---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-Q

(Mark One)

[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 31, 2011

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____to _____

COMMISSION FILE NUMBER000-52626

PENGRAM CORPORATION(Exact
name of registrant as specified in its charter)

|NEVADA                                                               | 68-0643436                          
|-------------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of incorporation or
      organization) | (I.R.S. Employer Identification No.)
|                                                                     |                                     
|                                                                     |                                     
|1200 Dupont Street, Suite 2J                                         |                                     
|Bellingham, WA                                                       | 98225                               
|(Address of principal executive offices)                             | (Zip Code)                          

(360) 255-3436(Registrant's telephone number,
including area code)

Not Applicable(Former name, former address and
former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  [ x ]Yes[ ] No

Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files).  [   ]  Yes     [   ] No

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of large accelerated filer,
accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act.

|Large accelerated filer [   ]                                                   | Accelerated filer [  ]        
|------------------------------------------------------------------------------- | ------------------------------
|Non-accelerated filer [   ] (Do not check if a smaller
      reporting company) | Smaller reporting company[ x ]

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

Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable date: As of
July 13, 2011, the Issuer had 58,264,344 Shares of Common Stock
outstanding.

---

PART I - FINANCIAL INFORMATION

|ITEM 1. | FINANCIAL STATEMENTS.
|------- | ---------------------

The accompanying unaudited financial statements have been
prepared in accordance with the instructions to Form 10-Q and Rule 8-03 of
Regulation S-X, and, therefore, do not include all information and footnotes
necessary for a complete presentation of financial position, results of
operations, cash flows, and stockholders' equity in conformity with generally
accepted accounting principles. In the opinion of management, all adjustments
considered necessary for a fair presentation of the results of operations and
financial position have been included and all such adjustments are of a normal
recurring nature. Operating results for the three and six months ended May 31,
2011 are not necessarily indicative of the results that can be expected for the
year ending November 30, 2011.

As used in this Quarterly Report, the terms "we, "us, "our,
Pengram and the Company mean Pengram Corporation and its subsidiaries,
unless otherwise indicated. All dollar amounts in this Quarterly Report are in
U.S. dollars unless otherwise stated.

2

---

PENGRAM CORPORATION(An Exploration Stage
Company)

SECOND QUARTER INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

SIX MONTHS ENDED MAY 31, 2011 AND 2010(Unaudited)
(Stated in U.S. Dollars)

---

|PENGRAM CORPORATION                          
|---------------------------------------------
|(An Exploration Stage Company)               
|                                             
|INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
|(Unaudited)                                  
|(Stated in U.S. Dollars)                     

|                                                                                                                                                                                                                      |   | MAY
      31 |   |   | NOVEMBER 30 |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ------------ | - | - | ----------- | -
|                                                                                                                                                                                                                      |   | 2011         |   |   | 2010        |  
|                                                                                                                                                                                                                      |   |              |   |   |             |  
|ASSETS                                                                                                                                                                                                                |   |              |   |   |             |  
|                                                                                                                                                                                                                      |   |              |   |   |             |  
|Current                                                                                                                                                                                                               |   |              |   |   |             |  
|Cash                                                                                                                                                                                                                  | $ | 15,938       |   | $ | 353         |  
|Total Current Assets                                                                                                                                                                                                  |   | 15,938       |   |   | 353         |  
|                                                                                                                                                                                                                      |   |              |   |   |             |  
|Long-term Investment(Note 3)                                                                                                                                                                                          |   | 10,367       |   |   | 10,367      |  
|Mineral Property Acquisition Costs(Note 4)                                                                                                                                                                            |   | 372,271      |   |   | 412,875     |  
|                                                                                                                                                                                                                      |   |              |   |   |             |  
|Total
      Assets                                                                                                                                                                                                    | $ | 398,576      |   | $ | 423,595     |  
|                                                                                                                                                                                                                      |   |              |   |   |             |  
|LIABILITIES                                                                                                                                                                                                           |   |              |   |   |             |  
|                                                                                                                                                                                                                      |   |              |   |   |             |  
|Current                                                                                                                                                                                                               |   |              |   |   |             |  
|Accounts
      payable and accrued liabilities                                                                                                                                                                        | $ | 321,412      |   | $ | 340,915     |  
|Amounts due to related
      parties (Note 11)                                                                                                                                                                        |   | 51,121       |   |   | 49,000      |  
|Amount
      due to shareholder                                                                                                                                                                                       |   | 1,920        |   |   | 1,920       |  
|Promissory notes payable
      (Notes 4 and 5)                                                                                                                                                                        |   | 147,212      |   |   | 96,248      |  
|Promissory notes payable to related parties (Note 6)                                                                                                                                                                  |   | 33,109       |   |   | 25,901      |  
|Loan payable (Note 7)                                                                                                                                                                                                 |   | 5,676        |   |   | 7,015       |  
|Unit
      subscriptions received (Note 9)                                                                                                                                                                            |   | 14,965       |   |   | 14,965      |  
|Total Current Liabilities                                                                                                                                                                                             |   | 575,415      |   |   | 535,964     |  
|                                                                                                                                                                                                                      |   |              |   |   |             |  
|STOCKHOLDERS DEFICIENCY                                                                                                                                                                                              |   |              |   |   |             |  
|                                                                                                                                                                                                                      |   |              |   |   |             |  
|Capital Stock(Note 10)                                                                                                                                                                                                |   |              |   |   |             |  
|Authorized:
                           
      100,000,000 preferred stock with a par value of $0.001 per share
                           
      300,000,000 common voting stock with a par value of $0.001 per share |   |              |   |   |             |  
|                                                                                                                                                                                                                      |   |              |   |   |             |  
|Issued:                       58,264,344
      at May 31, 2011 and
                           
      57,737,144 common shares as at November 30, 2010                                                                 |   | 58,264       |   |   | 57,737      |  
|Units and Share Subscriptions Received In Advance                                                                                                                                                                     |   | -            |   |   | 26,360      |  
|Additional Paid-In Capital                                                                                                                                                                                            |   | 869,285      |   |   | 851,852     |  
|Share Purchase Warrants(Note 10)                                                                                                                                                                                      |   | 30,150       |   |   | 21,750      |  
|Deficit Accumulated During The
      Exploration Stage                                                                                                                                                                |   | (1,134,538   | ) |   | (1,070,068  | )
|Total Stockholders Deficiency                                                                                                                                                                                        |   | (176,839     | ) |   | (112,369    | )
|                                                                                                                                                                                                                      |   |              |   |   |             |  
|Total
      Liabilities And Stockholders Deficiency                                                                                                                                                                  | $ | 398,576      |   | $ | 423,595     |  

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

---

|PENGRAM CORPORATION                                          
|-------------------------------------------------------------
|(An Exploration Stage Company)                               
|                                                             
|INTERIM CONDENSED CONSOLIDATED STATEMENTS OF
      OPERATIONS
|(Unaudited)                                                  
|(Stated in U.S. Dollars)                                     

|                                                           |   |            |   |   |            |   |   |            |   |   |            |   |   | CUMULATIVE  |  
|---------------------------------------------------------- | - | ---------- | - | - | ---------- | - | - | ---------- | - | - | ---------- | - | - | ----------- | -
|                                                           |   |            |   |   |            |   |   |            |   |   |            |   |   | PERIOD FROM |  
|                                                           |   | THREE      |   |   | SIX        |   |   | INCEPTION  |  
|                                                           |   | MONTHS     |   |   | MONTHS     |   |   | APRIL 28   |  
|                                                           |   | ENDED      |   |   | ENDED      |   |   | 2006 TO    |  
|                                                           |   | MAY 31     |   |   | MAY 31     |   |   | MAY 31     |  
|                                                           |   | 2011       |   |   | 2010       |   |   | 2011       |   |   | 2010       |   |   | 2011        |  
|                                                           |   |            |   |   |            |   |   |            |   |   |            |   |   |             |  
|Expenses                                                   |   |            |   |   |            |   |   |            |   |   |            |   |   |             |  
|Bank charges and interest                                  | $ | 4,253      |   | $ | 6,076      |   | $ | 7,402      |   | $ | 11,288     |   | $ | 48,459      |  
|Consulting fees                                            |   | 14,050     |   |   | -          |   |   | 26,350     |   |   | -          |   |   | 57,826      |  
|Depreciation expense                                       |   | -          |   |   | 126        |   |   | -          |   |   | 252        |   |   | 1,516       |  
|Filing
      and regulatory                                |   | 744        |   |   | 170        |   |   | 1,967      |   |   | 1,049      |   |   | 20,447      |  
|Finance charges                                            |   | -          |   |   | 23,106     |   |   | -          |   |   | 45,709     |   |   | 137,500     |  
|Incorporation costs                                        |   | -          |   |   | -          |   |   | -          |   |   | -          |   |   | 3,382       |  
|Investor relations                                         |   | -          |   |   | 1,000      |   |   | -          |   |   | 1,000      |   |   | 15,800      |  
|Management fees                                            |   | 9,000      |   |   | 9,000      |   |   | 18,000     |   |   | 18,000     |   |   | 146,600     |  
|Mineral
      property exploration costs                   |   | 28,512     |   |   | -          |   |   | 26,119     |   |   | 1,569      |   |   | 125,866     |  
|Office
      and administrative                            |   | 5,479      |   |   | 6,209      |   |   | 11,102     |   |   | 9,629      |   |   | 77,415      |  
|Professional fees                                          |   | 55,411     |   |   | 48,949     |   |   | 83,256     |   |   | 82,000     |   |   | 598,445     |  
|Recovery on
      mineral property                         |   | -          |   |   | -          |   |   | -          |   |   | -          |   |   | (18,377     | )
|Travel                                                     |   | -          |   |   | -          |   |   | -          |   |   | -          |   |   | 16,341      |  
|Website
      design                                       |   | 682        |   |   | -          |   |   | 1,044      |   |   | 3,500      |   |   | 5,088       |  
|Write-off
      of mineral property costs                  |   | -          |   |   | 3,000      |   |   | -          |   |   | 3,000      |   |   | 9,000       |  
|                                                           |   |            |   |   |            |   |   |            |   |   |            |   |   |             |  
|Loss Before Other Income                                   |   | (118,131   | ) |   | (97,636    | ) |   | (175,240   | ) |   | (176,996   | ) |   | (1,245,308  | )
|                                                           |   |            |   |   |            |   |   |            |   |   |            |   |   |             |  
|Other Income                                               |   |            |   |   |            |   |   |            |   |   |            |   |   |             |  
|Dividend
      income (Note 3)                             |   | 115,909    |   |   | -          |   |   | 115,909    |   |   | -          |   |   | 115,909     |  
|Loss on
      settlement of debt (Note 3)                  |   | (9,509     | ) |   | -          |   |   | (9,509     | ) |   | -          |   |   | (9,509      | )
|Unrealized
      gain on marketable securities (Note 3)    |   | 4,370      |   |   | -          |   |   | 4,370      |   |   | -          |   |   | 4,370       |  
|                                                           |   |            |   |   |            |   |   |            |   |   |            |   |   |             |  
|Net Loss For The Period                                    | $ | (7,361     | ) | $ | (97,636    | ) | $ | (64,470    | ) | $ | (176,996   | ) | $ | (1,134,538  | )
|                                                           |   |            |   |   |            |   |   |            |   |   |            |   |   |             |  
|Basic And Diluted Loss Per Share                           | $ | (0.01      | ) | $ | (0.01      | ) | $ | (0.01      | ) | $ | (0.01      | ) |   |             |  
|                                                           |   |            |   |   |            |   |   |            |   |   |            |   |   |             |  
|Weighted Average Number Of Common Shares
      Outstanding |   | 58,264,344 |   |   | 54,427,905 |   |   | 58,032,608 |   |   | 54,327,419 |   |   |             |  

