U.S. SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





FORM 10-K





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


EXCHANGE ACT OF 1934





For the fiscal year ended May 31, 2009


Commission file number: 0--32919





PATRIOT GOLD CORP.


(Exact name of registrant as specified in its charter)





Nevada

86-0947048(State of incorporation)

(I.R.S. Employer Identification No.)





3651 Lindell Road, Suite D


Las Vegas, Nevada, 89103


(Address of principal executive offices)





(702) 456-9565


(Registrant’s telephone number, including area code)





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


None





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


Common Stock, $0.001 par value








Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  ̈     No x





Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes  ̈     No x





Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No  ̈





Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment
to this Form 10-K.   x





1


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):





Large accelerated filer  ̈
Accelerated filer  ̈Non-accelerated filer  ̈
(Do not check if a smaller reporting company)
Smaller Reporting Company x





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





The issuer’s revenues for its most recent fiscal year were $Nil





The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the average bid and asked price of such common equity as November 30, 2008 was approximately $1,516,830.





The number of shares of the issuer’s common stock issued and outstanding as of August 25, 2009 was 26,224,400 shares.





Documents Incorporated By Reference:  None





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TABLE OF CONTENTS





PageGlossary of Mining Terms
4PART IItem 1
Business
7Item 1A
Risk Factors
11Item 1B
Unresolved Staff Comments
14Item 2
Properties
14Item 3
Legal Proceedings
50Item 4
Submission of Matters to a Vote of Security Holders
50PART IIItem 5
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
50Item 6
Selected Financial Data
52Item 7
Management’s Discussion and Analysis of Financial Condition and Results of Operations
53Item 7A
Quantitative and Qualitative Disclosures About Market Risk.
58Item 8
Financial Statements and Supplementary Data.
58Item 9
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
58Item 9A
Controls and Procedures
58Item 9B
Other Information
59PART IIIItem 10
Directors, Executive Officers and Corporate Governance
60Item 11
Executive Compensation
62Item 12
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
65Item 13
Certain Relationships and Related Transactions, and Director Independence
68Item 14
Principal Accountant Fees and Services
72PART IVItem 15
Exhibits, Financial Statement Schedules
73SIGNATURES

103





3


Glossary of Mining Terms





Adit(s),Historic working driven horizontally, or nearly so into a hillside to explore for and exploit ore.





Adularia.A potassium-rich alteration mineral – a form of orthoclase.





Air track holes.Drill hole constructed with a small portable drill rig using an air-driven hammer.





BLEG sampling.Bulk leach sampling. A large sample of soil or rock that is leached using cyanide to determine gold and silver content down to a detection limit of as little as 1.0 parts per billion.





CSMT Survey.A Controlled Source Megneto-telluric method used to map the variation of the Earth’s resistance to conduct electricity by measuring naturally occurring electric and magnetic fields at the Earth’s surface.





Controlled Source Magneto-telluric Survey.The recording of variations in a generated electrical field using sophisticated survey methods.





Core holes.A hole in the ground that is left after the process where a hollow drill bit with diamond chip teeth is used to drill into the ground. The center of the hollow drill fills with the core of the rock that is being drilled into, and when the drill is extracted, a hole is left
in the ground.





Felsic Tertiary Volcanic Rocks. Quartz-rich rocks derived from volcanoes and deposited between two and sixty-five million years ago.





Geochemical sampling.Sample of soil, rock, silt, water or vegetation analyzed to detect the presence of valuable metals or other metals which may accompany them. For example, arsenic may indicate the presence of gold.





Geologic mapping.Producing a plan and sectional map of the rock types, structure and alteration of a property.





Geophysical survey.Electrical, magnetic, gravity and other means used to detect features, which may be associated with mineral deposits





Ground magnetic survey.Recording variations in the earth’s magnetic field and plotting same.





Ground radiometric survey.A survey of radioactive minerals on the land surface.





Leaching. Leaching is a cost effective process where ore is subjected to a chemical liquid that dissolves the mineral component from ore, and then the liquid is collected and the metals extracted from it.





Level(s),Main underground passage driven along a level course to afford access to stopes or workings and provide ventilation and a haulageway for removal of ore.


4


Magnetic lows.An occurrence that may be indicative of a destruction of magnetic minerals by later hydrothermal (hot water) fluids that have come up along faults. These hydrothermal fluids may in turn have carried and deposited precious metals such as gold and/or silver.





Plug.A vertical pipe-like body of magma representing a volcanic vent similar to a dome.





Quartz Monzonite.A medium to coarse crystalline rock composed primarily of the minerals quartz, plagioclase and orthoclase.





Quartz Stockworks.A multi-directional system of quartz veinlets.





RC holes.Short form for Reverse Circulation Drill holes. These are holes left after the process of Reverse Circulation Drilling.





Resource.An estimate of the total tons and grade of a mineral deposit defined by surface sampling, drilling and occasionally underground sampling of historic diggings when available.





Reverse circulation drilling.A less expensive form of drilling than coring that does not allow for the recovery of a tube or core of rock. The material is brought up from depth as a series of small chips of rock that are then bagged and sent in for analysis. This is a quicker and
cheaper method of drilling, but does not give as much information about the underlying rocks.





Rhyolite plug dome.A domal feature formed by the extrusion of viscous quartz-rich volcanic rocks.





Scintillometer survey.A survey of radioactive minerals using a scintillometer, a hand-held, highly accurate measuring device.





Scoping Study.A detailed study of the various possible methods to mine a deposit.





Silicic dome.A convex landform created by extruding quartz-rich volcanic rocks





Stope(s), An excavation from which ore has been removed from sub-vertical openings above or below levels.





Tertiary.That portion of geologic time that includes abundant volcanism in the western U.S.





Trenching.A cost effective way of examining the structure and nature of mineral ores beneath gravel cover. It involves digging long usually shallow trenches in carefully selected areas to expose unweathered rock and allow sampling.





Volcanic center.Origin of major volcanic activity





Volcanoclastic.Coarse, unsorted sedimentary rock formed from erosion of volcanic debris.





5


Forward-Looking Statements





This Annual Report on Form 10-K contains forward-looking information. Forward-looking information includes statements relating to future actions, prospective products, future performance or results of current or anticipated products, sales and marketing efforts, costs and expenses, interest rates, outcome of contingencies, financial condition,
results of operations, liquidity, business strategies, cost savings, objectives of management of Patriot Gold Corp. (the “Company” or “we”) and other matters. Forward-looking information may be included in this Annual Report on Form 10-K or may be incorporated by reference from other documents filed with the Securities and Exchange Commission (the “SEC”) by the Company. One can find many of these statements by looking for words including, for example, “believes,”
“expects,” “anticipates,” “estimates” or similar expressions in this Annual Report on Form 10-K or in documents incorporated by reference in this Annual Report on Form 10-K. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or future events.





The Company has based the forward-looking statements relating to the Company’s operations on management’s current expectations, estimates and projections about the Company and the industry in which it operates. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that we
cannot predict. In particular, we have based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. Accordingly, the Company’s actual results may differ materially from those contemplated by these forward-looking statements. Any differences could result from a variety of factors, including, but not limited to general economic and business conditions, competition, and other factors.





6


PART I


Item 1.                      Description of Business.





We are engaged in natural resource exploration and anticipate acquiring, exploring, and if warranted and feasible, developing natural resource properties. Currently we are in the exploration state and are undertaking exploration programs in Arizona and Nevada.





History





We were incorporated in the State of Nevada on November 30, 1998. We were originally organized to engage in the business of breeding, raising and marketing ostriches, ostrich meat and ostrich by-products to the wholesale and retail markets. We operated from November 30, 1998 through approximately May 31, 2000 when we ceased all operations
due to lack of capital.





Mr. Manfred Schultz and Mr. Gerald Hinkley were our sole officers and directors from inception in November 1998, until they resigned on October 31, 2002. During such time, Messrs. Schultz and Hinkley were responsible for maintaining the Company in compliance with all SEC and other rules and regulations and for finding a suitable business
opportunity to acquire or merge with the Company. On October 20, 2002, Mr. Bruce Johnstone was appointed to the board of directors and as an officer. On October 31, 2002, Mr. Manfred Schultz and Mr. Gerald Hinkley resigned as directors and officers of the Company. The resignations were offered for personal reasons and not for any disagreement with management of the Company or its policies. Both resigning directors and the Company parted ways on good terms.





On or about May 1, 2001, the directors determined that it was in the best interest of our stockholders to become active again and we began seeking potential operating businesses and business opportunities with the intent to acquire or merge with such businesses. In June 2003, we filed an Amended and Restated Articles of Incorporation with
the Secretary of State of the State of Nevada changing the name of our Company and authorizing the issuance of preferred stock.





On June 12, 2003, we issued 13,500,000 Series A 7% Redeemable Preferred Shares to Mr. Bruce Johnstone, our director and officer, in consideration for his services; this issuance having been previously approved by a vote of both the Board of Directors and the majority stockholders. Each Series A 7% Redeemable Preferred Share had the right
to vote with the common shares on all matters requiring stockholder vote, including without limitation the election of directors. Mr. Johnstone received the shares in lieu of cash compensation for the services he provided to us. These services included, without limitation, the determination to transform the Company from the then business of ostrich meat production to the current business activity of resource exploration and ensuring that the Company would maintain its corporate existence. During this process,
Mr. Johnstone was responsible for finding and securing qualified directors for the board, which made up the new management team for the Company. Along with this he was also responsible for arranging and closing our July 2003 private placement financing. These funds provided the necessary funding to secure the first resource exploration projects which Mr. Johnstone established when he signed the Letter of Intent with MinQuest Inc. on June 27, 2003.





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On June 13, 2003, Messrs. Schultz and Hinkley, our former officers and directors, returned a total of 700,000 shares of common stock to us for cancellation. Given the fact that said individuals were no longer affiliated with the Company, at our request they agreed to return 70% of their holdings in the Company. We determined that having
them maintain 30% of their initial holdings in the Company was adequate consideration for the four years’ of services which they had performed. Since Messrs. Schultz and Hinkley were satisfied with our business plan to make the Company a natural resource exploration company, they did not request any consideration for the return of their shares.





On June 17, 2003, each issued and outstanding share of common stock was forward split at a rate of one for seven and six-tenths  (1:7.6) so that each share of common stock became equal to 7.6 shares.





On June 17, 2003, we received a new trading symbol to reflect the company name change and forward split of the common stock. The new trading symbol is PGOL.





On June 23, 2003 the Board adopted a resolution to (i) increase the number of positions on the Board to a total of three and (ii) appoint to the newly created positions Mr. Robert A. Sibthorpe of Vancouver, B.C. and Mr. Robert D. Coale of Solana Beach, CA.





On July 21, 2003, Mr. Bruce Johnstone resigned as an officer and director. The resignation was offered for personal reasons and not for any disagreement with management of the Company or its policies. On July 21, 2003, Mr. Ronald C. Blomkamp was appointed as the President, Chief Executive and Financial Officer and Secretary and a director
of the Company.





On October 13, 2005, Mr. Ronald Blomkamp, the Chairman, President, Chief Executive Officer, Chief Operating Officer, Secretary, and a director resigned from each of his positions as an officer and director of the Company.   On the same date, the Company’s board of directors voted to appoint Mr. Robert Coale as Chairman,
President, Chief Executive Officer, Chief Operating Officer, Secretary and Treasurer.  Also on the same date, the Company’s board of directors elected Mr. Duncan Budge as a member of the board of directors of the Company.





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





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





8


On September 5, 2008 Mr. Robert Sibthorpe resigned from his position as a Director of the Company and on the same date Mr. Jared Beebe was appointed a Director of the Company.





On September 12, 2008 Mr. Robert Coale resigned from his positions as President, Chief Executive Officer, Secretary, and Treasurer but remained as a Director of the Company.  In addition, on September 12, 2008, Mr. Duncan Budge resigned from his position as a Director of the Company.





Also on September 12, 2008 Mr. Herb Duerr was appointed President, Chief Executive Officer, Secretary, Treasurer, and Director of the Company.  Mr. Duerr is also an Officer of MinQuest Inc (“MinQuest”).  All of the Company’s mineral properties have either been directly or indirectly optioned from MinQuest.





Business Operations





We are a natural resource exploration company with an objective of acquiring, exploring, and if warranted and feasible, developing natural resource properties. Our primary focus in the natural resource sector is gold. We are an exploration stage company. We do not consider ourselves a “blank check” company required to comply
with Rule 419 of the Securities and Exchange Commission, because we were not organized for the purpose of effecting, and our business plan is not to effect, a merger with or acquisition of an unidentified company or companies, or other entity or person. We do not intend to merge with or acquire another company in the next 12 months.





Though we have the expertise on our board of directors to take a resource property that hosts a viable ore deposit into mining production, the costs and time frame for doing so are considerable, and the subsequent return on investment for our shareholders would be very long term. Therefore, we anticipate selling or partnering any ore
bodies that we may discover to a major mining company. Many major mining companies obtain their ore reserves through the purchase of ore bodies found by junior exploration companies. Although these major mining companies do some exploration work themselves, many of them rely on the junior resource exploration companies to provide them with future deposits for them to mine. By selling or partnering a deposit found by us to these major mining companies, it would provide an immediate return to our shareholders without
the long time frame and cost of putting a mine into operation ourselves, and it would also provide future capital for the Company to continue operations.





The search for valuable natural resources as a business is extremely risky. We can provide investors with no assurance that the properties we have either optioned or purchased in Nevada and Arizona contain commercially exploitable reserves. Exploration for natural reserves is a speculative venture involving substantial risk. Few properties
that are explored are ultimately developed into producing commercially feasible reserves. Problems such as unusual or unexpected formations and other conditions are involved in mineral exploration and often result in unsuccessful exploration efforts. In such a case, we would be unable to complete our business plan and any money spent on exploration would be lost.





9


Natural resource exploration and development requires significant capital and our assets and resources are limited. Therefore, we anticipate participating in the natural resource industry through the selling or partnering of our properties, the purchase of small interests in producing properties, the purchase of properties where feasibility
studies already exist or by the optioning of natural resource exploration and development projects. To date we have several properties under option, and are in the early stages of exploring these properties. There has been no indication as yet that any commercially viable mineral deposits exist on these properties, and there is no assurance that a commercially viable mineral deposit exists on any of our properties. Further exploration will be required before a final evaluation as to the economic and legal feasibility
is determined.





Financing





In July 2003 we completed a private placement of shares and warrants which generated an aggregate of $367,500 in proceeds.  The private placement we closed in November 2003 generated an additional $1,080,000 in gross proceeds. Also, $2,060,825 and $1,597,500 during the years ended May 31, 2004 and 2005, respectively, was obtained
from the exercise of stock options issued under the Company’s 2003 stock option plan. There were no fund raising activities undertaken by the Company during the fiscal year ended May 31, 2009.  With the funds currently held by the Company, we are adequately funded for all work programs and option commitments for the next 12 months. If we were to develop any of our properties beyond the exploration activities currently being undertaken by the Company, we would need to raise further funding.  If
additional funding is required, management plans to seek the additional capital through private placements and public offerings of its common stock but there can be no assurances that management would be successful in its attempt to raise the additional funds.





Competition





The mineral exploration industry, in general, is intensively competitive and even if commercial quantities of ore are discovered, a ready market may not exist for sale of same. Numerous factors beyond our control may affect the marketability of any substances discovered. These factors include market fluctuations, the proximity and capacity
of natural resource markets and processing equipment, government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in our not receiving an adequate return on invested capital.




Government Regulation





The federal government and various state and local governments have adopted laws and regulations regarding the protection of natural resources, human health and the environment. We will be required to conduct all exploration activities in accordance with all applicable laws and regulations. These may include requiring working permits for
any exploration work that results in physical disturbances to the land and locating claims, posting claims and reporting work performed on the mineral claims. The laws and regulations may tell us how and where we can explore for natural resources, as well as environmental matters relating to exploration and development. Because these laws and regulations change frequently, the costs of compliance with existing and future environmental regulations cannot be predicted with certainty.


10


Any exploration or production on United States Federal land will have to comply with the Federal Land Management Planning Act which has the effect generally of protecting the environment. Any exploration or production on private property, whether owned or leased, will have to comply with the Endangered Species Act and the Clean Water Act.
The cost of complying with environmental concerns under any of these acts varies on a case-by-case basis. In many instances the cost can be prohibitive to development. Environmental costs associated with a particular project must be factored into the overall cost evaluation of whether to proceed with the project.





Other than the normal bonding requirements, there are no costs to us at the present time in connection with compliance with environmental laws. However, since we do anticipate engaging in natural resource projects, these costs could occur at any time. Costs could extend into the millions of dollars for which we could be liable. In the event
of liability, we would be entitled to contribution from other owners so that our percentage share of a particular project would be the percentage share of our liability on that project. However, other owners may not be willing or able to share in the cost of the liability. Even if liability is limited to our percentage share, any significant liability would wipe out our assets and resources.





Employees





We have commenced only limited operations. Therefore, we have no full time employees. Our sole officer and three directors provide planning and organizational services for us on a part-time basis.





Subsidiaries





We do not have any subsidiaries and we are not part of a group.





Item 1A.                      Risk Factors





Factors that May Affect Future Results





1. We will require additional funds in the future to achieve our current business strategy and our inability to obtain funding will cause our business to fail.





Based upon current plans we expect to incur operating losses in future periods. This will happen because there are expenses associated with the acquisition and exploration of natural resource properties. While we have sufficient cash on hand to fund our operating needs to May 31, 2010, we will need to raise additional funds in the future
through public or private debt or equity sales in order to fund our future operations and fulfill contractual obligations. These financings may not be available when needed. Even if these financings are available, it may be on terms that we deem unacceptable or are materially adverse to your interests with respect to dilution of book value, dividend preferences, liquidation preferences, or other terms. Our inability to obtain financing would have an adverse effect on our ability to implement our current exploration
in Arizona and Nevada, and as a result, could require us to diminish or suspend our operations and possibly cease our existence. Obtaining additional financing would be subject to a number of factors, including the market prices for the mineral property and silver and copper. These factors may make the timing, amount, terms or conditions of additional financing unavailable to us.


11


2. If we do not complete the required option payments and capital expenditure requirements mandated in our respective agreements with MinQuest, Inc. (“MinQuest”) we will lose our interest in that respective property and our business may fail.





If we do not make all of the property payments to MinQuest or incur the required expenditures in accordance with the respective property option agreements we will lose our option to purchase the respective property for which we have not made the payments and may not be able to continue to execute our business objectives if we are unable
to find an alternate exploration interest. Since our payment obligations are non-refundable, if we do not make any payments, we will lose any payments previously made and all our rights to the properties.





3. Because of our reliance on MinQuest our operations would be severely impacted should our relationship with MinQuest be terminated for any reason.





A portion of our Moss property was acquired from MinQuest and we have directly or indirectly optioned the Bruner, Vernal, Imperial, Whisky, NK, and Weepah properties from MinQuest.  In addition, to date all of our exploration activity on these properties has been undertaken by MinQuest.  As a result, MinQuest has significant
knowledge about our properties and it would be very difficult for us to replace MinQuest should our relationship with them be terminated for any reason.  Also, on September 12, 2008 Mr. Herb Duerr was appointed President, Chief Executive Officer, Secretary, Treasurer, and Director of the Company.  Mr. Duerr is also an Officer of MinQuest.  To date, there have not been any conflicts between the Company and MinQuest.





4. Because our Directors serve as Officers and Directors of other companies engaged in mineral exploration, a potential conflict of interest could negatively impact our ability to acquire properties to explore and to run our business.





All of our Directors and Officers work for other mining and mineral exploration companies.  Due to time demands placed on our Directors and Officers, and due to the competitive nature of the exploration business, the potential exists for conflicts of interest to occur from time to time that could adversely affect our ability to
conduct our business. The Officers and Directors’ full-time employment with other entities limits the amount of time they can dedicate to us as a director or officer. Also, our Directors and Officers may have a conflict of interest in helping us identify and obtain the rights to mineral properties because they may also be considering the same properties. To mitigate these risks, we work with several geologists in order to ensure that we are not overly reliant on any one of our Directors to provide us with
geological services.  However, we cannot be certain that a conflict of interest will not arise in the future.  To date, there have not been any conflicts of interest between any of our Directors or Officers and the Company.





5. Because of the speculative nature of exploration and development, there is a substantial risk that our business will fail.





12


The search for valuable natural resources as a business is extremely risky. We can provide investors with no assurance that the properties we have in Arizona and Nevada contain commercially exploitable reserves. Exploration for natural reserves is a speculative venture involving substantial risk. Few properties that are explored are ultimately
developed into producing commercially feasible reserves. Problems such as unusual or unexpected formations and other conditions are involved in mineral exploration and often result in unsuccessful exploration efforts. In such a case, we would be unable to complete our business plan.





6. Because we have not commenced business operations, we face a high risk of business failure due to our inability to predict the success of our business





We are in the initial stages of exploration of our mineral claims and thus have no way to evaluate the likelihood that we will be able to operate our business successfully. To date have been involved primarily in organizational activities, and the acquisition and exploration of the mineral claims. We have not earned any revenues as of the
date of this report.





7. Because of the unique difficulties and uncertainties inherent in mineral exploration and the mining business, we face a high risk of business failure





Potential investors should be aware of the difficulties normally encountered by early-stage mineral exploration companies and the high rate of failure of such enterprises. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the exploration
of the mineral properties that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems relating to exploration, and additional costs and expenses that may exceed current estimates.





In addition, the search for valuable minerals involves numerous hazards. As a result, we may become subject to liability for such hazards, including pollution, cave-ins and other hazards against which we cannot insure or against which we may elect not to insure. The payment of such liabilities may have a material adverse effect on our financial
position.





8. Because we anticipate our operating expenses will increase prior to our earning revenues, we may never achieve profitability





Prior to completion of our exploration stage, we anticipate that we will incur increased operating expenses without realizing any revenues. Therefore, we expect to incur significant losses into the foreseeable future. We recognize that if we are unable to generate significant revenues from the exploration of our mineral claims we will not
be able to earn profits or continue operations. There is no history upon which to base any assumption as to the likelihood that we will prove successful, and we can provide investors with no assurance that we will generate any operating revenues or ever achieve profitable operations. If we are unsuccessful in addressing these risks, our business will most likely fail.





9. Because access to our mineral claims may be restricted by inclement weather, we may be delayed in our exploration





13


Access to our mineral properties may be restricted through some of the year due to weather in the


area. As a result, any attempt to test or explore the property is largely limited to the times when weather permits such activities. These limitations can result in significant delays in exploration efforts. Such delays can have a significant negative effect on our results of operations.





10. Because our President has only agreed to provide his services on a part-time basis, he may not be able or willing to devote a sufficient amount of time to our business operations, causing our business to fail





Mr. Duerr, our sole officer, is also an Officer of MinQuest.  As a result of his duties and responsibilities with MinQuest Mr. Duerr provides his management and geological services to a number of companies. Because we are in the early stages of our business, Mr. Duerr will not be spending all of his time working for the Company.
Mr. Duerr will expend enough time to undertake the work programs that have been approved by the Company.  Later, if the demands of our business require additional time from Mr. Duerr, he is prepared to adjust his timetable to devote more time to our business. However, it still may not be possible for Mr. Duerr to devote sufficient time to the management of our business, as and when needed, especially if the demands of Mr. Duerr’s other interests increase. Competing demands on Mr. Duerr’s
time may lead to a divergence between his interests and the interests of our shareholders.





