
to transform the Company from the then business of ostrich meat production to
the current business activity of resource exploration and ensuring that the
Company would maintain its corporate existence. During this process, Mr.
Johnstone was responsible for finding and securing qualified directors for the
board, which made up the new management team for the Company. Along with this he
was also responsible for arranging and closing our July 2003 private placement
financing. These funds provided the necessary funding to secure the first
resource exploration projects which Mr. Johnstone established when he signed the
Letter of Intent with MinQuest Inc. on June 27, 2003.
 
  7
  On June
13, 2003, Messrs. Schultz and Hinkley, our former officers and directors,
returned a total of 700,000 shares of common stock to us for cancellation. Given
the fact that said individuals were no longer affiliated with the Company, at
our request they agreed to return 70% of their holdings in the Company. We
determined that having them maintain 30% of their initial holdings in the
Company was adequate consideration for the four years’ of services which they
had performed. Since Messrs. Schultz and Hinkley were satisfied with our
business plan to make the Company a natural resource exploration company, they
did not request any consideration for the return of their shares.
 
 On June
17, 2003, each issued and outstanding share of common stock was forward split at
a rate of one for seven and six-tenths  (1:7.6) so that each share of
common stock became equal to 7.6 shares.
 
 On June
17, 2003, we received a new trading symbol to reflect the company name change
and forward split of the common stock. The new trading symbol is
PGOL.
 
 On June
23, 2003 the Board adopted a resolution to (i) increase the number of positions
on the Board to a total of three and (ii) appoint to the newly created positions
Mr. Robert A. Sibthorpe of Vancouver, B.C. and Mr. Robert D. Coale of Solana
Beach, CA.
 
 On July
21, 2003, Mr. Bruce Johnstone resigned as an officer and director. The
resignation was offered for personal reasons and not for any disagreement with
management of the Company or its policies. On July 21, 2003, Mr. Ronald C.
Blomkamp was appointed as the President, Chief Executive and Financial Officer
and Secretary and a director of the Company.
 
 On
October 13, 2005, Mr. Ronald Blomkamp, the Chairman, President, Chief Executive
Officer, Chief Operating Officer, Secretary, and a director resigned from each
of his positions as an officer and director of the Company.   On
the same date, the Company’s board of directors voted to appoint Mr. Robert
Coale as Chairman, President, Chief Executive Officer, Chief Operating Officer,
Secretary and Treasurer.  Also on the same date, the Company’s board
of directors elected Mr. Duncan Budge as a member of the board of directors of
the Company.
 
 On March
10, 2006 the Company granted stock options to Mr. Robert Coale, who is the
Chairman, President, Chief Executive Officer, Chief Operating Officer,
Secretary, Treasurer, and Director and to Mr. Robert Sibthorpe who is a director
of the Company.  In consideration therefor, Mr. Coale, Mr. Sibthorpe
and the Company entered into Buy-Back Option Agreements, pursuant to which
Messrs. Coale and Sibthorpe granted to the Company the option to purchase all or
any portion of the 3,000,000 shares of the Company’s common stock that are owned
by each of Mr. Coale and Mr. Sibthorpe respectively for a purchase price of
$0.01 per share.
 
 Also on
March 10, 2006, the Company entered into a Redemption Agreement with Ronald
Blomkamp, the Company’s former President and Chief Executive Officer, pursuant
to which the Company purchased from Mr. Blomkamp the 3,000,000 shares of the
Company’s common stock that were owned by Mr. Blomkamp.  The purchase
price for such shares paid to Mr. Blomkamp by the Company was $0.01 per share,
which amounted to an aggregate of $30,000.  The purchased share were
returned to treasury and cancelled.
 
  8
  Business
Operations
 
 We are a
natural resource exploration company with an objective of acquiring, exploring,
and if warranted and feasible, developing natural resource properties. Our
primary focus in the natural resource sector is gold. We are an exploration
stage company. We do not consider ourselves a “blank check” company required to
comply with Rule 419 of the Securities and Exchange Commission, because we were
not organized for the purpose of effecting, and our business plan is not to
effect, a merger with or acquisition of an unidentified company or companies, or
other entity or person. We do not intend to merge with or acquire another
company in the next 12 months.
 
 Though we
have the expertise on our board of directors to take a resource property that
hosts a viable ore deposit into mining production, the costs and time frame for
doing so are considerable, and the subsequent return on investment for our
shareholders would be very long term. Therefore, we anticipate selling or
partnering any ore bodies that we may discover to a major mining company. Many
major mining companies obtain their ore reserves through the purchase of ore
bodies found by junior exploration companies. Although these major mining
companies do some exploration work themselves, many of them rely on the junior
resource exploration companies to provide them with future deposits for them to
mine. By selling or partnering a deposit found by us to these major mining
companies, it would provide an immediate return to our shareholders without the
long time frame and cost of putting a mine into operation ourselves, and it
would also provide future capital for the Company to continue
operations.
 
 The
search for valuable natural resources as a business is extremely risky. We can
provide investors with no assurance that the properties we have either optioned
or purchased in Nevada and Arizona contain commercially exploitable reserves.
Exploration for natural reserves is a speculative venture involving substantial
risk. Few properties that are explored are ultimately developed into producing
commercially feasible reserves. Problems such as unusual or unexpected
formations and other conditions are involved in mineral exploration and often
result in unsuccessful exploration efforts. In such a case, we would be unable
to complete our business plan and any money spent on exploration would be
lost.
 
 Natural
resource exploration and development requires significant capital and our assets
and resources are limited. Therefore, we anticipate participating in the natural
resource industry through the selling or partnering of our properties, the
purchase of small interests in producing properties, the purchase of properties
where feasibility studies already exist or by the optioning of natural resource
exploration and development projects. To date we have several properties under
option, and are in the early stages of exploring these properties. There has
been no indication as yet that any commercially viable mineral deposits exist on
these properties, and there is no assurance that a commercially viable mineral
deposit exists on any of our properties. Further exploration will be required
before a final evaluation as to the economic and legal feasibility is
determined.
 
  9
  Financing
 
 In July
2003 we completed a private placement of shares and warrants which generated an
aggregate of $367,500 in proceeds.  The private placement we closed in
November 2003 generated an additional $1,080,000 in gross proceeds. Also,
$2,060,825 and $1,597,500 during the years ended May 31, 2004 and 2005,
respectively, was obtained from the exercise of stock options issued under the
Company’s 2003 stock option plan. There were no fund raising activities
undertaken by the Company during the fiscal year ended May 31,
2008.  With the funds currently held by the Company, we are adequately
funded for all work programs and option commitments for the next 12 months. If
we were to develop any of our properties beyond the exploration activities
currently being undertaken by the Company, we would need to raise further
funding.  If additional funding is required, management plans to seek
the additional capital through private placements and public offerings of its
common stock but there can be no assurances that management would be successful
in its attempt to raise the additional funds.
 
 Competition
 
 The
mineral exploration industry, in general, is intensively competitive and even if
commercial quantities of ore are discovered, a ready market may not exist for
sale of same. Numerous factors beyond our control may affect the marketability
of any substances discovered. These factors include market fluctuations, the
proximity and capacity of natural resource markets and processing equipment,
government regulations, including regulations relating to prices, taxes,
royalties, land tenure, land use, importing and exporting of minerals and
environmental protection. The exact effect of these factors cannot be accurately
predicted, but the combination of these factors may result in our not receiving
an adequate return on invested capital.
  Government
Regulation
 
 The
federal government and various state and local governments have adopted laws and
regulations regarding the protection of natural resources, human health and the
environment. We will be required to conduct all exploration activities in
accordance with all applicable laws and regulations. These may include requiring
working permits for any exploration work that results in physical disturbances
to the land and locating claims, posting claims and reporting work performed on
the mineral claims. The laws and regulations may tell us how and where we can
explore for natural resources, as well as environmental matters relating to
exploration and development. Because these laws and regulations change
frequently, the costs of compliance with existing and future environmental
regulations cannot be predicted with certainty.
 
 Any
exploration or production on United States Federal land will have to comply with
the Federal Land Management Planning Act which has the effect generally of
protecting the environment. Any exploration or production on private property,
whether owned or leased, will have to comply with the Endangered Species Act and
the Clean Water Act. The cost of complying with environmental concerns under any
of these acts varies on a case-by-case basis. In many instances the cost can be
prohibitive to development. Environmental costs associated with a particular
project must be factored into the overall cost evaluation of whether to proceed
with the project.
 
  10
  Other
than the normal bonding requirements, there are no costs to us at the present
time in connection with compliance with environmental laws. However, since we do
anticipate engaging in natural resource projects, these costs could occur at any
time. Costs could extend into the millions of dollars for which we could be
liable. In the event of liability, we would be entitled to contribution from
other owners so that our percentage share of a particular project would be the
percentage share of our liability on that project. However, other owners may not
be willing or able to share in the cost of the liability. Even if liability is
limited to our percentage share, any significant liability would wipe out our
assets and resources.
 
 Employees
 
 We have
commenced only limited operations. Therefore, we have no full time employees.
Our sole officer and three directors provide planning and organizational
services for us on a part-time basis.
 
 Subsidiaries
 
 We do not
have any subsidiaries and we are not part of a group.
 
 Item
1A.                      Risk
Factors
 
 Factors that May Affect
Future Results
 
 1.
We will require additional funds in the future to achieve our current business
strategy and our inability to obtain funding will cause our business to
fail.
 
 Based
upon current plans we expect to incur operating losses in future periods. This
will happen because there are expenses associated with the acquisition and
exploration of natural resource properties. While we have sufficient cash on
hand to fund our operating needs to May 31, 2009, we will need to raise
additional funds in the future through public or private debt or equity sales in
order to fund our future operations and fulfill contractual obligations. These
financings may not be available when needed. Even if these financings are
available, it may be on terms that we deem unacceptable or are materially
adverse to your interests with respect to dilution of book value, dividend
preferences, liquidation preferences, or other terms. Our inability to obtain
financing would have an adverse effect on our ability to implement our current
exploration in Arizona and Nevada, and as a result, could require us to diminish
or suspend our operations and possibly cease our existence. Obtaining additional
financing would be subject to a number of factors, including the market prices
for the mineral property and silver and copper. These factors may make the
timing, amount, terms or conditions of additional financing unavailable to
us.
 
  11
  2.
If we do not complete the required option payments and capital expenditure
requirements mandated in our respective agreements with MinQuest, Inc.
(“MinQuest”) we will lose our interest in that respective property and our
business may fail.
 
 If we do
not make all of the property payments to MinQuest or incur the required
expenditures in accordance with the respective property option agreements we
will lose our option to purchase the respective property for which we have not
made the payments and may not be able to continue to execute our business
objectives if we are unable to find an alternate exploration interest. Since our
payment obligations are non-refundable, if we do not make any payments, we will
lose any payments previously made and all our rights to the
properties.
  3.
Because of our reliance on MinQuest our operations would be severely impacted
should our relationship with MinQuest be terminated for any reason.
  A portion
of our Moss property was acquired from MinQuest and we optioned the Bruner,
Vernal, Whisky, NK, and Weepah properties from MinQuest.  In addition,
to date all of our exploration activity on these properties has been undertaken
by MinQuest.  As a result, MinQuest has significant knowledge about
our properties and it would be very difficult for us to replace MinQuest should
our relationship with them be terminated for any reason.  To date,
there have not been any conflicts between the Company and MinQuest.
  4.
Because our Directors serve as Officers and Directors of other companies engaged
in mineral exploration, a potential conflict of interest could negatively impact
our ability to acquire properties to explore and to run our
business.
  All of
our Directors and Officers work for other mining and mineral exploration
companies.  Due to time demands placed on our Directors and Officers,
and due to the competitive nature of the exploration business, the potential
exists for conflicts of interest to occur from time to time that could adversely
affect our ability to conduct our business. The Officers and Directors’
full-time employment with other entities limits the amount of time they can
dedicate to us as a director or officer. Also, our Directors and Officers may
have a conflict of interest in helping us identify and obtain the rights to
mineral properties because they may also be considering the same properties. To
mitigate these risks, we work with several geologists in order to ensure that we
are not overly reliant on any one of our Directors to provide us with geological
services.  However, we cannot be certain that a conflict of interest
will not arise in the future.  To date, there have not been any
conflicts of interest between any of our Directors or Officers and the
Company.
  5.
Because of the speculative nature of exploration and development, there is a
substantial risk that our business will fail.
  The
search for valuable natural resources as a business is extremely risky. We can
provide investors with no assurance that the properties we have in Arizona and
Nevada contain commercially exploitable reserves. Exploration for natural
reserves is a speculative venture involving substantial risk. Few properties
that are explored are ultimately developed into producing commercially feasible
reserves. Problems such as unusual or unexpected formations and other conditions
are involved in mineral exploration and often result in unsuccessful exploration
efforts. In such a case, we would be unable to complete our business
plan.
   12
  6.
Because we have not commenced business operations, we face a high risk of
business failure due to our inability to predict the success of our
business
 
 We are in
the initial stages of exploration of our mineral claims and thus have no way to
evaluate the likelihood that we will be able to operate our business
successfully. To date have been involved primarily in organizational activities,
and the acquisition and exploration of the mineral claims. We have not earned
any revenues as of the date of this report.
 
 7.
Because of the unique difficulties and uncertainties inherent in mineral
exploration and the mining business, we face a high risk of business
failure
 
 Potential
investors should be aware of the difficulties normally encountered by
early-stage mineral exploration companies and the high rate of failure of such
enterprises. The likelihood of success must be considered in light of the
problems, expenses, difficulties, complications and delays encountered in
connection with the exploration of the mineral properties that we plan to
undertake. These potential problems include, but are not limited to,
unanticipated problems relating to exploration, and additional costs and
expenses that may exceed current estimates.
 
 In
addition, the search for valuable minerals involves numerous hazards. As a
result, we may become subject to liability for such hazards, including
pollution, cave-ins and other hazards against which we cannot insure or against
which we may elect not to insure. The payment of such liabilities may have a
material adverse effect on our financial position.
 
 8.
Because we anticipate our operating expenses will increase prior to our earning
revenues, we may never achieve profitability
 
 Prior to
completion of our exploration stage, we anticipate that we will incur increased
operating expenses without realizing any revenues. Therefore, we expect to incur
significant losses into the foreseeable future. We recognize that if we are
unable to generate significant revenues from the exploration of our mineral
claims we will not be able to earn profits or continue operations. There is no
history upon which to base any assumption as to the likelihood that we will
prove successful, and we can provide investors with no assurance that we will
generate any operating revenues or ever achieve profitable operations. If we are
unsuccessful in addressing these risks, our business will most likely
fail.
 
 9.
Because access to our mineral claims may be restricted by inclement weather, we
may be delayed in our exploration
 
 Access to
our mineral properties may be restricted through some of the year due to weather
in the area. As
a result, any attempt to test or explore the property is largely limited to the
times when weather permits such activities. These limitations can result in
significant delays in exploration efforts. Such delays can have a significant
negative effect on our results of operations.
 
  13
  10.
Because our President has only agreed to provide his services on a part-time
basis, he may not be able or willing to devote a sufficient amount of time to
our business operations, causing our business to fail
 
 Mr.
Coale, our sole officer, provides his management services to a number of
companies. Because we are in the early stages of our business, Mr. Coale will
not be spending a significant amount of time working for the Company. Mr. Coale
expects to expend approximately five hours per week on our business. Later, if
the demands of our business require the full business time of Mr. Coale, he is
prepared to adjust his timetable to devote more time to our business. However,
it still may not be possible for Mr. Coale to devote sufficient time to the
management of our business, as and when needed, especially if the demands of Mr.
Coale’s other interests increase. Competing demands on Mr. Coale’s time may lead
to a divergence between his interests and the interests of other
shareholders.
 
 Risks Related To Legal
Uncertainty and Regulations
 
 11.
As we undertake exploration of our mineral claims, we will be subject to
compliance with government regulation that may increase the anticipated cost of
our exploration programs
 
 There are
several governmental regulations that materially restrict mineral exploration.
We will be subject to the federal, state and local laws of the United States,
Arizona, and Nevada as we carry out our exploration program. We may be required
to obtain work permits, post bonds and perform remediation work for any physical
disturbance to the land in order to comply with these laws. While our planned
exploration program budgets for regulatory compliance, there is a risk that new
regulations could increase our costs of doing business and prevent us from
carrying out our exploration programs.
  Item
1B.                      Unresolved
Staff Comments
 
 There are
no unresolved staff comments.
 
 Item
2. Description of Properties.
 
 We do not
lease or own any real property. We currently maintain our corporate office on a
month-to-month basis at an amount of CDN $1,742 per month at #501-1775 Bellevue
Avenue, West Vancouver, British Columbia, Canada, V7V 1A9.  Management
believes that our office space is suitable for our current needs.
 
  14
  In the
following discussion relating to our interests in real property, there are
references to “patented” mining claims and “unpatented” mining claims. A
patented mining claim is one for which the U.S. government has passed its title
to the claimant, giving that person title to the land as well as the minerals
and other resources above and below the surface. The patented claim is then
treated like any other private land and is subject to local property taxes. An
unpatented mining claim on U.S. government lands establishes a claim to the
locatable minerals (also referred to as stakeable minerals) on the land and the
right of possession solely for mining purposes. No title to the land passes to
the claimant. If a proven economic mineral deposit is developed, provisions of
federal mining laws permit owners of unpatented mining claims to patent (to
obtain title to) the claim. If one purchases an unpatented mining claim that is
later declared invalid by the U.S. government, one could be
evicted.
 
 Bruner and Vernal
Properties
 
 
  
 Map of
our Bruner and Vernal properties located in western Nevada.
 
  15
  Acquisition of
Interest
 
 Pursuant
to a Property Option Agreement, dated as of July 25, 2003, with MinQuest, Inc.,
a Nevada corporation (“MinQuest”), we have the option to earn a 100% interest in
the Bruner and Vernal mineral exploration properties located in
Nevada.   Together, these two properties consist of 28 mining
claims on a total of 560 acres in the northwest trending Walker Lane located in
western Nevada, as further described below.
 
 Simultaneous
with the execution and delivery of the Property Option Agreement, we paid
MinQuest $12,500. In order to earn a 100% interest in these two properties, we
must pay MinQuest, Inc. and incur expenditures relating to mining operations in
accordance with the following schedule: (i) on or before July 25, 2004, $20,000
to MinQuest and $75,000 in expenditures; (ii) on or before July 25, 2005,
$20,000 to MinQuest and an additional $100,000 in expenditures; (iii) on or
before July 25, 2006, $20,000 to MinQuest and an additional $100,000 in
expenditures; (iv) on or before July 25, 2007, $20,000 to MinQuest and an
additional $100,000 in expenditures; and (v) on or before July 25, 2008, an
additional $125,000 in expenditures. If we have not incurred the requisite
expenditures to maintain our option in good standing, we have a 60-day period
subsequent to July 25th to make
such payment along with such amount which shall be deemed to have been an
expenditure incurred by us during such period. Since our payment obligations are
non-refundable, if we do not make any payments, we will lose any payments made
and all our rights to the properties. If all said payments are made, then we
will acquire all mining interests in the property, subject to MinQuest retaining
a 3% royalty of the aggregate proceeds received by us from any smelter or other
purchaser of any ores, concentrates, metals or other material of commercial
value produced from the property, minus the cost of transportation of the ores,
concentrates or metals, including related insurance, and smelting and refining
charges, including penalties.
 
 Pursuant
to the Property Option Agreement, we have a one-time option to purchase up to 2%
of MinQuest’s royalty interest at a rate of $1,000,000 for each 1%. We must
exercise our option 90 days following completion of a bankable feasibility study
of the Bruner and Vernal properties, which, as it relates to a mineral resource
or reserve, is an evaluation of the economics for the extraction (mining),
processing and marketing of a defined ore reserve that would justify financing
from a banking or financing institution for putting the mine into
production.
 
 On July
25, 2003, we paid MinQuest $12,500 with respect to the properties, and we owed
an additional $80,000 which was due in four equal annual installments commencing
on July 25, 2004. With the approval of MinQuest, we paid the first installment
on August 27, 2004 and we paid the second installment on September 20,
2005.  On July 25, 2006 and 2007 respectively we made the third and
fourth installments of $20,000.  The payment made on July 25, 2007 was
the final payment due under the property option agreement for the Bruner and
Vernal properties.  By July 25, 2008, we were to have spent $500,000
on exploration, and by that date we had spent an aggregate of approximately
$424,000 on exploration of the two properties resulting in a shortfall of
approximately $76,000.  The Company intends to undertake an
exploration program in 2009 to complete its obligations under the Bruner and
Vernal agreement.
  16
  Bruner
Property
 
 Description
and Location of the Bruner Property
 
  
  17
  The
property is located approximately 130 miles east-southeast of Reno, Nevada at
the northern end of the Paradise Range. Access from Fallon, the closest town of
any size, is by 50 miles of paved highway and 16 miles of gravel
roads.  We hold the property via 16 unpatented mining claims (320
acres).
 
 Exploration
History of the Bruner Property
 
 The
original operators at the Bruner Property are unknown. Prospecting at the
property began in the early 1900’s while mining was occurring on other
properties located to the west. However, modern exploration of the property
began in 1983 and included the following work:
 
 o
              In
      1983, Kennecott Minerals
      Companydrilled fifteen RC holes (holes left after the process of
      reverse circulation drilling) on the
property.
 
 o
              In
      1988-1990, Newmont Exploration Ltd. drilled approximately 10 RC holes;
      conducted detailed geologic mapping (producing a plan map of the rock
      types, structure and alteration), geochemical surveys (which is sampling
      of rocks or soil and determination of the absolute abundances of
      elements), air and ground magnetic surveys (recording variations in the
      earth’s magnetic field and plotting same), and ground radiometric surveys
      (a survey of radioactive materials on the land
  surface).
 
 o
              In
      1990-1995, Miramar Mining Corp. drilled 5 RC holes and conducted BLEG
      (bulk leach extractable gold) sampling and air photo interpretation. BLEG
      sampling involves a large sample of soil or rock that is leached using
      cyanide to determine gold and silver content down to a detection limit of
      as little as 1.0 part per billion.
 
 Geology
of the Bruner Property Mineral Claims
 
 The
Bruner mining district is underlain by a sequence of intermediate to felsic
Tertiary volcanic rocks (which are quartz-rich rocks derived from volcanoes and
deposited between two and sixty-five million years ago), including ash flow
tuffs, tuffaceous sediments, and flows. A volcanic center, the origin of major
volcanic activity, is thought to underlay the district, with associated silicic
domes (a convex landform created by extruding quartz-rich volcanic rocks) and
plugs (landform similar to a dome, but smaller) intruding the volcanic section.
The exposed stratigraphic section measures over 2,500 feet in thickness. The
“Duluth Tuff”, a variably crystal rich ash flow tuff, is the host for gold and
silver mineralization. Flow banded silicic volcanics, volcanoclastics (coarse,
unsorted sedimentary rock formed from volcanic rocks) and andesite underlie the
tuff and flow-banded rhyolite overlies the host unit. Two generations of
intrusive rocks have been described within the district. Ore in the Bruner
district is hosted by vuggy, fractured, quartz-adularia (potassium-rich
alternation mineral) -veined and/or stockworked tuff. Mineralization is
primarily fault controlled, although some disseminated values do
occur.
 
  18
  Current
State of Exploration
 
 The
Bruner claims presently do not have any mineral reserves. The property that is
the subject of our mineral claims is undeveloped and does not contain any
open-pit or underground mines. There is no mining plant or equipment located on
the property that is the subject of the mineral claims. Currently, there is no
power supply to the mineral claims. Our planned exploration program is
exploratory in nature and no mineral reserves may ever be found.
 
 Geological
Exploration Program
  In July
2003, members of our Board of Directors and geology team made an onsite
inspection of Bruner Property. From this visit, an exploration plan was
determined and a schedule to begin work on the properties was organized to
commence in the month of September 2003.  The Company completed an
exploration program consisting of geologic mapping, surface geochemical
sampling, and a Global Positioning System geophysical survey (electrical,
magnetic and other means used to detect features, which may be associated with
mineral deposits) was also conducted. Such a survey measures the magnetic
variations within the underlying rocks.
 
 Since
then, a ground magnetics survey and detailed mapping and rock sampling of the
western portion of the claim block on the Bruner Property has been completed.
The rock sampling is a collection of a series of small chips over a measured
distance, which is then submitted for a chemical analysis, usually to determine
the metallic content over the sampled interval. The magnetics indicate the
presence of northwesterly and northerly trending faults under the pediment cover
that may host gold mineralization. Faults, which are breaks in the rock along
which the movement has taken place, are often the sites for the deposition of
metallic rich fluids. A pediment cover is a broad, gently sloping surface at the
base of a steeper slope. Geologic mapping of rocks exposed in the western
portion of our claims shows several small quartz bearing structures trending
northwest and dipping steeply to the northeast. These small structures are
thought to be related to a much larger vein, often filled with quartz, contained
within a fault or break in the rock (a fault-hosted vein system) under gravel
cover in the broad valley south of the mapping. Approximately 1 square mile of
ground magnetics was completed at Bruner. The survey was done on 50 meter spaced
lines, run north-south using a GPS controlled Geometrics magnetometer, which is
the geophysical instrument used in collecting magnetic data with an attached GPS
that allows the operator to more precisely determine the location of each
station where the magnetic signature is taken.
 
