UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-KSB/A

                                  AMENDMENT #2

    Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
                                   Act of 1934

                      For the Year Ended December 31, 2004

                         Commission file number: 0-26217

                            CHINA NETTV HOLDINGS INC.
                            -------------------------
        (Exact name of small business issuer as specified in its charter)



             Nevada                                     98-02031-70
             ------                                     -----------
(State or other jurisdiction of                (IRS Employee Identification No.)
 incorporation or organization)


    Suite 536, World Trade Centre, 999 Canada Place, Vancouver, B.C. V6C 3E2
    ------------------------------------------------------------------------
                    (Address of principal executive offices)

                                 (604) 641-1366
                           (Issuer's telephone number)

        Securities Registered pursuant to section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the  Securities  and  Exchange Act of 1934
during the preceding 12 months (or for such shorter  period that the  registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days.

Yes X No

Check if disclosure of delinquent  filers pursuant to Item 405 of Regulation S-B
is not contained in this form, and no disclosure will 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-KSB or any  amendment to
this Form 10-KSB.

                                        X

State issuer's revenues for its most recent fiscal year. $0

                                        1

<PAGE>

Aggregate  market  value  of the  voting  stock  held by  non-affiliates  of the
registrant as of December 31, 2004. $15,958,121

Number of outstanding  shares of the registrant's par value $0.001 common stock,
as of December 31, 2004. 142,236,575

EXPLANATORY NOTE

China NetTV Holdings Inc. is filing this Form 10-KSB/A-2 to its Annual Report on
Form 10-KSB for the year ended  December 31, 2004, as originally  filed with the
SEC on March 17, 2005, for the following purposes:

   o      Restating the valuation of the Company's Investment in Highland Mining
          Inc.  ("Highland") due to an error in the calculation of the valuation
          of securities  issued in connection with the consummation of the Share
          Exchange  Agreement with Highland during 2004. The Company  originally
          recorded the  investment  at the fair market  value of the  securities
          issued at the date of the exchange,  as determined by published quoted
          market  prices.  However,  the Company has since  determined  that the
          transaction  should  have been  valued at the  historical  cost  basis
          incurred by the  founding  shareholders  of  Highland,  who became the
          major  shareholders  of the Company  after the  exchange,  because the
          exchange  occurred  between  entities  under common  control.  The net
          effect of error in valuation  was a decrease in total assets and total
          stockholders' equity by $11,200,000. There was no effect on previously
          reported  net loss and net loss per share  amounts.  See Note 2 to the
          Financial Statements.

   o      Restating the fair value of the agreement to issue 9,639,000 shares as
          an expense item as the finder was an outsider.  The Company originally
          recorded the amount as a reduction in additional paid-in capital.  The
          net effect of the error was an increase  in loss of $771,120  and loss
          per share by $0.01. See Note 2 to the Financial Statements.

   o      Correcting  the  date  of  inception  of the  development  stage  from
          September 15, 1998,  the date of  incorporation,  to July 1, 2003, the
          date  the  company  entered  into  the  development  stage,  including
          revisions to the financial statements to reflect such.

   o      Updating Note 10 of the Notes to the Financial  Statements to disclose
          the impact of the Company's  contractual  arrangements  to issue stock
          for  those   contracts  that  could  require  the  Company  to  obtain
          shareholder  approval  to increase  its  authorized  share  capital to
          satisfy its obligations under those arrangements.

   o      Revising  the  Company's  disclosures  under  Item  8a  "Controls  and
          Procedures" to comply with Item 308 (c) of Regulation S-B.

   o      Including a copy of a material  agreement  to issue common stock as an
          exhibit as required by Regulation S-B, Item 601. (Exhibit 10.3)

As a result of this  amendment,  China NetTV Holdings Inc. is filing as exhibits
to this Form 10-KSB/A-2 the  certifications  pursuant to Sections 302 and 906 of
the Sarbanes-Oxley Act of 2002.


                                        2

<PAGE>

                            CHINA NETTV HOLDINGS INC.
                                 FORM 10-KSB/A-2


                                     INDEX

                                                                            Page
                                                                            ----
                                     Part I

Item 1.   Description of Business..............................................4

Item 2.   Description of Properties............................................7

Item 3.   Legal Proceedings....................................................8

Item 4.   Submission of Matters of a Vote of Security Holders..................8

                                     Part II

Item 5.   Market for Registrant's Common Equity and Related Stockholder
          Matters..............................................................8

Item 6.   Management's Discussion and Analysis or Plan
          of Operation.........................................................9

Item 7.   Financial Statements................................................18

Item 8.   Changes in and Disagreements with Accountants on
          Accounting and Financial Disclosure.................................18

Item 8A.  Controls and Procedures.............................................19

                                    Part III

Item 9.   Directors, Executive Officers, Promoters, and Control
          Persons; Compliance with Section 16(a) of the Exchange Act..........19

Item 10.  Executive Compensation..............................................22

Item 11.  Security Ownership of Certain Beneficial Owners and Management
          and Related Stockholder Matters.....................................23

Item 12.  Certain Relationships and Related Transactions......................25

                                     Part IV

Item 13.  Exhibits and Reports on Form 8-K....................................26

Item 14.  Principal Accountant Fees and Services..............................26

Signatures....................................................................27





                                        3

<PAGE>

                                     Part I

ITEM 1. DESCRIPTION OF BUSINESS

When used in this Form 10-KSB, the words "expects,"  "anticipates,"  "estimates"
and similar  expressions  are intended to identify  forward-looking  statements.
Such  statements  are subject to risks and  uncertainties,  including  those set
forth below under "Risks and Uncertainties,"  that could cause actual results to
differ materially from those projected.  These forward-looking  statements speak
only as of the date hereof.  The Company  expressly  disclaims any obligation or
undertaking to release publicly any updates or revisions to any  forward-looking
statements contained herein to reflect any change in the Company's  expectations
with regard  thereto or any change in events,  conditions  or  circumstances  on
which any statement is based.  This discussion  should be read together with the
financial  statements  and other  financial  information  included  in this Form
10-KSB.

(a) General Description and Development of Business

HISTORY OF COMPANY

The Company was incorporated on September 15, 1998 as Vancouver's  Finest Coffee
Company  for the purpose of building a retail  premium  coffee  business to sell
premium quality coffee drinks through  Company-owned and operated retail kiosks.
In early 2000, the Company commissioned a study into the viability of the coffee
kiosk business and, at the Company's Annual General Meeting in March,  2000, the
shareholders  approved a resolution  for the directors to pursue another line of
business other than the originally proposed coffee kiosk business.

In May 2000,  the Company  acquired  100% control of China NetTV Inc., a British
Virgin  Islands  company.  China  NetTV  had a Letter  of Intent to form a Joint
Venture in China with Sichuan QianFeng Digital Audio/Video Equipment Co. Ltd.

In June 2000,  China NetTV Inc.  signed a Joint  Venture  contract  with Sichuan
QianFeng Digital Audio/Video Equipment Co. Ltd.

In September 2000, the Joint Venture  Company  Chengdu  Qianfeng NetTV Co., Ltd.
was formed after receiving  approval from Moftec  (Ministry of Foreign Trade and
Economic Cooperation).

The Company funded the Joint Venture with Sichuan QianFeng  Digital  Audio/Video
Equipment Co. Ltd., in the production of trial digital set-top boxes for Nanning
TV in Guangxi Province in China until 2002.

As of August 31, 2002 the Company had paid  $1,280,000 of the  $1,500,000 due to
complete the  purchase of the initial  interest in the joint  venture,  however,
thereafter  it was unable to complete  the terms of the  agreement,  abandon the
joint  venture,  and,  therefore,  management  has  elected to expense the joint
venture payments from the company's books.

The Company  believes there will be no further  liability in connection with the
agreement.

                                        4

<PAGE>

On  November  28,  2003,  the Board of  Directors  has  approved  to abandon the
inactive subsidiary, China NetTV Inc.

On  July  4,  2003,  the  Company  entered  into  a  share  exchange   agreement
("Agreement")  to acquire  all of the issued  and  outstanding  shares of Honglu
Investment Holdings,  Inc.  ("Honglu"),  a Chinese company that held prospecting
permits and licenses on mineral prospects in Tibet,  China. On November 5, 2004,
the Company and Honglu  shareholders  mutually agreed to terminate the Agreement
because the Tibet government had on August 10, 2004 rejected the application for
approval of the Agreement  with the Company.  All the shares issued under escrow
in relation to the Agreement, in total of 129,700,000, were returned to treasury
for cancellation on February 14, 2005.

On February 5, 2004, the Company had granted to Hunter  Dickinson,  Inc. ("HDI")
an exclusive  option to acquire an aggregate  50% of the Property  Rights to the
Xietongmen Gold-Copper Prospect in Tibet and a further option to acquire up to a
further 10% of Property Rights,  for an aggregate of 60% of such Property Rights
under certain  terms and  conditions.  On November 9, 2004,  the Company and HDI
mutually agreed to terminate the exclusive  option  agreement due to the failure
to achieve approval of the Honglu transaction from the Tibet government.

CURRENT BUSINESS

On  November  5, 2004,  the Company  and  shareholders  of Highland  Mining Inc.
("Highland")  entered into a Share Exchange Agreement whereby the Company agreed
to issue 85,000,000 of its common shares from treasury and an agreement to issue
common stock for issuance of 65,000,000  of the  Company's  common shares (to be
issued  after the  increase  of  authorized  common  stock of the  Company to be
approved in the coming Annual General Meeting) in exchange for 50% of the issued
and outstanding  shares of Highland held by Highland  Shareholders,  pursuant to
the terms and conditions hereafter set forth:

1. If Highland  Shareholders  are unable to enter into a binding  agreement on a
share purchase and sale  transaction  (the  "Definitive  Agreement") with Hunter
Dickinson  Inc.  ("HDI")  to sell and  transfer  the other 50% of the issued and
outstanding  shares of  Highland  (the  "Remaining  Shares") to HDI on or before
March  30,  2005 (the  "Outside  Date"),  or if either or both HDI and  Highland
Shareholders decide to terminate the Definitive  Agreement pursuant to the terms
and  conditions  therein on or before the Outside  Date,  then  unless  Highland
Shareholders and the Company otherwise agree,  Highland  Shareholders shall sell
and transfer the Remaining Shares to the Company at a nominal price, pursuant to
the same terms and conditions  contained  hereunder as applicable to the parties
then.

2.  Highland  Shareholders  have  direct or  indirect  rights or options  to, or
interests in, (the rights, options and interests together are called "Additional
Rights") 25 mineral  prospects in Tibet,  China (the  "Additional  Properties"),
subject to terms and  conditions  and  regulatory  requirements  attached to the
Additional Rights. Highland Shareholders agreed to transfer and assign, or shall
cause to be transferred and assigned,  to the Company the Additional  Rights for
$1.00,  subject to terms and  conditions and  regulatory  requirements  attached
thereto, and terms and conditions herein. No rights have yet been transferred.

Upon  completion of the  Exchange,  the  following  individuals  were elected or
appointed as directors of the Company: Zhi Wang, Jie Yang, Xiaojun Ma, Jing Wang
and Maurice Tsakok.

The Company  agreed to pay a finder's  fee in the form of an  agreement to issue
common  stock for  issuance  of  9,639,000  common  shares of the  Company  upon
completion of the share exchange and the increase of authorized  common stock of
the Company to be approved in the coming Annual General Meeting.

                                        5

<PAGE>

On November 9, 2004, Highland shareholders entered into an option agreement with
Continental  Minerals Corp.  ("Continental")  ( a Hunter  Dickinson,  Inc. group
company).  Continental  obtained  an option to  acquire  50% of the  issued  and
outstanding  shares of  Highland  through  payment  of  $2,000,000  to  Highland
shareholders and investment of $5,000,000 in Highland to fund the exploration of
the  Xietongmen  Copper-Gold  Property  located near Xiong  Village,  Xietongmen
County, Rikaze area, Tibet Autonomous Region,  China.  Continental may acquire a
further  10% of the issued  and  outstanding  shares of  Highland,  through  the
investment  of  $3,000,000  in Highland to fund  exploration  of the  Xietongmen
Copper-Gold Property, in the event of its doing so, the Company's  shareholdings
in Highland will be reduced to 40%. The preliminary  option agreement is subject
to a feasibility study by Continental and customary title matters,  permits, and
approvals.

HIGHLAND MINING INC.

Highland Mining Inc. fully and legally owns Tianyuan  Mineral  Exploration  Ltd.
("Tianyuan"),  as a wholly owned foreign enterprise  registered in Tibet, China,
incorporated  pursuant to relevant Chinese laws and regulations,  which holds an
exploration license covering Xietongmen Mine in Tibet, China.

Highland  Mining  Shareholders  has direct or indirect  rights or options to, or
interests  in, 25 mineral  prospects  (including  Xietongmen)  in Tibet,  China,
subject to terms and  conditions  and  regulatory  requirements  attached to the
Rights.  Highland  Shareholders,  subject to terms and conditions and regulatory
requirements related to the rights.

MINERAL EXPLORATION AND EXTRACTION BUSINESS

The  business of mineral  deposit  exploration  and  extraction  involves a high
degree of risk. Few properties  that are explored are ultimately  developed into
production.  At present,  none of the  Honglu's  properties  has a known body of
commercial ore. Other risks facing the Company include competition,  reliance on
third parties and joint venture  partners,  environmental  and insurance  risks,
political and environmental instability,  statutory and regulatory requirements,
fluctuations  in mineral prices and foreign  currency,  share price  volatility,
title risks, and uncertainty of additional financing.

The Company has sought to identify  what it believes to be the most  significant
risks to its business,  but cannot predict whether or to what extent any of such
risks may be  realized  nor can there be any  assurances  that the  Company  has
identified  all possible  risks that might  arise.  Investors  should  carefully
consider all of such risk factors  before  making an  investment  decision  with
respect to the Company's stock.

CURRENT SITUATION

The  Company,  a  junior  mining  company,  has  assembled  a  portfolio  of  25
base/precious metal and industrial mineral prospects upon which it holds options
in Tibet, China through its 50% owned Chinese  subsidiary  Highland Mining Inc..
It is the Company's  intention to focus  exclusively on the exploration of these
base and  precious  metal  mineral  prospects  in Tibet,  China.  The Company is
seeking  joint  venture  partners  to assist  in the  exploration  and  possible
development of these mineral prospects.

                                       6

<PAGE>

Initially,  the  Company  will  concentrate  its efforts in the  development  of
mineral prospects in Tibet. Today,  Chinese authorities are making unprecedented
efforts to open up the Tibetan  plateau to  large-scale  mineral  development in
order to meet  domestic  demand for raw  materials.  The Chinese  Government  is
increasingly  seeking  foreign  investment  and  international  co-operation  to
facilitate  this  particular  aspect  of  their  economic  policy.  In  order to
accommodate such development, the Qinghai-Tibet Railway, one of the regions most
important new construction  projects,  is expected to be completed by the end of
2006.

The Company sought  experienced and recognized joint venture  partners,  and the
Company negotiated a "Property Option Agreement" with Hunter Dickinson,  Inc. An
initial  Agreement  was  reached in February  2004,  with  Continental  Minerals
Corporation  ("Continental"),  a member of the Hunter Dickinson  Group,  whereby
Continental  has  acquired  the right to earn a 60%  interest  in the  Company's
Xietongmen   gold-copper   prospect.   The  Xietongmen   prospect   consists  of
porphyry-like disseminated and quartz stockwork mineralization.