Risks Related To Legal Uncertainty and Regulations





11. As we undertake exploration of our mineral claims, we will be subject to compliance with government regulation that may increase the anticipated cost of our exploration programs





There are several governmental regulations that materially restrict mineral exploration. We will be subject to the federal, state and local laws of the United States, Arizona, and Nevada as we carry out our exploration program. We may be required to obtain work permits, post bonds and perform remediation work for any physical disturbance
to the land in order to comply with these laws. While our planned exploration program budgets for regulatory compliance, there is a risk that new regulations could increase our costs of doing business and prevent us from carrying out our exploration programs.




Item 1B.                      Unresolved Staff Comments





There are no unresolved staff comments.





Item 2. Description of Properties.





We do not lease or own any real property. We currently maintain our corporate office on a month-to-month basis at 3651 Lindell Road, Suite D Las Vegas, Nevada, 89103.  Management believes that our office space is suitable for our current needs.





14


In the following discussion relating to our interests in real property, there are references to “patented” mining claims and “unpatented” mining claims. A patented mining claim is one for which the U.S. government has passed its title to the claimant, giving that person title to the land as well as the minerals and
other resources above and below the surface. The patented claim is then treated like any other private land and is subject to local property taxes. An unpatented mining claim on U.S. government lands establishes a claim to the locatable minerals (also referred to as stakeable minerals) on the land and the right of possession solely for mining purposes. No title to the land passes to the claimant. If a proven economic mineral deposit is developed, provisions of federal mining laws permit owners of unpatented mining
claims to patent (to obtain title to) the claim. If one purchases an unpatented mining claim that is later declared invalid by the U.S. government, one could be evicted.





Bruner and Vernal Properties







Map of our Bruner and Vernal properties located in western Nevada.





15


Acquisition of Interest





Pursuant to a Property Option Agreement, dated as of July 25, 2003, with MinQuest, Inc., a Nevada corporation (“MinQuest”), we have the option to earn a 100% interest in the Bruner and Vernal mineral exploration properties located in Nevada.   Together, these two properties originally consisted of 28 unpatented
mining claims on a total of 560 acres in the northwest trending Walker Lane located in western Nevada.  In September, 2008 the company expanded the Bruner position from 16 unpatented mining claims to 51 unpatented mining claims.  This brought the total number acres at Bruner under the Company’s control to 1,020 acres at that time.





Simultaneous with the execution and delivery of the Property Option Agreement, we paid MinQuest $12,500. In order to earn a 100% interest in these two properties, we must pay MinQuest, Inc. and incur expenditures relating to mining operations in accordance with the following schedule: (i) on or before July 25, 2004, $20,000 to MinQuest
and $75,000 in expenditures; (ii) on or before July 25, 2005, $20,000 to MinQuest and an additional $100,000 in expenditures; (iii) on or before July 25, 2006, $20,000 to MinQuest and an additional $100,000 in expenditures; (iv) on or before July 25, 2007, $20,000 to MinQuest and an additional $100,000 in expenditures; and (v) on or before July 25, 2008, an additional $125,000 in expenditures. If we have not incurred the requisite expenditures to maintain our option in good standing, we have a 60-day period subsequent
to July 25th to make such payment along with such amount which shall be deemed to have been an expenditure incurred by us during such period. Since our payment obligations are non-refundable, if we do not make any payments, we will lose any payments made and all our rights to the properties. If all said payments are made, then we will acquire all mining interests in the property, subject to MinQuest retaining a 3% royalty of the aggregate
proceeds received by us from any smelter or other purchaser of any ores, concentrates, metals or other material of commercial value produced from the property, minus the cost of transportation of the ores, concentrates or metals, including related insurance, and smelting and refining charges, including penalties.





Pursuant to the Property Option Agreement, we have a one-time option to purchase up to 2% of MinQuest’s royalty interest at a rate of $1,000,000 for each 1%. We must exercise our option 90 days following completion of a bankable feasibility study of the Bruner and Vernal properties, which, as it relates to a mineral resource or
reserve, is an evaluation of the economics for the extraction (mining), processing and marketing of a defined ore reserve that would justify financing from a banking or financing institution for putting the mine into production.





On July 25, 2003, we paid MinQuest $12,500 with respect to the properties, and we owed an additional $80,000 which was due in four equal annual installments commencing on July 25, 2004. With the approval of MinQuest, we paid the first installment on August 27, 2004 and we paid the second installment on September 20, 2005.  On
July 25, 2006 and 2007 respectively we made the third and fourth installments of $20,000.  The payment made on July 25, 2007 was the final payment due under the property option agreement for the Bruner and Vernal properties.  To date we were to have spent $500,000 on exploration, and we had spent an aggregate of approximately $499,327 on exploration of the two properties resulting in a shortfall of approximately $673.  The Company intends to undertake an exploration program in 2009
to complete its obligations under the Bruner and Vernal agreement.





16


Bruner Property Expansion





On April 1, 2009, the Company entered into a Property Option Agreement (the “Agreement”) with American International Ventures Inc. (“AIV”), to acquire the exclusive option to an undivided right, title and interest in 28 patented Federal mining claims and millsites located in Nye County, Nevada (the “Property”).
Simultaneous with the execution and delivery of the Agreement, the Company paid AIV $30,000.  In order to earn its option in the Property, the Company must make annual property option payments each year on April 1 consisting of $35,000 in 2010, $40,000 in 2011, $45,000 in 2012, $50,000 in 2013, $55,000 in 2014, $60,000 in 2015, and $1,185,000 in 2016.  Following which the Company shall be deemed to have exercised its option under the Agreement and shall be entitled to an undivided 100% right,
title and interest in and to the Property subject to a 1.5% Net Smelter Return (“NSR”) royalty payable to AIV and a 2% NSR payable to the former Property owner.  The 2% NSR royalty may be purchased by the Company for a total payment of $500,000 and 1% of AIV’s 1.5% NSR royalty can be purchased by the Company for an additional payment of $500,000 at any time up to 30 days after beginning mine construction. The
claims optioned under the agreement with AIV are contiguous with the Company’s existing Bruner property claims.





17


Bruner Property





Description and Location of the Bruner Property









18


The property is located approximately 130 miles east-southeast of Reno, Nevada at the northern end of the Paradise Range. Access from Fallon, the closest town of any size, is by 50 miles of paved highway and 16 miles of gravel roads. We now hold the property via 51 unpatented mining claims (1,020 acres) and 28 patented claims (477.655 acres).





Exploration History of the Bruner Property





The original operators at the Bruner Property were varied. Prospecting at the property began in the early 1900’s and underground mining began in 1920.  Mining on several of the veins located within the property occurred up to 1949 producing over 58,500 gold equivalent ounces.  The average gold to silver ratio from
the Penelas mine was 1:4.5 for recorded production from 1935 to 1942.  Modern exploration of the property began in 1979 and included the following work:





o
In 1983, Kennecott Minerals Companydrilled fifteen RC holes (holes left after the process of reverse circulation drilling) on the property.





o
In 1988-1990, Newmont Exploration Ltd. drilled approximately 10 RC holes; conducted detailed geologic mapping (producing a plan map of the rock types, structure and alteration), geochemical surveys (which is sampling of rocks or soil and determination of the absolute abundances of elements), air and ground magnetic surveys (recording variations in the earth’s magnetic field and plotting same), and ground radiometric
surveys (a survey of radioactive materials on the land surface).





o
In 1990-1995, Miramar Mining Corp. drilled 5 RC holes and conducted BLEG (bulk leach extractable gold) sampling and air photo interpretation. BLEG sampling involves a large sample of soil or rock that is leached using cyanide to determine gold and silver content down to a detection limit of as little as 1.0 part per billion.





Geology of the Bruner Property Mineral Claims





The Bruner mining district is underlain by a sequence of intermediate to felsic Tertiary volcanic rocks (which are quartz-rich rocks derived from volcanoes and deposited between two and sixty-five million years ago), including ash flow tuffs, tuffaceous sediments, and flows. A volcanic center, the origin of major volcanic activity, is thought
to underlay the district, with associated silicic domes (a convex landform created by extruding quartz-rich volcanic rocks) and plugs (landform similar to a dome, but smaller) intruding the volcanic section. The exposed stratigraphic section measures over 2,500 feet in thickness. The “Duluth Tuff”, a variably crystal rich ash flow tuff, is the host for gold and silver mineralization. Flow banded silicic volcanics, volcanoclastics (coarse, unsorted sedimentary rock formed from volcanic rocks) and andesite
underlie the tuff and flow-banded rhyolite overlies the host unit. Two generations of intrusive rocks have been described within the district. Ore in the Bruner district is hosted by vuggy, fractured, quartz-adularia (potassium-rich alternation mineral) -veined and/or stockworked tuff. Mineralization is primarily fault controlled, although some disseminated values do occur.





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Current State of Exploration





The Bruner claims presently do not have any mineral reserves. The company is in the process of compiling all historic drilling and underground sampling results.  These results will be evaluated to determine if one or more precious metals resources may exist within the property boundaries.  The property that is the subject
of our unpatented mineral claims contains the Penelas workings with 1000 feet of shaft and 4,000 feet of crosscuts on nine levels.  Past production from the Penelas is recorded at over 26,000 ounces of gold and 120,000 ounces of silver from 1935 to 1942.  Other historic workings include the Bruner adit with over 1,000 feet of workings and several shafts, and the Derelict mine with a 300 foot shaft and small open pit.





The 28 patented mining claims contain the Duluth set of workings on the south end of the patented claim group comprising over 1000 feet of workings in 3 shafts and numerous stopes.  Past production from the Duluth is reported as $70,000 of gold and silver from 1935 to 1944.  This amount is based on a gold price of $35
per ounce and a silver price averaging $0.43 per ounce.  The Paymaster mine is located on the north end of the patented claim group.  It has a 375-foot shaft with 2,000 feet of workings on three levels.  The Paymaster has no recorded production.





There is no mining plant or equipment located within the property boundaries. Currently, there is no power supply to the mineral claims. Our planned program includes compilation of all activities to the present with the goal of producing an outline of mineralized areas, guiding further exploration drilling and potentially defining a resource
figure based on historic exploration activities.  However, this program is exploratory in nature and no minable reserves may ever be found.





Geological Exploration Program




In July 2003, members of our Board of Directors and geology team made an onsite inspection of Bruner Property. From this visit, an exploration plan was determined and a schedule to begin work on the properties was organized to commence in the month of September 2003.  The Company completed an exploration program consisting of
geologic mapping, surface geochemical sampling, a Global Positioning System (GPS) survey of grid based magnetic survey, drill holes and cultural features, and a CSMT geophysical survey (electrical, magnetic and other means used to detect features, which may be associated with mineral deposits) was also conducted. Such a survey measures the magnetic variations within the underlying rocks.





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Since then, a ground magnetics survey and detailed mapping and rock sampling of the western portion of the claim block on the Bruner Property has been completed. The rock sampling is a collection of a series of small chips over a measured distance, which is then submitted for a chemical analysis, usually to determine the metallic content
over the sampled interval. The magnetics indicate the presence of northwesterly and northerly trending faults under the pediment cover that may host gold mineralization. Faults, which are breaks in the rock along which the movement has taken place, are often the sites for the deposition of metallic rich fluids. A pediment cover is a broad, gently sloping surface at the base of a steeper slope. Geologic mapping of rocks exposed in the western portion of our claims shows several small quartz bearing structures
trending northwest and dipping steeply to the northeast. These small structures are thought to be related to a much larger vein, often filled with quartz, and contained within a fault or break in the rock (a fault-hosted vein system) under gravel cover in the broad valley south of the mapping. Approximately 1 square mile of ground magnetics was completed at Bruner. The survey was done on 50 meter spaced lines, run north-south using a GPS controlled Geometrics magnetometer, which is the geophysical instrument
used in collecting magnetic data with an attached GPS that allows the operator to more precisely determine the location of each station where the magnetic signature is taken.





The interpretation shows numerous northwest and north-south trending magnetic lows associated with faults. Magnetic lows are an occurrence that may be indicative of a destruction of magnetic minerals by later hydrothermal (hot water) fluids that have come up along these faults. These hydrothermal fluids may in turn have carried and deposited
precious metals such as gold and/or silver. A much more continuous northwest trending feature that has not been drill tested is located to the southeast, under gravel cover (where there is no exposure of rock at the surface).    Data were sufficiently encouraging that an expanded CSMT survey was conducted to trace these structures in the third dimension.





In addition to our drilling programs noted below, our exploration program to date at Bruner has included:




·
geologic mapping (producing a plan map of the rock types, structure and alteration),


·
rock chip geochemical sampling (sample of soil, rock, silt, water or vegetation analyzed to detect the presence of valuable metals or other metals which may accompany them (e.g., Arsenic may indicate the presence of gold),


·
a ground magnetic survey, and


·
a Controlled Source Magneto Telluric (CSMT) survey which recorded variations in a generated electrical field using sophisticated survey methods.





21


In October 2004, we received the approval of a Notice of Intent for Exploration Drilling, and an environmental bond filed with the Nevada office of the Bureau of Land Management. A total of 18 drill sites were located to target both extensions of the gold intercepts in previous drilling and in geophysical anomalies found by a CSMT survey.
A CSMT survey is an electromagnetic method used to map the variation of the Earth’s resistance to conduct electricity by measuring naturally occurring electric and magnetic fields at the Earth’s surface. With the proper approvals in place, we began drilling on the Bruner property on December 20, 2004. This drilling program was completed in March 2005 at a total cost of approximately $153,800, with a total of 3,200 feet of reverse circulation (RC) drilling in 7 holes. The depths of the holes ranged
from 300 to 750 feet. We have received assays for all holes and the results were encouraging enough that additional drilling was conducted.





Because of the favorable drilling results from the drilling program we began on December 20, 2004, we decided to conduct additional drill testing on the Bruner property, including both reverse circulation and core drilling.  In April 2005, we filed an amended drilling plan with the Bureau of Land Management that allowed three
fences of drill holes with the fences spaced 400 feet apart along the apparent trend of the mineralization.  This program was completed in the fall of 2005 with 11 holes totaling 4,205 feet being drilled.





The Board of Directors approved a 2007 exploration budget of approximately $120,000 for the Bruner Property.  In November 2007, the Company drilled three holes at Bruner to test deeper targets within the gold-bearing tuffaceous host rocks.  The holes were drilled using an RC drill rig and totaled 3,240 feet. The holes
were spaced roughly 400 feet apart on a line running east-northeast.  All holes were angled steeply to the north to cut projected, south-dipping shear zones. Drill hole B-18 and B-19 were drilled to a depth of 1,000 and B-20 was drilled 1,240 feet deep.  All three holes contained intermittent gold at various depths.





The results show a distinct increase in gold grade from the southwest (B-18) to the northeast (B-20). Only hole B-20 contained significant grade gold over any significant width. Further drilling north and east of B-20 may be warranted to vector in on the strongest part of the gold system. The drill program confirmed that gold mineralization
continues at depth and is hosted by tuffaceous rocks.





The Company recently expanded the Bruner property by adding to its unpatented claim position and acquiring a lease/option on 28 patented claims within the project area.  The recent acquisition of the entire district has required a thorough compilation of all available data for the project area.  This compilation has
identified at least four viable drill targets separate from the company’s original target.  These targets include the Duluth, Penelas, Paymaster and Bruno targets.  These targets have seen moderate to intense drill programs in the past due to surface mineralization and alteration consistent with large precious metals systems located in other parts of the Great Basin.  The Duluth area has sufficient drilling to entertain significant past resource estimates by Newmont and Miramar.  However,
no recent resource or reserve estimates have been conducted by the Company.





22


Future plans for the Bruner Project include finalizing all compilations then designing a drill program that will expand and in-fill within the Duluth area and include step out drilling of high grade gold mineralization at the Penelas target.  Evaluation of the Bruno and Paymaster targets will include mapping and surface sampling
and eventual drill program to test their potential at depth.  Additional surface grid sampling will be conducted on other localized gold anomalies within the project boundaries.  Past work has included a widespread BLEG survey.  The survey has identified several outlying anomalies that require further mapping and surface sampling to properly assess their merits.





Vernal Project





Description and Location of the Vernal Property








23


The property is located approximately 140 miles east-southeast of Reno, Nevada on the west side of the Shoshone Mountains. Access from Fallon, the closest town of any size, is by 50 miles of paved highway and 30 miles of gravel roads.   We hold the property via 12 unpatented mining claims (240 acres).





Exploration History of the Vernal Property





Historical work includes numerous short adits constructed on the property between 1907 and 1936. There appears to have been little or no mineral production.





Geology of the Vernal Mineral Claims





The Vernal Property is underlain by a thick sequence of Tertiary age rhyolitic volcanic rocks including tuffs, flows and intrusives. A volcanic center is thought to underlie the district, with an intruding rhyolite plug dome (a domal feature formed by the extrusion of viscous quartz-rich volcanic rocks) thought to be closely related to
mineralization encountered by the geologists of Amselco, the U.S. subsidiary of a British company, who explored the Vernal Property back in the 1980’s, and who in 1983 mapped, sampled and drilled the Vernal Property. Amelsco has not been involved with the Vernal Property over the last 20 years and is not associated with our option on the property or the exploration work we are doing there. A 225 foot wide zone of poorly outcropping quartz stockworks (a multi-directional quartz veinlet system) and larger
veining trends exists northeast from the northern margin of the plug. The veining consists of chalcedony containing 1-5% pyrite. Clay alteration of the host volcanics is strong. Northwest trending veins are also present, but very poorly exposed. Both directions carry gold values. Scattered vein float is found over the plug. The most significant gold values in rock chips come from veining in tuffaceous rocks north of the nearly east-west contact of the plug. This area has poor exposure, but sampling of old dumps
and pits show an open-ended gold anomaly that measures 630 feet by 450 feet.





Current State of Exploration





The Vernal claims presently do not have any mineral reserves. The property that is the subject of our mineral claims is undeveloped and does not contain any open-pits.  Numerous shallow underground excavations occur within the central portion of the property.  No reported historic production is noted for the property.  There
is no mining plant or equipment located on the property that is the subject of the mineral claim. Currently, there is no power supply to the mineral claims. Our planned exploration program is exploratory in nature and no mineral reserves may ever be found.  Although drill holes are present within the property boundary, there is no drilled resource on our claims.





24


Geological Exploration Program




In July 2003, members of our Board of Directors and geology team made an onsite inspection of Vernal.  At the Vernal property, mapping (the process of laying out a grid on the land for area identification where samples are taken) and sampling (the process of taking small quantities of soil and rock for analysis) have been completed.  In
March 2005, we initiated the process to secure the proper permits for trenching and geochemical sampling from the U.S. Forest Service.





Our exploration of the Vernal property to date has consisted of geologic mapping, trenching and rock chip geochemical sampling.   The Board of Directors approved a budget of approximately $55,000 (including the refundable bond of $900) for the Vernal property.  An exploration program was conducted in November, 2008.  The
program consisted of 200 feet of trenching, sampling and mapping, and opening, mapping and sampling of an underground workings consisting of approximately 275 feet of workings.  The Company is currently evaluating the results of the program at the Vernal property.





25


Moss Property







26





The Moss Property consists of 63 unpatented claims and 15 patented claims located in the Oatman Mining District of Mohave County, Arizona. The Company acquired these claims in a series of transactions during fiscal 2004 and 2005.





Acquisition of Interest





Gintoff Claim





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





MinQuest Claims





We hold the MinQuest claims via 62 unpatented mining claims that were acquired from MinQuest.   On March 4, 2004, we signed the agreement that earned us a 100 percent interest in these claims by paying MinQuest a one-time lease fee of $50,000.   The fee of $50,000 was paid on July 7, 2004.  A three
percent NSR production royalty is retained by MinQuest.





Williams Property





The property is comprised of six patented claims, which as a group, we call the Williams Property. These claims were held collectively by as many as 23 owners within an extended family who were represented by Barbara Williams, a realtor, and a member of this extended family, who put together the letter of intent and arranged for the signing
of the agreement by the numerous owners. None of these owners, including Barbara Williams, has or has had any relationship or affiliation with us prior to the agreement for the Williams Property.





In October 2003, our former director Robert Sibthorpe (who is a geologist by training) had evaluated the proposal for the purchase of the Williams Property. His recommendation was to visit the site, and if the visual inspection supported the information presented in the proposal, then an offer to purchase should be drawn up.  In
November 2003 we executed a letter of intent to purchase a 100% interest in Williams Property owned by the extended family. This property is unrelated to and separate from the MinQuest Claims.  The sellers delivered to us all information in their possession regarding the Williams Property.  During the six-month period after the signing of the letter of intent we had the right to conduct our due diligence on the Williams Property and if we decided not to proceed we had to give the sellers and
escrow agent notice no less than 10 days prior to the six-month anniversary of our intention not to close. During this period we could not perform mining or remove any ore from the property. We were responsible for all costs and expenses associated with the purchase of the Williams Property, including escrow fees, cost of feasibility study, charges resulting from any tests, environmental assessments reports or surveys, and any exploration activity costs. Once we had concluded our analysis and had determined that
it is feasible to close on the purchase of the Williams Property, doing so would give us full rights to begin mining operations.





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At the recommendation of Mr. Sibthorpe, in January, 2004, Mr. Robert Coale (P.E.), another one of our directors and our then-current President, visited the site to see the overall geological setting and occurrence of mineralization and evaluated the drilling program proposed by MinQuest, the company that we would contract to co-ordinate
any work programs undertaken. At that time, the metallurgical data and reports that had been collected from the sellers were reviewed. Mr. Coale’s analysis revealed that reagent (liquid chemicals used for leaching) consumptions are acceptable and deleterious compounds (minerals present in the ore that would be difficult to work with) were not apparent. He recommended bulk sampling at a selected location in the future once the definition of the ore body was further advanced through drilling.  On
January 31, 2004 Robert Sibthorpe wrote a report with a summary of the property, a review of the draft budget supplied by Richard Kern, our work program contractor, and a layout of the drilling program planned for the property.





The drilling was conducted throughout the spring and early summer of 2004, and in June 2004, Mr. Sibthorpe wrote a report incorporating the results of the drill program which encouraged us to pursue the project. Also in June 2004, Mr. Kern sent a memo to the Company regarding the potential at the Williams property. Mr. Kern’s recommendation
was that we should proceed with the purchase of the Williams Property.





On February 19, 2004, we executed a formal agreement to purchase the Williams Property for $350,000. On February 27, 2004 we deposited $25,000 with the title company, which was acting as escrow agent, and three months after signing, on June 14, 2004, we deposited an additional $25,000. When the title company, acting as escrow agent, received
the signature pages from the various sellers, the initial $25,000 deposit was to be delivered to the sellers. On the three-month anniversary after we signed the definitive agreement, the second $25,000 was to be delivered to the sellers. By mid-July, 2004, the escrow agent had received 19 of the 23 signatures, which under Arizona law was enough to complete the transaction, and on July 24, 2004, the first and second deposits of $25,000 each were released to the sellers. On or before the 6-month anniversary after
we signed the definitive agreement, the balance of $300,000 was due to the sellers. As a result of our due diligence, we decided to complete the purchase of the Williams Property. On August 27, 2004 we paid the final $300,000 to the escrow agent for the closing of the sale. On November 11, 2004, the escrow agent released the $300,000 to the sellers for the closing of the sale, and, as a result, we now own 100% interest in the Williams Property.





Greenwood Claim





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





Martinez Claims





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





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Ruth and Rattan Claims





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





Description and Location of the Moss Property




The Moss Property is located in Mohave County, Arizona in the historic Oatman District, and is located some 5 miles northwest of the town of Oatman, with Kingman, Arizona to the east, Laughlin, Nevada to the west and Las Vegas, Nevada to the north. Access is via paved and gravel roads from Bullhead City.