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

---

|PENGRAM CORPORATION                                          
|-------------------------------------------------------------
|(An Exploration Stage Company)                               
|                                                             
|INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH
      FLOWS
|(Unaudited)                                                  
|(Stated in U.S. Dollars)                                     

|                                                                              |   | SIX      |   |   | CUMULATIVE         |  
|----------------------------------------------------------------------------- | - | -------- | - | - | ------------------ | -
|                                                                              |   | MONTHS   |   |   | PERIOD FROM        |  
|                                                                              |   | ENDED    |   |   | INCEPTION APRIL 28 |  
|                                                                              |   | MAY 31   |   |   | 2006 TO MAY 31     |  
|                                                                              |   | 2011     |   |   | 2010               |  
|                                                                              |   |          |   |   |                    |  
|Cash Provided By (Used In):                                                   |   |          |   |   |                    |  
|Operating Activities                                                          |   |          |   |   |                    |  
|Net loss
      for the period                                                 | $ | (64,470  | ) | $ | (176,996           | )
|Adjustment for items not
      affecting cash:                                |   |          |   |   |                    |  
|Depreciation                                                                  |   | -        |   |   | 252                |  
|Finance charges on convertible notes                                          |   | -        |   |   | 45,709             |  
|Foreign exchange                                                              |   | -        |   |   | 438                |  
|Recovery of mineral property                                                  |   | -        |   |   | -                  |  
|Accrued interest expense                                                      |   | 6,887    |   |   | 10,999             |  
|Write-off of mineral property costs                                           |   | -        |   |   | 3,000              |  
|Dividend income                                                               |   | (115,909 | ) |   | -                  |  
|Loss on settlement of dept                                                    |   | 9,509    |   |   | -                  |  
|Unrealized gain of marketable securities                                      |   | (4,370   | ) |   | -                  |  
|Changes in non-cash
      operating working capital items:                    |   |          |   |   |                    |  
|Accounts payable and accrued liabilities                                      |   | 43,934   |   |   | 57,452             |  
|Amounts due to related parties                                                |   | 16,511   |   |   | 12,000             |  
|Prepaid expenses                                                              |   | -        |   |   | (11,057            | )
|                                                                              |   | (107,908 | ) |   | (58,203            | )
|Investing Activities                                                          |   |          |   |   |                    |  
|Advances                                                                      |   | -        |   |   | -                  |  
|Mineral
      property acquisition costs                                      |   | -        |   |   | (42,878            | )
|Recovery of mineral
      property costs                                      |   | 40,604   |   |   | -                  |  
|Purchase
      of computer equipment                                          |   | -        |   |   | -                  |  
|                                                                              |   | 40,604   |   |   | (42,878            | )
|Financing Activities                                                          |   |          |   |   |                    |  
|Issuance of convertible
      notes                                           |   | -        |   |   | -                  |  
|Issuance
      of common stock                                                |   | -        |   |   | -                  |  
|Finders fees                                                                 |   | -        |   |   | (5,042             | )
|Units and
      share subscriptions received in advance                       |   | -        |   |   | 67,450             |  
|Advance on promissory
      note payable                                      |   | 85,500   |   |   | 75,000             |  
|Repayment
      of promissory note                                            |   | (14,611  | ) |   | -                  |  
|Promissory note payable
      to related party                                |   | 12,000   |   |   | -                  |  
|Repayment
      of promissory notes payable to related parties                |   | -        |   |   | -                  |  
|Advance on loan payable                                                       |   | -        |   |   | -                  |  
|Advance
      on amount due to shareholder                                    |   | -        |   |   | -                  |  
|                                                                              |   | 82,889   |   |   | 137,408            |  
|                                                                              |   |          |   |   |                    |  
|Increase In Cash                                                              |   | 15,585   |   |   | 36,327             |  
|Cash, Beginning Of Period                                                     |   | 353      |   |   | 3,711              |  
|Cash, End Of
      Period                                                     | $ | 15,938   |   | $ | 40,038             |  
|                                                                              |   |          |   |   |                    |  
|Supplemental Disclosure Of Cash Flow Information                              |   |          |   |   |                    |  
|Cash paid
      during the period for:                                        |   |          |   |   |                    |  
|Interest                                                                      | $ | -        |   | $ | -                  |  
|Income taxes                                                                  | $ | -        |   | $ | -                  |  
|                                                                              |   |          |   |   |                    |  
|Non-Cash Financing And Investing
      Activities                             |   |          |   |   |                    |  
|Shares received from
      Solfotara Minerals Corp. (Note 3)                  | $ | -        |   | $ | -                  |  
|Shares
      issued for mineral property acquisition costs (Note 4)           | $ | -        |   | $ | 6,400              |  
|Promissory note payable
      for mineral property acquisition costs (Note 4) | $ | -        |   | $ | -                  |  
|Shares
      issued on conversion of convertible note (Note 10)               | $ | -        |   | $ | 10,000             |  
|Shares issued from funds
      received in advance (Note 10)                  | $ | 26,360   |   | $ | -                  |  
|Marketable securities
      transferred for settlement debt (Note 3)          | $ | 110,770  |   | $ | -                  |  

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

---

|PENGRAM CORPORATION                                                    
|-----------------------------------------------------------------------
|(An Exploration Stage Company)                                         
|                                                                       
|INTERIM CONDENSED STATEMENTS OF STOCKHOLDERS EQUITY
      (DEFICIENCY)
|                                                                       
|PERIOD FROM INCEPTION APRIL 28, 2006 TO MAY 31,
      2011             
|(Unaudited)                                                            
|(Stated in U.S. Dollars)                                               

DEFICITACCUMULATEDSHARE
    
    
    
    
    
    
    
    
    DURINGSUBSCRIPTIONS
    
    
    ADDITIONAL
    
    
    SHARE
    
    
    THECOMMON STOCK
    
    
    RECEIVED
    
    
    PAID-IN
    
    
    PURCHASE
    
    
    EXPLORATIONSHARES
    
    
    AMOUNT
    
    
    IN
      ADVANCE
    
    
    CAPITAL
    
    
    WARRANTS
    
    
    STAGE
    
    
    TOTALJune 19, 2006  stock issued for cash at
      $0.001
    
    27,000,000
    
    $
    27,000
    
    $
    -
    
    $
    (18,000
    )
    $
    -
    
    $
    -
    
    $
    9,000Stock issued for cash at $0.01 in private placement
    
    17,997,144
    
    
    17,997
    
    
    -
    
    
    101,984
    
    
    -
    
    
    -
    
    
    119,981Net loss for the period
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    (20,112
    )
    
    (20,112
    )Balance, November 30, 2006
    
    44,997,144
    
    
    44,997
    
    
    -
    
    
    83,984
    
    
    -
    
    
    (20,112
    )
    
    108,869Net loss for the year
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    (108,384
    )
    
    (108,384
    )Balance, November 30, 2007
    
    44,997,144
    
    
    44,997
    
    
    -
    
    
    83,984
    
    
    -
    
    
    (128,496
    )
    
    485September 4, 2008  units issued for cash
      at $0.03
    
    3,000,000
    
    
    3,000
    
    
    -
    
    
    41,300
    
    
    35,700
    
    
    -
    
    
    80,000Net loss for the year
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    (139,039
    )
    
    (139,039
    )Balance, November 30, 2008
    
    47,997,144
    
    
    47,997
    
    
    -
    
    
    125,284
    
    
    35,700
    
    
    (267,535
    )
    
    (58,554
    )Stock issued for mineral property
    
    6,000,000
    
    
    6,000
    
    
    -
    
    
    294,000
    
    
    -
    
    
    -
    
    
    300,000Relative fair value allocation of convertible notes
    
    -
    
    
    -
    
    
    -
    
    
    90,021
    
    
    47,479
    
    
    -
    
    
    137,500Stock issued under assignment agreement
    
    150,000
    
    
    150
    
    
    -
    
    
    37,350
    
    
    -
    
    
    -
    
    
    37,500Stock issued pursuant to extension agreement
    
    60,000
    
    
    60
    
    
    -
    
    
    35,940
    
    
    -
    
    
    -
    
    
    36,000Share subscriptions received in advance
    
    -
    
    
    -
    
    
    2,500
    
    
    -
    
    
    -
    
    
    -
    
    
    2,500Net loss for the year
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    (375,580
    )
    
    (375,580
    )Balance, November 30, 2009
    
    54,207,144
    
    
    54,207
    
    
    2,500
    
    
    582,595
    
    
    83,179
    
    
    (643,115
    )
    
    79,366Units issued for cash at $0.10
    
    600,000
    
    
    600
    
    
    -
    
    
    37,650
    
    
    21,750
    
    
    -
    
    
    60,000Finders fees
    
    -
    
    
    -
    
    
    -
    
    
    (5,042
    )
    
    -
    
    
    -
    
    
    (5,042
    )Exercise of warrants
    
    150,000
    
    
    150
    
    
    (2,500
    )
    
    12,350
    
    
    -
    
    
    -
    
    
    10,000Expiry of warrants
    
    -
    
    
    -
    
    
    -
    
    
    83,179
    
    
    (83,179
    )
    
    -
    
    
    -Conversion of convertible notes
    
    2,750,000
    
    
    2,750
    
    
    -
    
    
    134,750
    
    
    -
    
    
    -
    
    
    137,500Stock issued under assignment agreement
    
    30,000
    
    
    30
    
    
    -
    
    
    6,370
    
    
    -
    
    
    -
    
    
    6,400Share subscriptions received in advance
    
    -
    
    
    -
    
    
    26,360
    
    
    -
    
    
    -
    
    
    -
    
    
    26,360Net loss for the year
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    (426,953
    )
    
    (426,953
    )Balance, November 30, 2010
    
    57,737,144
    
    
    57,737
    
    
    26,360
    
    
    851,852
    
    
    21,750
    
    
    (1,070,068
    )
    
    (112,369
    )Units issued for cash at $0.05
    
    527,200
    
    
    527
    
    
    (26,360
    )
    
    17,433
    
    
    8,400
    
    
    -
    
    
    -Net loss for the period
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    (64,470
    )
    
    (64,470
    )Balance, May 31, 2011
    
    58,264,344
    
    $
    58,264
    
    $
    -
    
    $
    869,285
    
    $
    30,150
    
    $
    (1,134,538
    )
    $
    (176,839
    )


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

---

|PENGRAM CORPORATION                                               
|------------------------------------------------------------------
|(An Exploration Stage Company)                                    
|                                                                  
|NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS
|                                                                  
|MAY 31, 2011                                                      
|(Unaudited)                                                       
|(Stated in U.S. Dollars)                                          

|1. | BASIS OF PRESENTATION AND NATURE OF
    OPERATIONS
|-- | --------------------------------------------------

The unaudited financial information
furnished herein reflects all adjustments, all of which are of a normal
recurring nature, which in the opinion of management are necessary to fairly
state the interim consolidated financial position of Pengram Corporation (the
Company) and the results of its operations for the periods presented. This
report on Form 10-Q should be read in conjunction with the Companys financial
statements and notes thereto included in the Companys Form 10-K for the fiscal
year ended November 30, 2010. The Company assumes that the users of the interim
financial information herein have read or have access to the audited financial
statements for the preceding fiscal year and that the adequacy of additional
disclosure needed for a fair presentation may be determined in that context.
Accordingly, footnote disclosure, which would substantially duplicate the
disclosure contained in the Companys Form 10-K for the fiscal year ended
November 30, 2010, has been omitted. The results of operations for the six month
period ended May 31, 2011 are not necessarily indicative of results for the
entire fiscal year ending November 30, 2011.

Consolidated Financial Statements

These consolidated financial statements
include the accounts of Pengram Corporation (the Company) and its wholly owned
subsidiaries, Magellan Acquisition Corp. (Nevada) (MAC) and Clisbako Minerals
Inc. (British Columbia) (CMI). All intercompany balances have been
eliminated.

Organization

The Company was incorporated in the
State of Nevada, U.S.A., on April 28, 2006. The Companys principal executive
offices are in Bellingham, Washington, U.S.A. The Companys year end is November
30.

Exploration Stage Activities

The Company has been in the exploration
stage since its formation and has not yet realized any revenues from its planned
operations. The Company was formed for the purpose of acquiring exploration and
development stage natural resource properties. The Company has not commenced
business operations. The Company is an exploration stage company as defined in
the Securities and Exchange Commission (S.E.C.) Industry Guide No. 7.

---

|PENGRAM CORPORATION                                               
|------------------------------------------------------------------
|(An Exploration Stage Company)                                    
|                                                                  
|NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS
|                                                                  
|MAY 31, 2011                                                      
|(Unaudited)                                                       
|(Stated in U.S. Dollars)                                          

|1. | BASIS OF PRESENTATION AND NATURE OF OPERATIONS(Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | Going Concern                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | The accompanying financial statements have been prepared
      assuming the Company will continue as a going concern.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | As shown in the accompanying financial statements, the
      Company has incurred a net loss of $1,134,538 for the period from April
      28, 2006 (inception) to May 31, 2011, and has no revenues. These factors
      raise substantial doubt about the Companys ability to continue as a going
      concern. The future of the Company is dependent upon its ability to obtain
      financing and upon future profitable operations from the development of
      its natural resource properties. Management has plans to seek additional
      capital through a private placement and public offering of its common
      stock. The financial statements do not include any adjustments relating to
      the recoverability and classification of recorded assets, or the amounts
      of and classification of liabilities that might be necessary in the event
      the Company cannot continue in existence.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|2. | SUMMARY OF SIGNIFICANT ACCOUNTING
  POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | The financial statements of the Company have been
      prepared in accordance with generally accepted accounting principles in
      the United States. Because a precise determination of many assets and
      liabilities is dependent upon future events, the preparation of financial
      statements for a period necessarily involves the use of estimates which
      have been made using careful judgement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | The financial statements have, in managements opinion,
      been properly prepared within the framework of the significant accounting
      policies summarized below:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

---

|PENGRAM CORPORATION                                               
|------------------------------------------------------------------
|(An Exploration Stage Company)                                    
|                                                                  
|NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS
|                                                                  
|MAY 31, 2011                                                      
|(Unaudited)                                                       
|(Stated in U.S. Dollars)                                          

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
|-- | -----------------------------------------------------
|   |                                                      
|   | c)                                                   
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      

---

|PENGRAM CORPORATION                                               
|------------------------------------------------------------------
|(An Exploration Stage Company)                                    
|                                                                  
|NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS
|                                                                  
|MAY 31, 2011                                                      
|(Unaudited)                                                       
|(Stated in U.S. Dollars)                                          

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
|-- | -----------------------------------------------------
|   |                                                      
|   | c)                                                   
|   |                                                      
|   |                                                      
|   |                                                      
|   | d)                                                   
|   |                                                      
|   |                                                      
|   |                                                      
|   | e)                                                   
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   | f)                                                   
|   |                                                      
|   |                                                      
|   |                                                      
|   | g)                                                   
|   |                                                      
|   |                                                      
|   |                                                      
|   | h)                                                   
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      

---

|PENGRAM CORPORATION                                               
|------------------------------------------------------------------
|(An Exploration Stage Company)                                    
|                                                                  
|NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS
|                                                                  
|MAY 31, 2011                                                      
|(Unaudited)                                                       
|(Stated in U.S. Dollars)                                          

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
|-- | -----------------------------------------------------
|   |                                                      
|   | i)                                                   
|   |                                                      
|   |                                                      
|   |                                                      
|   | j)                                                   
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      

MAY 31
    
    
    NOVEMBER 302011
    
    
    2010Share purchase warrants
    
    1,127,200
    
    
    600,000


| | k) | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    | The Company uses an asset and liability approach for
      financial accounting and reporting on income taxes. If it is more likely
      than not that some portion or all of a deferred tax asset will not be
      realized, a valuation allowance is recognized.                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | l) | Impairment of Long-Lived Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    | The Company records impairment losses on long-lived
      assets used in operations when indicators of impairment are present and
      the undiscounted cash flows estimated to be generated by those assets are
      less than the assets carrying amount. In such cases, the amount of the
      impairment is determined based on the relative fair values of the impaired
      assets. The Company tests the recoverability of the assets whenever events
      or changes in circumstances indicate that its carrying amount may not be
      recoverable.

