FORM 10-KSB
                  SECURITIES AND EXCHANGE COMMISSION
                        Washington, D.C.  20549

 [X]  15, ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
          EXCHANGE ACT OF 1934 for the fiscal year ended:
                   6/30/05

                      OR

 [ ]  15, TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
          SECURITIES EXCHANGE ACT OF 1934
      For the transition period from     to

                     Commission file number: 0-22965

                        Pinnacle Resources, Inc.
          (Exact name of Small Business Issuer in its charter)

      WYOMING                                          84-1414869
(State or other jurisdiction of                     (I.R.S. Employer
incorporation or organization                      Identification No.)

                   9600 E. Arapahoe Road, Suite 260,
                   Englewood, Colorado                      80112
              (Address of principal executive offices)    (Zip Code)

             Registrant's Telephone number, including area code:
                             (303) 705-8600

Securities registered pursuant to Section 12(b) of the Act:  None
Securities registered pursuant to Section 12(g) of the Act:  Common
Stock, $.00001 par value

Check whether the issuer is not required to file reports pursuant to
Section 13 or 15(d) of the Exchange Act   [   ]

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

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



<PAGE>2

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

Pinnacle's revenues for its most recent fiscal year were $0.00.  The
market value of Pinnacle's voting $.00001 par value common stock held
by non-affiliates of Pinnacle was approximately $330,000.

The number of shares outstanding of Company's only class of common
stock, as of June 30, 2005 was 18,185,050 shares of its $.00001 par
value common stock.

No documents are incorporated into the text by reference.

Transitional  Small  Business  Disclosure  Format  (check  one)
 Yes                No     x
     --------          --------




<PAGE>3

                     PART I

ITEM  1.  BUSINESS General

Business Development.   Pinnacle Resources, Inc. was incorporated
pursuant to the laws of the State of Wyoming on January 6, 1995 under
the name of Claremont House, Corp.  On June 26, 1997, the Articles of
Incorporation were amended to change the name to Pinnacle Resources,
Inc. and to authorize 2,000,000 Preferred Shares with a par value of
$.01 per Preferred Share.

Pinnacle has had limited operations since its inception in 1995 due to
its lack of working capital.  In June 1997, Pinnacle issued 4,000,000
Common Shares for cash at $.025 per Common Share for an aggregate of
$100,000 to thirteen individuals who were then non-affiliates. Victory
Minerals Corp., a holding company controlled by Glen Gamble, purchased
2,000,000 of those Common Shares.  Claremont House, Corp. was acquired,
and its name changed to Pinnacle Resources, Inc., in order to more
clearly identify its new business purpose, which is to evaluate,
structure, and complete mergers with, or acquire other unrelated
privately-owned corporations.  In the course of its activities,
Pinnacle plans to arrange (or provide) funding for companies that it
evaluates and will try to structure merger or acquisition opportunities
so that conditions are advantageous to Pinnacle.  Currently, Pinnacle
is developing technology and equipment to mine ocean diamonds, building
a tantalum refinery, and developing its vanadium/titanium property.
All these activities are located in South Africa.  Additionally,
Pinnacle has acquired control of a Ghana company that holds a gold
prospecting license in Ghana (in equatorial Africa).  Recently, the
Company acquired interests in a technology developed to convert
carbonaceous waste into green energy.

Company History/Operating Strategy.   In 1995 the Company's principals,
Glen Gamble and Robert Hildebrand, two experienced mining industry
experts, saw an opportunity for a quick-footed aggressive company that
could benefit from the changing political and economic climate in South
Africa.  The post-apartheid government forced a restructuring of South
Africa's world-renowned mining industry by decreeing that major
monopolistic mining companies had to divest themselves of some of their
mineral holdings.

In anticipation of being able to acquire promising mineral prospects
and the need for financing of acquisitions, the company's principals
filed a Form 10 Registration with the U.S. Securities Exchange
Commission to take Pinnacle public.  That approval and subsequent
listing as a Bulletin Board stock was obtained in July 1996.

A South African business group that had formed Plateau Resources Pty
Ltd presented the first attractive mineral prospect to Pinnacle.
Pinnacle's management evaluated the opportunity and acquired Plateau
for 2,000,000 million shares of Pinnacle common stock and made a
capital infusion commitment to Plateau of US$300,000.  Then, in October
1996 Pinnacle caused its subsidiary, Plateau Resources, to file an
application for Prospecting Rights with the Lebowa Mineral Trust, and
by March 1997 Pinnacle had been awarded four claims on the world famous


<PAGE>4

Platreef which hosts a platinum-bearing formation.  In the following
two years the company's exploration and drilling program resulted in
the discovery of platinum group mineralization.

Pinnacle has pursued a strategy of identifying and acquiring mineral
interests in an environment of emerging opportunities.  This approach
of building its asset portfolio was successful because it enabled the
Company to acquire a platinum property as well as five contiguous
claims, 17 kilometers in length, on a drilled prospect that has been
reported to be the largest undeveloped vanadium/titanium ore body in
the world.  The vanadium prospect is held by a new subsidiary, Vanadium
and Magnetite Exploration and Development Pty Ltd. (VanMag).  This
company has been awarded a 30 year Mineral Lease and Mining
Authorization on these lands and recently the company completed a two
year effort to secure a sufficient water supply for the operation of a
40,000 ton per month processing plant on the property.

In February of 2003, Pinnacle accepted Corridor Mining of South Africa
as a Black Empowerment 1/3 equity partner in order to comply with the
new South African government's legislation which calls for black
ownership participation on State owned minerals and to help obtain the
Mining Authorization.

Having achieved success in its initial exploration effort on the
platinum property the company was able to attract an industry partner
to further develop the platinum prospect without further demand on
Pinnacle's financial resources.  The company accepted a joint-venture
arrangement and drilling expenditure commitment from Hunter Dickinson
Inc of Vancouver, Canada wherein the Company realized cash and stock in
a Canadian public company, Anooraq Resources, Inc.  After eighteen
months HDI offered to take over Plateau Resources completely and the
company received further stock considerations in Anooraq and a cash
consideration of US$500,000.  This money and the sale of Anooraq stock
has enabled Pinnacle to fund its administrative overhead as well as to
finance its present ventures.

The next opportunity of high interest was certain proprietary and
patented know-how and technology that could separate vanadium and
titanium from magnetite ore.  This capability is also applicable for
the separation and processing of tantalite ore.  Consequently, the
Company acquired the technology via a merger with Titan Intellectual
and then licensed the technology to a new South African company, Titan
Processors (Pty) Ltd.  The Company then agreed to finance Titan's start
up with a financial loan commitment of up to $500,000.  Since then
Pinnacle has advanced Titan a total of US$687,600.  Titan completed its
test processing runs and effectively produced high grade tantalum
pentoxide.  Titan's pilot refinery is on an industrial campus with
Rappa Holdings, who in 2005 expanded their tantalite ore beneficiation
facility and wanted Titan to its refining capacity as well.  Toward
that end, Rappa started acquiring various construction materials and
and processing equipment for expansion of the refining plant in
anticipation that Titan would continue to receive financing and could
then repay Rappa for the cost of refinery expansion.  However, Rappa
was unable to produce sufficient quantities of beneficiated tantalite
concentrates to feed Titan's expanded refining capacity.  After

<PAGE>5

struggling with off spec concentrated feed-stock from Rappa and paying
for overhead and labor that was not yielding sales, Pinnacle elected
not to further fund this venture.  As a result, in June 2006, the Titan
staff was dismissed and the refinery turned over to Rappa in lieu of
payment.  There were no outstanding notes, debts or operational bills
of Titan that are the obligation of Pinnacle.

Simultaneously, with the commitment to Titan, Pinnacle reviewed, and
then agreed to fund, a new, patented ocean diamond recovery platform
called "Aqua Walker".  This invention was housed in Diamonaire Pty Ltd.
Pinnacle, up through June 2006, had approximately $800,000 invested and
was holding 10% interest bearing notes of an approximate value of $1
million.  By May 2006, the technology required additional funding for
completion of its design and innovations but Pinnacle management was
not necessarily satisfied with the corporate structure and sought to
change the relationship.  Therefore, in June 2006, Pinnacle took
possession of 100% of Diamonaire thus making it a wholly owned
subsidiary and agreed to further fund the venture on a loan basis.

In exchange for full ownership of Diamonaire, the Pinnacle board
approved the issuance of a 2 million shares option at $.07 per share in
favor of Aqua Options Ltd.  Such share options are to be made available
upon performance benchmarks where the technology must successfully
produce revenue results, and, the technology company may elect to
purchase Pinnacle stock in the market placer and any shares so
purchased shall diminish the optioned shares.  Additionally, Aqua
Options contributed certain mining equipment and rolling stock to
Diamonaire and took back a 10% note in the amount of Rand 800,000
(approximately US$120,000).

The AquaWalker made its maiden walk at Seal Beach on the west coast of
South Africa in April of 2003 and was expected to start commercial
operations toward the end of 2004.  In July of 2004, Diamonaire was
awarded a 1.7 kilometer stretch of Geelwal Beach on the South African
west coast by diamond concession holder, TransHex Pty Ltd.

The inventor and operator, doing business as Aqua Options Pty Ltd.
wanted to set up a technology holding company for all of the aqua
marine technology and we agreed that all of the technology regarding
recovery of marine diamonds be held in C-Options, another South African
entity.  However, the intent is to have the technology company lease
back the technology for a fee of 20% of the revenues from diamond
sales.  Pinnacle management of is of opinion that changes, alterations,
improvements, and future innovations to this technology will require
new drawings, new patent applications and a certain amount of research,
testing, and development.  Pinnacle does not want unanticipated
research and development costs reflecting on future revenues in
Diamonaire, and ultimately in Pinnacle.

In May 2007, Pinnacle entered into a term sheet agreement covering the
above points and agreed to loan Diamonaire up to an additional $1
million.  As a result, Pinnacle lent Diamonaire $506,000 on May 23,
2007.  In July 2007, Pinnacle advanced another $220,000 all on a loan
basis at 10% interest.  An additional amount of $300,000, if needed by

<PAGE>6

Diamonaire may be sent within the next 60 days.  Any additional
financing beyond the $1 million commitment is solely at the option of
Pinnacle.