Exploration History of the Moss Property





Discovered in 1864, the Moss Mine was the first gold discovery made in the Oatman District.  Historical records show that the Oatman District produced up to two million ounces of gold mostly from underground mines.  The Moss Mine reportedly produced high-grade gold values of $114,000 from two tons of ore at $20 per ounce
of gold.  A reported $240,000 of gold and silver were produced from the Moss property before 1880.  The mine was worked intermittently through the 1930’s but produced only minor amounts of gold after the initial bonanza grades.   The mine lay idle until the early 1980’s when a number of mining companies explored the district. These companies included Billiton Minerals, Magma Copper, Golconda Resources and Addwest Minerals.





Work already completed on the Williams portion of the Moss Property includes a pre-feasibility study as well as 36,000 feet of primarily reverse circulation drilling which was conducted over twenty years ago. Reverse circulation drilling is a less expensive form of drilling that does not allow for the recovery of a tube or core of rock,
in which the material is brought up from depth as a series of small chips of rock that are then bagged and sent in for analysis. Though this is a quicker and cheaper method of drilling, reverse circulation drilling does not give as much information about the underlying rocks.





Geology of the Moss Property





The project area is underlain by Tertiary quartz monzonite (a coarsely crystalline rock composed primarily of the minerals quartz, plagioclase and orthoclase) intruding tertiary volcanics. Precambrian basement rocks underlie the volcanics. The veins consist of quartz-calcite and lesser adularia. The principal vein is up to 45 feet thick
and can be followed on surface for over 5,000 feet. The hanging wall commonly has several tens of feet of stockwork veining. Gold values are somewhat erratic, but appear to be highest in the thicker and deeper parts of the vein explored to date.





29


Current State of Exploration





The Moss Property is undergoing an evaluation for potential mineral reserves. The property that is the subject to our mineral claims contains several shafts.  At least one shaft is reported to be 230 feet deep with a single level at 225 feet deep trending along the strike of the vein.  Several adits of variable length
were driven to intersect the vein along its strike.  A reported past production of $240,000 at a $20 gold price occurred from a high-grade zone within the Moss property.





Numerous drill holes from past drilling endeavors combined with sampling of underground workings within the patented mining claims have culminated in a pre-feasibility study based on drill results from pre-1992 exploration.  The company is contemplating updating the historic pre-feasibility report with additions from recent drilling
programs and metallurgical tests to determine the existence of mineral reserves.





There is no mining plant or equipment located on the property that is the subject of the mineral claims.  Currently, there is no power supply to the mineral claims. Our planned exploration program is exploratory in nature and no mineral reserves may ever be found.





Geological Exploration Program




Our exploration of the Moss Property has consisted of geologic mapping, vein geochemical sampling and drill testing of the identified veins.  The Moss Property contains the site of the former Moss Mine.  The most significant historic mining at Moss Mine occurred on narrow veins that trend sub-parallel to the Moss Mine
vein and dip steeply northerly. These veins should intersect the Moss Mine vein at depth. The deepest vein intercepts at Moss are less than 400 feet. The Ruth vein should intersect the Moss Mine vein at 800-900 feet below the surface. If the Moss Mine vein is the feeder for the Ruth vein it should contain similar gold values at that level. The Moss Mine vein needs drill testing to a depth of 900 feet to determine its potential to contain high-grade gold mineralization.





Phase 1 drilling has been completed at the Moss Property. A total of 36 holes were drilled totaling 8,807 feet. Thirty holes were drilled on the Gintoff Claim on the Moss Property, and six holes were drilled on one of the adjacent parcels of land.   The easternmost section of the Property, which was mostly untested by drilling,
was drilled with thirty reverse circulation holes. This allowed accurate cross-sections to be made for this area. The coverage on this section is generally two or three holes on 100 foot sections testing grades and widths from 50-250 feet down dip. In the western area, limited confirmation drilling was carried out and the results obtained were generally in line with the values obtained by previous operators. Geological information obtained may now provide a structural explanation for the lack of success obtained
here to date by previous operators.





A study of all drilling results at the Moss Property indicates a tendency for total gold content to increase with intercept depth. Roughly 60% of the deeper holes have better intercepts than shallow holes. An example from our drilling tests the vein over a vertical extent of 300 feet. In this example the gold content nearly doubles between
AR-5 and AR-23.





30


An expanded program of drilling began in April 2005, and was expected to be completed by May 2006.  Approximately 12,000 feet of reverse circulation (RC) drilling was planned to be done to test for possible high-grade (0.30 ounces per ton or above) down-dip extensions of the Moss vein. We planned to drill 10 to 15 holes.  The
depths of these holes were to have ranged from 500 to 1,300 feet. The program budget for this program was $643,700.





The first portion of this expanded drilling program was expected to be completed by the fall of 2005.  However, after eight holes were attempted, drilling was halted because of difficulty in drilling through the granite, because the drilling rig that we contracted to use was too light to penetrate the rock.  We had sought
to contract a heavier rig to continue the program, which we had expected to happen by December 2005.  The remainder of the program was completed when the Company completed 6 core holes from November 2006 to February 2007 for a total amount drilled of 3,917 feet.  The exploration program failed to find higher grades but it did show that the vein system continues to at least 800 feet below the surface and appears to be thickening.




In the spring of 2008, the Company submitted core samples to a laboratory where leach testing was conducted.  Leaching was conducted in both bench scale (Bottle rolls) and in columns using crushed ore as the feed sample.  Three column leach tests at 3 different crush sizes were completed on the Moss drilling samples.
They were leached for 120 days. The fine crush of 1⁄4 inch had 66% of the gold and 42% of the silver recovered in 120 days.  The recovery curve is still not flat at the end of 120 days indicating additional gold/silver could be recovered. The recoveries are already near the 70% gold and 50% silver that is average for the industry.  The 1 inch crush column recovered 39% of the gold and 14% of the silver after 120 days, but the leach curve again indicates no significant decrease in percent
recovery by month indicating that greater recoveries may be obtained over longer periods of time.




Using the column leach data obtained from the testing program completed in April 2008 as well as additional information, the Company may engage an outside firm to conduct a preliminary economic analysis that will evaluate the overall value of the property considering metallurgical recovery, volume and gold grade of mineralized rock, capital
and operating costs, and other factors.  This information will be used to define additional work needed to enhance the value of the property.





In May 2009 the Board of Directors approved a $200,000 exploration budget for the Moss Property.  The goal of this program is to further define the trend and depth of mineralization as well as provide additional metallurgical material for column tests.  The column tests will be conducted for a longer period to determine
potential recoveries from various size fractions.





31


Margarita Property





Acquisition of Interest





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





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





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





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





On July 25, 2008, subsequent to the completion of a drill program on the Margarita Property, the Company terminated its option under the property option agreement and does not currently have any interest in the Margarita Property.  In exchange for its release from its obligations under the Margarita Property Agreement, the Company
agreed to pay the 2008 annual claim filings fees on the property of $8,268.  Under the release agreement, the Company is not required to make the $100,000 payment due May 31, 2008.





32


Whiskey Property











33


Acquisition of Interest





On March 15, 2008, the Company executed a property option agreement with MinQuest granting the Company the right to acquire 100% of the mining interests in the Whiskey Property (“Whiskey”) currently controlled by MinQuest.  Annual option payments and minimum annual exploration expenditures under the agreement are as
noted below:


Property

WorkPayments

Expenditures$USD

$USDUpon Execution of the Agreement
$
50,000
$
-By March 15, 2009

50,000

50,000By March 15, 2010

50,000

150,000By March 15, 2011

65,000

200,000By March 15, 2012

80,000

350,000By March 15, 2013

100,000

200,000By March 15, 2014

100,000

200,000By March 15, 2015

100,000

200,000By March 15, 2016

100,000

200,000By March 15, 2017

100,000

200,000By March 15, 2018

250,000

750,000$
1,045,000
$
2,500,000





Upon execution of the Agreement, the Company paid MinQuest $50,000 in relation to the execution of the agreement.  Since the payment obligations are non-refundable, if any payments under the Agreement are not made, the Company will lose any previous payments made and all its rights to the respective property. If all said payments
under the Agreement are made, then the Company will acquire all mining interests in the property. If the Company fails to make any payment when due, the Agreement gives the Company a 60-day grace period to pay the amount of the deficiency.  MinQuest retained a 3% royalty of the aggregate proceeds received by the Company from any smelter or other purchaser of any ores, concentrates, metals or other material of commercial value produced from the property, minus the cost of transportation of the ores,
concentrates or metals, including related insurance, and smelting and refining charges, including penalties.





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





34


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





To May 31, 2009 the Company has made the $50,000 payment due on signing and the $50,000 due on March 15, 2009.    By May 31, 2009, the Company was to have incurred $50,000 on exploration but had incurred approximately $40,870 on exploration of the property.  The Company intends to complete the additional required
expenditures of $9,130 during 2009. In the event the Company does not make the indicated option payments and incur the exploration expenditures, when demanded, the Company will lose its interest in the property.





Description and Location of the Whiskey Property





The Whiskey is located in Mineral County, Nevada and currently consists of 83 unpatented mining claims.  Access is via paved highway, gravel and dirt roads and the land is administered by the federal Bureau of Land Management.





Exploration History of the Whiskey Property





Portions of the property have been explored by Conoco from 1971 to 1973, Grayhill/US Minerals Exploration from 1981-1985, Homestake/Combined Metals Reduction from 1986-1991, Santa Fe Minerals from 1992 to 1994, and Newmont from 2003-2005.  During the bulk of the exploration work the property was divided by ownership interests
into the west and east halves.  Only Newmont and MinQuest have completely controlled all of the alteration in the basin.





Past exploration includes rock chip sampling, geologic mapping, and drilling.  Advanced argillic alteration is widespread along a set of east-southeast trending fault zones covering an area 17,000 feet long by 6000 feet wide.  The alteration zone is covered on the east end
by post-mineral volcanic cover and on the west end by recent alluvium.  Drilling by the Homestake-Combined Metals Reduction joint venture was restricted to the southeast portion of the claim group.  This effort encountered anomalous to ore-grade gold values in one of several siliceous knobs at the edge of the basalt.  The drilling completed by Santa Fe and Dennison on the west end of the property encountered anomalous to ore grade gold values in 6 of 15 holes.  The most
recent work by Newmont suggested excellent potential for gold mineralization along strike of known gold mineralization, under alluvium cover and under post-mineral basalt cover.  Newmont’s target size was 3 million ounces.  Targeting was primarily under post-mineral cover.  Newmont dropped the property before testing their exploration model.





35


Geology of the Whiskey Property





The property lies within the Walker Lane structural zone and within a well mineralized easterly trend of volcanic hosted gold-silver deposits starting at Bodie and trending through Paradise Peak.  A possible Cretaceous granite outcrops on the northeast portion of the property.  The granite is equigranular and coarsely
crystalline.  Conoco initially believed the intrusive to be responsible for the large area of alteration within the Whiskey Flat area because of the intensely argillized and silicified rocks surrounding the intrusive and the potassic alteration developed along the southern margin of the stock.  This conviction led to the relatively minor amount of mapping and sampling conducted during the 1971 through 1973 field seasons.





Tertiary volcanic rock consisting of andesite flows, rhyolite tuffs, pyroclastics flows and volcanoclastic sediments comprise the entire package of pre-mineral rocks.  This package of pre-mineral rocks has been overlain by Tertiary to Quaternary age post-mineral basalt flows and extensive wind-blown sand.  High angle
faults trend easterly forming the north and south boundaries of the Whiskey basin.  Northerly trending faults offset the easterly trending fault zones in several places.  At least one low angle fault occurs along the southern border of the property.





Alteration within the basin and along the margins consists of opaline replacement, intense argillization, and intense silicification of all pre-mineral rock types along structures.  The alteration events are typical of Paradise Peak and Borealis style alteration events.  The alteration can be traced over 17,000 feet
in length and covers a broad area about 6500 feet across.  One area of intense clay alteration has been exploited as a soil conditioner in the past.  Considerable prospecting for metals has occurred throughout the rest of the area as demonstrated by numerous pits and shafts.  Portions of the opaline alteration near the center of the claim block have reportedly been exploited for mercury.  However, the best gold in drilling failed to show any evidence of prospecting.





The historic shafts and pits prospected brecciated, silicified and iron stained fault zones.  Many of these breccias contain silica and/or alunite cementing the breccia fragments.  Outcropping, intensely silicified rock on the southeast portion of the claim group is reported to contain gold at surface.  This
type of silicification forms bold knobs that have survived erosion and peak through the post-mineral basalt capping.  Previous drilling efforts have focused on these intensely silicified knobs and their immediate projections.  The early exploration successes in the surrounding area have driven much of the exploration philosophy at Whiskey.





Initially, exploration in the Borealis district successfully identified discrete, “dish shaped” ore bodies by drilling on top of silicified knobs.  This same exploration technique was employed at the Whiskey property throughout all of the exploration programs described above.  This method of exploration at
Whiskey has identified at least two areas of gold mineralization.  The eastern end of the property hosts ore grade gold mineralization within a siliceous knob which is covered on the south and east by young basalt.  The western end of the property contains several siliceous knobs with sub-ore grade intercepts over substantial widths.  These knobs of silica dip to the south, covered on the south by basalt and on the west by wind-blown sand.





36


The recent identification of “feeder structures” under opaline silica at the Borealis Freedom Flats deposit has shifted the exploration philosophy to evaluation of the structures along strike of the apparent silica knobs.  Several fault zones within the boundaries of the Whiskey claims were noted to be highly silicified
and numerous faults contain opalized material on surface.  These fault zones trend toward the silica knobs and are believed to be the structural features that provided permeability for the mobilization of mineralizing fluids.  No drilling has targeted these fault zones.





Current State of Exploration





The Whiskey Property presently does not have any mineral reserves. The property that is the subject to our mineral claims is undeveloped and does not contain any open-pit or underground mines. There is no mining plant or equipment located on the property that is the subject of the mineral claim. Currently, there is no power supply to the
mineral claim. Our planned exploration program is exploratory in nature and no mineral reserves may ever be found.  There is no drilled resource on our claims.





Geological Exploration Program




To date the work completed on the Whiskey Property has consisted of detailed mapping of the entire property, cursory surface sampling and definition of drill targets.  Further work considered for the project area entails grid sampling of various highly altered volcanic tuffs expanding areas of known gold mineralization with additional
drilling.





37


NK Property











38


Acquisition of Interest





On March 15, 2008, the Company executed a property option agreement with MinQuest granting the Company the right to acquire 100% of the mining interests in the NK Property (“NK”) currently controlled by MinQuest.  On July 25, 2008 the NK Property Option Agreement was amended whereby the annual minimum work expenditures
were lowered to match those of the Weepah Agreement as the two properties are at a similar stage of exploration.  Annual option payments and minimum annual exploration expenditures under the agreement are as noted below:





Property

WorkPayments

Expenditures$USD

$USDUpon Execution of the Agreement
$
20,000
$
-By March 15, 2009

20,000

50,000By March 15, 2010

20,000

75,000By March 15, 2011

35,000

100,000By March 15, 2012

45,000

250,000By March 15, 2013

50,000

100,000By March 15, 2014

50,000

100,000By March 15, 2015

50,000

100,000By March 15, 2016

50,000

100,000By March 15, 2017

50,000

100,000By March 15, 2018

100,000

250,000$
490,000
$
1,225,000





Upon execution of the Agreement, the Company paid MinQuest $20,000 in relation to the execution of the agreement.  Since the payment obligations are non-refundable, if any payments under the Agreement are not made, the Company will lose any previous payments made and all its rights to the respective property. If all said payments
under the Agreement are made, then the Company will acquire all mining interests in the property. If the Company fails to make any payment when due, the Agreement gives the Company a 60-day grace period to pay the amount of the deficiency.  MinQuest retained a 3% royalty of the aggregate proceeds received by the Company from any smelter or other purchaser of any ores, concentrates, metals or other material of commercial value produced from the property, minus the cost of transportation of the ores,
concentrates or metals, including related insurance, and smelting and refining charges, including penalties.





39


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





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





To May 31, 2009 the Company has made the $20,000 payment due on signing and the $20,000 due on March 15, 2009.    By May 31, 2009, the Company was to have incurred $50,000 on exploration but had incurred approximately $12,709 on exploration of the property.  The Company intends to complete the additional required
expenditures of $37,291 during 2009.  In the event the Company does not make the indicated option payments and incur the exploration expenditures, when demanded, the Company will lose its interest in the property.





Description and Location of the NK Property





The NK currently consists of 24 unpatented mining claims and is located in Mineral County in an unincorporated mining area in west-central Nevada.  Access is via paved highways and gravel roads and drainages.





Exploration History of the NK Property





The previous sampling and mapping indicates at least three separate mineralized zones from 30 to 80 feet thick bisecting the property from south to north.  An additional area of alteration is indicated from silicified chips in float adjacent to the range front fault which parallels the eastern border of the range.  Along
with silicification of the host rock, some areas contain quartz veins as stockworks, barite and fluorite veining, and occasional gossanous areas of high sulfide content.  Exploration work listed below has focused on apparent surface expressions of mineralization.




Westely Mines - 1984-1985 - Sampling and mapping
  Brancote - 1991-1992 - Mapping and sampling
  Hemlo, Cordex - 1993-1994 - Mapping and sampling







40


Geology of the NK Property





The regional geology consists of a thick pile of Tertiary to Oligocene volcanics ranging from rhyolite tuffs to basalt flows.  Generally, the older rhyolite units have been altered and mineralized while the younger basalt flow post dates the mineralization.





Alteration consists of bleaching, argillization and silicification along low and high angle fault zones.  Quartz veining filling microfractures, barite and fluorite veins, and occasional gossan zones representing massive sulfide fill faults and fractures within the altered areas.  The best gold values are related to
areas of silicified volcanic rock with secondary druzy quartz veinlets filing micro-fractures.





MinQuest believes the best target is the range front fault zone.  Probable alteration of volcanoclastic sediments and rhyolite tuff appear to be related to the range front fault zone.  This fault may have contributed additional structural preparation allowing further alteration and mineralization to occur.  The
entire structural zone has been mostly covered by shedding material from the hillside above.  Further to the east argillized and opaline altered volcanic rock appears intermittently in the base of some ravines.





Current State of Exploration





The NK Property presently does not have any mineral reserves. The property that is the subject to our mineral claims is undeveloped and does not contain any open-pit or underground mines. There is no mining plant or equipment located on the property that is the subject of the mineral claim. Currently, there is no power supply to the mineral
claim. Our planned exploration program is exploratory in nature and no mineral reserves may ever be found.  There is no drilled resource on our claims.





Geological Exploration Program




To date the exploration work undertaken on the NK property has consisted of detailed mapping, additional surface sampling and definition of drill targets.  Additional work contemplated for the project includes a detailed geophysical survey along the range front to determine potential for buried mineralization and a drill program
to test the resultant anomalies.





41


Weepah Property











42


Acquisition of Interest





On March 15, 2008, the Company executed a property option agreement with MinQuest granting the Company the right to acquire 100% of the mining interests in the Weepah Property (“Weepah”) currently controlled by MinQuest. Annual option payments and minimum annual exploration expenditures under the agreement are as noted below:





Property

WorkPayments

Expenditures$USD

$USDUpon Execution of the Agreement
$
20,000
$
-By March 15, 2009

20,000

50,000By March 15, 2010

20,000

75,000By March 15, 2011

35,000

100,000By March 15, 2012

45,000

250,000By March 15, 2013

50,000

100,000By March 15, 2014

50,000

100,000By March 15, 2015

50,000

100,000By March 15, 2016

50,000

100,000By March 15, 2017

50,000

100,000By March 15, 2018

100,000

250,000$
490,000
$
1,225,000




Upon execution of the Agreement, the Company paid MinQuest $20,000 in relation to the execution of the agreement.  Since the payment obligations are non-refundable, if any payments under the Agreement are not made, the Company will lose any previous payments made and all its rights to the respective property. If all said payments
under the Agreement are made, then the Company will acquire all mining interests in the property. If the Company fails to make any payment when due, the Agreement gives the Company a 60-day grace period to pay the amount of the deficiency.  MinQuest retained a 3% royalty of the aggregate proceeds received by the Company from any smelter or other purchaser of any ores, concentrates, metals or other material of commercial value produced from the property, minus the cost of transportation of the ores,
concentrates or metals, including related insurance, and smelting and refining charges, including penalties.




43


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





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





To May 31, 2009 the Company has made the $20,000 payment due on signing and the $20,000 due on March 15, 2009.    By May 31, 2009, the Company was to have incurred $50,000 on exploration but had incurred approximately $4,715 on exploration of the property.  The Company intends to complete the additional required
expenditures of $45,285 during 2009. In the event the Company does not make the indicated option payments and incur the exploration expenditures, when demanded, the Company will lose its interest in the property.





Description and Location of the Weepah Property





The Weepah Property currently consists of 14 unpatented claims and is located in Esmeralda County, Nevada approximately 6 miles (9.6 km) northeast of Silver Peak and 21 miles (33.6 km) west-northwest of Goldfield, Nevada.  Access is via 7 miles (11 km) of paved and gravel roads from the town of Silver Peak.  The Weepah
Hills prospect is approximately 5 miles (8 km) south of the historic Weepah mine and 8.5 miles (14 km) northeast of the Mineral Ridge mine.





Exploration History of the Weepah Property





The Weepah Property was likely first discovered in the 1860’s when Silver Peak was first developed.  No production is reported for the area, although historic workings suggest some small shipments may have occurred from high-grade veins.  If so, the ore was probably shipped to the nearby Silver Peak mill.  Recent
exploration efforts began in the early 1980's when Grayhill Exploration sampled the property.  Since then WX Syndicate, Newmont and Mountain West Exploration have conducted exploration efforts totaling over US$100,000 in expenditures.





·
Grayhill Exploration
1983-84
Geochemical sampling·
WX Syndicate
1986-91
4 RC holes for 500 feet (160 m)·
Newmont
1988
Geochemical sampling·
Mountain West
1991-92
Geochemical Sampling





44


A total of 500 feet (160 m) in 4 holes have been completed on the property.  All of the drilling was shallow and drilled in the pediment.  Drilling targeted the extension of mineralization within the range.  Drilling failed to encounter the mineralized zone because geology of the area was not understood.  This
lack of understanding and dearth of exploration within the outcropping mineralized area leaves substantial potential for development of ore reserves.





Geology of the Weepah Property





The property lies within the southern portion of the Walker Lane structural corridor.   Mineralization is hosted within the PreCambrian Wyman Formation, Reed Dolomite and Lone Mountain Formation.  The Wyman Formation is composed of up to 300 meters of micaceous shale, thin to thick-bedded limestone and interbedded
quartzite.  The Reed Dolomite is composed of over 3000 feet of thick bedded dolostone with interbedded limestone and quartzite.  The Lone Mountain Formation is composed of more than 2100 feet of massive dolomite and limestone with thin interbeds of shaley limestone.  Gold and silver mineralization at the Weepah project are associated with quartz stockworks, silicified limestone and disseminations within low and high-angle shear zones.





The Weepah Hills property contains excellent untested sediment hosted mineralization. Gold and silver mineralization identified at the Weepah Hills property is of similar grades as the nearby Weepah and Mineral Ridge mines.  Surface sampling has identified two zones from 1200 to 1500 feet long and up to 50 feet wide.





