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:
                   6/30/04
                      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 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

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, 2004 was 16,523,050 shares of its $.00001 par
value common stock.

Check whether the Issuer has filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court.
Yes [x]  No [ ]

 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

A.   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
(post split) 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 mandated business
purpose, which is to evaluate, structure, and complete mergers with, or
acquisition of, 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 mining ocean diamonds, refining
tantalum, 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 prospecting claim.

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 reef.  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 the results were
the platinum properties as well as five contiguous claims, 17
kilometers in length, on what has been reported to be the largest
undeveloped vanadium/titanium ore body in the world. These properties
are held by a new subsidiary, Vanadium and Magnetite Exploration and
Development Pty Ltd. (Vanmag) and the company has been awarded a 30
year Mineral Lease over these properties and recently the company
completed a two year effort to secure sufficient water for the
operation of a 40,000 ton per month processing plant on the property.
Currently, Pinnacle is pursuing a Mining Authorization which, when
granted, will allow Pinnacle to go forward with plans to produce the
property.

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

Having achieved success in its initial 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 placement of Anooraq stock has enabled Pinnacle to
fund its administrative overhead as well as to finance it present
ventures.

The next opportunity of high interest was certain proprietary and
patented know-how and technology that would 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, and agreed to finance Titan's start up with a
financial loan commitment of up to $500,000 even though the
contributions to date have exceeded that original commitment by
$78,000.  As of this date, Titan has completed its test processing runs
and effectively produced high grade tantalum pentoxide and expects to
start showing sale receipts within the fiscal year 2005 as the plant is
being modified for commercial production capability.



<PAGE>5

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
and the Company has loaned US$557,000 to Diamonaire to date.  The Aqua
Walker made its maiden walk at Seal Beach on the west coast of South
Africa in April of 2003 and is expected to start commercial operations
toward the end of 2004.   In July of 2004, Diamonaire was allocated a
1.7 kilometer stretch of Geewal Beech on the South African west coast
by diamond concession holder, Trans Hex Pty Ltd.   This is where
Diamonaire intends to commence its commercial diamond recovery
operations.

The Market Opportunity

The Company has (1) obtained mineral rights and subsequently a mining
license to begin mining and production of vanadium and titanium in the
Northern Province of South Africa, thus 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% 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
tonnes of magnetite containing 1.67 million tonnes of vanadium
pentoxide. Assays from diamond core drilling show that the "run-of-mine
ore" contains an average of 1.24% vanadium pentoxide and 11.88%
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 and
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)
tonnes 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).



<PAGE>6

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 tonne 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.

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% of Plateau to Anooraq Resources Inc of
Vancouver Canada for cash and stock, and then two years later completed
a tax-free exchange for 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 it
Anooraq stock for US$800,000.

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 "Aqua Walker", 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 "Aqua-Walker" 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 Aqua Walker and then pay 65% 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 precious 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

<PAGE>7

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 license to build a tantalite
refinery utilizing the licensed technology in  South Africa. The
licensing agreement expires in ten years.

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 before the end of December 2004.

Employees

Pinnacle presently has three employees. Mr. Gamble, the President draws
a $5,000 per month; Mr. Hildebrand, Vice President of Finance draws
$4,000 per month and Anne Guarnera, Administrative Assistant manages
the office and draws $3,000 per month.

Subsidiaries

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

In December, Pinnacle acquired 446 shares in Orovi Ghana, a corporation
that holds a gold prospecting claim on the reknowned Asbanti gold trand
in central Ghana.   Pinnacle expects to take control and full ownership
of Orovi Ghana in 2005.

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.



<PAGE>8

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 the Company.
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 who 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 comprise the Small Business Investment
Incentive development company 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



<PAGE>9

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 the Company 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.

Pinnacle, through its shareholding in Orovi Ghana Ltd., holds a gold
prospecting right on the Riyadh concession in the central district of
the Republic of Ghana.


ITEM 3.    LEGAL PROCEEDINGS.

Pinnacle entered into an agreement with Petty International Development
Corporation to help create a European retail market for Pinnacle's
stock and to arrange for the closing and completion of a private
placement offering; and to secure a variety of mining ventures in South
America.

