UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 FORM
10-QSB
 
 (Mark
One)
  x QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
  For the
Quarterly Period Ended June 30, 2008
   ̈ TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
  For the
transition period from _____ to _____.
  
 Commission
File No.  333-135376
 
 PIEDMONT
MINING COMPANY, INC.
 (Exact
Name of Registrant as Specified in Its Charter)
 
 North
      Carolina
              
              56-1378516(State
      or Other Jurisdiction
                Of
      Incorporation or Organization)
              (I.R.S.
      Employer Identification
                Number)18124
      Wedge Parkway, Suite 214
                Reno,
      Nevada
              89511(Address
      of Principal Executive Offices)
              (Zip
      Code)
 
 Registrant’s
telephone number, including area code (212)
734-9848
  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.
 
 Yes
      x
              No
       ̈
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act.)
 
 Yes
       ̈
              No
      x
 
 As
of  August 13, 2008 there were 67,631,976 outstanding shares of the
issuer’s common stock.
 
 Transitional
      Small Business Disclosure Format (Check one):
              Yes
       ̈
              No
      x
 
 
 
  
  PIEDMONT
MINING COMPANY, INC.
 
 FORM
10-QSB INDEX
 
 Page NumberPART
      I – FINANCIAL INFORMATIONItem
      1. Financial StatementsConsolidated
      Balance Sheets
              3Consolidated
      Statements of Loss
              4Consolidated
      Statements of Cash Flows
              5Notes
      to Consolidated Financial Statements
              6Item
      2. Management’s Discussion and Analysis or Plan of
    Operation
              19Item
      3. Controls and Procedures
              23PART
      II – OTHER INFORMATIONItem
      1. Legal Proceedings
              23Item
      2. Unregistered Sales of Equity Securities and Use of
    Proceeds
              23Item
      3. Defaults Upon Senior Securities
              24Item
      4. Submission of Matters to a Vote of Security Holders
              24Item
      5. Other Information
              24Item
      6. Exhibits
              24Signature
      Page
              25
 
  2
  PART
I – FINANCIAL INFORMATION
 
 Item
1. Financial Statements
 
 PIEDMONT
      MINING COMPANY, INC.
                (An
      Exploration Stage Company)
                CONSOLIDATED
      BALANCE SHEETSJune
      30,
              
              December
      31,2008
                (unaudited)
              
              2007
                (audited)CURRENT
      ASSETS
              $
              
              
              $Cash
      and cash equivalents
              
              12,256
              
              
              165,877Prepaid
      expenses and other (Note 3)
              
              244,715
              
              
              21,168Total
      current assets
              
              256,971
              
              
              187,045MINERAL
      PROPERTIES (Note 3)
              
              100,000
              
              
              275,500RECLAMATION
      BONDS (Note 3)
              
              29,339
              
              
              -EQUIPMENT
      (Note 4)
              
              497
              
              
              929Total
      Assets
              
              386,807
              
              
              463,474CURRENT
      LIABILITIESAccounts
      payable and accrued liabilities
              
              301,495
              
              
              322,149Due
      to related parties (Note 5)
              
              86,940
              
              
              83,008Total
      current liabilities
              
              388,435
              
              
              405,157STOCKHOLDERS’
      EQUITY (DEFICIENCY)Capital
      Stock (Note 6)Authorized:50,000,000
      Preferred stock $1.00 par value200,000,000
      Common stock no par valueCommon
      stock issued and outstanding:67,531,976  (2007
      – 63,063,774) common shares
              
              15,738,185
              
              
              15,700,695Additional
      paid-in capital
              
              1,445,518
              
              
              730,042Deficit
      accumulated prior to the exploration stage
              
              (12,564,287
              
              
              (12,564,287
              )Deficit
      accumulated during exploration stage
              
              (4,621,044
              
              
              (3,808,133
              )Total
      stockholders’ equity (deficiency)
              
              (1,628
              
              
              58,317Total
      liabilities and stockholders’ equity (deficiency)
              
              386,807
              
              
              463,474The
      accompanying notes are an integral part of these financial
      statements.
  3
  PIEDMONT
MINING COMPANY, INC.
 (An
Exploration Stage Company)
 CONSOLIDATED
STATEMENTS OF LOSS
 (unaudited)
 
 
 Three
      months
                Ended
                June
      30, 2008
              
              
              Three
      months
                Ended
                June
      30, 2007
              
              
              Six
      months
                Ended
                June
      30, 2008
              
              
              Six
      months
                Ended
                June
      30, 2007
              
              
              For
      the Period from January 1, 2002 (Date of Inception of Exploration Stage)
      to
                June
      30, 2008$
              
              
              
              $
              
              
              
              $
              
              
              
              $
              
              
              
              $EXPENSESDepreciation
              
              
              216
              
              
              
              465
              
              
              
              432
              
              
              
              930
              
              
              
              145,886Exploration,
      geological and geophysical costs
              
              
              116,981
              
              
              
              22,833
              
              
              
              190,942
              
              
              
              106,302
              
              
              
              1,993,198General
      and administrative
              
              
              91,829
              
              
              
              27,713
              
              
              
              127,183
              
              
              
              68,608
              
              
              
              814,676Loss
      on abandoned properties (Note 3)
              
              
              205,500
              
              
              
              -
              
              
              
              205,500
              
              
              
              -
              
              
              
              205,500Management
      fees
              
              
              94,850
              
              
              
              67,946
              
              
              
              186,117
              
              
              
              177,311
              
              
              
              723,788Professional
      fees
              
              
              50,196
              
              
              
              53,648
              
              
              
              105,936
              
              
              
              113,880
              
              
              
              702,631559,572
              
              
              
              172,605
              
              
              
              816,110
              
              
              
              467,031
              
              
              
              4,585,680LOSS
      BEFORE OTHER ITEMS
              
              
              (559,572
              )
              
              
              (172,605
              )
              
              
              (816,110
              )
              
              
              (467,031
              )
              
              
              (4,585,680
              )INTEREST
      INCOME
              
              
              -
              
              
              
              
              
              
              
              3,198
              
              
              