Structure is the most important factor in ore control in the Silver Peak Mining District.  At the Mineral Ridge deposit ore controls are believed to be associated with detachment faults and high angle shear zones.  These structures have developed a system of stacked mineralized zones amenable to open-pit mining methods.  The
historic Weepah mine is associated with a high angle fault zone with coincident lateral migration of mineralizing fluids.





The Weepah Hills property has aspects of both nearby mines showing both low and high angle fault zones and associated mineralization.  The Weepah Hills mineralization is largely localized along three parallel structures which trend northerly.  The low angle structures measure 20 to 30 degrees dipping southeasterly and
nearly parallel to bedding.  The high angle structures dip 70 to 80 degrees to the west.  The mineralization has been offset by a west-northwest fault on the south end and becomes covered by massive dolomite to the north.  Gold/silver is hosted by silicified limestone, quartz veined shale and iron rich shear zones. The highest grade mineralization occurs in iron rich quartz veins within shale beds.  Numerous dikes of intermediate to felsic origin have been mapped in within
the core area.





Current State of Exploration





The Weepah Property presently does not have any mineral reserves. The property that is the subject to our mineral claims is undeveloped and does not contain any open-pit or underground mines. There is no mining plant or equipment located on the property that is the subject of the mineral claim. Currently, there is no power supply to the
mineral claim. Our planned exploration program is exploratory in nature and no mineral reserves may ever be found.  There is no drilled resource on our claims.


45


Geological Exploration Program




To date exploration on the Weepah Property has consisted of a detailed geologic map and geochemical sampling of the project area.  Mapping and sampling have identified mineralization consistent with the nearby active Mineral Ridge mine.  The company contemplates a geophysical survey to identify mineralization under alluvial
cover within the southern portion of the claim block.  Drilling would be deemed necessary to test any significant anomalies defined by the geophysical survey.





Imperial Property











Acquisition of Interest





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





46


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





Description and Location of the Imperial Property





The Imperial Property is located in Esmeralda County, Nevada, approximately 60 kilometres southwest of Tonopah and 300 kilometers northwest of Las Vegas in the Railroad Springs Mining District. The property consists of 24 mineral claims elongated in an east-west direction, covering approximately 450 acres located in Railroad Pass between
the Montezuma Range to the northeast and the Silver Peak Range to the southwest. The property covers portions of two adjacent US Geological Survey 7 1⁄2’ quadrangle map sheets:  Lida Wash, Nevada and Montezuma Peak, SW Nevada. The center of the property is situated at approximately 117o 31’ 43” West longitude and 37o 33’ North latitude.




Land claims in the district are administered under Department of Interior, Bureau of Land Management (“BLM”) under the Federal Land Policy and Management Act of 1976. The Imperial claims cover portions of Sections 34, 35, and 36 in Township 4S, Range 40 East in Esmeralda County, Nevada. None of the claims have been legally surveyed.
The property is most easily accessed from the community of Silver Peak, Nevada by following US route 95 west from Tonopah for a distance of 35 kilometers and turning south onto paved State Highway 295 for 21 kilometers and then west on a secondary gravel road for 500 meters to the eastern claim boundary.







MinQuest is the registered owner of 14 of the claims that make up the Imperial Property. Ten of the claims (Lida 1 to Lida 10) are registered to Richard Kern, Michael Forth, and James Motter. Under the terms of a Letter Agreement, the Lida claims have been leased to MinQuest for a period of 20 years. The lease allows MinQuest to transfer
title to third parties providing all conditions of the original agreement are met.





Exploration History of the Imperial Property





The Imperial Property was first developed in the 1920’s but apparently had little or no production until the late 1930’s. The Imperial Mine produced approximately 10,000 tons of ore and was probably shut down at the beginning of World War II. The mine has two adits, the longest of which has approximately 2,600 feet of drifts
and crosscuts. A 200 foot shaft, which is not accessible, is also located on the property.





47


The property has been explored by Energy Reserves Group, Goldsil Mining, Felmont Oil, and Nevada Star Resource Corporation. Felmont conducted the bulk of the work during 1983 – 1984 including drilling 19 reverse circulation holes. Five of these holes intercepted significant thickness of oxide gold in “Carlin-style” mineralization.
Six of their holes were drilled on the area that hosted the Imperial Mine. No other holes were drilled on this target that is more than a mile long. Felmont dropped the property partly because they lost the rights to the portion of the claim covering the Imperial Mine and partly because they were taken over by Homestake.





Nevada Star conducted a soil survey over the non-Imperial Mine claim block in 1987 and partially tested the area around two of the better Felmont holes with shallow, close-spaced grid drilling. This work which defined an area of gold mineralization and confirmed the presence of Carlin-style gold in silty rocks adjacent to northeast trending
high angle feeder faults, was to be followed up by drill testing of this and several other targets. However, Nevada Star was unable to raise the capital needed to continue and relinquished the property.





Goldfields completed a two phase exploration drill program that focused on the high-grade vein and disseminated gold targets within the Imperial Property. The program included 31 reverse circulation holes for a total of 7,935 feet of drilling.





The first phase of the program was completed in the fall of 2004 and included 10 drill holes for a total of 2,995 feet. All of these holes were drilled on the Imperial Target.  In addition to the drilling Goldfields has also conducted underground sampling. A total of 40 samples have been taken of quartz vein related mineralization
underground. This work confirmed the presence of high grade values in the two adits sampled and will help target further drilling.





Of the first ten drill holes drilled, several intersected stopes which were not visible on existing underground maps. This was to be expected to some extent, as Phase I of the drill program was designed to test an area of previous underground mining which had already had extensive workings. Of particular interest was drill hole IR-4 which
intersected 10 feet of high grade gold. This 10 foot interval (105’ to 115’) averages 0.50 oz/ton gold occurs within a 40 foot interval (110’ to 140’) that averages 0.154 oz/ton gold. Seven of the ten holes drilled contain gold intercepts exceeding 1.0 ppm (0.029 oz/ton).





The second phase of the drilling was completed in the fall of 2005.  This phase included 21 holes for a total of 4,940 feet.  Goldfields drilled 14 holes in the Resource Target area with all but five containing +0.01 oz/ton gold intercepts.  Two of the holes intersected, or came close to intersecting, the feeder
structure within the favorable host sediment. Hole IR-22 contained 35 feet averaging 0.072 oz/ton gold and IR-23 contained 25 feet at 0.034 oz/ton gold including 5 feet at 0.096 oz/ton at the bottom of the hole.  The drilling indicates the gold is located within one nearly flat-lying favorable sedimentary unit (a calcareous siltstone) that is approximately 50 feet thick. Gold grade drops off quickly as one moves away from the feeder fault. Holes drilled beneath the mineralized unit, even those intersecting
the feeder fault, were barren. The flat-lying mineralization appears to dip gently to the northwest and is approximately 200 feet wide and 40 to 50 feet thick. The gold bearing horizon has not been drilled to the southwest.





48


Two holes targeted the Jasperoid Breccia Target with one hole being drilled under the gold bearing jasperoid and another targeting the possible intersection of the northeast trending feeder fault with the Imperial fault.   Both of these holes (IR-25 and26) were barren. Just as at the Resource Target, these holes drilled beneath
the favorable stratigraphy and missed the mineralization. Future drilling should be collared above the favorable horizon in proximity to the feeder fault.





In addition to the drilling, a total of 40 channel (continuous and consistent amount) samples were taken across veins exposed in the upper and lower adits. Sample widths were noted. Once at the assay lab each was weighed. Sample preparation, performed by ALS Chemex in Reno, Nevada, consisted of crushing the entire sample, splitting off
1,000 grams, pulverizing all 1,000 grams and splitting off 50 grams of this pulp for fire assay for gold and 50 grams for silver.





Geology of the Imperial Property





The geology of the property is described in a December, 2002 report by Geoffrey N. Goodall, President of Global Geological Consultants Ltd., a private consulting firm. Regionally, the Imperial Property is located within the Walker Lane which hosts several precious metal deposits. Two distinct types of gold mineralization occur on the Imperial
Property. The first type is associated with high angle bodies of jasperoid that outcrop along the east-west axis of the property. The second type of mineralization is identified from drill hole data in the eastern part of the property. Here gold mineralization is associated with flat lying bedding and is disseminated throughout highly altered limonite stained decalcified siltstones.





Structurally, two fault sets appear closely related to mineralization. The Imperial Fault and other associated west-northwest structural zones have received the bulk of the exploration within the district. Numerous northeast trending faults, some of which are shown by soil geochemistry, have received little attention as possible feeders.
Nearly all gold anomalies from the eastern half of the claims have a northeast trend. These anomalies are thought to be leakage along feeder faults.





Three primary Carlin-type targets are present at Imperial. The first and most important is the Imperial Target that has only one hole on the favorable side of the approximately 1,600 meter long structure. The second target, called the Resource Target is an open-ended 500 meter long gold in soil anomaly along a northeast trending fault system.
A final target called the Jasperoid Breccia Target is a large anomaly under cover in the central portion of the claim group. The anomaly is 400 meters long and has gold in soil anomaly at its west end.







Current State of Exploration





The Imperial Property presently does not have any mineral reserves. The property that is the subject to our mineral claims is undeveloped and does not contain any open-pit or underground mines. There is no mining plant or equipment located on the property that is the subject of the mineral claim. Currently, there is no power supply to the
mineral claim. Our planned exploration program is exploratory in nature and no mineral reserves may ever be found.  There is no drilled resource on our claims.





49


Geological Exploration Program




The Company is currently evaluating the drill locations and results of the programs completed by Goldfields in order to determine the next phase of exploration for the Imperial Property.





Item 3.                      Legal Proceedings.





There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company.  The
Company’s properties are not the subject of any pending legal proceedings.





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





No matters were submitted to a vote of security holders during the fourth quarter of the fiscal year covered by this report.





PART II





Item 5.                      Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities.





Market Information.


Our common stock is traded on the Financial Industry Regulatory Authority Over The Counter Bulletin Board (“OTCBB”) under the symbol “PGOL.” The OTCBB does not have any quantitative or qualitative standards such as those required for companies listed on Nasdaq.  The following table sets forth the range
of quarterly high and low closing bid prices of the common stock as reported on http://finance.yahoo.com during the years ending May 31, 2009 and May 31, 2008:





Financial Quarter
Bid Price Information*Year
Quarter
High Bid Price
Low Bid Price2009
Fourth Quarter
$0.31
$0.065Third Quarter
$0.11
$0.065Second Quarter
$0.09
$0.065First Quarter
$0.09
$0.062008
Fourth Quarter
$0.11
$0.07Third Quarter
$0.12
$0.075Second Quarter
$0.15
$0.085First Quarter
$0.16
$0.085





*The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.





50


Holders.





On August 25, 2009, there were approximately sixty-three (63) holders of record of the Company’s common stock.





Dividends.





The Company has not declared or paid any cash dividends on its common stock nor does it anticipate paying any in the foreseeable future. Furthermore, the Company expects to retain any future earnings to finance its operations and expansion. The payment of cash dividends in the future will be at the discretion of its Board of Directors and
will depend upon its earnings levels, capital requirements, any restrictive loan covenants and other factors the Board considers relevant.





Warrants or Options.





No warrants, options or other securities convertible or exchangeable into equity securities were issued during the fiscal year ending May 31, 2009.





Securities Authorized for Issuance under Equity Compensation Plans





We do not have any equity compensation plans that were approved by our shareholders. Set forth below is certain information as of May 31, 2009, the end of our most recently completed fiscal year, regarding equity compensation plans that have not been approved by our stockholders.





Equity compensation plans not approved by stockholders – as of May 31, 2009Plan Category

Number of securities to be
issued upon exercise of
outstanding options, warrants and rights

Weighted average exercise
price of outstanding options,
warrants and rights

Number of securities
remaining available for
future issuance2003 Stock Option Plan*

5,546,000
(1)

$0.26

506,0002005 Stock Option Plan*

2,000,000


$0.25

1,000,000Share Purchase Warrants

3,456,000


$1.48

N/A





*Subsequent to May 31, 2009, 205,000 stock options issued under the 2003 Plan and 500,000 stock options under the 2005 Plan were cancelled.





(1)           Since the plan provides for appropriate adjustments in the event of stock splits and other similar events, when our common stock was forward split on June 17, 2003, a corresponding adjustment was made to the option plan. Accordingly, as of June 17, 2003 there were 2,546,000
shares available for issuance under the Stock Option Plan. On September 22, 2003, we amended our Stock Option Plan by increasing the number of shares available for issuance under the plan to 5,546,000 shares


51


As of May 31, 2009, there were a total of 5,040,000 options granted under the 2003 Plan with exercise prices ranging from $0.05 per share to $1.50 per share.  There were also a total of 1,000,000 options granted under the 2005 Plan with an exercise price of $0.25 per share.





The following discussion describes material terms of grants made pursuant to the stock option plans:





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





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





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





Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities.


There was no sale of unregistered securities during the fiscal year ended May 31, 2009.
 
 Purchases of Equity Securities by the Company and Affiliated Purchasers.


There was no purchase of equity securities by the Company and affiliated purchasers during the fiscal year ended May 31, 2009.





Item 6.                      Selected Financial Data





A smaller reporting company, as defined by Item 10 of Regulation S-K, is not required to provide the information required by this item.





52


Item 7.                      Management’s Discussion and Analysis or Plan of Operation.





Overview





As a natural resource exploration company our focus is to locate prospective properties that may host mineral reserves that could eventually be put into mining production. With this in mind, we have to this date identified and secured interests in several mining claims with respect to properties in the Walker Lane area of Nevada and the
historic Oatman mining district of Arizona. We have adequate funding to meet all our obligations on our current projects until at least May 31, 2009.





We do not intend to use any employees, with the exception of part-time clerical assistance on an as-needed basis. Outside advisors, attorneys or consultants will only be used if they can be obtained for a minimal cost or for a deferred payment basis. Management is confident that it will be able to operate in this manner and continue during
the next twelve months.





Plan of Operation





During the twelve-month period ending May 31, 2009, our objective is to continue to explore the properties subject to our mining claims.  The funds in our treasury are sufficient to meet all planned activities as outlined below, with a contingency margin. As a result of this, we do not expect to enter into any new financing arrangements
during the twelve months ending May 31, 2009.





We continue to run our operations with the use of contract operators, and as such do not anticipate a change to our company staffing levels. We remain focused on keeping the staff compliment, which currently consists of our three directors and one investor relations person, at a minimum to conserve capital. Our staffing in no way hinders
our operations, as outsourcing of necessary operations continues to be the most cost effective and efficient manner of conducting the business of the Company.





We do not anticipate any equipment purchases in the twelve months ending May 31, 2009.





The following is an overview of the project work to date, as well as anticipated work for the next twelve months. Specific dates when work will begin, and how long it will take to complete each step is subject to change due to the variables of weather, availability of work crews for a particular type of work, and the results of work that
is planned, the outcome of which will determine what the next step on that project will be.





Bruner and Vernal Projects.





As of May 31, 2009, we have substantially fulfilled our exploration and property option commitments with respect to the Bruner and Vernal projects.  To May 31, 2009, we have made total property option payments of $80,000 and have incurred approximately $499,327 of property expenditures.  On July 25, 2007 we made the
final property option installment of $20,000.  Under the property agreement we were to have spent $500,000 by July 25, 2008.  As of May 31, 2009 there is a shortfall in expenditures of approximately $673.  The Company intends to undertake an exploration program in 2009 to complete its obligations under the Bruner and Vernal agreement.


53





Bruner Expansion





On April 1, 2009 simultaneous with the execution and delivery of the Bruner Expansion Agreement, the Company made the initial property option payment of $30,000.  The next property option payment of $35,000 is due April 1, 2010.  The Bruner Expansion Agreement does not require minimum annual exploration expenditures.





Future plans for the Bruner Project include finalizing all compilations then designing a drill program that will expand and in-fill within the Duluth area and include step out drilling of high grade gold mineralization at the Penelas target.  Evaluation of the Bruno and Paymaster targets will include mapping and surface sampling
and eventual drill program to test their potential at depth.  Additional surface grid sampling will be conducted on other localized gold anomalies within the project boundaries.  Past work has included a widespread BLEG survey.  The survey has identified several outlying anomalies that require further mapping and surface sampling to properly assess their merits.





Moss Property





The Moss Property agreements do not require on-going property payments nor minimum annual exploration expenditures.  In May 2009 the Board of Directors approved a $200,000 exploration budget for the Moss Property.  The goal of this program is to further define the trend and depth of mineralization as well as provide
additional metallurgical material for column tests.  The column tests will be conducted for a longer period to determine potential recoveries from various size fractions.








Margarita Property





On January 29, 2008, the Company acquired the rights to the Margarita Property.  Subsequent to the completion of a drill program, the Company terminated the Margarita Property Option Agreement. As a result of terminating the Margarita Property Option Agreement, the Company agreed to pay the 2008 annual claim filings fees on the
property of $8,268.  Under the release agreement, the Company was not required to make the $100,000 payment due May 31, 2008 and no longer has any obligations under the agreement.





Whiskey Property





The Company acquired the Whiskey Property on March 15, 2008.  To May 31, 2009 the Company has made the $50,000 payment due on signing and the $50,000 due on March 15, 2009.    By May 31, 2009, the Company was to have incurred $50,000 on exploration but had incurred approximately $40,870 on exploration of the
property.  The Company intends to complete the additional required expenditures of $9,130 during 2009.





54


NK Property





The Company acquired the NK Property on March 15, 2008.  To May 31, 2009 the Company has made the $20,000 payment due on signing and the $20,000 due on March 15, 2009.    By May 31, 2009, the Company was to have incurred $50,000 on exploration but had incurred approximately $12,709 on exploration of the property.  The
Company intends to complete the additional required expenditures of $37,291 during 2009.





Weepah Property





The Company acquired the Weepah Property on March 15, 2008.  To May 31, 2009 the Company has made the $20,000 payment due on signing and the $20,000 due on March 15, 2009.    By May 31, 2009, the Company was to have incurred $50,000 on exploration but had incurred approximately $4,715 on exploration of the
property.  The Company intends to complete the additional required expenditures of $45,285 during 2009.





Imperial Property





On May 30, 2008, the Company acquired the rights to the Imperial Property.  The Company made a property option payment of $20,000 on July 1, 2008 and is required to incur an additional $223,056 in property expenditures in order to complete its obligations under the property option agreement.





Results of Operations





The Twelve Months Ended May 31, 2009 compared to the Twelve Months Ended May 31, 2008





The Company had no revenues during the fiscal years ended May 31, 2009 and May 31, 2008 because it was in the exploration state during such fiscal years. The net loss from operations for fiscal 2009 was $714,796 compared to $1,325,808 in fiscal 2008.   The net loss from operations decreased significantly in 2009 compared
to 2008 largely due to a large decrease in exploration expenses to $386,192 in 2009 from $1,172,292 in 2008, a decrease of $786,100.  A large portion of the difference in exploration expenses between 2009 and 2008 was that two significant payments made in 2008 did not recur in 2009.  In 2008, the Company acquired the Margarita Property for $200,000 and the Imperial Property for $250,000.  In 2009 total property option payments were $140,000 while in 2008 they totaled $110,000.  In
both 20009 and 2008 the Company paid an aggregate $90,000 for the Whiskey, NK, and Weepah properties but in 2009 an additional $30,000 was paid under the Bruner Expansion Agreement and the final Imperial property option payment of $20,000 was made while in 2008 the final $20,000 payment under the original Bruner and Vernal agreement was paid.    An additional reason for the decrease in exploration expenses was that during 2009 the Company undertook minimal exploration of its Whiskey, NK, and
Weepah properties and as at May 31, 2009 the Company had only just commenced its planned Moss drill program. In 2008 the Company completed drill programs on both the Bruner and Margarita Properties.





55


General and administrative expenses were $328,604in 2009 compared to $153,516 in 2008, an increase of $175,088.  The increase relates to expenses for corporate development. Other than the increased costs associated with the Company’s corporate development activities, general and administrative expenses decreased slightly
in 2009 compared to 2008.





Interest income decreased to $40,099 in 2009 from $108,903 in 2008.  The decrease is largely due to lower average invested cash balances and a decrease in interest rates on invested cash balances.





The Twelve Months Ended May 31, 2008 compared to the Twelve Months Ended May 31, 2007





The Company had no revenues during the fiscal years ended May 31, 2008 and May 31, 2007 because it was in the exploration state during such fiscal years. The net loss from operations for fiscal 2008 was $1,325,808 compared to $423,488 in fiscal 2007.   The net loss from operations increased significantly in 2008 compared
to 2007 due to a large increase in exploration expenses to $1,172,292 in 2008 from $250,634 in 2007, an increase of $921,658.  In 2008, the Company acquired the Margarita Property for $200,000 and the Imperial Property for $250,000.  In addition, the Company acquired the Whiskey, NK, and Weepah Properties for an aggregate initial option payment of $90,000.  Also in 2008, the Company completed drill programs on both the Bruner and Margarita Properties.  In 2007, the Company’s
only major exploration activity was to undertake a drill program on the Moss Property.  Other than making the required property option payment of $20,000, the Company did not incur any significant expenditures related to the Bruner or Vernal properties in the twelve months ended May 31, 2007.





General and administrative expenses were $153,516 in 2008 compared to $172,854 in 2007, a decrease of $19,338.  The decrease was largely due to the recognition in 2007 of $26,611 in stock-based compensation relating to stock options granted during 2006 while for 2008, the effect of revaluing the options granted in 2006 resulted
in a reversal of the expense of $973. No stock options were granted in 2008 or 2007.





Interest income decreased to $108,903 in 2008 from $127,059 in 2007.  The decrease is largely due to lower average invested cash balances and a decrease in interest rates on invested cash balances.





Liquidity and capital resources





We had total assets of $1,210,041 at May 31, 2009 consisting of cash of $1,195,886 and reclamation deposits of $14,155.  We had total liabilities of $65,989 at May 31, 2009 all of which are current liabilities consisting of accounts payable and accrued liabilities.





We anticipate that we will incur the following to May 31, 2010:





-
$125,000 in connection with property option payments under the Company’s Whiskey, NK, Weepah, and Bruner Expansion option agreements;





-
$869,000 in property exploration expenses and claim payments in order to meet the requirements of the Company’s property option agreements;


56


-
$100,000 for operating expenses, including working capital and general, legal, accounting and administrative expenses associated with reporting requirements under the Securities Exchange Act of 1934.





Cash used in operations was $936,627 for the year ended May 31, 2009 while it was $882,663 for 2008.  A significant portion of the increase was due to a large reduction in accounts payable in 2009 compared to 2008.  In 2009 accounts payable were reduced by $262,773 while in 2008 accounts payable were increased by $326,678.  The
effect of the change over the two year period resulted in a $598,451 difference in cash flows from 2009 compared to 2008.  Partially offsetting the effect of the change on accounts payable was a decrease in the net loss to $673,168 in 2009 from $1,211,237 in 2008.  The effect of stock-based compensation was consistent between 2009 and 2008.





Cash from operations from inception to date has not been sufficient to provide the operating capital necessary to operate. In November 2003 we issued 864,000 shares of common stock and 864,000 Class A warrants, 864,000 Class B warrants, 864,000 Class C warrants and 864,000 Class D warrants. This private offering generated gross proceeds
of $1,080,000.00. The Class A-1 warrants are exercisable on November 27, 2004 for an original period of five years at an exercise price of $1.40 per share of common stock; the Class B-1 warrants are exercisable on November 27, 2005 for an original period of four years at an exercise price of $1.45; the Class C-1 warrants are exercisable on November 27, 2006 for an original period of three years at an exercise price of $1.50; and the Class D-1 warrants are exercisable on November 27, 2007 for an original period
of two years at an exercise price of $1.55. The Company has the right, in its sole discretion, to accelerate the exercise date of the warrants, to decrease the exercise price of the warrants and/or extend the expiration date of the warrants.  On June 8, 2009 the expiry date on all of the warrants was extended from November 27, 2009 to November 27, 2011.