Among  the  mineral  properties,   several  exhibit  copper,  copper/gold,   and
copper/molybdenum mineralization. Since its private placement in January of 2005
has given it current  working  capital and  liquidity,  The  Company  intends to
investigate  and  rank  these  properties  in  order  to  plan  a  comprehensive
exploration  program and joint  venture/financial  arrangement in the next year.
The company raised $2.4 million in private placement to meet its working capital
requirements.

In November 2004, the terms of the original Agreement had to be modified whereby
under the terms of the  Property  Option  Agreement,  Continental  has  acquired
options  to  purchase  50%  or  60%  of  the  shares  of  Highland  Mining  Inc.
("Highland").  Under  this  Agreement,  Continental  will pay $2  million  ($1.2
million on receiving  regulatory  approval and the balance $0.80 million after a
year of the  agreement  date) to the  original  shareholders  of Highland and $5
million  investment in Highland to fund  exploration  of the property.  Of this,
prospect  expenditures  of $3 million  must be funded by November 9, 2005 with a
further  $2  million  of  prospect  expenditures  funded by  November  9,  2006.
Continental  can then  increase  its  interest  in  Highland  to 60%  within the
following  year through  investment  of an  additional $3 million in Highland to
fund the  exploration.  In the event that  Continental  exercises its options to
acquire the additional 10% shareholding of Highland,  the Company's shareholding
will be reduced to 40%.

The Xietongmen joint venture agreement is the first venture.  Concurrently,  the
Company is reviewing and prioritizing the other 24 mineral prospects with a view
to forming  similar joint  venture/financial  arrangements.  The prospects under
review  represent a broad array of  precious/base  metal and industrial  mineral
targets.  The Company  holds,  through  original  Highland  shareholders,  a 65%
interest in each of these  properties  except for three  properties in which the
Company retains a 100% interest.

Continental  assembled its exploration  team, and, with the drilling  contractor
visited the  Xietongmen  Copper-Gold  property in December  2004.  Subsequently,
Continental made preparation for a Phase I, 25-hole drilling program, comprising
8,000 meters to commence  during the first  quarter of 2005.  This program is on
target.

EMPLOYEES

As of December 31, 2004, the Company has no employees.  The Company continues to
rely on the  expertise of the  officers and  directors to carry out its business
strategy.  The Company  anticipates  the need for increased  administrative  and
other staff as the business of the Company grows.

ITEM 2. DESCRIPTION OF PROPERTIES

The Company currently  maintains an office at Suite 536 World Trade Centre,  999
Canada Place, Vancouver, B.C., Canada as its corporate headquarters.

As of December 31, 2004, The Registrant had the following tangible assets.
(The amount is quoted in US Dollar)

(a) Real Estate. None

(b) Computer and Office Equipment $9,058

                                        7

<PAGE>

ITEM 3. LEGAL PROCEEDINGS

The  Company  is not,  and  does  not  anticipate  being a  party  to any  legal
proceedings in the foreseeable future.

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

No matters  were  submitted  during the fiscal year  covered by this report to a
vote of security holders of the Company,  through the solicitation of proxies or
otherwise.

                                     Part II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

(a) The Company's  common stock is traded on the NASD Electronic  Bulletin Board
under the symbol "CTVH.OB". Prices reported represent prices between dealers, do
not include markups,  markdowns or commissions and do not necessarily  represent
actual  transactions.  The market for the Company's shares has been sporadic and
at times very limited.

The  following  table sets forth high and low bid  quotations  of the  Company's
common  stock  for the  financial  years  ended  December  31,  2004 and 2003 as
follows:



                                       Bid

                                         2004

                                         High              Low
                                         ----              ---
First Quarter                            0.550              0.230
Second Quarter                           0.310              0.051
Third Quarter                            0.110              0.040
Fourth Quarter                           0.190              0.065



                                       Bid

                                         2003

                                         High              Low
                                         ----              ---
First Quarter                            0.085             0.010
Second Quarter                           0.095             0.010
Third Quarter                            0.210             0.060
Fourth Quarter                           0.700             0.120



Such Bulletin Board quotations reflect interdealer prices, without mark up, mark
down or commission and may not necessarily represent actual transactions.

(b) As of December 31, 2004, the Company had  approximately  400 shareholders of
record of the common stock.

                                        8

<PAGE>

(c) No dividends on outstanding  common stock have been paid within the last two
fiscal years,  and interim  periods.  The Company does not  anticipate or intend
upon paying dividends for the foreseeable future.

50,000 and 2,940,000  Series A warrants were  exercised at $0.10 each on January
6, 2004 and January 27, 2004 respectively.

On October 1, 2004, 200,375 Series C warrants were exercised at $0.08 each.

March 11, 2005,  the Company  completed a  non-brokered  private  placement  for
48,000,000  units at $0.05 per unit for total proceeds of $2,400,000.  Each unit
will consist of one common share and one non-transferable share purchase warrant
"E"  entitling  the holder to purchase one common share for two years,  at $0.08
per share in the first year or $0.25 in the second year.  The proceeds from this
private  placement  will  be used  for  working  capital  and  acquiring  mining
properties in the future. A 7% finder's fee will be paid in shares.

3,040,000 Series "B" warrants expired on January 12, 2005.

As of February 24, 2005, the Company has 15,849,625,  and 200,375 Series "C" and
"D" Stock Purchase Warrants outstanding, respectively.

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

The  information  presented here should be read in conjunction  with China NetTV
Holdings Inc.'s financial statements and other information included in this Form
10-KSB.  When used in this Form  10-KSB,  the  words  "expects,"  "anticipates,"
"estimates"  and similar  expressions  are intended to identify  forward-looking
statements.  Such statements are subject to risks and  uncertainties,  including
those set forth below under "Risks and  Uncertainties,"  that could cause actual
results  to  differ  materially  from  those  projected.  These  forward-looking
statements speak only as of the date hereof. The Company expressly disclaims any
obligation or  undertaking  to release  publicly any updates or revisions to any
forward-looking  statements  contained  herein  to  reflect  any  change  in the
Company's  expectations with regard thereto or any change in events,  conditions
or circumstances on which any statement is based.

Critical Accounting Policies and Estimates

Our  discussion  and analysis or plan of  operation is based upon our  financial
statements,  which have been prepared in accordance with  accounting  principles
generally  accepted in the United States.  The  preparation  of these  financial
statements  requires us to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues and expenses, and related disclosure of
contingent  assets  and  liabilities.   We  base  our  estimates  on  historical
experience and on various other  assumptions  that are believed to be reasonable
under  the  circumstances,  the  results  of which  form the  basis  for  making
judgments  about the  carrying  values of assets  and  liabilities  that are not
readily  apparent  from other  sources.  Actual  results  may differ  from these
estimates under different assumptions or conditions.

                                        9

<PAGE>

An  accounting  policy is deemed to be critical  if it  requires  an  accounting
estimate to be made based on assumptions about matters that are highly uncertain
at the time the estimate is made,  and if different  estimates  that  reasonably
could have been used or changes in the  accounting  estimate that are reasonably
likely to occur could materially change the financial statements. We believe the
following critical  accounting  policies reflect our more significant  estimates
and assumptions used in the preparation of our financial statements:

Common  stock  held in escrow - The  Company  has issued  129,700,000  shares of
common stock that are held in escrow and the related  9,639,00  shares of common
stock for legal fees,  which have not been valued  pursuant to  consummation  of
certain  agreements,   which  were  subject  to  Chinese  government  regulatory
approval. All these shares were subsequently cancelled in February 2005.

Contingencies  - We may be subject to certain  asserted  and  unasserted  claims
encountered  in the  normal  course  of  business.  It is our  belief  that  the
resolution  of these  matters  will not have a  material  adverse  effect on our
financial  position  or  results  of  operations,  however,  we  cannot  provide
assurance that damages that result in a material adverse effect on our financial
position  or results of  operations  will not be  imposed in these  matters.  We
account for contingent  liabilities when it is probable that future expenditures
will be made and such expenditures can be reasonably estimated.

Income Taxes - We record a valuation allowance to reduce our deferred tax assets
to the amount that is more likely than not to be  realized.  We have  considered
future market growth,  forecasted  earnings,  future taxable income, and prudent
and feasible tax planning  strategies  in  determining  the need for a valuation
allowance.  We currently  have recorded a full valuation  allowance  against net
deferred tax assets as we currently  believe it is more likely than not that the
deferred tax assets will not be realized.

Plan of Operations

The Company has had no revenues from operations since inception.  The operations
of the Company have been financed through private placements and loans.

The  Company  has  expended  substantially  all of its  efforts  during the last
fifteen months to achieve a  participation  in mineral  prospect  exploration in
Tibet with the appropriate Chinese government regulatory approval.

2005 BUDGET



Rent                                         $   44,444
Salaries and wages                              118,519
Traveling/conference/seminars, etc.              18,519
Communications and other expenses                18,519
Consulting fees                                  77,778
Audit and accounting fees                        18,519
Professional and legal fees                      74,074
Exploration expenses                            500,000
Investigation expenses                          500,000
                                                -------
                                             $1,370,372



The  Company  intends to develop  gold and other  mineral  deposits in Tibet and
other areas of China  recognizing  that China's recent  economic growth rate has
placed an increasing demand on the need for domestic production of metals.

                                       10

<PAGE>

Currently,  China  places  fourth in the world  wide  production  of copper  but
substantially  falls short of its  domestic  requirements.  The  development  of
partially  developed  base and precious  metal deposit in South Western China is
seen as an opportunity to aid China in meeting its domestic requirements.

The majority of the Company's expenses for the year ended December 31, 2004 have
consisted  of  the  following  major  expenses:   consulting   fees,  legal  and
professional fees, and travel and promotion expenses. Such fees were incurred in
connection with efforts to consummate the acquisition of Honglu,  negotiating an
Option Agreement with Continental Minerals Corporation (a Hunter Dickinson, Inc.
group company), and the subsequent acquisition of 50% interest in Highland.

To date, we have not been profitable in any of our endeavors and we face all the
risks  common to  companies  in their  early  stages of  development,  including
undercapitalization and uncertainty of funding sources, high initial expenditure
levels  and  uncertain   revenue  streams,   an  unproven  business  model,  and
difficulties in managing growth.  Our recurring losses raise  substantial  doubt
about our ability to continue as a going  concern.  Our financial  statements do
not  reflect  any  adjustments  that  might  result  from  the  outcome  of this
uncertainty.  We believe we will  continue to incur losses for at least the next
12 months and will  require  additional  cash to  satisfy  our  operations.  The
Company's future funding  requirements will depend on numerous factors,  many of
which are beyond our control.

Due to the  "start  up"  nature of the  Company's  business,  we expect to incur
losses as we expand.  We expect to raise  additional  funds  through  private or
public equity  investment in order to expand the range and scope of our business
operations.  We will seek  access to  private  or public  equity but there is no
assurance  that such  additional  funds  will be  available  for the  Company to
finance its operations on acceptable terms, if at all. We cannot assure you that
we will be able to raise funds through a sale or equity transaction,  or if such
funding is available,  that it will be on favorable  terms.  Our common stock is
currently traded on the over-the-counter market on an electronic bulletin board.

Change of Management

Maurice  Tsakok  has been a  Director  since  May  2000.  Ronald  Xiuru  Xie was
appointed  to the Board  effective  July 5, 2003 and he  resigned on November 3,
2004.  Zhi Wang,  Jie Yang and  Anthony  Garson were  appointed  to the Board on
August 4, 2003.  Zhi Wang and Jie Yang resigned on August 23, 2004 and have been
reappointed as directors on November 5, 2004.

Ronald  Xiuru Xie was the  President  of the Company from July 5, 2003 to May 4,
2004.  Anthony Garson has been  appointed as President on May 10, 2004.  Maurice
Tsakok continues to act as Secretary of the Company.

Results of Operations

The Company has had no  operations  during the fiscal  year ended  December  31,
2004.  The Company  generated  no revenue and  incurred  expenses of  $1,055,134
stemming from general, administrative and consulting expenditures related to its
negotiations to acquire  mineral  prospects in China as compared to $698,044 for
the same  period of last year.  The  increase  was  mainly due to the  increased
expenses  incurred  including  (i)  consulting  fees paid to the  directors  and
consultants for their services and (ii) legal fees incurred.

                                       11

<PAGE>

The Company  expects the trend of losses to continue at an increasing rate after
the  acquisition  of 50%  interest in Highland  until we can achieve  commercial
production on some of the mineral properties or sell some of mineral properties,
of which there can be no assurance.

Liquidity and Working Capital

As of December 31, 2004,  the Company had total  current  assets of $903,427 and
total  current  liabilities  of $149,535.  The Company has a working  capital of
$753,892 at December 31, 2004. For the year ended December 31, 2004, the Company
received  $299,000 and $16,030 in cash  proceeds  from the exercise of 2,990,000
and 200,375 Series A and C Stock Purchase Warrants respectively, $100,000 though
the  execution  of a  promissory  note and  $1,200,000  share  subscription  for
24,000,000 units at $0.05 each. The Company has no other capital resources other
than the  ability  to use its  common  stock to  achieve  additional  capital or
exercise of the warrants by the holders.

The Company has arranged a non-brokered private placement of 48,000,000 units at
$0.05 per unit for total proceeds of $2,400,000.  Half of the subscriptions were
received on  December  31, 2004 and  another  $850,000  has been  received as of
February   25,   2005.   Each  unit   consists  of  one  common  share  and  one
non-transferable  share  purchase  warrant  entitling the holder to purchase one
common share for two years, at $0.08 per share in the first year or $0.25 in the
second year.  The proceeds from this private  placement will be used for working
capital and acquiring mining properties in the future. A 7% finder's fee will be
paid in shares.

The Company  has no other  capital  resources  other than the ability to use its
common  stock to achieve  additional  capital or exercise of the warrants by the
holders.

Recent Accounting Pronouncements

The  Financial  Accounting  Standards  Board  ("FASB") has issued the  following
pronouncements,  none of which are expected to have a significant  affect on the
financial statements:

In March 2004,  the EITF reached final  consensuses  on EITF 03-6 which provides
additional guidance to determine whether a security is a participating  security
and therefore  subject to the  two-class  method under SFAS 128. The guidance in
EITF 03-6 clarifies the notion of what constitutes a participating security, and
is effective for fiscal periods  (interim or annual)  beginning  after March 31,
2004.  EITF  03-06  provides  guidance  in  applying  the  two-class  method  of
calculating  earnings per share for companies that have issued  securities other
than common stock that  contractually  entitle the holder to  participate in any
dividends  declared  and  earnings  of the  company.  The opinion  defines  what
constitutes a  participating  security and how to apply the two-class  method of
calculating earnings per share to those securities. In addition, the consensuses
in  EITF  03-6  nullify  the  guidance  in  EITF  Topic  No.  D-95,  "Effect  of
Participating  Convertible  Securities on the  Computation of Basic Earnings Per
Share",  and requires the use of the  two-class  method to compute  basic EPS by
companies with participating  convertible securities.  The adoption did not have
an impact on our calculation of earnings per share.