              1
              
              
              
              11,225LOSS
      ON OTHER NON-OPERATING ACTIVITIES
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (46,590
              )NET
      LOSS
              
              
              (559,572
              )
              
              
              (172,605
              )
              
              
              (812,912
              )
              
              
              (467,030
              )
              
              
              (4,621,045
              )BASIC
      AND DILUTED
                LOSS  PER
      SHARE
              
              
              (0.008
              )
              
              
              (0.003
              )
              
              
              (0.013
              )
              
              
              (0.009
              )WEIGHTED
      AVERAGE COMMON
                SHARES
      OUTSTANDING, BASIC
                AND
      DILUTED
              
              
              66,816,647
              
              
              
              55,527,025
              
              
              
              64,295,112
              
              
              
              54,947,175
 
  The
accompanying notes are an integral part of these financial
statements.
  4
  PIEDMONT
MINING COMPANY, INC.
 (An
Exploration Stage Company)
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 (unaudited)
 Six
      Months Ended
                June
      30,
              
              
              For
      the Period from January 1, 2002 (Date of Inception of Exploration Stage)
      to2008
              
              
              2007
              
              
              June
      30, 2008$
              
              
              
              $
              
              
              
              $CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      loss
              
              
              (812,912
              )
              
              
              (467,030
              )
              
              
              (4,621,045
              )Adjustments
      to reconcile net loss to net cash from operating
    activities:Warrants
      issued as finance fees
              
              
              -
              
              
              
              -
              
              
              
              92,100Loss
      on abandoned projects
              
              
              205,500
              
              
              
              -
              
              
              
              205,500Stock
      based compensation
              
              
              102,517
              
              
              
              129,311
              
              
              
              369,384Depreciation
              
              
              432
              
              
              
              930
              
              
              
              145,886Loss
      on other non-operating activities
              
              
              -
              
              
              
              -
              
              
              
              (21,000
              )Changes
      in operating assets and liabilities:Prepaid
      expenses and other
              
              
              (223,547
              )
              
              
              18,105
              
              
              
              (241,765
              )Accounts
      payable and accrued liabilities
              
              
              (20,654
              )
              
              
              44,239
              
              
              
              345,046NET
      CASH FLOWS USED IN
                OPERATING
      ACTIVITIES
              
              
              (748,664
              )
              
              
              (274,445
              )
              
              
              (3,725,894
              )CASH
      FLOWS FROM FINANCING ACTIVITIESIssuance
      of shares for cash, net of issuance costs
              
              
              650,450
              
              
              
              376,768
              
              
              
              3,650,174Related
      party advances (repayments)
              
              
              3,932
              
              
              
              (9,000
              )
              
              
              (10,073
              )Convertible
      notes
              
              
              -
              
              
              
              -
              
              
              
              291,145NET
      CASH FLOWS FROM
                FINANCING
      ACTIVITIES
              
              
              654,382
              
              
              
              367,768
              
              
              
              3,931,246CASH
      FLOWS FROM INVESTING ACTIVITIESPurchase
      of equipment
              
              
              -
              
              
              
              -
              
              
              
              (5,579
              )Proceeds
      from non-operating activities
              
              
              -
              
              
              
              -
              
              
              
              97,125Reclamation
      bonds
              
              
              (29,339
              )
              
              
              -
              
              
              
              (29,339
              )Mineral
      property costs
              
              
              (30,000
              )
              
              
              (110,000
              )
              
              
              (256,000
              )NET
      CASH FLOWS USED IN
                INVESTING
      ACTIVITIES
              
              
              (54,339
              )
              
              
              (110,000
              )
              
              
              (193,793
              )INCREASE
      (DECREASE) IN CASH AND
                CASH
      EQUIVALENTS
              
              
              (153,621
              )
              
              
              (16,677
              )
              
              
              11,559CASH
      AND CASH EQUIVALENTS, BEGINNING
              
              
              165,877
              
              
              
              17,222
              
              
              
              697CASH AND CASH EQUIVALENTS,
      ENDING
              
              
              12,256
              
              
              
              545
              
              
              
              12,256SUPPLEMENTAL
      CASH FLOW INFORMATION AND
                NON-CASH INVESTING AND
      FINANCING ACTIVITIES (Note 7)
 
  The
accompanying notes are an integral part of these financial
statements
  5
 PIEDMONT
MINING COMPANY, INC.
 (An
Exploration Stage Company)
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
30, 2008
 (unaudited)
 NOTE
1:                      NATURE
OF OPERATIONS
 
 Piedmont
Mining Company, Inc. (the Company) was formed in 1983 under the laws of the
State of North Carolina, USA, and is currently in the exploration stage, which
is characterized by significant expenditures for the examination and development
of exploration properties.  As a result, under Statement of Financial
Accounting Standards No. 7 (SFAS) Accounting and Reporting by
Development Stage Enterprises, the Company re-established itself as an
exploration stage company in 2003 and began reporting under exploration stage
guidelines.
 
 The
Company has entered into agreements on various exploration properties in the
state of Nevada and may opt to acquire one or more of the properties that the
Company currently leases pursuant to option and earn-in agreements. Management’s
plan is to conduct exploration for gold and silver at these properties and at
other properties it may enter into agreements on to assess whether they might
possess economic deposits of gold and/or silver which could be recovered at a
profit. The Company does not intend to build an exploration staff but rather to
work with competent exploration groups who can manage the exploration activities
on these properties with the Company’s funding.
 
 The
Company’s focus for the foreseeable future will be on the exploration of its
properties.  Since April 2005, the Company has entered into
agreements, directly and under options, for the purpose of exploring for
economic deposits of gold and silver in the State of Nevada.  In April
2006 the Company commenced exploration on the Trinity Silver Project in Pershing
County, Nevada. (Note 3)
 
 Going
Concern
 These
financial statements have been prepared in accordance with generally accepted
accounting principles in the United States of America with the on-going
assumption applicable to a going concern which contemplates the realization of
assets and the satisfaction of liabilities and commitments in the normal course
of business.
 