The Market Opportunity.   (1) The Company has obtained mineral rights
and subsequently a mining authorization to begin mining and production
of vanadium and titanium in the Northern Province of South Africa,
thereby opening the door for Pinnacle to attract a joint venture
industry partner;
(2) sold its platinum rights in South Africa and used the cash and
stock from that transaction to fund operations and two new ventures;
(3) agreed to fund a diamond recovery joint venture in the ocean off
South Africa's west coast and;
(4) funded the construction of a tantalum refinery in Johannesburg,
South Africa.

Vanadium/Titanium Project
-------------------------
In June 2000 Pinnacle concluded negotiations to acquire 100 percent
ownership of Vanadium and Magnetite Exploration and Development (Pty)
Ltd. (VanMag) a South African corporation holding an exclusive 30-year
mineral lease on five contiguous farms near Potgietersrus, South
Africa.

The farms cover 17,188 acres within the Bushveld Complex, a region that
accounts for 50 percent of the world's vanadium supply.  They host a 6-
meter thick main bed of magnetite, approximately 17 kilometers in
strike length, which is believed to be the largest undeveloped resource
of Vanadium in the world.  Indicated resource of the main magnetite
layer to a depth of only 80 meters is estimated to be 100 million tons
of magnetite containing 1.67 million tons of vanadium pentoxide.
Assays from diamond core drilling show that the "run-of-mine ore"
contains an average of 1.24 percent vanadium pentoxide and 11.88
percent titanium dioxide. The outcropping and shallow magnetite beds
offer the potential of low cost open pit mining.

Ross Glanville & Associates of Vancouver, Canada used the results of
investigations undertaken by The Department of Mining Engineering of
the University of Witwatersrand for an economic valuation of the
Vanadium properties.  They concluded that over a 20-year project life,
at an annual Production Rate of 4,120 (four thousand one hundred and
twenty) tons of ferrovanadium (FeV) and a price of $15 /kg FeV, the
operation showed a net present value (NPV) of $73.6 million USD
(Seventy Three Million Six Hundred Thousand US Dollars).

Management is of the opinion that the vanadium and titanium property
represents an excellent business opportunity, for the shareholders of
Pinnacle.  As of June 30, 2002, Pinnacle had succeeded in obtaining
water rights on the farms sufficient to accommodate a 40,000 tons per
month processing plant.   Additionally VanMag applied for a Mining
Authorization which was granted in April of 2004.  In early 2003,
Pinnacle concluded a sale of 1/3 of its VanMag shares to Corridor
Mining Ltd a Black Empowerment Group thus complying with South Africa's
new mandate for black partners on State owned minerals.

<PAGE>7

Platinum
--------
In 1995 the Company acquired Plateau Resources Pty Ltd, a South African
corporation, which had been awarded Prospecting Rights on four farms,
which had platinum mineralization.  The Company funded an exploratory
drilling program and was able to demonstrate that there was sufficient
platinum mineralization to initiate a thorough drilling and development
program. The Company sold 50 percent of Plateau to Anooraq Resources
Inc of Vancouver Canada for cash and stock, and then two years later
completed a tax-free exchange of its seven million shares of Anooraq
stock.  Pinnacle sold parcels of the Anooraq stock over the last 18
months to cover overhead and fund the start-up of the tantalum refinery
and the Aqua-Walker and then Pinnacle concluded a sale of the balance
of its Anooraq stock for US$800,000 during fiscal year 2004.

Diamond Recovery Project
------------------------
In March 2002 Pinnacle entered in to a 50/50 joint venture with Ocean
Options Pty Ltd of South Africa to form Diamonaire Pty Ltd, which was
formed to hold the patents and designs for the "AquaWalker", a walking
platform that walks into the ocean and performs the recovery of
diamondiferous gravels from the ocean floor.  This technology enables
the company to mine certain offshore deposits that were previously
inaccessible by conventional methods, i.e. boat and diver operations or
beach operations.  Diamonaire built the first "AquaWalker" platform and
has completed its sea trials and demonstrated that the technology is
capable of producing diamondiferous gravels off the difficult and
treacherous west coast of South Africa.  Diamonaire was allocated a 1.7
kilometer section of a diamond concession in July of 2004 by master
diamond concessionaire, Trans Hex Pty Ltd, who will process diamonds
out of the gravels harvested by the AquaWalker and then pay 65 percent
of the sale proceeds to Diamonaire.

Tantalum Refinery
-----------------
In February 2002, Pinnacle acquired certain intellectual property from
a South African inventor for cash and common stock equivalents. The
intellectual property consists of a method to refine tantalum,
vanadium, and titanium ores.  Tantalum is a strategic metal used in
electronics and space industry.

Pinnacle licensed the intellectual property to Titan Processors (Pty)
Limited (Titan), a newly formed South African company, owned by a South
African mining group in exchange for a royalty of $1.00 per pound of
tantalum oxide produced and sold under the license and a percentage of
Titan's net profits.  In addition, Pinnacle agreed to fund the start-up
of a refinery and employ the inventor. A South African mining group
agreed to provide the equipment and mining permit to build a tantalite
refinery utilizing the licensed technology in  South Africa.  The
licensing agreement expires in ten years.



<PAGE>8

Pinnacle has been funding the construction and expansion of the
tantalum refinery which is designed for processing tantalite mined
throughout southern Africa and is expected to begin producing high
purity tantalum pentoxide and niobium oxide for the electronics
industry during fiscal year 2006.

Employees
---------
Pinnacle presently has two employees.  Mr. Gamble, the President draws
a $5,000 per month and Mr. Hildebrand, Vice President of Finance draws
$4,000 per month.

Subsidiaries
------------
Vanadium and Magnetite Exploration and Development (Pty) Ltd. (VanMag),
a South African Corporation is owned 66.7 percent by Pinnacle;
Diamonaire Pty Ltd is owned 50 percent by the Company and Ocean Options
Pty Ltd; and Titan Intellectual Limited, a Nevada Corporation is wholly
owned by Pinnacle.

In January of 2007, Pinnacle entered into a Share Sale Agreement with
Golden Falls Trading 565 Pty Ltd for the sale of 93 1/3 percent of the
total issued shares of Vanadium and Magnetite Exploration and
Development Pty Ltd., in consideration of payment of US$9 million.
VanMag is the holder of certain mining rights to a vanadium-bearing
magnetite deposit in the Limpopo Province of South Africa.  Pinnacle
receivedy6 a down payment of $200,000 in January of 2007 and an
additional $3.2 million in May of 2007.  The purchaser further placed
$1.6 million in escrow pending our minority shareholder obtaining
permission from the provincial government to sell their shares.
Pinnacle is currently engaged in negotiations to resolve this issue so
as to obtain the release of the $1.6 million held in escrow.  The
purchasers are presently preparing the application to convert VanMag's
old order mining right to a new order right as required by the new
South African Mining and Mineral Act.  Upon such conversion, Pinnacle
will receive an additional $4 million.  To date, Pinnacle's pre-tax
gain is approximately $2 million on the sale of its shareholding in
VanMag.

In December 2003, Pinnacle acquired 446 shares, all of the issued
stock, Orovi Ghana Ltd., a Ghanaian corporation that holds a gold
prospecting license on the renowned Ashanti gold trend in central
Ghana.  Orovi Ghana had entered into an exploration/option agreement
with Golden Star Resources Ltd. of Denver, Colorado.  In fiscal year
2004, Pinnacle received a non-refundable advance of $200,000 of the
$400,000 sales price.

Subsequent to the year ended June 30, 2005, Pinnacle entered into a
loan agreement with Golden Star in which Golden Star loaned Pinnacle
$145,690 with an option to convert the loan into the purchase price
under the original option agreement in connection with the exercise of
the option.   On April 20, 2007, Golden Star exercised its option and
upon a final payment of $17,165 acquired all of Pinnacle's shares of
its subsidiary, Orovi Ghana, for the aggregate amount of $362,855.  The



<PAGE>9

difference of $37,145 with the option price of $400,000 was the agreed
upon consideration for the cancellation of the 10 percent net profits
interest Pinnacle had outstanding.  Pre-tax gain was about $330,000

Other Information
-----------------
Other than Pinnacle's normal office overhead and the commitment to the
vanadium/titanium project, Pinnacle has no other plans, arrangements or
pre-planned financing commitments for which it is obligated.  Pinnacle
has aspirations as stated earlier but they are contingent upon the
successful obtainment of investment funds.

Pinnacle has no pre-arranged financing with any other prospects.
Pinnacle has not made any prior commitments, or any understandings,
with any third parties, or any of its affiliated entities, such as
Victory Minerals or Re-Group, Inc. for financing or participation.
Additionally, Pinnacle does not have any plans, arrangements,
commitments or understandings to pay any finders' fees to any person or
entity.

Pinnacle does not have any plans, arrangements, commitments or
understandings to obtain an interest in an operating producing mine or
oil, gas or mineral property owned by a mining or energy-related
company.

Competition
-----------
Pinnacle is, and will remain for the foreseeable future, an
insignificant participant among those firms that are also engaged in
the business of Pinnacle.  There are many established entities and
financial concerns which have significantly greater financial and
personnel resources and technical expertise than Pinnacle.  Management
will rely upon their own ability to generate potential lending
candidates, either through their own personal industries in which
management has had prior experience.  In view of Pinnacle's extremely
limited resources, it should be expected that Pinnacle will continue to
be at a significant competitive disadvantage compared to Pinnacle's
competitors.

Federal and/or State Regulation
-------------------------------
Pinnacle is not subject to any federal or state regulations regarding
its services.

Business Development Company
----------------------------
As Pinnacle obtains equity interests in companies which desire to
become public, Pinnacle may become subject to the provisions of the
Investment Company Act of 1940 or the Investment Advisers Act of 1940.
It is possible that Pinnacle may choose to elect to be treated as a
Business Development Company ("BDC") pursuant to Section 54 of the
Investment Company Act of 1940 (the "1940 Act").  On October 21, 1980,
the 1940 Act was amended by a series of amendments, which added
sections 59 through 65.  These sections relate to the Small Business

<PAGE>10

Investment Incentive Development Company that is defined as a domestic
closed-end company which is operated for the purpose of making certain
types of investments and which makes available significant managerial
assistance to the companies in which it invests.  Generally, a company
which elects to be treated as a business development company, or
intends within 90 days to so elect, is exempt from certain provisions
of sections 1 through 53 of the 1940 Act.