Toward this end Pinnacle had issued 3,000,000 shares of its common
stock but by December 1, 2001  PIDC had not performed and indeed had
damaged the retail market for Pinnacle stock. In lieu of litigation at
the time, PIDC, and Pinnacle voluntarily agreed to rescind the
agreement calling for the return of the 3,000,000 shares that PNRR had
issued.  When PIDC subsequently refused to return the shares, Pinnacle
had no alternative but to file legal action to stop PIDC from further
breaching its agreement.  A jury trial in July 2003 in the Houston
District Court resulted in a verdict favorable to Pinnacle as the jury
awarded the Company court costs of $50,000 plus $810,000 in damages as
well as the return of the shares.  The attorney must file with the
courts to obtain a judgment and has an appointment date of September
29, 2003 to perfect or amend the jury award.  Largely, the outcome is
in the hands of the presiding judge.

<PAGE>10

The district judge converted the damages claim into the return of the
2,825,000 shares held by the court.   Pinnacle retrieved the shares
from the court and returned them to the treasury.   Currently, Pinnacle
holds a $50,000 judgment against the plaintiff but Pinnacle has not
expended the funds to perfect or collect on the judgment.

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

During the fourth quarter of the fiscal year ended June 30, 2004, no
matters were submitted to a vote of Pinnacle's security holders,
through the solicitation of proxies.






<PAGE>11

                    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, 2004, there is 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
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>
9/30/01                 1.48               1.02
12/31/01                1.02                .52
3/31/02                  .25                .09
6/30/02                  .18                .05
9/30/02                  .12                .04
12/31/02                 .07                .03
3/31/03                  .05                .03
6/30/03                  .05                .03
9/30/03                  .07                .05
12/31/03                 .08                .08
3/31/04                  .16                .13
6/30/04                  .17                .14
</TABLE>
The approximate number of holders of record of Pinnacle's $.00001 par
value common stock, as of June 30, 2004 and September 30, 2004 was 391.

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.

General Information Concerning the Company

Since inception, we have acquired interests in four South African
entities:

1.   Plateau Resources (Pty) (Ltd), (Plateau);
2.   Vanadium and Magnetite Exploration and Development (Pty) (Ltd),
       (Van Mag);
3.   Titan Processors (Pty) (Ltd), (Titan); and
4.   Diamonaire Joint Venture.


<PAGE>12

In fiscal 2003 and 2002, we sold our interest in Plateau to Anooraq
Resources (Pty) (Ltd), a South African company for 7 million shares of
Anooraq common stock.   Anooraq is exploring the property.

In addition, we have acquired an interest in a Republic of Ghana
company, which holds a gold prospecting claim.

In addition, we loaned funds to three domestic companies to fund their
research and development and we made an equity investment in a start-up
domestic company.

Basis of presentation of the financial statements

Our consolidated financial statements include the financial statements
of Van Mag because we own a controlling interest in their common stock.
Our consolidated financial statements also include the financial
statements of Titan Processors even though we own no Titan voting
stock. We exercise control over Titan through a majority of the seats
on Titan's Board of Directors and through the impact of certain
commercial arrangements that give us control over their operations.  In
our view, the consolidated financial statements would be incomplete
without Titan.  We changed our method of accounting in Diamonaire
Exploration Pty. Ltd. We now consolidate Diamonaire and formerly, we
accounted for Diamonaire on the equity method.

Results of operations

We reported a net loss of $415,866 ($.02 per share) for the year ended
June 30, 2004, as compared to a net profit of $2,475,648 ($.14 per
share) for the year earlier period. Our net profit resulted from the
sale of a subsidiary, Plateau Resources.  We accepted 7,000,000 shares
of Anooraq stock in exchange for Plateau.  We had 2,543,000 shares of
Anooraq common stock remaining at June 30, 2003.  We sold those shares
in August 2003 for $.33 per share.

General and administrative expenses increased approximately 98 percent,
from $605,797 for the year ended June 30, 2003 to $1,196,674 for the
year ended June 30, 2004 primarily due to the readying for start-up of
Titan and Diamonaire commercial operations and due diligence on other
potential investments.