 The
Company is in the exploration stage and to date has not yet generated any net
revenues or cash flow from its activities. The Company has a history of losses
and has a working capital deficit of $131,464 and a deficit of $17,185,331 at
June 30, 2008.  This creates an uncertainty as to how the Company will
fund its operations and maintain sufficient cash flow to operate as a going
concern. These financial statements do not reflect any adjustments to the
carrying values of assets that might result from the outcome of this
uncertainty.
 
 The
Company intends to fund its ongoing operations by way of private placements of
its securities as may be required.  Since 2002, private placements of
stock with warrants and the exercise of some of those warrants have resulted in
net cash proceeds of $3,650,174 through June 30, 2008.
 
 Management
believes these efforts will contribute toward funding the Company’s activities
until appropriate levels of funding can be arranged and/or revenue can be earned
from the properties either through production or sale.  The Company’s
ability to meet its cash requirements in the next year is dependent upon its
continuing to obtain financing and satisfying certain obligations, such as
compensating its officers and consultants either through monetary means or the
granting of stock options.  If this is not achieved, there is
substantial doubt the Company may be able to continue as a going
concern.
   6
 PIEDMONT
MINING COMPANY, INC.
 (An
Exploration Stage Company)
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
30, 2008
 (unaudited)
 NOTE
1:                      NATURE
OF OPERATIONS (continued)
 
 Unaudited
Interim Financial Statements
 The
accompanying unaudited interim consolidated financial statements have been
prepared in accordance with United States generally accepted accounting
principles for interim financial information and with the instructions to Form
10-QSB of Regulation S-B. They may not include all information and footnotes
required by United States generally accepted accounting principles for complete
financial statement disclosure. However, except as disclosed herein, there have
been no material changes in the information disclosed in the notes to the
financial statements for the year ended December 31, 2007, included in the
Company’s Form 10-KSB filed with the Securities and Exchange Commission on March
31, 2008. The unaudited interim consolidated financial statements should be read
in conjunction with those financial statements included in the Form 10-KSB. In
the opinion of Management, all adjustments considered necessary for a fair
presentation, consisting solely of normal recurring adjustments, have been made.
Operating results for the six months ended June 30, 2008 are not necessarily
indicative of the results that may be expected for the year ending December 31,
2008.
 NOTE
2:                      SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
 
 Basis
of Presentation
 These
financial statements are presented in United States dollars and have been
prepared in accordance with accounting principals generally accepted in the
United States of America.
 
 Basis
of Consolidation
 The
accompanying consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries, NetColony, LLC and Piedmont Gold
Company, Inc.   Neither subsidiary has material operations,
tangible assets or liabilities.  All significant intercompany accounts
and transactions, if any, have been eliminated in consolidation.
 
 Cash
and Cash Equivalents
 The
Company considers all highly liquid instruments with an original maturity of
three months or less at the time of issuance to be cash
equivalents.
 
 Comparative
Figures
 Certain
comparative figures have been reclassified in order to conform to the current
year’s financial statement presentation.
 
 Use
of Estimates
 The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the
period.  Actual results could differ from those
estimates.  Significant areas requiring management’s estimates and
assumptions are determining the fair value of shares of common stock,
convertible debentures and financial instruments. Other areas requiring
estimates include deferred tax balances, valuation allowances, allocations of
expenditures to mineral property interests and asset impairment
tests.
 
 Equipment
 Equipment
is comprised of computer equipment that is recorded at cost and amortized over 3
years on a straight-line basis.
 
  7
 PIEDMONT
MINING COMPANY, INC.
 (An
Exploration Stage Company)
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
30, 2008
 (unaudited)
 NOTE
2:                      SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES  (continued)
 
 Mineral
Property Costs
 The
Company is primarily engaged in the acquisition, exploration and development of
mineral properties.  Pursuant to Emerging Issues Task Force (EITF)
04-02, mineral rights are capitalized at cost. This includes lease payments
under exploration agreements.  The projects are assessed for
impairment when facts and circumstances indicate their carrying values exceed
the recoverable values, such as failure to discover mineable ore.  If
a mineable ore body is found, these costs will be amortized when production
begins using a units-of-production method.  These costs are recorded to
exploration projects on the consolidated balance sheets.  Other
exploration, geological costs and research and development costs are expensed as
incurred
 
 In the
event that mineral property acquisition costs are paid or settled with Company
shares, those shares are valued at market at the time the shares are
issued.
 
 When it
has been determined that a mineral property can be economically developed as a
result of establishing proven and probable reserves and pre-feasibility, the
costs incurred to develop such property to production are
capitalized.
 
 Estimated
future removal and site restoration costs, when determinable are provided over
the life of proven reserves on a units-of-production basis.  Costs,
which include production equipment removal and environmental remediation, are
estimated each period by management based on current regulations, actual
expenses incurred, and technology and industry standards.  Any charge
is included in exploration expense or the provision for depletion and
depreciation during the period and the actual restoration expenditures are
charged to the accumulated provision amounts as incurred.
 
 As of the
date of these financial statements, all of the Company’s exploration costs have
been expensed.
 
 To date
the Company has not established any proven or probable reserves on its mineral
properties.
 
 Asset
Retirement Obligations
 The
Company has adopted the provisions of SFAS No. 143 "Accounting for Asset
Retirement Obligations," which establishes standards for the initial measurement
and subsequent accounting for obligations associated with the sale, abandonment
or other disposal of long-lived tangible assets.  The adoption of this
standard has had no effect on the Company's financial position or results of
operations.  To June 30, 2008 any potential costs relating to the
ultimate disposition of the Company's mineral property interests are not
determinable.
 
 Impairment
of Long-Lived Assets
 The
Company reviews property and equipment and certain identifiable intangibles,
excluding goodwill, for impairment in accordance with SFAS No. 144, Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of. Long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate the carrying amount of an asset may not be
recoverable.  Recoverability of these assets is measured by comparison
of its carrying amount to future undiscounted cash flows the assets are expected
to generate.  If property, plant, and equipment and certain
identifiable intangibles are considered to be impaired, the impairment to be
recognized equals the amount by which the carrying value of the assets exceeds
fair market value.  For the six months ended June 30, 2008 and the
fiscal year ended December 31, 2007, the Company had no material impairment of
its long-lived assets.
 