To take advantage of these special regulatory provisions, a BDC must
comply with sections 59 through 65 of the 1940 Act, which require,
among other things, that:
   a.   a majority of the BDC's directors must not be "interested
persons" as defined in section 2(a)(19) of the 1940 Act;
   b.   A BDC is restricted in the kind of investments it can make,
i.e., at least seventy percent of the BDC's assets (excluding assets
necessary to maintain the business, such as office furniture) must
consist of securities of small, developing business or financially
troubled businesses and such liquid assets as cash or cash items,
Government securities or short-term, high quality debt securities;
   c.   A BDC must annually furnish to its shareholders a statement, in
such form and manner as the Securities and Exchange Commission may
prescribe, about the risks involved in investing in a BDC due to the
nature of its portfolio, and;
   d.   A BDC must have a class of equity securities registered under
the 1934 Act or have filed a registration statement under that section
and must comply with the periodic reporting requirements under the 1934
Act, including annual reports, quarterly reports and reports of certain
material changes, rather than with those in section 30 of the 1940 Act.

Seasonal Nature of Business Activities
--------------------------------------
Pinnacle's business activities are not seasonal.


ITEM 2.  PROPERTIES.

In January 2000, Pinnacle moved its offices to 9600 E. Arapahoe Road,
Suite 260, Englewood, Colorado 80112.  Pinnacle pays $2,800 rent per
month for its current office space and subleases two offices for $3,000
per month including copier, fax, telephone and secretarial.  Pinnacle's
offices consist of approximately 1,500 square feet of executive office
space and secretarial area.  Management believes that this space will
meet Pinnacle's needs for the foreseeable future.

Through its subsidiary, VanMag, Pinnacle holds an exclusive 30-year
Mineral Lease on five contiguous farms near Potgietersrus, South
Africa.

Through Diamonaire Pty Ltd, Pinnacle holds a Mining Contract Right on a
1.7 kilometer allocation of Beach and Offshore Diamond Concession
located on the west coast of South Africa.



<PAGE>11

Until April 20, 2007, Pinnacle, through its shareholding in Orovi Ghana
Ltd., held a gold prospecting license on the Riyadh concession in the
central district of the Republic of Ghana.


ITEM 3.   LEGAL PROCEEDINGS.

During the fourth quarter of the fiscal year ended June 30, 2005 the
Company was not a party to any legal proceedings


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

During the fourth quarter of the fiscal year ended June 30, 2005, no
matters were submitted to a vote of Pinnacle's security holders,
through the solicitation of proxies.




<PAGE>12

                    PART II

ITEM 5.    MARKET FOR COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

Market Information.  Pinnacle's common shares are listed in the over-
the-counter market.  As of June 30, 2005, there was only a limited
market for Pinnacle's common shares.

The following table sets forth the range of high and low bid quotations
for Pinnacle's common stock for each quarter of the last two fiscal
years.  The quotations represent inter-dealer prices without retail
markup, markdown or commission, and may not necessarily represent
actual transactions.
<TABLE>
<CAPTION>
Quarter Ended        High Bid            Low Bid

                  <c>                  <c>
9/30/03                .07                 .05
12/31/03               .19                 .08
3/31/04                .16                 .13
6/30/04                .17                 .14
9/30/04                .20                 .14
12/31/04               .19                 .06
3/31/05                .19                 .06
6/30/05                .16                 .06
</TABLE>
The approximate number of holders of record of Pinnacle's $.00001 par
value common stock, as of June 30, 2005 and July 31, 2007 was 220.

Dividends.   Holders of Pinnacle's common stock are entitled to receive
such dividends as may be declared by its board of directors. No
dividends on Pinnacle's common stock have ever been paid, and Pinnacle
does not anticipate that dividends will be paid on its common stock in
the foreseeable future.


ITEM 6   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Basis of Presentation of the Financial Statements
-------------------------------------------------
Our consolidated financial statements include the financial statements
of VanMag because as of June 30, 2005 we owned a controlling interest
in their common stock.  We also consolidate the financial statements of
Titan Processors, even though we own no Titan voting stock, because we
controled Titan's board of directors at June 30, 2005.  In addition, we
control Titan's operations through the impact of certain commercial
arrangements entered into with Titan.  Diamonaire's financial
statements are also consolidated, as we own 50 percent of its
outstanding stock and hold voting control of its board of directors.



<PAGE>13

Results of Operations
Year ended June 30, 2005 compared to year ended June 30, 2004
-------------------------------------------------------------
Net income (loss) for fiscal year 2005 totaled ($781,294) versus a loss
of ($415,868) in fiscal year 2004 representing an increase (in loss) of
88.0 percent.  This increase in loss resulted mainly from the absence
of non-operating income in 2005 versus $1,379,103 that was realized in
2004 from the sale of the Company's subsidiary, Plateau Resources.

General and Administrative expense in 2005 was $578,225 versus
$1,196,674 in 2004, a decrease of 51.7 percent.  Less prospecting for
new projects and lower overhead costs associated with Titan and
Diamonaire contributed to this improvement.

Stock-based compensation decreased by $124,650 to $21,200 in 2005 from
$145,850 for fiscal year 2004, a decrease of 85.5 percent.

Inflation has not affected our operation.

However, the impact of a weakening US dollar has impacted our
operations.  In 2001, we could purchase 13 South African Rand for
$1.00.  As of June 30, 2005, the exchange rate was 6.67 South African
Rand to US$1.00, seriously eroding our ability to finance South African
operations.  Unrealized losses from foreign currency translations are
included in income.

Liquidity
---------
In fiscal 2004, our ability to generate adequate amounts of cash to
meet our needs came from the sale of Anooraq common stock.  During
fiscal year 2005 we had no Anooraq stock left to sell and relied on
cash reserves, an advance payment on our Ghana gold property sale and
proceeds from loans from officers of the Company.  Our cash position
decreased from $55,327 at June 30, 2004 to $36,557 at June 30, 2005.
Until our subsidiaries commence operations and provide cash flows, we
will rely on our own common stock sales, proceeds from borrowings and
property sales.  Until we receive these proceeds, and there is no
assurance that we will receive these proceeds, we will rely on
principal shareholders to fund operations.

VanMag
------
This subsidiary is not expected to generate cash flow until such time
as we sell it or we commence mining operations.  Mining authorization
was granted in fiscal year 2004.  Profits from a sale or from mining
operations, if any, would be shared (1/3rd) with our minority interest
holder.

Titan Processors
----------------
Titan did not provide any operating revenue in fiscal 2005.



<PAGE>14

Diamonaire joint venture
------------------------
We own approximately 50 percent of the joint venture that owns 80
percent of the operating company, Ocean Exploration, a South African
company.  The mining equipment has been tested and is operational.
Mining did not provide any operating revenue in fiscal 2005.  A new
diamond mining concession has been obtained and the AquaWalker is being
modified to commence mining operations in fiscal 2006.

Financial condition
-------------------
Property and equipment

Property and equipment decreased to $570,393 at June 30, 2005 from
$586,317 at June 30, 2004.  Provisions for depreciation in fiscal 2005
and 2004 were $158,791 and $134,080, respectively.  Net property
deletions in fiscal year 2005 were $15,924.  We completed construction
of the aforementioned tantalum refinery in fiscal 2004 and increased
production capacity during fiscal year 2005.

Net deficit of affiliate
------------------------
This refers to the net deficit in equity of our affiliate, Titan
Processors.

Our strategy in the near future is to continue to focus on developing a
substantial share of the world tantalum market and on recovering
diamonds using our modified AquWalker.  We will continue to study the
feasibility of mining magnetite and recovering the contained vanadium
and titanium. We are searching for an industry partner to joint venture
the installation of a processing facility.  Through our association
with Dr. Jan Becker, we possess a proprietary technology to separate
and recover these co-products from the iron ore.  We believe that our
future success will depend on our ability to develop our current
businesses and to invest wisely in new businesses.




<PAGE>15

ITEM 7.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


                        PINNACLE RESOURCES, INC.
                                Index to
                   Consolidated Financial Statements

                                                              Page
                                                           ----------

Report of Independent Registered Public Accounting Firm        F-2

Consolidated Balance Sheet at June 30, 2005                    F-3

Consolidated Statements of Operations for the years ended
 June 30, 2005 and 2004                                        F-4

Consolidated Statements of Other Comprehensive Income
 for the years ended June 30, 2005 and 2004                    F-5

Consolidated Statement of Changes in Shareholders' Deficit
 for the period from July 1, 2002 through June 30, 2005        F-6

Consolidated Statements of Cash Flows for the years ended
 June 30, 2005 and 2004                                        F-7

Notes to Consolidated Financial Statements                     F-8




<PAGE>16

        REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders
Pinnacle Resources, Inc.

We have audited the accompanying consolidated balance sheet of Pinnacle
Resources, Inc. and subsidiaries as of June 30, 2005 and the related
consolidated statements of operations, other comprehensive income,
changes in shareholders' deficit, and cash flows for the years ended
June 30, 2005 and 2004.  These consolidated financial statements are
the responsibility of the Company's management.  Our responsibility is
to express an opinion on these consolidated 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 consolidated financial statements are free
of material misstatements.  An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.  We believe
that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Pinnacle Resources, Inc. and subsidiaries as of June 30, 2005 and the
results of their operations and their cash flows for the years ended
June 30, 2005 and 2004 in conformity with accounting principles
generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming the
Company will continue as a going concern.  As discussed in Note 1 to
the financial statements, the Company's significant operating losses
raise substantial doubt about its ability to continue as a going
concern.  The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.