Consulting expenses paid to related parties increased approximately 23
percent, from $104,435 for the year ended June 30, 2003, to $128,700
for the year ended June 30, 2004 primarily due to the increased
activity of both Titan and Diamonaire and due diligence on other
potential investments.

Allowance for uncollectible notes receivable increased by 100 percent,
from $-0- for the year ended June 30, 2003 to $53,369 for the year
ended June 30, 2004, because we set up reserves for principal and
interest related to two loans that we made to unrelated third-parties.



<PAGE>13

Stock-based compensation increased from $2,700 for the year ended June
30, 2003 to $145,850 reflecting an increase in the quoted market price
of our common stock.  We issued 1,035,000 shares to unrelated
consultants for investor relations and public relations services valued
at an average priced of $0.14 per shares.

Gain on sale of subsidiary decreased from $1,722,031for the year ended
June 30, 2003 to $1,379,103 because the price of Anooraq common stock
decreased from the year earlier period and because we sold fewer shares
of Anooraq common.

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, 2004, the exchange rate was 6.5 Rand to $1.00,
seriously eroding our ability to finance South African operations.
Unrealized losses from foreign currency translations are included in
income.


Liquidity

In fiscal years 2003 and 2004, our ability to generate adequate amounts
of cash to meet our needs came from the sale of Anooraq common stock.
Our subsidiaries (Van Mag and Diamonaire) and affiliate (Titan) used
liquidity in those fiscal years.  Sales of Anooraq common stock
provided us with $1,533,872 in cash in fiscal 2003 as compared with
$819,148 in cash in fiscal 2004.   Our cash position decreased from
$216,130 at June 30, 2003 to $55,327 at June 30, 2004 as a result.
Until our subsidiaries commence operations and provide consolidated
cash flows, we will rely on our own common stock sales and proceeds
from borrowings. We have a commitment for $450,000 in convertible debt
financing expected to close in the second quarter of fiscal 2005.
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.

Van Mag
This subsidiary is not expected to generate cash flow until such time
as we sell it or we commence mining operations.  In 2004, we paid a
deposit of approximately $39,000 for a performance bond to ensure asset
retirement obligations and for mineral lease fees.  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 2004.  The world-
wide tantalum market was depressed in fiscal 2004.  However, markets
are improving.



<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 2004.  A new
diamond mining concession has been obtained and we expect to commence
mining operations in fiscal 2005.

Financial condition

Investments

Our trading securities were comprised exclusively of Anooraq stock.
The fair value of our Anooraq investment decreased from $819,148
(2,543,000 shares) to $-0- (-0- shares) during the year ended June 30,
2004 due to the sale of our final tranche of Anooraq stock in August
2003.  At June 30, 2004, we had no shares of Anooraq stock.

Property and equipment
Property and equipment increased from $246,203 at June 30, 2003 to
$586,317 at June 30, 2004.  Provisions for depreciation in fiscal 2004
and 2003 were $134,080 and $55,212, respectively.  Net property
additions were $341,114 in fiscal 2004.  We completed construction of
the aforementioned tantalum refinery in fiscal 2003 and we increased
production capacity on fiscal 2004.

Deferred revenue

Deferred revenue decreased from $1,265,549 at June 30, 2003 to $-0- at
June 30, 2004 as we sold the remaining shares of Anooraq stock in
August 2003.

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 recovering diamonds
using our new equipment.  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
                                                           ----------

Independent Auditors' Report                                   F-2

Consolidated Balance Sheet at June 30, 2004                    F-3

Consolidated Statements of Operations for the years ended
 June 30, 2004 and 2003                                        F-4

Consolidated Statements of Other Comprehensive Income
 for the years ended June 30, 2004 and 2003                    F-5

Consolidated Statement of Changes in Shareholders' Equity
 for the period from July 1, 2002 through June 30, 2004      F-6, 7

Consolidated Statements of Cash Flows for the years
 ended June 30, 2004 and 2003                                F-8, 9

Notes to Consolidated Financial Statements                    F-10





<PAGE>16

                      INDEPENDENT AUDITORS' REPORT

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, 2004 and the related
consolidated statements of operations, other comprehensive income,
changes in shareholders' equity, and cash flows for the years ended
June 30, 2004 and 2003.  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, 2004 and the
results of their operations and their cash flows for the years ended
June 30, 2004 and 2003 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.