---

|PENGRAM CORPORATION                                               
|------------------------------------------------------------------
|(An Exploration Stage Company)                                    
|                                                                  
|NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS
|                                                                  
|MAY 31, 2011                                                      
|(Unaudited)                                                       
|(Stated in U.S. Dollars)                                          

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
|-- | -----------------------------------------------------
|   |                                                      
|   | m)                                                   
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   | n)                                                   
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      

---

|PENGRAM CORPORATION                                               
|------------------------------------------------------------------
|(An Exploration Stage Company)                                    
|                                                                  
|NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS
|                                                                  
|MAY 31, 2011                                                      
|(Unaudited)                                                       
|(Stated in U.S. Dollars)                                          

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
|-- | -----------------------------------------------------
|   |                                                      
|   | o)                                                   
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   | p)                                                   
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      

| | Level 1: | Observable inputs such as quoted prices in active
      markets;                                                                        
| | -------- | ----------------------------------------------------------------------------------------------------------------------------------------
| |          |                                                                                                                                         
| | Level 2: | Inputs, other than the quoted prices in active markets,
      that are observable either directly or indirectly; and                    
| |          |                                                                                                                                         
| | Level 3: | Unobservable inputs in which there is little or no market
      data, which require the reporting entity to develop its own assumptions.

The Company did not have any fair
value adjustments for assets and liabilities measured at fair value on a
nonrecurring basis during the six month period ended May 31, 2011.

---

|PENGRAM CORPORATION                                               
|------------------------------------------------------------------
|(An Exploration Stage Company)                                    
|                                                                  
|NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS
|                                                                  
|MAY 31, 2011                                                      
|(Unaudited)                                                       
|(Stated in U.S. Dollars)                                          

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
|-- | -----------------------------------------------------
|   |                                                      
|   | p)                                                   
|   |                                                      
|   |                                                      

| |                                                               |   |            |  |   | QUOTED        |  |   | SIGNIFICANT   |  |   |               | 
| | ------------------------------------------------------------- | - | ---------- |  | - | ------------- |  | - | ------------- |  | - | ------------- | 
| |                                                               |   | FAIR VALUE |  |   | PRICES        |  |   | OTHER         |  |   |               | 
| |                                                               |   | AT         |  |   | IN ACTIVE     |  |   | OBSERVABLE    |  |   | UNOBSERVABLE  | 
| |                                                               |   | MAY 31     |  |   | MARKETS       |  |   | INPUTS        |  |   | INPUTS        | 
| | DESCRIPTION                                                   |   | 2011       |  |   | **(LEVEL 1)** |  |   | **(LEVEL 2)** |  |   | **(LEVEL 3)** | 
| |                                                               |   |            |  |   |               |  |   |               |  |   |               | 
| | Financial Assets:                                             |   |            |  |   |               |  |   |               |  |   |               | 
| | Cash                                                          | $ | 15,938     |  | $ | 15,938        |  | $ | -             |  | $ | -             | 
| | Financial assets measured at fair value at
      May 31, 2011 | $ | 15,938     |  | $ | 15,938        |  | $ | -             |  | $ | -             | 

| | q) | Recent Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    | In May 2011, the FASB issued new authoritative guidance
      to provide a consistent definition of fair value and ensure that fair
      value measurements and disclosure requirements are similar between GAAP
      and International Financial Reporting Standards. This guidance changes
      certain fair value measurement principles and enhances the disclosure
      requirements for fair value measurements. This guidance is effective for
      interim and annual periods beginning after December 15, 2011 and is
      applied prospectively. The Company does not expect that the adoption of
      this guidance will have a material impact on its financial
    statements.

---

|PENGRAM CORPORATION                                               
|------------------------------------------------------------------
|(An Exploration Stage Company)                                    
|                                                                  
|NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS
|                                                                  
|MAY 31, 2011                                                      
|(Unaudited)                                                       
|(Stated in U.S. Dollars)                                          

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
|-- | -----------------------------------------------------

| | q) | Recent Accounting Pronouncements
  (Continued)
| | -- | ----------------------------------------------

In April 2010, the FASB provided an
update to address the classification of an employee share-based payment award
with an exercise price denominated in the currency of a market in which the
underlying equity security trades. FASB Accounting Standards Codification Topic
718, CompensationStock Compensation, provides guidance on the classification of
a share-based payment award as either equity or a liability. A share-based
payment award that contains a condition that is not a market, performance, or
service condition is required to be classified as a liability. This standard is
effective for fiscal years beginning after December 15, 2010, and for subsequent
interim and annual reporting periods thereafter. The Company does not expect the
adoption of this standard to have a significant effect on the Company's results
of operations or financial position.

In January 2010, the FASB issued ASU
2010-06, Fair Value Measurements and Disclosures (Topic 820), Improving
Disclosures about Fair Value Measurements,amending ASC 820. ASU 2010-06
requires entities to provide new disclosures and clarify existing disclosures
relating to fair value measurements. The new disclosures and clarifications of
existing disclosures are effective for interim and annual reporting periods
beginning after December 15, 2009, except for the disclosures about purchases,
sales, issuances, and settlements in Level 3 fair value measurements, which are
effective for fiscal years beginning after December 15, 2010 and for interim
periods within those fiscal years. The Company is currently evaluating the
impact of ASU 2010-06, but does not expect its adoption to have a material
impact on the Companys financial position or results of operations.

In October 2009, the FASB issued ASU
2009-13, Revenue Recognition (Topic 605), Multiple-Deliverable Revenue
Arrangementsamending ASC 605. ASU 2009-13 requires entities to allocate
revenue in an arrangement using estimated selling prices of the delivered goods
and services based on a selling price hierarchy. ASU 2009-13 eliminates the
residual method of revenue allocation and requires revenue to be allocated using
the relative selling price method. ASU 2009-13 is effective prospectively for
revenue arrangements entered into or materially modified in fiscal years
beginning on or after June 15, 2010. The adoption did not have a material impact
on the Companys financial position or results of operations.

Management does not believe any other
recently issued but not yet effective accounting pronouncements, if adopted,
would have an effect on the accompanying financial statements.

---

|PENGRAM CORPORATION                                               
|------------------------------------------------------------------
|(An Exploration Stage Company)                                    
|                                                                  
|NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS
|                                                                  
|MAY 31, 2011                                                      
|(Unaudited)                                                       
|(Stated in U.S. Dollars)                                          

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)                                                                                                                                                                                                                                                                                              
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                    
|   | q)                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                    
|3. | LONG-TERM INVESTMENT                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                    
|   | In the year ended November 30, 2009, the Company received
      250,000 common shares in Solfotara Mining Corp. (Solfotara), a private
      Canadian company as consideration for transferring its interest in an
      option agreement to Solfotara. The total value attributed to the common
      stock received from Solfotara was $10,367.
|   |                                                                                                                                                                                                                                                                                                                                                    
|   | Solfotara undertook a corporate reorganization, whereby
      it spun out a certain project to Copper Development Corporation (CDC) in
      consideration for publicly traded shares in CDC.                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                    
|   | These marketable securities were distributed to
      Solfotaras shareholders on March 24, 2011. Accordingly, the Company
      received 209,000 shares in CDC, having a fair value of $115,909. This
      receipt was recognized as dividend income in the statement of
      operations.                                                       
|   |                                                                                                                                                                                                                                                                                                                                                    
|   | On April 21, 2011, the Company settled $110,770 of debt
      by transferring its ownership in the 209,000 CDC shares which had a value
      of $120,279. The settlement of debt was allocated as
  follows:                                                                                                                                      

Accounts payable and accured liabilities
    $
    64,448Amounts due to related parties
    
    14,390Promissory notes payable
    
    24,459Promissory notes payable to related parties
    
    5,883Loan payable
    
    1,590$
    110,770


As result of this settlement, the
Company recorded a loss on settlement of debt of $9,509 and an unrealized gain
on the marketable securities of $4,370 in the statement of operations.

---

|PENGRAM CORPORATION                                               
|------------------------------------------------------------------
|(An Exploration Stage Company)                                    
|                                                                  
|NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS
|                                                                  
|MAY 31, 2011                                                      
|(Unaudited)                                                       
|(Stated in U.S. Dollars)                                          

|4. | MINERAL PROPERTY ACQUISITION
  COSTS
|-- | ------------------------------------

| |                     |   |             |  |   |           |  |   |            |   |   |          |   |   | RECOVERY        |  |   |         | 
| | ------------------- | - | ----------- |  | - | --------- |  | - | ---------- | - | - | -------- | - | - | --------------- |  | - | ------- | 
| |                     |   | NOVEMBER 30 |  |   |           |  |   | ABANDONED, |   |   |          |   |   | RECOGNIZED      |  |   | MAY 31  | 
| |                     |   | 2010        |  |   | ADDITIONS |  |   | IMPAIRED   |   |   | RECOVERY |   |   | AS
      INCOME |  |   | 2011    | 
| | Mineral Property    |   |             |  |   |           |  |   |            |   |   |          |   |   |                 |  |   |         | 
| |                     |   |             |  |   |           |  |   |            |   |   |          |   |   |                 |  |   |         | 
| | Clisbako claims (a) | $ | 350,350     |  | $ | -         |  | $ | -          |   | $ | (40,604  | ) | $ | -               |  | $ | 309,746 | 
| | Eureka claims (b)   |   | 62,525      |  |   | -         |  |   | -          |   |   | -        |   |   | -               |  |   | 62,525  | 
| | Elko claims (e)     |   | -           |  |   | 10,000    |  |   | (10,000    | ) |   | -        |   |   | -               |  |   | -       | 
| |                     |   |             |  |   |           |  |   |            |   |   |          |   |   |                 |  |   |         | 
| |                     | $ | 412,875     |  | $ | 10,000    |  | $ | (10,000    | ) | $ | (40,604  | ) | $ | -               |  | $ | 372,271 | 

| |                        |   |             |  |   |           |  |   |            |   |   |          |   |   | RECOVERY        |  |   |             | 
| | ---------------------- | - | ----------- |  | - | --------- |  | - | ---------- | - | - | -------- | - | - | --------------- |  | - | ----------- | 
| |                        |   | NOVEMBER 30 |  |   |           |  |   | ABANDONED, |   |   |          |   |   | RECOGNIZED      |  |   | NOVEMBER 30 | 
| |                        |   | 2009        |  |   | ADDITIONS |  |   | IMPAIRED   |   |   | RECOVERY |   |   | AS
      INCOME |  |   | 2010        | 
| | Mineral Property       |   |             |  |   |           |  |   |            |   |   |          |   |   |                 |  |   |             | 
| |                        |   |             |  |   |           |  |   |            |   |   |          |   |   |                 |  |   |             | 
| | Clisbako claims (a)    | $ | 392,600     |  | $ | 6,400     |  | $ | -          |   | $ | (48,650  | ) | $ | -               |  | $ | 350,350     | 
| | Eureka claims (b)      |   | 47,500      |  |   | 15,025    |  |   | -          |   |   | -        |   |   | -               |  |   | 62,525      | 
| | Manado Gold claims (c) |   | -           |  |   | 50,050    |  |   | -          |   |   | (68,427  | ) |   | 18,377          |  |   | -           | 
| | June claims (d)        |   | -           |  |   | 3,000     |  |   | (3,000     | ) |   | -        |   |   | -               |  |   | -           | 
| |                        |   |             |  |   |           |  |   |            |   |   |          |   |   |                 |  |   |             | 
| |                        | $ | 440,100     |  | $ | 74,475    |  | $ | (3,000     | ) | $ | (117,077 | ) | $ | 18,377          |  | $ | 412,875     | 

| | a) | Clisbako Claims                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    | On December 16, 2008, the Company entered into a purchase
      agreement to acquire an undivided 100% interest in a group of ten mineral
      claims (collectively known as the Clisbako claims) located in the
      Cariboo Mining Division of British Columbia, Canada. Consideration for the
      claims was 6,000,000 shares (issued  see Note 10(a)) of the Companys
      common stock with a value of $300,000 and the issuance to the vendor of a
      promissory note in the amount of CDN$70,000 (US$56,600) payable June 30,
      2009. On July 23, 2009, the Company reached an agreement with the vendor
      to extend the deadline of the CDN$70,000 mineral property payment
      (Property Payment) to December 31, 2009. In consideration of the
      extension of the deadline, the Company issued 60,000 common shares to the
      vendor with a fair value of $36,000.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    | On January 21, 2010, the Company reached an agreement
      with the vendor to further extend the due date of the Property Payment to
      February 15, 2010. In consideration of the further extension of the
      deadline, the Company issued 10,000 shares of its common stock to the
      vendor with a value of $4,200.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    | On March 15, 2010, the Company entered into a third
      extension agreement dated for reference February 15, 2010, with the vendor
      to extend the Property Payment from February 15, 2010 to June 30, 2010. In
      consideration of the extension, the Company issued to the vendor 20,000
      common shares with a value of $2,200.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