Investing activities in 2009 were the result of the Company receiving a $17,000 refund of the reclamation deposit that it had previously paid on the Margarita property while investing activities in 2008 consisted of the payment of reclamation deposits on the Margarita, Imperial, and Vernal properties totaling $31,155.  There were
no financing activities in either 2009 or 2008.





Going Concern Consideration





Management believes that the gross proceeds from the private placements and from the exercise of stock options will be sufficient to continue our planned activities until May 31, 2010, the end of our next fiscal year. However, we anticipate generating losses and therefore we may be unable to continue operations in the future as a going
concern. No adjustment has been made in the accompanying financial statements to the amounts and classification of assets and liabilities that could result should we be unable to continue as a going concern.





We currently have no agreements, arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources.





57


Accordingly, our independent auditors included an explanatory paragraph in their report on the accompanying financial statements regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors.





Off-balance sheet arrangements





We have no off-balance sheet arrangements.





Item 7A                      Quantitative and Qualitative Disclosure About Market Risk





A smaller reporting company, as defined by Item 10 of Regulation S-K, is not required to provide the information required by this item.








Item 8.                                Financial Statements.





The financial statements are set forth immediately preceding the signature page.





Item 9.                                Changes In and Disagreements with Accountants on Accounting and Financial
Disclosure.





None.





Item 9A(T).                      Controls and Procedures.





Evaluation of Disclosure Controls and Procedures





As required by Rule 13a-15 under the Securities Exchange Act of 1934 (the “Exchange Act”), the Company’s management carried out an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures as of May 31, 2009, being the date of the Company’s most recently completed fiscal
year end. This evaluation was carried out under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, Mr. Herb Duerr.




Changes in Internal Control Over Financial Reporting





During the most recently completed fiscal year ended May 31, 2009, the Company reduced its staff and as a result, a limitation in the segregation of duties occurred.  This weakness has been reported by the Company.





58


Evaluation of Internal Control Over Financial Reporting





Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control system has been designed to provide reasonable assurance to our management and board of directors regarding the preparation and fair presentation of our published financial statements. All internal control
systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.





Management conducted an evaluation of the design and operation of the Company’s internal control over financial reporting as of May 31, 2009, based on the criteria set forth in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.  This evaluation included
review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation. Based on this evaluation, management concluded that our internal control over financial reporting was not effective as of May 31, 2009 due to the following material weakness:





·
Our Company’s administration is composed of a small number of administrative individuals resulting in a situation where limitations on segregation of duties exist.  In order to remedy this situation we would need to hire additional staff to provide greater segregation of duties.  Currently, it is not feasible to hire additional staff to obtain optimal segregation of duties.  Management
will reassess this matter in the following year to determine whether improvement in segregation of duty is feasible.





This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit
us to provide only management’s report in this annual report.





Item 9B. Other Information.





None.


59


PART II





Item 10.                      Directors, Executive Officers and Corporate Governance.





Directors and Officers.





All directors of our Company hold office until the next annual general meeting of the stockholders or until their successors are elected and qualified. The officers of our Company are appointed by our board of directors and hold office until their earlier death, retirement, resignation or removal. Our directors, executive officers and other
significant employees, their ages, positions held and duration each person has held that position, are as follows:


Name
Position Held with the Company
Age
Date First AppointedHerb Duerr
Chairman, President, Chief  Executive Officer, Chief Operating Officer, Secretary Treasurer, and Director
55
September 12, 2008(1)Robert Coale
Director
69
June 23, 2003(1)Jared Beebe
Director
58
September 5, 2008





(1)On September 12, 2008 Mr. Herb Duerr was appointed President, Chief Executive Officer, Secretary, Treasurer, and Director of the Company.   Mr. Coale was first appointed as a Director on June 23, 2003 and on October 13, 2005 Mr. Robert Coale was appointed as the
Company’s Chairman, President, Chief Executive and Operating Officer, and Secretary.  Since September 12, 2008 Mr. Coale has served only as a Director of the Company.





Business Experience





The following is a brief account of the education and business experience of each director, executive officer and key employee during at least the past five years, indicating each person’s principal occupation during the period, and the name and principal business of the organization by which he was employed.





Herb Duerr is an exploration geologist with over twenty-five years experience in base and precious metal exploration.  Since 1998 Mr. Duerr has been a principal of MinQuest Inc. which is a privately held precious metal exploration and development company.  He holds
a Bachelor of Science in Geology from Florida Atlantic University.





Robert Coale has been a Director since June 2003 and served as our Chairman, President, and Chief Executive and Operating Officer and Secretary and Treasurer from October 2005 to September 2008.   Since April 2004 he has also been a Director of Giant Oil & Gas Inc.,
a publicly traded natural gas exploration company. He is a Professional Engineer with two engineering degrees (1963 - MetE. - Colorado School of Mines, 1971 - MSc. - University of the Witwatersrand in South Africa) and an MBA from the University of Minnesota (1982).  He has over 40 years of resource related business and management experience.   Mr. Coale is currently an independent consulting engineer specializing in mineral processing and natural gas fueling systems including development
of projects for converting low-grade or stranded natural gas sources into liquefied natural gas.


60


Jared Beebe is an experienced geologist with an extensive background in mineral exploration.   In his nearly 20 years of working in the mining industry, he has worked for a variety of exploration companies in Canada and the United States.  He is currently an
independent consulting Project Manager.  He previously worked for Soho Resources from 2007 to 2008, for Globex Mining in 2006, for Scorpio Mining in 2005 and from 1999 to 2004 he worked as a researcher at the University of Quebec where he studied Geographic Information Systems.  Mr. Beebe earned a Bachelor of Science degree in Geology from Metropolitan State College, Denver, Colorado, in 1981.  He is a member of the Association of Applied Geochemists, the Geological Society of Nevada,
the Ordre du Géologues du Québec, and the Society of Economic Geologists. Mr. Beebe also currently a Director of American Goldfields Inc, a publicly-traded junior mineral exploration company.





There are no family relationships among our directors or officers.  None of our directors or officers has been affiliated with any company that has filed for bankruptcy within the last five years.  We are not aware of any proceedings to which any of our officers or directors, or any associate of any such officer or director,
is a party adverse to our company or has a material interest adverse to it.  Other than the previous Shareholders Agreement among Mr. Coale and Mr. Sibthorpe which is discussed below, there are no agreements with respect to the election of Directors. Other than described in Section 10 below, we have not compensated our Directors for service on our Board of Directors, any committee thereof, or reimbursed for expenses incurred for attendance at meetings of our Board of Directors and/or any committee of
our Board of Directors.





Audit Committee Financial Expert.





The Board of Directors has not established an audit committee and does not have an audit committee financial expert. The Board is seeking additional Board members whom it hopes will qualify as such an expert.





Section 16(a) Beneficial Ownership Reporting Compliance.





Section 16(a) of the Securities Exchange Act of 1934 requires officers and Directors of the Company and persons who own more than ten percent of a registered class of the Company’s equity securities to file reports of ownership and changes in their ownership with the Securities and Exchange Commission, and forward copies of such filings
to the Company. During the most recent fiscal year, none of the directors, officers, and beneficial owners of more than ten percent of the equity securities of the Company registered pursuant to Section 12 of the Exchange Act has failed to file such forms on a timely basis.





Code of Ethics.




The Company has not adopted a Code of Ethics, as defined by SEC rules that applies to the Company's Chief Executive Officer and Chief Financial Officer, and Secretary (its principal executive officer and principal accounting and financial officer). The Company has not adopted such a Code of Ethics because of the small size and limited resources
of the Company, and because management's attention has been focused on matters pertaining to raising capital and the operation of the business.




61


Changes to Procedures for Recommendations of Director Nominees.





During the fiscal year ended May 31, 2009, there were no material changes to the procedures by which security holders may recommend nominees to our board of directors.





Item 11.                      Executive Compensation.





Summary Compensation





On November 1, 2005, the Company signed a service agreement with its former President, Robert Coale.  Pursuant to the agreement the Company paid Mr. Coale, beginning November 2005, $2,500 per month for his expertise to identify and acquire certain exploration style properties that fit the parameters of the Company’s business
plan, oversee and manage, as directed by the Company, the Company’s exploration programs that will be undertaken from time-to-time, and perform all of the duties normally associated with serving as the President and Chief Executive Officer of a publicly traded mining company.  The service agreement was for an indefinite term, cancellable in writing by either party with 30 days written notice.  Effective July 1, 2008, Mr. Coale agreed to indefinitely suspend payments under the agreement
and effective September 12, 2008 the agreement was cancelled when Mr. Coale resigned as President, Chief Executive Officer, Secretary, Treasurer, and Director of the Company.  For the year ended May 31, 2009, the Company paid $2,500 (2008 - $30,000) pursuant to this agreement.





On September 12, 2008 Mr. Herb Duerr was appointed President, Chief Executive Officer, Secretary, Treasurer, and Director of the Company.  Mr. Duerr is also an Officer of MinQuest Inc (“MinQuest”).  All of the Company’s mineral properties have either been directly or indirectly optioned from MinQuest.  All
exploration work undertaken on any of the Company’s properties will be at the direction and discretion of the Company.   For the year ended May 31, 2009, the Company made total property payments of $110,000 to MinQuest related to property option payments for the Whiskey, NK, Weepah, and Imperial properties.  For the twelve-months ended May 31, 2009 the Company paid Mr. Duerr an amount of $32,325 with respect to fees paid to Mr. Duerr for geological services rendered to the Company.





62


The following table sets forth information concerning the compensation paid or earned during the fiscal years ended May 31, 2009 and 2008 for services rendered to our Company in all capacities by the following persons: (i) all individuals who served as the principal executive officer or acting in a similar capacity during the fiscal year
ended May 31, 2009, regardless of compensation level; (ii) all individuals who served as officers at May 31, 2009 and whose total compensation during the fiscal year ended May 31, 2009 exceeded $100,000; and (iii) up to two additional individuals who served as officers during the fiscal year ended May 31, 2009 and whose total compensation during the fiscal year ended May 31, 2009 exceeded $100,000, regardless of whether they were serving as officers at the end of such fiscal year.





SUMMARY COMPENSATION TABLEName and principal position
(a)
Year
(b)
Salary ($)
(c)
Bonus ($)
(d)
Stock Awards ($)
(e)
Option Awards ($)
(f)
Non-Equity Incentive Plan Compensation ($)
(g)
Nonqualified Deferred Compensation Earnings ($)
(h)
All Other Compensation ($)
(i)
Total ($)
(j)Herb Duerr(1)
2009
32,325
0
0
0
0
0
0
32,3252008
0
0
0
0
0
0
0
0Robert Coale(1)
2009
2,500
0
0
0
0
0
0
2,5002008
30,000
0
0
0
0
0
0
30,000





(1)On September 12, 2008 Mr. Herb Duerr was appointed President, Chief Executive Officer, Secretary, Treasurer, and Director of the Company.   Mr. Duerr is our only officer.  Mr. Coale was first appointed as a Director on June 23, 2003 and on October
13, 2005 Mr. Robert Coale was appointed as the Company’s Chairman, President, Chief Executive and Operating Officer, and Secretary.  Since September 12, 2008 Mr. Coale has served only as a Director of the Company.





63


Outstanding Equity Awards





The table set forth below presents certain information concerning unexercised options, stock that has not vested, and equity incentive plan awards for each named executive officer above outstanding as of May 31, 2009.





OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-ENDOPTION AWARDS
STOCK AWARDSName
(a)
Number of Securities Underlying Unexercised Options
(#)
Exercisable
(b)
Number of Securities Underlying Unexercised Options
(#)
Unexer-
cisable
(c)
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options
(#)
(d)
Option Exer-
cise Price
($)
(e)
Option Expira-
tion Date
(f)
Number of Shares or Units of Stock That Have Not Vested
(#)
(g)
Mark-
et Value of Shares or Units of Stock That Have Not Vested
($)
(h)
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested
(#)
(i)
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested
(#)
(j)Herb Duerr
40,000
0
0
1.03
July 25, 2013
0
0
0
0Robert Coale
100,000(2)
0
0
0.05
June 23, 2013
0
0
0
0200,000(3)
0
0
0.25
March 10, 2016
0
0
0
0





(1) On July 25, 2003 Mr. Duerr was granted the right to purchase an aggregate of 40,000 common shares at an exercise price of $1.03 per option pursuant to the 2003 Stock Option Plan.  These options have fully vested.





(2) On June 23, 2003 Mr. Coale was granted the right to purchase an aggregate of 100,000 common shares at an exercise price of $0.05 per option pursuant to the 2003 Stock Option Plan.  These options have fully vested.





(3) On March 10, 2006, Mr. Coale was granted the right to purchase an additional 200,000 common shares at an exercise price of $0.25 per option pursuant to the 2005 Stock Option Plan.  The $0.25 options vest in equal installments of 33,333 commencing September 10, 2006 and ending March 10, 2009.  These options have fully
vested.





64


Compensation of Directors





Except as described above under the section entitled “Summary Compensation,” none of our directors received any compensation during the fiscal year ended May 31, 2009.





Item 12.                      Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.





The following table lists, as of August 25, 2009, the number of shares of common stock of the Company beneficially owned by (i) each person or entity known to the Company to be the beneficial owner of more than 5% of the outstanding common stock; (ii) each officer and director of the Company; and (iii) all officers and directors as a group.
Information relating to beneficial ownership of common stock by our principal stockholders and management is based upon information furnished by each person using “beneficial ownership” concepts under the rules of the Securities and Exchange Commission. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or
direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment
power.





65


The percentages below are calculated based on 26,224,400 shares of Common Stock which are issued and outstanding as of August 25, 2009.  Unless indicated otherwise, all addresses below are c/o Patriot Gold Corp., 3651 Lindell Road, Suite D, Las Vegas, Nevada, 89103.





Name of Beneficial Owner

Amount and Nature of Beneficial Ownership

Percentage
of ClassRobert D. Coale

6,300,000
(1)
24.0%Almir Ramic

1,730,000
(2)
6.6%Colin Bruce Worth

1,600,000
(3)
6.1%Herb Duerr

40,000
(4)
*Jared Beebe

-

*Directors and Officers as a Group (3 individuals)

6,340,000

25.9%





* Represents less than 1%.





(1)
Includes 100,000 options pursuant to the 2003 Stock Option Plan to purchase common stock at a purchase price of $0.05 per share and 200,000 options pursuant to the 2005 Stock Option Plan to purchase common stock at a purchase price of$0.25 per share.


(2)
Includes 1,280,000 shares of our common stock issuable upon the exercise of warrants held by Mr. Ramic.  All such warrants are currently exercisable.


(3)
Includes 1,280,000 share of our common stock issuable upon the exercise of warrants held by Mr. Worth. All such warrants are currently exercisable.


(4)
Includes 40,000 options pursuant to the 2003 Stock Option Plan to purchase common stock at a purchase price of $1.03 per share.





Shareholders’ Agreement





Messrs. Sibthorpe and Coale were party to a Shareholders’ Agreement dated as of January 22, 2004. The agreement provided that for so long as the person holds any of the 3,000,000 shares which he received from Bruce Johnstone, the directors shall vote such shares to maintain three persons on our board. Upon any vote to appoint representatives
to the Board, each shareholder agreed that he shall vote his shares for the other two shareholders. If one of the three shareholders is no longer a shareholder, or if the Board or our shareholders decided to remove one of the Board members, or the shareholder no longer holds any of the 3,000,000 shares which he received from Mr. Johnstone, then the other two shareholders agreed to vote their shares together to either maintain the number of Board members as two or to nominate and appoint a third Board member.
The agreement also provides that for all other matters in which shares are voted, the three shareholders shall vote their 3,000,000 shares together as determined by the decision of two of the three shareholders. These three shareholders had determined that such agreement would be beneficial in maintaining control among themselves over the shares that they had received from Mr. Johnstone.





66


The shareholders also agreed that he will not, directly or indirectly, sell, pledge, gift or in any other way dispose of any of the 3,000,000 shares which he received from Mr. Johnstone. This transfer restriction shall apply to such shares in all situations during all times that such individual holds any of the 3,000,000 shares. Although
the shareholders’ agreement restricts transfers of the shares received from Mr. Johnstone and held by the directors, a director can no longer hold the shares which he received from Mr. Johnstone if he dies or if the agreement is amended by the parties to permit a transfer. The Company is not aware of any such amendment being contemplated by the parties.  Mr. Coale acquired Mr. Sibthorpe’s shares upon Mr. Sibthrope’s resignation from the Board of Directors.  As a result, the
Shareholders’ Agreement no longer has effect as Mr. Coale is the sole shareholder under the original agreement.





Buyback Agreements





On March 10, 2006 the Company granted stock options to Mr. Robert Coale, who was the Company’s former Chairman, President, Chief Executive Officer, Chief Operating Officer, Secretary, and a director and to Mr. Robert Sibthorpe who was a former director of the Company.  In consideration therefor, Mr. Coale, Mr. Sibthorpe
and the Company entered into a Buy-Back Option Agreements, pursuant to which Messrs. Coale and Sibthorpe granted to the Company the option to purchase all or any portion of the 3,000,000 shares of the Company’s common stock that are owned by each of Mr. Coale and Mr. Sibthorpe respectively for a purchase price of $0.01 per share.  Mr. Coale acquired Mr. Sibthorpe’s 3,000,000 shares upon Mr. Sibthrope’s resignation from the Board of Directors.  The shares acquired by Mr. Coale
are subject to the same terms as originally agreed to by Mr. Sibthorpe under the buyback agreement.





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





We are unaware of any other contract or other arrangement the operation of which may at a subsequent date result in a change in control of our company.





Securities Authorized for Issuance under Equity Compensation Plans





Information regarding our equity compensation plans is set forth above under Part II, Item 5.





67


Item 13.                      Certain Relationships and Related Transactions, and Director Independence.





Related Party Transactions





Related Party Transactions with Herb Duerr and MinQuest Inc.





On September 12, 2008 Mr. Herb Duerr was appointed President, Chief Executive Officer, Secretary, Treasurer, and Director of the Company.  Mr. Duerr is also an Officer of MinQuest Inc (“MinQuest”).  All of the Company’s mineral properties have either been directly or indirectly optioned from MinQuest.  All
exploration work undertaken on any of the Company’s properties will be at the direction and discretion of the Company.   For the year ended May 31, 2009, the Company made total property payments of $110,000 to MinQuest related to property option payments for the Whiskey, NK, Weepah, and Imperial properties.  For the twelve-months ended May 31, 2009 the Company paid Mr. Duerr an amount of $32,325 with respect to fees paid to Mr. Duerr for geological services rendered to the Company.


Bruner and Vernal Property Option Agreement





Pursuant to a Property Option Agreement, dated as of July 25, 2003, with MinQuest we have the option to earn a 100% interest in the Bruner and Vernal mineral exploration properties located in Nevada.   Simultaneous with the execution and delivery of the Property Option Agreement, we paid MinQuest $12,500 and we owed an additional
$80,000 which was due in four equal annual installments commencing on July 25, 2004. With the approval of MinQuest, we paid the first installment on August 27, 2004 and we paid the second installment on September 20, 2005.  On July 25, 2006 and 2007 respectively we made the third and fourth installments of $20,000.  The payment made on July 25, 2007 was the final payment due under the property option agreement for the Bruner and Vernal properties.  To date we were to have spent $500,000
on exploration, and we had spent an aggregate of approximately $499,327 on exploration of the two properties resulting in a shortfall of approximately $673.  The Company intends to undertake an exploration program in 2009 to complete its obligations under the Bruner and Vernal agreement.





Moss Property Option Agreement





A portion of our Moss Property was acquired from MinQuest.  On March 4, 2004, we signed the agreement that earned us a 100 percent interest in 62 unpatented mining claims by paying MinQuest a one-time lease fee of $50,000.   The fee of $50,000 was paid on July 7, 2004.





Whiskey Property Option Agreement


68





On March 15, 2008, the Company executed the Whiskey Property Option Agreement with MinQuest granting the Company the right to acquire 100% of the mining interests of the Nevada mineral exploration property.  Under the agreement the Company agreed to make total property options payments to MinQuest of $1,045,000 and incur an aggregate
$2,500,000 in property exploration expenditures by March 15, 2018.  To May 31, 2009 the Company has made the $50,000 payment due on signing and the $50,000 due on March 15, 2009.    By May 31, 2009, the Company was to have incurred $50,000 on exploration but had incurred approximately $40,870 on exploration of the property.  The Company intends to complete the additional required expenditures of $9,130 during 2009. In the event the Company does not make the indicated option
payments and incur the exploration expenditures, when demanded, the Company will lose its interest in the property.





NK Property Option Agreement





On March 15, 2008, the Company executed the NK Property Option Agreement with MinQuest granting the Company the right to acquire 100% of the mining interests of the Nevada mineral exploration property.  Under the agreement the Company agreed to make total property options payments to MinQuest of $490,000 and incur an aggregate
$1,225,000 in property exploration expenditures by March 15, 2018.  To May 31, 2009 the Company has made the $20,000 payment due on signing and the $20,000 due on March 15, 2009.    By May 31, 2009, the Company was to have incurred $50,000 on exploration but had incurred approximately $12,709 on exploration of the property.  The Company intends to complete the additional required expenditures of $37,291 during 2009.  In the event the Company does not make the
indicated option payments and incur the exploration expenditures, when demanded, the Company will lose its interest in the property.


Weepah Property Option Agreement





On March 15, 2008, the Company executed the Weepah Property Option Agreement with MinQuest granting the Company the right to acquire 100% of the mining interests of the Nevada mineral exploration property.  Under the agreement the Company agreed to make total property options payments to MinQuest of $490,000 and incur an aggregate
$1,225,000 in property exploration expenditures by March 15, 2018.  To May 31, 2009 the Company has made the $20,000 payment due on signing and the $20,000 due on March 15, 2009.    By May 31, 2009, the Company was to have incurred $50,000 on exploration but had incurred approximately $4,715 on exploration of the property.  The Company intends to complete the additional required expenditures of $45,285 during 2009.  In the event the Company does not make the indicated
option payments and incur the exploration expenditures, when demanded, the Company will lose its interest in the property.





69


Imperial Property Option Agreement





On May 30, 2008, the Company entered into an Assignment and Assumption Agreement (the “Agreement”) with American Goldfields Inc., a Nevada corporation (“American Goldfields”), to acquire the exclusive option to an undivided right, title and interest in 22 unpatented Federal mining claims located in Esmeralda County,
Nevada (the “Property”). American Goldfields had originally acquired its exclusive option on the Property on June 30, 2004, when it entered into a Property Option Agreement with MinQuest, the owner of the Property.  On July 1, 2008 the Company made a $20,000 property option payment to MinQuest which was the final option payment due under the Imperial Property Option Agreement.  The Company needs to incur an aggregate $223,056 in property expenditures to earn a 100% interest in
the property.