 The
interpretation shows numerous northwest and north-south trending magnetic lows
associated with faults. Magnetic lows are an occurrence that may be indicative
of a destruction of magnetic minerals by later hydrothermal (hot water) fluids
that have come up along these faults. These hydrothermal fluids may in turn have
carried and deposited precious metals such as gold and/or silver. A much more
continuous northwest trending feature that has not been drill tested is located
to the southeast, under gravel cover (where there is no exposure of rock at the
surface).    Data are sufficiently encouraging that an
expanded CSMT survey is recommended to trace these structures in the third
dimension.
 
  19
  Our
exploration program to date at Bruner has included:
 
 o
              geologic
      mapping (producing a plan map of the rock types, structure and
      alteration);
 o
              rock
      chip geochemical sampling (sample of soil, rock, silt, water or vegetation
      analyzed to detect the presence of valuable metals or other metals which
      may accompany them (e.g., Arsenic may indicate the presence of
      gold);
 o
              a
      ground magnetic survey; and
 o
              a
      Controlled Source Magneto-telluric survey (recording variations in a
      generated electrical field using sophisticated survey
      methods).
 
 In
October 2004, we received the approval of a Notice of Intent for Exploration
Drilling, and an environmental bond filed with the Nevada office of the Bureau
of Land Management. A total of 18 drill sites were located to target both
extensions of the gold intercepts in previous drilling and in geophysical
anomalies found by a CSMT survey. A CSMT survey is an electromagnetic method
used to map the variation of the Earth’s resistance to conduct electricity by
measuring naturally occurring electric and magnetic fields at the Earth’s
surface. With the proper approvals in place, we began drilling on the Bruner
property on December 20, 2004. This drilling program was completed in March 2005
at a total cost of approximately $153,800, with a total of 3,200 feet of reverse
circulation (RC) drilling in 7 holes. The depths of the holes ranged from 300 to
750 feet. We have received assays for all holes and the results were encouraging
enough that additional drilling was conducted.
 
 Because
of the favorable drilling results from the drilling program we began on December
20, 2004, we decided to conduct additional drill testing on the Bruner property,
including both reverse circulation and core drilling.  In April 2005,
we filed an amended drilling plan with the Bureau of Land Management that
allowed three fences of drill holes with the fences spaced 400 feet apart along
the apparent trend of the mineralization.  This program was completed
in the fall of 2005 with 11 holes totaling 4,205 feet being
drilled.
 
 The Board
of Directors approved a 2007 exploration budget of approximately $120,000 for
the Bruner Property.  In November, 2007, the Company drilled three
holes at Bruner to test deeper targets within the gold-bearing tuffaceous host
rocks.  The holes were drilled using an RC drill rig and totaled 3,240
feet. The holes were spaced roughly 400 feet apart on a line running
east-northeast.  All holes were angled steeply to the north to cut
projected, south-dipping shear zones. Drill hole B-18 and B-19 were drilled1,000
feet deep and B-20 was drilled 1,240 feet deep.  All three holes
contained intermittent gold at various depths.
 
 The
results show a distinct increase in gold grade from the southwest (B-18) to the
northeast (B-20). Only hole B-20 contained economic grade gold over any
significant width. Further drilling north and east of B-20 may be warranted to
vector in on the strongest part of the gold system. The drill program confirmed
that gold mineralization continues at depth and is hosted by tuffaceous
rocks.   The Company is currently evaluating these results and
will determine the course of action for the Bruner property in the coming
months.
 
  20
  Vernal
Project
 
 Description
and Location of the Vernal Property
 
  
  21
  The
property is located approximately 140 miles east-southeast of Reno, Nevada on
the west side of the Shoshone Mountains. Access from Fallon, the closest town of
any size, is by 50 miles of paved highway and 30 miles of gravel
roads.   We hold the property via 12 unpatented mining claims
(240 acres).
 
 Exploration
History of the Vernal Property
 
 Historical
work includes several short adits constructed on the property between 1907 and
1916. There appears to have been little or no mineral production.
 
 Geology
of the Vernal Mineral Claims
 
 The
Vernal Property is underlain by a thick sequence of Tertiary age rhyolitic
volcanic rocks including tuffs, flows and intrusives. A volcanic center is
thought to underlie the district, with an intruding rhyolite plug dome (a domal
feature formed by the extrusion of viscous quartz-rich volcanic rocks) thought
to be closely related to mineralization encountered by the geologists of
Amselco, the U.S. subsidiary of a British company, who explored the Vernal
Property back in the 1980’s, and who in 1983 mapped, sampled and drilled the
Vernal Property. Amelsco has not been involved with the Vernal Property over the
last 20 years and isnot associated with our option on the property or the
exploration work we are doing there. A 225 foot wide zone of poorly outcropping
quartz stockworks (a multi-directional quartz veinlet) and larger veining trends
exists northeast from the northern margin of the plug. The veining consists of
chalcedony containing 1-5% pyrite. Clay alteration of the host volcanics is
strong. Northwest trending veins are also present, but very poorly exposed. Both
directions carry gold values. Scattered vein float is found over the plug. The
most significant gold values in rock chips come from veining in tuffaceous rocks
north of the nearly east-west contact of the plug. This area has poor exposure,
but sampling of old dumps and pits show an open-ended gold anomaly that measures
630 feet by 450 feet.
 
 Current
State of Exploration
 
 The
Vernal claims presently do not have any mineral reserves. The property that is
the subject of our mineral claims is undeveloped and does not contain any
open-pit or underground mines. There is no mining plant or equipment located on
the property that is the subject of the mineral claim. Currently, there is no
power supply to the mineral claim. Our planned exploration program is
exploratory in nature and no mineral reserves may ever be
found.  There is no drilled resource on our claims.
 
 Geological
Exploration Program
  In July
2003, members of our Board of Directors and geology team made an onsite
inspection of Vernal.  At the Vernal Property, mapping (the process of
laying out a grid on the land for area identification where samples are taken)
and sampling (the process of taking small quantities of soil and rock for
analysis) have been completed.  In March 2005, we initiated the
process to secure the proper permits for trenching and geochemical sampling from
the U.S. Forest Service.  As a result of the Company not having
immediate plans to conduct drilling on the Vernal Property in 2005, the Company
stopped the permitting process before receiving permits for the Vernal
Property.
 
  22
  Our
exploration of the Vernal Property to date has consisted of geologic mapping and
rock chip geochemical sampling.   The Board of Directors has
approved a budget of approximately $55,000 (including the refundable bond of
$15,000) for the Vernal Property.  The program is to include trenching
and mapping.  The Company is currently re-evaluating its plans for the
Vernal as the Company may choose to make additional expenditures on the Bruner
rather than the Vernal.
 
 Moss
Property
   
  23
  Moss
Property
 
 The Moss
Property consists of 63 unpatented claims and 15 patented claims located in the
Oatman District of Mohave County, Arizona. The Company acquired these claims in
a series of transactions during fiscal 2004 and 2005.
 
 Acquisition
of Interest
 
 Gintoff
Claim
 
 On
November 14, 2003 the Company entered into a letter of intent to acquire a
single patented claim from Gregory Gintoff.  The total purchase price
of $50,000 was made in two installments of $10,000 in December 2003 and $40,000
in February 2004.
 
 MinQuest
Claims
 
 We hold
the MinQuest claims via 62 unpatented mining claims that were acquired from
MinQuest.   On March 4, 2004, we signed the agreement that earned
us a 100 percent interest in these claims by paying MinQuest a one-time lease
fee of $50,000.   The fee of $50,000 was paid on July 7,
2004.  A three percent NSR production royalty is retained by
MinQuest.
 
 Williams
Property
 
 The
property is comprised of six patented claims, which as a group, we call the
Williams Property. These claims were held collectively by as many as 23 owners
within an extended family who were represented by Barbara Williams, a realtor,
and a member of this extended family, who put together the letter of intent and
arranged for the signing of the agreement by the numerous owners. None of these
owners, including Barbara Williams, has or has had any relationship or
affiliation with us prior to the agreement for the Williams
Property.
 
 In
October 2003, our director Robert Sibthorpe (who is a geologist by training) had
evaluated the proposal for the purchase of the Williams Property. His
recommendation was to visit the site, and if the visual inspection supported the
information presented in the proposal, then an offer to purchase should be drawn
up.  In November 2003 we executed a letter of intent to purchase a
100% interest in Williams Property owned by the extended family. This property
is unrelated to and separate from the MinQuest Claims.  The sellers
delivered to us all information in their possession regarding the Williams
Property.  During the six-month period after the signing of the letter
of intent we had the right to conduct our due diligence on the Williams Property
and if we decided not to proceed we had to give the sellers and escrow agent
notice no less than 10 days prior to the six-month anniversary of our intention
not to close. During this period we could not perform mining or remove any ore
from the property. We were responsible for all costs and expenses associated
with the purchase of the Williams Property, including escrow fees, cost of
feasibility study, charges resulting from any tests, environmental assessments
reports or surveys, and any exploration activity costs. Once we had concluded
our analysis and had determined that it is feasible to close on the purchase of
the Williams Property, doing so would give us full rights to begin mining
operations.
 
  24
  At the
recommendation of Mr. Sibthorpe, in January, 2004, Mr. Robert Coale (P.E.),
another one of our directors and our current President, visited the site to see
the overall geological setting and occurrence of mineralization and evaluated
the drilling program proposed by MinQuest, the company that we would contract to
co-ordinate any work programs undertaken. At that time, the metallurgical data
and reports that had been collected from the sellers were reviewed. Mr. Coale’s
analysis revealed that reagent (liquid chemicals used for leaching) consumptions
are acceptable and deleterious compounds (things present in the ore that would
be difficult to work with) were not apparent. He recommended bulk sampling at a
selected location in the future once the definition of the ore body was further
advanced through drilling.  On January 31, 2004 Robert Sibthorpe wrote
a report with a summary of the property, a review of the draft budget supplied
by Richard Kern, our work program contractor, and a layout of the drilling
program planned for the property.
 
 The
drilling was conducted throughout the spring and early summer of 2004, and in
June 2004, Mr. Sibthorpe wrote a report incorporating the results of the drill
program which encouraged us to pursue the project. Also in June 2004, Mr. Kern
sent a memo to the Company regarding the potential at the Williams property. Mr.
Kern’s recommendation was that we should proceed with the purchase of the
Williams Property.
 
 On
February 19, 2004, we executed a formal agreement to purchase the Williams
Property for $350,000. On February 27, 2004 we deposited $25,000 with the title
company, which was acting as escrow agent, and three months after signing, on
June 14, 2004, we deposited an additional $25,000. When the title company,
acting as escrow agent, received the signature pages from the various sellers,
the initial $25,000 deposit was to be delivered to the sellers. On the
three-month anniversary after we signed the definitive agreement, the second
$25,000 was to be delivered to the sellers. By mid-July, 2004, the escrow agent
had received 19 of the 23 signatures, which under Arizona law was enough to
complete the transaction, and on July 24, 2004, the first and second deposits of
$25,000 each were released to the sellers. On or before the 6-month anniversary
after we signed the definitive agreement, the balance of $300,000 was due to the
sellers. As a result of our due diligence, we decided to complete the purchase
of the Williams Property. On August 27, 2004 we paid the final $300,000 to the
escrow agent for the closing of the sale. On November 11, 2004, the escrow agent
released the $300,000 to the sellers for the closing of the sale, and, as a
result, we now own 100% interest in the Williams Property.
 
 Greenwood
Claim
 
 On
January 18, 2005 the Company completed the acquisition of a single patented
claim from an individual for $150,000.
 
 Martinez
Claims
 
 The
Company acquired five patented claims from Ramon and Edna Martinez for a total
of $150,000.  The Company made one payment of $75,000 on November 8,
2004 and made the final payment of $75,000 on February 14, 2005.
 
  25
  Ruth and Rattan
Claims
 
 On
January 18, 2005, the Company made a single payment of $25,000 to acquire two
patented claims known as the Ruth and Rattan claims.
 
 Description
and Location of the Moss Property
  The Moss
Property is located in Mohave County, Arizona in the historic Oatman District,
and is located some 5 miles northwest of the town of Oatman, with Kingman,
Arizona to the east, Laughlin, Nevada to the west and Las Vegas, Nevada to the
north. Access is via gravel roads from Bullhead City.
  Exploration
History of the Moss Property
 
 Discovered
in 1864, the Moss Mine was the first gold discovery made in the Oatman
District.  Historical records show that the Oatman District produced
up to two million ounces of gold mostly from underground mines.  The
Moss Mine was worked intermittently through the 1930’s but produced only minor
amounts of gold.   The mine lay idle until the early 1980’s when
a number of mining companies explored the district. These companies included
Billiton Minerals, Magma Copper, Golconda Resources and Addwest
Minerals.
 
 Work
already completed on the Williams portion of the Moss Property includes a
pre-feasibility study as well as 36,000 feet of primarily reverse circulation
drilling which was conducted over twenty years ago. Reverse circulation drilling
is a less expensive form of drilling that does not allow for the recovery of a
tube or core of rock, in which the material is brought up from depth as a series
of small chips of rock that are then bagged and sent in for analysis. Though
this is a quicker and cheaper method of drilling, reverse circulation drilling
does not give as much information about the underlying rocks.
 
 Geology
of the Moss Property
 
 The
project area is underlain by Tertiary quartz monzonite (a coarsely crystalline
rock composed primarily of the minerals quartz, plagioclase and orthoclase)
intruding tertiary volcanics. Precambrian basement rocks underlie the volcanics.
The veins consist of quartz-calcite and lesser adularia. The principal vein is
up to 45 feet thick and can be followed on surface for over 5,000 feet. The
hanging wall of the veins commonly have several tens of feet of stockwork
veining. Gold values are somewhat erratic, but appear to be highest in the
thicker and deeper parts of the vein explored to date.
 
 Current
State of Exploration
 
 The Moss
Property presently does not have any mineral reserves. The property that is the
subject to our mineral claims is undeveloped and does not contain any open-pit
or underground mines. There is no mining plant or equipment located on the
property that is the subject of the mineral claim. Currently, there is no power
supply to the mineral claim. Our planned exploration program is exploratory in
nature and no mineral reserves may ever be found.  There is no drilled
resource on our claims.
  26
  Geological
Exploration Program
  
 Our
exploration of the Moss Property has consisted of geologic mapping, vein
geochemical sampling and drill testing of the identified veins.  The
Moss Property contains the site of the former Moss Mine.  The most
significant historic mining at Moss Mine occurred on narrow veins that trend
sub-parallel to the Moss Mine vein and dip steeply northerly. These veins should
intersect the Moss Mine vein at depth. The deepest vein intercepts at Moss are
less than 400 feet. The Ruth vein should intersect the Moss Mine vein at 800-900
feet below the surface. If the Moss Mine vein is the feeder for the Ruth vein it
must contain similar gold values at that level. The Moss Mine vein needs drill
testing to a depth of 900 feet to determine its potential to contain high-grade
gold mineralization.
 
 Phase 1
drilling has been completed at the Moss Property. A total of 36 holes were
drilled totaling 8,807 feet. Thirty holes were drilled on the Gintoff Claim on
the Moss Property, and six holes were drilled on one of the adjacent parcels of
land.   The easternmost section of the Property, which was mostly
untested by drilling, was drilled with thirty reverse circulation holes. This
allowed accurate cross-sections to be made for this area. The coverage on this
section is generally two or three holes on 100 foot sections testing grades and
widths from 50-250 feet down dip. In the western area, limited confirmation
drilling was carried out and the results obtained were generally in line with
the values obtained by previous operators. Geological information obtained may
now provide a structural explanation for the lack of success obtained here to
date by previous operators.
 
 A study
of all drilling results at the Moss Property indicates a tendency for total gold
content to increase with intercept depth. Roughly 60% of the deeper holes have
better intercepts than shallow holes. An example from our drilling tests the
vein over a vertical extent of 300 feet. In this example the gold content nearly
doubles between AR-5 and AR-23.
 
 An
expanded program of drilling began in April 2005, and was expected to be
completed by May 2006.  Approximately 12,000 feet of reverse
circulation (RC) drilling was planned to be done to test for possible high-grade
(0.30 ounces per ton or above) down-dip extensions of the Moss vein. We planned
to drill 10 to 15 holes.  The depths of these holes were to have
ranged from 500 to 1,300 feet. The program budget for this program was
$643,700.
 
 The first
portion of this expanded drilling program was expected to be completed by the
fall of 2005.  However, after eight holes were attempted, drilling was
halted because of difficulty in drilling through the granite, because the
drilling rig that we contracted to use was too light to penetrate the
rock.  We had sought to contract a heavier rig to continue the
program, which we had expected to happen by December 2005.  The
remainder of the program was completed when the Company completed 6 core holes
from November 2006 to February 2007 for a total amount drilled of 3,917
feet.  The exploration program failed to find higher grades but it did
show that the vein system continues to at least 800 feet below the surface and
appears to be thickening.
 
  27
  Encouraging
drilling results from earlier programs warrant an initial Scoping Study level
investigation, which is the determination of the indicated size and grade of the
deposit and possible methods of mining and recovering the gold and
silver.  Tonnage and grade will be determined by outlining the
mineralization on sections constructed every 100 feet across the deposit and
using the average grade of the drilling intersections.  An open pit is
then designed that would allow extraction of the mineral in
deposit.  The option of underground mining is also
considered.  Tests are conducted to determine the best method of
extracting the gold and silver.  These tests would include the
amenability of “heap leaching”. Heap leaching is the piling of ore on an
impermeable liner, circulating gold/silver-dissolving solutions (normally
cyanide) through the pile or “heap” and recovering the gold/silver from the
circulating solution using carbon.  Another method that would be
tested is “milling” to recover the gold and silver. Milling involves crushing
and grinding the ore into tiny particles that allow the gold/silver to be
removed by simple gravity separation techniques or by using chemicals in
solution. Determination of the best methods of mining and recovery of the
precious metals then allows production costs to be calculated.
  In the
spring of  2008, the Company submitted core samples to a laboratory
where leach testing was conducted.  Leaching was conducted in both
bench scale (Bottle rolls) and in columns using crushed ore as the feed
sample.  Three column leach tests at 3 different crush sizes were
completed on the Moss drilling samples. They were leached for 120 days. The fine
crush of 1⁄4 inch had 66% of the gold and 42% of the silver recovered in 120
days.  The recovery curve is still not flat at the end of 120 days
indicating additional gold/silver could be recovered. The recoveries are already
near the 70% Au and 50% Ag that is average for the industry.  The 1
inch crush column recovered 39% of the gold and 14% of the silver after 120
days, but the leach curve again indicates no significant decrease in % recovery
by month indicating that greater recoveries may be obtained over longer periods
of time.
  Using the
column leach data obtained from the testing program completed in April 2008 as
well as additional information, the Company may engage an outside firm to
conduct a preliminary economic analysis that will evaluate the overall value of
the property considering metallurgical recovery, volume and gold grade of
mineralized rock, capital and operating costs, and other
factors.  This information will be used to define additional work
needed to enhance the value of the property.
 
  28
  Margarita
Property
  
  29
  Acquisition
of Interest
 
 On
January 29, 2008, the Company entered into an Assignment and Assumption
Agreement (the “Agreement”) with American Goldrush Corp. (“Goldrush”) whereby
Goldrush assigned all of its rights and obligations under the Margarita Property
Option Agreement to the Company.  Pursuant to the Agreement, the
Company assumed the rights, and agreed to perform all of the duties and
obligations, of Goldrush arising under the Margarita Property Option
Agreement.   Simultaneous with the execution and delivery of the
Agreement, the Company paid Goldrush $200,000 which amount represents the full
payment and satisfaction for the assignment to the Company by
Goldrush.
 
 Included
in the assignment to the Company were all sums incurred by Goldrush in
connection with its exploration of the Margarita Property which includes a
reclamation bond previously paid by Goldrush to the Forest Service in Arizona,
all expenditure credits incurred by Goldrush prior to the execution of the
Agreement and all property option payments made to the Margarita Property owner.
In addition, Goldrush also assigned all of its rights and obligations under the
Finders’ Fee Agreement to the Company.  Subsequent to the execution of
the Agreement, Goldrush did not retain any interest in the Margarita
Property.
 
 The
remaining annual option payments and minimum annual exploration expenditures
under the Margarita Property Option Agreement are as noted below:
 Property
              
              
              WorkPayments
              
              
              Expenditures$USD
              
              
              $USDBy
      May 31, 2008
              
              
              100,000
              
              
              
              300,000By
      May 31, 2009
              
              
              125,000
              
              
              
              300,000By
      May 31, 2010
              
              
              150,000
              
              
              
              -By
      May 31, 2011
              
              
              200,000
              
              
              
              -By
      May 31, 2012
              
              
              200,000
              
              
              
              -$
              775,000
              
              
              $
              600,000
 
 The
underlying Margarita Property Option Agreement is subject to a 2 % net smelter
return royalty to the property owner, James Sorrell (the “optionor”), upon
production. The Company has the option (exercisable for 90 days following
completion of a bankable feasibility study) to buy the optionor’s net smelter
return interest for $500,000 per 1% increment or $1,000,000 for the entire 2%
net smelter return interest.
 
  30
  In
addition, the Margarita Property is subject to a Finder’s Fee
Agreement.  The Company has agreed to pay a fee equal to 10% of the
Property Option Payments made during the first three years of the Margarita
Property Option Agreement.  It is estimated that if the Company makes
all of the remaining scheduled property option payments, the amount to be paid
under the Finder’s Fee Agreement by the Company will be $22,500. If the Company
terminates the Margarita Property Option Agreement, the Company will not owe any
further payments under the Finder’s Fee Agreement.  If it has not been
terminated earlier, the Finder’s Fee Agreement will terminate automatically on
July 14, 2009.
 
 On July
25, 2008, subsequent to the completion of a drill program on the Margarita
Property, the Company terminated its option under the property option agreement
and does not currently have any interest in the Margarita
Property.  In exchange for its release from its obligations under the
Margarita Property Agreement, the Company agreed to pay the 2008 annual claim
filings fees on the property of $8,268.  Under the release agreement,
the Company is not required to make the $100,000 payment due May 31,
2008.
 
 Description
and Location of the Margarita Property
 
 The
original Margarita Property consisted of 39 unpatented claims covering
approximately 640 acres in the Oro Blanco Mining District of Santa Cruz County,
Arizona.  In the first quarter of 2007, the Company staked an
additional 30 claims covering 540 acres that became part of the ground covered
by the Margarita Property Option Agreement.  The claims are within the
Coronado National Forest, and are approximately 10 miles north of the Mexican
border.  The Margarita Property is best reached by traveling south
from Tucson on I-19 to the Arivaca Road and following the paved road to Arivaca,
thence about 11 miles over the gravel-surfaced Ruby Road to the project
area.
 
 The
Margarita Property consists of 69 unpatented claims covering approximately 1,180
acres in the Oro Blanco Mining District of Santa Cruz County,
Arizona.  The claims are within the Coronado National Forest, and are
approximately 10 miles north of the Mexican border.
 
 Exploration
History of the Margarita Property
 
 The
Margarita Property is centrally located within a broad area of numerous old
mines and prospects dating back to early Spanish colonial times where gold,
silver, lead and copper were mined from Mesozoic and early Tertiary igneous rock
units.  Previous work on the property appears to demonstrate the
presence of a zone at the Margarita Property of over 4,000 feet by 1,500 feet
encompassing half a million tons of altered and mineralized tuff in a flat lying
zone exhibiting gold mineralization.  The mineralization averages
between 0.05 and 0.06 troy ounces of gold per ton associated with intense
silicification and clay pyrite alteration.
 
  31
  The
previous work undertaken by the various explorers of the Margarita Property had
not previously been collected in one location.  During 2006, Goldrush
expended most of its exploration activity collecting property data from various
sources, preparing maps, and visiting the property to match the data with
physical observation.  Based on a review of all of the data available
to Goldrush, several possible drill targets were identified including targets
that were not located on the existing boundary of the Margarita
Property.  As a result, the Goldrush staked an additional 30
claims.
 
 Goldrush
formally approved a work plan for drilling on the Margarita
Property.  However, due to difficulties with locating a suitable
contractor to undertake the drilling and due to insufficient funds available to
Goldrush, it decided to assign its rights and obligations to the property to the
Company.
 
 Geology
of the Margarita Property
 
 The gold
mineralization at the Margarita Property and related diggings in the area occurs
as disseminations within limonite stained tuffaceous rocks exhibiting intense
silicification.  There are five such zones within the claim group with
Margarita being the largest.  Other similar zones have been identified
outside of the claim boundary.   Where exposed at the surface,
the silicified rocks occur as low hills or modest, irregular hills of limonite
stained tuff.  They appear as tabular or manto like zones within
tuffaceous beds in the subsurface.  Prior drilling results show that
the silicification and associated gold mineralization has lateral continuity but
does not occupy the entire tuff bed, and no significant mineralization was
reported from the quartz monzonite although the monzonite is believed by some to
be the source of the mineralization.  In the subsurface, the tuff
occur as bands up to 50 feet or so in thickness alternating with parallel units
of quartz monzonite.  Extensive shallow drilling has shown that, in
addition to the surface occurrences, there are as many as three mantos within a
few hundred feet of the surface which are similar in character and
mineralization to those at the surface.
 