---

|PENGRAM CORPORATION                                               
|------------------------------------------------------------------
|(An Exploration Stage Company)                                    
|                                                                  
|NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS
|                                                                  
|MAY 31, 2011                                                      
|(Unaudited)                                                       
|(Stated in U.S. Dollars)                                          

|4. | MINERAL PROPERTY ACQUISITION COSTS(Continued)
|-- | ---------------------------------------------

| | a) | Clisbako Claims(Continued)
| | -- | --------------------------

On September 15, 2010, and as amended
by letter agreement dated November 15, 2010, the Company, through its wholly
owned subsidiary, CMI., entered into an option agreement (the "Clisbako Option
Agreement") with Manado Gold Corp., which has two common directors with the
Company, whereby the Company granted Manado Gold Corp. the sole and exclusive
right and option to acquire a 75% undivided interest in the Clisbako Property.
Under the terms of the Option Agreement, Manado Gold Corp. will exercise its
option upon completing the following:

| | 1. | Paying an aggregate of $150,000 to CMI. as
  follows:
| | -- | -----------------------------------------------------

| | (a) | $50,000 on execution of the agreement (CDN$50,000 or
      US$48,650 has been paid);                                                                                                                                                                                  
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                       
| | (b) | a further $50,000 on or before February 28, 2011 (paid
      CDN$40,000 or US$40,604); and                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                       
| | (c) | a further $50,000 on or before April 30, 2011. (By
      agreement dated April 30, 2011 with Manado Gold Corp., the Company has
      agreed to waive payment, in exchange to terminate an assigned option with
      respect to the Manado property. See Note 4 (c)).

| | 2. | Issuing an aggregate of 600,000 Shares to CMI as
      follows:
| | -- | ---------------------------------------------------------------

(a)
    100,000 Shares on or before September 15, 2011;(b)
    a further 200,000 Shares on or before September
      15, 2012; and(c)
    a further 300,000 Shares on or before September
      15, 2013.


| | 3. | Incurring Exploration Expenditures of CDN$650,000 on the
      Clisbako Property as follows:
| | -- | --------------------------------------------------------------------------------------------

| | (a) | CDN$100,000 on or before September 15, 2011;                    
| | --- | ----------------------------------------------------------------
| |     |                                                                 
| | (b) | a further CDN$300,000 on or before September 15, 2012;
      and
| |     |                                                                 
| | (c) | a further CDN$250,000 on or before September 15,
    2013.      

Manado Gold Corp. will also be
responsible to make all government payments required to keep the claims in good
standing.

---

|PENGRAM CORPORATION                                               
|------------------------------------------------------------------
|(An Exploration Stage Company)                                    
|                                                                  
|NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS
|                                                                  
|MAY 31, 2011                                                      
|(Unaudited)                                                       
|(Stated in U.S. Dollars)                                          

|4. | MINERAL PROPERTY ACQUISITION COSTS(Continued)
|-- | ---------------------------------------------
|   |                                              
|   | b)                                           
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              

---

|PENGRAM CORPORATION                                               
|------------------------------------------------------------------
|(An Exploration Stage Company)                                    
|                                                                  
|NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS
|                                                                  
|MAY 31, 2011                                                      
|(Unaudited)                                                       
|(Stated in U.S. Dollars)                                          

|4. | MINERAL PROPERTY ACQUISITION COSTS(Continued)
|-- | ---------------------------------------------
|   |                                              
|   | b)                                           
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              

The term of the CPG Option expires
August 28, 2013, but may be extended for five years by paying $6,200 in each
subsequent year. The Company is also obligated to pay all county and BLM claim
fees and Nevada state taxes during the currency of the agreement.

The CPG Project is subject to a
royalty of 3% net smelter returns upon the commencement of commercial
production. At any time the Company may reduce the royalty as follows:

| | (a) | to 1% by paying $1,000,000 to the royalty holder;
    or
| | --- | --------------------------------------------------------
| |     |                                                         
| | (b) | to 2% by paying $500,000 to the royalty
  holder.       

Fish Claims

The Company entered into an agreement
dated as of March 31, 2011 with Claremont to earn a 100% undivided interest (the
Fish Option) in the Fish Claims by:

| | (a) | paying to Claremont advance royalty payments as
      follows:
| | --- | --------------------------------------------------------------
| |     |                                                               
| |     | i)                                                            
| |     |                                                               
| |     | ii)                                                           
| |     |                                                               
| |     | iii)                                                          

---

|PENGRAM CORPORATION                                               
|------------------------------------------------------------------
|(An Exploration Stage Company)                                    
|                                                                  
|NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS
|                                                                  
|MAY 31, 2011                                                      
|(Unaudited)                                                       
|(Stated in U.S. Dollars)                                          

|4. | MINERAL PROPERTY ACQUISITION COSTS(Continued)
|-- | ---------------------------------------------
|   |                                              
|   | b)                                           
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              

The term of the Fish Option expires
August 28, 2013, but may be extended for five years by paying $8,100 in each
subsequent year. The Company is also obligated to pay all county and BLM claim
fees and Nevada state taxes during the currency of the agreement.

The Fish Claims are subject to a
royalty of 3% net smelter returns upon the commencement of commercial
production. At any time the Company may reduce the royalty as follows:

| | (a) | to 1% by paying $1,000,000 to the royalty holder;
    or
| | --- | --------------------------------------------------------
| |     |                                                         
| | (b) | to 2% by paying $500,000 to the royalty
  holder.       

Golden Snow Property

The Company entered into an agreement
dated as of March 31, 2011 with Scoonover Exploration LLC and JR Exploration LLC
(collectively, the Golden Snow Optionors) to earn a 100% undivided interest
(the Golden Snow Option) in the Golden Snow Property by:

| | (a) | paying to the Golden Snow Optionors advance royalty
      payments as follows:
| | --- | ------------------------------------------------------------------------------
| |     |                                                                               
| |     | i)                                                                            
| |     |                                                                               
| |     | ii)                                                                           
| |     |                                                                               
| |     | iii)                                                                          

---

|PENGRAM CORPORATION                                               
|------------------------------------------------------------------
|(An Exploration Stage Company)                                    
|                                                                  
|NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS
|                                                                  
|MAY 31, 2011                                                      
|(Unaudited)                                                       
|(Stated in U.S. Dollars)                                          

|4. | MINERAL PROPERTY ACQUISITION COSTS(Continued)
|-- | ---------------------------------------------
|   |                                              
|   | b)                                           
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              

The term of the Golden Snow Option
expires August 28, 2013, but may be extended for five years by paying $15,900 in
each subsequent year. The Company is also obligated to pay all county and BLM
claim fees and Nevada state taxes during the currency of the agreement.

The Golden Snow Property is subject to
a royalty of 3% net smelter returns upon the commencement of commercial
production. At any time the Company may reduce the royalty as follows:

| | (a) | to 1% by paying $1,000,000 to the royalty holder;
    or
| | --- | --------------------------------------------------------
| |     |                                                         
| | (b) | to 2% by paying $500,000 to the royalty
  holder.       

Agreement with Terrace Ventures
Inc. (Golden Snow Property)

On April 26, 2011, the Company entered
into an agreement (the "Earn-In Agreement") with Terrace Ventures
Inc.(Terrace). Under the terms of the Earn-In Agreement, Terrace will earn up
to a 75% interest in the Companys agreement with the Golden Snow Optionors (the
Underlying Agreement) by paying the Company up to $175,000 and expending up to
$1,750,000 in exploration expenditures on the Golden Snow Property as
follows:

| | (a) | The first 25% interest in the Underlying Agreement upon
      Terrace:
| | --- | ----------------------------------------------------------------------
| |     |                                                                       
| |     | (i)                                                                   

---

|PENGRAM CORPORATION                                               
|------------------------------------------------------------------
|(An Exploration Stage Company)                                    
|                                                                  
|NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS
|                                                                  
|MAY 31, 2011                                                      
|(Unaudited)                                                       
|(Stated in U.S. Dollars)                                          

|4. | MINERAL PROPERTY ACQUISITION COSTS(Continued)
|-- | ---------------------------------------------
|   |                                              
|   | b)                                           
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              

| |    | Terrace is also obligated to pay all advance royalties,
      county and BLM claim fees and Nevada state taxes during the currency of
      the Earn-In Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | c) | Manada Gold Claims                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | On January 19, 2010 the Company entered into an option
      agreement to acquire interests in four mineral claims (collectively known
      as the Manado Gold claims) in the Lobongan District of Northern
      Sulawesi, Indonesia. The Company paid $35,000 for this option agreement
      and then entered into an acquisition agreement to purchase an 85% in the
      Manado gold claims over a three year period. Terms of the acquisition
      agreement were for the Company to earn an initial 10% interest to pay a
      cash payment of $90,000 (paid $15,050), issue 150,000 shares of the
      Companys stock (not issued) and complete an exploration program of at
      least $250,000 (not completed); to earn a further 15% pay a cash payment
      of $100,000, issue 300,000 shares of the Companys stock, and complete an
      additional $500,000 exploration program; to earn a further 26% interest
      pay $200,000, issue 500,000 shares of the Companys stock and incur a
      further $1,000,000 in exploration expenditures; the final 34% interest
      upon completion of a scoping study on the
claims.

---

|PENGRAM CORPORATION                                               
|------------------------------------------------------------------
|(An Exploration Stage Company)                                    
|                                                                  
|NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS
|                                                                  
|MAY 31, 2011                                                      
|(Unaudited)                                                       
|(Stated in U.S. Dollars)                                          

|4. | MINERAL PROPERTY ACQUISITION COSTS(Continued)
|-- | ---------------------------------------------
|   |                                              
|   | c)                                           
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              
|   |                                              

| | d) | June Claims                                                                                                                                                                                                                                                                                                             
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                         
| |    | On February 5, 2010, the Company entered into an option
      agreement to acquire an undivided 100% interest in a series of mineral
      claims (collectively known as the June claims) situated in the Alberni
      Mining Division of British Columbia, Canada. Consideration for the claims
      is as follows:
| |    |                                                                                                                                                                                                                                                                                                                         
| |    | i)                                                                                                                                                                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                                                                                                         
| |    | ii)                                                                                                                                                                                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                         
| |    | iii)                                                                                                                                                                                                                                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                         
| |    | iv)                                                                                                                                                                                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                         
| |    | v)                                                                                                                                                                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                                                                                                         
| |    | During the year ended November 30, 2010, the Company
      abandoned and wrote off all costs incurred with respect to the June
      property.                                                                                                                                                                          

---

|PENGRAM CORPORATION                                               
|------------------------------------------------------------------
|(An Exploration Stage Company)                                    
|                                                                  
|NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS
|                                                                  
|MAY 31, 2011                                                      
|(Unaudited)                                                       
|(Stated in U.S. Dollars)                                          

|4. | MINERAL PROPERTY AND ACQUISITION COSTS(Continued)
|-- | -------------------------------------------------
|   |                                                  
|   | e)                                               
|   |                                                  
|   |                                                  
|   |                                                  
|5. | PROMISSORY NOTES PAYABLE                         
|   |                                                  
|   | a)                                               
|   |                                                  
|   |                                                  
|   |                                                  
|   | b)                                               
|   |                                                  
|   |                                                  
|   |                                                  
|   | c)                                               

---

|PENGRAM CORPORATION                                               
|------------------------------------------------------------------
|(An Exploration Stage Company)                                    
|                                                                  
|NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS
|                                                                  
|MAY 31, 2011                                                      
|(Unaudited)                                                       
|(Stated in U.S. Dollars)                                          

|6. | PROMISSORY NOTES PAYABLE TO RELATED
  PARTIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|7. | LOAN PAYABLE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | On October 1, 2008, the Company received a loan from an
      arms length party of $10,000. The loan is unsecured, repayable on demand
      and bears interest at 10% per annum, payable annually. During the year
      ended November 30, 2009, the Company paid back $4,610 of this balance. As
      at May 31, 2011, a total of $1,876 (November 30, 2010 - $1,625) has been
      accrued as interest payable on the loan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | On April 21, 2011, the Company settled $1,590 of the loan
      by way of exchange of marketable securities for debt. See Note
3.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|8. | CONVERTIBLE NOTES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | On April 30, 2009, the Company issued 55, $2,500
      Convertible Notes (the notes) in the aggregate amount of $137,500 due
      and payable on or before October 31, 2010, with interest charged at the
      rate of 10% per annum payable annually. Attached to the Notes were 550,000
      share purchase warrants (10,000 attached to each of the 55 notes). Each
      warrant entitles the holder to purchase three shares of the Companys
      common stock for a period expiring one year from the date of issuance of
      the notes at an exercise price of $0.25 ($0.083 per share). At the
      election of the holder, the notes and interest accrued thereon are
      convertible into such number of shares of the Companys common stock as
      shall be equal to the principal amount of the convertible note to be
      converted divided by $0.05. Conversion of the notes does not affect the
      warrants.