In April 2004, the EITF reached consensus on EITF Issue No. 03-6, "Participating
Securities and the Two Class Method under FASB Statement No. 128" ("EITF 03-6").
EITF 03-6 addresses a number of questions regarding the computation of earnings

                                       12

<PAGE>

per share by companies that have issued  securities other than common stock that
contractually entitle the holder to participate in the dividends and earnings of
the company when, and if, it declares  dividends on its common stock.  EITF 03-6
also provides  further  guidance in applying the two-class method of calculating
earnings per share, clarifying what constitutes a participating security and how
to apply  the  two-class  method of  computing  earnings  per  share  once it is
determined  that  a  security  is  participating,   including  how  to  allocate
undistributed  earnings to such a security.  EITF 03-6 is  effective  for fiscal
periods beginning after March 31, 2004 and requires  retroactive  restatement of
prior earning per share amounts. This statement does not affect the Company.

In June 2004, the FASB issued EITF Issue No. 02-14,  "Whether an Investor Should
Apply the Equity Method of Accounting to  Investments  Other Than Common Stock."
EITF Issue No. 02-14 addresses  whether the equity method of accounting  applies
when an  investor  does not have an  investment  in  voting  common  stock of an
investee but exercises significant influence through other means. EITF Issue No.
02-14 states that an investor  should only apply the equity method of accounting
when it has investments in either common stock or in-substance common stock of a
corporation,  provided that the investor has the ability to exercise significant
influence  over the  operating  and  financial  policies  of the  investee.  The
accounting  provisions  of EITF Issue No. 02-14 are  effective for the reporting
period  beginning  after  September  15, 2004.  The Company is in the process of
determining  the effect,  if any, of the  adoption of EITF Issue No.  02-14 will
have on the Company's financial position, results of operations, or cash flows.

In November 2004, the FASB issued SFAS No. 151,  "Inventory  Costs, an amendment
of ARB No. 43,  Chapter 4." The  amendments  made by SFAS No. 151  clarify  that
abnormal amounts of idle facility expense,  freight,  handling costs, and wasted
materials (spoilage) should be recognized as current-period  charges and require
the allocation of fixed  production  overheads to inventory  based on the normal
capacity of the production  facilities.  The guidance is effective for inventory
costs  incurred  during  fiscal years  beginning  after  November 23, 2004.  The
Company  does not  believe  the  adoption  of SFAS No.  151 will have a material
impact on our financial position, results of operations or cash flows.

In  December  2004,  the FASB  issued  a  revision  of  Statement  of  Financial
Accounting  Standards No. 123,  "Accounting for Stock-Based  Compensation" (SFAS
123R). SFAS 123R supersedes APB Opinion No. 25,  "Accounting for Stock Issued to
Employees,"  and its  related  implementation  guidance.  SFAS 123R  establishes
standards  for the  accounting  for  transactions  in  which  an  entity  incurs
liabilities  in exchange for goods or services  that are based on the fair value
of the  entity's  equity  instruments  or that may be settled by the issuance of
those equity instruments.  SFAS 123R does not change the accounting guidance for
share-based  payment  transactions with parties other than employees provided in
SFAS 123 as originally  issued and EITF Issue No. 96-18,  "Accounting for Equity
Instruments  That Are  Issued  to Other  Than  Employees  for  Acquiring,  or in
Conjunction with Selling, Goods or Services." SFAS 123R is effective for interim
reporting  period that begins after June 15, 2005. The Company is in the process
of  determining  the  effect  of the  adoption  of SFAS  123R  will  have on its
financial position, results of operations, or cash flows.

In December  2004,  the FASB issued SFAS No.  153,  "Exchanges  of  Non-monetary
Assets - an  amendment  of APB Opinion No. 29." The  guidance in APB Opinion No.
29,  "Accounting for Non-monetary  Transactions," is based on the principle that
exchanges of  non-monetary  assets should be measured based on the fair value of
the  assets  exchanged  and  provided  an  exception  to the  basic  measurement
principle  (fair  value)  for  exchanges  of  similar  productive  assets.  That
exception  required  that some  non-monetary  exchanges,  although  commercially
substantive,  be recorded on a carryover  basis.  This Statement  eliminates the
exception to fair value for exchanges of similar  productive assets and replaces
it  with a  general  exception  for  exchange  transactions  that  do  not  have
commercial  substance--that  is, transactions that are not expected to result in
significant changes in the cash flows of the reporting entity. The provisions of
this  Statement are  effective for  non-monetary  asset  exchanges  occurring in
fiscal  periods  beginning  after June 15,  2005,  applied  prospectively.  This
statement does not affect the Company.

                                       13

<PAGE>

RISK FACTORS

We have sought to identify what we believe to be the most  significant  risks to
our business. However, we cannot predict whether, or to what extent, any of such
risks may be realized nor can we guarantee that we have  identified all possible
risks that might arise.  Investors  should  carefully  consider all of such risk
factors  before making an investment  decision with respect to our Common Stock.
We provide the  following  cautionary  discussion  of risks,  uncertainties  and
possible inaccurate assumptions relevant to our business. These are factors that
we think  could  cause our actual  results to differ  materially  from  expected
results. Other factors besides those listed here could adversely affect us.

PENNY STOCK RISK

The Company's stock differs from many stocks, in that it is a "penny stock." The
Securities  and  Exchange  Commission  has adopted a number of rules to regulate
"penny  stocks."  These rules  include,  but are not limited to,  Rules  3a5l-l,
15g-1,  15g-2,  15g-3,  15g-4,  15g-5,  15g-6 and 15g-7 under the Securities and
Exchange Act of 1934, as amended.

Because our securities  probably  constitute "penny stock" within the meaning of
the rules, the rules would apply to us and our securities. The rules may further
affect the ability of owners of our stock to sell their securities in any market
that may develop for them.  There may be a limited market for penny stocks,  due
to the regulatory burdens on broker-dealers. The market among dealers may not be
active.  Investors  in penny  stock  often are  unable to sell stock back to the
dealer  that sold them the stock.  The  mark-ups or  commissions  charged by the
broker-dealers  may be greater  than any  profit a seller  may make.  Because of
large dealer spreads, investors may be unable to sell the stock immediately back
to the dealer at the same price the dealer  sold the stock to the  investor.  In
some cases, the stock may fall quickly in value. Investors may be unable to reap
any profit from any sale of the stock, if they can sell it at all.

Stockholders  should be aware that,  according  to the  Securities  and Exchange
Commission  Release No. 34- 29093,  the market for penny  stocks has suffered in
recent years from patterns of fraud and abuse. These patterns include:

o    Control of the market for the security by one or a few broker-dealers  that
     are often related to the promoter or issuer;

o    Manipulation of prices through prearranged  matching of purchases and sales
     and false and misleading press releases;

o    Boiler  room"   practices   involving   high  pressure  sales  tactics  and
     unrealistic price projections by

(i)  Excessive  and  undisclosed  bid-ask  differentials  and markups by selling
broker-dealers; and inexperienced sales persons;

(ii)  The   wholesale   dumping  of  the  same   securities   by  promoters  and
broker-dealers after prices have been manipulated to a desired level, along with
the inevitable collapse of those prices with consequent investor losses.

Furthermore,  the "penny stock" designation may adversely affect the development
of any public  market  for the  Company's  shares of common  stock or, if such a
market develops,  its  continuation.  Broker-dealers  are required to personally
determine whether an investment in "penny stock" is suitable for customers.

Penny  stocks  are  securities  (i) with a price of less than five  dollars  per
share; (ii) that are not traded on a "recognized" national exchange; (iii) whose
prices are not quoted on the NASDAQ automated  quotation  system  (NASDAQ-listed
stocks must still meet  requirement  (i)  above);  or (iv) of an issuer with net
tangible  assets  less than  $2,000,000  (if the issuer  has been in  continuous
operation  for at least three years) or $5,000,000  (if in continuous  operation
for less  than  three  years),  or with  average  annual  revenues  of less than
$6,000,000 for the last three years.

                                       14

<PAGE>

Section  15(g) of the  Exchange  Act, and Rule 15g-2 of the  Commission  require
broker-dealers  dealing in penny stocks to provide  potential  investors  with a
document  disclosing  the risks of penny stocks and to obtain a manually  signed
and dated written receipt of the document before  effecting any transaction in a
penny stock for the  investor's  account.  Potential  investors in the Company's
common  stock are urged to obtain  and read  such  disclosure  carefully  before
purchasing any shares that are deemed to be "penny stock."

Rule 15g-9 of the Commission requires  broker-dealers in penny stocks to approve
the account of any investor for  transactions  in such stocks before selling any
penny stock to that investor.  This procedure  requires the broker-dealer to (i)
obtain from the investor information  concerning his or her financial situation,
investment  experience and investment  objectives;  (ii)  reasonably  determine,
based on that  information,  that  transactions in penny stocks are suitable for
the investor and that the investor has sufficient knowledge and experience as to
be reasonably capable of evaluating the risks of penny stock transactions; (iii)
provide the investor with a written  statement  setting forth the basis on which
the broker-dealer made the determination in (ii) above; and (iv) receive a sign-
ed and  dated  copy of such  statement  from the  investor,  confirming  that it
accurately reflects the investor's  financial situation,  investment  experience
and investment  objectives.  Compliance with these requirements may make it more
difficult for the Company's stockholders to resell their shares to third parties
or to otherwise dispose of them.

Limited Operating History; Anticipated Losses; Uncertainty of Future Results

China NetTV  Holdings  Inc. has only a limited  operating  history upon which an
evaluation  of the  Company  and  its  prospects  can be  based.  The  Company's
prospects must be evaluated with a view to the risks encountered by a company in
an early stage of development and with which the Company intends to operate, and
the acceptance of the Company's business model. To the extent that such expenses
are not subsequently followed by commensurate  revenues, the Company's business,
results of operations  and  financial  condition  will be  materially  adversely
affected.  If cash  generated  by  operations  is  insufficient  to satisfy  the
Company's liquidity requirements, the Company may be required to sell additional
equity or debt  securities.  The sale of additional  equity or convertible  debt
securities would result in additional dilution to the Company's stockholders.

Limited Public Market, Possible Volatility of Share Price

The Company's  Common Stock is currently  quoted on the NASD OTC Bulletin  Board
under the ticker symbol CTVH. As of December 31, 2004, there were  approximately
142,236,575 shares of Common Stock outstanding. There can be no assurance that a
trading market will be sustained in the future.

Potential Fluctuations in Quarterly Results

Significant  variations in our quarterly  operating results may adversely affect
the market price of our common  stock.  Our  operating  results have varied on a
quarterly  basis  during  our  limited  operating  history,  and  we  expect  to
experience significant fluctuations in future quarterly operating results. These
fluctuations have been and may in the future be caused by numerous factors, many
of  which  are  outside  of  our  control.  We  believe  that   period-to-period
comparisons of our results of operations  will not necessarily be meaningful and
that you should not rely upon them as an indication of future performance. Also,
it is likely  that our  operating  results  could be below the  expectations  of
public market  analysts and investors.  This could  adversely  affect the market
price of our common stock.

                                       15

<PAGE>

Dependence on Executive Officers and Technical Personnel

The success of our business plan depends on attracting qualified personnel,  and
failure to retain the necessary  personnel could adversely  affect our business.
Competition for qualified  personnel is intense,  and we may need to pay premium
wages to attract  and  retain  personnel.  Attracting  and  retaining  qualified
personnel  is  critical  to our  business.  Inability  to attract and retain the
qualified  personnel necessary would limit our ability to implement our business
plan successfully.

Management of Growth

The Company expects to experience  significant growth in the number of employees
and the scope of its  operations.  In  particular,  the Company  intends to hire
additional  staff for  mineral  exploration  and  administrative  support.  Such
activities can result in increased  responsibilities for management. The Company
expects to experience difficulty in filling its needs for qualified personnel.

The  Company's  future  success  depends  upon its  ability  to  raise  adequate
financing to meet its mineral exploration and operation  expenses.  This need to
manage its expenses will place a significant strain on the Company's  management
and  operational  resources.  If the  Company is unable to manage  its  expenses
effectively,  the  Company's  business,  results of  operations,  and  financial
condition will be materially adversely affected.

Need for Additional Financing

The  Company  believes it has  sufficient  capital to meet its  short-term  cash
needs,   including  the  costs  of  compliance  with  the  continuing  reporting
requirements of the Securities Exchange Act of 1934. However, if losses continue
it may have to seek loans or equity  placements  to cover longer term cash needs
to continue operations and expansion.

No commitments to provide additional funds have been made by management or other
stockholders.  Accordingly,  there can be no assurance that any additional funds
will be available to the Company to allow it to cover operation expenses.

If future operations are unprofitable, it will be forced to develop another line
of business,  or to finance its operations through the sale of assets it has, or
enter  into the sale of  stock  for  additional  capital,  none of which  may be
feasible  when  needed.  The  Company  has no  specific  management  ability  or
financial resources or plans to enter any other business as of this date.

The effects of inflation have not had a material impact on its operation, nor is
it expected to in the immediate future.

Political Risks

The market in China is monitored by the government,  which could impose taxes or
restrictions at any time which would make operations unprofitable and infeasible
and cause a write-off of  investment  in the mineral  properties.  Other factors
include  political  policy on foreign  ownership,  political  policy to open the
doors to foreign  investors,  and political  policy on mineral  claims and metal
prices.

                                       16

<PAGE>

POLITICAL, ECONOMIC AND REGULATORY RISKS IN CHINA

THERE ARE ECONOMIC RISKS  ASSOCIATED  WITH DOING BUSINESS IN CHINA WHICH COULD
AFFECT OUR OPERATIONS

The Chinese economy has experienced  significant  growth in the past decade, but
this growth has been  uneven  across  geographic  and  economic  sectors and has
recently  been  slowing.  There can be no  assurance  that this  growth will not
continue to  decrease  or that the slow down will not have a negative  effect on
our  business.  The Chinese  economy is also  experiencing  deflation  which may
continue in the future.  The current economic situation may adversely affect our
ability to do business or sell  minerals,  if ever the  Company  produces,  as a
result of slowing domestic demand and deflation.

REGULATION OF THE MINERALS INDUSTRY IN CHINA MAY ADVERSELY AFFECT OUR BUSINESS

In China enacted regulations governing minerals extraction. Because many Chinese
laws,  regulations and legal requirements with regard to foreign  investments in
the minerals industry are relatively new and untested,  their interpretation and
enforcement  by Chinese  authorities  may involve  significant  uncertainty.  In
addition,  the Chinese legal system is a civil law system in which decided legal
cases have little  precedential value. As a result in many cases it is difficult
to predict outcomes. We cannot predict the effect of further developments in the
Chinese  legal  system,  particularly  with  regard  to the  minerals  industry,
including  the  promulgation  of new  laws,  changes  to  existing  laws  or the
interpretation  or  enforcement,  or the  preemption  of  local  regulations  by
national laws.

RESTRICTIONS  ON CURRENCY  EXCHANGE  COULD LIMIT OUR ABILITY TO  REPATRIATE  OUR
REVENUES FROM CHINA

Although Chinese governmental  policies were introduced in 1996 to allow greater
convertibility of the Renminbi,  significant  restrictions  still remain. We can
provide no assurance  that the Chinese  regulatory  authorities  will not impose
greater   restrictions  on  the   convertibility  of  the  Renminbi  to  western
currencies. The government could refuse to allow the exchange, or could restrict
the amount or volume of exchange.  Because the  majority of our future  revenues
may be in the form of Renminbi, any future restrictions on currency exchange may
limit our ability to utilize revenue  generated in Renminbi to fund our business
activities  outside China, if we ever have any. This restriction,  if it occurs,
may affect our ability to pay  repatriate  any profits in U.S.  dollars or other
acceptable currency.