 The
Margarita Property is centrally located within a broad area of numerous old
mines and prospects dating back to early Spanish colonial times where gold,
silver, lead and copper were mined from Mesozoic and early Tertiary igneous rock
units.  Previous work on the property appears to demonstrate the
presence of a zone at the Margarita Property of over 4,000 feet by 1,500 feet
encompassing half a million tons of altered and mineralized tuff in a flat lying
zone exhibiting gold mineralization.  The mineralization averages
between 0.05 and 0.06 troy ounces of gold per ton associated with intense
silicification and clay pyrite alteration.
 
 The
accepted view of the intrusive relationship of the quartz monzonite with the
parallel zones of tuff and the monzonite’s relationship to the mineralizing
event could be subject to alternative interpretations leading to broader
potentials for bulk tonnage mineralization.
 
  32
  Current
State of Exploration
 
 The
Margarita Property presently does not have any mineral reserves. The property
that is the subject to our mineral claims is undeveloped and does not contain
any open-pit or underground mines. There is no mining plant or equipment located
on the property that is the subject of the mineral claim. Currently, there is no
power supply to the mineral claim. Our planned exploration program is
exploratory in nature and no mineral reserves may ever be
found.  There is no drilled resource on our claims.
 
 Geological
Exploration Program
  The
Company began its $350,000 drill program in February 2008 and completed it in
May 2008.  The drill program was budgeted for ten core holes for a
total of 7,500 feet.   All of the holes were drilled using
reverse circulation (RC) drilling techniques with samples being recovered for
each five-foot interval of drilling.  Samples were fire assayed for
gold and for a suite of 34 other elements by inductively coupled plasma (ICP)
analysis.
 
 The
location of the drill holes was established by considering the surface
expressions of the mineral structure as well as certain geophysical data
prepared by previous lease holders.  The purpose of the drilling
program is to test the theoretical geologic model developed for the property by
defining possible higher-grade deep feeder zones, and mineralized zone structure
and continuity.  Based on the poor results of the drill program, the
Company terminated the Margarita Property Option Agreement.
 
  33
  Whiskey
Property
  
 
  34
  Acquisition
of Interest
 
 On March
15, 2008, the Company executed a property option agreement with MinQuest
granting the Company the right to acquire 100% of the mining interests in the
Whiskey Property (“Whiskey”) currently controlled by MinQuest.  Annual
option payments and minimum annual exploration expenditures under the agreement
are as noted below:
 Property
              
              
              WorkPayments
              
              
              Expenditures$USD
              
              
              $USDUpon
      Execution of the Agreement
              
              $
              50,000
              
              
              $
              -By
      March 15, 2009
              
              
              50,000
              
              
              
              50,000By
      March 15, 2010
              
              
              50,000
              
              
              
              150,000By
      March 15, 2011
              
              
              65,000
              
              
              
              200,000By
      March 15, 2012
              
              
              80,000
              
              
              
              350,000By
      March 15, 2013
              
              
              100,000
              
              
              
              200,000By
      March 15, 2014
              
              
              100,000
              
              
              
              200,000By
      March 15, 2015
              
              
              100,000
              
              
              
              200,000By
      March 15, 2016
              
              
              100,000
              
              
              
              200,000By
      March 15, 2017
              
              
              100,000
              
              
              
              200,000By
      March 15, 2018
              
              
              250,000
              
              
              
              750,000$
              1,045,000
              
              
              $
              2,500,000
 
  Upon
execution of the Agreement, the Company paid MinQuest $50,000 in relation to the
execution of the agreement.  Since the payment obligations are
non-refundable, if any payments under the Agreement are not made, the Company
will lose any previous payments made and all its rights to the respective
property. If all said payments under the Agreement are made, then the Company
will acquire all mining interests in the property. If the Company fails to make
any payment when due, the Agreement gives the Company a 60-day grace period to
pay the amount of the deficiency.  MinQuest retained a 3% royalty of
the aggregate proceeds received by the Company from any smelter or other
purchaser of any ores, concentrates, metals or other material of commercial
value produced from the property, minus the cost of transportation of the ores,
concentrates or metals, including related insurance, and smelting and refining
charges, including penalties.
  The
Company has the one time right exercisable for 90 days following completion of a
bankable feasibility study to buy up to one half (50%) of MinQuest’s royalty
interest (i.e. an amount equal to 1.5% of the royalty interest) for $2,250,000.
The right to purchase the said royalty interest shall be exercised by the
Company by providing the MinQuest with notice of the purchase accompanied by
payment in the amount of USD $2,250,000.
  35
  The
Company may use MinQuest for its mineral exploration expertise on the property.
In addition, any mineral interests staked, located, granted or acquired by
either the Company or MinQuest which is located within a 1 mile radius of the
property will be included in the option granted to the Company for the
respective property.  The agreement will terminate if the Company
fails to comply with its obligations in the agreement and fails to cure such
alleged breach. If the Company gives notice that it denies a default has
occurred, the matter shall be determined finally through such means of dispute
resolution as such matter has been subjected to by either party.
 
 Description
and Location of the Whiskey Property
 
 The
Whiskey is located in Mineral County, Nevada and currently consists of 83
unpatented mining claims.  Access is via paved highway, gravel and
dirt roads and the land is administered by the federal Bureau of Land
Management.
 
 Exploration
History of the Whiskey Property
 
 Portions
of the property have been explored by Conoco from 1971 to 1973, Grayhill/US
Minerals Exploration from 1981-1985, Homestake/Combined Metals Reduction from
1986-1991, Santa Fe Minerals from 1992 to 1994, and Newmont from
2003-2005.  During the bulk of the exploration work the property was
divided by ownership interests into the west and east halves.  Only
Newmont and MinQuest have completely controlled all of the alteration in the
basin.
 
 Past exploration includes rock chip
sampling, geologic mapping, and drilling.  Advanced argillic
alteration is widespread along a set of east-southeast trending fault zones
covering an area 17,000 feet long by 6000 feet wide.  The alteration
zone is covered on the east end by post-mineral volcanic cover and on the west
end by recent alluvium.  Drilling by the Homestake-Combined Metals
Reduction joint venture was restricted to the southeast portion of the claim
group.  This effort encountered anomalous to ore-grade gold values in
one of several siliceous knobs at the edge of the basalt.  The
drilling completed by Santa Fe and Dennison on the west end of the property
encountered anomalous to ore grade gold values in 6 of 15 holes.  The
most recent work by Newmont suggested excellent potential for gold
mineralization along strike of known gold mineralization, under alluvium cover
and under post-mineral basalt cover.  Newmont’s target size was 3
million ounces.  Targeting was primarily under post-mineral
cover.  Newmont dropped the property before testing their exploration
model.
 
 Geology
of the Whiskey Property
 
 The
property lies within the Walker Lane structural zone and within a well
mineralized easterly trend of volcanic hosted gold-silver deposits starting at
Bodie and trending through Paradise Peak.  A possible Cretaceous
granite outcrops on the northeast portion of the property.  The
granite is equigranular and coarsely crystalline.  Conoco initially
believed the intrusive to be responsible for the large area of alteration within
the Whiskey Flat area because of the intensely argillized and silicified rocks
surrounding the intrusive and the potassic alteration developed along the
southern margin of the stock.  This conviction led to the relatively
minor amount of mapping and sampling conducted during the 1971 through 1973
field seasons.
 
  36
  Tertiary
volcanic rock consisting of andesite flows, rhyolite tuffs, pyroclastics flows
and volcanoclastic sediments comprise the entire package of pre-mineral
rocks.  This package of pre-mineral rocks has been overlain by
Tertiary to Quaternary age post-mineral basalt flows and extensive wind-blown
sand.  High angle faults trend easterly forming the north and south
boundaries of the Whiskey Flats basin.  Northerly trending faults
offset the easterly trending fault zones in several places.  At least
one low angle fault occurs along the southern border of the
property.
 
 Alteration
within the basin and along the margins consists of opaline replacement, intense
argillization, and intense silicification of all pre-mineral rock types along
structures.  The alteration events are typical of Paradise Peak and
Borealis style alteration events.  The alteration can be traced over
17,000 feet in length and covers a broad area about 6500 feet
across.  One area of intense clay alteration has been exploited as a
soil conditioner in the past.  Considerable prospecting for metals has
occurred throughout the rest of the area as demonstrated by numerous pits and
shafts.  Portions of the opaline alteration near the center of the
claim block have reportedly been exploited for mercury.  However, the
best gold in drilling failed to show any evidence of prospecting.
 
 The
historic shafts and pits prospected brecciated, silicified and iron stained
fault zones.  Many of these breccias contain silica and/or alunite
cementing the breccia fragments.  Outcropping, intensely silicified
rock on the southeast portion of the claim group is reported to contain gold at
surface.  This type of silicification forms bold knobs that have
survived erosion and peak through the post-mineral basalt
capping.  Previous drilling efforts have focused on these intensely
silicified knobs and their immediate projections.  The early
exploration successes in the surrounding area have driven much of the
exploration philosophy at Whiskey Flats.
 
 Initially,
exploration in the Borealis district successfully identified discrete, “dish
shaped” ore bodies by drilling on top of silicified knobs.  This same
exploration technique was employed at the Whiskey Flats property throughout all
of the exploration programs described above.  This method of
exploration at Whiskey Flats has identified at least two areas of gold
mineralization.  The eastern end of the property hosts ore grade gold
mineralization within a siliceous knob which is covered on the south and east by
young basalt.  The western end of the property contains several
siliceous knobs with sub-ore grade intercepts over substantial
widths.  These knobs of silica dip to the south, covered on the south
by basalt and on the west by wind-blown sand.
 
 The
recent identification of “feeder structures” under opaline silica at the
Borealis Freedom Flats deposit has shifted the exploration philosophy to
evaluation of the structures along strike of the apparent silica
knobs.  Several fault zones within the boundaries of the Whiskey
claims were noted to be highly silicified and numerous faults contain opalized
material on surface.  These fault zones trend toward the silica knobs
and are believed to be the structural features that provided permeability for
the mobilization of mineralizing fluids.  No drilling has targeted
these fault zones.
 
  37
  Current
State of Exploration
 
 The
Whiskey Property presently does not have any mineral reserves. The property that
is the subject to our mineral claims is undeveloped and does not contain any
open-pit or underground mines. There is no mining plant or equipment located on
the property that is the subject of the mineral claim. Currently, there is no
power supply to the mineral claim. Our planned exploration program is
exploratory in nature and no mineral reserves may ever be
found.  There is no drilled resource on our claims.
 
 Geological
Exploration Program
  The
Company has received recommendations from MinQuest regarding an exploration
program for the Whiskey Property.  However, as the Whiskey Property
was only acquired by the Company in March 2008, the Company has not hey
determined a budget or work program for the property.
 
  38
  NK
Property
 
 
  39
  Acquisition
of Interest
 
 On March
15, 2008, the Company executed a property option agreement with MinQuest
granting the Company the right to acquire 100% of the mining interests in the NK
Property (“NK”) currently controlled by MinQuest.  On July 25, 2008
the NK Property Option Agreement was amended whereby the annual minimum work
expenditures were lowered to match those of the Weepah Agreement as the two
properties are at a similar stage of exploration.  Annual option
payments and minimum annual exploration expenditures under the agreement are as
noted below:
 Property
              
              
              WorkPayments
              
              
              Expenditures$USD
              
              
              $USDUpon
      Execution of the Agreement
              
              $
              20,000
              
              
              $
              -By
      March 15, 2009
              
              
              20,000
              
              
              
              50,000By
      March 15, 2010
              
              
              20,000
              
              
              
              75,000By
      March 15, 2011
              
              
              35,000
              
              
              
              100,000By
      March 15, 2012
              
              
              45,000
              
              
              
              250,000By
      March 15, 2013
              
              
              50,000
              
              
              
              100,000By
      March 15, 2014
              
              
              50,000
              
              
              
              100,000By
      March 15, 2015
              
              
              50,000
              
              
              
              100,000By
      March 15, 2016
              
              
              50,000
              
              
              
              100,000By
      March 15, 2017
              
              
              50,000
              
              
              
              100,000By
      March 15, 2018
              
              
              100,000
              
              
              
              250,000$
              490,000
              
              
              $
              1,225,000
 
  Upon
execution of the Agreement, the Company paid MinQuest $20,000 in relation to the
execution of the agreement.  Since the payment obligations are
non-refundable, if any payments under the Agreement are not made, the Company
will lose any previous payments made and all its rights to the respective
property. If all said payments under the Agreement are made, then the Company
will acquire all mining interests in the property. If the Company fails to make
any payment when due, the Agreement gives the Company a 60-day grace period to
pay the amount of the deficiency.  MinQuest retained a 3% royalty of
the aggregate proceeds received by the Company from any smelter or other
purchaser of any ores, concentrates, metals or other material of commercial
value produced from the property, minus the cost of transportation of the ores,
concentrates or metals, including related insurance, and smelting and refining
charges, including penalties.
   40
  The
Company has the one time right exercisable for 90 days following completion of a
bankable feasibility study to buy up to one half (50%) of MinQuest’s royalty
interest (i.e. an amount equal to 1.5% of the royalty interest) for $2,250,000.
The right to purchase the said royalty interest shall be exercised by the
Company by providing the MinQuest with notice of the purchase accompanied by
payment in the amount of USD $2,250,000.
 
 The
Company may use MinQuest for its mineral exploration expertise on the property.
In addition, any mineral interests staked, located, granted or acquired by
either the Company or MinQuest which is located within a 1 mile radius of the
property will be included in the option granted to the Company for the
respective property.  The agreement will terminate if the Company
fails to comply with its obligations in the agreement and fails to cure such
alleged breach. If the Company gives notice that it denies a default has
occurred, the matter shall be determined finally through such means of dispute
resolution as such matter has been subjected to by either party.
 
 Description
and Location of the NK Property
 
 The NK
currently consists of 24 unpatented mining claims and is located in Mineral
County in an unincorporated mining area in west-central
Nevada.  Access is via paved highways and gravel roads and
drainages.
 
 Exploration
History of the NK Property
 
 The
previous sampling and mapping indicates at least three separate mineralized
zones from 30 to 80 feet thick bisecting the property from south to
north.  An additional area of alteration is indicated from silicified
chips in float adjacent to the range front fault which parallels the eastern
border of the range.  Along with silicification of the host rock, some
areas contain quartz veins as stockworks, barite and fluorite veining, and
occasional gossanous areas of high sulfide content.  Exploration work
listed below has focused on apparent surface expressions of
mineralization.
 
 Westely
      Mines - 1984-1985 - Sampling and
mapping
 
 Brancote
      - 1991-1992 - Mapping and sampling
 
 Hemlo,
      Cordex - 1993-1994 - Mapping and
sampling
 
 Geology
of the NK Property
 
 The
regional geology consists of a thick pile of Tertiary to Oligocene volcanics
ranging from rhyolite tuffs to basalt flows.  Generally, the older
rhyolite units have been altered and mineralized while the younger basalt flow
post dates the mineralization.
 
  41
  Alteration
consists of bleaching, argillization and silicification along low and high angle
fault zones.  Quartz veining filling microfractures, barite and
fluorite veins, and occasional gossan zones representing massive sulfide fill
faults and fractures within the altered areas.  The best gold values
are related to areas of silicified volcanic rock with secondary druzy quartz
veinlets filing micro-fractures.
 
 MinQuest
believes the best target is the range front fault zone.  Probable
alteration of volcanoclastic sediments and rhyolite tuff appear to be related to
the range front fault zone.  This fault may have contributed
additional structural preparation allowing further alteration and mineralization
to occur.  The entire structural zone has been mostly covered by
shedding material from the hillside above.  Further to the east
argillized and opaline altered volcanic rock appears intermittently in the base
of some ravines.
 
 Current
State of Exploration
 
 The NK
Property presently does not have any mineral reserves. The property that is the
subject to our mineral claims is undeveloped and does not contain any open-pit
or underground mines. There is no mining plant or equipment located on the
property that is the subject of the mineral claim. Currently, there is no power
supply to the mineral claim. Our planned exploration program is exploratory in
nature and no mineral reserves may ever be found.  There is no drilled
resource on our claims.
 
 Geological
Exploration Program
  The
Company has received recommendations from MinQuest regarding an exploration
program for the NK Property.  However, as the NK Property was only
acquired by the Company in March 2008, the Company has not hey determined a
budget or work program for the property.
 
  42
  Weepah
Property
 
 
  43
  Acquisition
of Interest
 
 On March
15, 2008, the Company executed a property option agreement with MinQuest
granting the Company the right to acquire 100% of the mining interests in the
Weepah Property (“Weepah”) currently controlled by MinQuest. Annual option
payments and minimum annual exploration expenditures under the agreement are as
noted below:
 Property
              
              
              WorkPayments
              
              
              Expenditures$USD
              
              
              $USDUpon
      Execution of the Agreement
              
              $
              20,000
              
              
              $
              -By
      March 15, 2009
              
              
              20,000
              
              
              
              50,000By
      March 15, 2010
              
              
              20,000
              
              
              
              75,000By
      March 15, 2011
              
              
              35,000
              
              
              
              100,000By
      March 15, 2012
              
              
              45,000
              
              
              
              250,000By
      March 15, 2013
              
              
              50,000
              
              
              
              100,000By
      March 15, 2014
              
              
              50,000
              
              
              
              100,000By
      March 15, 2015
              
              
              50,000
              
              
              
              100,000By
      March 15, 2016
              
              
              50,000
              
              
              
              100,000By
      March 15, 2017
              
              
              50,000
              
              
              
              100,000By
      March 15, 2018
              
              
              100,000
              
              
              
              250,000$
              490,000
              
              
              $
              1,225,000
  Upon
execution of the Agreement, the Company paid MinQuest $20,000 in relation to the
execution of the agreement.  Since the payment obligations are
non-refundable, if any payments under the Agreement are not made, the Company
will lose any previous payments made and all its rights to the respective
property. If all said payments under the Agreement are made, then the Company
will acquire all mining interests in the property. If the Company fails to make
any payment when due, the Agreement gives the Company a 60-day grace period to
pay the amount of the deficiency.  MinQuest retained a 3% royalty of
the aggregate proceeds received by the Company from any smelter or other
purchaser of any ores, concentrates, metals or other material of commercial
value produced from the property, minus the cost of transportation of the ores,
concentrates or metals, including related insurance, and smelting and refining
charges, including penalties.
  The
Company has the one time right exercisable for 90 days following completion of a
bankable feasibility study to buy up to one half (50%) of MinQuest’s royalty
interest (i.e. an amount equal to 1.5% of the royalty interest) for $2,250,000.
The right to purchase the said royalty interest shall be exercised by the
Company by providing the MinQuest with notice of the purchase accompanied by
payment in the amount of USD $2,250,000.
  44
  The
Company may use MinQuest for its mineral exploration expertise on the property.
In addition, any mineral interests staked, located, granted or acquired by
either the Company or MinQuest which is located within a 1 mile radius of the
property will be included in the option granted to the Company for the
respective property.  The agreement will terminate if the Company
fails to comply with its obligations in the agreement and fails to cure such
alleged breach. If the Company gives notice that it denies a default has
occurred, the matter shall be determined finally through such means of dispute
resolution as such matter has been subjected to by either party.
 
 Description
and Location of the Weepah Property
 
 The
Weepah Property currently consists of 14 unpatented claims and is located in
Esmeralda County, Nevada approximately 6 miles (9.6 km) northeast of Silver Peak
and 21 miles (33.6 km) west-northwest of Goldfield, Nevada.  Access is
via 7 miles (11 km) of paved and gravel roads from the town of Silver
Peak.  The Weepah Hills prospect is approximately 5 miles (8 km) south
of the historic Weepah mine and 8.5 miles (14 km) northeast of the Mineral Ridge
mine.
 
 Exploration
History of the Weepah Property
 
 The
Weepah Property was likely first discovered in the 1860’s when Silver Peak was
first developed.  No production is reported for the area, although
historic workings suggest some small shipments may have occurred from high-grade
veins.  If so, the ore was probably shipped to the nearby Silver Peak
mill.  Recent exploration efforts began in the early 1980's when
Grayhill Exploration sampled the property.  Since then WX Syndicate,
Newmont and Mountain West Exploration have conducted exploration efforts
totaling over US$100,000 in expenditures.
 
 ·
              Grayhill
      Exploration              1983-84                      Geochemical
      sampling
 ·
              WX
      Syndicate                       1986-91                      4
      RC holes for 500 feet (160 m)
 ·
              Newmont                                1988                            Geochemical
      sampling
 ·
              Mountain
      West      
                    1991-92                      Geochemical
      Sampling
 
 A total
of 500 feet (160 m) in 4 holes have been completed on the
property.  All of the drilling was shallow and drilled in the
pediment.  Drilling targeted the extension of mineralization within
the range.  Drilling failed to encounter the mineralized zone because
geology of the area was not understood.  This lack of understanding
and dearth of exploration within the outcropping mineralized area leaves
substantial potential for development of ore reserves.
 
 Geology
of the Weepah Property
 
 The
property lies within the southern portion of the Walker Lane structural
corridor.   Mineralization is hosted within the PreCambrian Wyman
Formation, Reed Dolomite and Lone Mountain Formation.  The Wyman
Formation is composed of up to 300 meters of micaceous shale, thin to
thick-bedded limestone and interbedded quartzite.  The Reed Dolomite
is composed of over 3000 feet of thick bedded dolostone with interbedded
limestone and quartzite.  The Lone Mountain Formation is composed of
more than 2100 feet of massive dolomite and limestone with thin interbeds of
shaley limestone.  Gold and silver mineralization at the Weepah are
associated with quartz stockworks, silicified limestone and disseminations
within low and high-angle shear zones.
  45
  The
Weepah Hills property contains excellent untested sediment hosted
mineralization. Gold and silver mineralization identified at the Weepah Hills
property is of similar grades as the nearby Weepah and Mineral Ridge
mines.  Surface sampling has identified two zones from 1200 to 1500
feet long and up to 50 feet wide.
 
 Structure
is the most important factor in ore control in the Silver Peak Mining
District.  At the Mineral Ridge deposit ore controls are believed to
be associated with detachment faults and high angle shear
zones.  These structures have developed a system of stacked
mineralized zones amenable to open-pit mining methods.  The historic
Weepah mine is associated with a high angle fault zone with coincident lateral
migration of mineralizing fluids.
 
 The
Weepah Hills property has aspects of both nearby mines showing both low and high
angle fault zones and associated mineralization.  The Weepah Hills
mineralization is largely localized along three parallel structures which trend
northerly.  The low angle structures measure 20 to 30 degrees dipping
southeasterly and nearly parallel to bedding.  The high angle
structures dip 70 to 80 degrees to the west.  The mineralization has
been offset by a west-northwest fault on the south end and becomes covered by
massive dolomite to the north.  Gold/silver is hosted by silicified
limestone, quartz veined shale and iron rich shear zones. The highest grade
mineralization occurs in iron rich quartz veins within shale
beds.  Numerous dikes of intermediate to felsic origin have been
mapped in within the core area.
 
 Current
State of Exploration
 
 The
Weepah Property presently does not have any mineral reserves. The property that
is the subject to our mineral claims is undeveloped and does not contain any
open-pit or underground mines. There is no mining plant or equipment located on
the property that is the subject of the mineral claim. Currently, there is no
power supply to the mineral claim. Our planned exploration program is
exploratory in nature and no mineral reserves may ever be
found.  There is no drilled resource on our claims.
 
 Geological
Exploration Program
  The
Company has received recommendations from MinQuest regarding an exploration
program for the Weepah Property.  However, as the Weepah Property was
only acquired by the Company in March 2008, the Company has not hey determined a
budget or work program for the property.
 
  46
  Imperial
Property
 
  
 
 Acquisition
of Interest
 
 On May
30, 2008, the Company entered into an Assignment and Assumption Agreement (the
“Agreement”) with American Goldfields Inc., a Nevada corporation (“Goldfields”),
to acquire the exclusive option to an undivided right, title and interest in 22
unpatented Federal mining claims located in Esmeralda County, Nevada. Goldfields
had originally acquired its exclusive option on the Property on June 30, 2004,
when it entered into a Property Option Agreement (the “Property Agreement”) with
MinQuest, the owner of the Imperial Property.
 
  47
  Pursuant
to the Agreement, the Company assumed the rights, and agreed to perform all of
the duties and obligations, of Goldfields arising under the Property Agreement.
Simultaneous with the execution and delivery of the Agreement, the Company paid
Goldfields $250,000, which amount represents the full payment and satisfaction
for the assignment by Goldfields to the Company of the Property Agreement and
all rights and obligations with respect thereto. Included in the assignment
were, without limitation, all sums incurred by Goldfields in connection with the
Property, specifically (i) the refunding of the reclamation bond previously paid
by Goldfields to the Bureau of Land Management in Nevada in the amount of
$13,255; (ii) the approximately $277,000 of expenditures incurred by Goldfields
prior to the Agreement; and (iii) the $120,000 paid to MinQuest Inc. as option
payments under the Property Agreement.
 