---

|PENGRAM CORPORATION                                               
|------------------------------------------------------------------
|(An Exploration Stage Company)                                    
|                                                                  
|NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS
|                                                                  
|MAY 31, 2011                                                      
|(Unaudited)                                                       
|(Stated in U.S. Dollars)                                          

|8. | CONVERTIBLE NOTES(Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | During the year ended November 30, 2008, the Company had
      received $67,500 towards the convertible notes offering. During the year
      end November 30, 2009, the Company received the remaining $70,000 towards
      this offering.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The Company has allocated the proceeds received between
      the notes and the detachable warrants on a relative fair value basis. The
      fair value of the warrants was estimated using the Black-Scholes option
      pricing model at the date of issue with the following weighted average
      assumptions: expected dividend yield of 0%; average risk free interest
      rate of 0.63%; expected volatility of 229% and a term of 1.0 year. The
      fair value of the notes was estimated by multiplying the number of shares
      that would result from an immediate exercise of the conversion option, by
      the market price on the date of issue. The relative fair values of the
      notes and the warrants determine the debt discount attributable to the
      warrants. The result was $47,479 of the proceeds being allocated to the
      warrants and $90,021 being allocated to the notes. The resulting discount
      on the notes is amortized over the term of the notes to maturity such
      that, in the absence of any conversions, the carrying value of the notes
      at maturity would be equal to the face amount of $137,500. In the event of
      a conversion of any, or all, of the face amount of the notes, the
      proportionate amount of the unamortized discount as of the date of
      conversion is immediately charged to operations.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | In accordance with the provisions of ASC 470  20, the
      Company determined the intrinsic value of the beneficial conversion
      feature on the notes by comparing the market price of the Companys common
      stock at issuance of the notes to the effective conversion price of the
      notes, as determined by dividing the proceeds allocated to the notes by
      the number of shares that would result from an immediate exercise of the
      conversion option. The initial beneficial conversion feature was
      determined to be $734,250; however, in accordance with the provisions of
      ASC 470  20, it is limited to the proceeds allocated to the notes, being
      $90,021. This beneficial conversion feature was recorded as an immediate
      charge to additional paid-in capital and a further discount on the
      convertible note carrying value. This further discount is to be amortized
      over the term of the notes to maturity. In the event of a conversion of
      any, or all, of the face amount of the notes, the proportionate amount of
      the unamortized beneficial conversion feature as of the date of conversion
      is immediately charged to operations.                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | During the year ended November 30, 2010, the Company
      recorded as finance charges, $28,964 of amortization (May 31, 2010 -
      $15,783) of the discount resulting from the allocation of proceeds to the
      warrants and a further $54,917 (May 31, 2010 - $29,925) of the intrinsic
      value of the beneficial conversion feature, leaving total unamortized
      amounts of $Nil (May 31, 2010 - $38,173). The accrued interest of $24,122
      remains unpaid as of May 31, 2011 and November 30, 2010, and is included
      in accounts payable and accrued liabilities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

---

|PENGRAM CORPORATION                                               
|------------------------------------------------------------------
|(An Exploration Stage Company)                                    
|                                                                  
|NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS
|                                                                  
|MAY 31, 2011                                                      
|(Unaudited)                                                       
|(Stated in U.S. Dollars)                                          

|8.  | CONVERTIBLE NOTES(Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | During the year ended November 30, 2010, the entire
      principal of $137,500 was converted into 2,750,000 shares of the Companys
      common stock.                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|9.  | UNIT SUBSCRIPTIONS RECEIVED                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | During the year ended November 30, 2010, the Company
      received $14,965 in subscription funds in connection with a private
      placement mentioned above. Due to the provision in the subscription
      agreements that the subscription funds will constitute non-interest
      bearing demand loans to the Company in the event the subscriptions are not
      accepted by the Company, the Company classified the unit subscriptions
      received in advance as current liabilities.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10. | CAPITAL STOCK                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

---

|PENGRAM CORPORATION                                               
|------------------------------------------------------------------
|(An Exploration Stage Company)                                    
|                                                                  
|NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS
|                                                                  
|MAY 31, 2011                                                      
|(Unaudited)                                                       
|(Stated in U.S. Dollars)                                          

|10. | CAPITAL STOCK(Continued)
|--- | ------------------------
|    |                         
|    | a)                      
|    |                         
|    |                         
|    |                         
|    |                         
|    |                         
|    |                         
|    |                         
|    |                         
|    |                         
|    |                         
|    |                         
|    |                         
|    |                         
|    |                         
|    |                         
|    |                         
|    |                         
|    | b)                      
|    |                         
|    |                         

NUMBER OF
    EXERCISEWARRANTS
    PRICE
    EXPIRY DATE500,000
    $ 0.15
    July 20, 2012100,000
    $ 0.15
    August 4, 2012527,200
    $ 0.10
    February 18, 20131,127,200


---

|PENGRAM CORPORATION                                               
|------------------------------------------------------------------
|(An Exploration Stage Company)                                    
|                                                                  
|NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS
|                                                                  
|MAY 31, 2011                                                      
|(Unaudited)                                                       
|(Stated in U.S. Dollars)                                          

|10. | CAPITAL STOCK(Continued)
|--- | ------------------------
|    |                         
|    | b)                      
|    |                         
|    |                         

NUMBER OF
    
    
    WEIGHTED AVERAGEWARRANTS
    
    
    EXERCISE PRICEBalance, November 30, 2009
    
    4,650,000
    
    $
    0.05Granted
    
    600,000
    
    $
    0.15Exercised
    
    (150,000
    )
    $
    (0.083
    )Expired
    
    (4,500,000
    )
    $
    (0.05
    )Balance, November 30, 2010
    
    600,000
    
    $
    0.15Granted
    
    527,200
    
    $
    0.10Balance, May 31, 2011
    
    1,127,200
    
    $
    0.13


The fair value of the warrants issued
in connection with the private placement during the year ended November 30, 2010
was measured at the award date using the Black-Scholes option pricing model with
the following weighted average assumptions: expected dividend yield of 0%;
average risk free interest rate of 1.46%; expected volatility of 168% and a term
of 2 years. Of the total proceeds, $21,750 was allocated to share purchase
warrants.

The fair value of the warrants issued
in connection with the private placement during the six month period ended May
31, 2011 was measured at the award date using the Black-Scholes option pricing
model with the following weighted average assumptions: expected dividend yield
of 0%; average risk free interest rate of 0.78%; expected volatility of 202% and
a term of 2 years. Of the total proceeds, $8,400 was allocated to share purchase
warrants.

---

|PENGRAM CORPORATION                                               
|------------------------------------------------------------------
|(An Exploration Stage Company)                                    
|                                                                  
|NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS
|                                                                  
|MAY 31, 2011                                                      
|(Unaudited)                                                       
|(Stated in U.S. Dollars)                                          

|10. | CAPITAL STOCK(Continued)                                                                                                                                                                                                                                                        
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                 
|    | c)                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                 
|11. | RELATED PARTY TRANSACTIONS                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                 
|    | As of May 31, 2011, the Company is indebted to the
      following additional related parties otherwise not disclosed in previous
      notes:                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                 
|    | i)                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                 
|    | ii)                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                 
|    | The amounts due to the related parties are unsecured,
      non-interest bearing with no fixed terms of repayment.                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                 
|    | During the six months ended May 31, 2011, the Company
      paid or accrued $18,000 (2010 - $18,000) for management fees to the board
      of directors of MAC.                                                                                                                
|    |                                                                                                                                                                                                                                                                                 
|    | On April 21, 2011, outstanding management fees
      aggregating $14,390 were settled by the Company by the transferring of
      marketable securities to related parties. See Note 3.                                                                                         
|    |                                                                                                                                                                                                                                                                                 
|    | These transactions with related parties were in the
      normal course of operations and were measured at the exchange value which
      represented the amount of consideration established and agreed to by the
      parties.                                               
|    |                                                                                                                                                                                                                                                                                 
|12. | COMMITMENTS AND CONTRACTUAL OBLIGATIONS                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                 
|    | The Company has no significant commitments or contractual
      obligations with any parties respecting executive compensation, consulting
      arrangements or other matters. Rental of premises and investor relations
      services are provided on a month-to-month
basis.

---

|PENGRAM CORPORATION                                               
|------------------------------------------------------------------
|(An Exploration Stage Company)                                    
|                                                                  
|NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS
|                                                                  
|MAY 31, 2011                                                      
|(Unaudited)                                                       
|(Stated in U.S. Dollars)                                          

|13. | SEGMENT INFORMATION                                                                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                   
|    | The Company has one reportable operating segment, being
      the acquisition and exploration of mineral properties. Details of
      identifiable assets by geographic segments are as
  follows:

MINERALPROPERTYINTERESTSMay 31 2011USA
    $
    62,525Canada
    
    309,746$
    372,271


MINERALPROPERTYINTERESTSNovember 30, 2010USA
    $
    62,525Canada
    
    350,350$
    412,875


|14. | SUBSEQUENT EVENTS                                                                                                                                                                                                                                
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                  
|    | Subsequent to May 31, 2011, the Company entered into two
      promissory note agreements whereby it borrowed $28,346 from an arms
      length party. Each note bears interest at 10% per annum, is unsecured and
      is repayable on demand.

---

|ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF
      FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|------- | --------------------------------------------------------------------------------------------

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS

Certain statements contained in this Quarterly Report
constitute "forward-looking statements. These statements, identified by words
such as plan, "anticipate, "believe, "estimate, "should, "expect" and
similar expressions include our expectations and objectives regarding our future
financial position, operating results and business strategy. These statements
reflect the current views of management with respect to future events and are
subject to risks, uncertainties and other factors that may cause our actual
results, performance or achievements, or industry results, to be materially
different from those described in the forward-looking statements. Such risks and
uncertainties include those set forth under the caption "Part II - Item 1A. Risk
Factors and elsewhere in this Quarterly Report. We advise you to carefully
review the reports and documents we file from time to time with the United
States Securities and Exchange Commission (the SEC), particularly our periodic
reports filed with the SEC pursuant to the Securities Exchange Act of 1934 (the
Exchange Act).

OVERVIEW

We were incorporated on April 28, 2006 under the laws of the
State of Nevada.

Our business plan is to assemble a portfolio of mineral
properties with gold potential and to engage in the exploration and development
of these properties. We currently have an option to acquire a 100% interest in
certain mineral properties known as the Fish Project in Esmeralda County, Nevada
and the CPG Project in Mineral County, Nevada. We also have an option to acquire
the Golden Snow Property in Eureka County, Nevada, which is subject to a 75%
earn-in by Terrace Ventures Inc.

We hold 100% title in ten contiguous mineral claims covering an
area of approximately 3,388 hectares (the Clisbako Property) located in the
Interior Plateau Region of north central British Columbia. On September 15,
2010, Clisbako Minerals Inc. (Clisbako) entered into an option agreement (the
Clisbako Option Agreement) with Manado Gold Corp. (Manado Corp.) whereby we
granted Manado Corp. the sole and exclusive right and option to acquire a 75%
undivided interest in the Clisbako Property. Under the terms of the Clisbako
Option Agreement, Manado Corp. will exercise its option upon paying Clisbako an
aggregate of USD $150,000, issuing 600,000 shares of Manado Corp.s common stock
and incurring CAD $650,000 in exploration expenditures on the Clisbako Property
in stages over a three year period.

We previously held an option to acquire the Manado Gold
Property located 50 miles south of Manado in northern Sulawesi, Indonesia. On
April 10, 2011, we received a notice from a party purporting to represent Agus
Abidin, the vendor of the Manado Gold Property. The notice purports to cancel
our rights under the letter agreement dated November 2, 2009 (the "Agreement")
alleging that we failed to meet the requirements under the Agreement. Under the
terms of the Agreement, we had elected to exercise our right to enter into a
formal agreement to acquire the Manado Gold Property; however, the vendor, Mr.
Abidin, had not met legal requirements to convert the tenures under which the
Manado Gold Property is held into the new form of tenure required by the new
Indonesian mining laws which is necessary to permit us to acquire our interest.
Despite numerous requests by us to Mr. Abidin and his representatives, this was
never accomplished by him. Because of the delays on the part of the vendor, we
had already determined to focus on our North American properties. Based on the
notice received, we are now considering legal action against the vendor. We have
advanced a total of $50,000 to the vendor.

Based on the potential and current state of development, we
have decided to focus our resources on the Fish Project and CPG Project.

3

---

RECENT CORPORATE DEVELOPMENTS

We experienced the following corporate developments since the
filing of our Quarterly Report on Form 10-Q for the fiscal Quarter ended
February 28, 2011:

|1. | Effective April 21, 2011, Bryan Wilson resigned as a
      member of our Board of Directors. To fill the vacancy created by his
      resignation, we appointed Howard Metzler as a member of our Board of
      Directors. There were no disagreements between with Mr. Wilson regarding
      any matter relating to the Companys operations, policies or
    practices.                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|2. | On April 26, 2011, we entered into three property
      agreements dated as of March 31, 2011 covering our Golden Snow, CPG and
      Fish Properties located in Nevada. The three properties were previously
      held under a single agreement. The three new agreements are on
      substantially the same terms, but allow us to acquire each property
      independently and permit us to enter into agreements for joint venture
      financing of exploration programs on a property-by-property basis. See
      CPG Project, Fish Claims and Golden Snow Property below.                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|3. | We entered into an agreement with Terrace Ventures Inc.
      dated April 26, 2011 (the "Earn-In Agreement"). Under the terms of the
      Earn-In Agreement, Terrace will earn up to a 75% interest in the Companys
      agreement with the Golden Snow Optionors (the Underlying Agreement) by
      paying to the Company up to $175,000 and expending up to $1,750,000 to do
      exploration work on the Golden Snow Property. See Agreement with Terrace
      Ventures Inc. below.                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|4. | On May 12, 2011, we entered into an amendment to the
      letter agreement dated April 13, 2011 with Development Resources LLC
      granting us the exclusive right to negotiate the acquisition of 54 mineral
      claims located in the Long Canyon area of Elko County, Nevada. Under the
      terms of the amendment agreement, Development Resources LLC, the owner of
      the mineral claims, agreed to extend the exclusivity period for an
      additional 7 days to permit negotiations to be completed. We were unable
      to reach an agreement with Development Resources LLC by the end of the
      exclusivity period.                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|5. | We settled approximately $110,000 of outstanding
      indebtedness of the Company and our wholly-owned subsidiary, Magellan
      Acquisition Corp. ("Magellan"), by transferring our 209,000 shares of
      Copper Development Corp. held by Magellan to certain creditors of the
      Company and Magellan, including $7,923.50 of indebtedness to Richard W.
      Donaldson, our President, $5,883.00 of indebtedness to Kahala Financial
      Corp. a company controlled by Mr. Donaldson, $6,174.50 of indebtedness to
      Don Archibald, a director of Magellan and $291.50 of indebtedness to David
      K. Ryan, a director of Magellan. For the purposes of the settlement, the
      shares of Copper Development Corp. were valued based on their trading
      price on the London AIM Market of approximately $0.55 per
  share.