As discussed in Note 1 to the consolidated financial statements, the
Company changed its method of accounting for its joint venture
agreement effective June 30, 2004.


Cordovano and Honeck, P.C.
Denver, Colorado
August 30, 2004




<PAGE>17
                        PINNACLE RESOURCES, INC.
                      Consolidated Balance Sheet
                             June 30, 2004

                                Assets
Current assets:
  Cash                                                     $   55,327
  Receivables                                                  57,127
                                                           ----------
      Total current assets                                    112,454

Advances to unrelated third-parties, net of allowance
 (Note 3)                                                      16,380
Property and equipment, net of accumulated depreciation
 (Note 4)                                                     586,317
Indebtedness of related parties-not current (Note 2)           16,864
Other assets                                                   66,391
                                                           ----------
                                                           $  798,406
                                                           ==========

                  Liabilities and Shareholders' Equity
Current liabilities:
  Accounts payable and accrued liabilities                 $   54,612
  Notes payable:
    To Bank                                                    50,000
    To related party (Note 5)                                  50,000
  Other current liabilities                                     2,018
  Due to related party (Note 2)                                15,000
                                                           ----------
      Total current liabilities                               171,630
                                                           ----------

Due to related party, not current (Note 2)                    106,115

Minority interest in net assets of consolidated subsidiary     35,059
                                                           ----------
                                                              312,804

Commitment (Note 9)                                                 -

Shareholders' equity (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 16,523,050 shares               165
  Additional paid-in capital                                3,306,033
  Accumulated other comprehensive income                      570,685
  Accumulated deficit                                      (3,391,271)
                                                           ----------
      Total shareholders' equity                              485,602
                                                           ----------
                                                           $   798,406

See accompanying notes to consolidated financial statements.

<PAGE>18

                        PINNACLE RESOURCES, INC.
                  Consolidated Statements of Operations

                                                Years Ended June 30,
                                                 2004         2003
                                              ----------   ----------
Operating expenses:
  Prospecting costs                           $  242,157   $   13,399
  General and administrative costs             1,196,674      605,797
  Consulting expenses paid to related
   parties (Note 2)                              128,700      104,435
  Stock-based compensation:
    Professional services                        145,850        2,700
    Provision for uncollectible notes
     receivable (Note 3)                          53,369            -
                                              ----------   ----------
      Total operating expenses                 1,766,750      726,331
                                              ----------   ----------

Loss before income taxes, nonoperating income,
 interest expense and minority interest       (1,766,750)    (726,331)

Non-operating income:
  Gain on sale of subsidiary                   1,379,103    1,722,031
  Other nonoperating income (expense),net         34,711    1,502,188
  Interest income (expense), net                 (62,932)     (15,550)
                                              ----------   ----------
      Income/loss before income taxes
        and minority interest                   (415,868)   2,482,338
                                              ----------   ----------
  Income tax provision (Note 8)                        -            -
                                              ----------   ----------
      Income/loss before minority interest      (415,868)   2,482,338
                                              ----------   ----------
Minority interest in net loss of consolidated
 Subsidiary                                            2       (6,690)
                                              ----------   ----------
      Net income/loss                         $ (415,866)  $2,475,648
                                              ==========   ==========
Basic and diluted income/loss per share       $    (0.02)  $     0.14
                                              ==========   ==========
Weighted average common shares outstanding    16,642,024   17,388,383
                                              ==========   ==========





See accompanying notes to consolidated financal statements.




<PAGE>19

                        PINNACLE RESOURCES, INC.
          Consolidated Statements of other Comprehensive Income


                                                Years Ended June 30,
                                                 2004         2003
                                              ----------   ----------

Net income/loss                               $ (415,866)  $2,475,648

  Other comprehensive income/loss , net of tax:
    Unrealized holding gain                            -   (2,100,000)
    Foreign currency translation                 575,518      (11,741)
                                              ----------   ----------
      Comprehensive income                    $  159,652   $  363,907
                                              ==========   ==========





See accompanying notes to consolidated financial statements.