A GENERAL ECONOMIC DOWNTURN IN CHINA COULD ADVERSELY AFFECT OUR BUSINESS

In the last few years the general health of the economy,  in China where we have
conducted all of our operations to date, has been relatively strong and growing,
a consequence of which has been increasing  capital  spending by individuals and
growing companies to keep pace with rapid technological  advances. To the extent
the general  economic  health of China  declines from recent  levels,  or to the
extent  individuals or companies fear a decline is imminent,  these  individuals
and companies  may reduce  demand for minerals.  Any decline or concern about an
imminent  decline  could  delay  decisions  among  certain of our  customers  to
purchase  production  if we  ever  have  any or  could  delay  decisions  by our
prospective  customers to make initial  commitments  to purchase.  Such downturn
would have a material and adverse effect on our business,  prospects,  operating
results and financial condition.

                                       17

<PAGE>

Other Risks and Uncertainties

The  business of mineral  deposit  exploration  and  extraction  involves a high
degree of risk. Few prospects  that are explored are  ultimately  developed into
production.  At  present,  none of  Highland's  prospects  has a  known  body of
commercial ore. Other risks facing the Company include competition,  reliance on
third parties and joint venture  partners,  environmental  and insurance  risks,
political and environmental instability,  statutory and regulatory requirements,
fluctuations  in mineral prices and foreign  currency,  share price  volatility,
title risks, and uncertainty of additional financing.

The Company has sought to identify  what it believes to be the most  significant
risks to its business,  but cannot predict whether or to what extent any of such
risks may be  realized  nor can there be any  assurances  that the  Company  has
identified  all possible  risks that might  arise.  Investors  should  carefully
consider all of such risk factors  before  making an  investment  decision  with
respect to the Company's stock.

ITEM 7 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We do not have any market risk sensitive instruments. Since operations in Canada
are in Canadian dollar denominated  accounts, we do believe that we have foreign
currency  risk in that as the Canadian  dollar  increases  in value  against the
United Sates dollar our operating  costs increase when reported in United States
dollars.

Our product is quoted for sale in United States dollars.

Market Risk

As of the date of this  report,  the Company  does not hold any  derivatives  or
other  investments  that are subject to market risk. The carrying  values of any
financial  instruments,  approximate fair value as of those dates because of the
relatively  short-term  maturity  of  these  instruments  which  eliminates  any
potential market risk associated with such instruments.

ITEM 7A - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The  response  to this Item is included  as a separate  Exhibit to this  report.
Please see pages F-1 through F-10.

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

In  connection  with the audits of the most recent  fiscal years and any interim
period preceding resignation,  no disagreements exist with any former accountant
on any matter of accounting principles or procedure,  which disagreements if not
resolved to the satisfaction of the former  accountant would have caused them to
make  reference in  connection  with their  report to the subject  matter of the
disagreement(s).

                                       18

<PAGE>

The principal  accountant's  report on the financial  statements  for any of the
past two years  contained no adverse  opinion or a disclaimer of opinion nor was
qualified  as to  uncertainty,  audit  scope or  accounting  principles,  except
modified to include a paragraph discussing the entity's ability to continue as a
going concern.

Item 8A. CONTROLS AND PROCEDURES

Based on an evaluation  as of the date of the end of the period  covered by this
report,  our Chief Executive Officer and Chief Financial  Officer,  conducted an
evaluation of the  effectiveness  of the design and operation of our  disclosure
controls and procedures,  as required by Exchange Act Rule 13a-15. Based on that
evaluation,  our Chief Executive  Officer and Chief Financial  Officer concluded
that our disclosure  controls and procedures were effective as of the end of the
period covered by this report.

There were no changes in our internal  controls over  financial  reporting  that
occurred during the year ended December 31, 2004 that have materially  affected,
or are  reasonably  likely to  materially  affect,  our  internal  control  over
financial reporting.


                                    Part III

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

(a) The following  table  furnishes  the  information  concerning  the Company's
directors and officers as of December 31, 2004. The directors of the Company are
elected every year and serve until their successors are elected and qualify.



Name                   Age       Title                                Term
------------------     ---       ------------------                   ---------

Anthony Garson         61        President & Director                  Annual

Jie Yang               41        Vice President & Director             Annual

Zhi Wang               47        Chairman & Director                   Annual

Maurice Tsakok         53        Secretary & Director                  Annual



The  following  table sets forth the  portion  of their  time the  Officers  and
Directors devote to the Company:



Anthony Garson             40%
Jie Yang                   90%
Zhi Wang                   30%
Maurice Tsakok             50%



                                       19

<PAGE>

The term of office for each director is one (1) year, or until his/her successor
is elected at the Company's annual meeting and is qualified.  The term of office
for each officer of the Company is at the pleasure of the board of directors.

The board of directors  does not have a  nominating  committee.  Therefore,  the
selection  of  persons  or  election  to the  board  of  directors  was  neither
independently made nor negotiated at arm's length.

(b) Identification of Certain Significant Employees.

Strategic  matters  and  critical  decisions  are handled by the  directors  and
executive officers of the Company.

(c) Family Relationships. None

(d) Business Experience.

The following is a brief account of the business experience during the past five
years of each director and executive officer of the Company, including principal
occupations  and  employment  during  that  period  and the name  and  principal
business of any  corporation or other  organization in which such occupation and
employment were carried on.

Zhi Wang, Chairman, Director

Zhi  completed  diploma in business  administration  at China Radio & Television
University   ("CRTVU")  in  1984  and  pursued   further   studies  in  business
administration under an exchange program in Australia 1988.

From 2001 to present,  he has been Chairman and  President of Honglu  Investment
Holdings,  Inc.,  Tianyubofeng Science & Technology,  Inc., a Chinese company in
aluminum and carbon coke producing business, and Standard Hotel Management,  Co.
He is President  and General  Manager,  Ziyuewentao  Enterprises  Inc.,  1997 to
present;  General Manager, Tianjin Zangtong Trading Co., 1993; Managing Director
of Hong Kong Zangtong Trading Co., 1990; CEO of Tibet Autonomous Region Economic
& Trade  Bureau,  Beijing  Office,  1987;  Member,  the Leading  Team on Tibetan
Economy, the State Council of China, 1984.

Jie Yang, Director and Vice President of Operations

Jie graduated from the Beijing University of International Business & Economics,
Beijing, China in 1984 with a Bachelor of Economics degree.

He has been a director and Vice President of Honglu  Investment  Holdings,  Inc.
since 2001; President of Sundecin Enterprises Inc. (1997-2001); General Manager,
Jianxin Trading Co., 1988-97 and Assistant Customs  Supervisor,  Beijing Customs
Administration, 1984-87.

                                       20

<PAGE>

Anthony Garson, Vice-Chairman, President and Director

Anthony  obtained a B.Sc. in Earth Science in 1969 from  University of Waterloo,
Ontario. He received a MBA from University of Toronto, Ontario in 1983.

He began his career with the Ontario  Department of Mines and subsequently  with
Derry, Michener and Booth, a geological consulting firm in Toronto. For the past
30 years,  Mr. Garson has been  extensively  involved in the brokerage  industry
having served as a Mines & Metals Analyst. Previous positions include: Mines and
Metals analyst,  Equities  Investment  Division of Bank of Nova Scotia,  Toronto
(1975-80);  Vice President and Senior Mining Analyst for Canadian  operations of
Dean Witter Reynolds  (Canada) Ltd.  (1981-85);  and  Vice-President  and Senior
Mining Analyst of Canaccord Capital (1990-1993); London, England.

Mr. Garson was a principal and founding  partner of Union Capital Markets (U.K.)
Ltd,  licensed  under the Securities  and Futures  Authority of London,  England
(1993-95);  He has acted as a director of several public  companies that include
Chairman and director of Global Pacific Minerals, Vancouver, BC (1995-97). He is
currently a director of Grayd Resources Corporation; a director of DiscFactories
Corporation;  a  director  of Colibri  Resource  Corp.  and a  director  of Toba
Industries  Inc. He is an Associate  of Mining  Capital  Corporation,  a private
research and equity mining finance company located in Toronto, Ontario.

Maurice Tsakok, Director and Secretary

Maurice  received  a  Mechanical  Engineering  degree  from  the  University  of
Minnesota (1974) and an MBA in Management Information Systems (MIS) from Hofstra
University (1976).

Previous positions include: Staff Application  Performance Analyst with the Bank
of Montreal (1976-1994);  Vice-President (1994 -1996) with Sagit Mutual Funds, a
mutual fund company,  in which he was  responsible  for computer  operations and
research  on global  technology  companies.  He served as a  Director  of Richco
Investors Inc. from 1995 to October 2003.

Since 1997, he has acted as a consultant to the high-tech  industry by providing
technical analysis on high-tech companies.  He is a principal director in Gemsco
Management, Ltd. He was currently a Director of Xin Net Corp. until May, 2004.

(e) Directors' Compensation

Directors who are also officers of the Registrant  receive no cash  compensation
for services as a director. On May 31, 2000, the Company granted 5,000,000 stock
options  at $0.40  per  share  with an  expiry  date of May 31,  2005,  of which
2,250,000 of the options were issued  indirectly to the  Company's  Officers and
Directors  through separate  management  companies.  As of December 31, 2004, no
options had yet been exercised.

On July 5, 2003,  the Company  granted stock  options to three  directors of the
Company for the sale of 6,000,000  shares of the Company's common stock at $0.05
per share with  expiry  date on August 1, 2006 for their  services  in the past.
These options were subsequently cancelled on November 4, 2004.

On September  11, 2003,  the Company  granted stock options to a director of the
Company for the sale of 1,000,000  shares of the Company's common stock at $0.10
per share with expiry date on August 31, 2006 for his  services in the past.  No
option has yet been exercised.

As of  December  31,  2004,  there  are  6,000,000  stock  options  outstanding.
6,000,000  options were  cancelled  and no options  were  forfeited or exercised
during the year ended December 31, 2004. The weighted  average exercise price of
the  options  outstanding  and  exercisable  is $0.35 and the  weighted  average
remaining contractual life is 0.8 years.

Shares owned by Richco Investors are beneficially owned by Raoul Tsakok.

                                       21

<PAGE>

Section 16(a) of the Securities  Exchange Act of 1934, as amended (The "Exchange
Act"),  requires the  Registrant's  officers and directors,  and persons who own
more than 10% of a registered class of the Registrant's  equity  securities,  to
file reports of ownership  and changes in ownership of equity  securities of the
Registrant  with the  Securities and Exchange  Commission and NASDAQ.  Officers,
directors and  greater-than  10% shareholders are required by the Securities and
Exchange  Commission  regulation  to furnish to  Registrant  with  copies of all
Section 16(a) that they file.  All of the current  officers and  directors  have
filed Sec. 16(a) disclosures.

ITEM 10. EXECUTIVE COMPENSATION

Other  persons  who hold more than 10% of the  outstanding  shares  who have not
filed or filed late: None

Some of the  officers  and  directors of the Company will not devote more than a
portion of their time to the  affairs of the  Company.  There will be  occasions
when the time  requirements of the Company's  business conflict with the demands
of their other  business and  investment  activities.  Such conflict may require
that the company attempt to employ additional  personnel.  There is no assurance
that the services of such persons will be available or that they can be obtained
upon terms favorable to the Company.

EXECUTIVE COMPENSATION

(a) Cash Compensation.

Compensation  paid by the Company for all  services  provided up to December 31,
2004 to each of its executive officers:

<TABLE>
<CAPTION>

                                        SUMMARY COMPENSATION TABLE OF EXECUTIVES

                                        Annual Compensation                           Long Term Compensation
                       ------------------------------------------------------    ---------------------------------
     Name and                                                Other Annual           Restricted
     Principal                                               Compensation         Stock Options/     Securities
     Position           Year   Salary ($)     Bonus ($)       Awards ($)               SARs          Underlying
<S>                     <C>    <C>          <C>              <C>                <C>                 <C>

    Ronald Xie,         2004   -                  30,000             57,600      -                   9,639,000

President/Director      2003   -                  20,000             60,000      -                  -

   (resigned on         2002   -            -              -                     -                  -
  Nov. 03, 2004)


  Anthony Garson        2004   -            -                        38,714      1,000,000          -

President/Director      2003   -            -                        12,089      -                  -

                        2002   -            -              -                     -                  -


     Jie Yang           2004   -                  10,000             48,043      -                  2,350,000

  Vice President/       2003   -                  10,000             30,000      -

     Director           2002   -            -              -                     -


  Maurice Tsakok        2004   -            -                        38,520       750,000           -

    Secretary/          2003   -            -                        19,260      -                  -

     Director           2002   -            -              -                     -                  -


     Gary Gui           2004   -            -                        39,677      -                  -

  Vice President        2003   -            -                        11,754      -                  -

                        2002   -            -              -                     -                  -

                                       22


<PAGE>

 Ernest Cheung        2004   -            -              -              1,500,000      -

President/Director      2003   -            -              -              -              -
(resigned on July 4,
       2003)            2002   -            -              -              -              -


   Marc Hung            2004   -            -              -              -              -

Director                2003   -            -              -              -              -
(resigned on July 4,
       2003)            2002   -            -              -               500,000       -
</TABLE>



The following table sets forth certain  information  concerning the remuneration
paid by the Company for the fiscal year ended December 31, 2004.

<TABLE>
<CAPTION>

                                        DIRECTORS' COMPENSATION

                             Annual Compensation                      Security Grants
                     -------------------------------------    ---------------------------------
   Name and            Annual                Consulting           Number           Number
   Principal          Retainer    Meeting    Fees/Other             of         of Underlying
   Position           Fees ($)   Fees ($)     Fees ($)            Shares        Options/SARs
<S>                   <C>        <C>        <C>               <C>             <C>

  Ronald Xie,            -       -          -                 -               -
 (resigned on
 May 4, 2004)


Anthony Garson           -       -          -                 -               1,000,000


   Jie Yang              -       -          -                 -               2,350,000


   Zhi Wang              -       -          39,000            -               9,400,000


Maurice Tsakok           -       -          -                 -                 750,000

Ernest Cheung
(resigned on July 4,

2003)                    -       -          -                 -               1,500,000

Marc Hung
(resigned on July 4,
2003)                    -       -          -                 -                 500,000

Loong Keng Lim           -       -          -                 -               -
 (resigned on
March 30, 2004)
</TABLE>


The Company has made no Long Term  Compensation  payouts  (LTIP or other) in the
past year.

                                                       Amount of
  Title of           Name and Address of               Beneficial     Percent of
    Class              Beneficial Owner                 Interest        Class


Common         Zhi Wang                                10,600,000          7.45%
               116 - 2205 Bridgeport Parkway
               CA USA 94404


Common         Richco Investors Inc.                   15,000,000         10.55%
               Suite 900 - 789 West Pender Street
               Vancouver, B.C., V6C 1H2



ITEM 11.  SECURITY  OWNERSHIP OF CERTAIN  BENEFICIAL  OWNERS AND  MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

a) Beneficial  owners of five percent (5%) or greater,  of the Company's  common
stock:  (No  preferred  stock is  outstanding  at the date of this  report.) The
following  sets forth  information  with respect to ownership by holders of more
than five percent (5%) of the Registrant's  common stock known by the Registrant
based upon 193,596,575 shares outstanding at March 7, 2005.