 Description
and Location of the Imperial Property
 
 The
Imperial Property is located in Esmeralda County, Nevada, approximately 60
kilometres southwest of Tonopah and 300 kilometers northwest of Las Vegas in the
Railroad Springs Mining District. The property consists of 24 mineral claims
elongated in an east-west direction, covering approximately 450 acres located in
Railroad Pass between the Montezuma Range to the northeast and the Silver Peak
Range to the southwest. The property covers portions of two adjacent US
Geological Survey 7 1⁄2’ quadrangle map sheets:  Lida Wash, Nevada and
Montezuma Peak, SW Nevada. The center of the property is situated at
approximately 117o 31’ 43” West longitude and 37o 33’ North
latitude.
  Land
claims in the district are administered under Department of Interior, Bureau of
Land Management (“BLM”) under the Federal Land Policy and Management Act of
1976. The Imperial claims cover portions of Sections 34, 35, and 36 in Township
4S, Range 40 East in Esmeralda County, Nevada. None of the claims have been
legally surveyed. The property is most easily accessed from the community of
Silver Peak, Nevada by following US route 95 west from Tonopah for a distance of
35 kilometers and turning south onto paved State Highway 295 for 21 kilometers
and then west on a secondary gravel road for 500 meters to the eastern claim
boundary.
 
  MinQuest
is the registered owner of 14 of the claims that make up the Imperial Property.
Ten of the claims (Lida 1 to Lida 10) are registered to Richard Kern, Michael
Forth, and James Motter. Under the terms of a Letter Agreement, the Lida claims
have been leased to MinQuest for a period of 20 years. The lease allows MinQuest
to transfer title to third parties providing all conditions of the original
agreement are met.
 
 Exploration
History of the Imperial Property
 
 The
Imperial Property was first developed in the 1920’s but apparently had little or
no production until the late 1930’s. The Imperial Mine produced approximately
10,000 tons of ore and was probably shut down at the beginning of World War II.
The mine has two adits, the longest of which has approximately 2,600 feet of
drifts and crosscuts. A 200 foot shaft, which is not accessible, is also located
on the property.
 
  48
  The
property has been explored by Energy Reserves Group, Goldsil Mining, Felmont
Oil, and Nevada Star Resource Corporation. Felmont conducted the bulk of the
work during 1983 – 1984 including drilling 19 reverse circulation holes. Five of
these holes intercepted significant thickness of oxide gold in “Carlin-style”
mineralization. Six of their holes were drilled on the area that hosted the
Imperial Mine. No other holes were drilled on this target that is more than a
mile long. Felmont dropped the property partly because they lost the rights to
the portion of the claim covering the Imperial Mine and partly because they were
taken over by Homestake.
 
 Nevada
Star conducted a soil survey over the non-Imperial Mine claim block in 1987 and
partially tested the area around two of the better Felmont holes with shallow,
close-spaced grid drilling. This work which defined an area of gold
mineralization and confirmed the presence of Carlin-style gold in silty rocks
adjacent to northeast trending high angle feeder faults, was to be followed up
by drill testing of this and several other targets. However, Nevada Star was
unable to raise the capital needed to continue and relinquished the
property.
 
 Goldfields
completed a two phase exploration drill program that focused on the high-grade
vein and disseminated gold targets within the Imperial Property. The program
included 31 reverse circulation holes for a total of 7,935 feet of
drilling.
 
 The first
phase of the program was completed in the fall of 2004 and included 10 drill
holes for a total of 2,995 feet. All of these holes were drilled on the Imperial
Target.  In addition to the drilling Goldfields has also conducted
underground sampling. A total of 40 samples have been taken of quartz vein
related mineralization underground. This work confirmed the presence of high
grade values in the two adits sampled and will help target further
drilling.
 
 Of the
first ten drill holes drilled, several intersected stopes which were not visible
on existing underground maps. This was to be expected to some extent, as Phase I
of the drill program was designed to test an area of previous underground mining
which had already had extensive workings. Of particular interest was drill hole
IR-4 which intersected 10 feet of high grade gold. This 10 foot interval (105’
to 115’) averages 0.50 oz/ton gold occurs within a 40 foot interval (110’ to
140’) that averages 0.154 oz/ton gold. Seven of the ten holes drilled contain
gold intercepts exceeding 1.0 ppm (0.029 oz/ton).
 
 The
second phase of the drilling was completed in the fall of 2005.  This
phase included 21 holes for a total of 4,940 feet.  Goldfields drilled
14 holes in the Resource Target area with all but 5 containing +0.01 oz/ton gold
intercepts.  Two of the holes intersected, or came close to
intersecting, the feeder structure within the favorable host sediment. Hole
IR-22 contained 35 feet averaging 0.072 oz/ton gold and IR-23 contained 25 feet
at 0.034 oz/ton gold including 5 feet at 0.096 oz/ton at the bottom of the
hole.  The drilling indicates the gold is located within one nearly
flat-lying favorable sedimentary unit (a calcareous siltstone) that is
approximately 50 feet thick. Gold grade drops off quickly as one moves away from
the feeder fault. Holes drilled beneath the mineralized unit, even those
intersecting the feeder fault, were barren. The flat-lying mineralization
appears to dip gently to the northwest and is approximately 200 feet wide and 40
to 50 feet thick. The gold bearing horizon has not been drilled to the
southwest.
 
  49
  Two holes
targeted the Jasperoid Breccia Target with one hole being drilled under the gold
bearing jasperoid and another targeting the possible intersection of the
northeast trending feeder fault with the Imperial fault.   Both
of these holes (IR-25 and26) were barren. Just as at the Resource Target, these
holes drilled beneath the favorable stratigraphy and missed the mineralization.
Future drilling should be collared above the favorable horizon in proximity to
the feeder fault.
 
 In
addition to the drilling, a total of 40 channel (continuous and consistent
amount) samples were taken across veins exposed in the upper and lower adits.
Sample widths were noted. Once at the assay lab each was weighed. Sample
preparation, performed by ALS Chemex in Reno, Nevada, consisted of crushing the
entire sample, splitting off 1,000 grams, pulverizing all 1,000 grams and
splitting off 50 grams of this pulp for fire assay for gold and 50 grams for
silver.
 
 Geology
of the Imperial Property
 
 The
geology of the property is described in a December, 2002 report by Geoffrey N.
Goodall, President of Global Geological Consultants Ltd., a private consulting
firm. Regionally, the Imperial Property is located within the Walker Lane which
hosts several precious metal deposits. Two distinct types of gold mineralization
occur on the Imperial Property. The first type is associated with high angle
bodies of jasperoid that outcrop along the east-west axis of the property. The
second type of mineralization is identified from drill hole data in the eastern
part of the property. Here gold mineralization is associated with flat lying
bedding and is disseminated throughout highly altered limonite stained
decalcified siltstones.
 
 Structurally,
two fault sets appear closely related to mineralization. The Imperial Fault and
other associated west-northwest structural zones have received the bulk of the
exploration within the district. Numerous northeast trending faults, some of
which are shown by soil geochemistry, have received little attention as possible
feeders. Nearly all gold anomalies from the eastern half of the claims have a
northeast trend. These anomalies are thought to be leakage along feeder
faults.
 
 Three
primary Carlin-type targets are present at Imperial. The first and most
important is the Imperial Target that has only one hole on the favourable side
of the approximately 1,600 meter long structure. The second target, called the
Resource Target is an open-ended 500 meter long gold in soil anomaly along a
northeast trending fault system. A final target called the Jasperoid Breccia
Target is a large anomaly under cover in the central portion of the claim group.
The anomaly is 400 meters long and has gold in soil anomaly at its west
end.
  Current
State of Exploration
 
 The
Imperial Property presently does not have any mineral reserves. The property
that is the subject to our mineral claims is undeveloped and does not contain
any open-pit or underground mines. There is no mining plant or equipment located
on the property that is the subject of the mineral claim. Currently, there is no
power supply to the mineral claim. Our planned exploration program is
exploratory in nature and no mineral reserves may ever be
found.  There is no drilled resource on our claims.
 
  50
  Geological
Exploration Program
  The
Company is currently evaluating the drill locations and results of the programs
completed by Goldfields in order to determine the next phase of exploration for
the Imperial Property.
 
 Item
3.                      Legal
Proceedings.
 
 There are
no pending legal proceedings to which the Company is a party or in which any
director, officer or affiliate of the Company, any owner of record or
beneficially of more than 5% of any class of voting securities of the Company,
or security holder is a party adverse to the Company or has a material interest
adverse to the Company.  The Company’s properties are not the subject
of any pending legal proceedings.
 
 Item
4.                      Submission
of Matters to a Vote of Security Holders.
 
 No
matters were submitted to a vote of security holders during the fourth quarter
of the fiscal year covered by this report.
 
 PART
II
 
 Item
5.                      Market
for Registrant’s Common Equity, Related Stockholder
 Matters, and Issuer Purchases of Equity
Securities.
 
 Market
Information.
 
 Our
common stock is traded on the Financial Industry Regulatory Authority Over The
Counter Bulletin Board (“OTCBB”) under the symbol “PGOL.” The OTCBB does not
have any quantitative or qualitative standards such as those required for
companies listed on Nasdaq.  The following table sets forth the range
of quarterly high and low closing bid prices of the common stock as reported on
http://finance.yahoo.com during the years ending May 31, 2008 and May 31,
2007:
 
 Financial Quarter
              Bid Price Information*Year
              Quarter
              High Bid Price
              Low Bid Price2008
              Fourth
      Quarter
              $0.11
              $0.07Third
      Quarter
              $0.12
              $0.075Second
      Quarter
              $0.15
              $0.085First
      Quarter
              $0.16
              $0.085
  2007
              Fourth
      Quarter
              $0.21
              $0.09Third
      Quarter
              $0.17
              $0.09Second
      Quarter
              $0.23
              $0.06First
      Quarter
              $0.26
              $0.11
 
 *The
quotations reflect inter-dealer prices, without retail mark-up, mark-down or
commission and may not represent actual transactions.
 
  51
  Holders.
 
 On August
27, 2008, there were approximately 68 (sixty-eight) holders of record of the
Company’s common stock.
 
 Dividends.
 
 The
Company has not declared or paid any cash dividends on its common stock nor does
it anticipate paying any in the foreseeable future. Furthermore, the Company
expects to retain any future earnings to finance its operations and expansion.
The payment of cash dividends in the future will be at the discretion of its
Board of Directors and will depend upon its earnings levels, capital
requirements, any restrictive loan covenants and other factors the Board
considers relevant.
 
 Warrants or
Options.
 
 No
warrants, options or other securities convertible or exchangeable into equity
securities were issued during the fiscal year ending May 31, 2008.
 
 Securities Authorized for
Issuance under Equity Compensation Plans
 
 We do not
have any equity compensation plans that were approved by our shareholders. Set
forth below is certain information as of May 31, 2008, the end of our most
recently completed fiscal year, regarding equity compensation plans that have
not been approved by our stockholders.
 
 Equity
      compensation plans not approved by stockholders – as of May 31,
      2008Plan
      Category
              
              Number
      of securities to be
                issued
      upon exercise of
                outstanding
      options, warrants and rights
              
              Weighted
      average exercise
                price
      of outstanding options,
                warrants
      and rights
              
              Number
      of securities
                remaining
      available for
                future
      issuance2003
      Stock Option Plan
              
              5,546,000
              (1)
              
              $0.26
              
              506,0002005
      Stock Option Plan
              
              2,000,000
              
              
              $0.25
              
              1,000,000Share
      Purchase Warrants
              
              3,456,000
              
              
              $1.48
              
              N/A
 
 (1)           Since
the plan provides for appropriate adjustments in the event of stock splits and
other similar events, when our common stock was forward split on June 17, 2003,
a corresponding adjustment was made to the option plan. Accordingly, as of June
17, 2003 there were 2,546,000 shares available for issuance under the Stock
Option Plan. On September 22, 2003, we amended our Stock Option Plan by
increasing the number of shares available for issuance under the plan to
5,546,000 shares
 
  52
  As of May
31, 2008, there were a total of 5,040,000 options granted under the 2003 Plan
with exercise prices ranging from $0.05 per share to $1.50 per
share.  There were also a total of 1,000,000 options granted under the
2005 Plan with an exercise price of $0.25 per share.
 
 The
following discussion describes material terms of grants made pursuant to the
stock option plans:
 
 Pursuant
to the 2003 and 2005 Stock Option Plans, grants of shares can be made to
employees, officers, directors, consultants and independent contractors of
non-qualified stock options as well as stock options to employees that qualify
as incentive stock options under Section 422 of the Internal Revenue Code of
1986 (“Code”). The Plan is administered by the Option Committee of the Board of
Directors (the “Committee”), which has, subject to specified limitations, the
full authority to grant options and establish the terms and conditions for
vesting and exercise thereof. Currently the entire Board functions as the
Committee.
 
 In order
to exercise an option granted under the Plan, the optionee must pay the full
exercise price of the shares being purchased. Payment may be made either: (i) in
cash; or (ii) at the discretion of the Committee, by delivering shares of common
stock already owned by the optionee that have a fair market value equal to the
applicable exercise price; or (iii) with the approval of the Committee, with
monies borrowed from us.
 
 Subject
to the foregoing, the Committee has broad discretion to describe the terms and
conditions applicable to options granted under the Plan. The Committee may at
any time discontinue granting options under the Plan or otherwise suspend, amend
or terminate the Plan and may, with the consent of an optionee, make such
modification of the terms and conditions of such optionee’s option as the
Committee shall deem advisable.
 
 Recent Sales of Unregistered
Securities; Use of Proceeds from Registered Securities.
 
 None
during the fiscal year ended May 31, 2008.
 
 Purchases of Equity
Securities by the Company and Affiliated Purchasers.
 
 None.
 
 Item
6.                      Selected
Financial Data
 
 Not
applicable to smaller reporting companies.
 
 Item
7.                      Management’s
Discussion and Analysis or Plan of Operation.
 
 Overview
 
 As a
natural resource exploration company our focus is to locate prospective
properties that may host mineral reserves that could eventually be put into
mining production. With this in mind, we have to this date identified and
secured interests in several mining claims with respect to properties in the
Walker Lane area of Nevada and the historic Oatman mining district of Arizona.
We have adequate funding to meet all our obligations on our current projects
until at least May 31, 2009.
  53
  We do not
intend to use any employees, with the exception of part-time clerical assistance
on an as-needed basis. Outside advisors, attorneys or consultants will only be
used if they can be obtained for a minimal cost or for a deferred payment basis.
Management is confident that it will be able to operate in this manner and
continue during the next twelve months.
 
 Plan of
Operation
 
 During
the twelve-month period ending May 31, 2009, our objective is to continue to
explore the properties subject to our mining claims.  The funds in our
treasury are sufficient to meet all planned activities as outlined below, with a
contingency margin. As a result of this, we do not expect to enter into any new
financing arrangements during the twelve months ending May 31,
2009.
 
 We
continue to run our operations with the use of contract operators, and as such
do not anticipate a change to our company staffing levels. We remain focused on
keeping the staff compliment, which currently consists of our three directors
and one investor relations person, at a minimum to conserve capital. Our
staffing in no way hinders our operations, as outsourcing of necessary
operations continues to be the most cost effective and efficient manner of
conducting the business of the Company.
 
 We do not
anticipate any equipment purchases in the twelve months ending May 31,
2009.
 
 The
following is an overview of the project work to date, as well as anticipated
work for the next twelve months. Specific dates when work will begin, and how
long it will take to complete each step is subject to change due to the
variables of weather, availability of work crews for a particular type of work,
and the results of work that is planned, the outcome of which will determine
what the next step on that project will be.
 
 Bruner and Vernal
Projects.
 
 As of May
31, 2008, we have fulfilled our exploration and property option commitments with
respect to the Bruner and Vernal projects.  To May 31, 2008, we made
total property option payments of $80,000 and have incurred approximately
$424,000 of property expenditures.  On July 25, 2007 we made the final
property option installment of $20,000.  Under the property agreement
we were to have spent $500,000 by July 25, 2008.  As of May 31, 2008
there is a shortfall in expenditures of approximately $76,000.  The
Company intends to undertake an exploration program in 2009 to complete its
obligations under the Bruner and Vernal agreement.
 
 Moss
Property
 
 The Moss
Property agreements do not require on-going property payments nor minimum annual
exploration expenditure.
 
  54
  Margarita
Property
 
 On
January 29, 2008, the Company acquired the rights to the Margarita
Property.  Subsequent to the completion of a drill program, the
Company terminated the Margarita Property Option Agreement. As a result of
terminating the Margarita Property Option Agreement, the Company agreed to pay
the 2008 annual claim filings fees on the property of $8,268.  Under
the release agreement, the Company was not required to make the $100,000 payment
due May 31, 2008 and no longer has any obligations under the
agreement.
 
 Whiskey
Property
 
 The
Company acquired the Whiskey Property on March 15, 2008 and is required to make
a property option payment of $50,000 and incur $50,000 in expenditures on the
Whiskey Property by March 15, 2009.
 
 NK
Property
 
 The
Company acquired the NK Property on March 15, 2008 and is required to make a
property option payment of $20,000 and incur $50,000 in expenditures on the NK
Property by March 15, 2009.
 
 Weepah
Property
 
 The
Company acquired the Weepah Property on March 15, 2008 and is required to make a
property option payment of $20,000 and incur $50,000 in expenditures on the
Weepah Property by March 15, 2009.
 
 Imperial
Property
 
 On May
30, 2008, the Company acquired the rights to the Imperial
Property.  The Company made a property option payment of $20,000 on
July 1, 2008 and is required to incur $100,000 in property expenditures in the
next year.
 
  55
  Results of
Operations
 
 The Twelve Months Ended May 31, 2008 compared to the Twelve Months Ended May 31, 2007
 
 The
Company had no revenues during the fiscal years ended May 31, 2008 and May 31,
2007 because it was in the exploration state during such fiscal years. The net
loss from operations for fiscal 2008 was $1,325,808 compared to $423,488 in
fiscal 2007.   The net loss from operations increased
significantly in 2008 compared to 2007 due to a large increase in exploration
expenses to $1,172,292 in 2008 from $250,634 in 2007, an increase of
$921,658.  In 2008, the Company acquired the Margarita Property for
$200,000 and the Imperial Property for $250,000.  In addition, the
Company acquired the Whiskey, NK, and Weepah Properties for an aggregate initial
option payment of $90,000.  Also in 2008, the Company completed drill
programs on both the Bruner and Margarita Properties.  In 2007, the
Company’s only major exploration activity was to undertake a drill program on
the Moss Property.  Other than making the required property option
payment of $20,000, the Company did not incur any significant expenditures
related to the Bruner or Vernal properties in the twelve months ended May 31,
2007.
 
 General
and administrative expenses were $153,516 in 2008 compared to $172,854 in 2007,
a decrease of $19,338.  The decrease was largely due to the
recognition in 2007 of $26,611 in stock-based compensation relating to stock
options granted during 2006 while for 2008, the effect of revaluing the options
granted in 2006 resulted in a reversal of the expense of $973. No stock options
were granted in 2008 or 2007.
 
 Interest
income decreased to $108,903 in 2008 from $127,059 in 2007.  The
decrease is largely due to lower average invested cash balances and a decrease
in interest rates on invested cash balances.
 
 The Twelve Months Ended May 31, 2007 compared to the Twelve Months Ended May 31, 2006
 
 The
Company had no revenues during the fiscal years ended May 31, 2007 and May 31,
2006 because it was in the exploration state during such fiscal years. The net
loss from operations for fiscal 2007 was $423,488 compared to $401,847 in fiscal
2006.   While the total net loss from operations was consistent
between the two years, the components of the loss were
different.  Exploration expenses increased to $250,634 in 2007 from
$187,407 in 2006, an increase of $63,227.  In 2007, the Company
undertook a drill program on the Moss Property while the majority of the costs
for the previous Moss drill program were incurred at the end of fiscal 2005
resulting in only a small portion of exploration costs being incurred in the
twelve months ended May 31, 2006.  Partially offsetting the increased
spending on the Moss property in 2007 was a large reduction in spending on the
Bruner property.  Other than making the required property option
payment, the Company did not incur any significant expenditures related to the
Bruner or Vernal properties in the twelve months ended May 31,
2007.  The previous drill program on the Bruner property began in
fiscal 2005 and concluded in the first portion of fiscal 2006.  As a
result, in the twelve months ended May 31, 2006, the Company incurred
exploration costs relating to the Bruner property.
 
  56
  General
and administrative expenses were $172,854 in 2007 compared to $214,440 in 2006,
a decrease of $41,586.  The decrease was largely due to the
recognition in 2006 of $86,483 in stock-based compensation relating to stock
options granted during 2006.  No stock options were granted in 2007
but $26,611 in stock-based compensation was recognized in 2007 relating to the
revaluation and amortization of unvested stock options from the 2006
grant.  Partially offsetting the effect of lower stock-based
compensation in 2007 was higher management fees paid to the Company’s
President.  He began receiving $2,500 a month in November 2005 so for
fiscal 2006 he received $17,500 while he received $30,000 for 2007.
 
 Interest
income increased from $102,921 in 2006 to $127,059 in 2007.  The
increase is largely due to an increase in interest rates on invested cash
balances.
 
 Liquidity and capital
resources
 
 We had
total assets of $2,147,020 at May 31, 2008 consisting of cash of $2,115,513, net
office equipment of $352, and reclamation deposits of $31,155.  We had
total liabilities of $328,762 at May 31, 2008 all of which are current
liabilities consisting of accounts payable and accrued liabilities.
 
 We
anticipate that we will incur the following to May 31, 2009:
 
 -
              $110,000
      in connection with property option payments under the Company’s Whiskey,
      NK, Weepah, Imperial option agreements. The $20,000 for the Imperial
      Property was paid in July 2008;
 
 -
              $388,000
      in property exploration expenses and claim payments in order to meet the
      requirements of the Company’s property option
  agreements;
 
 -
              $119,000
      for operating expenses, including working capital and general, legal,
      accounting and administrative expenses associated with reporting
      requirements under the Securities Exchange Act of
  1934.
 
 Cash used
in operations was $882,663 for the year ended May 31, 2008 while it was $233,693
for 2007.  A significant portion of the increase was due to an
increase in the net loss to $1,211,237 in 2008 from $295,288 in
2007.  Partially offsetting the effect of a higher net loss in 2008
was a cash inflow from the increase in accounts payable and accrued liabilities
of $326,678 in 2008 compared to an inflow of $521 in 2007.  Included
in the loss for 2008 was a reversal of stock-based compensation of $973 related
to options granted in 2006 while in 2007 the amount was an expense of
$26,611.  Cash inflows of $30,528 relating to the recovery of prepaid
expenses occurred in 2007 while an inflow of $1,472 was received in
2008.
 
  57
  Cash from
operations from inception to date has not been sufficient to provide the
operating capital necessary to operate. In November 2003 we issued 864,000
shares of common stock and 864,000 Class A warrants, 864,000 Class B warrants,
864,000 Class C warrants and 864,000 Class D warrants. This private offering
generated gross proceeds of $1,080,000.00. The Class A-1 warrants are
exercisable on November 27, 2004 for a period of five years at an exercise price
of $1.40 per share of common stock; the Class B-1 warrants are exercisable on
November 27, 2005 for a period of four years at an exercise price of $1.45; the
Class C-1 warrants are exercisable on November 27, 2006 for a period of three
years at an exercise price of $1.50; and the Class D-1 warrants are exercisable
on November 27, 2007 for a period of two years at an exercise price of $1.55.
The Company has the right, in its sole discretion, to accelerate the exercise
date of the warrants, to decrease the exercise price of the warrants and/or
extend the expiration date of the warrants.
 
 There
were no investing activities in 2007 while in 2008 the Company paid reclamation
deposits on the Imperial, Margarita, and Vernal properties totaling
$31,155.  There were no financing activities in either 2008 or
2007.
 
 Going Concern
Consideration
 
 Management
believes that the gross proceeds from the private placements and from the
exercise of stock options will be sufficient to continue our planned activities
until May 31, 2009, the end of our next fiscal year. However, we anticipate
generating losses and therefore we may be unable to continue operations in the
future as a going concern. No adjustment has been made in the accompanying
financial statements to the amounts and classification of assets and liabilities
that could result should we be unable to continue as a going
concern.
 
 We
currently have no agreements, arrangements or understandings with any person to
obtain funds through bank loans, lines of credit or any other
sources.
 
 Accordingly,
our independent auditors included an explanatory paragraph in their report on
the accompanying financial statements regarding concerns about our ability to
continue as a going concern. Our financial statements contain additional note
disclosures describing the circumstances that lead to this disclosure by our
independent auditors.
 
 Off-balance sheet
arrangements
 
 We have
no off-balance sheet arrangements.
 