Related Party Transactions with Robert Coale





On March 10, 2006, we entered into a Stock Option Agreement with Robert Coale, who was our former Chairman, President, Chief Executive Officer, Chief Operating Officer, Secretary, and a director. Pursuant to such agreement, Mr. Coale was issued 200,000 options, each entitling him to purchase one share of common stock at a price of $0.25
until March 10, 2016.  In consideration  therefor,  Mr. Coale and our company  entered into a Buy-Back Option  Agreement,  pursuant to which Mr. Coale  granted to our company  the option  to  purchase  all  or  any  portion  of  the  3,000,000  shares  of  our common stock that are owned by Mr. Coale for a purchase
price of $0.01 per share.





Related Party Transactions with Robert Sibthorpe





On March 10, 2006, we entered into a Stock Option Agreement with Robert Sibthorpe, who was our former director.  Pursuant to such agreement, Mr. Sibthorpe was issued 200,000 options, each entitling him to purchase one share of common stock at a price of $0.25 until March 10, 2016.  In consideration therefor, Mr. Sibthorpe
and our company entered into a Buy-Back Option Agreement,  pursuant to which Mr. Sibthorpe granted to our company an option  to  purchase  all  or  any  portion  of  the  3,000,000  shares  of our common stock that are owned by Mr. Sibthorpe for a purchase price of $0.01 per share.  Mr. Coale acquired Mr. Sibthorpe’s 3,000,000 shares upon Mr. Sibthrope’s resignation from
the Board of Directors.  The shares acquired by Mr. Coale are subject to the same terms as originally agreed to by Mr. Sibthorpe under the buyback agreement.





Related Party Transactions with Ronald Blomkamp





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





70


There are no promoters associated or involved with the company. We have a single individual, Mr. Brian Uppal, who acts as our investor relations person to answer questions received from phone callers. Mr. Uppal has been compensated by a grant of 250,000 stock options under our stock option plan. These options were granted on October 14,
2003, with an exercise price of $1.50, and because the option price was above fair market value of $1.47, we did not record any compensation expense. We have also hired Shareholder.com, a fulfillment service provider, to handle the logistics of mailing out an informational pamphlet prepared by us to those investors who have requested more information about us through our Web site. Under our agreement with Shareholder.com, Shareholder.com performs mail order fulfillment service to persons who request an investor
package through our Web site. The investor enters the required information on our Website. The information is then transmitted to Shareholder.com, which then mails the investor package to the person requesting it. The investor and Shareholder.com do not communicate with each other and Shareholder.com adds no materials of their own to the mailings to our investors. Shareholder.com acts only as a collation and mailing service provider to us so that we do not have to spend time doing this work.





Under the Shareholder.com agreement, which has a month-to-month term, we are responsible for the preparation and contents of the investor package. The pamphlet we provided to Shareholder.com consisted of basic information about us, the members of our management team and our business, and the information is taken from our Web site.  Under
the Shareholder.com agreement, Shareholder.com acted solely as a transmitter of information to investors that we provided to them for which we paid;





·
an initial start up fee of $495,


·
a monthly fee of $195 for the mail order fulfillment service,


·
a processing fee of $0.95 per request


·
and the cost of postage and handling of investor packages mailed by Shareholder.com.





Director Independence





We are not subject to the listing requirements of any national securities exchange or national securities association and, as a result, we are not at this time required to have our board comprised of a majority of “independent directors.” We do not believe that any of our directors currently meet the definition of “independent”
as promulgated by the rules and regulations of the American Stock Exchange.





71


ITEM 14                      PRINCIPAL ACCOUNTING FEES AND SERVICES





Robison, Hill & Co. is currently serving as the Company’s auditors. Their fees billed to the Company for the fiscal years ending May 31, 2009 and 2008 are set forth below:


Fiscal year ending
May 31, 2009

Fiscal year ending
May 31, 2008Audit Fees

$
27,000


$
27,000Audit Related Fees
NIL

NILTax Fees

NIL

NILAll Other Fees

NIL


NIL





As of May 31, 2009, the Company did not have a formal, documented pre-approval policy for the fees of the principal accountant. It is in the process of adopting such a policy.


72


Item 15.                      Exhibits.





EXHIBIT
NUMBER

DESCRIPTION3.1

Articles of Incorporation of Registrant. (1)3.2

Registrant’s Restated Articles of Incorporation. (2)3.3

By-Laws of Registrant. (1)4.1

Specimen common stock certificate. (1)4.2

Form of Class A Warrant. (3)4.3

Form of Class B Warrant. (3)4.4

Form of Class C Warrant. (3)4.5

Form of Class D Warrant. (3)4.6

Warrant Agreement – July 2003 private placement. (3)4.7

Form of Class A-1 Warrant. (6)4.8

Form of Class B-1 Warrant. (6)4.9

Form of Class C-1 Warrant. (6)4.10

Form of Class D-1 Warrant. (6)4.11

Warrant Agreement – November 2003 private placement. (8)10.1

Property Option Agreement dated as of July 25, 2003 between MinQuest Inc. and Patriot Gold Corporation. (9)10.2

2003 Stock Option Plan. (4)10.3

Agreement dated as of September 2, 2003 by and between Patriot Gold Corp. and Bruce Johnstone. (5)10.4

Shareholders’ Agreement dated as of January 22, 2004, among Patriot Gold Corp., Ron Blomkamp, Robert Sibthorpe and Robert Coale. (6)10.5

Agreement dated January 22, 2004 executed by Bruce Johnstone with respect to registration rights. (8)10.6

Letter of Intent dated November 13, 2003 between Patriot Gold Corp. and Ms. Barbara Williams. (9)10.7

Purchase Contract dated February 19, 2004 between the Company, the parties identified therein as the Seller and First American Title Insurance Company of Yavapai County, as escrow agent. (7)10.8

Binding Letter Agreement, dated March 4, 2004, by and between the Company and MinQuest, Inc. (8)10.9

Agreement with Shareholder.com (10)10.10

2005 Stock Option Plan (11)10.11

Buy-Back Option Agreement, dated March 10, 2006, between the Company and Robert Coale (12)10.12

Buy-Back Option Agreement, dated March 10, 2006, between the Company and Robert Sibthorpe (12)10.13

Redemption Agreement, dated March 10, 2006, between the Company and Ronald C. Blomkamp (12)10.14

Letter Agreement, dated July 24, 2007, between MinQuest Inc. and the Company (13)10.15

Assignment and Assumption Agreement dated January 29, 2008 between the Company and American Goldrush Corp. (14)10.16

Whiskey Flat Property Option Agreement, dated March 15, 2008 between the Company and MinQuest Inc. (15)10.17

NK Property Option Agreement, dated March 15, 2008 between the Company and MinQuest Inc. (15)10.18

Weepah Property Option Agreement, dated March 15, 2008 between the Company and MinQuest Inc. (15)10.19

Assignment and Assumption Agreement dated May 30, 2008 between the Company and American Goldfields Inc. (16)10.20

Bruner Property Option Agreement, dated April 1, 2009 between the Company and American International Ventures Inc. (17)31

Rule 13a-14(a)/15d14(a) Certifications (attached hereto)32

Section 1350 Certifications (attached hereto)


(1) Previously filed with the Company’s Form 10SB12g submitted to the SEC on June 25, 2001, SEC file number 0-32919.


(2) Previously filed as an exhibit to the Company’s Information Statement submitted to the SEC on May 21, 2003.


(3) Previously filed as exhibits to the Company’s May 31, 2003 Form 10-K submitted to the SEC on August 26, 2003.


(4) Previously filed as Exhibit 4.1 to the Company’s Form S-8 on May 30, 2003, SEC File Number 333-105691, as amended by the Company’s Post-Effective Amendment of Form S-8 filed on September 23, 2003.


(5) Previously filed as an exhibit to the Company’s August 31, 2003 Form 10-QSB submitted to the SEC on October 14, 2003.


(6)  Previously filed with the Company’s registration statement on Form SB-2, Registration No. 333-112424, submitted to the SEC on February 2, 2004.


(7) Previously filed as an exhibit to the Company’s February 29, 2004 Form 10-QSB submitted to the SEC on April 9, 2004.


(8)  Previously filed with the amendment No. 2 to the Company’s registration statement on Form SB-2/A, Registration No. 333-112424, submitted to the SEC on July 16, 2004.


(9)  Previously filed with the amendment No. 3 to the Company’s registration statement on Form SB-2/A, Registration No. 333-112424, submitted to the SEC on October 6, 2004.


(10) Previously filed with the amendment No. 4 to the Company’s registration statement on Form SB-2/A, Registration No. 333-112424, submitted to the SEC on December 27, 2004.


(11) Previously filed as Exhibit 4.1 to the Company’s Form S-8 filed on November 18, 2005 File Number 333-129840.


(12) Previously filed with the Company’s Form 8-K submitted to the SEC on March 10, 2006.


(13) Previously filed as an exhibit to the Company’s May 31, 2007 Form 10-K submitted to the SEC on August 29, 2008.


(14) Previously filed with the Company’s Form 8-K submitted to the SEC on February 1, 2008.


(15) Previously filed with the Company’s Form 8-K submitted to the SEC on March 20, 2008.


(16) Previously filed with the Company’s Form 8-K submitted to the SEC on June 3, 2008.


(17) Previously filed with the Company’s Form 8-K submitted to the SEC on April 1, 2009.





73







PATRIOT GOLD CORP.




(An Exploration State Company)




-:-




INDEPENDENT AUDITOR’S REPORT




MAY 31, 2009 AND 2008






74


Contents

PageReport of Independent Registered Public Accountants

F - 1Balance SheetsMay 31, 2009 and 2008

F - 2Statements of Operations for theYears Ended May 31, 2009 and 2008 and the Cumulative PeriodJune 1, 2000 (Inception of Exploration State) to May 31, 2009

F - 3Statement of Stockholders’ EquitySince November 30, 1998 (Inception) to May 31, 2009

F - 4Statements of Cash Flows for theYears Ended May 31, 2009 and 2008 and the Cumulative PeriodJune 1, 2000 (Inception of Exploration State) to May 31, 2009

F – 11Notes to Financial Statements

F - 13
 
  75
  
 
 ROBISON, HILL & CO.



Certified Public AccountantsA PROFESSIONAL CORPORATIONBRENT M. DAVIES, CPADAVID O. SEAL, CPAW. DALE WESTENSKOW, CPABARRY D. LOVELESS, CPASTEPHEN M. HALLEY, CPA
 
  REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
  Patriot Gold Corp.
  (An Exploration State Company)
  We have audited the accompanying balance sheet of Patriot Gold Corp. (An Exploration State Company) as of May 31, 2009 and 2008, and the related statements of operations and cash flows for the two years ended May 31, 2009 and 2008 and the cumulative period June 1, 2000 (inception of exploration state) to May 31, 2009, and the statements
of stockholders’ equity since November 30, 1998 (inception) to May 31, 2009. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
  We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting.  Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting.  Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
  In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Patriot Gold Corp. (An Exploration State Company) as of May 31, 2009 and 2008, and the results of its operations and its cash flows for the years ended May 31, 2009 and 2008 and the cumulative period June 1, 2000
(inception of exploration state) to May 31, 2009, in conformity with accounting principles generally accepted in the United States of America.
  The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations and has no source of revenue that raise substantial doubt about its ability to continue as a going concern. Management’s
plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
  
  
  /S/ Robison, Hill & Co.
 Certified Public Accountants
  Salt Lake City, Utah
 August 24,, 2009
  MEMBERS OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
 MEMBERS OF THE SEC PRACTICE SECTION and THE PRIVATE COMPANIES PRACTICE SECTION
 
 1366 East Murray-Holladay Road, Salt Lake City, Utah  84117-5050
 Telephone 801/272-8045, Facsimile 801/277-9942
 76
  PATRIOT GOLD CORP.
 (An Exploration State Company)
 BALANCE SHEETS
 
 May 31,


May 31,2009


2008ASSETS:Current Assets:Cash

$
1,195,886


$
2,115,513Total Current Assets


1,195,886



2,115,513Reclamation Deposits (note 4)


14,155



31,155Office Equipment, Net


-



352Total Assets

$
1,210,041


$
2,147,020LIABILITIES & STOCKHOLDERS’ EQUITY:Current Liabilities:Accounts Payable

$
65,989


$
328,762Total Current Liabilities


65,989



328,762Stockholders’ Equity:Preferred Stock, Par Value $.001Authorized 20,000,000 shares,No shares issued at May 31, 2009 and 2008


—



—Common Stock, Par Value $.001Authorized 100,000,000 shares,Issued 26,224,400 shares atMay 31, 2009 (May 31, 2008 – 26,224,400)


26,224



26,224Paid-In Capital


26,381,625



26,382,663Currency Translation Adjustment


(16,361
)


(16,361
)Deficit Accumulated Since Inception of Exploration State


(25,206,354
)


(24,533,186
)Retained Deficit


(41,082
)


(41,082
)Total Stockholders’ Equity


1,144,052



1,818,258Total Liabilities and Stockholders’ Equity

$
1,210,041


$
2,147,020
 
 The accompanying notes are an integral part of these financial statements.
  77
  
  PATRIOT GOLD CORP.
 (An Exploration State Company)
 STATEMENTS OF OPERATIONS
 
 CumulativeSinceJune 1, 2000For the Year Ended


Inception ofMay 31,


Exploration2009


2008


StateRevenues

$
—


$
—


$
—Cost of Revenues


—



—



—Gross Margin


—



—



—Expenses:Mining Costs


386,192



1,172,292



3,375,243General and Administrative


328,604



153,516



22,274,283Net Loss from Operations


(714,796
)


(1,325,808
)


(25,649,526
)Other Income (Expense)Interest


40,099



108,903



446,102Currency Exchange


1,529



5,668



(2,930
)Net Other Income (Expense)


41,628



114,571



443,172Net Loss

$
(673,168
)

$
(1,211,237
)

$
(25,206,354
)Basic and Diluted loss perShare

$
(0.03
)

$
(0.05)Weighted Average SharesOutstanding


26,224,400



26,224,400
 
 The accompanying notes are an integral part of these financial statements.
  78
  
  PATRIOT GOLD CORP.
 (An Exploration State Company)
 STATEMENT OF STOCKHOLDERS’ EQUITY
 
 DeficitCumulative




AccumulatedSubscription

Currency




DuringPreferred Stock

Common Stock

Paid-In

Stock

Translation

Retained


ExplorationShares

Par Value

Shares

Par Value

Capital

Receivable

Adjustment

Deficit


StateBalance at November 30, 1998(inception)
—

$
—

—

$
—

$
—

$
—

$
—

$
—


$
—November 30, 1998 Issuance ofStock for services and paymentof accounts payable
—


—

1,000,000


1,000


—


—


—


—



—April 1, 1999 Issuance of Stockfor cash pursuant to privateplacement
—


—

1,004,000


1,004


49,196


—


—


—



—Net Loss
—


—

—


—


—


—


—


(38,305
)


—Currency Translation Adjustment
—


—

—


—


—


—


(15,996
)

—



——Balance at May 31, 1999
—


—

2,004,000


2,004


49,196


—


(15,996
)

(38,305
)


—Retroactive Adjustment for 1:7.6Stock Split June 17, 2003
—


—

13,226,400


13,226


(13,226
)

—


—


—



—Restated Balance May 31, 1999
—


—

15,230,400


15,230


35,970


—


(15,996
)

(38,305
)


—Net Loss
—


—

—


—


—


—


—


(2,777
)


—Currency Translation Adjustment
—


—

—


—


—


—


(489
)

—



—Balance at May 31, 2000
—


—

15,230,400


15,230


35,970


—


(16,485
)

(41,082
)


—
 
  79
  
  PATRIOT GOLD CORP.
 (An Exploration State Company)
 STATEMENT OF STOCKHOLDERS’ EQUITY
 (Continued)
 
 DeficitCumulative




AccumulatedSubscription

Currency




DuringPreferred Stock

Common Stock

Paid-In

Stock

Translation

Retained


ExplorationShares

Par Value

Shares

Par Value

Capital

Receivable

Adjustment

Deficit


StateBalance at May 31, 2000
—

$
—

15,230,400

$
15,230

$
35,970

$
—

$
(16,485
)
$
(41,082
)

$
—Contributed Capital
—


—

—


—


3,788


—


—


—



—Net Loss
—


—

—


—


—


—


—


—



(3,811
)Currency Translation Adjustment
—


—

—


—


—


—


172


—



—Balance at May 31, 2001
—


—

15,230,400


15,230


39,758


—


(16,313
)

(41,082
)


(3,811
)Contributed Capital
—


—

—


—


2,080


—


—


—



—Net Loss
—


—

—


—


—


—


—


—



(2,630
)Currency Translation Adjustment
—


—

—


—


—


—


(48
)

—



—Balance at May 31, 2002
—


—

15,230,400


15,230


41,838


—


(16,361
)

(41,082
)


(6,441
)Contributed Capital
—


—

—


—


3,972


—


—


—



—Net Loss
—


—

—


—


—


—


—


—



(11,215
)Balance at May 31, 2003
—


—

15,230,400


15,230


45,810


—


(16,361
)

(41,082
)


(17,656
)
 
  80
  
  PATRIOT GOLD CORP.
 (An Exploration State Company)
 STATEMENT OF STOCKHOLDERS’ EQUITY
 (Continued)
 
 DeficitCumulative





AccumulatedSubscription

Currency





DuringPreferred Stock

Common Stock


Paid-In

Stock

Translation


Retained


ExplorationShares


Par Value

Shares

Par Value


Capital

Receivable

Adjustment


Deficit


StateBalance at May 31, 2003
—


$
—

15,230,400

$
15,230


$
45,810

$
—

$
(16,361
)

$
(41,082
)

$
(17,656
)June 11, 2003 Issuances of
Preferred Shares for Services
13,500,000



13,500

—


—



—


—


—



—



—Shares from Former Officer/Directors
—



—

(5,320,000
)

(5,320
)


5,320


—


—



—



—July 25, 2003, Shares andWarrants Issued for Cash
—



—

350,000


350



367,150


—


—



—



—July, 2003 Compensation fromIssuance of Stock OptionsBelow Fair Market Value
—



—

—


—



235,354


—


—



—



—September 2, 2003, PreferredShares Converted to Common
(13,500,000
)


(13,500
)
13,500,000


13,500



—


—


—



—



—September 12, 2003, StockOptions Exercised
—



—

200,000


200



9,800


—


—



—



—September 17, 2003, StockOptions Exercised
—



—

930,000


930



45,570


—


—



—



—September 22, 2003, StockOptions Exercised
—



—

525,000


525



25,725


—


—



—



—September 23, 2003, StockOptions Exercised
—



—

105,000


105



8,895


—


—



—



—
 
  81
  
  PATRIOT GOLD CORP.
 (An Exploration State Company)
 STATEMENT OF STOCKHOLDERS’ EQUITY
 (Continued)
 
 DeficitCumulative




AccumulatedSubscription

Currency




DuringPreferred Stock

Common Stock

Paid-In

Stock

Translation

Retained


ExplorationShares

Par Value

Shares

Par Value

Capital

Receivable

Adjustment

Deficit


StateSeptember 26, 2003, StockOptions Exercised
—

$
—

465,000

$
465

$
602,785

$
—

$
—

$
—


$
—September, 2003 CompensationFrom Issuance of StockOptions Below Fair MarketValue
—


—

—


—


1,458,240


—


—


—



—October 1, 2003, Stock OptionsExercised
—


—

5,000


5


3,995


—


—


—



—October 15, 2003, StockOptions Exercised
—


—

625,000


625


900,625


—


—


—



—November 12, 2003, StockOptions Exercised
—


—

220,000


220


109,780


—


—


—



—November 27, 2003, CommonStock and Warrants Issued forCash
—


—

864,000


864


1,079,136


—


—


—



—
 
  82
  
  PATRIOT GOLD CORP.
 (An Exploration State Company)
 STATEMENT OF STOCKHOLDERS’ EQUITY
 (Continued)
 
 DeficitCumulative




AccumulatedSubscription

Currency




DuringPreferred Stock

Common Stock

Paid-In

Stock

Translation

Retained


ExplorationShares

Par Value

Shares

Par Value

Capital

Receivable

Adjustment

Deficit


StateNovember 2003, CompensationFrom Issuance of StockOptions Below Fair MarketValue
—

$
—

—

$
—

$
290,818

$
—

$
—

$
—


$
—December 2, 2003 StockOptions Exercised
—


—

5,000


5


3,995


(4,000
)

—


—



—December 22, 2003, StockOptions Exercised
—


—

20,000


20


20,580


—


—


—



—December 2003, CompensationFrom Issuance of StockOptions Below Fair MarketValue
—


—

—


—


346,412


—


—


—



—January 2, 2004, Stock OptionsExercised
—


—

220,000


220


164,780


—


—


—



—January 24, 2004, CapitalContributed for DirectorCompensation
—


—

—


—


16,254,000


—


—


—



—February 2004, CompensationFrom Issuance of StockOptions Below Fair MarketValue
—


—

—


—


1,949,522


—


—


—



—
 
  83
  
  PATRIOT GOLD CORP.
 (An Exploration State Company)
 STATEMENT OF STOCKHOLDERS’ EQUITY
 (Continued)
 
 DeficitCumulative





AccumulatedSubscription


Currency





DuringPreferred Stock

Common Stock


Paid-In


Stock


Translation


Retained


ExplorationShares

Par Value

Shares


Par Value


Capital


Receivable


Adjustment


Deficit


StateMarch 2004, CompensationFrom Issuance of StockOptions Below FairMarket Value
—

$
—

—


$
—


$
612,030


$
—


$
—


$
—


$
—March 5, 2004, StockOptions Exercised
—


—

1,285,000



1,285



1,761,215



(1,597,500
)


—



—



—April 2, 2004, Stock OptionsExercised
—


—

50,000



50



74,950



(75,000
)


—



—



—Net Loss
—


—

—



—



—



—



—



—



(21,625,478
)Balance May 31, 2004
—


—

29,279,400



29,279



26,376,487



(1,676,500
)


(16,361
)


(41,082
)


(21,643,134
)Cash from SubscriptionReceivable
—


—

—



—



—



1,597,500



—



—



—Net Loss
—


—

—



—



—



—



—



—



(1,093,485
)Balance May 31, 2005
—


—

29,279,400



29,279



26,376,487



(79,000
)


(16,361
)


(41,082
)


(22,736,619
)March 2006, Redemption of3,000,000 common shares
—


—

(3,000,000
)


(3,000
)


(27,000
)


—



—



—



—March 2006, CompensationFrom the Issuance of StockOptions at Fair Market Value.
—


—

—



—



86,483



—



—



—



—Net Loss
—


—

—



—



—



—



—



—



(290,042
)Balance May 31, 2006
—

$
—

26,279,400


$
26,279


$
26,435,970


$
(79,000
)

$
(16,361
)

$
(41,082
)

$
(23,026,661
)
  
  84
  PATRIOT GOLD CORP.
 (An Exploration State Company)
 STATEMENT OF STOCKHOLDERS’ EQUITY
 (Continued)
 
 DeficitCumulative





AccumulatedSubscription


Currency





DuringPreferred Stock

Common Stock


Paid-In


Stock


Translation


Retained


ExplorationShares

Par Value

Shares


Par Value


Capital


Receivable


Adjustment


Deficit


StateBalance May 31, 2006
—

$
—

26,279,400


$
26,279


$
26,435,970


$
(79,000
)

$
(16,361
)

$
(41,082
)

$
(23,026,661
)January 12, 2007, CancellationOf 55,000 common shares
—


—

(55,000
)


(55
)


(78,945
)