/s/ Cordovano and Honeck, LLP
-----------------------------
Cordovano and Honeck, LLP
Denver, Colorado
November 15, 2005

F-2


<PAGE>17
                        PINNACLE RESOURCES, INC.
                       Consolidated Balance Sheet
                             June 30, 2005

                                Assets
Current assets:
  Cash and cash items                                      $   36,557
  Accounts and notes receivable
    Accounts
      Related parties (Note 2)                                 15,751
      Others                                                   21,248
    Notes
      Others (Note 3)                                          85,000
      Interest receivable, others                               7,724
  Allowance for doubtful accounts and notes receivable        (92,724)
  Prepaid expenses                                             30,890
                                                           ----------
        Total current assets                                  104,446
  Property and equipment, net of accumulated depreciation
   of $244,744 (Note 4)                                       570,393
  Other assets                                                 65,935
                                                           ----------
                                                           $  740,774
                                                           ==========
                  Liabilities and Shareholders' Deficit
Current liabilities:
    Accounts payable and accrued liabilities               $  110,921
    Notes payable:
      Bank (Note 5)                                            50,000
      Related parties (Note 2)                                186,249
    Interest payable, related parties                           3,176
  Deferred revenue (Note 11)                                  200,000
  Other current liabilities                                    91,466
                                                           ----------
        Total current liabilities                             641,812
Due to related party, not current (Note 2)                     89,989
Minority interest in net assets of consolidated subsidiary     24,289
                                                           ----------
                                                              756,090
Shareholders' deficit (Notes 6 & 7):
  Net deficit of affiliate                                        (10)
  Preferred stock , $.01 par value;  authorized 2,000,000
   shares, issued and outstanding -0- shares                        -
 Common stock , $.00001 par value;  authorized 500,000,000
   shares, issued and outstanding 18,185,050 shares               182
  Additional paid-in capital                                3,448,717
  Accumulated other comprehensive income                      708,360
  Accumulated deficit                                      (4,172,565)
                                                           ----------
        Total shareholders' deficit                           (15,316)
                                                           ----------
                                                           $  740,774
                                                           ==========

See accompanying notes to consolidated financial statements.
F-3
<PAGE>18

                        PINNACLE RESOURCES, INC.
                  Consolidated Statement of Operations

                                                Years Ended June 30,
                                                 2005         2004
                                              ----------   ----------
Operating expenses:
  Prospecting costs                           $  131,962   $  242,157
  General and administrative costs               578,225    1,196,674
  Consulting expenses paid to related
   parties (Note 2)                              130,100      128,700
  Stock-based compensation:
    Professional services (Note 7)                21,200      145,850
  Provision for uncollectible notes receivable
   (Note 3)                                       39,354       53,369
                                              ----------   ----------
      Total operating expenses                   900,841    1,766,750
                                              ----------   ----------

Loss before income taxes, nonoperating income,
 interest expense and minority interest         (900,841)  (1,766,750)

Non-operating income:
  Gain on sale of subsidiary                           -    1,379,103
  Gain on debt reduction                          25,000            -
  Gain on disposal of equipment                   28,254            -
  Other nonoperating income (expense), net        61,270       34,711
  Interest income (expense), net                  (5,747)     (62,932)
                                              ----------   ----------
      Income/loss before income taxes
        and minority interest                   (792,064)    (415,868)

  Income tax provision (Note 8)                        -            -
                                              ----------   ----------
      Income/loss before minority interest      (792,064)    (415,868)

Minority interest in net loss of consolidated
 Subsidiary                                       10,770            2
                                              ----------   ----------
      Net income/loss                         $ (781,294)  $ (415,866)
                                              ==========   ==========

Basic and diluted income/loss per share       $    (0.05)  $    (0.02)
                                              ==========   ==========

Weighted average common shares outstanding    16,660,191   16,642,024
                                              ==========   ==========


See accompanying notes to consolidated financial statements.

F-4



<PAGE>19

                        PINNACLE RESOURCES, INC.
          Consolidated Statement of Other Comprehensive Income

                                                Years Ended June 30,
                                                 2005         2004
                                              ----------   ----------

Net income/loss                               $ (781,294)  $ (415,866)

  Other comprehensive income/loss , net of tax:
    Foreign currency translation                 137,675      575,518
                                              ----------   ----------
      Comprehensive income                    $ (643,619)  $  159,652
                                              ==========   ==========




See accompanying notes to consolidated financial statements.

F-5



<PAGE>20

                        PINNACLE RESOURCES, INC.
       Consolidated Statement of Changes in Shareholders' Equity
<TABLE>
<CAPTION>
                                                         Common Stock         Additional
                                          Titan       ------------------        Paid-in
                                       Processors     Shares         Par        capital
                                       ----------   ----------   ----------   ----------

                                         <c>          <c>          <c>          <c>
       Balance, June 30, 2003             (34,842)  17,543,050          175    3,060,173

Issuance of common stock in exchange
 for services at $0.14 (average) per
 share (Note 7)                                 -    1,035,000           10      145,840
Exercise of stock options (Note 7)              -      770,000            8       99,992
Settlement of lawsuit/return of shares
 to the Treasury and cancelled
 (Note 7)                                       -   (2,825,000)         (28)          28
Affiliate adjustment                       34,832            -            -            -
Net loss for the year ended
 June 30, 2004                                  -            -            -            -
Other comprehensive income                      -            -            -            -
                                       ----------   ----------   ----------   ----------
       Balance, June 30, 2004                 (10)  16,523,050          165    3,306,033

Issuance of common stock in exchange for
 services at $0.12 (average) per share
 (Note 7)                                       -      180,000            2       21,198
Shares issued for accrued interest
 (Note 7)                                       -       27,000            -        3,501
Shares issued for debt reduction
 (Note 7)                                       -    1,250,000           13       99,987
Sale of restricted shares at $0.08
 per share.                                     -      125,000            1        9,999
Sale of restricted shares at $0.10
 per share                                      -       80,000            1        7,999
Net loss for the year ended June 30, 2005       -           -             -            -
Other comprehensive income                      -           -             -            -
                                       ----------   ----------   ----------   ----------
       Balance, June 30, 2005          $      (10)  18,185,050   $      182   $3,448,717




<PAGE>21

                        PINNACLE RESOURCES, INC.
(Continued)   Consolidated Statement of Changes in Shareholders' Equity

                                                   Accumulated
                                                       Other
                                                  comprehensive  Accumulated
                                                   Income/Loss     Deficit       Total
                                                    ----------   ----------   ----------
       Balance, June 30, 2003                           (4,833)  (2,975,405)      45,268

Issuance of common stock in exchange
 for services at $0.14 (average) per
 share (Note 7)                                              -            -      145,850
Exercise of stock options (Note 7)                           -            -      100,000
Settlement of lawsuit/return of shares
 to the Treasury and cancelled
 (Note 7)                                                    -            -            -
Affiliate adjustment                                         -            -       34,832
Net loss for the year ended
 June 30, 2004                                               -     (415,866)    (415,866)
Other comprehensive income                             575,518            -      575,518
                                                    ----------   ----------   ----------
       Balance, June 30, 2004                          570,685   (3,391,271)     485,602

Issuance of common stock in exchange for
 services at $0.12 (average) per share
 (Note 7)                                                    -            -       21,200
Shares issued for accrued interest
 (Note 7)                                                    -            -        3,501
Shares issued for debt reduction
 (Note 7)                                                    -            -      100,000
Sale of restricted shares at $0.08
 per share.                                                  -            -       10,000
Sale of restricted shares at $0.10
 per share                                                   -            -        8,000
Net loss for the year ended June 30, 2005                    -     (781,294)    (781,294)
Other comprehensive income                             137,675            -      137,675
                                                    ----------   ----------   ----------
       Balance, June 30, 2005                       $  708,360  $(4,172,565)  $  (15,316)
                                                    ==========   ==========   ==========
</TABLE>



See accompanying notes to consolidated financial statements.

F-6



<PAGE>22

                        PINNACLE RESOURCES, INC.
                   Consolidated Statement of Cash Flow
<TABLE>
<CAPTION>
                                                             Years Ended June 30,
                                                              2005         2004
                                                           ----------   ----------

                                                        <c>          <c>
Cash flows from operating activities:
 Net income/loss                                           $ (781,294)  $ (415,866)
  Adjustments to reconcile net loss to cash flows from
  operating activities:
    Common stock issued for services (Note 7)                  21,200      145,850
    Common stock issued for interest (Note 7)                   3,501            -
    Depreciation and amortization                             158,791      134,080
    Provision for uncollectible notes receivable (Note 3)      39,354       53,369
    Cash received from the sale of trading securities               -      819,148
    Changes in current assets and current liabilities:
      Gain on debt reduction                                  (25,000)           -
      Gain on sale of trading securities (Note 3)                   -   (1,265,549)
      Increase in receivables and other current assets        (93,275)      93,825
      Increase in accounts payable and accrued liabilities    224,277      170,511
                                                           ----------   ----------
        Net cash provided by operating activities            (452,446)    (264,632)
                                                           ----------   ----------

Cash flows from investing activities:
  Purchase of equipment                                       (20,204)     (42,833)
  Advances made to unrelated third-parties (Note 3)                 -     (106,000)
  Repayments of advances made to unrelated third-parties
   (Note 3)                                                    30,000       10,000
                                                           ----------   ----------
        Net cash used in investing activities                   9,796     (138,833)
                                                           ----------   ----------

Cash flows from financing activities:
  Advances from related parties (Note 2)                      120,000       40,000
  Repayment of advances from related parties (Note 2)        (194,294)     (25,000)
  Proceeds from loans                                         480,156       72,829
  Proceeds from line of credit                                      -      100,000
  Principal payments on line of credit                              -      (50,000)
  Cash proceeds from sale of common stock                      18,000      100,000
                                                           ----------   ----------
        Net cash provided by financing activities             423,862      237,829
                                                           ----------   ----------
Effect of exchange rate changes on cash                            18        4,833
                                                           ----------   ----------
        Net change in cash                                    (18,770)    (160,803)

Cash:
  Beginning of period                                          55,327      216,130
                                                           ----------   ----------
  End of period                                            $   36,557   $   55,327
                                                           ==========   ==========

<PAGE>23

                        PINNACLE RESOURCES, INC.
 (Continued)       Consolidated Statement of Cash Flow

                                                             Years Ended June 30,
                                                              2005         2004
                                                           ----------   ----------

                                                        <c>          <c>

Supplemental disclosure of cash flow information:
  Cash paid during the year for:
    Interest                                               $    9,021   $        -
                                                           ==========   ==========
    Income taxes                                           $        -   $        -
                                                           ==========   ==========

Non-cash financing and investing activities:
  Repayment of funds advanced for common stock             $  125,000   $        -
                                                           ==========   ==========
</TABLE>





See accompanying notes to consolidated financial statements.