CPG PROJECT

The CPG Project consists of 44 unpatented lode mining claims in
the Walker Lane of Western Nevada. Under the terms of the agreement between us
and Claremont Nevada Mines LLC (the CPG Optionor), we have the right to earn a
100% undivided interest (the CPG Option) in the CPG Project by:

|(a) | paying to the CPG Optionor advance royalty payments as
      follows:                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                     
|    | (i)                                                                                                                                                 
|    |                                                                                                                                                     
|    | (ii)                                                                                                                                                
|    |                                                                                                                                                     
|    | (iii)                                                                                                                                               
|    |                                                                                                                                                     
|(b) | paying to the CPG Optionor, during the term of the
      option, $1,000 in connection with the delivery by the Company to the CPG
      Optionor of:
|    |                                                                                                                                                     
|    | (i)                                                                                                                                                 

4

---

| | (ii) | a final feasibility study in respect of the property that
      is approved by the Companys management.
| | ---- | --------------------------------------------------------------------------------------------------------

The term of the CPG Option expires August 28, 2013, but may be
extended for five years by paying $6,200 in each subsequent year. We are also
obligated to pay all county and BLM claim fees and Nevada state taxes during the
currency of the agreement.

The CPG Project is subject to a royalty of 3% net smelter
returns upon the commencement of commercial production. At any time the Company
may reduce the royalty as follows:

|(a) | to 1% by paying $1,000,000 to the royalty holder;
    or
|--- | --------------------------------------------------------
|    |                                                         
|(b) | to 2% by paying $500,000 to the royalty
  holder.       

FISH CLAIMS

The Fish Claims consists of 58 unpatented lode mining claims in
the Lone Mountain Mining District of Esmeralda County, Nevada. Under the terms
of the agreement between us and Claremont Nevada Mines LLC (the Fish
Optionor), the Company has the right to earn a 100% undivided interest (the
Fish Option) in the Fish Claims by:

|(a) | paying to the Fish Optionor advance royalty payments as
      follows:                                                                                
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                       
|    | (i)                                                                                                                                                   
|    |                                                                                                                                                       
|    | (ii)                                                                                                                                                  
|    |                                                                                                                                                       
|    | (iii)                                                                                                                                                 
|    |                                                                                                                                                       
|(b) | paying to the Fish Optionor, during the term of the
      option, $1,000 in connection with the delivery by the Company to the Fish
      Optionor of:
|    |                                                                                                                                                       
|    | (i)                                                                                                                                                   
|    |                                                                                                                                                       
|    | (ii)                                                                                                                                                  

The term of the Fish Option expires August 28, 2013, but may be
extended for five years by paying $8,100 in each subsequent year. We are also
obligated to pay all county and BLM claim fees and Nevada state taxes during the
currency of the agreement.

The Fish Claims are subject to a royalty of 3% net smelter
returns upon the commencement of commercial production. At any time the Company
may reduce the royalty as follows:

|(a) | to 1% by paying $1,000,000 to the royalty holder;
    or
|--- | --------------------------------------------------------
|    |                                                         
|(b) | to 2% by paying $500,000 to the royalty
  holder.       

GOLDEN SNOW PROPERTY

The Golden Snow Property consists of 83 mineral claims located
in the Eureka Mining District in Eureka County, Nevada. Under the terms of the
agreement among the Company, Scoonover Exploration LLC and JR Exploration LLC
(collectively, the Golden Snow Optionors), the Company has the right to earn a
100% undivided interest (the Golden Snow Option) in the Golden Snow Property
by:

|(a) | paying to the Golden Snow Optionors advance royalty
      payments as follows:
|--- | ------------------------------------------------------------------------------

5

---

|    | (i)                                                                                                                                                                    | $10,600 on or before August 28, 2011;                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                        |                                                                                                                                                                        
|    | (ii)                                                                                                                                                                   | $13,200 on or before August 28, 2012; and                                                                                                                              
|    |                                                                                                                                                                        |                                                                                                                                                                        
|    | (iii)                                                                                                                                                                  | $15,900 on or before August 28, 2013.                                                                                                                                  
|    |                                                                                                                                                                        |                                                                                                                                                                        
|(b) | paying to the Golden Snow Optionors, during the term of
      the option, $1,000 in connection with the delivery by the Company to the
      Golden Snow Optionors of:
|    |                                                                                                                                                                        |                                                                                                                                                                        
|    | (i)                                                                                                                                                                    | a copy of a mine plan of operations in respect of the
      property which is approved by the lead government agency having
      responsibility for such approval; and
|    |                                                                                                                                                                        |                                                                                                                                                                        
|    | (ii)                                                                                                                                                                   | a final feasibility study in respect of the property that
      is approved by the Companys management.                                                               

The term of the Golden Snow Option expires August 28, 2013, but
may be extended for five years by paying $15,900 in each subsequent year. The
Company is also obligated to pay all county and BLM claim fees and Nevada state
taxes during the currency of the agreement.

The Golden Snow Property is subject to a royalty of 3% net
smelter returns upon the commencement of commercial production. At any time the
Company may reduce the royalty as follows:

|(a) | to 1% by paying $1,000,000 to the royalty holder;
    or
|--- | --------------------------------------------------------
|    |                                                         
|(b) | to 2% by paying $500,000 to the royalty
  holder.       

Agreement with Terrace Ventures Inc. (Golden Snow
Property)

We entered into an agreement with Terrace Ventures Inc. dated
April 26, 2011, as amended on June 29, 2011, (the "Earn-In Agreement) whereby
Terrace will earn up to a 75% interest in our agreement with the Golden Snow
Optionors (the Underlying Agreement) by paying us up to $175,000 and expending
up to $1,750,000 to do exploration work on the Golden Snow Property as
follows:

|(a) | The first 25% interest in the Underlying Agreement upon
      Terrace:    
|--- | --------------------------------------------------------------------------
|    |                                                                           
|    | (i)                                                                       
|    |                                                                           
|    | (ii)                                                                      
|    |                                                                           
|(b) | An additional 25% interest in the Underlying Agreement
      upon Terrace:
|    |                                                                           
|    | (i)                                                                       
|    |                                                                           
|    | (ii)                                                                      
|    |                                                                           
|(c) | An additional 25% interest in the Underlying Agreement
      upon Terrace:
|    |                                                                           
|    | (i)                                                                       
|    |                                                                           
|    | (ii)                                                                      

Terrace is also obligated to pay all advance royalties, county
and BLM claim fees and Nevada state taxes during the currency of the Earn-In
Agreement.

PLAN OF OPERATION

Over the next twelve months, our plan of operation is to focus
our resources on the exploration of the CPG Project and the Fish Claims. Subject
to obtaining sufficient financing, we plan to retain a consulting geologist to
conduct a review of these properties in order to recommend an
exploration program to be conducted in summer 2011. Once our consulting
geologist has provided us with their findings, we will determine whether to
proceed with an exploration program on these properties.

6

---

During the next twelve months, we will be required to make a
number of payments in order to maintain our options to acquire the CPG Project,
Fish Claims and Golden Snow Property. Under the terms of our options to acquire
the CPG Project, Fish Claims and Golden Snow Property, in order to keep them in
good standing, we are required to pay: (i) Claremont and the Golden Snow
Optionors option payments totaling $20,100 by August 28, 2011; and (ii) Bureau
of Land Management maintenance and claim fees of approximately $32,583 by
September 1, 2011. If we are unable to make the payments to Claremont, the
Golden Snow Optionors, the Bureau of Land Management or pay the annual
maintenance claim fees, we will lose our interest in the CPG Project, Fish
Claims and Golden Snow Property.

As the agreement is an option, we may decide at any time not to
proceed in which case we would not be liable to pay any funds beyond the amounts
due at the time we provide notice that we are not proceeding. There is no
assurance that we will exercise the option.

As at May 31, 2011, we had $15,938 cash on hand. Accordingly,
we have insufficient cash on hand to proceed with our exploration on the CPG
Project, Fish Claims and Golden Snow Property, and meet our ongoing operating
costs. As such, we will require substantial financing in order to meet our
obligations. There is no assurance that we will be able to acquire such
financing on terms that are acceptable to us, or at all.

RESULTS OF OPERATIONS

Three and Six Months Summary

|             |   | Three          |   |   | Three          |   |  |            |  |   |                |   |   |                |   |  |            | 
|------------ | - | -------------- | - | - | -------------- | - |  | ---------- |  | - | -------------- | - | - | -------------- | - |  | ---------- | 
|             |   | Months         |   |   | Months         |   |  | Percentage |  |   | Six Months     |   |   | Six Months     |   |  | Percentage | 
|             |   | Ended May      |   |   | Ended May      |   |  | Increase / |  |   | Ended May      |   |   | Ended May      |   |  | Increase / | 
|             |   | 31,
      2011 |   |   | 31,
      2010 |   |  | (Decrease) |  |   | 31,
      2011 |   |   | 31,
      2010 |   |  | (Decrease) | 
|Revenue      | $ | Nil            |   | $ | Nil            |   |  | n/a        |  | $ | Nil            |   | $ | Nil            |   |  | n/a        | 
|Expenses     |   | (118,131       | ) |   | (97,636        | ) |  | 21.0%      |  |   | (175,240       | ) |   | (176,996       | ) |  | (1.0)%     | 
|Other Income |   | 110,770        |   |   | -              |   |  | n/a        |  |   | 110,770        |   |   | -              |   |  | n/a        | 
|Net Loss     | $ | (7,361         | ) | $ | (97,636        | ) |  | (92.5)%    |  | $ | (64,470        | ) | $ | (176,996       | ) |  | (63.6)%    | 

Revenue

We have not earned any revenues to date. We do not anticipate
earning revenues until such time as we enter into commercial production of our
mineral properties. We are presently in the exploration stage of our business
and we can provide no assurance that we will discover commercially exploitable
levels of mineral resources on our properties, or if such deposits are
discovered, that we will enter into further substantial exploration programs.

7

---

Expenses

Our operating expenses for the three and six months ended May
31, 2011 and 2010 consisted of the following:

|                                   |   |                    |  |   |              |  |  |            |  |   | Six
      Months |  |   | Six
      Months |  |  |            | 
|---------------------------------- | - | ------------------ |  | - | ------------ |  |  | ---------- |  | - | ---------------- |  | - | ---------------- |  |  | ---------- | 
|                                   |   | Three Months       |  |   | Three Months |  |  | Percentage |  |   | Ended            |  |   | Ended            |  |  | Percentage | 
|                                   |   | Ended              |  |   | Ended        |  |  | Increase / |  |   | May 31,          |  |   | May 31,          |  |  | Increase / | 
|                                   |   | May
      31, 2011 |  |   | May 31, 2010 |  |  | (Decrease) |  |   | 2011             |  |   | 2010             |  |  | (Decrease) | 
|Bank charges and interest          | $ | 4,253              |  | $ | 6,076        |  |  | (30.0)%    |  | $ | 7,402            |  | $ | 11,288           |  |  | (34.4)%    | 
|Consulting fees                    |   | 14,050             |  |   | -            |  |  | 100.0%     |  |   | 26,350           |  |   | -                |  |  | 100.0%     | 
|Depreciation Expense               |   | -                  |  |   | 126          |  |  | (100.0)%   |  |   | -                |  |   | 252              |  |  | (100.0)%   | 
|Filing and Regulatory              |   | 744                |  |   | 170          |  |  | 337.6%     |  |   | 1,967            |  |   | 1,049            |  |  | 87.5%      | 
|Finance Charges                    |   | -                  |  |   | 23,106       |  |  | (100.0)%   |  |   | -                |  |   | 45,709           |  |  | (100.0)%   | 
|Investor Relations                 |   | -                  |  |   | 1,000        |  |  | (100.0)%   |  |   | -                |  |   | 1,000            |  |  | (100.0)%   | 
|Management Fees                    |   | 9,000              |  |   | 9,000        |  |  | 0.0%       |  |   | 18,000           |  |   | 18,000           |  |  | 0.0%       | 
|Mineral Property Exploration Costs |   | 28,512             |  |   | -            |  |  | 100.0%     |  |   | 26,119           |  |   | 1,569            |  |  | 1564.7%    | 
|Office and Administrative          |   | 5,479              |  |   | 6,209        |  |  | (11.8)%    |  |   | 11,102           |  |   | 9,629            |  |  | 15.3%      | 
|Professional Fees                  |   | 55,411             |  |   | 48,949       |  |  | 13.2%      |  |   | 83,256           |  |   | 82,000           |  |  | 1.5%       | 
|Website design                     |   | 682                |  |   | -            |  |  | 100.0%     |  |   | 1,044            |  |   | 3,500            |  |  | (70.2)%    | 
|Write-off Mineral Property Costs   |   | -                  |  |   | 3,000        |  |  | (100.0)%   |  |   | -                |  |   | 3,000            |  |  | (100.0)%   | 
|Total Operating Expenses           | $ | 118,131            |  | $ | 97,636       |  |  | 21.0%      |  | $ | 175,240          |  | $ | 176,996          |  |  | (1.0)%     | 

Our operating expenses during the quarter ended May 31, 2011
totaled $118,131 compared with $97,636 during the quarter ended May 31, 2010.
The increase in our operating expenses was primarily a result of increased
consulting fees, filing and regulatory, mineral property exploration costs,
professional fees and website design, This increase was partially offset by a
decrease in bank charges and interest, depreciation expense, finance charges,
investor relations, office and administrative and write-off mineral property
cost.