  8
 PIEDMONT
MINING COMPANY, INC.
 (An
Exploration Stage Company)
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
30, 2008
 (unaudited)
 NOTE
2:                      SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES  (continued)
 
 Financial
Instruments
 The fair
values of cash and cash equivalents, accounts payable and accrued liabilities
and amounts due to related parties were estimated to approximate their carrying
values due to the immediate or short-term maturity of these financial
instruments.  The fair value of the Company’s net smelter royalty
obligations (refer to Note 3) is not determinable at the current stage of the
Company’s exploration program.  Accordingly, no value has been
assigned by management.   The Company’s operations and financing
activities are conducted primarily in United States dollars, and as a result the
Company is not subject to significant exposure to market risks from changes in
foreign currency rates.  Management has determined that the Company is
not exposed to significant credit risk.
 
 Loss
per Common Share
 Basic
loss per share (“LPS”) includes no dilution and is computed by dividing loss
attributable to common stockholders by the weighted average number of common
shares outstanding for the period.  Diluted earnings per share
reflects the potential dilution of securities that could share in the earnings
(loss) of the Company.  The common shares potentially issuable upon
exercise of stock options and warrants were not included in the calculation of
weighted average number of shares outstanding because the effect would be
anti-dilutive.
 
 Net loss
used in determining basic LPS for the six months ended June 30, 2008 and 2007
was ($812,912) and ($467,030), respectively. The weighted average number of
shares of common stock used in determining basic LPS for the
six  months ended June 30, 2008 and 2007 was 64,295,112 and
54,947,175, respectively.
 
 Foreign
Currency Translation
 The
financial statements are presented in United States dollars.  In
accordance with SFAS No. 52, “Foreign Currency Translation”, foreign denominated
monetary assets and liabilities are translated to their United States dollar
equivalents using foreign exchange rates which prevailed at the balance sheet
date.  Revenue and expenses are translated at average rates of
exchange during the year. Related translation adjustments are reported as a
separate component of stockholders’ equity, whereas gains or losses resulting
from foreign currency transactions are included in results of
operations.
 
 Income
Taxes
 The
Company follows the liability method of accounting for income
taxes.  Under this method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax balances.  Deferred tax assets and liabilities
are measured using enacted or substantially enacted tax rates expected to apply
to the taxable income in the years in which those differences are expected to be
recovered or settled.  The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that
includes the date of enactment or substantive enactment.  As at June
30, 2008, the Company had net operating loss carry forwards; however, due to the
uncertainty of realization, the Company has provided a full valuation allowance
for the potential deferred tax assets resulting from these losses carry
forwards.
 
 Stock-Based
Compensation
 On
January 1, 2006, the Company adopted SFAS No. 123 (revised 2004) (SFAS No.
123R), Share-Based Payment, which addresses the accounting for stock-based
payment transactions in which an enterprise receives employee services in
exchange for (a) equity instruments of the enterprise or (b) liabilities that
are based on the fair value of the enterprise’s equity instruments or that may
be settled by the issuance of such equity instruments.  In January
2005, the Securities and Exchange Commission (SEC) issued Staff Accounting
Bulletin (SAB) No. 107, which provides supplemental implementation guidance for
SFAS No. 123R. SFAS No. 123R eliminates the ability to account for stock-based
compensation transactions using the intrinsic value method under Accounting
Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees,
and instead generally requires that such
  9
 PIEDMONT
MINING COMPANY, INC.
 (An
Exploration Stage Company)
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
30, 2008
 (unaudited)
 NOTE
2:                      SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES  (continued)
 
 Stock-Based
Compensation (continued)
 transactions
be accounted for using a fair-value-based method.  The Company uses
the Black-Scholes-Merton (“BSM”) option-pricing model to determine the
fair-value of stock-based awards under SFAS No. 123R, consistent with that used
for proforma disclosures under SFAS No. 123, Accounting for Stock-Based
Compensation.  The Company has elected the modified prospective
transition method as permitted by SFAS No. 123R and accordingly prior periods
have not been restated to reflect the impact of SFAS No. 123R.  The
modified prospective transition method requires that stock-based compensation
expense be recorded for all new and unvested stock options, restricted stock,
restricted stock units, and employee stock purchase plan shares that are
ultimately expected to vest as the requisite service is rendered beginning on
January 1, 2006 the first day of the Company’s fiscal year
2006.  Stock-based compensation expense for awards granted prior to
January 1, 2006 is based on the grant date fair-value as determined under the
pro forma provisions of SFAS No. 123.
 
 Registration
Payment Arrangements
 On
January 1, 2007, the Company adopted FSP EITF 00-19-02, Accounting for
Registration Payment Arrangements (“FSP 00-19-2”) which addresses accounting for
registration payment arrangements.  FSP 00-19-2 specifies that the
contingent obligation to make future payments or otherwise transfer
consideration under a registration payment arrangement, whether issued as a
separate agreement or included as a provision of a financial instrument or other
agreement, should be separately recognized and measured in accordance with FASB
Statement No. 5, Accounting for Contingencies.  FSP 00-19-2 further
clarifies that a financial instrument subject to a registration payment
arrangement should be accounted for in accordance with other applicable
generally accepted accounting principles without regard to the contingent
obligation to transfer consideration pursuant to the registration payment
arrangement.
 
 Recent
Accounting Pronouncements
 In March
2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and
Hedging Activities ("SFAS 161"). SFAS 161 is intended to improve financial
reporting about derivative instruments and hedging activities by requiring
enhanced disclosures to enable investors to better understand their effects on
an entity's financial position, financial performance, and cash flows. SFAS 161
achieves these improvements by requiring disclosure of the fair values of
derivative instruments and their gains and losses in a tabular format. It also
provides more information about an entity's liquidity by requiring disclosure of
derivative features that are credit risk-related. Finally, it requires
cross-referencing within footnotes to enable financial statement users to locate
important information about derivative instruments. SFAS 161 will be effective
for financial statements issued for fiscal years and interim periods beginning
after November 15, 2008, and will be adopted by the Company beginning in the
first quarter of fiscal 2009. The Company does not expect there to be any
significant impact of adopting SFAS 161 on its financial position, cash flows
and results of operations.
 