F-7



<PAGE>24

                        PINNACLE RESOURCES, INC.
              Notes to Consolidated Financial Statements

Note 1:  Organization, business and summary of significant accounting
policies

Pinnacle Resources, Inc. ("we" "our" "us" or "the Company") was
incorporated under the laws of Wyoming in January 1995.  We engage in
(1) exploring for and developing natural resources; and (2) chemical
refining.

Basis of presentation
---------------------
Our consolidated financial statements include our accounts and our
wholly owned South African subsidiaries; Diamonaire Exploration (Pty)
Ltd) ("Diamonaire") and Vanadium and Magnetite Exploration &
Development Co. (Pty) (Ltd) ("Van Mag").  Our consolidated financial
statements also include the accounts of Titan Processors (Pty) (Ltd),
also a South African company, which is controlled by members of our
Board of Directors.  All significant intercompany balances and
transactions have been eliminated in consolidation and combination.

In December 2003, we executed an agreement with the US parent of a
Ghana subsidiary to acquire all of the outstanding common stock of
their subsidiary in consideration of $31,000.  However, we were unable
to obtain access to the accounting and other records of Orovi Ghana
(Pty) Ltd. ("OGL").  Because of lack of control, we excluded OGL from
consolidation.

Our significant operating losses raise substantial doubt about our
ability to continue as a going concern.  Our tantalite plant in
Johannesburg and our diamond mining operations on the west coast of
South Africa are expected to provide revenues in calendar year 2006.
Until then, we are operating at the forbearance of our creditors and
the ability and willingness of our principal shareholders to fund
essential operations.  We are also considering selling assets.

Use of estimates
----------------
The preparation of consolidated 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 consolidated financial statements and the reported
amounts of revenues and expenses during the reporting period.  Actual
results could differ from those estimates.

Cash equivalents
----------------
For the purposes of the consolidated statements of cash flows, the
Company considers all highly liquid debt instruments purchased with an
original maturity of three months or less to be cash equivalents.  The
Company had no cash equivalents at June 30, 2005.

F-8


<PAGE>25
                        PINNACLE RESOURCES, INC.
              Notes to Consolidated Financial Statements

Note 1:  Organization, business and summary of significant accounting
policies (continued)

Equipment and depreciation
--------------------------
Property and equipment are stated at cost less accumulated
depreciation.  Depreciation is provided using the straight-line method
over the estimated useful lives of the assets, which is estimated to be
three to five years.  Expenditures for repairs and maintenance are
charged to expense when incurred.  Expenditures for major renewals and
betterments, which extend the useful lives of existing equipment, are
capitalized and depreciated.  Upon retirement or disposition of
property and equipment, the cost and related accumulated depreciation
are removed from the accounts and any resulting gain or loss is
recognized in the consolidated statements of operations.

Net income per share
--------------------
The Company reports net income per share in accordance with SFAS No.
128, "Earnings per Share".  Under SFAS 128, net income (loss) per
share-basic excludes dilution and is determined by dividing loss
available to common shareholders by the weighted average number of
common shares outstanding during the period.  Net income (loss) per
share-diluted reflects the potential dilution that could occur if
securities and other contracts to issue common stock were exercised or
converted into common stock.  As of June 30, 2005, the Company had
1,000,000 stock options outstanding that were not included in the
calculation of net loss per share-diluted because the options were
antidilutive.

Income taxes
------------
Income taxes are provided for the tax effects of transactions reported
in the financial statements and consist of taxes currently due plus
deferred taxes related primarily to differences between the recorded
book basis and tax basis of assets and liabilities for financial and
income tax reporting.  The deferred tax assets and liabilities
represent the future tax return consequences of those differences,
which will either be taxable or deductible when the assets and
liabilities are recovered or settled.  Deferred taxes are also
recognized for operating losses that are available to offset future
taxable income and tax credits that are available to offset future
income taxes.

Fair value of financial instruments
-----------------------------------
Our financial instruments, including cash and accounts payable and
other accrued liabilities are carried at cost, which approximates their
fair value due to the short-term maturity of these instruments.  The
capital lease obligation is carried at cost, which approximates fair
value due to the prevailing market rate for similar instruments.

F-9


<PAGE>26

                        PINNACLE RESOURCES, INC.
              Notes to Consolidated Financial Statements

Note 1:  Organization, business and summary of significant accounting
policies (Continued)

Concentrations of operations outside the our home country
---------------------------------------------------------
Substantially all of our activities were conducted in the Republic of
South Africa.  As such we are a foreign corporation and are subject to
the laws and rules, including the currency restrictions and tax laws,
of that country.

Foreign currency translation
----------------------------
Assets and liabilities of non-US subsidiaries are translated to US
Dollars at end-of-period exchange rates.  The effects of this
translation for non-US subsidiaries are reported in other comprehensive
income (loss).  Remeasurement of assets and liabilities of non-US
subsidiaries that use a currency other than the US dollar as their
functional currency are included in income as transaction gains and
losses.  Income statement elements of all non-US subsidiaries are
translated to US Dollars at average-period exchange rates and are
recognized as part of revenues, costs and expenses.  The functional
currency of our foreign subsidiaries is the local currency, the South
African Rand.


Note 2:  Related party transactions

During the years ended June 30, 2005 and 2004, we paid an affiliated
company $26,500 and $66,000, respectively, for consulting services.
The president of our parent company controls the affiliate.

During the years ended June 30, 2005 and 2004, officers and director of
the Company were paid $103,600 and $85,700, respectively, for
consulting services.  The consulting services were for due diligence
investigations on potential mining projects and other administrative
services.

During the year ended June 30, 2005, our principal shareholders loaned
us $111,249 for working capital.  The loans are due on demand and bear
interest at the rate of 6 percent per annum.

In March 2004, pursuant to the terms of an unsecured 30 day promissory
note, a relative of an officer advanced the Company $50,000 for working
capital.  Interest on the note is at 13 percent, payable in shares of
our common stock.  In April the note was replaced with a demand
promissory note under substantially the same terms and conditions as
the March note.  In October, the relative of our principal shareholder
advanced the Company an additional $25,000 for working capital.
Interest on the note was payable in the form of 3,500 shares of our

F-10



<PAGE>27
                        PINNACLE RESOURCES, INC.
              Notes to Consolidated Financial Statements

Note 2:  Related party transactions (Continued)

common stock.  In January 2005, the notes were replaced with a demand
promissory note with interest payable in the form of 15,000 shares of
our common stock.

As of June 30, 2005, an officer/director of Diamonaire was indebted to
the subsidiary in the amount of $15,751.  This amount is reflected as
receivable, related party in the accompanying financial statements.

As of June 30, 2005, Titan was indebted to our joint venture partner in
the amount of $24,989.  As of June 30, 2005, we were indebted to a
principal shareholder in the amount of $65,000 for funds advanced to us
for working capital.  These advances are reflected as due to related
party, not current.

Our president and another officer, together, guarantee a $50,000 line
of credit with a financial institution.  See Note 5 for details of the
lines of credit.

Note 3:  Advances to and investments in unrelated third parties

At June 30, 2005, we held notes receivable from three unrelated third
party corporations in the amount of $85,000 plus accrued interest.  As
of June 30, 2005, this amount was fully reserved.

On August 30, 1999 the Company purchased all of the outstanding common
stock of Plateau Resources (Pty) (Ltd) in exchange for 1,500,000 shares
of the Company's common stock valued at $375,000.  During the year
ended June 30, 2000, the Company entered into an agreement with Anooraq
Resources Corporation ("Anooraq"), whereby Anooraq could purchase up to
70 percent of the Company's interest in Plateau.  In August 2001, after
Anooraq had acquired approximately 35 percent of Plateau's common
stock, the Company exchanged its remaining shares of Plateau's common
stock (65 percent) for 7 million shares of Anooraq's common stock.  The
transaction was accounted for as a tax-free exchange.  The Company and
Anooraq signed a Cooperative Agreement as part of the sale, which put
significant restrictions on the Company's ability to (1) sell its
Anooraq common stock in the open market; and (2) vote its ownership
shares.

Initially, the Company deferred all of its gain, totaling $3,780,775,
on the sale of Plateau.  The Company recognized a pro-rata portion of
the gain as it sold its Anooraq shares.  Deferred tax liabilities
related to the sale of Plateau in the amount of $1,219,267 were offset
by prior years' income tax asset allowances.   In the year ended June
30, 2004, the Company recognized the deferred gain of $1,265,549.

F-11



<PAGE>28
                        PINNACLE RESOURCES, INC.
              Notes to Consolidated Financial Statements

Note 4:  Property and equipment

Our property and equipment, at June 30, 2005, consisted of the
following:

     Plant and equipment                      $  760,648
     Office equipment                             21,857
     Furniture                                    32,662
                                              ----------
                                                 815,167
     Less accumulated depreciation              (244,774)
                                              ----------
                                              $  570,393
                                              ==========

Depreciation expense for the years ended June 30, 2005 and 2004 totaled
$158,791 and $134,080, respectively.


Note 5:  Short-term debt

We have one line of credit totaling $50,000 of which $-0- was unused at
June 30, 2005.  Advances made under the lines of credit carry interest
rates of prime plus from one to three percent (8.50 percent at June 30,
2005) and may be extended annually with the consent of the financial
institution.


Note 6:  Foreign operations

We engage in foreign operations through the following subsidiaries:

Titan Processors (Pty) (Ltd)
----------------------------
In February 2003, we acquired certain intellectual property from a
South African inventor for cash, shares of our common stock and options
to purchase our common stock.