                                       23

<PAGE>

                                                       Amount of
  Title of           Name and Address of               Beneficial     Percent of
    Class              Beneficial Owner                 Interest        Class

Common         Zhi Wang                                10,600,000          7.45%
               116 - 2205 Bridgeport Parkway
               CA USA 94404


Common         Richco Investors Inc.                   15,000,000         10.55%
               Suite 900 - 789 West Pender Street
               Vancouver, B.C., V6C 1H2



b) The following  sets forth  information  with respect to the Company's  common
stock beneficially owned by each Officer and Director,  and by all Directors and
Officers as a group, at March 7, 2005.



                                                        Amount of
Title of              Name and Address of              Beneficial    Percent of
  Class                Beneficial Owner                 Interest        Class

Common       Anthony Garson                              1,000,000        0.70%
             Suite 536, World Trade Centre
             999 Canada Place, Vancouver,
             B.C., V6C 3E2

Common       Jie Yang                                    2,650,000        1.86%
             Suite 536, World Trade Centre
             999 Canada Place, Vancouver,
             B.C., V6C 3E2

Common       Maurice Tsakok                                750,000        0.53%
             Suite 900 - 789 West Pender Street
             Vancouver, B.C., V6C 1H2

             Options for 750,000 shares (including
             Beneficial ownership through Gemsco
             Management LTD.)

Common       Gary Gui                                            -        0.00%
             Suite 536, World Trade Centre
             999 Canada Place, Vancouver,
             B.C., V6C 3E2


Common       Zhi Wang                                   10,600,000        7.45%
             116 - 2205 Bridgeport Parkway
             CA USA 94404



Total as a group  15,000,000  10.55%.  If all options are  exercised  15,500,000
10.90%

                                       24

<PAGE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

There  were no salary  or  benefits  paid to Zhi Wang by  Highland  Mining  Inc.
("Highland") during the fiscal year 2004. Zhi Wang is the only common director /
officer of Highland and China NetTV Holdings Inc. ("CTVH").

Zhi Wang,  Director of CTVH, and Richco Investors Inc., a company of which Raoul
Tsakok,  a beneficial  owner,  holds more than 5% of the shares of CTVH which is
disclosed in Item 11 of the 10-KSB.

<TABLE>
<CAPTION>

                                        Number of
        Name/                           options         Exercise        Date of         Expiry
        Position                        granted         price           grant           date
<S>                                     <C>             <C>             <C>             <C>

Tony Garson                             1,000,000       $0.10           9/11/2003       8/31/2006
President/Director

Gemsco Management Ltd.                    750,000        0.40           5/31/2000       5/31/2005
(controlled by Maurice
Tsakok, Secretary/Director)

Archer Pacific Management Ltd.          1,500,000        0.40           5/31/2000       5/31/2005
(controlled by Ernest Cheung,
former President/former Director)

Marc Hung (former Director)               500,000        0.40           5/31/2000       5/31/2005
                                        ---------
                                        3,750,000
                                        =========
</TABLE>

CTVH  executed a promissory  note for $100,000  with interest at 0% thereon to a
company  controlled  by Zhi Wang, a Director  and  Chairman of the Company.  The
amount is  repayable  on May 15,  2005.  The Company has the right to prepay the
note in whole or in part at any time without premium or penalty.  The funds were
obtained to further support working capital requirements. The note was repaid in
January 2005.

Under the contract for share exchange  between  Highland  shareholders  and CTVH
dated  November 5, 2004, a finder's  fee in the form of a debenture  convertible
into 9,639,000  common shares of CTVH upon completion of the share exchange will
be paid to Ronald Xie, the ex-Director  and  ex-President of CTVH. At the CTVH's
option,  at any time within 90 days of the date of the  debenture  (November  5,
2004),  CTVH could send a notice to the holder  indicating  its intention to pay
the  holder a cash  payment  in lieu of shares on the basis of $0.25 per  share.
CTVH did not exercise the option.

                                       25

<PAGE>

                                     Part IV

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

A. Exhibits

Exhibit 10.1 Option Agreement
Exhibit 10.2 Shareholder Agreement
Exhibit 10.3 Agreement to Issue Common Stock
Exhibit 31 - Sarbanes Oxley Certification
Exhibit 32 - Sarbanes Oxley Certification

B. Reports on Form 8-K

8-K filed on February 27, 2004 8-K filed on March 2, 2004 8-K filed on March 18,
2004 8-K filed on March 31,  2004 8-K/A  filed on May 11, 2004 8-K filed on July
14,  2004 8-K filed on August 9, 2004 8-K filed on August 31,  2004 8-K filed on
September 2, 2004 8-K/A filed on December 3, 2004 8-K filed on December 17, 2004

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees - The aggregate fees billed for  professional  services  rendered for
the  audit of our  annual  financial  statements  and  review  of our  quarterly
financial  statements  included in our periodic and other reports filed with the
SEC were  $27,300 and $16,500  for the years ended  December  31, 2004 and 2003,
respectively.

Audit-Related  Fees - The Company paid Clancy and Co.  $15,000 for audit related
fees.

Tax Fees - The Company paid Clancy and Co. $5,600 for tax returns.

All Other Fees - None

Audit Committee Pre-Approval Policies and Procedures

The Company does not currently have an Audit  Committee.  The Company's  current
policy  is that the Board of  Directors  pre-approves  all  audit and  non-audit
services  that are to be  performed  and fees to be charged  by our  independent
auditor  to assure  that the  provision  of these  services  does not impair the
independence of such auditor.  The Board of Directors  pre-approved of all audit
services and fees of our  independent  auditor for the years ended  December 31,
2004 and 2003.  Our  independent  auditors did not provide us with any non-audit
services during the periods indicated above.

                                       26

<PAGE>

                                   SIGNATURES

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

Date:    November 10, 2005                  CHINA NETTV HOLDINGS INC.

                                            By: /s/ Anthony Garson
                                                ----------------------------
                                                Anthony Garson
                                                President


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the dates indicated.



/s/ Anthony Garson             President and Director   November 10, 2005

-------------------------
Anthony Garson

/s/ Maurice Tsakok              Secretary and Director  November 11, 2005

-------------------------
Maurice Tsakok


/s/ Jie Yang                   Vice President & Director November 11, 2005
-------------------------
Jie Yang

/s/ Zhi Wang                       Director & Chairman   November 11, 2005
-------------------------
Zhi Wang

                                       27

<PAGE>

                            CHINA NETTV HOLDINGS INC.
                          INDEX TO FINANCIAL STATEMENTS



Report of Independent Registered Public Accounting Firm......................F-1

Balance Sheet................................................................F-2

Statement of Operations......................................................F-3

Statement of Changes in Stockholders' Equity...........................F-4 - F-6

Statement of Cash Flows................................................F-7 - F-8

Notes to the Financial Statements.....................................F-9 - F-17


<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of China NetTV Holdings Inc.

We have audited the balance sheet of China NetTV  Holdings  Inc. (a  development
stage company) (a Nevada  corporation)  as of December 31, 2004, and the related
statement of operations,  changes in stockholders' equity and cash flows for the
years  ended  December  31,  2004 and  2003,  and the  cumulative  amounts  from
inception of the  development  stage (July 1, 2003) to December 31, 2004.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of China NetTV Holdings Inc. at
December 31, 2004,  and the results of its operations and its cash flows for the
years  ended  December  31,  2004 and  2003,  and the  cumulative  amounts  from
inception of the  development  stage to December 31, 2004,  in  conformity  with
accounting principles generally accepted in the United States of America.

As  described  in Note 2 to the  financial  statements,  the  December 31, 2004,
financial statements have been restated.

As  discussed in Note 1 to the  financial  statements,  the Company  entered the
development  stage in July 1, 2003,  and has  incurred  significant  losses both
prior to and during the development stage resulting in a significant accumulated
deficit.  Unless the Company attains future profitable operations and/or obtains
additional financing,  there is substantial doubt about the Company's ability to
continue as a going concern.  Management's plans in regards to these matters are
discussed in Note 1. The  financial  statements  do not include any  adjustments
that might result from the outcome of this uncertainty.



/s/ Clancy and Co., P.L.L.C.
Clancy and Co., P.L.L.C.
Phoenix, Arizona

February 25, 2005,  except for Note 2 and Note 10, as to which the date is as of
October 5, 2005 and October 11, 2005, respectively


                                       F-1


<PAGE>

<TABLE>
<CAPTION>

                                            CHINA NETTV HOLDINGS INC.
                                          (A Development Stage Company)
                                                  BALANCE SHEET
                                                DECEMBER 31, 2004

Stated in U.S. dollars
------------------------------------------------------------------------------------------------------------------
ASSETS                                                                                             (Restated)
<S>                                                                                         <C>
Current Assets
   Cash and cash equivalents                                                                $             900,309
   Prepaid expenses and other current assets                                                                2,287
   Prepaid expenses - related party                                                                           831
                                                                                             ---------------------
Total Current Assets                                                                                      903,427

Investment - at equity  (Note 2)                                                                          800,000

Fixed assets, net (Note 3)                                                                                  9,058

                                                                                             ---------------------
Total Assets                                                                                $           1,712,485
                                                                                             =====================

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
   Accounts payable and accrued expenses                                                    $              47,082
   Promissory note payable - related party (Note 4)                                                       100,000
   Due to related parties                                                                                   2,453
                                                                                             ---------------------
Total current liabilities                                                                                 149,535
                                                                                             ---------------------


Commitments and contingencies (Notes 2, 9 and 10)                                                                          -

Stockholders' Equity
   Common stock : $0.001 par value, authorized: 200,000,000
       Issued and outstanding: 142,236,575 shares                                                         142,236
   Additional paid-in capital                                                                           3,542,327
   Common stock subscription received (Note 8)                                                          1,200,000
   Agreement to issue common stock for acquisition cost (65,000,000 shares) (Note 2)                         -
   Agreement to issue common stock for finder's fee (9,639,000 shares) (Note 2)                         771,120
   Accumulated deficit prior to the development stage                                                  (1,554,790)
   Accumulated deficit during the development stage                                                    (2,537,943)
                                                                                             ---------------------
Total Stockholders' Equity                                                                              1,562,950
                                                                                             ---------------------

Total Liabilities and Stockholders' Equity                                                  $           1,712,485
                                                                                             =====================
                 The accompanying notes are an integral part of these financial statements.
                                                       F-2
</TABLE>


<PAGE>

<TABLE>
<CAPTION>

                           CHINA NETTV HOLDINGS INC.
                          (a Development Stage Company)
                             STATEMENTS OF OPERATIONS
               FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003, AND
                        CUMULATIVE AMOUNTS FROM INCEPTION (JULY 1, 2003)
                           TO DECEMBER 31, 2004

                                                                  Cumulative
Stated in U.S. dollars                                          From Inception              2004                 2003
                                                                   (Restated)          (Restated)
------------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>                   <C>                     <C>
Revenues                                                            $        -        $         -          $         -

General and administrative expenses                                  1,744,695          1,055,134              698,044
Finder's fee                                                           771,120            771,120                    -
                                                            ------------------------------------------------------------
Operating loss                                                      (2,515,815)        (1,826,254)            (698,044)

Other expenses
   Interest income                                                          62                 62                   -
   Accounts payable written off                                          3,453              3,453                   -
   Loss on disposal of fixed assets                                    (16,009)           (16,009)                   -
   Interest expense                                                     (9,634)            (6,078)             (10,048)
                                                              ------------------------------------------------------------
Total other expenses                                                   (22,128)           (18,572)             (10,048)
                                                            ------------------------------------------------------------
Provision for income taxes                                                   -                  -                    -
                                                           ------------------------------------------------------------
Net loss available to common stockholders                        $  (2,537,943)    $   (1,844,826)       $    (708,092)

Net loss incurred prior to the development stage (Restated)                  -                  -       $
(14,975)
Net loss incurred during the development stage (Restated)        $  (2,537,943)    $   (1,844,826)       $    (693,117)
                                                            -----------------------------------------------------------
                                                            ============================================================
Basic and diluted loss per share                                                     $      (0.03)        $      (0.02)
                                                                               =========================================
Weighted average common shares outstanding (Restated)                                  57,805,857           43,058,972
                                                                               =========================================

                      The accompanying notes are an integral part of these financial statements.
                                                                F-3
</TABLE>

<PAGE>

<TABLE>
<CAPTION>


                                                         CHINA NETTV HOLDINGS INC.
                                                       (a Development Stage Company)
                                               STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                                    FROM INCEPTION (JULY 1, 2003) TO DECEMBER 31, 2004

                                                                                     Accumulated   Accumulated
                                                                                     Deficit       Deficit       Agreement
                                               Common     Additional   Common stock  prior to      during         to issue
                                   Common      Stock at     Paid-In    Subscription  development   development    common
Stated in U.S. dollars             shares      Par Value    Capital     Received      stage         stage          stock      Total
                                   (Restated)  (Restated) (Restated)                (Restated)     (Restated)  (Restated)(Restated)
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                <C>         <C>       <C>            <C>         <C>            <C>         <C>       <C>
Balance, July 1, 2003 (inception)  37,446,200    $37,446  $1,364,802          $ -   $(1,554,790)         $  -       -    $(152,542)
Issuance of common stock into
  escrow for acquisition costs on
  July 23, 2003                    97,700,000     97,700     (97,700)           -           -               -       -             -
Issuance of common stock for
  acquisition costs on July 23,
  2003 - related party              6,839,000      6,839     (6,839)            -           -               -       -             -
Comprehensive loss:
   Net loss, two months ended
   August 31, 2003                          -          -           -            -           -         (312,248)     -     (312,248)
Compensation cost - stock options           -          -     210,000            -           -               -       -
(210,000)
                                  -------------------------------------------------------------------------------------------------
Balance, August 31, 2003          141,985,200    141,985   1,470,263            -    (1,554,790)      (312,248)     -     (254,790)



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

                                                        F-4
</TABLE>


<PAGE>

<TABLE>
<CAPTION>

                                                         CHINA NETTV HOLDINGS INC.
                                                       (a Development Stage Company)
                                               STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                                    FROM INCEPTION (July 1, 2003) TO DECEMBER 31, 2004

                                                                                         Accumulated  Accumulated
                                                                                       Deficit      Deficit      Agreement
                                                 Common     Additional   Common stock  prior to     during        to issue
                                    Common      Stock at     Paid-In     Subscription  development  development    common
Stated in U.S. dollars              Shares      Par Value    Capital     Received      stage        stage           stock     Total
                                    (Restated)  (Restated)  (Restated)                (Restated)   (Restated)   (Restated)(Restated)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>        <C>         <C>          <C>           <C>          <C>          <C>         <C>