 In May
2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted
Accounting Principles (“SFAS No. 162”). SFAS No. 162 is intended to improve
financial reporting by identifying a consistent framework, or hierarchy, for
selecting accounting principles to be used in preparing financial statements
that are presented in conformity with U.S. generally accepted accounting
principles for nongovernmental entities. SFAS No. 162 is effective 60 days
following the SEC's approval of the Public Company Accounting Oversight Board
Auditing amendments to AU Section 411, The Meaning ofPresent Fairly
in Conformity with Generally Accepted Accounting Principles.
  10
 PIEDMONT
MINING COMPANY, INC.
 (An
Exploration Stage Company)
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
30, 2008
 (unaudited)
 NOTE
3:                      MINERAL
PROPERTIES
 
 A summary
of capitalized costs is as follows:
 Balance
      as at
                December
      31, 2007
              Incurred
      during
                the
      period
              Abandoned
              Balance
      as at
                June
      30, 2008Antelope
      Ridge
              $     68,500
              $           -
              $     (68,500)
              $               -Bullion
      Mountain
              20,000
              -
              -
              20,000Dome
      Hi-Ho
              107,000
              30,000
              (137,000)
              -Dutch
      Flat
              35,000
              -
              -
              35,000Pasco
      Canyon
              10,000
              -
              -
              10,000Trinity
      Silver
              10,000
              -
              -
              10,000PPM
      Gold
              25,000
              
              
              25,000$  275,500
              $   30,000
              $  (205,500)
              $     100,000
 
 A.           Antelope
Ridge Project
 The
Company entered into a 10 year Mining Lease with Option to Purchase dated April
26, 2005 on 50 claims in the Fish Creek Mining District, Eureka County, Nevada
(the “Antelope Ridge Project”).  The Company had made lease and option
payments totaling $68,500 and had expensed $189,746 in exploration costs with
respect to this Project.  In June, 2008, the Company terminated this
agreement and recorded an impairment loss of $68,500.
 
 B.           Bullion
Mountain Project
 Effective
November 11, 2005, the Company entered into a ten year Mining Lease with Option
to Purchase on 17 claims in Lander County, Nevada (the ‘Bullion Mountain
Project’) pursuant to the following terms:
 1.
              Lease
      payments required:
 a)
              On
      signing:
              $5,000
      plus $2,274 for claims fees reimbursement was
  paid
 b)
              First
      anniversary:
              $5,000
      was paid
 c)
              Second
      anniversary:
              $10,000
      was paid
 d)
              Third
      anniversary and each anniversary thereafter:
              $15,000
 2.
              The
      Company must expend the following additional amounts in exploration and
      maintenance of the property during the first two years of the
      agreement:
 a)   By
November
2006:           $20,000
(incurred)
 b)   By
November 2007:        
  $50,000
 In
September, 2007, this agreement was amended and the time for completing the
remaining work obligation was extended indefinitely.
 3.
              The
      Company has the option to purchase this property at any time for $500,000,
      which must be exercised before production can commence. All lease, work
      requirement and property maintenance payments made up to this point would
      be deducted from the purchase
price.
 4.
              Upon
      exercise of the purchase option, the Company would be required to pay a 3%
      net smelter returns royalty on production from the
    property.
 5.
              The
      Company has the right to terminate this agreement at any time by giving 60
      days prior written notice.
 
 As at
June 30, 2008, the Company has made lease payments totaling $20,000 and has
incurred $24,458 in exploration costs.
 
 C.           Dome-Hi-Ho
Project
 Effective
on April 26, 2005, the Company entered into a five year Exploration and Option
to Enter Into a Joint Venture Agreement on 44 claims in Lander County, Nevada
(the ‘Dome HiHo Project’.  The Company had made lease and option
payments totaling $137,000 and had expensed $350,510 in exploration costs with
respect to this Project.  In June, 2008, the Company terminated this
agreement and recorded an impairment loss of $137,000.
 
  11
 PIEDMONT
MINING COMPANY, INC.
 (An
Exploration Stage Company)
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
30, 2008
 (unaudited)
 NOTE
3:                      
MINERAL PROPERTIES (continued)
 
 D.           Trinity
Silver Project
 Effective
on September 15, 2005, the Company entered into an Exploration and Development
Agreement on the Trinity Silver Project (‘TSP’) in Pershing County,
Nevada.  The TSP consists of 40 claims, 1,280 acres of fee land and
2,560 acres of sub-leased fee land. Pursuant to the terms of the
Agreement:
 
 1.           Lease
and option payments required:
 a)         On
signing:                    $10,000
was paid.
 2.           Required
expenditures for exploration and property maintenance:
 a)         In
year
1:                      $75,000
(completed).
 b)         In
year
2:                      $125,000
(completed).
 c)
              Prior
      to September 15, 2008: a total of $1,000,000 in order to earn an initial
      25% interest in the TSP.
 d)
              Prior
      to September 15, 2010: an additional $1,000,000, in order to earn an
      additional 26% interest (51% in total) in the
  TSP.
 e)
              Prior
      to September 15, 2013: an additional $2,000,000 in order to earn an
      additional 9% interest (for a total of 60%) in the
  TSP.
 3.
              Upon
      achieving its 51% or its 60% interest, the Company may then elect to form
      a joint venture, and the Company would be the operator of the joint
      venture.
 4.           The
Company may terminate this agreement at any time upon 30 days written
notice.
 
 As at
June 30, 2008, the Company has made lease payments totaling $10,000 and has
incurred $615,921 in exploration and property maintenance costs with respect to
the Trinity Silver Project.
 