<PAGE>20

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

                               <c>          <c>          <c>          <c>
          Balance, July 1, 2002   $        -   17,253,050   $      173   $3,051,475
Issuance of common stock in
 exchange for joint venture at
 $.03 per share (Note 7)                   -      200,000            1        5,999
Issuance of common stock in
 exchange for services at
 $.03 per share (Note 7)                   -       90,000            1        2,699
Net deficit of affiliate             (34,842)           -            -            -
Net income for the year ended
 June 30, 2003                             -            -            -            -
Comprehensive loss                         -            -            -            -
                                  ----------   ----------   ----------   ----------
          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
                                  ==========   ==========   ==========   ==========





See accompanying notes to consolidated financial statements.




<PAGE>21

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

                                             Accumulated
                                                Other
                                            Comprehensive  Accumulated
                                             Income/Loss    Deficit       Total
                                             -----------   -----------   ----------
          Balance, July 1, 2002              $ 2,106,908    (5,451,053)  $ (292,497)
Issuance of common stock in
 exchange for joint venture at
 $.03 per share (Note 7)                               -             -        6,000
Issuance of common stock in
 exchange for services at
 $.03 per share (Note 7)                               -             -        2,700
Net deficit of affiliate                               -             -      (34,842)
Net income for the year ended June 30, 2003            -     2,475,648    2,475,648
Comprehensive loss                            (2,111,741)            -   (2,111,741)
                                             -----------   -----------   ----------
          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
                                             ===========   ===========   ==========
</TABLE>





See accompanying notes to consolidated financial statements.




<PAGE>22

                        PINNACLE RESOURCES, INC.
                 Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
                                                             Years Ended June 30,
                                                              2004         2003
                                                           ----------   ----------

                                                        <c>          <c>
Cash flows from operating activities:
 Net income/loss                                           $ (415,866)  $2,475,648
  Adjustments to reconcile net loss to cash flows
  from operating activities:
   Common stock issued for services (Note 8)                  145,850        2,700
   Depreciation and amortization                               134,080       55,212
   Provision for uncollectible notes receivable (Note 3)       53,369            -
   Cash received from the sale of trading securities          819,148    1,533,872
   Changes in current assets and current liabilities:
     Gain on sale of trading securities (Note 3)           (1,265,549)  (1,502,188)
     Gain on sale of subsidiary                                     -   (1,722,031)
     Purchase of inventory                                          -      (21,168)
     Increase in receivables and other current assets          93,825      (39,879)
     Increase in accounts payable and accrued liabilities     170,511(344,647)
                                                           ----------   ----------
        Net cash provided by (used in) operating activities  (264,632)     437,519
                                                           ----------   ----------

Cash flows from investing activities:
 Purchase of equipment                                        (42,833)    (429,720)
 Advances made to unrelated third-parties (Note 3)           (106,000)           -
 Repayments of advances made to unrelated third-parties
  (Note 3)                                                     10,000            -
 Purchase of subsidiary, cash received                              -        6,090
        Net cash used in investing activities                (138,833)    (423,630)
                                                           ----------   ----------

Cash flows from financing activities:
 Advances from related parties (Note 2)                        40,000            -
 Repayment of advances from related parties (Note 2)          (25,000)           -
 Proceeds from loans                                           72,829      252,418
 Proceeds from line of credit                                 100,000            -
 Principal payments on line of credit                         (50,000)     (43,483)
 Cash proceeds from sale of common stock                      100,000            -
        Net cash provided by financing activities             237,829      208,935
                                                           ----------   ----------
     Effect of cumulative translation adjustment on cash        4,833      (11,741)
                                                           ----------   ----------
        Net change in cash                                   (160,803)     211,083
                                                           ----------   ----------


See accompanying notes to consolidated financial statements.