Issuance of common stock for cash
    $0.06 on October 29, 2003        15,000,000    15,000     885,000            -            -            -         -       900,000
Issuance of common stock for 7%
    finders fee for shares issued
    on October 29, 2003               1,050,000     1,050     (1,050)            -            -            -         -             -
Exercise of Series A stock purchase
    warrants @ $0.10 on December
    11, 2003                             50,000        50       4,950            -            -            -         -         5,000
Exercise of Series B stock purchase
    warrants @ $0.15 on December
    23, 2003                            250,000       250      37,250            -            -            -          -       37,500
Exercise of Series A stock purchase
    warrants @ $0.10 on December
    23, 2003                            250,000       250      24,750            -            -            -          -       25,000
Compensation cost - stock options             -         -      10,000            -            -            -          -       10,000
Comprehensive loss:
   Net loss, four months ended
    December 31, 2003                         -         -           -            -            -       (380,869)       -    (380,869)
                                    ------------------------------------------------------------------------------------------------
Balance, December 31, 2003          158,585,200   158,885   2,431,163            -     (1,554,790)    (693,117)       -     341,841
Exercise of Series A stock purchase
    warrants at $0.10 per share on
    January 6, 2004                      50,000        50       4,950            -            -             -         -       5,000
Exercise of Series A stock purchase
</TABLE>


<PAGE>

<TABLE>
<CAPTION>


                                                         CHINA NETTV HOLDINGS INC.
                                                       (a Development Stage Company)
                                               STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                                    FROM INCEPTION (July 1, 2003) TO DECEMBER 31, 2004

                                                                                         Accumulated  Accumulated
                                                                                         Deficit      Deficit      Agreement
                                                   Common     Additional   Common stock  prior to     during       to issue
                                      Common      Stock at     Paid-In     Subscription  development  development   common
Stated in U.S. dollars                Shares      Par Value    Capital     Received      stage        stage         stock      Total
                                     (Restated)    (Restated)  (Restated)              (Restated)  (Restated)  (Restated) (Restated)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>          <C>        <C>           <C>         <C>         <C>         <C>         <C>

  warrants at $0.10 per share on
  January 27, 2004                    2,940,000     2,940     291,060            -             -            -         -     294,000
Issuance of common stock into
  escrow for acquisition of
  mineral property on April 15,
  2004                               32,000,000    32,000     (32,000)           -             -            -          -         -
Issuance of common stock for legal
  services at $0.10 per share on
  April 28, 2004 - related party      2,800,000     2,800     277,200            -             -            -          -    280,000
Exercise of Series C stock purchase
  warrants at $0.08 per share on
  October 1, 2004                       200,375       200      15,830            -             -            -          -     16,030
Cancellation of common stock issued
  in escrow for acquisition costs
  (97,700,000 Shares), finder's
  fee (6,839,000 Shares) on July
  23, 2003 And legal costs
  (2,800,000 shares) on April 28,
  2004                             (139,339,000) (139,339)   (140,661)           -             -            -          -   (280,000)
Issuance of common stock for the
  partial acquisition of Highland
  Mining Inc. at historical cost
  on December 28, 2004
  (85,000,000 shares)                85,000,000    85,000     715,000            -             -            -          -    800,000

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

                                                        F-5

</TABLE>


<PAGE>
<TABLE>
<CAPTION>



                                                        CHINA NETTV HOLDINGS INC.
                                                       (a Development Stage Company)
                                               STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                                    FROM INCEPTION (July 1, 2003) TO DECEMBER 31, 2004

                                                                                        Accumulated  Accumulated
                                                                                        Deficit      Deficit     Agreement
                                                 Common      Additional  Common stock   prior to     during      to issue
                                    Common      Stock at      Paid-In    Subscription   development  development  common
Stated in U.S. dollars              Shares      Par Value     Capital    Received       stage        stage         stock       Total
                                    (Restated)  (Restated)   (Restated)               (Restated)   (Restated)   (Restated)(Restated)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                 <C>         <C>          <C>         <C>          <C>           <C>         <C>        <C>
Issuance of Agreement To Issue
 Common
   Stock (65,000,000 shares) for
   acquisition of Highland Mining,
   Inc.                                    -         -           -               -           -             -            -          -

Issuance of agreement to issue
 common
   stock for finder's fee on acqui-
   sition of Highland Mining Inc.
   for 9,639,000 shares at $0.08
   per share on December 28, 2004          -         -           -               -           -             -      771,120          -

   Legal fees incurred for issuance
   of common stock on December 28,
   2004 in connection with the
   partial acquisition of Highland
   Mining Inc.                              -        -     (20,215)              -           -             -            -   (20,215)

Subscription received on December
  31, 2004 for private placement
  of 24,000,000 shares at $0.05            -        -           -       1,200,000           -             -            -   1,200,000
Comprehensive loss:
  Net loss, year ended December
  31, 2004                                 -        -           -             -             -     (1,844,826)          - (1,844,826)
                                   -------------------------------------------------------------------------------------------------
Balance, December 31, 2004         142,236,575  $142,236  $3,542,327   $1,200,000  $(1,554,790)  $(2,537,943)   $771,120 $1,562,950
====================================================================================================================================

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

                                                        F-6
</TABLE>


<PAGE>


<TABLE>
<CAPTION>


                            CHINA NETTV HOLDINGS INC.
                          (a Development Stage Company)
                            STATEMENTS OF CASH FLOWS
               FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003, AND
                        CUMULATIVE AMOUNTS FROM INCEPTION (JULY 1, 2003)
                             TO DECEMBER 31, 2004

                                                                      Cumulative
Stated in U.S. dollars                                              from inception           2004                2003
                                                                      (Restated)            (Restated)
------------------------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>                 <C>                  <C>
Cash flows from operating activities
  Net loss                                                            $   (2,537,943)     $   (1,844,826)      $    (708,092)
  Adjustments to reconcile net loss to net cash
        used in operating activities
    Depreciation                                                               17,624              13,004               4,620
     Compensation cost - stock options                                         220,000                                 220,000
     Common stock issued for expenses                                          771,120            771,120                    -
    Accounts payable written off                                              (3,453)             (3,453)                   -
   Loss on disposal of fixed assets                                            16,009              16,009                   -
    Changes in assets and liabilities:
     (Increase) decrease in prepaid expenses                                  (2,287)             (1,593)               (694)
     (Increase) decrease in prepaid expenses - related party                    (831)              28,154            (28,985)
     (Increase) decrease in security deposit                                        -               6,128             (6,128)
      Increase (decrease) in accounts payable and accrued
      expenses                                                               (16,323)            (24,439)               4,939
      Increase (decrease) in accrued expenses - related party                       -            (78,000)              78,000
                                                                 -------------------------------------------------------------
  Net cash flows used in operating activities                             (1,536,084)         (1,117,896)           (436,340)

Cash flows from investing activities
    Capital expenditures                                                     (45,269)             (2,061)            (43,208)
    Proceeds from disposal of fixed assets                                    44,525              44,525                   -
                                                                 -------------------------------------------------------------
  Net cash flows used in investing activities                                   (744)             42,464             (43,208)

Cash flows from financing activities
    Advances (repayments) - amounts due from related parties                 (93,540)           (100,018)             24,263
    Principal payments - installment loans payable                           (52,230)            (50,130)             (2,100)
    Cash received under promissory note payable - related party              100,000             100,000                   -
    Proceeds from the issuance of common stock                             1,282,530             315,030             967,500
    Proceeds from subscription received                                    1,200,000           1,200,000                   -
                                                                 -------------------------------------------------------------
  Net cash flows provided by financing activities                          2,436,760           1,464,882             989,663
                                                                 -------------------------------------------------------------

Increase (decrease) in cash and cash equivalents                             899,932             389,450             510,115
Cash and cash equivalents - beginning of period                                  377             510,859                 744
                                                                 -------------------------------------------------------------
Cash and cash equivalents - end of period                               $    900,309       $     900,309       $     510,859
                                                                 =============================================================

Supplemental information Cash paid for:
    Interest                                                             $      6,239       $       6,078         $       343
                                                                 =============================================================
    Income taxes                                                                    -                   -                   -
                                                                 =============================================================

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

                                                        F-7

</TABLE>


<PAGE>

<TABLE>
<CAPTION>

                            CHINA NETTV HOLDINGS INC.
                          (a Development Stage Company)
                            STATEMENTS OF CASH FLOWS
               FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003, AND
                        CUMULATIVE AMOUNTS FROM INCEPTION (JULY 1, 2003)
                           TO DECEMBER 31, 2004

                                                                      Cumulative
Stated in U.S. dollars                                              from inception               2004               2003
                                                                      (Restated)             (Restated)
------------------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>                 <C>                          <C>
Non-cash investing and financing activities:
    Common stock issued for acquisition of Highland Mining Inc.        $      800,000      $      800,000                   -
                                                                 =============================================================
    Agreement To Issue Common Stock issued for acquisition of Highland
         Mining Inc.                                                   $            -      $            -                   -
                                                                 =============================================================
    Agreement To Issue Common Stock issued for finder's fee paid for
         acquisition of Highland Mining Inc.                            $     771,120      $      771,120                   -
                                                                 =============================================================
</TABLE>











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

                                       F-8

<PAGE>




                            CHINA NETTV HOLDINGS INC.


                            CHINA NETTV HOLDINGS INC.
                          (a Development Stage Company)
                        NOTES TO THE FINANCIAL STATEMENTS
                                DECEMBER 31, 2004

NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business and Basis of Presentation

China NetTV Holdings Inc. ("the Company") was incorporated under the laws of the
State of Nevada on September 15, 1998, under the name "Vancouver's Finest Coffee
Company," with an authorized  capital of 200,000,000  shares of $0.001 par value
common stock. On May 30, 2000, the name was changed to China NetTV Holdings Inc.
On November  28, 2003,  the  Company's  board of directors  voted to abandon the
Company's  inactive  subsidiary,  China NetTV Inc. with immediate effect.  There
were no assets or liabilities in this inactive subsidiary.

The  Company  was  originally  organized  for the  purpose of  marketing  retail
specialty  coffee.  The Company  later  changed its  business  direction  to the
operations  of digital  technology  in May 2000 and then to the  acquisition  of
interests in mineral properties on or about July 1, 2003 (See Notes 2 and 8), at
which date the Company entered the  development  stage. On December 1, 2003, the
Company changed its fiscal year end from August 31 to December 31.

The Company is a development  stage  company as defined by Financial  Accounting
Standards Board No. 7. The accompanying  financial statements have been prepared
in conformity with generally accepted accounting  principles,  which contemplate
continuation of the Company as a going concern. However, the Company has limited
operations  and has  sustained  substantial  operating  losses in  recent  years
resulting  in a  substantial  accumulated  deficit.  In view of  these  matters,
realization of a major portion of the assets in the  accompanying  balance sheet
is dependent  upon the  continued  operations  of the Company,  which in turn is
dependent upon the Company's ability to meet its financing requirements, and the
success of its future operations.

To meet these objectives,  the Company has arranged to raise $2,400,000 pursuant
to a  non-brokered  private  placement of  48,000,000  shares of common stock at
$0.05 per share.  (See Notes 8 and 10) The Company may seek additional equity as
necessary  and it  expects  to raise  funds  through  private  or public  equity
investment  in order to  support  existing  operations  and expand the range and
scope of its business.  There is no assurance that such additional funds will be
available  for the Company on acceptable  terms,  if at all.  Additionally,  the
Company has also  consummated  the partial  acquisition of Highland Mining Inc.,
which has certain rights or options to, or interests in 25 mineral properties in
Tibet,  China. (See Note 2) Management  believes that actions presently taken to
revise  the  Company's   operating  and  financial   requirements   provide  the
opportunity  for the  Company to  continue  as a going  concern.  The  Company's
ability to achieve these objectives cannot be determined at this time.

Summary of Significant Accounting Policies

Accounting  method - The  financial  statements  are prepared  under the accrual
method of accounting.

Use of estimates - 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  - The  Company  considers  all  highly  liquid  debt
instruments  with  original  maturities  of  three  months  or  less  to be cash
equivalents.

                                       F-9

<PAGE>

Fixed assets - Fixed assets,  stated at cost, are  depreciated  over the asset's
estimated   useful  life,   ranging  from  three  to  five  years.   Significant
improvements  and  betterments  are  capitalized  where it is probable  that the
expenditure  resulted in an increase in the future economic benefits expected to
be obtained form the use of the asset beyond its originally assessed standard of
performance.  Routine repairs and maintenance are expensed when incurred.  Gains
and losses on  disposal  of fixed  assets are  recognized  in the  statement  of
operations  based on the net disposal  proceeds less the carrying  amount of the
assets.

Impairment or Disposal of Long-lived Assets - The Company reports the impairment
of long-lived  assets and certain  identifiable  intangibles in accordance  with
Statement of Financial  Accounting  Standards ("SFAS") No. 144,  "Accounting for
the Impairment or Disposal of Long-lived Assets".  Certain long-lived assets and
identifiable  intangibles  held  by the  Company  are  reviewed  for  impairment
whenever assets or changes in  circumstances  indicate the carrying amount of an
asset may not be recoverable.  Accordingly,  an impairment loss is recognized in
the period it is determined. A component of an entity that is classified as held
for sale or that has been disposed of is presented as a  discontinued  operation
if the  operations  and cash  flows  of the  component  will be (or  have  been)
eliminated  from the  ongoing  operations  of the entity and the entity will not
have any significant continuing involvement in the operations of the component.

Advertising  costs - Advertising  costs are expensed as incurred.  There were no
advertising costs for the periods presented.

Offering costs - Costs directly  attributable to any proposed or actual offering
of securities are charged  against the gross proceeds of the offering.  Costs of
an aborted offering are expensed.

Revenue  recognition  - Revenue  is  recognized  on the sale and  delivery  of a
product or the completion of a service rendered.

Income taxes - The Company  accounts for income  taxes under the  provisions  of
Statement of Financial  Accounting  Standards ("SFAS") No. 109,  "Accounting for
Income Taxes." Under SFAS No. 109,  deferred  income tax assets and  liabilities
are computed for differences  between the financial  statements and tax bases of
assets and liabilities that will result in taxable or deductible  amounts in the
future,  based on enacted tax laws and rates  applicable to the periods in which
the differences are expected to affect taxable income.  Valuation allowances are
established  when necessary,  to reduce deferred income tax assets to the amount
expected to be realized.

Foreign  currency  translations  - The assets and  liabilities  of the Company's
foreign  operations  are  generally  translated  into U.S.  dollars  at  current
exchange  rates,  and revenues and expenses are  translated at average  exchange
rates  for the  year.  Resulting  translation  adjustments  are  reflected  as a
separate  component of stockholders'  equity.  Transaction gains and losses that
arise from exchange rate fluctuations on transactions  denominated in a currency
other than the functional currency, except those transactions which operate as a
hedge of an identifiable  foreign currency commitment or as a hedge of a foreign
currency  investment  position,  are  included in the results of  operations  as
incurred.

Fair value of financial  instruments  - For certain of the  Company's  financial
instruments,  including cash and cash equivalents,  prepaid  expenses,  accounts
payable  and other  accrued  liabilities,  and  promissory  notes  payable,  the
carrying amounts approximate fair value due to their short maturities.

Earnings per share - Basic  earnings or loss per share are based on the weighted
average number of common shares outstanding.  Diluted earnings or loss per share
is based on the  weighted  average  number  of  common  shares  outstanding  and
dilutive common stock equivalents.  Basic earnings/loss per share is computed by
dividing  income/loss  (numerator)  applicable  to  common  stockholders  by the
weighted  average  number of common  shares  outstanding  (denominator)  for the
period.  All earnings or loss per share amounts in the financial  statements are
basic  earnings  or loss per share,  as defined by SFAS No. 128,  "Earnings  Per
Share." Diluted earnings or loss per share does not differ materially from basic
earnings or loss per share for all  periods  presented.  Convertible  securities
that could  potentially  dilute  basic  earnings per share in the future such as
options and warrants are not included in the computation of diluted earnings per
share  because  to do so would be  antidilutive.  All per  share  and per  share
information  are adjusted  retroactively  to reflect stock splits and changes in
par value.