79,000



—



—



—Compensation From theRevaluation of StockOptions Granted in Prior Years
—


—

—



—



26,611



—



—



—



—Net Loss
—


—

—



—



—



—



—



—



(295,288
)Balance May 31, 2007
—


—

26,224,400



26,224



26,383,636



—



(16,361
)


(41,082
)


(23,321,949
)Compensation From theRevaluation of StockOptions Granted in Prior Years
—


—

—



—



(973)



—



—



—



—Net Loss
—


—

—



—



—



—



—



—



(1,211,237
)Balance May 31, 2008
—


—

26,224,400



26,224



26,382,663



—



(16,361
)


(41,082
)


(24,533,186
)Compensation From theRevaluation of StockOptions Granted in Prior Years
—


—

—



—



(1,038)



—



—



—



—Net Loss
—


—

—



—



—



—



—



—



(673,168
)Balance May 31, 2009
—

$
—

26,224,400


$
26,224


$
26,381,625


$
—


$
(16,361
)

$
(41,082
)

$
(25,206,354
)
 
 The accompanying notes are an integral part of these financial statements.
  85
  
  PATRIOT GOLD CORP.
 (An Exploration State Company)
 STATEMENTS OF CASH FLOWS
 
 CumulativeSinceJune 1, 2000For the Year Ended


Inception ofMay 31,


May 31,


Exploration2009


2008


StateCASH FLOWS FROM OPERATING ACTIVITIES:Net Loss

$
(673,168
)

$
(1,211,237
)

$
(25,206,354
)Adjustments to Reconcile Net Loss to NetCash Used in Operating Activities:Compensation Expense of Stock Options


(1,038)



(973)



5,003,484Stock Issued for Services


—



—



16,267,500Depreciation


352



1,397



4,193Change in Operating Assets and Liabilities:(Increase) Decrease in Prepaid Expenses


—



1,472



—Increase (Decrease) in Accounts Payable


(262,773
)


326.678



59,746Net Cash Used in Operating Activities


(936,627
)


(882,663)



(3,871,431
)CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of Office Equipment


—



—



(4,193)Reclamation Deposits


17,000



(31,155)



(14,155)Net Cash Used in Investing Activities


17,000



(31,155)



(18,348)CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from Sale of Common Stock


—



—



5,105,825Redemption of Common Shares


—



—



(30,000)Proceeds from Contributed Capital


—



—



9,840Net Cash Provided by Financing Activities


—



—



5,085,665Net (Decrease) Increase inCash and Cash Equivalents


(919,627)



(913,818)



1,195,886Cash and Cash Equivalentsat Beginning of Period


2,115,513



3,029,331



—Cash and Cash Equivalentsat End of Period

$
1,195,886


$
2,115,513


$
1,195,886
 
  86
  
  PATRIOT GOLD CORP.
 (An Exploration State Company)
 STATEMENTS OF CASH FLOWS
 (Continued)
 
 CumulativeSinceJune 1, 2000For the Year Ended



Inception ofMay 31,



May 31,



Exploration2009



2008



StateSUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid during the year for:Interest
$
—


$
—


$
—Income taxes
$
—


$
—


$
—SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
 
 Settlement of Subscription Receivable by the Cancellation of Common Stock
$
—


$
—


$
79,000
 
 During the year ended May 31, 2006, the Company granted 1,000,000 stock options to various directors and consultants for an exercise price of $0.25 per share. Consulting expense of $86,483 was recorded for the year ended May 31, 2006.  The vesting period for some of these options is up to three years.  As a result, the
unvested portions of the options have been revalued in subsequent periods resulting in a reversal of stock option expense of ($1,038) and ($973) at May 31, 2009 and 2008 respectively and an additional option expense of $26,611 at May 31, 2007 due to the amortization of the fair value of the options as determined by the Black-Scholes model between the date of grant and May 31, 2009, 2008, and 2007.   All of these options have now fully vested and as a result will not be revalued in subsequent periods.
  
 The accompanying notes are an integral part of these financial statements.
  87
  
  NOTE 1 – NATURE OF BUSINESS AND OPERATIONS
  The Company has no products or services as of May 31, 2009. The Company operated from November 30, 1998 through approximately May 31, 2000 in the production of ostrich meat. On June 1, 2000, the Company ceased operations.
  In June 2003, Management decided to change the direction of the Company and has decided to become a natural resource exploration company and will seek opportunities in this field. The Company is currently engaging in the acquisition, exploration, and if warranted and feasible, development of natural resource properties. Since June 1, 2000,
the Company has been in the exploration state.
  NOTE 2 – ABILITY TO CONTINUE AS A GOING CONCERN
  The accompanying financial statements have been prepared in U.S. dollars and in accordance with accounting principles generally accepted in the United States on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business.  Since June 1,
2000 the Company has been in the exploration state.  The Company has not realized any revenue from its present operations.  During the year ended May 31, 2009, the Company incurred a loss of $673,168 and has an accumulated deficit of $25,206,354 at May 31, 2009.  These conditions raise substantial doubt about the Company's ability to continue as a going concern.
  The Company's ability to continue as a going concern is dependent on its ability to develop its natural resource properties and ultimately achieve profitable operations and to generate sufficient cash flow from financing and operations to meet its obligations as they become payable. The Company expects that it will need approximately $1,100,000
to fund its operations during the next twelve months which will include property option payments, exploration of its properties as well as the costs associated with maintaining an office.  The Company currently has sufficient cash to fund its planned operations for the next twelve months.  However, in order to develop its properties, the Company will need to obtain financing in the future.  Management plans to seek additional capital through private placements and public offerings
of its common stock.  Although there are no assurances that management’s plans will be realized, management believes that the Company will be able to continue operations in the future.  Accordingly, no adjustment relating to the recoverability and classification of recorded asset amounts and the classification of liabilities has been made to the accompanying financial statements in anticipation of the Company not being able to continue as a going concern.
  NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES
  Management’s Estimates and Assumptions
  The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from those estimates.
  Cash and Cash Equivalents
  For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes.
  88
   Foreign Currency
  Prior to the quarter ending August 31, 2003, the Company’s primary functional currency was the Canadian dollar. During, the quarter ended August 31, 2003, the Company underwent significant changes in its operations. Prior to May 31, 2000, the company was in the business of producing ostrich meat in Canada. Subsequently, on June 1,
2000, the Company ceased operations and remained dormant until June 2003, when the Company decided to enter the mining industry in the United States. Due to the change in direction of the Company the majority of its operations and transactions would be located in the United States and the majority of the transaction would be in U.S. dollars. This was considered “a significant change in economic facts and circumstances” per SFAS 52, Appendix A and thus the Company changed its functional currency from
the Canadian dollar to the U.S. dollar.
  The Company’s functional currency is the U.S. dollar. However, the Company still has a few transactions with Canadian suppliers. Transaction gains and losses are included in income.
  Concentration of Credit Risk
  The Company has no off-balance-sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. The Company maintains the majority of its cash balances with one financial institution in the form of demand deposits.
  Loss per Share
  Net income (loss) per share is computed by dividing the net income by the weighted average number of shares outstanding during the period. As of May 31, 2009, the company has outstanding options and warrants of 1,385,000 and 3,456,000, respectively all of which are currently exercisable.  The effects of the Company’s common
stock equivalents are anti-dilutive for May 31, 2009 and 2008 and are thus not presented.
  Comprehensive Income
  The Company has adopted SFAS No. 130, “Reporting Comprehensive Income”, which establishes standards for reporting and display of comprehensive income, its components and accumulated balances. The Company has disclosed this information on its Statement of Operations. Comprehensive income is comprised of net income (loss) and
all changes to capital deficit except those resulting from investments by owners and distribution to owners.
  Stock Options
 
 Effective June 1, 2006, the company adopted the provisions of SFAS No. 123(R). SFAS No. 123(R) requires employee equity awards to be accounted for under the fair value method. Accordingly, share-based compensation is measured at grant date based on the fair value of the award. Prior to June 1, 2006, the company accounted for awards granted
to employees under its equity incentive plans under the intrinsic value method prescribed by Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25), and related interpretations, and provided the required pro forma disclosures prescribed by SFAS No. 123, “Accounting for Stock-Based Compensation” (SFAS No. 123), as amended.   No stock options were granted to employees during the years ended May 31, 2009 or 2008 and accordingly,
no compensation expense was recognized under APB No. 25 for the years ended May 31, 2009 or 2008.  In addition, no compensation expense is required to be recognized under provisions of SFAS No. 123(R) with respect to employees.
 
 Under the modified prospective method of adoption for SFAS No. 123(R), the compensation cost recognized by the company beginning on June 1, 2006 includes (a) compensation cost for all equity incentive awards granted prior to, but not yet vested as of June 1, 2006, based on the grant-date fair value estimated in accordance with the original
provisions of SFAS No. 123, and (b) compensation cost for all equity incentive awards granted subsequent to June 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of SFAS No. 123(R). The company uses the straight-line attribution method to recognize share-based compensation costs over the service period of the award. Upon exercise, cancellation, forfeiture, or expiration of stock options, or upon vesting or forfeiture of restricted stock units, deferred tax assets for options
and restricted stock units with multiple vesting dates are eliminated for each vesting period on a first-in, first-out basis as if each vesting period was a separate award. To calculate the excess tax benefits available for use in offsetting future tax shortfalls as of the date of implementation, the company followed the alternative transition method discussed in FASB Staff Position No. 123(R)-3.
 
  89
  During the year ended May 31, 2009 or 2008 no stock options were granted to non-employees.  Accordingly, no stock-based compensation expense was recognized for new stock option grants in the Statement of Operations and Comprehensive Loss at May 31, 2009 or 2008.
 
 Compensation expense for unvested options granted to non-employees in previous periods is revalued at each period end and is being amortized over the vesting period of the options.  As a result of amortizing and revaluing the common stock option expense for unvested options granted in the year ended May 31, 2006, a reversal of
stock option expense of ($1,038) (2008 – a reversal of expense of ($973) has been recognized in the Statement of Operations at May 31, 2009.
  Exploration and Development Costs
  On June 1, 2000, the Company ceased operations and until June 2003 conducted minimal administrative activities. The Company has been in the exploration state since that time and has not yet realized any revenue from its planned operations. It is primarily engaged in the acquisition, exploration and development of mining properties. Mineral
exploration costs and payments related to the acquisition of the mineral rights are expensed as incurred. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs incurred to acquire and develop such property will be capitalized. Such costs will be amortized using the units-of-production method over the estimated life of the probable reserve.
  Advertising Costs
  Advertising costs are expensed as incurred. There were no advertising expenses for the years ended May 31, 2009 and 2008.
 
 Office Equipment and Furniture
 
 Equipment and furniture are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets which range from three to five years.
 
 Equipment and Furniture consist of the following:

May 31,2009


2008Equipment

$
645


$
645Furniture


3,548



3,5484,193



4,193Less accumulated depreciation


(4,193
)


(3,841
)Total

$
-


$
352
 
 Depreciation expense of $352 (2008 - $1,397) has been recorded for each of the respective year ended May 31, 2009.
 
 Fair Value of Financial Instruments
 
 The carrying value of the Company's financial instruments, including receivables, prepaids, accounts payable, and accrued liabilities, at May 31, 2009 and 2008 approximates their fair values due to the short-term nature of these financial instruments.
 
 New Accounting Pronouncements
 
 SFAS 157
 
 In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard (“SFAS”) No. 157, “Fair Value Measurements” (“FAS 157”). FAS 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted
accounting principles, and expands disclosures about fair value measurements. The provisions of FAS 157 are effective fiscal years beginning after November 15, 2007.  The implementation of SFAS 157 did not have a material impact on the Company’s financial statements.
  90
  SFAS 159
  In February 2007, the FASB issued SFAS No. 159 “The Fair Value Option for Financial Assets and Financial Liabilities - including an amendment of FASB Statement No. 115” (“SFAS No. 159”) which permits entities to choose to measure many financial instruments and certain other items at fair value. This statement is
effective for fiscal periods beginning after November 15, 2007. The implementation of SFAS 159 did not have a material impact on the Company’s financial statements.
 
 SFAS 141R
 
 In December 2007, the FASB issued SFAS 141R “Business Combinations” and SFAS 160 “Non-controlling Interests in Consolidated Financial Statements”, which are both effective for fiscal years beginning after December 15, 2008. SFAS 141R, which will replace FAS 141, is applicable to business combinations consummated
after the effective date of December 15, 2008. The implementation of SFAS 141R did not have a material impact on the Company’s financial statements.
 
 SFAS 160
 
 In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in Consolidated Financial Statements – An amendment of ARB No. 51".  SFAS 160 requires companies with noncontrolling interests to disclose such interests clearly as a portion of equity but separate from the parent's equity.  The noncontrolling
interest's portion of net income must also be clearly presented on the Income Statement.  SFAS 160 is effective for financial statements issued for fiscal years beginning after on or after December 15, 2008.  The implementation of SFAS 160 is not expected to have a material impact on the Company’s financial statements.
 
 SFAS 161
 
 In March 2008, the FASB issued SFAS 161 “Disclosures about Derivative Instruments and Hedging Activities – an amendment of SFAS 133.  This Statement requires enhanced disclosures about an entity’s derivative and hedging activities and thereby improves the transparency of financial reporting. This Statement is
effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. This Statement encourages, but does not require, comparative disclosures for earlier periods at initial adoption.  The implementation of SFAS 161 is not expected to have a material impact on the Company’s financial statements.
 
 SFAS 162
 
 In May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted Accounting Principles".  SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of non-governmental entities that are presented in conformity with
generally accepted accounting principles in the United States.  It is effective 60 days following the SEC's approval of the Public Company Accounting Oversight Board amendments to AU Section 411, "The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles".  The implementation of SFAS 162 is not expected to have a material impact on the Company’s financial statements.
 
 FSP 142-3
 
 In April 2008, the FASB issued FSP No. 142-3, "Determination of the Useful Life of Intangible Assets" ("FSP 142-3").  FSP 142-3 amends the factors an entity should consider in developing renewal or extension assumptions used in determining the useful life of recognized intangible assets under FASB Statement No. 142, "Goodwill
and Other Intangible Assets".  This new guidance applies prospectively to intangible assets that are acquired individually or with a group of other assets in business combinations and asset acquisitions.  FSP 142-3 is effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2008.  Early adoption is prohibited.  The implementation of FSP 142-3 is not expected to have a material impact on the Company’s financial statements.
 
  91
  APB 14-1
 
 In May 2008, FASB issued FASB Staff Position ("FSP") APB 14-1, "Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)" ("FSP APB 14-1").  FSP APB 14-1 clarifies that convertible debt instruments that may be settled in cash upon either mandatory or optional conversion
(including partial cash settlement) are not addressed by paragraph 12 of APB Opinion No. 14, "Accounting for Convertible Debt and Debt issued with Stock Purchase Warrants."  Additionally, FSP APB 14-1 specifies that issuers of such instruments should separately account for the liability and equity components in a manner that will reflect the entity's nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods.  FSP APB 14-1 is effective for financial statements
issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years.  The implementation of APB 14-1 is not expected to have a material impact on the Company’s financial statements.
  NOTE 4 – RECLAMATION DEPOSITS
 
 The Company has been granted an exploration permit from the State of Nevada for its Vernal property.  As part of the application process, the Company is required to pay a refundable deposit to the State as surety for the estimated reclamation costs associated with the planned exploration program.    In addition,
as part of the Company’s acquisition of the Margarita and Imperial Properties the reclamation bonds for these respective properties were transferred to the Company. Upon completion of required reclamation the Company will receive a refund of the deposits.  During the year ended May 31, 2009, the Company received a refund in the amount of $17,000 for the reclamation bond related to the Margarita Property.
  NOTE 5 - INCOME TAXES
  As of May 31, 2009, the Company had a net operating loss carryforward for income tax reporting purposes of approximately $8,400,000 that may be offset against future taxable income through 2028. Current tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore,
the amount available to offset future taxable income may be limited. No tax benefit has been reported in the financial statements, because the Company believes there is a 50% or greater chance the carryforwards will expire unused. Accordingly, the potential tax benefits of the loss carryforwards are offset by a valuation allowance of the same amount.
  NOTE 6 – EXPLORATION STATE COMPANY
  The Company has not begun principal operations and as is common with a company in the exploration state, the Company has had recurring losses. Continuation of the Company as a going concern is dependent upon obtaining the additional working capital necessary to be successful in its planned activity, and the management of the Company has
developed a strategy, which it believes will accomplish this objective through additional equity funding and long term financing, which will enable the Company to operate for the coming year.
  NOTE 7 - RELATED PARTY TRANSACTIONS
 
 On November 1, 2005, the Company signed a service agreement with its former President, Robert Coale.  Pursuant to the agreement the Company paid Mr. Coale, beginning November 2005, $2,500 per month for his expertise to identify and acquire certain exploration style properties that fit the parameters of the Company’s business
plan, oversee and manage, as directed by the Company, the Company’s exploration programs that will be undertaken from time-to-time, and perform all of the duties normally associated with serving as the President and Chief Executive Officer of a publicly traded mining company.  The service agreement was for an indefinite term, cancellable in writing by either party with 30 days written notice.  Effective July 1, 2008, Mr. Coale agreed to indefinitely suspend payments under the agreement
and effective September 12, 2008 the agreement was cancelled when Mr. Coale resigned as President, Chief Executive Officer, Secretary, Treasurer, and Director of the Company.  For the year ended May 31, 2009, the Company paid $2,500 (2008 - $30,000) pursuant to this agreement.
 
  92
  On September 12, 2008 Mr. Herb Duerr was appointed President, Chief Executive Officer, Secretary, Treasurer, and Director of the Company.  Mr. Duerr is also an Officer of MinQuest Inc (“MinQuest”).  All of the Company’s mineral properties have either been directly or indirectly optioned from MinQuest.  All
exploration work undertaken on any of the Company’s properties will be at the direction and discretion of the Company.   For the year ended May 31, 2009, the Company made total property payments of $110,000 to MinQuest related to property option payments for the Whiskey, NK, Weepah, and Imperial properties.  Included in the net loss for twelve-months ended May 31, 2009 is an amount of $32,325 with respect to fees paid to Mr. Duerr for geological services rendered to the Company.
  NOTE 8 - STOCK OPTIONS
  Pursuant to the 2005 and 2003 Stock Option Plans, grants of shares can be made to employees, officers, directors, consultants and independent contractors of non-qualified stock options as well as for the grant of stock options to employees that qualify as incentive stock options under Section 422 of the Internal Revenue Code of 1986 (“Code”)
or as non-qualified stock options. The Plan is administered by the Option Committee of the Board of Directors (the “Committee”), which has, subject to specified limitations, the full authority to grant options and establish the terms and conditions for vesting and exercise thereof. Currently the entire Board functions as the Committee.
  In order to exercise an option granted under the Plan, the optionee must pay the full exercise price of the shares being purchased. Payment may be made either: (i) in cash; or (ii) at the discretion of the Committee, by delivering shares of common stock already owned by the optionee that have a fair market value equal to the applicable exercise
price; or (iii) with the approval of the Committee, with monies borrowed from us.
  Subject to the foregoing, the Committee has broad discretion to describe the terms and conditions applicable to options granted under the Plan. The Committee may at any time discontinue granting options under the Plan or otherwise suspend, amend or terminate the Plan and may, with the consent of an optionee, make such modification of the
terms and conditions of such optionee’s option as the Committee shall deem advisable.
  On May 26, 2003, the Board of Directors approved a stock option plan whereby 2,546,000 common shares have been set aside for employees and consultants to be distributed at the discretion of the Board of Directors. On September 22, 2003, the Board of Directors amended the stock option plan to allow 3,000,000 additional options. As of May
31, 2009, 5,040,000 stock options have been granted to various directors and consultants for an exercise price ranging from $.05 to $1.50 per share.  An additional 506,000 remain available to be granted under the 2003 Plan.  In most cases the fair value of the stock issued was higher than the exercise price. Compensation expense of $4,892,401 has been recorded in connection with the granting of the stock options as of May 31, 2004.   No options have been granted under the 2003
Plan subsequent to May 31, 2004.
  On November 18, 2005, the Board of Directors approved the 2005 stock option plan whereby 2,000,000 common shares have been set aside under the plan.  No options were granted under the 2005 Plan for the year ended May 31, 2008.  For the year ended May 31, 2006, 1,000,000 were granted to various directors and consultants
for an exercise price of $0.25 per share.  No options were granted under the 2005 Plan during the years ended May 31, 2009 or 2008.  The Black-Scholes option pricing model was used to calculate to estimate the fair value of the options granted in 2006. The following assumptions were made:
 
 Risk Free Rate
4.24%Expected Life of Option
10 yearsExpected Volatility of Stock (Based on Historical Volatility)
80.43%Expected Dividend yield of Stock
0.00
 
 The following table sets forth the options outstanding under the 2003 Plan as of May 31, 2009:
 Available for Grant


Options Outstanding


Weighted Average Exercise PriceBalance, May 31, 2007


506,000



385,000


$
0.26Options granted


-



-



-Options cancelled


-



-



-Options exercised


-



-



-Balance, May 31, 2009 and 2008


506,000



385,000


$
0.26
 
  93
  The following table sets forth the options outstanding under the 2005 Plan as of May 31, 2009:
 
 Available for Grant


Options Outstanding


Weighted Average Exercise PriceBalance, May 31, 2007


1,000,000



1,000,000


$
0.25Options granted


-



-



-Options cancelled


-



-



-Options exercised


-



-



-Balance, May 31, 2009 and 2008


1,000,000



1,000,000


$
0.25
 
 The following table summarizes information concerning outstanding and exercisable common stock options under the 2003 and 2005 Plans at May 31, 2009:
 
 Exercise Prices
Options Outstanding
Remaining Contractual Life
(in years)
Weighted
Average
Exercise Price
Number of Options Currently Exercisable
Weighted
Average
Exercise Price$ 0.05
*300,000
4.08
$ 0.05
300,000
$ 0.05$ 0.25
*1,000,000
6.75
$ 0.25
1,00,000
$ 0.25$ 0.80
*5,000
4.17
$ 0.80
5,000
$ 0.80$ 1.03
80,000
4.17
$ 1.03
80,000
$ 1.031,385,000

$ 0.25
1,385,000
$ 0.25
 
 *Subsequent to May 31, 2009, 500,000 stock options at an exercise price of $0.25, 200,000 stock options at an exercise price of $0.05, and 5,000 stock options at an exercise price of $0.80 were cancelled.
 
 The aggregate intrinsic value of stock options outstanding  at May 31, 2009 was $86,000 and the aggregate intrinsic value of stock options  exercisable at May 31, 2008 was also $86,000.  No stock options were exercised in 2009.  As of May 31, 2009 all stock options had vested and as a result, there
was no unrecognized compensation expense.
 