<PAGE>23

                        PINNACLE RESOURCES, INC.
                 Consolidated Statements of Cash Flows
(Continued)

Cash:
 Beginning of period                                          216,130        5,047
                                                           ----------   ----------
 End of period                                             $   55,327   $  216,130
                                                           ==========   ==========

Supplemental disclosure of cash flow information:
 Cash paid during the year for:
  Interest                                                 $        -   $    8,009
                                                           ==========   ==========
  Income taxes                                             $        -   $        -
                                                           ==========   ==========

Non-cash financing and investing activities:
 Acquisition of subsidiaries in exchange for common stock  $        -   $    6,000
                                                           ==========   ==========
 Sale of subsidiary for marketable securities              $        -   $        -
                                                           ==========   ==========
 Acquisition of property and equipment for common stock    $        -   $        -
                                                           ==========   ==========
</TABLE>





See accompanying notes to consolidated financial statements.




<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" or "us") 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.

Please note that in fiscal year 2003, we reflected our investment in
Diamonaire under the equity method of accounting for investments in
common stock.  As of and for the year ended June 30, 2004, we have
consolidated Diamonaire's financial statements.  We have restated the
prior year's financial statements accordingly.

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.  Orovi Ghana Ltd. has a
license granted by the Republic of Ghana to prospect for gold on
certain land.  Subsequent to acquisition, we have been unable to obtain
access to certain records of Orovi Ghana Ltd.  Because of lack of
control, we have excluded Orovi Ghana Ltd. from consolidation.

Our significant operating losses raise substantial doubt about our
ability to continue as a going concern.  Our management has arranged
financing from a private lender totalling $450,000 in convertible debt.
Our tantalite plant in Johannesburg and our diamond mining operations
on the west coast of South Africa are expected to provide revenues in
fiscal 2005.  Until then, we are operating at the forbearance of our
creditors and the ability and willingness of our principle shareholders
to fund essential operations.

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.



<PAGE>25

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, 2003.

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, 2003, 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.



<PAGE>26

Concentrations of operations outside 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, 2004 and 2003, we paid an affiliated
company $43,000 and $66,000, respectively, for consulting services.
The president of our parent company controls the affiliate.

During the years ended June 30, 2004 and 2003, officers and director of
the Company 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, our principle 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.

As of June 30, 2004, 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.

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

During the year ended June 30, 2004, we loaned a total of $65,000 to
three unrelated third party corporations.  As of June 30, 2004, after a
loan review by management, we determined that it was probable that two
of the loans were impaired.  We set up a reserve totaling $53,369 to
allow for uncollectible principal and interest payments.

<PAGE>27

During the year ended June 30, 2004, we purchased 150,000 shares of
common stock of an unrelated third party corporation for $150.

In October 2003, we entered into an agreement with Precision Pipe
Services, LLC and Carbon Conversion Technologies, LLC to invest
$100,000 in a new entity formed to evaluate and test new feedstocks for
a fee.  As of June 30, 2004, after an evaluation by management, we
determined that it was probable that the investment was impaired.  We
wrote-off the $100,000 investment as of June 30, 2004.

Note 4:  Property and equipment

Our property and equipment, at June 30, 2004, consisted of the
following:

     Plant and equipment                 $  728,434
     Office equipment                        18,774
     Furniture                               23,988
                                         ----------
                                            771,196
     Less accumulated depreciation         (184,879)
                                         ----------
                                         $  586,317
                                         ==========

Depreciation expense for the years ended June 30, 2004 and 2003 totaled
$134,080 and $42,623, respectively.

Note 5:  Short-term debt

Credit line
We have one line of credit totalling $50,000 of which $-0- was unused
at June 30, 2004.  Advances made under the lines of credit carry
interest rates of prime plus from one to three percent (7.25 percent at
June 30, 2004) and may be extended annually with the consent of the
financial institution.

Note payable to related party
In March 2004, pursuant to the terms of an unsecured 30 day promissory
note, a relative of our principle shareholder 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.

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.

<PAGE>28

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
                            agreement
   100,000   $     0.01   Upon tantalite refinery becoming operational
   100,000   $     0.01   Repayment of project funding
   700,000   $     0.01   One 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.



<PAGE>29

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, 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.

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 30, 2003, we issued 200,000 shares to Ocean
Options in exchange for its stock in Diamonaire, a joint venture.  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.