                                      F-10

<PAGE>

Stock-based  compensation - The Company  accounts for  stock-based  compensation
using the  intrinsic  value method  prescribed in  Accounting  Principles  Board
("APB") Opinion No. 25, "Accounting for Stock Issued to Employees." Compensation
cost for stock  options,  if any, is measured as the excess of the quoted market
price of the  Company's  stock at the date of grant over the amount an  employee
must  pay to  acquire  the  stock.  SFAS  No.123,  "Accounting  for  Stock-Based
Compensation,"  established  accounting  and  disclosure  requirements  using  a
fair-value-based  method of accounting  for  stock-based  employee  compensation
plans.  The Company has elected to remain on its current method of accounting as
described above, and has adopted the disclosure requirements of SFAS No. 123. In
December  2002,  the FASB  issued  SFAS No.  148,  "Accounting  for  Stock-Based
Compensation - Transition and Disclosure, amending FASB No. 123, and "Accounting
for  Stock-Based  Compensation".  This  statement  amends  Statement  No. 123 to
provide alternative methods of transition for an entity that voluntarily changes
to  the  fair  value  based  method  of  accounting  for  stock-based   employee
compensation.  SFAS No.  148  amends  APB  Opinion  No.  28  "Interim  Financial
Reporting"  to require  disclosure  about  those  effects  in interim  financial
information.  The Company adopts the disclosure  provisions and the amendment to
APB No. 28 effective for interim periods beginning after December 15, 2002.

Had compensation expense for the Company's  stock-based  compensation plans been
determined under FAS No. 123, based on the fair market value at the grant dates,
the  Company's  pro forma net loss and pro forma net loss per share  would  have
been reflected as follows at December 31:


                                                            2004         2003
                                                        ------------  ----------

Net loss
    As reported                                         $1,844,826   $  708,092
    Stock-based employee compensation cost, net of tax           -      576,467
                                                        ------------ -----------
    Pro forma                                           $1,844,826   $1,284,559
                                                        ============ ===========

Loss per share
    As reported                                         $     0.03   $     0.02
                                                        ============ ===========
    Pro forma                                           $     0.03   $     0.03
                                                        ============ ===========


Comprehensive  income - The Company includes items of other comprehensive income
(loss)  by  their  nature,  such  as  translation  adjustments,  in a  financial
statement and displays the  accumulated  balance of other  comprehensive  income
separately from retained  earnings and additional  paid-in capital in the equity
section of the balance sheet. The Company  discloses total  comprehensive  loss,
its  components  and  accumulated  balances on its  statement  of  stockholders'
equity.

Related  party  transaction  - A related  party is generally  defined as (i) any
person that holds 10% or more of the Company's  securities  and their  immediate
families,  (ii)  the  Company's  management,  (iii)  someone  that  directly  or
indirectly  controls,  is  controlled  by or is under  common  control  with the
Company,  or (iv)  anyone who can  significantly  influence  the  financial  and
operating  decisions of the Company. A transaction is considered to be a related
party  transaction when there is a transfer of resources or obligations  between
related parties.

Recent Accounting Pronouncements - The Financial Accounting Standards issued the
following  pronouncements  during  2004,  none of which are  expected  to have a
significant affect on the financial statements:

In March 2004,  the EITF reached final  consensuses  on EITF 03-6 which provides
additional guidance to determine whether a security is a participating  security
and therefore  subject to the  two-class  method under SFAS 128. The guidance in
EITF 03-6 clarifies the notion of what constitutes a participating security, and
is effective for fiscal periods  (interim or annual)  beginning  after March 31,
2004. EITF 03-06 provides guidance in applying the two-class method of

                                      F-11

<PAGE>

calculating  earnings per share for companies that have issued  securities other
than common stock that  contractually  entitle the holder to  participate in any
dividends  declared  and  earnings  of the  company.  The opinion  defines  what
constitutes a  participating  security and how to apply the two-class  method of
calculating earnings per share to those securities. In addition, the consensuses
in  EITF  03-6  nullify  the  guidance  in  EITF  Topic  No.  D-95,  "Effect  of
Participating  Convertible  Securities on the  Computation of Basic Earnings Per
Share",  and requires the use of the  two-class  method to compute  basic EPS by
companies with participating  convertible securities.  The adoption did not have
an impact on our calculation of earnings per share.

In April 2004, the EITF reached consensus on EITF Issue No. 03-6, "Participating
Securities and the Two Class Method under FASB Statement No. 128" ("EITF 03-6").
EITF 03-6 addresses a number of questions  regarding the computation of earnings
per share by companies that have issued  securities other than common stock that
contractually entitle the holder to participate in the dividends and earnings of
the company when, and if, it declares  dividends on its common stock.  EITF 03-6
also provides  further  guidance in applying the two-class method of calculating
earnings per share, clarifying what constitutes a participating security and how
to apply  the  two-class  method of  computing  earnings  per  share  once it is
determined  that  a  security  is  participating,   including  how  to  allocate
undistributed  earnings to such a security.  EITF 03-6 is  effective  for fiscal
periods beginning after March 31, 2004 and requires  retroactive  restatement of
prior earning per share amounts. This statement does not affect the Company.

In June 2004, the FASB issued EITF Issue No. 02-14,  "Whether an Investor Should
Apply the Equity Method of Accounting to  Investments  Other Than Common Stock."
EITF Issue No. 02-14 addresses  whether the equity method of accounting  applies
when an  investor  does not have an  investment  in  voting  common  stock of an
investee but exercises significant influence through other means. EITF Issue No.
02-14 states that an investor  should only apply the equity method of accounting
when it has investments in either common stock or in-substance common stock of a
corporation,  provided that the investor has the ability to exercise significant
influence  over the  operating  and  financial  policies  of the  investee.  The
accounting  provisions  of EITF Issue No. 02-14 are  effective for the reporting
period  beginning  after  September  15, 2004.  The Company is in the process of
determining  the effect,  if any, of the  adoption of EITF Issue No.  02-14 will
have on the Company's financial position, results of operations, or cash flows.

In November 2004, the FASB issued SFAS No. 151,  "Inventory  Costs, an amendment
of ARB No. 43,  Chapter 4." The  amendments  made by SFAS No. 151  clarify  that
abnormal amounts of idle facility expense,  freight,  handling costs, and wasted
materials (spoilage) should be recognized as current-period  charges and require
the allocation of fixed  production  overheads to inventory  based on the normal
capacity of the production  facilities.  The guidance is effective for inventory
costs  incurred  during  fiscal years  beginning  after  November 23, 2004.  The
Company  does not  believe  the  adoption  of SFAS No.  151 will have a material
impact on our financial position, results of operations or cash flows.

In  December  2004,  the FASB  issued  a  revision  of  Statement  of  Financial
Accounting  Standards No. 123,  "Accounting for Stock-Based  Compensation" (SFAS
123R). SFAS 123R supersedes APB Opinion No. 25,  "Accounting for Stock Issued to
Employees,"  and its  related  implementation  guidance.  SFAS 123R  establishes
standards  for the  accounting  for  transactions  in  which  an  entity  incurs
liabilities  in exchange for goods or services  that are based on the fair value
of the  entity's  equity  instruments  or that may be settled by the issuance of
those equity instruments.  SFAS 123R does not change the accounting guidance for
share-based  payment  transactions with parties other than employees provided in
SFAS 123 as originally  issued and EITF Issue No. 96-18,  "Accounting for Equity
Instruments  That Are  Issued  to Other  Than  Employees  for  Acquiring,  or in
Conjunction with Selling, Goods or Services." SFAS 123R is effective for interim
reporting  period that begins after June 15, 2005. The Company is in the process
of  determining  the  effect  of the  adoption  of SFAS  123R  will  have on its
financial position, results of operations, or cash flows.

                                      F-12

<PAGE>

In December  2004,  the FASB issued  SFAS No. 152,  "Accounting  for Real Estate
Time-Sharing  Transactions  - an  amendment of FASB  Statements  No. 66 and 67,"
which  discusses  the  accounting  and  reporting  of real  estate  time-sharing
transactions.  This  Statement is effective for financial  statements for fiscal
years  beginning  after June 15, 2005,  and  restatement  of  previously  issued
financial  statements  is not  permitted.  This  statement  does not  affect the
Company.

In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary Assets
- an  amendment  of APB  Opinion  No.  29." The  guidance in APB Opinion No. 29,
"Accounting  for  Nonmonetary  Transactions,"  is  based on the  principle  that
exchanges of  nonmonetary  assets should be measured  based on the fair value of
the  assets  exchanged  and  provided  an  exception  to the  basic  measurement
principle  (fair  value)  for  exchanges  of  similar  productive  assets.  That
exception  required  that  some  nonmonetary  exchanges,  although  commercially
substantive,  be recorded on a carryover  basis.  This Statement  eliminates the
exception to fair value for exchanges of similar  productive assets and replaces
it  with a  general  exception  for  exchange  transactions  that  do  not  have
commercial  substance--that  is, transactions that are not expected to result in
significant changes in the cash flows of the reporting entity. The provisions of
this Statement are effective for nonmonetary asset exchanges occurring in fiscal
periods  beginning after June 15, 2005,  applied  prospectively.  This statement
does not affect the Company.

NOTE 2 - INVESTMENT IN HIGHLAND MINING INC.  / CORRECTION OF ERROR - RESTATEMENT

Background of transaction

On  November  5, 2004,  the Company  and  shareholders  of Highland  Mining Inc.
("Highland") entered into a binding share exchange agreement whereby the Company
agreed to issue  85,000,000  of its common shares from treasury and an agreement
to issue common stock for issuance of 65,000,000 of the Company's  common shares
(after the increase of authorized  common stock of the Company to be approved in
the  coming  Annual  General  Meeting)  in  exchange  for 50% of the  issued and
outstanding  shares of Highland held by Highland  Shareholders,  pursuant to the
terms and conditions as hereinafter set forth:

1. If Highland  Shareholders  are unable to enter into a binding  agreement on a
share  purchase  and  sale  transaction   (the   "Definitive   Agreement")  with
Continental  Minerals  Corporation   ("Continental",   assignee  of  the  option
agreement  with  Hunter  Dickinson,  Inc.  and a company  listed on the  Toronto
Venture  Exchange)  to  sell  and  transfer  the  other  50% of the  issued  and
outstanding  shares of Highland (the  "Remaining  Shares") to  Continental on or
before March 30, 2005 (the "Outside Date"), or if either or both Continental and
Highland  Shareholders decide to terminate the Definitive  Agreement pursuant to
the terms and  conditions  therein on or before the  Outside  Date,  then unless
Highland  Shareholders and the Company  otherwise agree,  Highland  Shareholders
shall sell and transfer the Remaining  Shares to the Company at a nominal price,
pursuant to the same terms and conditions  contained  hereunder as applicable to
the parties then.

2.  Highland  Shareholders  have  direct or  indirect  rights or options  to, or
interests in, (the rights, options and interests together are called "Additional
Rights") 25 mineral properties  (including  Xietongmen  Copper-Gold Property) in
Tibet, China (the "Additional Properties"),  subject to terms and conditions and
regulatory requirements attached to the Additional Rights. Highland Shareholders
agree to transfer and assign, or shall cause to be transferred and assigned,  to
the Company the Additional Rights for $1.00, subject to terms and conditions and
regulatory requirements attached thereto, and terms and conditions herein.

Highland,  a  British  Virgin  Islands  company,  fully  owns  Tianyuan  Mineral
Exploration Ltd. ("Tianyuan"),  a private Chinese corporation, as a wholly owned
foreign enterprise ("WOFE") registered in Tibet, China, incorporated pursuant to
relevant  Chinese  laws and  regulations,  which  holds an  exploration  license
covering Xietongmen Copper-Gold Property located near Xiong Village,  Xietongmen
County, Rikaze area, Tibet Autonomous Region, China.

On November 9, 2004, the Highland  shareholders  signed a formal  agreement (the
"Preliminary  Option  Agreement") with Continental,  whereby  Continental has an
option to purchase 50% of the shares of Highland  through  payment of $2,000,000
to the original Highland  shareholders and funding Highland a further $5,000,000
of  exploration  expenses  on the  Xietongmen  Property.  Of  this,  exploration
expenditures  of $3,000,000  are to be funded by November 2005 with a further $2
million of exploration  expenditures to be funded by November 2006.  Continental
may  acquire a further 10% of the issued and  outstanding  shares of Highland by
funding an additional  $3,000,000 (by 2007) for exploration  expenditures on the
Xietongmen  Property.  In the event that  Continental  exercises  its options to
acquire the additional 10% shareholding of Highland, the Company's shareholdings
will be reduced to 40%. The Formal Agreement was finalized on December 23, 2004.

Under a Shareholders Agreement dated December 23, 2004 between Continental,  the
Company and other related parties, Continental will manage Highland and Tianyuan
during the option period.  Once the option is exercised and the first $8,000,000
in  exploration  expenses  is  funded,  further  funding  of  Highland  would be
proportional to interests held in the project, with a proportionate reduction in
the  shareholdings  of any  shareholder  which fails to match the funding of the
others.  If the other parties'  shareholdings  in Highland fall below 15%, those
parties may elect to convert their  holdings to an  entitlement  of 12.5% of the
after pay-back profit of Highland.

                                      F-13

<PAGE>

Upon consummation of the Definitive Agreement between the Highland  Shareholders
and  Continental on December 28, 2004, the Highland  Shareholders  transferred a
total of 50% of the  outstanding and issued shares of Highland to the Company in
exchange for 85,000,000 shares of the Company's common stock. The Company issued
an agreement to issue common stock for the issuance of 9,639,000  common  shares
(after the increase of authorized  common stock of the Company to be approved in
the coming Annual General Meeting) as finder's fee for the  transaction.  At the
Company's  option,  at any  time  within  90 days of the  date of the  debenture
(November 5, 2004), it can send a notice to the holder  indicating its intention
to pay the  holder a cash  payment  in lieu of  shares on the basis of $0.25 per
share.

Correction of Error - Restatement

The Company has restated the  valuation of its  Investment in Highland due to an
error in the  calculation  of the valuation of  securities  issued in connection
with the consummation of the Share Exchange Agreement with Highland. The Company
originally  recorded the  investment at the fair market value of the  securities
issued at the date of the exchange,  as  determined  by published  quoted market
prices.  However,  the Company has since determined that the transaction  should
have  been  valued  at the  historical  cost  basis  incurred  by  the  founding
shareholders of Highland, who became the major shareholders of the Company after
the  exchange,  because the  exchange  occurred  between  entities  under common
control.  The historical  cost basis was $800,000.  For the remaining 24 mineral
properties,  the  historical  costs  are  nominal.  The net  effect  of error in
valuation  was a  decrease  in total  assets and total  stockholders'  equity by
$11,200,000.  There was no effect on  previously  reported net loss and net loss
per share amounts.