The stock options granted vest based on the following performance
schedule:

  Number of     Option
   Shares        Price      Performance Target
  ----------   ----------   --------------------
     100,000   $     0.01   Execution of intellectual property
                             licensing agreements
     100,000   $     0.01   Upon tantalite refinery becoming
                             operational

F-12



<PAGE>29
                        PINNACLE RESOURCES, INC.
              Notes to Consolidated Financial Statements

Note 6:  Foreign operations (Continued)



     100,000   $     0.01   Repayment of project funding
     700,000   $     0.01   1 million options for each $1 million
                             in Titan profits
  ----------
   1,000,000
   =========

Any exercised shares have a resale restriction period of two years and
a restriction on the number of shares to be sold during a certain time
period.  In February 2003, the inventor exercised an option to purchase
100,000 shares upon execution of the intellectual property licensing
agreement and 100,000 shares upon the tantalite refinery becoming
operational.  We recorded $48,000 in stock-based compensation related
to the vesting of the options.  The intellectual property consisted of
a method to refine vanadium, titanium and tantalum ores.  Tantalum is a
precious metal material used in electronics and space industry.

In July 2003, we licensed the intellectual property to Titan Processors
(Pty) Limited (Titan), a newly formed South African company, 100 percent
owned by a South African mining group in exchange for a royalty of
$1.00 per pound of tantalum oxide produced and sold under the license
and a percentage of Titan's net profits.  In addition, we agreed to
fund the start up cost of a refinery.  The South African mining group
agreed to provide the equipment and mining license to build a tantalite
refinery utilizing the licensed technology in the Northern Province of
South Africa.  The licensing agreement expires in ten years.  We also
obtained control of Titan's board of directors.  Although we own no
Titan voting stock, we control the Board of Directors and the impact of
certain commercial arrangements result in our having control over the
operations of the affiliate.  Accordingly, Titan's financial statements
are combined and included in the accompanying consolidated financial
statements.

Vanadium and Magnetite Exploration & Development Co. (Pty) (Ltd)
----------------------------------------------------------------
On September 25, 2000, we purchased all of the outstanding common stock
of Vanadium and Magnetite Exploration & Development Co. (Pty) (Ltd)
("Van Mag"), a South African corporation, in exchange for 4,000,000
shares of the Our common stock. Van Mag holds a mineral lease on land
in South Africa that contains known quantities of vanadium.  We have
paid certain prospecting and lease costs since its purchase.  In April
2004, Van Mag was granted a mining license.  However we are pursuing a
joint venture partner for Van Mag in order to commence mining
operations.

F-13


<PAGE>30
                        PINNACLE RESOURCES, INC.
              Notes to Consolidated Financial Statements

Note 6:  Foreign operations (Continued)

In January 2003, Van Mag sold 1,333 shares of its common stock to
Corridor Mining Resources (Pty) (Ltd), a South African corporation.  As
a result, our percentage ownership of Van Mag decreased from 100
percent to approximately 67 percent.  We recorded an unrealized gain on
the sale of Van Mag's stock representing the difference between our
carrying basis and the fair value of the portion of the Van Mag
investment deemed to have been sold.  Accordingly, the consolidated
financial statements recognize Corridor's interest in Van Mag's net
assets and Corridor's pro-rata share of Van Mag's net losses.

Diamonaire Exploration (Pty) (Ltd)
----------------------------------
In July 2003, we and Ocean Options (Pty) (Ltd), a South African
corporation, formed Diamonaire Exploration (Pty) (Ltd), pursuant to the
terms of a joint venture agreement.  We and Ocean Options each own 50
percent of the outstanding common stock of Diamonaire.  Diamonaire owns
80 percent of the outstanding common stock of Ocean Exploration (Pty)
(Ltd), a South African corporation, formed to explore for and mine
diamonds in the ocean using certain new technology called the "Aqua
Walker".  Ocean Options provided the engineering for the Aqua Walker
and we agreed to contribute the construction funds.  Ocean Exploration
is presently conducting trial runs of the Aqua Walker off the west
coast of South Africa.  Because we control the Board of Directors of
Diamonaire, we consolidate their financial statements.

Note 7:  Shareholders' equity

During the year ended June 30, 2005, we issued 180,000 shares of common
stock to consultants in exchange for services rendered.  The
transactions were valued at a total of $21,200 based on the quoted
market price of our common stock on their respective dates of issuance.

During the year ended June 30, 2005, we issued 27,000 shares of common
stock for accrued interest.  The transactions were valued at a total of
$3,501 based on the quoted market price of our common stock on their
respective dates of issuance.

During the year ended June 30, 2005, we issued 1,250,000 shares of
common stock for $125,000 debt reduction.  The transaction was valued
based on the quoted market price of our common stock on the date of
issuance, which totaled $100,000.  We recognized a gain on debt
reduction of $25,000.

During the year ended June 30, 2004, we issued 1,035,000 shares of
common stock to consultants in exchange for services rendered.  The
transactions were valued at a total of $145,850 based on the quoted
market price of our common stock on their respective dates of issuance.

F-14



<PAGE>31
                        PINNACLE RESOURCES, INC.
              Notes to Consolidated Financial Statements

Note 7:  Shareholders' equity (Continued)

During the year ended June 30, 2004, we received 2,825,000 of our own
common stock pursuant to a favorable judgment of the Harris County
Circuit Court of Houston, Texas.  No gain or loss on the judgment was
recorded in the accompanying financial statements.

During the year ended June 3002, we issued 200,000 shares to Ocean
Options in exchange for its stock in Diamonaire.  The shares were
valued at the quoted market price on the date of issuance.

During the year ended June 30, 2003, we issued 90,000 shares to
consultants valued at $2,700.  The shares were valued at the quoted
market price on the day of issuance.

Stock options
-------------
On October 2, 2003, we granted to a Director an option to acquire
1,000,000 shares of our common stock at $.05 per share.  The option
vested on the date of grant and expires in October 2007.  The quoted
market price of our common stock on the date of grant was $.04 per
share.  We valued the option using the intrinsic method.  The fair
value of the option was estimated at $11,000.  In May 2004, the
Director exercised the option and purchased 770,000 shares of common
stock at $.13 per share.  The remaining 230,000 options expired prior
to exercise.

In May 2004, we granted a Director an option to purchase 1,000,000
shares of our common stock at $.13 per share.  The fair value of the
option was estimated at $22,000.  The fair value for these options was
estimated at the date of grant using the Black-Scholes option-pricing
model with the following assumptions:

     Risk-free interest                   2.50%
     Dividend yield                       0.00%
     Volatility factor                  130.00%
     Weighted average expected life     7.5 years

The Black-Scholes options valuation model was developed for use in
estimating the fair value of traded options, which have no vesting
restrictions and are fully transferable.  In addition, option valuation
models require the input of highly subjective assumptions including the
expected stock price volatility.  Because our stock options have
characteristics significantly different from those of traded options,
and because changes in the subjective input assumptions can materially
affect the fair value estimate, in management's opinion, the existing
models do not necessarily provide a reliable single measure of the fair

F-15



<PAGE>32
                        PINNACLE RESOURCES, INC.
              Notes to Consolidated Financial Statements

Note7:  Shareholders' equity (Continued)

value of its stock options.  However, we have presented the pro forma
net loss and pro forma basic and diluted loss per common share using
the assumptions noted above.

The effect of expensing the stock options on reported net income (loss)
and earnings (loss) per share would have been:

                                         June 30,
                              2005                      2004
                    -----------------------   -----------------------
                        Net       Earnings        Net       Earnings
                       Loss       Per Share      Loss       Per Share

  As reported       $ (781,294)  $    (0.05)  $ (415,866)  $        -
                    ==========   ==========   ==========   ==========
  Pro forma         $ (781,294)  $    (0.05)  $ (437,866)  $    (0.03)
                    ==========   ==========   ==========   ==========

The following schedule summarizes the changes in our outstanding stock
options:

                                 Options Outstanding and
                                       Exercisable          Weighted
                                 -----------------------     Average
                                                Exercise    Exercise
                                 Number of       Price        Price
                                   Shares      Per Share    Per Share
                                 ----------   ----------   ----------

Balance at June 30, 2004          1,000,000   $     0.13   $     0.13
  Options granted                         0   $     0.00   $     0.00
  Options exercised                       0   $     0.00   $     0.00
  Options expired                         0   $     0.00   $     0.00
                                 ----------   ----------   ----------

Balance at June 30, 2005          1,000,000   $     0.13   $     0.13
                                 ==========   ==========   ==========

Note 8:  Income taxes

A reconciliation of the US statutory federal income tax rate to the
effective tax rate is as follows:

F-16


<PAGE>33
                        PINNACLE RESOURCES, INC.
              Notes to Consolidated Financial Statements

Note 8:  Income taxes (Continued)

                                                For the Years Ended
                                                     June 30,
                                                -------------------
                                                 2005         2004
                                              ----------   ----------
U.S. federal statutory graduated rate           35.00%        34.00%
Deferred income related to consolidated
 subsidiary                                      0.00%         0.00%
State income tax rate, net of federal
 benefit                                         5.91%         3.14%
Net operating loss for which no tax
 benefit is currently available                -40.91%      -(37.14%
                                              ----------   ----------
                                                 0.00%         0.00%

At June 30, 2005, deferred tax assets consisted of a net tax asset of
$994,519, due to operating loss carryforwards of $2,805,503, which was
fully allowed for, in the valuation allowance of $994,519.  The
valuation allowance offsets the net deferred tax asset for which there
is no assurance of recovery.  The change in the valuation allowance for
the years ended June 30, 2005 and 2004 totaled $239,133 and $111,444,
respectively.  The current tax benefit totaled $239,133 and $111,444
for the years ended June 30, 2005 and 2004, respectively.  The net
operating loss carryforward expires through the year 2025.

The valuation allowance will be evaluated at the end of each year,
considering positive and negative evidence about whether the deferred
tax asset will be realized.  At that time, the allowance will either be
increased or reduced; reduction could result in the complete
elimination of the allowance if positive evidence indicates that the
value of the deferred tax assets is no longer impaired and the
allowance is no longer required.