 Item
7A                      Quantitative
and Qualitative Disclosure About Market Risk
 
 Not
applicable.
 
 Item
8.                        Financial
Statements.
 
 The
financial statements are set forth immediately preceding the signature
page.
 
  58
  Item
9.                                Changes
In and Disagreements with Accountants on Accounting and Financial
Disclosure.
 
 None.
 
 Item
9A(T).         
              Controls
and Procedures.
 
 Evaluation of Disclosure Controls and
Procedures
 
 The
Company’s principal executive and principal financial officers believe that the
Company’s disclosure controls and procedures, as defined in Securities Exchange
Act Rules 13a-15(e) or 15(d)-15(e), are effective. This conclusion was based on
an evaluation of these controls and procedures as of May 31, 2008.
 
 Changes
in Internal Control Over Financial Reporting
 
 There
have been no changes in our internal control over financial reporting that
occurred during the quarterly period ended May 31, 2008 that materially
affected, or that are reasonably likely to materially affect, our internal
control over financial reporting.
 
 Evaluation of Internal Control Over
Financial Reporting
 
 Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting. Our internal control system has been designed
to provide reasonable assurance to our management and board of directors
regarding the preparation and fair presentation of our published financial
statements. All internal control systems, no matter how well designed, have
inherent limitations. Therefore, even those systems determined to be effective
can provide only reasonable assurance with respect to financial statement
preparation and presentation.
 
 Our
management has assessed the effectiveness of our internal controls over
financial reporting as of May 31, 2008. To make this assessment, we used the
criteria for effective internal control over financial reporting described in
Internal Control — Integrated Framework, issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on our assessment, we believe
that, as of May 31, 2008, our internal controls over financial reporting were
effective.
 
 This
annual report does not include an attestation report of our registered public
accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the Securities and Exchange
Commission that permit us to provide only management’s report in this annual
report.
 
 Item
9B. Other Information.
 
 None.
  59
  PART
II
 
 Item
10.                      Directors,
Executive Officers and Corporate Governance.
 
 Directors and
Officers.
 
 All
directors of our Company hold office until the next annual general meeting of
the stockholders or until their successors are elected and qualified. The
officers of our Company are appointed by our board of directors and hold office
until their earlier death, retirement, resignation or removal. Our directors,
executive officers and other significant employees, their ages, positions held
and duration each person has held that position, are as follows:
 
 Name
              Position
      Held with the Company
              Age
              Date
      First AppointedRobert
      Coale
              Chairman,
      President, Chief  Executive Officer, Chief Operating Officer,
      Secretary Treasurer, and Director
              68
              June
      23, 2003(1)Robert
      A. Sibthorpe
              Director
              58
              June
      23, 2003Duncan
      Budge
              Director
              57
              October
      13, 2005
 
 (1) Mr.
Coale was first appointed as a Director on June 23, 2003.  On October
13, 2005, Mr. Ronald Blomkamp resigned as the Company’s Chairman, President,
Chief Executive and Operating Officer, and Secretary.  On that date,
Mr. Coale was appointed to the positions vacated by Mr. Blomkamp and Mr. Budge
was appointed as a Director of the Company.
 
 Business
Experience
 
 The
following is a brief account of the education and business experience of each
director, executive officer and key employee during at least the past five
years, indicating each person’s principal occupation during the period, and the
name and principal business of the organization by which he was
employed.
 
 Robert Coale has been a
Director since June 2003 and our Chairman, President, and Chief Executive and
Operating Officer and Secretary and Treasurer since October
2005.   Since April 2004 he has also been a Director of Giant Oil
& Gas Inc., a publicly traded natural gas exploration company. He is a
Professional Engineer with two engineering degrees (1963 - MetE. - Colorado
School of Mines, 1971 - MSc. - University of the Witwatersrand in South Africa)
and an MBA from the University of Minnesota (1982).  He has over 40
years of resource related business and management
experience.   Mr. Coale is currently an independent consulting
engineer specializing in mineral processing and natural gas fueling systems
including development of projects for converting low-grade or stranded natural
gas sources into liquefied natural gas.
  
  60
  Robert A. Sibthorpe has been a
director since June 23, 2003, and is an exploration Geologist and Financial
Analyst with more than 30 years of multi-disciplinary experience in many aspects
of the natural resource sector. Since the beginning of 2003 he has acted as an
independent consultant and director. From March 2003, to November 2003 Mr.
Sibthorpe sat on the Board of Freegold Ventures Corp., a Canadian listed public
company that is an exploration stage mining company, and since June of 2001 has
provided independent consulting services to Rare Earth Metals Corp., another
Canadian listed public company that is an exploration stage mining company. From
January 2003 to March 2003 Mr. Sibthorpe was involved with project generation
and review for Olympus Pacific Minerals Ltd., a company listed on the Toronto
Venture Exchange that is an exploration stage mining company. From January 2001
to January of 2003 Mr. Sibthorpe acted as Senior Vice President of Business
Development in Vancouver for Ivanhoe Mines Ltd., a Toronto Stock Exchange listed
public company that is a reserve stage mid-tier copper and iron ore producer,
where he was responsible for evaluating new opportunities, and for advancing
properties of merit already held by the company. By forming and running a “Small
Mines Unit”, he was directly responsible for placing into commercial production
an epithermal gold deposit in Korea and advancing two other Asian gold
properties to the Feasibility Study level. From May of 1999 to January of 2001
Mr. Sibthorpe was Senior Mining Analyst for Canaccord Capital Corp. (Vancouver),
a private Canadian brokerage house. In 1997 and 1998 Mr. Sibthorpe acted as an
independent consultant and director based out of Phoenix, Arizona, and from May
1997 to August of 2000 acted as an outside director for InnovaCom Inc., a U.S.
public developmental stage technology company that focuses on video compression
technology. Mr. Sibthorpe also acts as a Director for Madison Minerals, Inc., a
Toronto listed public company that is an exploration stage mining company, and
has done so since October of 1996. From June of 1986 to September of 1996 Mr.
Sibthorpe acted as Director and Senior Analyst Corporate Finance (Canada),
working in Toronto and Vancouver for Yorkton Securities Inc., a private
brokerage house that directly or through syndication raised some $3 billion in
equity capital for the mining sector during that ten year period. From June of
1979 to May of 1986 he worked at Midland Doherty Ltd., a brokerage house, as
Institutional Mining Analyst and was appointed a Director and Head of Research
for that firm. A graduate of the University of Toronto in 1971, he began his
career as a geologist conducting exploration programs for mining companies in
Canada, the Middle East and the Republic of South Africa for ten years, and in
1978 completed an MBA at the University of Toronto.
 
 Duncan Budge has served on our
Board of Directors since October 2005. He is a professional accountant who since
2001 has worked as an independent financial consultant to firms in a variety of
industries. He owned and operated his own Chartered Accounting firm from 1990 to
2001 until his retirement. Mr. Budge has a Bachelor of Commerce degree from the
University of British Columbia and obtained his Chartered Accountant designation
in 1977. Subsequent to his retirement in 2001, Mr. Budge resigned his Chartered
Accountant designation and as a result is not currently a Chartered Accountant.
Mr. Budge is also on the Board of Directors of Strata Oil & Gas Inc., Giant
Oil & Gas Inc., and Power Oil & Gas Inc., all of which are publicly
traded oil and gas exploration companies.
 
  61
  There are
no family relationships among our directors or officers. None of our directors
or officers has been affiliated with any company that has filed for bankruptcy
within the last five years. We are not aware of any proceedings to which any of
our officers or directors, or any associate of any such officer or director, is
a party adverse to our company or has a material interest adverse to it. Other
than the Shareholders Agreement among Mr. Coale and Mr. Sibthorpe which is
discussed below, there are no agreements with respect to the election of
Directors. Other than described in Section 10 below, we have not compensated our
Directors for service on our Board of Directors, any committee thereof, or
reimbursed for expenses incurred for attendance at meetings of our Board of
Directors and/or any committee of our Board of Directors.
 
 Audit Committee Financial
Expert.
 
 The Board
of Directors has not established an audit committee and does not have an audit
committee financial expert. The Board is seeking additional Board members whom
it hopes will qualify as such an expert.
 
 Section 16(a) Beneficial
Ownership Reporting Compliance.
 
 Section
16(a) of the Securities Exchange Act of 1934 requires officers and Directors of
the Company and persons who own more than ten percent of a registered class of
the Company’s equity securities to file reports of ownership and changes in
their ownership with the Securities and Exchange Commission, and forward copies
of such filings to the Company. During the most recent fiscal year, none of the
directors, officers, and beneficial owners of more than ten percent of the
equity securities of the Company registered pursuant to Section 12 of the
Exchange Act has failed to file such forms on a timely basis.
 
 Code of
Ethics.
  The
Company has not adopted a Code of Ethics, as defined by SEC rules that applies
to the Company's Chief Executive Officer and Chief Financial Officer, and
Secretary (its principal executive officer and principal accounting and
financial officer). The Company has not adopted such a Code of Ethics because of
the small size and limited resources of the Company, and because management's
attention has been focused on matters pertaining to raising capital and the
operation of the business.
  Changes to Procedures for
Recommendations of Director Nominees.
 
 During
the fiscal year ended May 31, 2008, there were no material changes to the
procedures by which security holders may recommend nominees to our board of
directors.
 
  62
  Item
11.                      Executive
Compensation.
 
 Summary
Compensation
 
 Since
November 1, 2005, we have paid $2,500 per month to Mr. Robert Coale, our
Chairman, President, Chief Executive Officer, Chief Operating Officer,
Secretary, treasurer, and a director, pursuant to a service agreement dated of
such date.  In order to preserve the cash resources of the Company,
effective June 1, 2008, Mr. Coale has agreed to suspend the payment for his
services.  For the years ended May 31, 2008 and 2007, the Company paid
$30,000 pursuant to this agreement.  The agreement has indefinite term
but can be cancelled by either party with 30 days written notice.  The
agreement does not provide for severance or termination benefits of any
kind.  We have no other officers.
 
 The
following table sets forth information concerning the compensation paid or
earned during the fiscal years ended May 31, 2008 and 2007 for services rendered
to our Company in all capacities by the following persons: (i) all individuals
who served as the principal executive officer or acting in a similar capacity
during the fiscal year ended May 31, 2008, regardless of compensation level; (ii) all individuals who served as officers at May 31, 2008 and
whose total compensation during the fiscal year ended May 31, 2008 exceeded
$100,000; and (iii) up to two additional individuals who served as officers
during the fiscal year ended May 31, 2008 and whose total compensation during
the fiscal year ended May 31, 2008 exceeded $100,000, regardless of whether they
were serving as officers at the end of such fiscal year.
 
 SUMMARY
      COMPENSATION TABLEName
      and principal position
                (a)
              Year
                (b)
              Salary
      ($)
                (c)
              Bonus
      ($)
                (d)
              Stock
      Awards ($)
                (e)
              Option
      Awards ($)
                (f)
              Non-Equity
      Incentive Plan Compensation ($)
                (g)
              Nonqualified
      Deferred Compensation Earnings ($)
                (h)
              All
      Other Compensation ($)
                (i)
              Total
      ($)
                (j)Robert
      Coale(1)
              2008
              30,000
              0
              0
              0
              0
              0
              0
              30,0002007
              30,000
              0
              0
              0
              0
              0
              0
              30,000
 
 (1) Mr.
Coale is our Chairman, President, Chief Executive Officer, Chief Operating
Officer, Secretary, Treasurer, and Director.  He is our only
officer.
 
  63
  Outstanding
Equity Awards
 
 The table
set forth below presents certain information concerning unexercised options,
stock that has not vested, and equity incentive plan awards for each named
executive officer above outstanding as of May 31, 2008.
 
 OUTSTANDING
      EQUITY AWARDS AT FISCAL YEAR-ENDOPTION
      AWARDS
              STOCK
      AWARDSName
                (a)
              Number
      of Securities Underlying Unexercised Options
                (#)
                Exercisable
                (b)
              Number
      of Securities Underlying Unexercised Options
                (#)
                Unexer-
                cisable
                (c)
              Equity
      Incentive Plan Awards: Number of Securities Underlying Unexercised
      Unearned Options
                (#)
                (d)
              Option
      Exer-
                cise
      Price
                ($)
                (e)
              Option
      Expira-
                tion
      Date
                (f)
              Number
      of Shares or Units of Stock That Have Not Vested
                (#)
                (g)
              Market
      Value of Shares or Units of Stock That Have Not Vested
                ($)
                (h)
              Equity
      Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights
      That Have Not Vested
                (#)
                (i)
              Equity
      Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or
      Other Rights That Have Not Vested
                (#)
                (j)Robert
      Coale
              100,000(1)
              0
              0
              0.05
              June
      23, 2013
              0
              0
              0
              0133,333(2)
              66,667(2)
              0
              0.25
              March
      10, 2016
              0
              0
              0
              0
 
 (1) On
June 23, 2003 Mr. Coale was granted the right to purchase an aggregate of
100,000 common shares at an exercise price of $0.05 per option pursuant to the
2003 Stock Option Plan.  These options have fully vested.
 
 (2) On
March 10, 2006, Mr. Coale was granted the right to purchase an additional
200,000 common shares at an exercise price of $0.25 per option pursuant to the
2005 Stock Option Plan.  The $0.25 options vest in equal installments
of 33,333 commencing September 10, 2006 and ending March 10, 2009.
 
 Compensation
of Directors
 
 Except as
described above under the section entitled “Summary Compensation,” none of our
directors received any compensation during the fiscal year ended May 31,
2008.
 
  64
  Item
12.                      Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.
 
 The
following table lists, as of August 28, 2008, the number of shares of common
stock of the Company beneficially owned by (i) each person or entity known to
the Company to be the beneficial owner of more than 5% of the outstanding common
stock; (ii) each officer and director of the Company; and (iii) all officers and
directors as a group. Information relating to beneficial ownership of common
stock by our principal stockholders and management is based upon information
furnished by each person using “beneficial ownership” concepts under the rules
of the Securities and Exchange Commission. Under these rules, a person is deemed
to be a beneficial owner of a security if that person has or shares voting
power, which includes the power to vote or direct the voting of the security, or
investment power, which includes the power to vote or direct the voting of the
security. The person is also deemed to be a beneficial owner of any security of
which that person has a right to acquire beneficial ownership within 60 days.
Under the Securities and Exchange Commission rules, more than one person may be
deemed to be a beneficial owner of the same securities, and a person may be
deemed to be a beneficial owner of securities as to which he or she may not have
any pecuniary beneficial interest. Except as noted below, each person has sole
voting and investment power.
 
 The percentages below are calculated
based on 26,224,400 shares of Common Stock which are issued and outstanding as
of August 28, 2008.  Unless indicated otherwise, all addresses below
are c/o Patriot Gold Corp., #501-1775 Bellevue Avenue, West Vancouver, British
Columbia, Canada, V7V 1A9.
 
 Name
      of Beneficial Owner
              
              Amount
      and Nature of Beneficial Ownership
              
              Percentage
                of
      ClassAlmir
      Ramic
              
              1,730,000
              (1)
              6.6%Colin
      Bruce Worth
              
              1,600,000
              (2)
              6.1%Robert
      A. Sibthorpe
              
              3,400,000
              (3)
              13.0%Robert
      D. Coale
              
              3,300,000
              (4)
              12.6%Duncan
      Budge
              
              100,000
              (5)
              *Directors
      and Officers as a Group (3 individuals)
              
              6,800,000
              
              25.9%
 
 *
Represents less than 1%.
 
 (1)
              Includes
      1,280,000 shares of our common stock issuable upon the exercise of
      warrants held by Mr. Ramic.  All such warrants are currently
      exercisable.
 (2)
              Includes
      1,280,000 share of our common stock issuable upon the exercise of warrants
      held by Mr. Worth. All such warrants are currently
      exercisable.
 (3)
              Includes
      200,000 options pursuant to the 2003 Stock Option Plan to purchase common
      stock at a purchase price of $0.05 per share and 200,000 options pursuant
      to the 2005 Stock Option Plan to purchase common stock at a purchase price
      of $0.25 per share.
 (4)
              Includes
      100,000 options pursuant to the 2003 Stock Option Plan to purchase common
      stock at a purchase price of $0.05 per share and 200,000 options pursuant
      to the 2005 Stock Option Plan to purchase common stock at a purchase price
      of $0.25 per share.
 (5)
              Includes
      100,000 options pursuant to the 2005 Stock Option Plan to purchase common
      stock at a purchase price of $0.25 per
share.
  65
  Shareholders’
Agreement
 
 Messrs.
Sibthorpe and Coale are party to a Shareholders’ Agreement dated as of January
22, 2004. The agreement provides that for so long as the person holds any of the
3,000,000 shares which he received from Bruce Johnstone, the directors shall
vote such shares to maintain three persons on our board. Upon any vote to
appoint representatives to the Board, each shareholder agreed that he shall vote
his shares for the other two shareholders. If one of the three shareholders is
no longer a shareholder, or if the Board or our shareholders decided to remove
one of the Board members, or the shareholder no longer holds any of the
3,000,000 shares which he received from Mr. Johnstone, then the other two
shareholders agreed to vote their shares together to either maintain the number
of Board members as two or to nominate and appoint a third Board member. The
agreement also provides that for all other matters in which shares are voted,
the three shareholders shall vote their 3,000,000 shares together as determined
by the decision of two of the three shareholders. These three shareholders had
determined that such agreement would be beneficial in maintaining control among
themselves over the shares that they had received from Mr.
Johnstone.
 
 The
shareholders also agreed that he will not, directly or indirectly, sell, pledge,
gift or in any other way dispose of any of the 3,000,000 shares which he
received from Mr. Johnstone. This transfer restriction shall apply to such
shares in all situations during all times that such individual holds any of the
3,000,000 shares. Although the shareholders’ agreement restricts transfers of
the shares received from Mr. Johnstone and held by the directors, a director can
no longer hold the shares which he received from Mr. Johnstone if he dies or if
the agreement is amended by the parties to permit a transfer. The Company is not
aware of any such amendment being contemplated by the parties.
 
 Buyback
Agreements
 
 On March
10, 2006 the Company granted stock options to Mr. Robert Coale, who is the
Chairman, President, Chief Executive Officer, Chief Operating Officer,
Secretary, and a director and to Mr. Robert Sibthorpe who is a director of the
Company.  In consideration therefor, Mr. Coale, Mr. Sibthorpe and the
Company entered into a Buy-Back Option Agreements, pursuant to which Messrs.
Coale and Sibthorpe granted to the Company the option to purchase all or any
portion of the 3,000,000 shares of the Company’s common stock that are owned by
each of Mr. Coale and Mr. Sibthorpe respectively for a purchase price of $0.01
per share.
 
 Also on
March 10, 2006, the Registrant entered into a Redemption Agreement with Ronald
Blomkamp, the Company’s former President and Chief Executive Officer pursuant to
which the Company purchased from Mr. Blomkamp the 3,000,000 shares of the
Company’s common stock that were owned by Mr. Blomkamp.  The purchase
price for such shares paid to Mr. Blomkamp by the Company was $0.01 per share,
which amounted to an aggregate of $30,000.  The 3,000,000 common
shares purchased from Mr. Blomkamp were cancelled by the Company.
 
 We are
unaware of any other contract or other arrangement the operation of which may at
a subsequent date result in a change in control of our company.
 
  66
  Securities Authorized for
Issuance under Equity Compensation Plans
 
 Information
regarding our equity compensation plans is set forth above under Part II, Item
5.
 
 Item
13.                      Certain
Relationships and Related Transactions, and Director Independence.
 
 Related
Transactions
 
 On March
10, 2006, we entered into a Stock Option Agreement with Robert Coale, who is our
Chairman, President, Chief Executive Officer, Chief Operating Officer,
Secretary, and a director. Pursuant to such agreement, Mr. Coale was issued
200,000 options, each entitling him to purchase one share of common stock at a
price of $0.25 until March 10, 2016.  In
consideration  therefor,  Mr. Coale and our
company  entered into a Buy-Back
Option  Agreement,  pursuant to which Mr.
Coale  granted to our company  the
option  to  purchase  all  or  any  portion  of  the  3,000,000  shares  of  our
common stock that are owned by Mr. Coale for a purchase price of $0.01 per
share.
 
 On March
10, 2006, we entered into a Stock Option Agreement with Robert Sibthorpe, who is
our director.  Pursuant to such agreement, Mr. Sibthorpe was issued
200,000 options, each entitling him to purchase one share of common stock at a
price of $0.25 until March 10, 2016.  In consideration therefor, Mr.
Sibthorpe and our company entered into a Buy-Back Option
Agreement,  pursuant to which Mr. Sibthorpe granted to our company an
option  to  purchase  all  or  any  portion  of  the  3,000,000  shares  of
our common stock that are owned by Mr. Sibthorpe for a purchase price of $0.01
per share.
 
 Also on
March 10, 2006, we entered into a Redemption Agreement with Ronald Blomkamp, the
Company’s former President and Chief Executive Officer pursuant to which the
Company purchased from Mr. Blomkamp the 3,000,000 shares of the Company’s common
stock that were owned by Mr. Blomkamp.  The purchase price for such
shares paid to Mr. Blomkamp by the Company was $0.01 per share, which amounted
to an aggregate of $30,000.  The 3,000,000 common shares purchased
from Mr. Blomkamp were cancelled by the Company.
 
 There are
no promoters associated or involved with the company. We have a single
individual, Mr. Brian Uppal, who acts as our investor relations person
to answer questions received from phone callers. Mr. Uppal has been compensated
by a grant of 250,000 stock options under our stock option plan. These options
were granted on October 14, 2003, with an exercise price of $1.50, and because
the option price was above fair market value of $1.47, we did not record any
compensation expense. We have also hired Shareholder.com, a fulfillment service
provider, to handle the logistics of mailing out an informational pamphlet
prepared by us to those investors who have requested more information about us
through our Web site. Under our agreement with Shareholder.com, Shareholder.com
performs mail order fulfillment service to persons who request an investor
package through our Web site. The investor enters the required information on
our Website. The information is then transmitted to Shareholder.com, which then
mails the investor package to the person requesting it.
The investor and Shareholder.com do not communicate with each other and Shareholder.com adds no materials of their own to the mailings to our investors. Shareholder.com acts only as a collation and mailing service provider to us so that we do not have to spend time doing this work.
 
 Under the
Shareholder.com agreement, which has a month-to-month term, we are responsible
for the preparation and contents of the investor package. The pamphlet we
provided to Shareholder.com consisted of basic information about us, the members
of our management team and our business, and the information is taken from our
Web site.  Under the Shareholder.com agreement, Shareholder.com acted
solely as a transmitter of information to investors that we provided to them for
which we paid;
 
 ·
              an
      initial start up fee of $495,
 ·
              a
      monthly fee of $195 for the mail order fulfillment
  service,
 ·
              a
      processing fee of $0.95 per request
 ·
              and
      the cost of postage and handling of investor packages mailed by
      Shareholder.com.
 
 Director
Independence
 
 We are
not subject to the listing requirements of any national securities exchange or
national securities association and, as a result, we are not at this time
required to have our board comprised of a majority of “independent directors.”
We do not believe that any of our directors currently meet the definition of
“independent” as promulgated by the rules and regulations of the American Stock
Exchange.
 
 ITEM
14                      PRINCIPAL
ACCOUNTING FEES AND SERVICES
 
 Robison,
Hill & Co. is currently serving as the Company’s auditors. Their fees billed
to the Company for the fiscal years ending May 31, 2008 and 2007 are set forth
below:
 Fiscal
      year ending
                May
      31, 2008
              
              Fiscal
      year ending
                May
      31, 2007Audit
      Fees
              
              $
              27,000
              
              
              $
              25,105Audit
      Related Fees
              NIL
              
              NILTax
      Fees
              
              NIL
              
              NILAll
      Other Fees
              
              NIL
              
              
              NIL
 As of May
31, 2008, the Company did not have a formal, documented pre-approval policy for
the fees of the principal accountant. It is in the process of adopting such a
policy.
  67
  Item
15.                      Exhibits.
 