During the six months ended May 31, 2011, our operating
expenses decreased from $176,996 to $175,240 during the six months ended May 31,
2010. The decrease in our operating expenses was primarily a result of decreased
bank charges and interest, depreciation expense, finance charges, investor
relations, website design and write off mineral property cost. This decrease was
partially offset by an increase in consulting fees, filing and regulatory,
mineral property exploration costs, office and administrative and professional
fees.

Finance fees during the three and six months ended May 31, 2010
primarily relate to amortization of the discount resulting from the allocation
of proceeds to the warrants and the intrinsic value beneficial conversion
feature.

Management fees relate to fees paid or accrued to the directors
of Magellan Acquisition Corp., our wholly owned Nevada subsidiary.

Professional fees primarily relate to meeting our ongoing
reporting requirements under the Exchange Act.

We anticipate our operating expenses will increase if we
implement our exploration program on our mineral properties.

8

---

LIQUIDITY AND CAPITAL RESOURCES

|Working Capital         |   |                       |   |   |                   |   |  |                       | 
|----------------------- | - | --------------------- | - | - | ----------------- | - |  | --------------------- | 
|                        |   |                       |   |   | At                |   |  | Percentage            | 
|                        |   | At
      May 31, 2011 |   |   | November 30, 2010 |   |  | Increase / (Decrease) | 
|Current Assets          | $ | 15,938                |   | $ | 353               |   |  | 4,415.0%              | 
|Current Liabilities     |   | (575,415              | ) |   | (535,964          | ) |  | 7.4%                  | 
|Working Capital Deficit | $ | (559,477              | ) | $ | (535,611          | ) |  | 4.5%                  | 

|Cash Flows                                     |   |                      |   |   |                      |  
|---------------------------------------------- | - | -------------------- | - | - | -------------------- | -
|                                               |   | Six Months Ended May |   |   | Six Months Ended May |  
|                                               |   | 31,
      2011       |   |   | 31,
      2010       |  
|Cash Flows (Used In) Operating Activities      | $ | (107,908             | ) | $ | (58,203              | )
|Cash Flows (Used In) From Investing Activities |   | 40,604               |   |   | (42,878              | )
|Cash Flows From Financing Activities           |   | 82,889               |   |   | 137,408              |  
|Increase (Decrease) In Cash During Period      | $ | 15,585               |   | $ | 36,327               |  

The increase in our working capital deficit at May 31, 2011
from our year ended November 30, 2010 is a result of the fact that our sole
source of financing was in the form of short term loans. During the six months
ended May 31, 2011, we received a loan of $12,000 from a related party and a
loan of $85,500 from a third party. Both loans bear interest at a rate of 10%
per annum and are due on demand.

Future Financings

As at May 31, 2011, we had $15,938 cash on hand. Currently, we
do not have sufficient financial resources to complete our plan of operation for
the next twelve months. We have not earned any revenues to date and we do not
anticipate earning revenues in the near future. As such, our ability to complete
our plan of operation is dependent upon our ability to obtain substantial
financing in the near term. Any future financing that we obtain is expected to
be in the form of sales of our equity securities. If we are successful in
completing any equity financings, of which there is no assurance, our existing
shareholders will experience a dilution of their interest in our company. There
is a substantial doubt that we will be able to obtain financing in an amount
that is sufficient to enable us to complete our proposed plan of operation. If
we are not successful in raising sufficient financing, we will not be able to
complete our plan of operation. We do not have any specific alternatives to our
current plan of operation and have not planned for any such contingency. If we
are not successful in raising sufficient financing, our business may fail and
our shareholders may lose all or part of their investment.

Our Board of Directors have approved a private placement
offering of up to 3,000,000 units (the Units) at a price of $0.05 per Unit for
gross proceeds of up to $150,000. Each Unit is comprised of one share of our
common stock and one share purchase warrant, with each warrant entitling the
subscriber to purchase an additional share of our common stock for a period of
two years following the date of issuance at an exercise price equal to $0.10 per
share. This offering of Units is being made to investors who are not U.S.
Persons as defined in Regulation S. To date, we have issued 527,200 units for
proceeds of $26,360 under this offering. There are no assurances that any
additional units will be sold under this offering.

OFF-BALANCE SHEET ARRANGEMENTS

We have no significant off-balance sheet arrangements that have
or are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources.

CRITICAL ACCOUNTING POLICIES

Our significant accounting policies are disclosed in the notes
to our consolidated financial statements for the six months ended May 31, 2011
included in this Quarterly Report.

9

---

We have identified certain accounting policies, described
below, that are most important to the portrayal of our current financial
condition and results of operations.

Use of Estimates

The preparation of financial statements, in conformity with
generally accepted accounting principles, requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying disclosures. Actual results may differ from the estimates.

Exploration Stage Enterprise

Our financial statements are prepared using the accrual method
of accounting. Until such properties are acquired and developed, we will
continue to prepare our financial statements and related disclosures in
accordance with entities in the exploration stage.

Mineral Property Interests

We are an exploration stage mining company and have not yet
realized any revenue from our operations. We are primarily engaged in the
acquisition, exploration and development of mining properties. Exploration costs
are expensed as incurred regardless of the stage of development or existence of
reserves. Costs of acquisition are capitalized subject to impairment testing,
when facts and circumstances indicate impairment may exist.

We regularly perform evaluations of any investment in mineral
properties to assess the recoverability and/or the residual value of our
investments in these assets. All long-lived assets are reviewed for impairment
whenever events or circumstances change which indicate the carrying amount of an
asset may not be recoverable.

Management periodically reviews the carrying value of our
investments in mineral leases and claims with internal and external mining
related professionals. A decision to abandon, reduce or expand a specific
project is based upon many factors including general and specific assessments of
mineral deposits, anticipated future mineral prices, anticipated future costs of
exploring, developing and operating a production mine, the expiration term and
ongoing expenses of maintaining mineral properties and the general likelihood
that we will continue exploration on such project. We do not set a
pre-determined holding period for properties with unproven deposits; however,
properties which have not demonstrated suitable metal concentrations at the
conclusion of each phase of an exploration program are re-evaluated to determine
if future exploration is warranted, whether there has been any impairment in
value and that their carrying values are appropriate.

If an area of interest is abandoned or it is determined that
its carrying value cannot be supported by future production or sale, the related
costs are charged against operations in the year of abandonment or determination
of value. The amounts recorded as mineral leases and claims represent costs to
date and do not necessarily reflect present or future values.

Our exploration activities are subject to various laws and
regulations governing the protection of the environment. These laws are
continually changing, generally becoming more restrictive. We have made, and
expect to make in the future, expenditures to comply with such laws and
regulations.

The accumulated costs of properties that are developed on the
stage of commercial production will be amortized to operations through
unit-of-production depletion.

|ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES
      ABOUT MARKET RISK.
|------- | -----------------------------------------------------------------

Not Applicable.

10

---

|ITEM 4T. | CONTROLS AND PROCEDURES.
|-------- | ------------------------

Disclosure Controls and Procedures

We carried out an evaluation of the effectiveness of our
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) as of May 31, 2011 (the Evaluation Date). This evaluation was
carried out under the supervision and with the participation of our Chief
Executive Officer and Chief Financial Officer. Based upon that evaluation, our
Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures were not effective as of the Evaluation Date
as a result of the material weaknesses in internal control over financial
reporting discussed in our Annual Report on Form 10-K for the year ended
November 30, 2010 (the 2010 Annual Report).

Notwithstanding the assessment that our internal control over
financial reporting was not effective and that there were material weaknesses as
identified in our 2010 Annual Report, we believe that our financial statements
contained in our Quarterly Report on Form 10-Q for the quarter ended May 31,
2011 fairly present our financial condition, results of operations and cash
flows in all material respects.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial
reporting that occurred during the quarter ended May 31, 2011 that have
materially affected, or that are reasonably likely to materially affect, our
internal control over financial reporting.

11

---

PART II - OTHER INFORMATION

|ITEM 1. | LEGAL PROCEEDINGS.
|------- | ------------------

None.

|ITEM 1A. | RISK FACTORS.
|-------- | -------------

The following are some of the important factors that could
affect our financial performance or could cause actual results to differ
materially from estimates contained in our forward-looking statements. We may
encounter risks in addition to those described below. Additional risks and
uncertainties not currently known to us, or that we currently deem to be
immaterial, may also impair or adversely affect our business, financial
condition or results of operation.

If we do not obtain additional financing, our business will
fail.

As of May 31, 2011, we had $15,938 cash on hand and a working
capital deficit of $559,477. Our plan of operation calls for significant
expenses in order to meet our obligations under the option agreements to acquire
the CPG Project, Fish Claims and Golden Snow Property. There is no guarantee
that we will exercise our option.

Our Board of Directors have approved a private placement
offering of up to 3,000,000 units (the Units) at a price of $0.05 per Unit for
gross proceeds of up to $150,000. Each Unit is comprised of one share of our
common stock and one share purchase warrant, with each warrant entitling the
subscriber to purchase an additional share of our common stock for a period of
two years following the date of issuance at an exercise price equal to $0.10 per
share. This offering of Units is being made to investors who are not U.S.
Persons as defined in Regulation S. To date, we have issued 527,200 units for
proceeds of $26,360 under this offering. There are no assurances that any
additional units will be sold under this offering.

Obtaining financing would be subject to a number of factors
outside of our control, including market conditions and additional costs and
expenses that might exceed current estimates. These factors may make the timing,
amount, terms or conditions of financing unavailable to us in which case we will
be unable to complete our plan of operation on our mineral properties and to
meet our obligations under our option agreements.

We have yet to earn revenue and our ability to sustain our
operations is dependent on our ability to raise financing. As a result, our
accountants believe there is substantial doubt about our ability to continue as
a going concern.

We have a cumulative net loss of $1,134,538 for the period from
our inception on April 28, 2006 to May 31, 2011, and have no revenues to date.
Our future is dependent upon our ability to obtain additional financing. Our
auditors have expressed substantial doubt about our ability to continue as a
going concern given our accumulated losses. This opinion could materially limit
our ability to raise additional funds by issuing new debt or equity securities
or otherwise. If we fail to raise sufficient capital, we will not be able to
complete our business plan. As a result, we may have to liquidate our business
and investors may lose their investment. Investors should consider our former
auditor's comments when determining if an investment in us is suitable.

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

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

12

---

We have no known mineral reserves and if we cannot find any,
we will have to cease operations.

We have no mineral reserves. If we do not find a mineral
reserve containing gold or if we cannot explore the mineral reserve, either
because we do not have the money to do it or because it will not be economically
feasible to do it, we will have to cease operations and you will lose your
investment. Mineral exploration, particularly for gold, is highly speculative.
It involves many risks and is often non-productive. Even if we are able to find
mineral reserves on our properties, our production capability is subject to
further risks including:

- Costs of bringing the property into production including exploration work,
  preparation of production feasibility studies, and construction of production
  facilities, all of which we have not budgeted for;
- Availability and costs of financing;
- Ongoing costs of production; and
- Environmental compliance regulations and restraints.

The marketability of any minerals acquired or discovered may be
affected by numerous factors which are beyond our control and which cannot be
accurately predicted, such as market fluctuations, the lack of milling
facilities and processing equipment near our mineral properties, and such other
factors as government regulations, including regulations relating to allowable
production, importing and exporting of minerals, and environmental
protection.

Given the above noted risks, the chances of finding reserves
on our mineral properties are remote and funds expended on exploration will
likely be lost.

Even if we discover proven reserves of precious metals on
our mineral properties, we may not be able to successfully commence commercial
production.

Our mineral properties do not contain any known bodies of ore.
If our exploration programs are successful in discovering proven reserves on our
mineral properties, we will require additional funds in order to place the
mineral properties into commercial production. The expenditures to be made by us
in the exploration of mineral properties in all probability will be lost as it
is an extremely remote possibility that the mineral claims will contain proven
reserves. If our exploration programs are successful in discovering proven
reserves, we will require additional funds in order to place the mineral
properties into commercial production. The funds required for commercial mineral
production can range from several millions to hundreds of millions. We currently
do not have sufficient funds to place our mineral claims into commercial
production. Obtaining additional financing would be subject to a number of
factors, including the market price for gold and the costs of exploring for or
mining these materials. These factors may make the timing, amount, terms or
conditions of additional financing unavailable to us. Because we will need
additional financing to fund our exploration activities there is substantial
doubt about our ability to continue as a going concern. At this time, there is a
risk that we will not be able to obtain such financing as and when needed.

We face significant competition in the mineral exploration
industry.

We compete with other mining and exploration companies
possessing greater financial resources and technical facilities than we do in
connection with the acquisition of mineral exploration claims and leases on
precious metal prospects and in connection with the recruitment and retention of
qualified personnel. There is significant competition for precious metals and,
as a result, we may be unable to acquire an interest in attractive mineral
exploration properties on terms we consider acceptable on a continuing
basis.