Note 9:  Operating leases

We lease office space and equipment under noncancelable operating
leases with terms of three years.  The following is a schedule by years
of future minimum rentals under the leases at June 30, 2005:

             Year ending June 30
                     2006                     $   37,257
                     2007                         37,809
                     2008                         37,928
                                              ----------
                                              $  112,994
                                              ==========

F-17


<PAGE>34
                        PINNACLE RESOURCES, INC.
              Notes to Consolidated Financial Statements

Note 10:  Environmental Remediation Contingency

A South African subsidiary has deposited $29,996 with a commercial bank
to guarantee contingencies related to rehabilitation of land disturbed
in terms of the Minerals Act, 1991.  Although a loss is possible, it is
not anticipated that any loss will result.

Note 11: Orovi Ghana Limited

Orovi Ghana Ltd. ("OGL") has a license granted by the Republic of Ghana
to prospect for gold on certain land located in an undeveloped gold
property in the western region of Ghana.  In October 2004, Golden Star
advanced to us $200,000 to extend an existing option agreement to
acquire a 100 percent interest in the prospecting license held by OGL.
The $200,000 was to be applied to the purchase of the prospecting
license.  The purchase price was to be determined later based on an
engineering reserve report.  The $200,000 advance is reflected as
deferred revenue in the accompanying financial statements.

Note 12:  Litigation

On July 29, 2005, Riyadh Mining Company Limited filed a lawsuit against
us in the Ghana Superior Court to rescind a 10 percent royalty interest
in the undeveloped Ghana gold property.  In our opinion, the suit is
without merit.  No amounts have been reserved in the accompanying
financial statements.

Note 13:  Subsequent events

On July 12, 2005, we agreed on a purchase price for the prospecting
license of $470,000, net of costs and expenses.  On July 12, 2005,
Golden Star advanced an additional $145,690 to us towards the purchase
of the prospecting license.  As security for the advance, we gave
Golden Star a first lien on all of the issued and outstanding shares of
Orovi Ghana Ltd. held by the Company.  Upon execution of the agreement,
we gave Golden Star the share certificates of Orovi Ghana, (Pty) Ltd.
together with a deed of transfer and an undated stock transfer.  The
transaction is expected to close on June 30, 2006.

F-18



<PAGE>34

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

None


ITEM 8A.  CONTROLS AND PROCEDURES

Controls and Procedures.

During the six months ended June 30, 2007 there were no changes in our
internal controls over financial reporting (as defined in Rule 13a-
15(f) and 15d-15(e)under the Exchange Act) that have materially
affected, or are reasonably likely to materially affect, our internal
control over financial reporting .

Evaluation of Disclosure Controls and Procedures

Glen R. Gamble, the Chief Executive Officer and Robert A. Hildebrand
the Chief Financial Officer of the Company have made an evaluation of
the disclosure controls and procedures relating to the report on Form
10KSB for the year ended June 30, 2005 as filed with the Securities and
Exchange Commission and have concluded such controls and procedures to
be effective as of June 30, 2005 to ensure that information required to
be disclosed by the issuer in the reports that it files or submits
under the Act is recorded, processed, summarized and reported, within
the time periods specified in the Commission's rules and forms and to
ensure that information required to be disclosed by an issuer in the
reports that it files or submits under the Act is accumulated and
communicated to the issuer's management, including its principal
executive and principal financial officers, or persons performing
similar functions, as appropriate to allow timely decisions regarding
required disclosure.

ITEM 8B.  OTHER INFORMATION

None




<PAGE>36

                                  PART III

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

Board of Directors.  The following persons listed below have been
retained to provide services as director until the qualification and
election of his successor.  All holders of Common Stock will have the
right to vote for directors.

Directors of Pinnacle.  The Board of Directors has primary
responsibility for adopting and reviewing implementation of the
business plan of Pinnacle, supervising the development business plan,
review of the officers' performance of specific business functions.
The Board is responsible for monitoring management, and from time to
time, to revise the strategic and operational plans of the Company. A
director shall be elected by the shareholders to serve until the next
annual meeting of shareholders, or until his or her death, or
resignation and his or her successor is elected.  Presently, Directors
receive no compensation or fees for their services rendered in such
capacity.

The Executive Officers and Directors are:
<TABLE>
<CAPTION>
Name                        Position                 Term(s) of Office

                            <c>                        <c>
Glen R. Gamble, age 59     President, Director       From June 26, 1997
                        Chief Executive Officer        to present

Robert A. Hildebrand,
   age 77              Vice President, Director       From Inception
                         Secretary/Treasurer             to present
                       Chief Financial Officer
                           President                  From Inception
                                                     to June 26, 1997

</TABLE>
On August 7, 2002, Terryl K. Jensen resigned as a director of Pinnacle
for personal reasons.

Resumes:

Glen R. Gamble.     Mr. Gamble has served as an officer and director of
variety of companies engaged in the fields of mining, oil and gas,
cattle, real estate and resource financing.  Currently, Mr. Gamble is
the Manager of Viatica Fund, LLC; a Director of Natural Buttes Gas
Corp.; Manager of Desert Flower Mining, LLC; and President and Chairman
of Victory Minerals Corp. and Pinnacle.   Offshore, Mr. Gamble also
serves as a Director on the Board of Directors of Plateau Resources
(Pty) Ltd., a South African corporation. Mr. Gamble assisted the
management in setting up an offshore parent holding company in the
Cayman Islands. Additionally, Mr. Gamble recently facilitated Plateau

<PAGE>37

Resources (Pty) Ltd. in obtaining mineral rights on South African
properties. He helped to fund, via private sources, Plateau's start-up
and operating capital to date.  Similarly, Mr. Gamble served on the

Board of Vanmag Exploration and Development (Pty) Ltd., also a South
African corporation. He also assisted this company in obtaining mineral
rights on a major vanadium deposit, and facilitated in setting up its
parent offshore company in the Cayman Islands.  Mr. Gamble resigned
from the Vanmag Board of Directors when the Cayman parent company sold
the South African entity.

Mr. Gamble graduated from Lakewood High School in 1962, performed three
years of military service in the U.S. Army from which he was Honorably
Discharged in May 1966.  Mr. Gamble attended the University of Colorado
and graduated with a Bachelor of Science degree in Accounting and
Finance in 1970.

In 1995, prior to his involvement with Pinnacle, Mr. Gamble, along with
another party, invested in discounted insurance policies called
viatical settlements.   Mr. Gamble headed up this two party investment
in Viatica Fund and Viatica Management, LLC.   Viatica Fund was unable
to become liquid as only one of the fund's insurance policies matured,
and even today, eight years later the remaining insurance policies are
still in place.    Based on an allegation that the funds had not been
distributed as agreed, the Colorado Securities Commission alleged that
Mr. Gamble violated the anti-fraud provisions of the Colorado
Securities Act.  Upon appeal by the Colorado Securities Commission of a
lower court decision in favor of Mr. Gamble, the appellate court
reversed the lower court decision.    In order to avoid further
litigation, Mr. Gamble accepted, on April 16, 2003, an Order of
Permanent Injunction and Other Relief wherein Mr. Gamble neither
admitted nor denied that the allegations in the complaint were true.
Mr. Gamble did agree to be restrained and enjoined from associating
with anyone in the business of viatical settlements; or to offer for
sale any security in Colorado that has not been registered; or is not
exempt from registration; or from engaging in Colorado as a securities
broker, investment adviser or investment adviser representative.
Additionally, Mr. Gamble is prohibited, in connection with the offer,
sale or purchase of any security in the Colorado, directly or
indirectly from violating the anti-fraud provisions of the Colorado
Securities Act.

Robert A. Hildebrand, Professional Engineer, B.Sc., -Vice President,
Chief Financial Officer and Director

R.A. Hildebrand is a registered professional mining engineer.  He holds
a geological engineering degree from the Colorado School of Mines and a
completion certificate from LaSalle University in business
administration.  He has been active in mineral exploration and
production for 49 years having held operating and executive positions
with both major and junior, publicly-held mining companies operating in
Africa, South America, China and North America.



<PAGE>38

From 1996 to 1998 Mr. Hildebrand served as vice president and treasurer
for the Environmental Assurance Corporation, a private company engaged
in the reclamation and financing of contaminated real estate.  He also
acted for eleven years (1980 to 1991) as the Consul (Hon.) of the
Netherlands for Colorado, New Mexico and Wyoming.  In 1991, Her Majesty
Queen Beatrix appointed Mr. Hildebrand a knight in The Order of Oranje-
Nassau.

Mr. Hildebrand is, or was within the past years, an officer and/or
director of the following public companies:  Anooraq Resources, General
Mining Company, Resource Finance Group Ltd., International Methane
Company and Polaris Resources, Inc.

Conflicts of Interest.   Pinnacle will be subject to various conflicts
of interest between Pinnacle and its Affiliates.  Since the executive
officers and directors will control the daily operations of Pinnacle
and its Affiliates, there may be occasions when the interests of
Pinnacle's Affiliates may be inconsistent with the interests of
Pinnacle.

Allocation of Management Time.  Pinnacle will rely on its officers to
manage Pinnacle's business operations.  Currently the officers are
devoting a minimal amount of their time for the operation of Pinnacle.
Pinnacle may obtain additional officers, as necessary.   As such, and
until all of their positions become "full time," there will be
conflicts of interest in allocating management time, services and
functions between Pinnacle and its Affiliates.   These individuals may
engage for their own account, or for the account of others in other
business ventures for which Pinnacle shall not be entitled to any
interest.

Pinnacle may, at some time in the future, compete with others for the
management services of the current and future officers of Pinnacle.  As
a result, these individuals may be placed in a position where their
decision to favor other operations in which they are associated over
those of Pinnacle will result in a conflict of interest.   It should
also be noted that it may be expedient for them to favor one operation
over another since their participation in such operations will vary.

In allocating their time, they will recognize their fiduciary
obligations to Pinnacle, the prevailing industry standards and the
financial situation of Pinnacle.