 EXHIBIT
                NUMBER
              
              DESCRIPTION3.1
              
              Articles
      of Incorporation of Registrant. (1)3.2
              
              Registrant’s
      Restated Articles of Incorporation. (2)3.3
              
              By-Laws
      of Registrant. (1)4.1
              
              Specimen
      common stock certificate. (1)4.2
              
              Form
      of Class A Warrant. (3)4.3
              
              Form
      of Class B Warrant. (3)4.4
              
              Form
      of Class C Warrant. (3)4.5
              
              Form
      of Class D Warrant. (3)4.6
              
              Warrant
      Agreement – July 2003 private placement. (3)4.7
              
              Form
      of Class A-1 Warrant. (6)4.8
              
              Form
      of Class B-1 Warrant. (6)4.9
              
              Form
      of Class C-1 Warrant. (6)4.10
              
              Form
      of Class D-1 Warrant. (6)4.11
              
              Warrant
      Agreement – November 2003 private placement. (8)10.1
              
              Property
      Option Agreement dated as of July 25, 2003 between MinQuest Inc. and
      Patriot Gold Corporation. (9)10.2
              
              2003
      Stock Option Plan. (4)10.3
              
              Agreement
      dated as of September 2, 2003 by and between Patriot Gold Corp. and Bruce
      Johnstone. (5)10.4
              
              Shareholders’
      Agreement dated as of January 22, 2004, among Patriot Gold Corp., Ron
      Blomkamp, Robert Sibthorpe and Robert Coale. (6)10.5
              
              Agreement
      dated January 22, 2004 executed by Bruce Johnstone with respect to
      registration rights. (8)10.6
              
              Letter
      of Intent dated November 13, 2003 between Patriot Gold Corp. and Ms.
      Barbara Williams. (9)10.7
              
              Purchase
      Contract dated February 19, 2004 between the Company, the parties
      identified therein as the Seller and First American Title Insurance
      Company of Yavapai County, as escrow agent. (7)10.8
              
              Binding
      Letter Agreement, dated March 4, 2004, by and between the Company and
      MinQuest, Inc. (8)10.9
              
              Agreement
      with Shareholder.com (10)10.10
              
              2005
      Stock Option Plan (11)10.11
              
              Buy-Back
      Option Agreement, dated March 10, 2006, between the Company and Robert
      Coale (12)10.12
              
              Buy-Back
      Option Agreement, dated March 10, 2006, between the Company and Robert
      Sibthorpe (12)10.13
              
              Redemption
      Agreement, dated March 10, 2006, between the Company and Ronald C.
      Blomkamp (12)10.14
              
              Letter
      Agreement, dated July 24, 2007, between MinQuest Inc. and the Company
      (13)10.15
              
              Assignment
      and Assumption Agreement dated January 29, 2008 between the Company and
      American Goldrush Corp. (14)10.16
              
              Whiskey
      Flat Property Option Agreement, dated March 15, 2008 between the Company
      and MinQuest Inc. (15)
   68
 
 10.17
              
              NK
      Property Option Agreement, dated March 15, 2008 between the Company and
      MinQuest Inc. (15)10.18
              
              Weepah
      Property Option Agreement, dated March 15, 2008 between the Company and
      MinQuest Inc. (15)10.19
              
              Assignment
      and Assumption Agreement dated May 30, 2008 between the Company and
      American Goldfields Inc. (16)31
              
              Rule
      13a-14(a)/15d14(a) Certifications (attached hereto)32
              
              Section
      1350 Certifications (attached
hereto)
 
 (1)
Previously filed with the Company’s Form 10SB12g submitted to the SEC on June
25, 2001, SEC file number 0-32919.
 (2)
Previously filed as an exhibit to the Company’s Information Statement submitted
to the SEC on May 21, 2003.
 (3)
Previously filed as exhibits to the Company’s May 31, 2003 Form 10-K submitted
to the SEC on August 26, 2003.
 (4)
Previously filed as Exhibit 4.1 to the Company’s Form S-8 on May 30, 2003, SEC
File Number 333-105691, as amended by the Company’s Post-Effective Amendment of
Form S-8 filed on September 23, 2003.
 (5)
Previously filed as an exhibit to the Company’s August 31, 2003 Form 10-QSB
submitted to the SEC on October 14, 2003.
 (6)  Previously
filed with the Company’s registration statement on Form SB-2, Registration No.
333-112424, submitted to the SEC on February 2, 2004.
 (7)
Previously filed as an exhibit to the Company’s February 29, 2004 Form 10-QSB
submitted to the SEC on April 9, 2004.
 (8)  Previously
filed with the amendment No. 2 to the Company’s registration statement on Form
SB-2/A, Registration No. 333-112424, submitted to the SEC on July 16,
2004.
 (9)  Previously
filed with the amendment No. 3 to the Company’s registration statement on Form
SB-2/A, Registration No. 333-112424, submitted to the SEC on October 6,
2004.
 (10)
Previously filed with the amendment No. 4 to the Company’s registration
statement on Form SB-2/A, Registration No. 333-112424, submitted to the SEC on
December 27, 2004.
 (11)
Previously filed as Exhibit 4.1 to the Company’s Form S-8 filed on November 18,
2005 File Number 333-129840.
 (12)
Previously filed with the Company’s Form 8-K submitted to the SEC on March 10,
2006.
 (13)
Previously filed as an exhibit to the Company’s May 31, 2007 Form 10-K submitted
to the SEC on August 29, 2008.
 (14)
Previously filed with the Company’s Form 8-K submitted to the SEC on February 1,
2008.
 (15)
Previously filed with the Company’s Form 8-K submitted to the SEC on March 20,
2008.
 (16)
Previously filed with the Company’s Form 8-K submitted to the SEC on June 3,
2008.
 
 
  69




PATRIOT
GOLD CORP.




(An
Exploration State Company)




-:-




INDEPENDENT
AUDITOR’S REPORT




May 31,
2008 and 2007


















70





Contents
            
            PageReport
      of Independent Registered Public Accountants
            
            F -
      1Balance
      SheetsMay
      31, 2008 and 2007
            
            F -
      2Statements
      of Operations for theYears
      Ended May 31, 2008 and 2007 and the Cumulative PeriodJune
      1, 2000 (Inception of Exploration State) to May 31, 2008
            
            F -
      3Statement
      of Stockholders’ EquitySince
      November 30, 1998 (Inception) to May 31, 2008
            
            F -
      4Statements
      of Cash Flows for theYears
      Ended May 31, 2008 and 2007 and the Cumulative PeriodJune
      1, 2000 (Inception of Exploration State) to May 31, 2008
            
            F –
      11Notes
      to Financial Statements
            
            F -
      13





71










ROBISON, HILL & CO.
            
            
            
            Certified
      Public AccountantsA
      PROFESSIONAL CORPORATIONBRENT
      M. DAVIES, CPADAVID
      O. SEAL, CPAW.
      DALE WESTENSKOW, CPABARRY
      D. LOVELESS, CPASTEPHEN
      M. HALLEY, CPA







REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS




Patriot
Gold Corp.




(An
Exploration State Company)




We have
audited the accompanying balance sheet of Patriot Gold Corp. (An Exploration
State Company) as of May 31, 2008 and 2007, and the related statements of
operations and cash flows for the two years ended May 31, 2008 and 2007 and the
cumulative period June 1, 2000 (inception of exploration state) to May 31, 2008,
and the statements of stockholders’ equity since November 30, 1998 (inception)
to May 31, 2008. These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on these
financial statements based on our audits.




We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting.  Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company’s internal control over financial
reporting.  Accordingly, we express no such opinion.  An
audit also 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 Patriot Gold Corp. (An Exploration
State Company) as of May 31, 2008 and 2007, and the results of its operations
and its cash flows for the years ended May 31, 2008 and 2007 and the cumulative
period June 1, 2000 (inception of exploration state) to May 31, 2008, in
conformity with accounting principles generally accepted in the United States of
America.




The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 1 to the financial
statements, the Company has suffered recurring losses from operations and has no
source of revenue that raise substantial doubt about its ability to continue as
a going concern. Management’s plans in regard to these matters are also
described in Note 1. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.














/S/ Robison, Hill &
Co.


Certified
Public Accountants




Salt Lake
City, Utah


August
25, 2008


MEMBERS
OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
 MEMBERS
OF THE SEC PRACTICE SECTION and THE PRIVATE COMPANIES PRACTICE SECTION
 
 1366 East
Murray-Holladay Road , Salt Lake City , Utah   84117-5050
 Telephone
801/272-8045, Facsimile 801/277-9942
 F -
1


PATRIOT GOLD
CORP.


(An
Exploration State Company)


BALANCE
SHEETS





May
      31,
            
            
            May
      31,2008
            
            
            2007ASSETS:Current
      Assets:Cash
            
            $
            2,115,513
            
            
            $
            3,029,331Prepaid
      Expense
            
            
            -
            
            
            
            1,472Total
      Current Assets
            
            
            2,115,513
            
            
            
            3,030,803Reclamation
      deposits (note 4)
            
            
            31,155
            
            
            
            -Office
      Equipment, Net
            
            
            352
            
            
            
            1,749Total
      Assets
            
            $
            2,147,020
            
            
            $
            3,032,552LIABILITIES
      & STOCKHOLDERS’ EQUITY:Current
      Liabilities:Accounts
      Payable
            
            $
            328,762
            
            
            $
            2,084Total
      Current Liabilities
            
            
            328,762
            
            
            
            2,084Stockholders’
      Equity:Preferred
      Stock, Par Value $.001Authorized
      20,000,000 shares,No
      shares issued at May 31, 2008 and 2007
            
            
            —
            
            
            
            —Common
      Stock, Par Value $.001Authorized
      100,000,000 shares,Issued
      26,224,400 shares atMay
      31, 2008 (May 31, 2007 – 26,224,400)
            
            
            26,224
            
            
            
            26,224Paid-In
      Capital
            
            
            26,382,663
            
            
            
            26,383,636Currency
      Translation Adjustment
            
            
            (16,361
            )
            
            
            (16,361
            )Deficit
      Accumulated Since Inception of Exploration State
            
            
            (24,533,186
            )
            
            
            (23,321,949
            )Retained
      Deficit
            
            
            (41,082
            )
            
            
            (41,082
            )Total
      Stockholders’ Equity
            
            
            1,818,258
            
            
            
            3,030,468Total
      Liabilities and Stockholders’ Equity
            
            $
            2,147,020
            
            
            $
            3,032,552





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


F -
2







PATRIOT
GOLD CORP.


(An
Exploration State Company)


STATEMENTS
OF OPERATIONS





CumulativeSinceJune
      1, 2000For
      the Year Ended
            
            
            Inception
      ofMay
      31,
            
            
            Exploration2008
            
            
            2007
            
            
            StateRevenues
            
            $
            —
            
            
            $
            —
            
            
            $
            —Cost
      of Revenues
            
            
            —
            
            
            
            —
            
            
            
            —Gross
      Margin
            
            
            —
            
            
            
            —
            
            
            
            —Expenses:Mining
      Costs
            
            
            1,172,292
            
            
            
            250,634
            
            
            
            2,989,051General
      and Administrative
            
            
            153,516
            
            
            
            172,854
            
            
            
            21,945,679Net
      Loss from Operations
            
            
            (1,325,808
            )
            
            
            (423,488
            )
            
            
            (24,934,730
            )Other
      Income (Expense)Interest
            
            
            108,903
            
            
            
            127,059
            
            
            
            406,003Currency
      Exchange
            
            
            5,668
            
            
            
            1,141
            
            
            
            (4,459
            )Net
      Other Income (Expense)
            
            
            114,571
            
            
            
            128,200
            
            
            
            401,544Net
      Loss
            
            $
            (1,211,237
            )
            
            $
            (295,288
            )
            
            $
            (24,533,186
            )Basic
      and Diluted loss perShare
            
            $
            (0.05
            )
            
            $
            (0.01)Weighted
      Average SharesOutstanding
            
            
            26,224,400
            
            
            
            26,258,455





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


F -
3







PATRIOT
GOLD CORP.


(An
Exploration State Company)


STATEMENT
OF STOCKHOLDERS’ EQUITY





DeficitCumulative
            
            
            
            
            
            AccumulatedSubscription
            
            
            Currency
            
            
            
            
            
            DuringPreferred
      Stock
            
            Common
      Stock
            
            
            Paid-In
            
            
            Stock
            
            
            Translation
            
            
            Retained
            
            
            ExplorationShares
            
            Par
      Value
            
            Shares
            
            Par
      Value
            
            
            Capital
            
            
            Receivable
            
            
            Adjustment
            
            
            Deficit
            
            
            StateBalance
      at November 30, 1998(inception)
            —
            
            $
            —
            
            —
            
            $
            —
            
            
            $
            —
            
            
            $
            —
            
            
            $
            —
            
            
            $
            —
            
            
            $
            —November
      30, 1998 Issuance ofStock
      for services and paymentof
      accounts payable
            —
            
            
            —
            
            1,000,000
            
            
            1,000
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —April
      1, 1999 Issuance of Stockfor
      cash pursuant to privateplacement
            —
            
            
            —
            
            1,004,000
            
            
            1,004
            
            
            
            49,196
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —Net
      Loss
            —
            
            
            —
            
            —
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            (38,305
            )
            
            
            —Currency
      Translation Adjustment
            —
            
            
            —
            
            —
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            (15,996
            )
            
            
            —
            
            
            
            ——Balance
      at May 31, 1999
            —
            
            
            —
            
            2,004,000
            
            
            2,004
            
            
            
            49,196
            
            
            
            —
            
            
            
            (15,996
            )
            
            
            (38,305
            )
            
            
            —Retroactive
      Adjustment for 1:7.6Stock
      Split June 17, 2003
            —
            
            
            —
            
            13,226,400
            
            
            13,226
            
            
            
            (13,226
            )
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —Restated
      Balance May 31, 1999
            —
            
            
            —
            
            15,230,400
            
            
            15,230
            
            
            
            35,970
            
            
            
            —
            
            
            
            (15,996
            )
            
            
            (38,305
            )
            
            
            —Net
      Loss
            —
            
            
            —
            
            —
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            (2,777
            )
            
            
            —Currency
      Translation Adjustment
            —
            
            
            —
            
            —
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            (489
            )
            
            
            —
            
            
            
            —Balance
      at May 31, 2000
            —
            
            
            —
            
            15,230,400
            
            
            15,230
            
            
            
            35,970
            
            
            
            —
            
            
            
            (16,485
            )
            
            
            (41,082
            )
            
            
            —





F -
4







PATRIOT
GOLD CORP.


(An
Exploration State Company)


STATEMENT
OF STOCKHOLDERS’ EQUITY


(Continued)





DeficitCumulative
            
            
            
            
            
            AccumulatedSubscription
            
            
            Currency
            
            
            
            
            
            DuringPreferred
      Stock
            
            Common
      Stock
            
            
            Paid-In
            
            
            Stock
            
            
            Translation
            
            
            Retained
            
            
            ExplorationShares
            
            Par
      Value
            
            Shares
            
            Par
      Value
            
            
            Capital
            
            
            Receivable
            
            
            Adjustment
            
            
            Deficit
            
            
            StateBalance
      at May 31, 2000
            —
            
            $
            —
            
            15,230,400
            
            $
            15,230
            
            
            $
            35,970
            
            
            $
            —
            
            
            $
            (16,485
            )
            
            $
            (41,082
            )
            
            $
            —Contributed
      Capital
            —
            
            
            —
            
            —
            
            
            —
            
            
            
            3,788
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —Net
      Loss
            —
            
            
            —
            
            —
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            (3,811
            )Currency
      Translation Adjustment
            —
            
            
            —
            
            —
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            172
            
            
            
            —
            
            
            
            —Balance
      at May 31, 2001
            —
            
            
            —
            
            15,230,400
            
            
            15,230
            
            
            
            39,758
            
            
            
            —
            
            
            
            (16,313
            )
            
            
            (41,082
            )
            
            
            (3,811
            )Contributed
      Capital
            —
            
            
            —
            
            —
            
            
            —
            
            
            
            2,080
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —Net
      Loss
            —
            
            
            —
            
            —
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            (2,630
            )Currency
      Translation Adjustment
            —
            
            
            —
            
            —
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            (48
            )
            
            
            —
            
            
            
            —Balance
      at May 31, 2002
            —
            
            
            —
            
            15,230,400
            
            
            15,230
            
            
            
            41,838
            
            
            
            —
            
            
            
            (16,361
            )
            
            
            (41,082
            )
            
            
            (6,441
            )Contributed
      Capital
            —
            
            
            —
            
            —
            
            
            —
            
            
            
            3,972
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —Net
      Loss
            —
            
            
            —
            
            —
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            (11,215
            )Balance
      at May 31, 2003
            —
            
            
            —
            
            15,230,400
            
            
            15,230
            
            
            
            45,810
            
            
            
            —
            
            
            
            (16,361
            )
            
            
            (41,082
            )
            
            
            (17,656
            )





F -
5







PATRIOT
GOLD CORP.


(An
Exploration State Company)


STATEMENT
OF STOCKHOLDERS’ EQUITY


(Continued)





DeficitCumulative
              
              
              
              
              
              AccumulatedSubscription
              
              
              Currency
              
              
              
              
              
              DuringPreferred
      Stock
              
              Common
      Stock
              
              
              Paid-In
              
              
              Stock
              
              
              Translation
              
              
              Retained
              
              
              ExplorationShares
              
              Par
      Value
              
              Shares
              
              Par
      Value
              
              
              Capital
              
              
              Receivable
              
              
              Adjustment
              
              
              Deficit
              
              
              StateBalance
      at May 31, 2003
              —
              
              $
              —
              
              15,230,400
              
              $
              15,230
              
              
              $
              45,810
              
              
              $
              —
              
              
              $
              (16,361
              )
              
              $
              (41,082
              )
              
              $
              (17,656
              )June
      11, 2003 Issuances of Preferred Shares for Services
              13,500,000
              
              
              13,500
              
              —
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —Shares
      from Former Officer/Directors
              —
              
              
              —
              
              (5,320,000
              )
              
              (5,320
              )
              
              
              5,320
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —July
      25, 2003, Shares andWarrants Issued for Cash
              —
              
              
              —
              
              350,000
              
              
              350
              
              
              
              367,150
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —July,
      2003 Compensation from Issuance of Stock Options Below Fair Market
      Value
              —
              
              
              —
              
              —
              
              
              —
              
              
              
              235,354
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —September
      2, 2003, Preferred Shares Converted to Common
              (13,500,000
              )
              
              (13,500
              )
              13,500,000
              
              
              13,500
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —September
      12, 2003, Stock Options Exercised
              —
              
              
              —
              
              200,000
              
              
              200
              
              
              
              9,800
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —September
      17, 2003, Stock Options Exercised
              —
              
              
              —
              
              930,000
              
              
              930
              
              
              
              45,570
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —September
      22, 2003, Stock Options Exercised
              —
              
              
              —
              
              525,000
              
              
              525
              
              
              
              25,725
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —September
      23, 2003, Stock Options Exercised
              —
              
              
              —
              
              105,000
              
              
              105
              
              
              
              8,895
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —





F -
6







PATRIOT
GOLD CORP.


(An
Exploration State Company)


STATEMENT
OF STOCKHOLDERS’ EQUITY


(Continued)





DeficitCumulative
            
            
            
            
            
            AccumulatedSubscription
            
            
            Currency
            
            
            
            
            
            DuringPreferred
      Stock
            
            Common
      Stock
            
            
            Paid-In
            
            
            Stock
            
            
            Translation
            
            
            Retained
            
            
            ExplorationShares
            
            Par
      Value
            
            Shares
            
            Par
      Value
            
            
            Capital
            
            
            Receivable
            
            
            Adjustment
            
            
            Deficit
            
            
            StateSeptember
      26, 2003, StockOptions
      Exercised
            —
            
            $
            —
            
            465,000
            
            $
            465
            
            
            $
            602,785
            
            
            $
            —
            
            
            $
            —
            
            
            $
            —
            
            
            $
            —September,
      2003 CompensationFrom
      Issuance of StockOptions
      Below Fair MarketValue
            —
            
            
            —
            
            —
            
            
            —
            
            
            
            1,458,240
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —October
      1, 2003, Stock OptionsExercised
            —
            
            
            —
            
            5,000
            
            
            5
            
            
            
            3,995
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —October
      15, 2003, StockOptions
      Exercised
            —
            
            
            —
            
            625,000
            
            
            625
            
            
            
            900,625
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —November
      12, 2003, StockOptions
      Exercised
            —
            
            
            —
            
            220,000
            
            
            220
            
            
            
            109,780
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —November
      27, 2003, CommonStock
      and Warrants Issued forCash
            —
            
            
            —
            
            864,000
            
            
            864
            
            
            
            1,079,136
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —





F -
7







PATRIOT
GOLD CORP.


(An
Exploration State Company)


STATEMENT
OF STOCKHOLDERS’ EQUITY


(Continued)





DeficitCumulative
            
            
            
            
            
            AccumulatedSubscription
            
            
            Currency
            
            
            
            
            
            DuringPreferred
      Stock
            
            Common
      Stock
            
            
            Paid-In
            
            
            Stock
            
            
            Translation
            
            
            Retained
            
            
            ExplorationShares
            
            Par
      Value
            
            Shares
            
            Par
      Value
            
            
            Capital
            
            
            Receivable
            
            
            Adjustment
            
            
            Deficit
            
            
            StateNovember
      2003, CompensationFrom
      Issuance of StockOptions
      Below Fair MarketValue
            —
            
            $
            —
            
            —
            
            $
            —
            
            
            $
            290,818
            
            
            $
            —
            
            
            $
            —
            
            
            $
            —
            
            
            $
            —December
      2, 2003 StockOptions
      Exercised
            —
            
            
            —
            
            5,000
            
            
            5
            
            
            
            3,995
            
            
            
            (4,000
            )
            
            
            —
            
            
            
            —
            
            
            
            —December
      22, 2003, StockOptions
      Exercised
            —
            
            
            —
            
            20,000
            
            
            20
            
            
            
            20,580
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —December
      2003, CompensationFrom
      Issuance of StockOptions
      Below Fair MarketValue
            —
            
            
            —
            
            —
            
            
            —
            
            
            
            346,412
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —January
      2, 2004, Stock OptionsExercised
            —
            
            
            —
            
            220,000
            
            
            220
            
            
            
            164,780
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —January
      24, 2004, CapitalContributed
      for DirectorCompensation
            —
            
            
            —
            
            —
            
            
            —
            
            
            
            16,254,000
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —February
      2004, CompensationFrom
      Issuance of StockOptions
      Below Fair MarketValue
            —
            
            
            —
            
            —
            
            
            —
            
            
            
            1,949,522
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —





F -
8







PATRIOT
GOLD CORP.


(An
Exploration State Company)


STATEMENT
OF STOCKHOLDERS’ EQUITY


(Continued)





DeficitCumulative
            
            
            
            
            
            AccumulatedSubscription
            
            
            Currency
            
            
            
            
            
            DuringPreferred
      Stock
            
            Common
      Stock
            
            
            Paid-In
            
            
            Stock
            
            
            Translation
            
            
            Retained
            
            
            ExplorationShares
            
            Par
      Value
            
            Shares
            
            
            Par
      Value
            
            
            Capital
            
            
            Receivable
            
            
            Adjustment
            
            
            Deficit
            
            
            StateMarch
      2004, CompensationFrom
      Issuance of StockOptions
      Below Fair MarketValue
            —
            
            $
            —
            
            —
            
            
            $
            —
            
            
            $
            612,030
            
            
            $
            —
            
            
            $
            —
            
            
            $
            —
            
            
            $
            —March
      5, 2004, Stock OptionsExercised
            —
            
            
            —
            
            1,285,000
            
            
            
            1,285
            
            
            
            1,761,215
            
            
            
            (1,597,500
            )
            
            
            —
            
            
            
            —
            
            
            
            —April
      2, 2004, Stock OptionsExercised
            —
            
            
            —
            
            50,000
            
            
            
            50
            
            
            
            74,950
            
            
            
            (75,000
            )
            
            
            —
            
            
            
            —
            
            
            
            —Net
      Loss
            —
            
            
            —
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            (21,625,478
            )Balance
      May 31, 2004
            —
            
            
            —
            
            29,279,400
            
            
            
            29,279
            
            
            
            26,376,487
            
            
            
            (1,676,500
            )
            
            
            (16,361
            )
            
            
            (41,082
            )
            
            
            (21,643,134
            )Cash
      from SubscriptionReceivable
            —
            
            
            —
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            1,597,500
            
            
            
            —
            
            
            
            —
            
            
            
            —Net
      Loss
            —
            
            
            —
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            (1,093,485
            )Balance
      May 31, 2005
            —
            
            
            —
            
            29,279,400
            
            
            
            29,279
            
            
            
            26,376,487
            
            
            
            (79,000
            )
            
            
            (16,361
            )
            
            
            (41,082
            )
            
            
            (22,736,619
            )March
      2006, Redemption of3,000,000
      common shares
            —
            
            
            —
            
            (3,000,000
            )
            
            
            (3,000
            )
            
            
            (27,000
            )
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —March
      2006, CompensationFrom
      the Issuance of StockOptions
      at Fair Market Value.
            —
            
            
            —
            
            —
            
            
            
            —
            
            
            
            86,483
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —Net
      Loss
            —
            
            
            —
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            (290,042
            )Balance
      May 31, 2006
            —
            
            $
            —
            
            26,279,400
            
            
            $
            26,279
            
            
            $
            26,435,970
            
            
            $
            (79,000
            )
            
            $
            (16,361
            )
            
            $
            (41,082
            )
            
            $
            (23,026,661
            )







F -
9


PATRIOT
GOLD CORP.