<PAGE>30

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 rate                  2.50 percent
     Dividend yield                           0.00 percent
     Volatility factor                      130.00 percent
     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
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:

                               For the Year Ended June 30,
                             2004                      2003
                       Net       Earnings        Net       Earnings
                      Loss       per Share     Income      per Share
                   ----------   ----------   ----------   ----------
As reported        $ (415,866)           -   $2,475,648   $        -
                   ==========   ==========   ==========   ==========
Pro forma          $  (437,866)  $    (0.03)  $2,464,648   $     0.14
                   ==========   ==========   ==========   ==========

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

                                 Options Outstanding and    Weighted
                                        Exercisable          Average
                                  Number of       Exercise Price
                                   Shares      Per Share    Per Share
                                 ----------   ----------   ----------
Balance at June 30, 2002             19,000   $     4.00   $     4.00
  Options granted                 1,000,000   $     0.05   $     0 05
  Options expired                   (19,000)  $     4.00   $     4.00
                                 ----------   ----------   ----------



<PAGE>31

Balance at June 30, 2003          1,000,000   $     0.05   $     0.05
  Options granted                 1,000,000   $     0.13   $     0.13
  Options exercised                  (770,000)  $     0.05   $     0.05
  Options expired                  (230,000)  $     0.05   $     0.05
                                 ----------   ----------   ----------
Balance at June 30, 2004          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:

                                                   For the Years
                                                   Ended June 30,
                                                 2004         2003
                                                Percent      Percent
                                              ----------   ----------
U.S. federal statutory graduated rate              34.00        34.00
Deferred income related to consolidated
  subsidiary                                        0.00       (14.57)
State income tax rate, net of federal benefit       3.14         3.14
Net operating loss for which no tax benefit is
  currently available                             (37.14)      (22.57)
                                              ----------   ----------
                                                    0.00         0.00
                                              ==========   ==========

At June 30, 2004, deferred tax assets consisted of a net tax asset of
$755,386, due to operating loss carryforwards of $2,033,889, which was
fully allowed for, in the valuation allowance of $755,386.  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, 2004 and 2003 totaled $111,444 and $(568,389),
respectively.  The current tax benefit totaled $111,444 and $568,389
for the years ended June 30, 2004 and 2003, respectively.  The net
operating loss carryforward expires through the year 2024.

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 two to four years.  The following is a schedule by
years of future minimum rentals under the leases at June 30, 2004:



<PAGE>32

          Year Ending
           June 30:
          ----------
             2005                 $   36,797
             2006                     37,349
             2007                      2,944
             2008                      2,944
                                  ----------
                                  $   80,034





<PAGE>33

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

There have not been any changes in or disagreements with accountants on
accounting and financial disclosure.













<PAGE>34

                                  PART III

ITEM 9.    DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

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
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

<PAGE>35

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.

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



<PAGE>36

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
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

<PAGE>37

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.

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
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

The following tabulates holdings of shares of Pinnacle by each person
or entity who, subject to the above, as of June 30, 2004, 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%*

<PAGE>38

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.
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

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.


<PAGE>39

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.

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.




<PAGE>40

ITEM 13.    EXHIBITS, FINANCIAL STATEMENT
SCHEDULES, AND REPORTS ON FORM 8-K
     (a)   FINANCIAL STATEMENTS AND SCHEDULES

The following financial statements and schedules
are filed as part of this report:

Report of Independent Public Auditors
Balance Sheet
Statement of Operations
Statement of Stockholder's Equity
Statement of Cash Flows
Notes to Financial Statements

Schedules Omitted:    All schedules other than those shown have been
omitted because they are not applicable, not required, or the required
information is shown  in  the  financial  statements  or  notes
thereto.

(b)    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.

(B)    REPORTS ON FORM 8-K
None



<PAGE>41

                 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:    October 12, 2004

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                                 10/12/2004
- ------------------------------
Glen R. Gamble
President and Director
(chief executive officer)


/s/ Robert A. Hildebrand                            10/12/2004
- ------------------------------
Robert A. Hildebrand
Secretary/Treasurer and Director
(Chief Financial Officer)
</TABLE>