Restatement of the 2004 balance sheet items can be summarized as follows:

Investment in Highland Mining Inc.
  Balance previously recorded (at fair market value)    $12,000,000
  Adjustment                                            (11,200,000)
                                                        ------------
  Restated amount (at historical cost)                  $   800,000
                                                        ============

Additional paid-in capital
  Balance previously recorded (at fair market value)    $ 8,771,207
  Adjustment                                             (5,228,880)
                                                        ------------
  Restated amount (at historical cost)                  $ 3,542,327
                                                        ============

Agreement to issue common stock for acquisition cost (65,000,000 shares)
  Balance previously recorded (at fair market value)    $ 5,971,120
  Adjustment                                             (5,971,120)
                                                        ------------
  Restated amount (at historical cost)                  $         -
                                                        ============

The Company has also restated the fair value of the agreement to issue 9,639,000
shares as an expense item as the finder is an outsider.  The Company  originally
recorded the amount as a reduction in additional paid-in capital. The net effect
of the  error  was an  increase  in loss of  $771,120  and  loss per  share  was
increased by $0.01.

Restatement  of the items in 2004  Statement of Operations  can be summarized as
follows:

Net loss available to common stockholders
  Balance previously recorded                           $(1,073,706)
  Adjustment: Finder's fee                                 (771,120)
                                                        ------------
  Restatement amount                                    $(1,844,826)
                                                        ============

Loss per share attributable to common stockholders
  Amount previously recorded                            $     (0.02)
  Restated amount                                       $     (0.03)


The financial statements for the year ended December 31, 2004 do not include any
post-acquisition  income or loss of  Highland  as the  transactions  of Highland
occurring from December 28, 2004 to December 31, 2004 were immaterial.  Highland
Mining Inc. was  incorporated  on June 18, 2004. The Company is classified as an
"exploration  stage  company",  which did not generate any revenues for 2004 and
incurred an operating loss of $518,078. The condensed consolidated balance sheet
of Highland Mining Inc. as of December 31, 2004 was as follows:

Current Assets                              $        94,301
Mineral Property                                  1,564,797
Due from related party                               39,986
                                             ---------------
Total Assets                                  $   1,699,084
                                             ===============

Current Liabilities
  Accounts payable                          $        21,060
  Due to related parties                            556,304
                                             ---------------
Total Liabilities                                   577,364
Stockholders equity                               1,121,720
                                             ---------------
Total Liabilities and Stockholders' Equity    $   1,699,084
                                             ===============


NOTE 3 - FIXED ASSETS

Fixed assets consist of the following:

<PAGE>

Office and computer equipment                                  $      14,207
Less : accumulated depreciation                                       (5,149)
                                                               ---------------
                                                               $       9,058
                                                               ===============


Depreciation  charged to operations  for year ended  December 31, 2004 and 2003,
and the  cumulative  amounts  from  inception  amounted to  $13,004,  $4,620 and
$17,624, respectively.

NOTE 4 - PROMISSORY NOTE PAYABLE

The Company  executed a promissory note for $100,000 with interest at 0% thereon
to a company controlled by Zhi Wang, a Director and Chairman of the Company. The
amount is  repayable  on May 15,  2005.  The Company has the right to prepay the
note in whole or in part at any time without premium or penalty.  The funds were
obtained to further support working capital requirements. The note was repaid in
January 2005.

NOTE 5 - RELATED PARTY TRANSACTIONS

During the year ended December 31, 2004, the Company incurred consulting fees of
$318,834 (2003:  $241,103) to certain directors,  ex-director and/or officers of
the  Company.  The  Company has  consulting  agreements  with a director  and an
officer of the Company as detailed in Note 9.

NOTE 6 - INCOME TAXES

There is no current or deferred  tax expense  for the years ended  December  31,
2004 and  2003,  due to the  Company's  loss  position.  The  Company  has fully
reserved for any benefits of these  losses.  The  deferred tax  consequences  of
temporary  differences in reporting items for financial statement and income tax
purposes are recognized, as appropriate.  Realization of the future tax benefits
related to the deferred tax assets is dependent on many  factors,  including the
Company's ability to generate taxable income within the net operating loss carry
forward  period.  Management  has  considered  these  factors  in  reaching  its
conclusion as to the valuation allowance for financial  reporting purposes.  The
income tax effect of temporary differences comprising the deferred tax assets on
the accompanying balance sheet is as follows:

                                      F-14

<PAGE>


Deferred tax asset from net operating loss carry forwards         $  1,392,000
Valuation allowance                                                (1,392,000)
                                                                 ---------------
Net deferred tax assets                                          $          -
                                                                 ===============

The Company has  available net operating  loss carry  forwards of  approximately
$2,200,000  for tax  purposes to offset  future  taxable  income,  which  expire
through 2024.  Pursuant to the Tax Reform Act of 1986, annual utilization of the
Company's net operating loss carryforwards may be limited if a cumulative change
in ownership of more than 50% is deemed to occur within any three-year period.

The difference  between income taxes at statutory rates and the amount presented
in the financial  statements for the years ended December 31, 2004 and 2003, and
cumulative from inception, is a result of the following approximated amounts:

<TABLE>
<CAPTION>

                                                                                                       Cumulative
                                                                   2004               2003           From Inception
<S>                                                        <C>                 <C>               <C>
Statutory federal income tax rate - expense (benefit)      $     627,000       $    241,000      $      1,392,000
Change in valuation allowance                                    (627,000)          (241,000)           (1,392,000)
                                                           ------------------- ----------------- ---------------------
                                                           $          -        $          -      $              -
                                                           =================== ================= =====================
</TABLE>

NOTE 7 - STOCK-BASED COMPENSATION

Stock options

On May 31, 2000, the Company's  board of directors  approved a stock option plan
for the sale of  5,000,000  shares of the  Company's  common  stock at $0.40 per
share. There are 5,000,000 options outstanding under the plan and none have been
exercised to date.  The stock  option plan will expire on May 31, 2005,  and the
directors  have retained the right to cancel the plan at any time before May 31,
2005, and can make awards to the officers and directors,  employees,  and others
as designated by the directors.  The fair value of the stock options granted was
approximately  $1,619,000 and has been recorded as compensation  expense for pro
forma purposes only.

On July 5, 2003,  the Company  granted stock  options to three  directors of the
Company for the sale of 6,000,000  shares of the Company's common stock at $0.05
per share with  expiry date on August 1, 2006,  for their  services in the past.
Compensation  cost recognized in these financial  statements for options granted
below fair market value amounted to $210,000.  The originally  issued  financial
statements  for the year ended August 31, 2003,  did not include  recognition of
compensation cost and accordingly, have been restated for that amount. There was
no effect on previously  reported total stockholders'  deficiency.  Net loss for
the year  ended  August  31,  2003,  increased  by  $210,000,  but  there was no
significant effect on previously  reported loss per share. The fair value of the
stock  options  granted  was  approximately  $477,149  and has been  recorded as
compensation   expense  for  pro  forma  purposes   only.   These  options  were
subsequently cancelled on November 4, 2004.

On September  11, 2003,  the Company  granted stock options to a director of the
Company for the sale of 1,000,000  shares of the Company's common stock at $0.10
per share with  expiry  date on August 1, 2006,  for his  services  in the past.
Compensation  cost recognized in these financial  statements for options granted
below fair market value amounted to $10,000. The fair value of the stock options
granted was approximately  $99,318 and has been recorded as compensation expense
for pro forma purposes only.

As of  December  31,  2004,  there  are  6,000,000  stock  options  outstanding.
6,000,000  options were  cancelled  and no options  were  forfeited or exercised
during the year ended December 31, 2004. The weighted  average exercise price of
the  options  outstanding  and  exercisable  is $0.35 and the  weighted  average
remaining contractual life is 0.8 years.

                                      F-15

<PAGE>

Stock warrants

The Company has issued  3,540,000  Series "A" Stock  Purchase  Warrants  with an
exercise price of $0.10 each that can be exercised at the earlier of:

1. August 15, 2004; or

2. the 90th day after the day on which the weighted average trading price of the
Company's shares exceed $0.13 per share for 10 consecutive trading days.

Upon exercise of the Series "A" Stock Purchase Warrant at $0.10, the holder will
receive  one Common  Share of the  Company  and an  additional  Series "B" Stock
Purchase  Warrant  exercisable at $0.15. The term of the Series "B" warrant will
be adjusted accordingly to expire one year after the occurrence of either (i) or
(ii) as described above.

The Company also issued  16,050,000 units Series "C" Stock Purchase  Warrants on
completion of a non-brokered  private placement on October 16, 2003. Each Series
"C" warrant  entitles  the holder to purchase  one  additional  share within the
first year at $0.08 or $0.25 in the second year.  Upon  exercise of a Series "C"
Stock   Purchase   Warrant,   the   purchaser   will   receive   an   additional
non-transferable  Series "D" Stock  Purchase  Warrant to purchase an  additional
share for $0.75 until September 30, 2006. (See Note 8)

During the year ended  December  31,  2004,  2,990,000  Series "A"  warrants and
200,375  Series "C"  warrants  were  exercised  at $0.10 and at $0.08 per share,
respectively,  for cash  proceeds of $299,000  and  $16,030,  respectively,  and
250,000 Series "A" warrants that expired.

As of December  31,  2004,  the Company has  3,040,000,  15,849,625  and 200,375
Series "B", "C" and "D" Stock Purchase Warrants outstanding,  respectively. (See
Note 8)

NOTE 8 - STOCKHOLDERS' EQUITY

Stock split - On December 12, 2001, the Company completed a forward common stock
split of 2 1/2 shares for 1 outstanding  share.  The financial  statements  have
been retroactively restated to reflect the split.

Private Placements of Common Stock

(i) On October 16, 2003, the Company completed non-brokered private placement of
15,000,000  units of  common  stock at $0.06  per  share  for cash  proceeds  of
$900,000.  Each unit consist of one common share and one non-transferable Series
"C" Stock Purchase Warrant entitling the holder to purchase one common share for
two years, at $0.08 per share in the first year or $0.25 per share in the second
year. Upon exercising each warrant,  the holder of each warrant will receive one
additional  non-transferable  Series "D" Stock  Purchase  Warrant to purchase an
additional  share for $0.75 until  September  30,  2006.  The Company  paid a 7%
finder's fee by issuing 1,050,000 units with the same terms and conditions.  The
finder's  fee common  stock  issued was valued at the fair  market  value of the
common stock ($63,000) and charged against  additional paid-in capital as a cost
of the offering. (See Note 7)

(ii) The  Company  has  arranged  a  non-brokered  private  placement  for up to
48,000,000  units at $0.05 per unit for total proceeds of $2,400,000.  Each unit
will consist of one common share and one non-transferable share purchase warrant
entitling  the holder to purchase one common  share for two years,  at $0.08 per
share in the first  year or $0.25 in the second  year.  The  proceeds  from this
private  placement  will  be used  for  working  capital  and  acquiring  mining
properties in the future. A 7% finder's fee will be paid in shares.  The Company
received  the first  $1,200,000  on December 31, 2004,  which is  classified  as
subscription  received  under  stockholders'  equity on the balance sheet as the
share certificates have not been received. (See Note 10)

                                      F-16

<PAGE>

Share  Exchange  Agreement - On July 4, 2003,  the Company  entered into a share
exchange  agreement  ("Agreement")  to acquire all of the issued and outstanding
shares of Honglu Investment Holdings,  Inc.  ("Honglu"),  a Chinese company that
owns prospecting  permits and licenses on mineral prospects in Tibet,  China. On
November  5, 2004,  the  Company  and  Honglu  shareholders  mutually  agreed to
terminate the Agreement as the Tibet government had on August 10, 2004, rejected
the  application  for approval of the  Agreement  with the  Company.  All of the
shares  issued in relation  to the  Agreement  were  returned to the Company and
cancelled effective this same date. (See Note 2)

NOTE 9 - COMMITMENTS AND CONTINGENCIES

Operating leases - In December 2003, the Company entered into a lease for office
space under a  non-cancelable  operating  lease for a term of 3 years  beginning
January  2004 and  expiring on December  31,  2006,  with two free months  rent.
Future commitments for the years ended December 31 are approximately as follows:

(2005-2006:  $17,000 per year).  Rent expense  charged to  operations  for years
ended  December 31, 2004 and 2003,  and the  cumulative  amounts from  inception
amounted to $13,588, $nil, and $13,588, respectively.

Commitments - (i) The Company has a consulting  agreement with a director of the
Company for his services at $3,000 per month until December 31, 2006.;  (ii) The
Company  has a  consulting  agreement  with an  officer of the  Company  for his
consulting  services at C$3,500 per month until  December 31,  2006.;  (iii) The
Company  also has a consulting  agreement  with a geologist  for his  consulting
services at C$3,200  per month until  December  31,  2006.;  (iv) On February 5,
2004,  the  Company  granted  to  Continental  Minerals  Corporation  (a  Hunter
Dickinson,  Inc. group company) an exclusive  option to acquire an aggregate 50%
of the Property  Rights to the  Xietongmen  Gold-Copper  Prospect in Tibet and a
further  option  to  acquire  up to a further  10% of  Property  Rights,  for an
aggregate of 60% of such Property Rights under certain terms and conditions.  On
November 9, 2004, the Company and  Continental  mutually agreed to terminate the
exclusive option agreement.

Stock options and warrants - See details in Notes 7 and 10.

Mineral properties - The Company has direct and indirect rights to earn interest
in 25 mineral  properties.  The Company is required by the Chinese  authority to
spend a specified  minimum  amount on a mineral  property  on a yearly  basis in
order to renew the exploration permit on that property. The Company has to incur
approximately  $444,000  each  year  for  maintaining  the  related  exploration
permits.

The Company is also required to reimburse the previous exploration  expenditures
incurred by the Chinese  authority in a mineral  property if the Company decides
to have commercial mining of that property. The Company has to pay approximately
$13.4 million to the Chinese authority if all the 25 mineral  properties are put
into commercial production.

NOTE 10 - SUBSEQUENT EVENTS

   o      Subsequent  to  year  end,  the  Company  received   $850,000  of  the
          $1,200,000 non-brokered private placement for the remaining 24,000,000
          units  subscribed for at $0.05 per unit. As a result of the completion
          of the private placement,  the Company has contractual arrangements to
          issue common stock that exceeds its authorized  and available  shares.
          In accordance  with Emerging  Issues Task Force  ("EITF") Issue 00-19,
          the Company will recognize a liability and related expense in 2005 for
          those  contracts that could require the Company to obtain  shareholder
          approval  to increase  its  authorized  shares  prior to being able to
          satisfy its obligations  under those  arrangements.  As of October 11,

<PAGE>

          2005, the Company had 42,796,200  potential  shares to be issued under
          contractual   arrangements,   mainly  from  outstanding  warrants  and
          options,  in excess of the unissued  shares from the authorized  share
          capital.  Changes in fair value are reported in earnings and disclosed
          in the financial statements as long as the contracts remain classified
          as  assets  or  liabilities.  If  contracts  classified  as  assets or
          liabilities are ultimately  settled in shares,  any gains or losses on
          those  contracts  are included in earnings.  The  classification  of a
          contract    is    reassessed    at   each    balance    sheet    date.
          The Company filed its Proxy Statement Pursuant to Section 14(a) of the
          Securities  Exchange  Act of 1934 to obtain  shareholder  approval  to
          amend its Articles of Incorporation to increase the authorized capital
          from 200,000,000 to 500,000,000 common shares.


   o      3,040,000 Series "B" warrants expired in January 2005.


                                      F-17