(An
Exploration State Company)


STATEMENT
OF STOCKHOLDERS’ EQUITY


(Continued)





DeficitCumulative
            
            
            
            
            
            AccumulatedSubscription
            
            
            Currency
            
            
            
            
            
            DuringPreferred
      Stock
            
            Common
      Stock
            
            
            Paid-In
            
            
            Stock
            
            
            Translation
            
            
            Retained
            
            
            ExplorationShares
            
            Par
      Value
            
            Shares
            
            
            Par
      Value
            
            
            Capital
            
            
            Receivable
            
            
            Adjustment
            
            
            Deficit
            
            
            StateBalance
      May 31, 2006
            —
            
            $
            —
            
            26,279,400
            
            
            $
            26,279
            
            
            $
            26,435,970
            
            
            $
            (79,000
            )
            
            $
            (16,361
            )
            
            $
            (41,082
            )
            
            $
            (23,026,661
            )January
      12, 2007, CancellationOf
      55,000 common shares
            —
            
            
            —
            
            (55,000
            )
            
            
            (55
            )
            
            
            (78,945
            )
            
            
            79,000
            
            
            
            —
            
            
            
            —
            
            
            
            —Compensation
      From theRevaluation
      of StockOptions
      Granted in Prior Years
            —
            
            
            —
            
            —
            
            
            
            —
            
            
            
            26,611
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —Net
      Loss
            —
            
            
            —
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            (295,288
            )Balance
      May 31, 2007
            —
            
            
            —
            
            26,224,400
            
            
            
            26,224
            
            
            
            26,383,636
            
            
            
            —
            
            
            
            (16,361
            )
            
            
            (41,082
            )
            
            
            (23,321,949
            )Compensation
      From theRevaluation
      of StockOptions
      Granted in Prior Years
            —
            
            
            —
            
            —
            
            
            
            —
            
            
            
            (973)
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —Net
      Loss
            —
            
            
            —
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            (1,211,237
            )Balance
      May 31, 2008
            —
            
            $
            —
            
            26,224,400
            
            
            $
            26,224
            
            
            $
            26,382,663
            
            
            $
            —
            
            
            $
            (16,361
            )
            
            $
            (41,082
            )
            
            $
            (24,533,186
            )





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


F -
10







PATRIOT
GOLD CORP.


(An
Exploration State Company)


STATEMENTS
OF CASH FLOWS





CumulativeSinceJune
      1, 2000For
      the Year Ended
            
            
            Inception
      ofMay
      31,
            
            
            May
      31,
            
            
            Exploration2008
            
            
            2007
            
            
            StateCASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      Loss
            
            $
            (1,211,237
            )
            
            $
            (295,288
            )
            
            $
            (24,533,186
            )Adjustments
      to Reconcile Net Loss to NetCash
      Used in Operating Activities:Compensation
      Expense of Stock Options
            
            
            (973)
            
            
            
            26,611
            
            
            
            5,004,522Stock
      Issued for Services
            
            
            —
            
            
            
            —
            
            
            
            16,267,500Depreciation
            
            
            1,397
            
            
            
            1,397
            
            
            
            3,841Change
      in Operating Assets and Liabilities:(Increase)
      Decrease in Receivables
            
            
            —
            
            
            
            2,538
            
            
            
            —(Increase)
      Decrease in Prepaid Expenses
            
            
            1,472
            
            
            
            30,528
            
            
            
            —Increase
      (Decrease) in Accounts Payable
            
            
            326,678
            
            
            
            521
            
            
            
            322,519Net
      Cash Used in Operating Activities
            
            
            (882,663
            )
            
            
            (233,693)
            
            
            
            (2,934,804
            )CASH
      FLOWS FROM INVESTING ACTIVITIES:Purchase
      of Office Equipment
            
            
            —
            
            
            
            —
            
            
            
            (4,193)Reclamation
      Deposits
            
            
            (31,155)
            
            
            
            —
            
            
            
            (31,155)Net
      Cash Used in Investing Activities
            
            
            (31,155)
            
            
            
            —
            
            
            
            (35,348)CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from Sale of Common Stock
            
            
            —
            
            
            
            —
            
            
            
            5,105,825Redemption
      of Common Shares
            
            
            —
            
            
            
            —
            
            
            
            (30,000)Proceeds
      from Contributed Capital
            
            
            —
            
            
            
            —
            
            
            
            9,840Net
      Cash Provided by Financing Activities
            
            
            —
            
            
            
            —
            
            
            
            5,085,665Net
      (Decrease) Increase inCash
      and Cash Equivalents
            
            
            (913,818)
            
            
            
            (233,693)
            
            
            
            2,115,513Cash
      and Cash Equivalentsat
      Beginning of Period
            
            
            3,029,331
            
            
            
            3,263,024
            
            
            
            —Cash
      and Cash Equivalentsat
      End of Period
            
            $
            2,115,513
            
            
            $
            3,029,331
            
            
            $
            2,115,513





F -
11







PATRIOT
GOLD CORP.


(An
Exploration State Company)


STATEMENTS
OF CASH FLOWS


(Continued)





CumulativeSinceJune
      1, 2000For
      the Year Ended
            
            
            Inception
      ofMay
      31,
            
            
            May
      31,
            
            
            Exploration2008
            
            
            2007
            
            
            StateSUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATION:Cash
      paid during the year for:Interest
            
            $
            —
            
            
            $
            —
            
            
            $
            —Income
      taxes
            
            $
            —
            
            
            $
            —
            
            
            $
            —SUPPLEMENTAL
      DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:





Settlement
      of Subscription ReceivableBy
      the Cancellation of Common Stock
            
            $
            —
            
            
            $
            79,000
            
            
            $
            79,000





During
the year ended May 31, 2006, the Company granted 1,000,000 stock options to
various directors and consultants for an exercise price of $0.25 per share.
Consulting expense of $86,483 was recorded for the year ended May 31,
2006.  The vesting period for some of these options is up to three
years.  As a result, the unvested portions of the options have been
revalued in subsequent periods resulting in a reversal of stock option expense
of ($973) at May 31, 2008 and an additional option expense of $26,611 at May 31,
2007 due to the amortization of the fair value of the options as determined by
the Black-Scholes model between the date of grant and May 31, 2008 and 2007
respectively.












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


F -
12







NOTE 1 –
NATURE OF BUSINESS AND OPERATIONS




The
Company has no products or services as of May 31, 2008. The Company operated
from November 30, 1998 through approximately May 31, 2000 in the production of
ostrich meat. On June 1, 2000, the Company ceased operations.




In June
2003, Management decided to change the direction of the Company and has decided
to become a natural resource exploration company and will seek opportunities in
this field. The Company is currently engaging in the acquisition, exploration,
and if warranted and feasible, development of natural resource properties. Since
June 1, 2000, the Company has been in the exploration state.




NOTE 2 –
ABILITY TO CONTINUE AS A GOING CONCERN




The
accompanying financial statements have been prepared in U.S. dollars and in
accordance with accounting principles generally accepted in the United States on
a going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities and commitments in the normal course of
business.  Since June 1, 2000 the Company has been in the exploration
state.  The Company has not realized any revenue from its present
operations.  During the year ended May 31, 2008, the Company incurred
a loss of $1,211,237 and has an accumulated deficit of $24,533,186 at May 31,
2008.  These conditions raise substantial doubt about the Company's
ability to continue as a going concern.




The
Company's ability to continue as a going concern is dependent on its ability to
develop its natural resource properties and ultimately achieve profitable
operations and to generate sufficient cash flow from financing and operations to
meet its obligations as they become payable. The Company expects that it will
need approximately $617,000 to fund its operations during the next twelve months
which will include property option payments, exploration of its properties as
well as the costs associated with maintaining an office.  The Company
currently has sufficient cash to fund its planned operations for the next twelve
months.  However, in order to develop its properties, the Company will
need to obtain financing in the future.  Management plans to seek
additional capital through private placements and public offerings of its common
stock.  Although there are no assurances that management’s plans will
be realized, management believes that the Company will be able to continue
operations in the future.  Accordingly, no adjustment relating to the
recoverability and classification of recorded asset amounts and the
classification of liabilities has been made to the accompanying financial
statements in anticipation of the Company not being able to continue as a going
concern.




NOTE 3 –
SIGNIFICANT ACCOUNTING POLICIES




Management’s Estimates and
Assumptions




The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.




Cash and Cash
Equivalents




For
purposes of the statement of cash flows, the Company considers all highly liquid
debt instruments purchased with a maturity of three months or less to be cash
equivalents to the extent the funds are not being held for investment
purposes.


F -
13




Foreign
Currency




Prior to
the quarter ending August 31, 2003, the Company’s primary functional currency
was the Canadian dollar. During, the quarter ended August 31, 2003, the Company
underwent significant changes in its operations. Prior to May 31, 2000, the
company was in the business of producing ostrich meat in Canada. Subsequently,
on June 1, 2000, the Company ceased operations and remained dormant until June
2003, when the Company decided to enter the mining industry in the United
States. Due to the change in direction of the Company the majority of its
operations and transactions would be located in the United States and the
majority of the transaction would be in U.S. dollars. This was considered “a
significant change in economic facts and circumstances” per SFAS 52, Appendix A
and thus the Company changed its functional currency from the Canadian dollar to
the U.S. dollar.




The
Company’s functional currency is the U.S. dollar. However, the Company still has
a few transactions with Canadian suppliers. Transaction gains and losses are
included in income.




Concentration of Credit
Risk




The
Company has no off-balance-sheet concentrations of credit risk such as foreign
exchange contracts, options contracts or other foreign hedging arrangements. The
Company maintains the majority of its cash balances with one financial
institution in the form of demand deposits.




Loss per
Share




Net
income (loss) per share is computed by dividing the net income by the weighted
average number of shares outstanding during the period. As of May 31, 2008, the
company has outstanding options and warrants of 1,385,000 and 3,456,000,
respectively of which 1,218,333 and 3,456,000 are exercisable.  The
effects of the Company’s common stock equivalents are anti-dilutive for May 31,
2008 and 2007 and are thus not presented.




Comprehensive
Income




The
Company has adopted SFAS No. 130, “Reporting Comprehensive Income”, which
establishes standards for reporting and display of comprehensive income, its
components and accumulated balances. The Company has disclosed this information
on its Statement of Operations. Comprehensive income is comprised of net income
(loss) and all changes to capital deficit except those resulting from
investments by owners and distribution to owners.




Stock
Options





Effective
June 1, 2006, the company adopted the provisions of SFAS No. 123(R). SFAS
No. 123(R) requires employee equity awards to be accounted for under the
fair value method. Accordingly, share-based compensation is measured at grant
date based on the fair value of the award. Prior to June 1, 2006, the
company accounted for awards granted to employees under its equity incentive
plans under the intrinsic value method prescribed by Accounting Principles Board
(APB) Opinion No. 25, “Accounting for Stock Issued to Employees” (APB
25), and related interpretations, and provided the required pro forma
disclosures prescribed by SFAS No. 123, “Accounting for Stock-Based
Compensation” (SFAS No. 123), as amended.   No stock options
were granted to employees during the years ended May 31, 2008 or 2007 and
accordingly, no compensation expense was recognized under APB No. 25 for the
years ended May 31, 2008 or 2007.  In addition, no compensation
expense is required to be recognized under provisions of SFAS No. 123(R) with
respect to employees.





Under the
modified prospective method of adoption for SFAS No. 123(R), the
compensation cost recognized by the company beginning on June 1, 2006 includes
(a) compensation cost for all equity incentive awards granted prior to, but
not yet vested as of June 1, 2006, based on the grant-date fair value
estimated in accordance with the original provisions of SFAS No. 123, and
(b) compensation cost for all equity incentive awards granted subsequent to
June 1, 2006, based on the grant-date fair value estimated in accordance
with the provisions of SFAS No. 123(R). The company uses the straight-line
attribution method to recognize share-based compensation costs over the service
period of the award. Upon exercise, cancellation, forfeiture, or expiration of
stock options, or upon vesting or forfeiture of restricted stock units, deferred
tax assets for options and restricted stock units with multiple vesting dates
are eliminated for each vesting period on a first-in, first-out basis as if each
vesting period was a separate award. To calculate the excess tax benefits
available for use in offsetting future tax shortfalls as of the date of
implementation, the company followed the alternative transition method discussed
in FASB Staff Position No. 123(R)-3.





F -
14


During
the year ended May 31, 2008 or 2007 no stock options were granted to
non-employees.  Accordingly, no stock-based compensation expense was
recognized for new stock option grants in the Statement of Operations and
Comprehensive Loss at May 31, 2008 or 2007.





Compensation
expense for unvested options granted to non-employees in previous periods is
revalued at each period end and is being amortized over the vesting period of
the options.  As a result of amortizing and revaluing the common stock
option expense for unvested options granted in the year ended May 31, 2006, a
reversal of stock option expense of ($973) (2007 – an expense of $26,611) has
been recognized in the Statement of Operations at May 31, 2008.




Exploration and Development
Costs




On June
1, 2000, the Company ceased operations and until June 2003 conducted minimal
administrative activities. The Company has been in the exploration state since
that time and has not yet realized any revenue from its planned operations. It
is primarily engaged in the acquisition, exploration and development of mining
properties. Mineral exploration costs and payments related to the acquisition of
the mineral rights are expensed as incurred. When it has been determined that a
mineral property can be economically developed as a result of establishing
proven and probable reserves, the costs incurred to acquire and develop such
property will be capitalized. Such costs will be amortized using the
units-of-production method over the estimated life of the probable
reserve.




Advertising
Costs




Advertising
costs are expensed as incurred. There were no advertising expenses for the years
ended May 31, 2008 and 2007.





OfficeEquipment and
Furniture





Equipment
and furniture are recorded at cost and depreciated using the straight-line
method over the estimated useful lives of the assets which range from three to
five years.





Equipment
      and Furniture consist of the following:
            
            May
      31,2008
            
            
            2007Equipment
            
            $
            645
            
            
            $
            645Furniture
            
            
            3,548
            
            
            
            3,5484,193
            
            
            
            4,193Less
      accumulated depreciation
            
            
            (3,841
            )
            
            
            (2,444
            )Total
            
            $
            352
            
            
            $
            1,749





Depreciation expense of $1,397 has been
recorded for each of the respective years ended May 31, 2008 and
2007.





FairValue of Financial
Instruments





The
carrying value of the Company's financial instruments, including receivables,
prepaids, accounts payable, and accrued liabilities, at May 31, 2008 and 2007
approximates their fair values due to the short-term nature of these financial
instruments.





F -
15


New Accounting
Pronouncements





SFAS No.
155





In
February 2006, FASB issued SFAS No. 155, “Accounting for Certain
Hybrid Financial Instruments — an Amendment of FASB Statements No. 133 and
140”. Among other things, SFAS No. 155 permits the election of fair value
re-measurement for certain hybrid financial instruments that would otherwise
require bifurcation under Statement 133, Accounting for Derivative Instruments
and Hedging Activities. These hybrid financial instruments would include both
assets and liabilities. SFAS No. 155 is effective for fiscal years
beginning after September 15, 2006.  The Company has determined the
adoption of this pronouncement did not have a material impact on the Company’s
financial statements.





SFAS No.
157





In
September 2006, the Financial Accounting Standards Board (“FASB”) issued
Statement of Financial Accounting Standard (“SFAS”) No. 157, “Fair Value
Measurements” (“FAS 157”). FAS 157 defines fair value, establishes a framework
for measuring fair value in accordance with generally accepted accounting
principles, and expands disclosures about fair value measurements. The
provisions of FAS 157 are effective fiscal years beginning after November 15,
2007. The Company is currently evaluating the impact of the provisions of SFAS
No. 157.





SFAS 159




In
February 2007, the FASB issued SFAS No. 159 “The Fair Value Option for Financial
Assets and Financial Liabilities - including an amendment of FASB Statement No.
115” (“SFAS No. 159”) which permits entities to choose to measure many financial
instruments and certain other items at fair value. This statement is effective
for fiscal periods beginning after November 15, 2007. The implementation of SFAS
159 is not expected to have a material impact on the Company’s financial
statements.





SFAS
141R





In
December 2007, the FASB issued SFAS 141R “Business Combinations” and SFAS 160
“Non-controlling Interests in Consolidated Financial Statements”, which are both
effective for fiscal years beginning after December 15, 2008. SFAS 141R, which
will replace FAS 141, is applicable to business combinations consummated after
the effective date of December 15, 2008. The implementation of SFAS 141R is not
expected to have a material impact on the Company’s financial
statements.





SFAS 161





In March
2008, the FASB issued SFAS 161 “Disclosures about Derivative Instruments and
Hedging Activities – an amendment of SFAS 133.  This Statement
requires enhanced disclosures about an entity’s derivative and hedging
activities and thereby improves the transparency of financial reporting. This
Statement is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008, with early application
encouraged. This Statement encourages, but does not require, comparative
disclosures for earlier periods at initial adoption.  The
implementation of SFAS 161 is not expected to have a material impact on the
Company’s financial statements.





F -
16


FIN 48





In July
2006, the FASB issued FIN 48 "Accounting for Uncertainty in Income Taxes - an
interpretation of FASB Statement No. 109". This interpretation provides guidance
on the financial statement recognition and measurement of a tax position taken
or expected to be taken in a tax return. FIN 48 prescribes a recognition
threshold and measurement of a tax position taken or expected to be taken in a
tax return. This interpretation also provides guidance on derecognition,
classification, interest and penalties, accounting in interim periods,
disclosure, and transition.  FIN 48 uses a two-step approach for evaluating
tax positions.  The first step, recognition, occurs when an enterprise
concludes that a tax position, based solely on its technical merits, is more
likely than not to be sustained upon examination.  The second step,
measurement, is only addressed if the recognition threshold is met; under this
step, the tax benefit is measured as the largest amount of the benefit,
determined on a cumulative probability basis, that is more likely than not to be
realized upon settlement.  FIN 48’s use of the term “more likely than
not” represents a greater than 50 percent likelihood of
occurrence.  The cumulative effect of applying the provisions of this
Interpretation shall be reported as an adjustment to the opening balance of
retained earnings for fiscal year in which the enterprise adopts the
Interpretation.  FIN 48 is effective for fiscal years beginning after
December 15, 2006.





Effective
May 1, 2007 the Company adopted FIN 48.  The adoption did not result in any
adjustment to opening retained earnings under US GAAP.  As a result of the
implementation of FIN 48, the Company did not recognize any liabilities for
unrecognized tax benefits.  In the event that the Company recognizes
interest accrued related to unrecognized tax benefits, it will be recorded in
interest expense.  Any penalties will be recorded in general and
administrative expense.




NOTE 4 –
RECLAMATION DEPOSITS





The
Company has been granted an exploration permit from the State of Nevada for its
Vernal property.  As part of the application process, the Company is
required to pay a refundable deposit to the State as surety for the estimated
reclamation costs associated with the planned exploration
program.    In addition, as part of the Company’s
acquisition of the Margarita and Imperial Properties (Note 13) the reclamation
bonds for these respective properties were transferred to the Company. Upon
completion of required reclamation the Company will receive a refund of the
deposits.




NOTE 5 -
INCOME TAXES




As of May
31, 2008, the Company had a net operating loss carryforward for income tax
reporting purposes of approximately $7,700,000 that may be offset against future
taxable income through 2027. Current tax laws limit the amount of loss available
to be offset against future taxable income when a substantial change in
ownership occurs. Therefore, the amount available to offset future taxable
income may be limited. No tax benefit has been reported in the financial
statements, because the Company believes there is a 50% or greater chance the
carryforwards will expire unused. Accordingly, the potential tax benefits of the
loss carryforwards are offset by a valuation allowance of the same
amount.




NOTE
6 – EXPLORATION STATE COMPANY




The
Company has not begun principal operations and as is common with a company in
the exploration state, the Company has had recurring losses. Continuation of the
Company as a going concern is dependent upon obtaining the additional working
capital necessary to be successful in its planned activity, and the management
of the Company has developed a strategy, which it believes will accomplish this
objective through additional equity funding and long term financing, which will
enable the Company to operate for the coming year.


F -
17




NOTE 7 -
RELATED PARTY TRANSACTIONS




As of May
31, 2008, all activities of the Company have been conducted by corporate
officers from either their homes or business offices. There are no commitments
for future use of the facilities.





On
November 1, 2005, the Company signed a service agreement with its President,
Robert Coale.  Pursuant to the agreement the Company will pay Mr.
Coale, beginning November 2005, $2,500 per month for his expertise to identify
and acquire certain exploration style properties that fit the parameters of the
Company’s business plan, oversee and manage, as directed by the Company, the
Company’s exploration programs that will be undertaken from time-to-time, and
perform all of the duties normally associated with serving as the President and
Chief Executive Officer of a publicly traded mining company.  The
service agreement shall be for an indefinite term, cancellable in writing by
either party with 30 days written notice.  For each of the years ended
May 31, 2008 and 2007 the Company paid $30,000 pursuant to this
agreement.




NOTE 8 -
STOCK OPTIONS




Pursuant
to the 2005 and 2003 Stock Option Plans, grants of shares can be made to
employees, officers, directors, consultants and independent contractors of
non-qualified stock options as well as for the grant of stock options to
employees that qualify as incentive stock options under Section 422 of the
Internal Revenue Code of 1986 (“Code”) or as non-qualified stock options. The
Plan is administered by the Option Committee of the Board of Directors (the
“Committee”), which has, subject to specified limitations, the full authority to
grant options and establish the terms and conditions for vesting and exercise
thereof. Currently the entire Board functions as the Committee.




In order
to exercise an option granted under the Plan, the optionee must pay the full
exercise price of the shares being purchased. Payment may be made either: (i) in
cash; or (ii) at the discretion of the Committee, by delivering shares of common
stock already owned by the optionee that have a fair market value equal to the
applicable exercise price; or (iii) with the approval of the Committee, with
monies borrowed from us.




Subject
to the foregoing, the Committee has broad discretion to describe the terms and
conditions applicable to options granted under the Plan. The Committee may at
any time discontinue granting options under the Plan or otherwise suspend, amend
or terminate the Plan and may, with the consent of an optionee, make such
modification of the terms and conditions of such optionee’s option as the
Committee shall deem advisable.




On May
26, 2003, the Board of Directors approved a stock option plan whereby 2,546,000
common shares have been set aside for employees and consultants to be
distributed at the discretion of the Board of Directors. On September 22, 2003,
the Board of Directors amended the stock option plan to allow 3,000,000
additional options. As of May 31, 2008, 5,040,000 stock options have been
granted to various directors and consultants for an exercise price ranging from
$.05 to $1.50 per share.  An additional 506,000 remain available to be
granted under the 2003 Plan.  In most cases the fair value of the
stock issued was higher than the exercise price. Compensation expense of
$4,892,401 has been recorded in connection with the granting of the stock
options as of May 31, 2004.   No options have been granted under
the 2003 Plan subsequent to May 31, 2004.




On
November 18, 2005, the Board of Directors approved the 2005 stock option plan
whereby 2,000,000 common shares have been set aside under the
plan.  No options were granted under the 2005 Plan for the year ended
May 31, 2008.  For the year ended May 31, 2006, 1,000,000 were granted
to various directors and consultants for an exercise price of $0.25 per
share.  No options were granted under the 2005 Plan during the years
ended May 31, 2008 or 2007.  The Black-Scholes option pricing model
was used to calculate to estimate the fair value of the options granted in 2006.
The following assumptions were made:







Risk
      Free Rate
            4.24%Expected
      Life of Option
            10
      yearsExpected
      Volatility of Stock (Based on Historical Volatility)
            80.43%Expected
      Dividend yield of Stock
            0.00








F -
18


The
following table sets forth the options outstanding under the 2003 Plan as of May
31, 2008:





Available
      for Grant
            
            
            Options
      Outstanding
            
            
            Weighted
      Average Exercise PriceBalance,
      May 31, 2006
            
            
            456,000
            
            
            
            435,000
            
            
            $
            0.24Options
      granted
            
            
            -
            
            
            
            -
            
            
            
            -Options
      cancelled
            
            
            50,000
            
            
            
            (50,000
            )
            
            $
            0.05Options
      exercised
            
            
            -
            
            
            
            -
            
            
            
            -Balance,
      May 31, 2008 and 2007
            
            
            506,000
            
            
            
            385,000
            
            
            $
            0.26








The
following table sets forth the options outstanding under the 2005 Plan as of May
31, 2008:





Available
      for Grant
            
            
            Options
      Outstanding
            
            
            Weighted
      Average Exercise PriceBalance,
      May 31, 2006
            
            
            1,000,000
            
            
            
            1,000,000
            
            
            $
            0.25Options
      granted
            
            
            -
            
            
            
            -
            
            
            
            -Options
      cancelled
            
            
            -
            
            
            
            -
            
            
            
            -Options
      exercised
            
            
            -
            
            
            
            -
            
            
            
            -Balance,
      May 31, 2008 and 2007
            
            
            1,000,000
            
            
            
            1,000,000
            
            
            $
            0.25








The
following table summarizes information concerning outstanding and exercisable
common stock options under the 2003 and 2005 Plans at May 31, 2008:





Exercise
      Prices
            Options
      Outstanding
            Remaining
      Contractual Life
              (in
      years)
            Weighted
              Average
              Exercise
      Price
            Number
      of Options Currently Exercisable
            Weighted
              Average
              Exercise
      Price$
      0.05
            300,000
            5.08
            $
      0.05
            300,000
            $
      0.05$
      0.25
            1,000,000
            7.75
            $
      0.25
            833,333
            $
      0.25$
      0.80
            5,000
            5.17
            $
      0.80
            5,000
            $
      0.80$
      1.03
            80,000
            5.17
            $
      1.03
            80,000
            $
      1.031,385,000
            
            $
      0.25
            1,218,333
            $
      0.25





The
aggregate intrinsic value of stock options outstanding  at May 31,
2008 was $10,500 and the aggregate intrinsic value of stock
options  exercisable at May 31, 2008 was also $10,500.  No
stock options were exercised in 2008.