There is no assurance that we will be able to exercise our
option to acquire the CPG Project, Fish Claims and Golden Snow Property.

In order to exercise our option to acquire the CPG Project,
Fish Claims and Golden Snow Property, we are required to make a series of cash
payments and meet the annual claim maintenance fees. In order to meet these
payments we will need to obtain substantial financing. If we are unable to meet
these payments, we will lose our options to acquire these properties.

13

---

Because our sole executive officer does not have formal
training specific to the technicalities of mineral exploration, there is a
higher risk that our business will fail.

Richard W. Donaldson, our sole executive officer, does not have
any formal training as a geologist or in the technical aspects of managing a
mineral exploration company. With the exception of Howard Metzler, a director,
our management may not be fully aware of the specific requirements related to
working within this industry. As such, the loss of Mr. Metzlers services could
cause irreparable harm to our operations, earnings, and ultimate financial
success could suffer irreparable harm due to management's lack of experience in
this industry.

Because the prices of metals fluctuate, if the price of
metals for which we are exploring decreases below a specified level, it may no
longer be profitable to explore for those metals and we will cease
operations.

Prices of metals are determined by such factors as expectations
for inflation, the strength of the United States dollar, global and regional
supply and demand, and political and economic conditions and production costs in
metals producing regions of the world. The aggregate effect of these factors on
metal prices is impossible for us to predict. In addition, the prices of
precious metals are sometimes subject to rapid short-term and/or prolonged
changes because of speculative activities. The current demand for and supply of
these metals affect the metal prices, but not necessarily in the same manner as
current supply and demand affect the prices of other commodities. The supply of
these metals primarily consists of new production from mining. If the prices of
the metals are, for a substantial period, below our foreseeable cost of
production, we could cease operations and investors could lose their entire
investment.

We may conduct further offerings in the future in which case
investors shareholdings will be diluted.

We are currently offering units (common stock and share
purchase warrants) for gross proceeds of up to $150,000. Since our inception, we
have relied on such equity sales of our common stock to fund our operations. We
may conduct further equity offerings in the future to finance our current
projects or to finance subsequent projects that we decide to undertake. If
common stock is issued in return for additional funds, the price per share could
be lower than that paid by our current stockholders. We anticipate continuing to
rely on equity sales of our common stock in order to fund our business
operations. If we issue additional stock, the interests of existing shareholders
will be diluted.

The quotation price of our common stock may be volatile,
with the result that an investor may not be able to sell any shares acquired at
a price equal to or greater than the price paid by the investor.

Our common shares are quoted on the OTCQB under the symbol
"PNGM. Companies quoted on the OTCQB have traditionally experienced extreme
price and volume fluctuations. In addition, our stock price may be adversely
affected by factors that are unrelated or disproportionate to our operating
performance. Market fluctuations, as well as general economic, political and
market conditions such as recessions, interest rates or international currency
fluctuations may adversely affect the market price of our common stock. As a
result of this potential volatility and potential lack of a trading market, an
investor may not be able to sell any of our common stock that they acquire at a
price equal or greater than the price paid by the investor.

Because our stock is a penny stock, shareholders will be
more limited in their ability to sell their stock.

The SEC has adopted rules that regulate broker-dealer practices
in connection with transactions in penny stocks. Penny stocks are generally
equity securities with a price of less than $5.00, other than securities
registered on certain national securities exchanges or quoted on the Nasdaq
system, provided that current price and volume information with respect to
transactions in such securities is provided by the exchange or quotation system.
Because our securities constitute penny stocks within the meaning of the
rules, the rules apply to us and to our securities. The rules may further affect
the ability of owners of shares to sell our securities in any market that might
develop for them. As long as the trading price of our common stock is less than
$5.00 per share, the common stock will be subject to Rule 15g-9 under the
Exchange Act. The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock, to deliver a standardized risk disclosure document
prepared by the SEC, that:

|1. | contains a description of the nature and level of risk in
      the market for penny stocks in both public offerings and secondary
      trading;
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------

14

---

|2. | contains a description of the brokers or dealers duties
      to the customer and of the rights and remedies available to the customer
      with respect to a violation to such duties or other requirements of
      securities laws;
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                          
|3. | contains a brief, clear, narrative description of a
      dealer market, including bid and ask prices for penny stocks and the
      significance of the spread between the bid and ask price;                                           
|   |                                                                                                                                                                                                                                          
|4. | contains a toll-free telephone number for inquiries on
      disciplinary actions;                                                                                                                                                       
|   |                                                                                                                                                                                                                                          
|5. | defines significant terms in the disclosure document or
      in the conduct of trading in penny stocks; and                                                                                                                             
|   |                                                                                                                                                                                                                                          
|6. | contains such other information and is in such form,
      including language, type, size and format, as the SEC shall require by
      rule or regulation.                                                                              

The broker-dealer also must provide, prior to effecting any
transaction in a penny stock, the customer with: (a) bid and offer quotations
for the penny stock; (b) the compensation of the broker-dealer and its
salesperson in the transaction; (c) the number of shares to which such bid and
ask prices apply, or other comparable information relating to the depth and
liquidity of the market for such stock; and (d) a monthly account statements
showing the market value of each penny stock held in the customers account. In
addition, the penny stock rules require that prior to a transaction in a penny
stock not otherwise exempt from those rules; the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchasers written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitably statement. These
disclosure requirements may have the effect of reducing the trading activity in
the secondary market for our stock.

|ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND
      USE OF PROCEEDS.
|------- | ------------------------------------------------------------------

Other than as disclosed in our Current Reports on Form 8-K, we
have not completed any unregistered sales of equity securities.

|ITEM 3. | DEFAULTS UPON SENIOR SECURITIES.
|------- | --------------------------------

None.

|ITEM 5. | OTHER INFORMATION.
|------- | ------------------

None.

|ITEM 6. | EXHIBITS.
|------- | ---------

|Exhibit |                                                                                                                                                                                       
|------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description of Exhibits                                                                                                                                                               
|3.1     | Articles of Incorporation. (1)                                                                                                                                                        
|3.2     | Certificate of Change Pursuant to NRS 78.209 increasing
      the authorized capital of common stock to 300,000,000 shares, par value
      $0.001 per share.(5)                      
|3.3     | Bylaws, as amended. (1)                                                                                                                                                               
|4.1     | Specimen Stock Certificate. (1)                                                                                                                                                       
|10.1    | Loan Agreement dated December 19, 2007 between the
      Company (as the borrower) and Kahala Financial Corp. (as the
      lender).(2)                                               
|10.2    | Purchase Agreement dated December 15, 2008 among Magellan
      Acquisition Corp., Solfotara Mining Corp. and Magellan Copper and Gold plc
      (Magellan Singapore Subsidiaries).(4)
|10.3    | Purchase Agreement dated December 16, 2008 between the
      Company and Bako Resources Inc. (Clisbako Property). (4)                                                                 

15

---

|Exhibit |                                                                                                                                                                                 
|------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description of Exhibits                                                                                                                                                         
|10.4    | Extension Agreement dated July
      23, 2009 between the Company and Bako Resources Inc. (7)                                                                                   
|10.5    | Assignment Agreement dated May 29, 2009 among the
      Company, Portal Resources US Inc. and Portal Resources Ltd. (Golden Snow
      Project, Fish Project and CPG Project)(6)
|10.6    | Agreement dated for reference November
      2, 2009 executed on January 19, 2010 between the Company and Agus Abidin
      (Manado Gold Property). (8)                         
|10.7    | Second Extension Agreement dated January 21, 2010
      between the Company and Bako Resources Inc. (Clisbako Property).
      (9)                                              
|10.8    | Extension Agreement Dated January
      21, 2010 between the Company and Agus Abidin (Manado Gold Property).                                                                    
|10.9    | Option agreement dated February 5, 2010 between
      the Company and Larry Sostad (June Claims). (10)                                                                          
|10.10   | Third Extension Agreement dated
      March 15, 2010 between the Company and Bako Resources Inc. (Clisbako
      Property).(11)                                                 
|10.11   | Second Extension Agreement Dated March 29, 2010
      between the Company and Agus Abidin (Manado Gold Property).(12)                                                           
|10.12   | Loan Agreement dated January 11,
      2010 between the Company and Laverne Assets Group Corp. (13)                                                                             
|10.12   | Agreement dated for reference April 23, 2010 executed
      on April 28, 2010 between the Company and Bull and Bear Financial Report.(14)                                       
|10.13   | Option Agreement dated July 23,
      2010 between the Clisbako Minerals Inc. and Interior Plateau Mining Corp.(15)                                                             
|10.14   | Assignment Agreement dated August 24, 2010 between
      the Company and Manado Gold Corp.(16)                                                                                  
|10.15   | Option Agreement dated for September
      15, 2010 between Clisbako Minerals Inc. and Manado Gold Corp.(17)                                                                    
|10.16   | Extension Agreement dated November 30, 2010 between
      the Company and Manado Gold Corp.(19)                                                                                 
|10.17   | 2011 Stock Option Plan.(18)                                                                                                                                                     
|10.18   | Option Agreement (Golden Snow) dated March 31,
      2011 between the Company and Scoonover Exploration LLC and JR Exploration
      LLC. (20)                                  
|10.19   | Option Agreement (CPG Project)
      dated March 31, 2011 between the Company and Claremont Nevada Mines LLC.
      (20)                                                        
|10.20   | Option Agreement (Fish Claims) dated March 31,
      2011 between the Company and Claremont Nevada Mines LLC. (20)                                                              
|10.21   | Earn-In Agreement (Golden Snow)
      dated April 26, 2011 between the Company and Terrace Ventures Inc. (20)                                                                   
|10.22   | Extension dated May 12, 2011 to Letter Agreement
      dated April 13, 2011 between the Company and Development Resources LLC.(21)                                              
|10.23   | Extension
      Agreement dated June 29, 2011 between the Company and Terrace Ventures Inc.                                                                                     
|14.1    | Code of Ethics. (3)                                                                                                                                                             
|21.1    | List of Subsidiaries.(19)                                                                                                                                                       
|31.1    | Certification of Chief
      Executive Officer and Chief Financial Officer as adopted pursuant to Section
      302 of the Sarbanes-Oxley Act of 2002.                          
|32.1    | Certification
      of Chief Executive Officer and Chief Financial Officer as adopted pursuant
      to Section 906 of the Sarbanes-Oxley Act of 2002.                          

|Notes: |                                                                                                         
|------ | --------------------------------------------------------------------------------------------------------
|(1)    | Previously filed as an exhibit to our
      Registration Statement on Form SB-2 filed on April 24, 2007.
|(2)    | Previously filed as an exhibit to our Current
      Report on Form 8-K filed on December 26, 2007.      
|(3)    | Previously filed as an exhibit to our Annual
      Report on Form 10-KSB filed on March 6, 2008.        
|(4)    | Previously filed as an exhibit to our Current
      Report on Form 8-K filed on December 22, 2008.      
|(5)    | Previously filed as an exhibit to our Current
      Report on Form 8-K filed on April 17, 2009.         
|(6)    | Previously filed as an exhibit to our Current
      Report on Form 8-K filed on June 2, 2009.           
|(7)    | Previously filed as an exhibit to our Current
      Report on Form 8-K filed on July 27, 2009.          
|(8)    | Previously filed as an exhibit to our Current
      Report on Form 8-K filed on January 21, 2010.       

16

---

|(9)  | Previously filed as an exhibit to our Current Report on
      Form 8-K filed on January 26, 2010.   
|---- | ----------------------------------------------------------------------------------------------------
|(10) | Previously filed as an exhibit to our Current Report on
      Form 8-K filed on February 11, 2010.  
|(11) | Previously filed as an exhibit to our Annual Report on
      Form 10-K filed on March 16, 2010.     
|(12) | Previously filed as an exhibit to our Current Report on
      Form 8-K filed on April 6, 2010.      
|(13) | Previously filed as an exhibit to our Quarterly Report on
      Form 10-Q filed on April 19, 2010.  
|(14) | Previously filed as an exhibit to our Current Report on
      Form 8-K filed on May 4, 2010.        
|(15) | Previously filed as an exhibit to our Current Report on
      Form 8-K filed on August 10, 2010.    
|(16) | Previously filed as an exhibit to our Current Report on
      Form 8-K filed on August 30, 2010.    
|(17) | Previously filed as an exhibit to our Quarterly Report on
      Form 10-Q filed on October 20, 2010.
|(18) | Previously filed as an exhibit to our Current Report on
      Form 8-K filed on March 3, 2011.      
|(19) | Previously filed as an exhibit to our Annual Report on
      Form 10-K filed on March 15, 2011.     
|(20) | Previously filed as an exhibit to our Current Report on
      Form 8-K filed on April 27, 2011.     
|(21) | Previously filed as an exhibit to our Current Report on
      Form 8-K filed on May 16, 2011.       

17

---

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.

|      |               |  |     | PENGRAM CORPORATION                                    
|----- | ------------- |  | --- | -------------------------------------------------------
|      |               |  |     |                                                        
|      |               |  |     |                                                        
|      |               |  |     |                                                        
|Date: | July 20, 2011 |  | By: | /s/
      Richard W. Donaldson                         
|      |               |  |     | RICHARD W. DONALDSON                                   
|      |               |  |     | Chief Executive Officer, Chief Financial
      Officer,
|      |               |  |     | President, Secretary, Treasurer,                       
|      |               |  |     | (Principal Executive Officer                           
|      |               |  |     | and Principal Financial Officer)                       

---