 E.           Pasco
Canyon Project
 On
February 14, 2006, the Company entered into a five year Option Agreement (the
‘Agreement’) on 24 claims in Nye County, Nevada (the ‘Pasco Canyon Project’),
pursuant to the following terms:
 
 1.
              Option
      payment required: On signing: $10,000
(paid).
 2.         The
Company is required to expend the following sums on exploration and maintenance
of the
 property during the term of the Agreement:
 Year
1                      $  50,000
(extended to July 14, 2008)
 Year
2                      $100,000
 Year
3                      $200,000
 Year
4                      $200,000
 Year
5                      $450,000
 3.
              Upon
      completion of the required expenditures, the Company will have acquired a
      60% undivided interest in the property. At that point, a formal joint
      venture agreement will be entered into by the Company with the Company
      being the operator of the joint
venture.
 4.
              The
      Company has the right to terminate this agreement at any time, subsequent
      to the first year’s expenditure requirement of $50,000, upon 30 days prior
      written notice.
 
 As at
June 30, 2008, the Company has made lease payments totaling $10,000 and has
incurred $41,144 in exploration costs with respect to the Pasco Canyon Project.
As of June 30, 2008 the Company has not completed all of the prescribed
exploration expenditures because a drilling permit has not yet been granted by
the U.S. Forest Service.   However, on September 17, 2007, the
Company was granted an ‘Agreement for Extension’ to complete the work
obligation.  Based on recent meetings with the U.S. Forest Service, it
is currently anticipated that the required permit may be received in the next
couple of months.  A drilling program has been planned and these costs
will be funded by the sale of common stock and warrants.
 
 
  12
 PIEDMONT
MINING COMPANY, INC.
 (An
Exploration Stage Company)
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
30, 2008
 (unaudited)
 NOTE
3:                      
MINERAL PROPERTIES (continued)
 
 F.           Dutch
Flat Gold Project
 On July
2, 2006, the Company entered into a five year Exploration Agreement with Option
to Form Joint Venture (the ‘Agreement’), on 114 claims in Humboldt County,
Nevada (the Dutch Flat Project) pursuant to the following terms:
 1.           Payment
upon signing:    $35,000
 2.
              The
      Company shall expend the following sums on exploration and maintenance of
      the property during the first 5 years of the
  Agreement:
 Year
1                      $200,000
(incurred)
 Year
2                      $300,000
 Year
3                      $500,000
 Year
4                      $500,000
 Year
5                      $500,000
 3.
              Upon
      completion of the $2,000,000 in exploration expenditures over the 5-year
      period, the Company shall have earned a 51% interest in the property and
      can then elect to either 1) form a joint venture at that point whereby the
      Company would own 51%, or 2) earn an additional 19% interest in property
      by funding a positive feasibility study and then form a joint
      venture.  The Company would be the operator of the joint
      venture.
 4.
              Six
      of these claims are subject to a 1.5% net smelter returns
      royalty.  Another company, in which one of the Company’s
      Directors has an interest, holds a 1% net smelter returns royalty on
      another sixteen of these claims.
 5.         The
Company may terminate this Agreement at any time after the first year on 30 days
notice.
 
 As at
June 30, 2008, the Company has made lease payments totaling $35,000 and has
incurred $493,065 in exploration costs.
 
 G.           PPM
Gold Project
 In April,
2007, the Company signed an “Exploration Agreement with Option to Form Joint
Venture” (the “Exploration Agreement”) with Miranda US, Inc., a wholly-owned
subsidiary of Miranda Gold Corp. (“Miranda”), a Canadian corporation listed on
the TSX Venture Exchange.
 
 Under the
terms of the Exploration Agreement, Piedmont has an option to earn a 55%
interest in 102 mining claims, located in Humboldt County, Nevada by incurring
$1,750,000 in exploration work during a five year period as
follows:
 (i)
              paying  $25,000
      to Miranda within 30 days of the effective date of the Exploration
      Agreement (paid);
 (ii)
              incurring
      at least $175,000 in exploration work during the first year of the
      Exploration Agreement;
 (iii)
              incurring
      an additional $200,000 in exploration work during the second
      year;
 (iv)
              incurring
      an additional $300,000 in exploration work during the third
      year;
 (v)
              incurring
      an additional $425,000 in exploration work during the fourth year;
      and
 (vi)
              incurring
      an additional $650,000 in exploration work during the fifth
      year.
 
 Upon
completing the total $1,750,000 work expenditure requirement, the Company will
have earned a 55% interest in the property and the project.  At that
point, the Company may enter into a joint venture with PPM Miranda, with the
Company being the operator.  After the first year of the agreement,
the Company may terminate the agreement at any time on 30 days written notice.
The Company must pay all claims maintenance fees, which will be creditable
against the work commitment expenditure requirement.
 
 As at
June 30, 2008, the Company made an initial payment of $25,000 on signing and has
expended $91,531 in exploration costs with respect to the PPM Gold
Project.  The Company holds a reclamation bond of 11,566 on this
property.
  13
 PIEDMONT
MINING COMPANY, INC.
 (An
Exploration Stage Company)
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
30, 2008
 (unaudited)
 NOTE
3:                      
MINERAL PROPERTIES (continued)
 
 H.           Willow
Creek Project
 On June
16, 2008, the Company entered into an Exploration Agreement with Option to Form
a Joint Venture with Carlin Gold Corporation (“Carlin”) on the Willow Creek
property, Elko County, Nevada. An initial payment of $10,000 was made in
November, 2007, and $300,000 was advanced to Carlin on signing the agreement, to
cover the first year’s work commitment. In addition, 100,000 common shares were
issued to Carlin subsequent to June 30, 2008.
 
 This
Agreement grants to the Company the exclusive right to earn a 51% interest in
the property by completing expenditure of $3,500,000 over a five year period as
follows:
 Year 1
              $  300,000
      (paid)Year
      2
              500,000Year
      3
              700,000Year
      4
              1,000,000Year 5
              1,000,000Total
              $3,500,000
 
 The
Company can terminate this Agreement at any time after completion of the first
year’s work requirement. The Company will be required to make all property
maintenance payments and pay $10,000 to Carlin Gold on each anniversary date of
the agreement.  Upon earning a 51% interest, the parties would enter
into a joint venture agreement.
 