As of May
31, 2008, there was a total of $1,546 in unrecognized compensation cost
related to all options granted and outstanding. This unrecognized compensation
cost is expected to be recognized over a weighted-average period of
approximately 0.75 years.





F -
19


A summary
of status of the Company’s unvested stock options as of May 31, 2008 under all
plans is presented below:





Number
              of
      Options
            
            
            Weighted
              Average
              Exercise
              Price
            
            
            Weighted
      Average
              Grant
      Date Fair ValueUnvested
      at June 1, 2006
            
            
            750,000
            
            
            $
            0.25
            
            
            $
            0.21Granted
            
            
            -
            
            
            
            -
            
            
            
            -Vested
            
            
            (416,667
            )
            
            
            0.25
            
            
            
            0.21Unvested
      at May 31, 2007
            
            
            333,333
            
            
            
            0.25
            
            
            
            0.21Granted
            
            
            -
            
            
            
            -
            
            
            
            -Vested
            
            
            (166,666
            )
            
            
            0.25
            
            
            
            0.21Unvested
      at May 31, 2008
            
            
            166,667
            
            
            $
            0.25
            
            
            $
            0.21









NOTE 9 -
WARRANTS




On July
25, 2003, the Company issued 350,000 Class A warrants, 350,000 Class B warrants,
350,000 Class C warrants, and 350,000 Class D warrants. Each warrant is
exercisable, commencing October 25, 2003, for a period of three years at a price
of $1.40, $1.45, $1.50 and $1.55, respectively, for one share of common stock.
The warrants were determined to have no value at the time of their issuance. The
shares and warrants were issued to three non-US residents.




On
November 27, 2003, the Company issued 864,000 Class A warrants, 864,000 Class B
warrants, 864,000 Class C warrants, and 864,000 Class D warrants. The Class A
warrants are exercisable on November 27, 2004 for a period of five years at an
exercise price of $1.40 per share of common stock; the Class B warrants are
exercisable on November 27, 2005 for a period of four years at an exercise price
of $1.45; the Class C warrants are exercisable on November 27, 2006 an at
exercise price of $1.50; and the Class D warrants became exercisable on November
27, 2007 at an exercise price of $1.55. The Company has the right, in its sole
discretion, to accelerate the exercise date of the warrants, to decrease the
exercise price of the warrants and/or extend the expiration date of the
warrants. The warrants were determined to have no value at the time of their
issuance. The shares and warrants were issued to three non-US
residents.





The
following table sets forth common share purchase warrants outstanding as of May
31, 2008:





Warrants
      OutstandingBalance,
      May 31, 2006
            
            
            4,856,000Warrants
      granted
            
            
            -Warrants
      expired
            
            
            (1,400,000
            )Balance,
      May 31, 2008 and 2007
            
            
            3,456,000





F -
20


The
following table lists the common share warrants outstanding at May 31,
2008.  Each warrant is exchangeable for one common share.





Number
      Outstanding
            Exercise
              Price
            Weighted
      Average Contractual Remaining Life (years)
            Number
      Currently Exercisable
            Exercise
              Price864,000
            $
      1.40
            1.50
            864,000
            $
      1.40864,000
            $
      1.45
            1.50
            864,000
            $
      1.45864,000
            $
      1.50
            1.50
            864,000
            $
      1.50864,000
            $
      1.55
            1.50
            864,000
            $
      1.553,456,000
            
            
            3,456,000





NOTE 10 -
COMMON STOCK TRANSACTIONS




The
Company was incorporated to allow for the issuance of up to 100,000,000 shares
of $.001 par value common stock (as amended).  At inception, the
Company issued 7,600,000 shares of common stock to its officers and directors
for services performed and payments made on the Company’s behalf during its
formation. This transaction was valued at approximately $.001 per share or an
aggregate approximate $1,000.




On
February 8, 1999, to provide initial working capital, the Company authorized a
private placement sale of an aggregate of 7,600,000 (1,000,000 pre-split) shares
of common stock at approximately $.05 per share. The private placement was
completed April 1, 1999 and 7,630,400 shares were issued for approximately
$50,200 in proceeds to the Company which were primarily used to pay operating
expenses.




On June
12, 2003, the previous President of the Company, returned 5,320,000 (700,000
pre-split) shares of common stock to the Company.




On July
25, 2003, the Company issued 350,000 shares of common stock and 1,400,000
warrants for $367,500 in cash to three individuals. Shares and warrants were
issued for $1.05 per share. The warrants were determined to have no fair value
at the time of their issuance and thus none of the proceeds were allocated to
the warrants.




On
September 2, 2003, the Company’s previous president converted his 13,500,000
shares of preferred stock into 13,500,000 shares of common stock. On January 24,
2004, Mr. Johnstone transferred 3,000,000 common shares to each of the
three directors. Compensation expense of $16,254,000 was record in connection
with the transfer.




During
September, October and November 2003, 3,075,000 common shares were issued to
various directors and consultants in connection with the exercising of stock
options for $1,710,225 in cash. The exercise price ranged from $0.05 to
$1.50.




On
November 27, 2003, the Company issued 864,000 shares of common stock and
3,456,000 warrants for $1,080,000 in cash to three individuals. Shares and
warrants were issued for $1.25 per share. The warrants were determined to have
no fair value at the time of their issuance and thus none of the proceeds were
allocated to the warrants.




During
the quarter ending February 29, 2004, 245,000 common shares were issued in
connection with the exercising of stock options for cash of $189,600. The
exercise price ranged from $0.75 to $1.03.




During
March and April 2004, 1,335,000 common shares were issued in connection with the
exercising of stock options for cash of $1,837,500. The exercise price ranged
from $0.75 to $1.50.





On March
10, 2006 the Company granted stock options to Mr. Robert Coale, who is the
President, Chief Executive Officer, Secretary, and Treasurer, and a director and
to Mr. Robert Sibthorpe who is a director of the Company.  In
consideration therefor, Mr. Coale, Mr. Sibthorpe and the Company entered into a
Buy-Back Option Agreements, pursuant to which Messrs. Coale and Sibthorpe
granted to the Company the option to purchase all or any portion of the
3,000,000 shares of the Company’s common stock that are owned by each of Mr.
Coale and Mr. Sibthorpe respectively for a purchase price of $0.01 per
share.





F -
21


Also on
March 10, 2006, the Registrant entered into a Redemption Agreement with Ronald
Blomkamp, the Company’s former President and Chief Executive Officer pursuant to
which the Company purchased from Mr. Blomkamp the 3,000,000 shares of the
Company’s common stock that were owned by Mr. Blomkamp.  The purchase
price for such shares paid to Mr. Blomkamp by the Company was $0.01 per share,
which amounted to an aggregate of $30,000.  The purchased shares were
returned to treasury and cancelled.





On
January 12, 2007 the Company settled the outstanding balance of its
Subscriptions Receivable of $79,000.  The two shareholders returned
the underlying 55,000 shares of common stock to the Company in settlement of the
balance of $79,000.  The shares were then cancelled by the
Company.




NOTE 11 -
PREFERRED STOCK




The
Company has authorized a total of 20,000,000 shares of Preferred Stock with a
par value of $.001. As of May 31, 2008, there are no preferred shares
outstanding.




The
Corporation is under no obligation to pay dividends on the Series A Redeemable
Preferred Stock, and the stock is redeemable at the option of the
Company.




In the
event of any liquidation, dissolution or winding-up of the Corporation, the
holders of outstanding shares of Series A Preferred shall be entitled to be paid
out of the assets of the Corporation available for distribution to shareholders,
before any payment shall be made to or set aside for holders of the Common
Stock, at an amount of $.001 plus any unpaid and accrued dividends per
share.




A holder
of Series A Preferred has the right to one vote per share in the case of matters
provided for in the General Corporation Law of the State of Nevada or the
Amended and Restated Articles of Incorporation or Bylaws to be voted on by the
holders of the Series A Preferred Stock as a separate class. In the case of
matters to be voted on by the holders of Common Stock and the holders of Series
A Preferred voting together as a single class, each share of Series A Preferred,
has full voting rights and powers equal to the voting rights and powers of the
holders of the Common Stock.




On June
11, 2003, the Company issued 13,500,000 Series A shares of preferred stock to
its president for services rendered and recorded $13,500 in consulting expenses.
The Series A shares have non-cumulative dividends of 7% of the redemption price
when declared by the Board. On September 2, 2003, the Company’s previous
president converted his 13,500,000 shares of preferred stock into 13,500,000
shares of common stock.




NOTE 12 -
STOCK SPLITS




On June
17, 2003, the Company approved a forward split at a rate of one for seven and
six-tenths so that each share of common stock was equal to 7.6 shares. All
references to shares in the accompanying financial statements have been adjusted
for the stock split.





F -
22


On
November 17, 2006, the Company held a special meeting (the "Meeting") of the
shareholders, pursuant to a proxy statement that it filed with the Securities
and Exchange Commission and that it had furnished to holders of record of the
outstanding shares of its common stock as of October 20, 2006.  At the
Meeting, the Board of Directors received approval from a majority of the
Company’s shareholders of the following matters: (1) grant of discretionary
authority to the Board of Directors to implement either of the following: (a) a
reverse stock split of the common stock on the basis of one post-consolidation
share for up to each ten pre-consolidation shares to occur at some time within
twelve months of the date of the shareholders’ meeting, with the exact time of
the reverse split to be determined by the Board of Directors, or (b) a forward
stock split of the common stock on the basis of up to three post-split shares
for each one pre-split share to occur at some time within twelve months of the
date of the shareholders’ meeting, with the exact time of the forward split to
be determined by the Board of Directors; and (3) the increase of the number of
authorized shares of the common stock from 100,000,000 shares, par value $0.001,
to 200,000,000 shares, par value $0.001, should the Board of Directors implement
a forward stock split as previously described.  Our Directors believed
that shareholder approval of a range for the exchange ratio of the reverse or
forward splits (as contrasted with approval of a specified ratio of the split)
provided the Board of Directors with maximum flexibility to achieve the purposes
of a stock split, and, therefore, was in the best interests of our shareholders.
The actual ratio for implementation of the reverse or forward split was to have
been determined by our Board based upon its evaluation as to what ratio of
pre-split shares to post-split shares would have been most advantageous to our
shareholders.  Our Board of Directors also believed that, should it
have determined to implement a forward stock split as described above, it would
have been necessary to have increased the number of authorized shares of common
stock in order to provide the Company with the flexibility to issue common stock
without further action by the Company's stockholders.  As of the date
of this report, the one year anniversary of the approval by the Company’s
shareholders has elapsed.  Prior to the elapsing of the one year time
period, the Board of Directors determined that it was in the best interests of
the Company’s shareholders not to undertake a share split of any
kind.




NOTE 13 -
MINERAL PROPERTIES




Bruner  and Vernal
Properties




The
Company has an agreement with Minquest, Inc. (“MinQuest”) which gives us the
right to purchase 100% of the mining interests of two Nevada mineral exploration
properties currently controlled by MinQuest, a natural resource exploration
company. Together, these two properties consist of 28 mining claims on a total
of 560 acres in the northwest trending Walker Lane located in western
Nevada.




In order
to earn a 100% interest in these two properties, the Company must pay MinQuest
and incur expenditures relating to mining operations in accordance with the
following schedule: (i) on or before July 25, 2004, $20,000 to MinQuest and
$75,000 in expenditures; (ii) on or before July 25, 2005, $20,000 to MinQuest
and an additional $100,000 in expenditures; (iii) on or before July 25, 2006,
$20,000 to MinQuest and an additional $100,000 in expenditures; (iv) on or
before July 25, 2007, $20,000 to MinQuest and an additional $100,000 in
expenditures; and (v) on or before July 25, 2008, an additional $125,000 in
expenditures. If the Company has not incurred the requisite expenditures to
maintain the option in good standing, the Company  has a 60-day period
subsequent to July 25th to make
such payment along with such amount which shall be deemed to have been an
expenditure incurred by us during such period. Since the payment obligations are
non-refundable, if the Company does not make any payments, it will lose any
payments made and all our rights to the properties. If all said payments are
made, then the Company will acquire all mining interests in the properties,
subject to MinQuest retaining a 3% royalty of the aggregate proceeds. The
Company has the right at any time to discontinue making the payments if the
exploration is determined to be unfeasible.





To May
31, 2008 the Company has made all of its property option payments with the
payment on July 25, 2007 being the final payment due under the property option
agreement for the Bruner and Vernal properties.  By July 25, 2008, the
Company will be required to have incurred $500,000 on exploration.  To
May 31, 2008 the Company has incurred approximately $424,000 on exploration of
the two properties.  The Company intends to complete the additional
required expenditures of $76,000 during 2009.




Moss
Property




The Moss
Property consists of 63 unpatented claims and 15 patented claims.  The
property has been acquired from various individuals and on various dates as
noted below.





F -
23


On
November 14, 2003 the Company entered into a letter of intent to acquire a
single patented claim from Gregory Gintoff.  The total purchase price
of $50,000 was made in two installments of $10,000 in December 2003 and $40,000
in February 2004.




On
February 19, 2004, the Company executed a formal agreement to purchase 100%
mining interest in six patented mining claims making up the Williams portion of
the Moss Property located in the historic Oatman gold mining district for
$350,000. On February 27, 2004, $25,000 was paid in connection with this
agreement and three months after signing, on June 14, 2004, an additional
$25,000 was paid. On or before the 6-month anniversary from when we signed the
definitive agreement, the balance of $300,000 was due to the sellers. On August
27, 2004, the Company paid the final $300,000 to the sellers.




On March
4, 2004, the Company signed an agreement that allowed it to acquire a 100
percent interest in 63 unpatented claims contiguous to the 15 patented claims at
the Moss Property.   The Company acquired these claims from
MinQuest for a one time lease fee of $50,000.   The fee of
$50,000 was paid on July 7, 2004.





On
January 18, 2005 the Company completed the acquisition of a single patented
claim from an individual for $150,000.





The
Company acquired five patented claims from Ramon and Edna Martinez for a total
of $150,000.  The Company made one payment of $75,000 on November 8,
2004 and made the final payment of $75,000 on February 14, 2005.





On
January 18, 2005, the Company made a single payment of $25,000 to acquire two
patented claims known as the Ruth and Rattan claims.





Margarita
Property





On
January 29, 2008, the Company entered into an Assignment and Assumption
Agreement (the “Agreement”) with American Goldrush Corp. (“Goldrush”) whereby
Goldrush assigned all of its rights and obligations under the Margarita Property
Option Agreement to the Company.  Pursuant to the Agreement, the
Company assumed the rights, and agreed to perform all of the duties and
obligations, of Goldrush arising under the Margarita Property Option
Agreement.   Simultaneous with the execution and delivery of the
Agreement, the Company paid Goldrush $200,000 which amount represents the full
payment and satisfaction for the assignment to the Company by
Goldrush.





Included
in the assignment to the Company were all sums incurred by Goldrush in
connection with its exploration of the Margarita Property which includes a
reclamation bond previously paid by Goldrush to the Forest Service in Arizona,
all expenditure credits incurred by Goldrush prior to the execution of the
Agreement and all property option payments made to the Margarita Property owner.
In addition, Goldrush also assigned all of its rights and obligations under the
Finders’ Fee Agreement to the Company.  Subsequent to the execution of
the Agreement, Goldrush did not retain any interest in the Margarita
Property.





The
remaining annual option payments and minimum annual exploration expenditures
under the Margarita Property Option Agreement are as noted below:


Margarita
      PropertyProperty
            
            
            WorkPayments
            
            
            Expenditures$USD
            
            
            $USDBy
      May 31, 2008
            
            
            100,000
            
            
            
            300,000By
      May 31, 2009
            
            
            125,000
            
            
            
            300,000By
      May 31, 2010
            
            
            150,000
            
            
            
            -By
      May 31, 2011
            
            
            200,000
            
            
            
            -By
      May 31, 2012
            
            
            200,000
            
            
            
            -$
            775,000
            
            
            $
            600,000


F -
24


The
underlying Margarita Property Option Agreement is subject to a 2 % net smelter
return royalty to the property owner, James Sorrell (the “optionor”), upon
production. The Company has the option (exercisable for 90 days following
completion of a bankable feasibility study) to buy the optionor’s net smelter
return interest for $500,000 per 1% increment or $1,000,000 for the entire 2%
net smelter return interest.





In
addition, the Margarita Property is subject to a Finder’s Fee
Agreement.  The Company has agreed to pay a fee equal to 10% of the
Property Option Payments made during the first three years of the Margarita
Property Option Agreement.  It is estimated that if the Company makes
all of the remaining scheduled property option payments, the amount to be paid
under the Finder’s Fee Agreement by the Company will be $22,500. If the Company
terminates the Margarita Property Option Agreement, the Company will not owe any
further payments under the Finder’s Fee Agreement.  If it has not been
terminated earlier, the Finder’s Fee Agreement will terminate automatically on
July 14, 2009.





Subsequent
to the completion of a drill program on the Margarita Property, the Company
terminated its option under the property option agreement and does not currently
have any interest in the Margarita Property.




Whisky, NK, and Weepah
Properties





On March
15, 2008, the Company executed three separate property option agreements (the
“Agreements”) with MinQuest granting the Company the right to acquire 100% of
the mining interests of three Nevada mineral exploration properties currently
controlled by MinQuest, a natural resource exploration company.





The
properties consist of the Whiskey Flat Property (“Whiskey”), NK Property (“NK”),
and the Weepah Property (“Weepah”) (collectively the
“Properties”).  Each of the Agreements is a separate agreement that
can be terminated irrespective of the status of any of the other
Agreements.





The
Properties are located in Nevada with the Whiskey and NK being in Mineral County
while the Weepah is located in Esmeralda County.  The Whiskey Property
currently consists of 83 unpatented mining claims, the NK Property currently
consists of 24 unpatented mining claims, and the Weepah Property currently
consists of 14 unpatented claims.





Annual
option payments and minimum annual exploration expenditures under each of the
respective Agreements are as noted below:


Whiskey
      Flat PropertyProperty
            
            
            WorkPayments
            
            
            Expenditures$USD
            
            
            $USDUpon
      Execution of the Agreement
            
            $
            50,000
            
            
            $
            -By
      March 15, 2009
            
            
            50,000
            
            
            
            50,000By
      March 15, 2010
            
            
            50,000
            
            
            
            150,000By
      March 15, 2011
            
            
            65,000
            
            
            
            200,000By
      March 15, 2012
            
            
            80,000
            
            
            
            350,000By
      March 15, 2013
            
            
            100,000
            
            
            
            200,000By
      March 15, 2014
            
            
            100,000
            
            
            
            200,000By
      March 15, 2015
            
            
            100,000
            
            
            
            200,000By
      March 15, 2016
            
            
            100,000
            
            
            
            200,000By
      March 15, 2017
            
            
            100,000
            
            
            
            200,000By
      March 15, 2018
            
            
            250,000
            
            
            
            750,000$
            1,045,000
            
            
            $
            2,500,000


F -
25









NK
      PropertyProperty
            
            
            WorkPayments
            
            
            Expenditures$USD
            
            
            $USDUpon
      Execution of the Agreement
            
            $
            20,000
            
            
            $
            -By
      March 15, 2009
            
            
            20,000
            
            
            
            50,000By
      March 15, 2010
            
            
            20,000
            
            
            
            75,000By
      March 15, 2011
            
            
            35,000
            
            
            
            100,000By
      March 15, 2012
            
            
            45,000
            
            
            
            250,000By
      March 15, 2013
            
            
            50,000
            
            
            
            100,000By
      March 15, 2014
            
            
            50,000
            
            
            
            100,000By
      March 15, 2015
            
            
            50,000
            
            
            
            100,000By
      March 15, 2016
            
            
            50,000
            
            
            
            100,000By
      March 15, 2017
            
            
            50,000
            
            
            
            100,000By
      March 15, 2018
            
            
            100,000
            
            
            
            250,000$
            490,000
            
            
            $
            1,225,000









Weepah
      PropertyProperty
            
            
            WorkPayments
            
            
            Expenditures$USD
            
            
            $USDUpon
      Execution of the Agreement
            
            $
            20,000
            
            
            $
            -By
      March 15, 2009
            
            
            20,000
            
            
            
            50,000By
      March 15, 2010
            
            
            20,000
            
            
            
            75,000By
      March 15, 2011
            
            
            35,000
            
            
            
            100,000By
      March 15, 2012
            
            
            45,000
            
            
            
            250,000By
      March 15, 2013
            
            
            50,000
            
            
            
            100,000By
      March 15, 2014
            
            
            50,000
            
            
            
            100,000By
      March 15, 2015
            
            
            50,000
            
            
            
            100,000By
      March 15, 2016
            
            
            50,000
            
            
            
            100,000By
      March 15, 2017
            
            
            50,000
            
            
            
            100,000By
      March 15, 2018
            
            
            100,000
            
            
            
            250,000$
            490,000
            
            
            $
            1,225,000









F -
26




Upon
execution of the Agreements, the Company paid MinQuest a total of $90,000 in
relation to the three agreements.  Since the payment obligations are
non-refundable, if any payments under any of the Agreements are not made, the
Company will lose any previous payments made and all its rights to the
respective property. If all said payments under any of the Agreements are made,
then the Company will acquire all mining interests in the respective property.
If the Company fails to make any payment when due, each of the Agreements gives
the Company a 60-day grace period to pay the amount of the
deficiency.  MinQuest retained a 3% royalty of the aggregate proceeds
received by the Company from any smelter or other purchaser of any ores,
concentrates, metals or other material of commercial value produced from the
Properties, minus the cost of transportation of the ores, concentrates or
metals, including related insurance, and smelting and refining charges,
including penalties.




The
Company has the one time right exercisable for 90 days following completion of a
bankable feasibility study to buy up to one half (50%) of MinQuest’s royalty
interest (i.e. an amount equal to 1.5% of the royalty interest) for $2,250,000.
The right to purchase the said royalty interest shall be exercised by the
Company by providing the MinQuest with notice of the purchase accompanied by
payment in the amount of USD $2,250,000.





The
Company may use MinQuest for its mineral exploration expertise on the
Properties. In addition, any mineral interests staked, located, granted or
acquired by either the Company or MinQuest which is located within a 1 mile
radius of the Properties will be included in the option granted to the Company
for the respective property.  Any of the Agreements will terminate if
the Company fails to comply with its obligations in any of the respective
Agreements and fails to cure such alleged breach. If the Company gives notice
that it denies a default has occurred, the matter shall be determined finally
through such means of dispute resolution as such matter has been subjected to by
either party.





Imperial
Property





On May
30, 2008, the Company entered into an Assignment and Assumption Agreement (the
“Agreement”) with American Goldfields Inc., a Nevada corporation (“American
Goldfields”), to acquire the exclusive option to an undivided right, title and
interest in 22 unpatented Federal mining claims located in Esmeralda County,
Nevada (the “Property”). American Goldfields had originally acquired its
exclusive option on the Property on June 30, 2004, when it entered into a
Property Option Agreement (the “Property Agreement”) with MinQuest, the owner of
the Property.





Pursuant
to the Agreement, the Company assumed the rights, and agreed to perform all of
the duties and obligations, of American Goldfields arising under the Property
Agreement. Simultaneous with the execution and delivery of the Agreement, the
Company paid American Goldfields $250,000, which amount represents the full
payment and satisfaction for the assignment by American Goldfields to the
Company of the Property Agreement and all rights and obligations with respect
thereto. Included in the assignment were, without limitation, all sums incurred
by American Goldfields in connection with the Property, specifically (i) the
refunding of the reclamation bond previously paid by American Goldfields to the
Bureau of Land Management in Nevada in the amount of $13,255; (ii) the
approximately $277,000 of expenditures incurred by American Goldfields prior to
the Agreement; and (iii) the $120,000 paid to MinQuest as option payments under
the Property Agreement.




As of May
31, 2008, these properties are unproven and all amounts paid in connection with
the acquisition of these rights and for expenditures in exploration of these
properties have been expensed.


F -
27





SIGNATURES





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





PATRIOT
GOLD CORP.





Dated:
      August 28, 2008
            By:
            /s/ Robert CoaleName:
            Robert
      CoaleTitle:
            President,
      Chief Executive and Operating Officer, Secretary and Treasurer, and
      Director (Principal Executive, Financial and Accounting
      Officer)





In
accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.








SIGNATURE
            TITLE
            
            DATE/s/Robert Coale
            Director, President, Chief Executive and Operating Officer, Secretary, and Treasurer (Principal Executive, Financial, and Accounting Officer)
            
            August
      28, 2008Robert
      Coale/s/ Robert Sibthorpe
            Director
            
            August
      28, 2008Robert Sibthorpe/s/ Duncan Budge
            Director
            
            August
      28, 2008Duncan Budge