   Conflicts of Interest Policy.  Pinnacle has adopted a policy that
any transactions with directors, officers or entities of which they are
also officers or directors or in which they have a financial interest,
will only be on terms consistent with industry standards and approved
by a majority of the disinterested directors of Pinnacle's board of
directors.  No such transactions by Pinnacle shall be either void or
voidable solely because of such relationship or interest of directors
or officers or solely because such directors are present at the meeting
of the Board of Directors of Pinnacle or a committee thereof which
approves such transactions, or solely because their votes are counted
for such purpose if: (i) the fact of such common directorship or
financial interest is disclosed or known by the Board of Directors or

<PAGE>39

committee and noted in the minutes, and the Board or committee
authorizes, approves or ratifies the contract or transaction in good
faith by a vote for that purpose without counting the vote or votes of
such interested directors; or (ii) the fact of such common directorship
or financial interest is disclosed to or known by the shareholders
entitled to vote and they approve or ratify the contract or transaction
in good faith by a majority vote or written consent of shareholders
holding a majority of the common shares entitled to vote (the votes of
the common or interested directors or officers shall be counted in any
such vote of shareholders), or (iii) the contract or transaction is
fair and reasonable to Pinnacle based on the material similarity of
terms to recent consulting agreements not involving interested parties,
or in all other agreements by competitive bids, at the time it is
authorized or approved.  In addition, interested directors may be
counted in determining the presence of a quorum at a meeting of the
board of directors of Pinnacle or a committee thereof which approves
such transactions.

Non-Qualified and Incentive Stock Option Plans.   Pinnacle does not
currently have any stock option plans, however, Pinnacle does intend to
pursue the adoption of a non-qualified stock option plan in the fourth
quarter of 2001.  Pinnacle filed an S-8 registration to have 1,000,000
shares of common stock available for an anticipated employee benefits
plan.

Section 16(a) Beneficial Ownership Reporting Compliance

To the Company's knowledge, no director, officer or beneficial owner of
more than ten percent of any class of equity securities of the
Corporation failed to file on a timely basis reports required by
Section 16(a) of the Exchange Act during 2005.

Code of Ethics Policy

We have not yet adopted a code of ethics that applies to our principal
executive officer, principal financial officer, principal accounting
officer or controller or persons performing similar functions.

Corporate Governance

There have been no changes in any state law or other procedures by
which security holders may recommend nominees to our board of
directors.  In addition to having no nominating committee for this
purpose, we currently have no specific audit committee and no audit
committee financial expert.  Based on the fact that our current
business affairs are simple, any such committees are excessive and
beyond the scope of our business and needs.


ITEM 10.    EXECUTIVE COMPENSATION

As operations increase, Pinnacle intends to enter into employment
agreements with its officers.   Upon funding, either through revenues
from operations, a private placement or initial public offering, should

<PAGE>40

the amount justify the salary demands, the key management of Pinnacle
would be compensated according to their duties.  No specific details
have been determined.


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

The following tabulates holdings of shares of Pinnacle by each person
or entity who, subject to the above, as of June 30, 2005, holds of
record or is known by management to own beneficially more than 5.0% of
the common shares and, in addition, by all directors and officers of
Pinnacle individually and as a group.  Each named beneficial owner has
sole voting and investment power with respect to the shares set forth
opposite his name.
<TABLE>
<CAPTION>
                                Percentage of
                              Number & Class(1)            Outstanding
Name and Address                   of Shares              Common Shares

                                  <c>                       <c>
Glen R. Gamble
12892 Sierra Circle
Parker, CO 80134                 2,200,000                    12.75%

Robert A. Hildebrand
405 Detroit Street
Englewood, CO 80206                 50,000                     .29%*

Beverly Jo Gamble
12892 Sierra Circle
Parker, CO 80134                   200,000                    1.16%

Victory Minerals Corp.
7345 E. Peakview
Englewood, Co 80111              2,000,000                   11.59%%

Re-Group, Inc.
9600 E. Arapahoe Road
#260
Englewood, CO 80112                266,000                    1.54%

All Directors & Officers
as a group (2 persons)           4,450,000                   25.79%

* Mr. R.A. Hildebrand has an option to acquire 1,000,000 common shares
at $.05 per share.
</TABLE>
Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended, beneficial ownership of a security consists of sole or shared
voting power (including the power to vote or direct the voting) and/or
sole or shared investment power (including the power to dispose or
direct the disposition) with respect to a security whether through a
contract, arrangement, understanding, relationship or otherwise.

<PAGE>41

Unless otherwise indicated, each person indicated above has sole power
to vote, or dispose or direct the disposition of all shares
beneficially owned, subject to applicable community property laws.

Beverly Jo Gamble is married to Glen R. Gamble, an officer and director
of Pinnacle.  As a result, Glen R. Gamble would be deemed to be a
beneficial owner of the Common Shares owned of record by Beverly Jo
Gamble.   Nevertheless, Glen R. Gamble disclaims any beneficial
ownership of the Common Shares owned of record by his wife.

Victory Minerals Corp. is a corporation controlled by Glen R. Gamble,
an officer and director of Pinnacle.   As a result, Glen R. Gamble
would be deemed to be a beneficial owner of the 2,000,000 common shares
owned of record by Victory Minerals Corp.

Daniel J. Boone and Jerry Welch Boone are principals of Re-Group, Inc.


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.

Pinnacle maintains a mailing address at located at 9600 E. Arapahoe,
Suite 260, Englewood, CO 80112 and shares that office space with a
former director, Terryl K. Jensen, who operates a Real Estate business
on the premises.

Glen Gamble, president of Pinnacle, is also an officer and director of
Victory Minerals Corporation, a significant shareholder of Pinnacle's
common stock.

Mr. Gamble is also a director on the board of directors of Plateau
Resources (Pty) Ltd., a South African corporation. Further, Mr. Gamble
has been appointed as a Director to the board of directors of Anooraq
Resources Corporation that is the 100% owner of Plateau Resources.
Likewise Mr. R.A. Hildebrand who is a Pinnacle director also holds
Directorship positions with Plateau and Anooraq.

During the years ended June 30, 2004 and 2003, we paid Victory
Minerals, an affiliated company, $43,000 and $66,000, respectively, for
consulting services.  Mr. Gamble, the president of Pinnacle controls
the affiliate.

During the years ended June 30, 2004 and 2003, R.A. Hildebrand and Glen
Gamble, officers and director of Pinnacle were paid $85,700 and
$38,435, respectively, for consulting services.  The consulting
services were for due diligence investigations on potential mining
projects and other administrative services.

During the year ended June 30, 2004, Glen Gamble, a principal
shareholder, loaned us $15,000 for working capital.  The loan is due on
demand and is non-interest bearing.  This amount is reflected as due to
related party in the accompanying financial statements.

<PAGE>42

As of June 30, 2004, Chris Wilson, an officer/director of Diamonaire
was indebted to the subsidiary in the amount of $16,864.  This amount
is reflected as indebtedness of related party-not current in the
accompanying financial statements.

As of June 30, 2004, Diamonaire was indebted to our joint venture
partner in the amount of $106,115.

Glen Gamble, our president and R.A. Hildebrand, an officer, together,
guarantee a $50,000 line of credit with a financial institution.

Director Independence.

The Company's Board of Directors consists of Glen R. Gamble and Robert A.
Hildebrand.  Glen R. Gamble is not independent as such term is defined by
a national securities exchange or an inter-dealer quotation system.
During the fiscal year ended June 30, 2005, there were no transactions
with related persons other than as described in the section above.





<PAGE>43

ITEM 13.    EXHIBITS

List of Exhibits

            The following of exhibits are filed with this report:

 (3.1)  Articles of Incorporation incorporated by referenced to Form
10SB filed August 7, 1997, File No. 0-22965
 (3.2)  Amendment to Articles of Incorporation incorporated by
referenced to Form 10SB filed August 7, 1997, File No. 0-22965
 (3.3)  Bylaws incorporated by reference to Form 10SB filed August 7,
1997, File No. 0-22965
 (3.4)  Amendment to Bylaws dated July 1, 1997 incorporated by
reference to Form 10SB filed October, 1997.
 (4.1)  Specimen Common Stock Certificate incorporated by reference to
Form 10SB filed August 7, 1997, File No. 0-22965
 (10.1)  Loan Agreement between Pinnacle and Asset Partners, LLC dated
October 22, 1997 incorporated by reference to Amendment 3 to Form 10SB.
(10.2)  Loan Agreement between Pinnacle and Plateau Resources (PTY)
Ltd. dated March 22, 1998 incorporated by reference to Amendment 3 to
Form 10SB.
 (10.3)  Loan Agreement between Pinnacle and Mel Keller dated March 18,
1998 incorporated by reference to Amendment 3 to Form 10SB.
 (31)  302 certification
 (32)  906 certification

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Audit Fees.  We incurred aggregate fees and expenses of approximately
$23,665 and $33,116, respectively, from Cordovano and Honeck, LLP for
the 2005 and 2004 fiscal years.  Such fees included work completed for
our annual audits and for the review of our financial statements
included in our Form 10-QSB.

Tax Fees. We did not incur any aggregate tax fees and expenses from
Cordovano and Honeck, LLP for the 2005 and 2004 fiscal years for
professional services rendered for tax compliance, tax advice, and tax
planning.

All Other Fees. We did not incur any other fees from Cordovano and
Honeck, LLP during fiscal 2005 and 2004.

The board of directors, acting as the Audit Committee considered
whether, and determined that, the auditor's provision of non-audit
services was compatible with maintaining the auditor's independence.
All of the services described above for fiscal year 2006 were approved
by the Board of Directors pursuant to its policies and procedures.  We
intend to continue using Cordovano and Honeck, LLP solely for audit and
audit-related services, tax consultation and tax compliance services,
and, as needed, for due diligence in acquisitions.





<PAGE>44

                 SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, Pinnacle has duly caused this Report
to be signed on its behalf by the undersigned duly authorized person.

Date:    August 2, 2007

Pinnacle Resources, Inc.

/s/ Glen R. Gamble
------------------------------------
By: Glen R. Gamble, President

Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on
behalf of Pinnacle and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>

                                                  <c>
/s/ Glen R. Gamble                                 August 2, 2007
- ------------------------------
Glen R. Gamble
President and Director
(chief executive officer)


/s/ Robert A. Hildebrand                           August 2, 2007
- ------------------------------
Robert A. Hildebrand
Secretary/Treasurer and Director
(Chief Financial Officer)
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