 As at
June 30, 2008, the Company has incurred $80,207 in exploration costs, including
the initial $10,000 payment.  A balance of $230,997 is recorded in
prepaid expenses, related to the remaining work commitment
advance.  The Company holds a reclamation bond of 17,773 on this
property.
 
 I.           Morgan
Pass Project
 On May
20, 2008, the Company signed a Letter of Intent with Nevada Eagle Resources LLC,
a wholly owned subsidiary of Gryphon Gold Corporation on the Morgan Pass
property in Elko County, Nevada.  The Letter of Intent is effective
for five years, during which the parties will negotiate an “Exploration
Agreement with Option to Form Joint Venture” at such time as the property is
released into “multiple use” from a “wilderness study area”.  During
this time the Company must:
 -
              Pay
      for staking and registration of initial
claims.
 -
              Commencing
      with the 2008-2009 assessment year, pay all maintenance
      requirements.
 -
              Pay
      $20,000 upon release of the properties into “multiple use”
      classification.
 -
              Upon
      release of the properties into “multiple use”, a work program will
      commence beginning from the date of the formal agreement, totaling
      $750,000over five years.
 
 As at
June 30, 2008, the Company has incurred $9,732 in exploration
costs.
  14
 PIEDMONT
MINING COMPANY, INC.
 (An
Exploration Stage Company)
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
30, 2008
 (unaudited)
 NOTE
4:                      EQUIPMENT
 
 June 30,
      2008
              
              
              December
      31, 2007Computer
      equipment
              
              $
              5,578
              
              
              $
              4,290Less:
      accumulated depreciation
              
              
              (5,081
              )
              
              
              (3,361
              )$
              497
              
              
              $
              929
 NOTE
5:                      DUE
TO RELATED PARTIES AND RELATED PARTY TRANSACTIONS
 
 The Board
of Directors has authorized a monthly management fee of $10,000 to the Company’s
President and CEO, which was increased to $14,000 per month, effective February
1, 2008. The unpaid portion of the monthly management fees at June 30, 2008 and
December 31, 2007 was $66,000 and $82,000, respectively.  Unpaid
administrative expenses incurred by the President and CEO at June 30, 2008 and
December 31, 2007 were $6,749 and $0, respectively. The Company reimburses the
President for office rent, which totaled $9,600 for the six months ended June
30, 2008, and $7,200 for the six months ended June 30, 2007.
 
 The
unpaid portion of exploration costs incurred by the Company’s Vice-President at
June 30, 2008 and December 31, 2007 were $12,791 and $1,621, respectively, which
includes his compensation of $10,960 and $950, respectively, for services
related to the various exploration projects and research and
development.
 
 The
directors receive a fee of $200 per meeting for participating in Board meetings
and Compensation and Audit Committee meetings. The Chairmen of these
Committeesreceive
$300 per meeting.  Unpaid directors’ fees at June 30, 2008 and
December 31, 2007 were $1,400 and nil, respectively.
 
 From time
to time, the Company’s officers and directors advance monies to the Company.
These loans bear interest at 5% annually. These loans are unsecured and have no
fixed repayment terms. The unpaid balances related to these advances at June 30,
2008 and December 31, 2007 were $nil, respectively.
 
 No stock
options were granted to its officers or directors by the Company for the six
months ended June 30, 2008.
 
 All
related party transactions involving provision of services or transfer of
tangible assets in the normal course of business were recorded at the exchange
amount, which is the value established and agreed to by the related parties
reflecting arms length consideration payable for similar services or
transfers.  (Other related party transactions are disclosed in Note
6.)
 NOTE
6:                      CAPITAL
STOCK
 
 Share
Capital
 The
Company’s capitalization is 50,000,000 authorized preferred shares with a par
value of $1.00 per share and 200,000,000 common shares with no par
value.
 
 The
holders of the Company’s common stock are entitled to one vote for each share
held of record on all matters submitted to a vote of
shareholders.  Holders of common stock are entitled to receive ratably
such dividends, if any, as may be declared by the Board of Directors out of
funds legally available.
 
 The
Company did not declare or pay any cash dividends during the past two
years.  The Company has no present plans for the payment of any
dividends.
  15
 PIEDMONT
MINING COMPANY, INC.
 (An
Exploration Stage Company)
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
30, 2008
 (unaudited)
 NOTE
6:                      CAPITAL
STOCK (continued)
 
 Common
Share Transactions
 During
the six months ended June 30, 2008, the Company completed the following equity
transactions:
 
 In
February, 2008, a private placement offering of 74,967 Units, consisting of one
share of Common Stock (the “Shares”) and one share of a Common Stock Purchase
Warrant (the “Warrants”) at a price of $0.30 per Unit for proceeds of
$22,490.  The Warrants are exercisable for a period of two years and
shall entitle the holder to purchase one share of Common Stock (the “Warrant
Shares”) for $0.60 per Warrant Share.
 
 In March,
2008, a private placement offering of 53,571 Units, consisting of one share of
Common Stock (the “Shares”) and one share of a Common Stock Purchase Warrant
(the “Warrants”) at a price of $0.28 per
 Unit for
proceeds of $15,000.  The Warrants are exercisable for a period of two
years and shall entitle the holder to purchase one share of Common Stock (the
“Warrant Shares”) for $0.50 per Warrant Share.
 
 In April,
2008, the Company completed a private placement offering of 86,000 Units,
consisting of one share of Common Stock and one Common Stock Purchase Warrant at
a price of $0.175 per Unit for proceeds of $15,050.  The Warrants are
exercisable for a period of two years and entitle the holder to purchase one
share of Common Stock for $0.27 per Share.
 
 In April
2008, the Company completed a private placement offering of 312,500 Units,
consisting of one share of Common Stock and one Common Stock Purchase Warrant at
a price of $0.16 per Unit for proceeds of $50,000.  The Warrants are
exercisable for a period of two years and entitle the holder to purchase one
share of Common Stock for $0.25 per Share.
 
 In April,
2008, 737,833 shares of Common Stock were issued upon the exercise of certain
warrants. The exercise price of the warrants was $0.15, which resulted in gross
proceeds in the amount of $110,675.
 