 A summary of status of the Company’s unvested stock options as of May 31, 2009 under all plans is presented below:
 
 Number
of Options


Weighted
Average
Exercise
Price


Weighted Average
Grant Date Fair ValueUnvested at June 1, 2007


333,333


$
0.25


$
0.21Granted


-



-



-Vested


(166,667
)


0.25



0.21Unvested at May 31, 2008


166,666



0.25



0.21Granted


-



-



-Vested


(166,666
)


0.25



0.21Unvested at May 31, 2009


-


$
-


$
-
  
  94
   NOTE 9 - WARRANTS
  On July 25, 2003, the Company issued 350,000 Class A warrants, 350,000 Class B warrants, 350,000 Class C warrants, and 350,000 Class D warrants. Each warrant is exercisable, commencing October 25, 2003, for a period of three years at a price of $1.40, $1.45, $1.50 and $1.55, respectively, for one share of common stock. The warrants were
determined to have no value at the time of their issuance. The shares and warrants were issued to three non-US residents.
  On November 27, 2003, the Company issued 864,000 Class A warrants, 864,000 Class B warrants, 864,000 Class C warrants, and 864,000 Class D warrants. The Class A warrants are exercisable on November 27, 2004 for a period of five years at an exercise price of $1.40 per share of common stock; the Class B warrants are exercisable on November
27, 2005 for a period of four years at an exercise price of $1.45; the Class C warrants are exercisable on November 27, 2006 an at exercise price of $1.50; and the Class D warrants became exercisable on November 27, 2007 at an exercise price of $1.55. The Company has the right, in its sole discretion, to accelerate the exercise date of the warrants, to decrease the exercise price of the warrants and/or extend the expiration date of the warrants. The warrants were determined to have no value at the time of their
issuance. The shares and warrants were issued to three non-US residents.
 
 The following table sets forth common share purchase warrants outstanding as of May 31, 2009:
 
 Warrants OutstandingBalance, May 31, 2007


3,456,000Warrants granted


-Warrants expired


-Balance, May 31, 2009 and 2008


3,456,000
 
 The following table lists the common share warrants outstanding at May 31, 2009.  Each warrant is exchangeable for one common share.
 
 Number Outstanding
Exercise
Price
Weighted Average Contractual Remaining Life (years) *
Number Currently Exercisable
Exercise
Price864,000
$ 1.40
0.50
864,000
$ 1.40864,000
$ 1.45
0.50
864,000
$ 1.45864,000
$ 1.50
0.50
864,000
$ 1.50864,000
$ 1.55
0.50
864,000
$ 1.553,456,000


3,456,000
 
 *Subsequent to May 31, 2009 the expiry date of all of the warrants was extended to November 27, 2011.
 
 NOTE 10 - COMMON STOCK TRANSACTIONS
  The Company was incorporated to allow for the issuance of up to 100,000,000 shares of $.001 par value common stock (as amended).  At inception, the Company issued 7,600,000 shares of common stock to its officers and directors for services performed and payments made on the Company’s behalf during its formation. This transaction
was valued at approximately $.001 per share or an aggregate approximate $1,000.
  On February 8, 1999, to provide initial working capital, the Company authorized a private placement sale of an aggregate of 7,600,000 (1,000,000 pre-split) shares of common stock at approximately $.05 per share. The private placement was completed April 1, 1999 and 7,630,400 shares were issued for approximately $50,200 in proceeds to the
Company which were primarily used to pay operating expenses.
  On June 12, 2003, the previous President of the Company, returned 5,320,000 (700,000 pre-split) shares of common stock to the Company.
  95
   On July 25, 2003, the Company issued 350,000 shares of common stock and 1,400,000 warrants for $367,500 in cash to three individuals. Shares and warrants were issued for $1.05 per share. The warrants were determined to have no fair value at the time of their issuance and thus none of the proceeds were allocated to the warrants.
  On September 2, 2003, the Company’s previous president converted his 13,500,000 shares of preferred stock into 13,500,000 shares of common stock. On January 24, 2004, Mr. Johnstone transferred 3,000,000 common shares to each of the three directors. Compensation expense of $16,254,000 was record in connection with the transfer.
  During September, October and November 2003, 3,075,000 common shares were issued to various directors and consultants in connection with the exercising of stock options for $1,710,225 in cash. The exercise price ranged from $0.05 to $1.50.
  On November 27, 2003, the Company issued 864,000 shares of common stock and 3,456,000 warrants for $1,080,000 in cash to three individuals. Shares and warrants were issued for $1.25 per share. The warrants were determined to have no fair value at the time of their issuance and thus none of the proceeds were allocated to the warrants.
  During the quarter ending February 29, 2004, 245,000 common shares were issued in connection with the exercising of stock options for cash of $189,600. The exercise price ranged from $0.75 to $1.03.
  During March and April 2004, 1,335,000 common shares were issued in connection with the exercising of stock options for cash of $1,837,500. The exercise price ranged from $0.75 to $1.50.
 
 On March 10, 2006 the Company granted stock options to Mr. Robert Coale, who is the President, Chief Executive Officer, Secretary, and Treasurer, and a director and to Mr. Robert Sibthorpe who is a director of the Company.  In consideration therefor, Mr. Coale, Mr. Sibthorpe and the Company entered into a Buy-Back Option Agreements,
pursuant to which Messrs. Coale and Sibthorpe granted to the Company the option to purchase all or any portion of the 3,000,000 shares of the Company’s common stock that are owned by each of Mr. Coale and Mr. Sibthorpe respectively for a purchase price of $0.01 per share.
 
 Also on March 10, 2006, the Registrant entered into a Redemption Agreement with Ronald Blomkamp, the Company’s former President and Chief Executive Officer pursuant to which the Company purchased from Mr. Blomkamp the 3,000,000 shares of the Company’s common stock that were owned by Mr. Blomkamp.  The purchase price
for such shares paid to Mr. Blomkamp by the Company was $0.01 per share, which amounted to an aggregate of $30,000.  The purchased shares were returned to treasury and cancelled.
 
 On January 12, 2007 the Company settled the outstanding balance of its Subscriptions Receivable of $79,000.  The two shareholders returned the underlying 55,000 shares of common stock to the Company in settlement of the balance of $79,000.  The shares were then cancelled by the Company.
  NOTE 11 - PREFERRED STOCK
  The Company has authorized a total of 20,000,000 shares of Preferred Stock with a par value of $.001. As of May 31, 2009, there are no preferred shares outstanding.
  The Corporation is under no obligation to pay dividends on the Series A Redeemable Preferred Stock, and the stock is redeemable at the option of the Company.
  In the event of any liquidation, dissolution or winding-up of the Corporation, the holders of outstanding shares of Series A Preferred shall be entitled to be paid out of the assets of the Corporation available for distribution to shareholders, before any payment shall be made to or set aside for holders of the Common Stock, at an amount
of $.001 plus any unpaid and accrued dividends per share.
  A holder of Series A Preferred has the right to one vote per share in the case of matters provided for in the General Corporation Law of the State of Nevada or the Amended and Restated Articles of Incorporation or Bylaws to be voted on by the holders of the Series A Preferred Stock as a separate class. In the case of matters to be voted
on by the holders of Common Stock and the holders of Series A Preferred voting together as a single class, each share of Series A Preferred, has full voting rights and powers equal to the voting rights and powers of the holders of the Common Stock.
  96
   On June 11, 2003, the Company issued 13,500,000 Series A shares of preferred stock to its president for services rendered and recorded $13,500 in consulting expenses. The Series A shares have non-cumulative dividends of 7% of the redemption price when declared by the Board. On September 2, 2003, the Company’s previous president converted
his 13,500,000 shares of preferred stock into 13,500,000 shares of common stock.
  NOTE 12 - STOCK SPLITS
  On June 17, 2003, the Company approved a forward split at a rate of one for seven and six-tenths so that each share of common stock was equal to 7.6 shares. All references to shares in the accompanying financial statements have been adjusted for the stock split.
 
 On November 17, 2006, the Company held a special meeting (the "Meeting") of the shareholders, pursuant to a proxy statement that it filed with the Securities and Exchange Commission and that it had furnished to holders of record of the outstanding shares of its common stock as of October 20, 2006.  At the Meeting, the Board of
Directors received approval from a majority of the Company’s shareholders of the following matters: (1) grant of discretionary authority to the Board of Directors to implement either of the following: (a) a reverse stock split of the common stock on the basis of one post-consolidation share for up to each ten pre-consolidation shares to occur at some time within twelve months of the date of the shareholders’ meeting, with the exact time of the reverse split to be determined by the Board of Directors,
or (b) a forward stock split of the common stock on the basis of up to three post-split shares for each one pre-split share to occur at some time within twelve months of the date of the shareholders’ meeting, with the exact time of the forward split to be determined by the Board of Directors; and (3) the increase of the number of authorized shares of the common stock from 100,000,000 shares, par value $0.001, to 200,000,000 shares, par value $0.001, should the Board of Directors implement a forward stock
split as previously described.  Our Directors believed that shareholder approval of a range for the exchange ratio of the reverse or forward splits (as contrasted with approval of a specified ratio of the split) provided the Board of Directors with maximum flexibility to achieve the purposes of a stock split, and, therefore, was in the best interests of our shareholders. The actual ratio for implementation of the reverse or forward split was to have been determined by our Board based upon its evaluation
as to what ratio of pre-split shares to post-split shares would have been most advantageous to our shareholders.  Our Board of Directors also believed that, should it have determined to implement a forward stock split as described above, it would have been necessary to have increased the number of authorized shares of common stock in order to provide the Company with the flexibility to issue common stock without further action by the Company's stockholders.  As of the date of this report,
the one year anniversary of the approval by the Company’s shareholders has elapsed.  Prior to the elapsing of the one year time period, the Board of Directors determined that it was in the best interests of the Company’s shareholders not to undertake a share split of any kind.
  NOTE 13 - MINERAL PROPERTIES
  Bruner  and Vernal Properties
  The Company has an agreement with Minquest, Inc. (“MinQuest”) which gives us the right to purchase 100% of the mining interests of two Nevada mineral exploration properties currently controlled by MinQuest, a natural resource exploration company. Together, these two properties originally consisted of 28 mining claims on a total
of 560 acres in the northwest trending Walker Lane located in western Nevada.  In September, 2008 the company expanded the Bruner position from 16 unpatented mining claims (320 acres) to 51 unpatented mining claims.  This brought the total number acres under the Company’s control at that time to 1,020 acres.
  In order to earn a 100% interest in these two properties, the Company must pay MinQuest and incur expenditures relating to mining operations in accordance with the following schedule: (i) on or before July 25, 2004, $20,000 to MinQuest and $75,000 in expenditures; (ii) on or before July 25, 2005, $20,000 to MinQuest and an additional $100,000
in expenditures; (iii) on or before July 25, 2006, $20,000 to MinQuest and an additional $100,000 in expenditures; (iv) on or before July 25, 2007, $20,000 to MinQuest and an additional $100,000 in expenditures; and (v) on or before July 25, 2008, an additional $125,000 in expenditures. If the Company has not incurred the requisite expenditures to maintain the option in good standing, the Company  has a 60-day period subsequent to July 25th to
make such payment along with such amount which shall be deemed to have been an expenditure incurred by us during such period. Since the payment obligations are non-refundable, if the Company does not make any payments, it will lose any payments made and all our rights to the properties. If all said payments are made, then the Company will acquire all mining interests in the properties, subject to MinQuest retaining a 3% royalty of the aggregate proceeds.
  97
   The Company has the right at any time to discontinue making the payments if the exploration is determined to be unfeasible.
 
 To May 31, 2009 the Company has made all of its property option payments with the payment on July 25, 2007 being the final payment due under the property option agreement for the Bruner and Vernal properties.  By July 25, 2008, the Company was to have incurred $500,000 on exploration.  To May 31, 2009 the Company has
incurred approximately $499,327 on exploration of the two properties.  The Company intends to complete the additional required expenditures of $673 during 2009.
 
 Bruner Property Expansion
 
 On April 1, 2009, the Company entered into a Property Option Agreement (the “Agreement”) with American International Ventures Inc. (“AIV”), to acquire the exclusive option to an undivided right, title and interest in 28 patented Federal mining claims and millsites located in Nye County, Nevada (the “Property”).
Simultaneous with the execution and delivery of the Agreement, the Company paid AIV $30,000.  In order to earn its option in the Property, the Company must make annual property option payments each year on April 1 consisting of $35,000 in 2010, $40,000 in 2011, $45,000 in 2012, $50,000 in 2013, $55,000 in 2014, $60,000 in 2015, and $1,185,000 in 2016.  Following which the Company shall be deemed to have exercised its option under the Agreement and shall be entitled to an undivided 100% right,
title and interest in and to the Property subject to a 1.5% Net Smelter Return (“NSR”) royalty payable to AIV and a 2% NSR payable to the former Property owner.  The 2% NSR royalty may be purchased by the Company for a total payment of $500,000 and 1% of AIV’s 1.5% NSR royalty can be purchased by the Company for an additional payment of $500,000 at any time up to 30 days after beginning mine construction.
 
 The claims optioned under the agreement with AIV are contiguous with the Company’s existing Bruner property claims.
  Moss Property
  The Moss Property consists of 63 unpatented claims and 15 patented claims.  The property has been acquired from various individuals and on various dates as noted below.
 
 On November 14, 2003 the Company entered into a letter of intent to acquire a single patented claim from Gregory Gintoff.  The total purchase price of $50,000 was made in two installments of $10,000 in December 2003 and $40,000 in February 2004.
  On February 19, 2004, the Company executed a formal agreement to purchase 100% mining interest in six patented mining claims making up the Williams portion of the Moss Property located in the historic Oatman gold mining district for $350,000. On February 27, 2004, $25,000 was paid in connection with this agreement and three months after
signing, on June 14, 2004, an additional $25,000 was paid. On or before the 6-month anniversary from when we signed the definitive agreement, the balance of $300,000 was due to the sellers. On August 27, 2004, the Company paid the final $300,000 to the sellers.
  On March 4, 2004, the Company signed an agreement that allowed it to acquire a 100 percent interest in 63 unpatented claims contiguous to the 15 patented claims at the Moss Property.   The Company acquired these claims from MinQuest for a one time lease fee of $50,000.   The fee of $50,000 was paid on July
7, 2004.
 
 On January 18, 2005 the Company completed the acquisition of a single patented claim from an individual for $150,000.
 
 The Company acquired five patented claims from Ramon and Edna Martinez for a total of $150,000.  The Company made one payment of $75,000 on November 8, 2004 and made the final payment of $75,000 on February 14, 2005.
 
 On January 18, 2005, the Company made a single payment of $25,000 to acquire two patented claims known as the Ruth and Rattan claims.
 
  98
  Margarita Property
 
 On January 29, 2008, the Company entered into an Assignment and Assumption Agreement (the “Agreement”) with American Goldrush Corp. (“Goldrush”) whereby Goldrush assigned all of its rights and obligations under the Margarita Property Option Agreement to the Company.  Pursuant to the Agreement, the Company
assumed the rights, and agreed to perform all of the duties and obligations, of Goldrush arising under the Margarita Property Option Agreement.   Simultaneous with the execution and delivery of the Agreement, the Company paid Goldrush $200,000 which amount represents the full payment and satisfaction for the assignment to the Company by Goldrush.
 
 Included in the assignment to the Company were all sums incurred by Goldrush in connection with its exploration of the Margarita Property which includes a reclamation bond previously paid by Goldrush to the Forest Service in Arizona, all expenditure credits incurred by Goldrush prior to the execution of the Agreement and all property option
payments made to the Margarita Property owner. In addition, Goldrush also assigned all of its rights and obligations under the Finders’ Fee Agreement to the Company.  Subsequent to the execution of the Agreement, Goldrush did not retain any interest in the Margarita Property.
 
 The underlying Margarita Property Option Agreement is subject to a 2 % net smelter return royalty to the property owner, James Sorrell (the “optionor”), upon production. The Company has the option (exercisable for 90 days following completion of a bankable feasibility study) to buy the optionor’s net smelter return interest
for $500,000 per 1% increment or $1,000,000 for the entire 2% net smelter return interest.
 
 In addition, the Margarita Property is subject to a Finder’s Fee Agreement.  The Company has agreed to pay a fee equal to 10% of the Property Option Payments made during the first three years of the Margarita Property Option Agreement.
 
 Subsequent to the completion of a drill program on the Margarita Property, the Company terminated its option under the property option agreement and does not currently have any interest in the Margarita Property.
  Whisky, NK, and Weepah Properties
 
 On March 15, 2008, the Company executed three separate property option agreements (the “Agreements”) with MinQuest granting the Company the right to acquire 100% of the mining interests of three Nevada mineral exploration properties currently controlled by MinQuest, a natural resource exploration company.  The properties
consist of the Whiskey Flat Property (“Whiskey”), NK Property (“NK”), and the Weepah Property (“Weepah”) (collectively the “Properties”).  Each of the Agreements is a separate agreement that can be terminated irrespective of the status of any of the other Agreements.
 
 The Properties are located in Nevada with the Whiskey and NK being in Mineral County while the Weepah is located in Esmeralda County.  The Whiskey Property currently consists of 83 unpatented mining claims, the NK Property currently consists of 24 unpatented mining claims, and the Weepah Property currently consists of 14 unpatented
claims.
 
 Upon execution of the Agreements, the Company paid MinQuest a total of $90,000 in relation to the three agreements.  Since the payment obligations are non-refundable, if any payments under any of the Agreements are not made, the Company will lose any previous payments made and all its rights to the respective property. If all
said payments under any of the Agreements are made, then the Company will acquire all mining interests in the respective property. If the Company fails to make any payment when due, each of the Agreements gives the Company a 60-day grace period to pay the amount of the deficiency.  MinQuest retained a 3% royalty of the aggregate proceeds received by the Company from any smelter or other purchaser of any ores, concentrates, metals or other material of commercial value produced from the Properties, minus
the cost of transportation of the ores, concentrates or metals, including related insurance, and smelting and refining charges, including penalties.
 
 The Company has the one time right exercisable for 90 days following completion of a bankable feasibility study to buy up to one half (50%) of MinQuest’s royalty interest (i.e. an amount equal to 1.5% of the royalty interest) for $2,250,000. The right to purchase the said royalty interest shall be exercised by the Company by providing
the MinQuest with notice of the purchase accompanied by payment in the amount of USD $2,250,000.
 
  99
  The Company may use MinQuest for its mineral exploration expertise on the Properties. In addition, any mineral interests staked, located, granted or acquired by either the Company or MinQuest which is located within a 1 mile radius of the Properties will be included in the option granted to the Company for the respective property.  Any
of the Agreements will terminate if the Company fails to comply with its obligations in any of the respective Agreements and fails to cure such alleged breach. If the Company gives notice that it denies a default has occurred, the matter shall be determined finally through such means of dispute resolution as such matter has been subjected to by either party.
 
 Whiskey Property
 
 Annual option payments and minimum annual exploration expenditures under the Whiskey Property Agreement are as noted below:
 
 Property

WorkPayments

Expenditures$USD

$USDUpon Execution of the Agreement
$
50,000
$
-By March 15, 2009

50,000

50,000By March 15, 2010

50,000

150,000By March 15, 2011

65,000

200,000By March 15, 2012

80,000

350,000By March 15, 2013

100,000

200,000By March 15, 2014

100,000

200,000By March 15, 2015

100,000

200,000By March 15, 2016

100,000

200,000By March 15, 2017

100,000

200,000By March 15, 2018

250,000

750,000$
1,045,000
$
2,500,000
 
 To May 31, 2009 the Company has made the $50,000 payment due on signing and the $50,000 due on March 15, 2009.  By May 31, 2009, the Company was to have incurred $50,000 on exploration but had incurred approximately $40,870 on exploration of the property.  The Company intends to complete the additional required expenditures
of $9,130 during 2009. In the event the Company does not make the indicated option payments and incur the exploration expenditures, when demanded, the Company will lose its interest in the property.
 
  100
  NK Property
 
 Annual option payments and minimum annual exploration expenditures under the NK Property Agreement are as noted below:
 
 Property

WorkPayments

Expenditures$USD

$USDUpon Execution of the Agreement
$
20,000
$
-By March 15, 2009

20,000

50,000By March 15, 2010

20,000

75,000By March 15, 2011

35,000

100,000By March 15, 2012

45,000

250,000By March 15, 2013

50,000

100,000By March 15, 2014

50,000

100,000By March 15, 2015

50,000

100,000By March 15, 2016

50,000

100,000By March 15, 2017

50,000

100,000By March 15, 2018

100,000

250,000$
490,000
$
1,225,000
 
 To May 31, 2009 the Company has made the $20,000 payment due on signing and the $20,000 due on March 15, 2009.  By May 31, 2009, the Company was to have incurred $50,000 on exploration but had incurred approximately $12,709 on exploration of the property.  The Company intends to complete the additional required expenditures
of $37,291 during 2009.  In the event the Company does not make the indicated option payments and incur the exploration expenditures, when demanded, the Company will lose its interest in the property.
 
 
  101
  Weepah Property
 
 Annual option payments and minimum annual exploration expenditures under the Weepah Property Agreement are as noted below:
 
 Property

WorkPayments

Expenditures$USD

$USDUpon Execution of the Agreement
$
20,000
$
-By March 15, 2009

20,000

50,000By March 15, 2010

20,000

75,000By March 15, 2011

35,000

100,000By March 15, 2012

45,000

250,000By March 15, 2013

50,000

100,000By March 15, 2014

50,000

100,000By March 15, 2015

50,000

100,000By March 15, 2016

50,000

100,000By March 15, 2017

50,000

100,000By March 15, 2018

100,000

250,000$
490,000
$
1,225,000
 
 To May 31, 2009 the Company has made the $20,000 payment due on signing and the $20,000 due on March 15, 2009.  By May 31, 2009, the Company was to have incurred $50,000 on exploration but had incurred approximately $4,715 on exploration of the property.  The Company intends to complete the additional required expenditures
of $45,285 during 2009. In the event the Company does not make the indicated option payments and incur the exploration expenditures, when demanded, the Company will lose its interest in the property.
 
 Imperial Property
 
 On May 30, 2008, the Company entered into an Assignment and Assumption Agreement (the “Agreement”) with American Goldfields Inc., a Nevada corporation (“American Goldfields”), to acquire the exclusive option to an undivided right, title and interest in 22 unpatented Federal mining claims located in Esmeralda County,
Nevada (the “Property”). American Goldfields had originally acquired its exclusive option on the Property on June 30, 2004, when it entered into a Property Option Agreement (the “Property Agreement”) with MinQuest, the owner of the Property.
 
 Pursuant to the Agreement, the Company assumed the rights, and agreed to perform all of the duties and obligations, of American Goldfields arising under the Property Agreement. Simultaneous with the execution and delivery of the Agreement, the Company paid American Goldfields $250,000, which amount represents the full payment and satisfaction
for the assignment by American Goldfields to the Company of the Property Agreement and all rights and obligations with respect thereto. Included in the assignment were, without limitation, all sums incurred by American Goldfields in connection with the Property, specifically (i) the refunding of the reclamation bond previously paid by American Goldfields to the Bureau of Land Management in Nevada in the amount of $13,255; (ii) the approximately $277,000 of expenditures incurred by American Goldfields prior to
the Agreement; and (iii) the $120,000 paid to MinQuest as option payments under the Property Agreement.  In the event the Company does not make the indicated option payments and incur the exploration expenditures, when demanded, the Company will lose its interest in the property.  On July 1, 2008 the Company made the final $20,000 property option payment due under the Imperial Property Option Agreement.
  As of May 31, 2009, these properties are unproven and all amounts paid in connection with the acquisition of these rights and for expenditures in exploration of these properties have been expensed.




102





SIGNATURES





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





PATRIOT GOLD CORP.Dated: August 25, 2009
By:                /s/ Herb DuerrName:                Herb DuerrTitle:                President, Chief Executive and Operating Officer, Secretary and Treasurer, and Director (Principal Executive, Financial and Accounting Officer)





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





SIGNATURE
TITLE
DATE/s/Herb Duerr
Herb Duerr
Director, President, Chief Executive and Operating Officer, Secretary, and Treasurer (Principal Executive, Financial, and Accounting Officer)
August 25, 2009/s/ Robert Coale
Robert Coale
Director
August 25, 2009/s/ Jared Beebe
Jared Beebe
Director
August 25, 2009