 In May,
2008 a private placement offering of 3,203,331 Units, consisting of one share of
Common Stock (the “Shares”) and one share of a Common Stock Purchase Warrant
(the “Warrants”) at a price of $0.15 per Unit for proceeds of $480,500 less
broker commission of $43,245 for net proceeds of $437,255.  The
Warrants are exercisable for a period of two years and shall entitle the holder
to purchase one share of Common Stock (the “Warrant Shares”) for $0.26 per
Warrant Share. In addition to the cash commission, the broker received a warrant
exercisable for a period of two years which shall entitle the broker to purchase
320,333 shares of Common Stock for $0.15 per Warrant Share.
 
 Stock-Based
Compensation and Other Equity Transactions
 The
Company does not have a stock-based compensation plan in place.  The
Company’s compensation committee makes recommendations to the Board of Directors
for the granting of awards of stock options to its officers and directors on a
case-by-case basis.
 
 For
options issued to service providers, the Company follows SFAS No. 123(R),
Accounting for Stock-Based Compensation, which requires that such transactions
be accounted for using a fair-value-based method.
The Company uses the Black-Scholes-Merton (“BSM”) option-pricing model to
determine the fair-value of stock-based awards under SFAS
No. 123(R).
 
 At the
time of issuance, the exercise price of all options granted was in excess of the
market price of the stock.
 
 In
February, 2008 a director retired from the Company’s Board and his vested
options expired unexercised.
 
  16
 PIEDMONT
MINING COMPANY, INC.
 (An
Exploration Stage Company)
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
30, 2008
 (unaudited)
 NOTE
6:                      CAPITAL
STOCK (continued)
 
 On April
9, 2008 150,000 stock options were granted to a consultant, of which 75,000 vest
immediately and 75,000 vest on the first anniversary in 2009. The term of this
award is three years.  The Company estimated the total fair market
value of these options to be $18,700 at the date of grant, using the BSM pricing
model using an expected life of 3 years, a risk-free interest rate of 4.45% and
an expected volatility of 109%.
 
 Of the
450,000 stock options granted during the year ended December 31, 2007, 150,000
vested in 2007; 150,000 vest in 2008; and the remainder vest in 2009. The terms
of these awards are three to five years. The fair value of these options was
$43,900 at the 2007 grant date.
 
 Total
compensation expense for the six months ended June 30, 2008 was $102,517 and for
the year ended December 31, 2007 was $143,500, which corresponds to the vesting
schedule.  As of June 30, 2008, the total compensation expense related
to non-vested awards to be recognized in future periods is
$40,084.  This expense will be recognized ratably as the stock options
vest during 2008 and 2009.
 
 Below is
a summary of the stock option activity for the six months ended June 30,
2008:
 WeightedAverageNumber
              
              
              Exercise
      Price$Outstanding,
      December 31, 2007
              
              
              5,975,000
              
              
              
              0.235Expired
      March 4, 2008
              
              
              (400,000
              )
              
              
              0.200Granted
      April 9, 2008
              
              
              150,000
              
              
              
              0.280Outstanding,
      June 30, 2008
              
              
              5,725,000
              
              
              
              0.239WeightedNonvested
              
              
              AverageOptions
              
              
              Fair
      ValueNonvested
      Options
              
              
              
              
              
              $Nonvested
      options, December 31, 2007
              
              
              1,150,000
              
              
              
              0.11Granted
      April 9, 2008
              
              
              150,000
              
              
              
              0.12Vested
              
              
              (925,000
              )
              
              
              0.11Nonvested
      options June 30, 2008
              
              
              375,000
              
              
              
              0.11
 
 The
following tables summarize information and terms of the options outstanding and
exercisable:
 
 Options
      Outstanding at June 30, 2008
              
              Options
      Exercisable at June 30, 2008Weighted
              
              
              
              WeightedAverage
              
              
              
              AverageRemaining
              Weighted
              
              
              Remaining
              WeightedRange
      of
              Number
              Contractual
              Average
              
              Number
              Contractual
              AverageExercise
      Prices
              of
      Shares
              Life
      (in years)
              Exercise
      Price
              
              of
      Shares
              Life
      (in years)
              Exercise
      Price$
      0.20 – 0.28
              5,725,000
              2.73
              $      0.239
              
              5,350,000
              2.65
              $     0.228
 
 Options
      Outstanding at December 31, 2007
              
              Options
      Exercisable at December 31, 2007Weighted
              
              
              
              WeightedAverage
              
              
              
              AverageRange
      of
              
              Remaining
              Weighted
              
              
              Remaining
              WeightedExercise
              Number
              Contractual
              Average
              
              Number
              Contractual
              AveragePrices
              Of
      Shares
              Life
      (in years)
              Exercise
      Price
              
              of
      Shares
              Life
      (in years)
              Exercise
      Price$
      0.20 – 0.27
              5,975,000
              3.15
              $      0.235
              
              4,825,000
              2.531
              $     0.233
  17
 PIEDMONT
MINING COMPANY, INC.
 (An
Exploration Stage Company)
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
30, 2008
 (unaudited)
 NOTE
6:                      CAPITAL
STOCK (continued)
 
 The
outstanding and exercisable stock options had no intrinsic value at June 30,
2008.
 
 Common Stock Purchase
Warrants
 Outstanding
warrants at June 30, 2008 were 10,320,702.  The exercise prices on all
warrants range from $0.15 to $0.60 per share. The warrants are exercisable
immediately upon issuance and the expiration dates range between one year and
three years after the date of issuance.
 
 During
the six months ended June 30, 2008, the Company issued warrants relating to unit
private placements granting holders the right purchase 4,050,702 shares of
common stock.  The exercise prices on these warrants range from $0.25
to $0.60 per share. The warrants were exercisable immediately upon issuance and
the expiration dates are two years after issuance.  The Company
estimated the total fair market value of these warrants to be $144,800 at the
date of grant, using the BSM pricing model using an expected life of one year, a
risk-free interest rate of 4.45% and an expected volatility of
109%.  The fair value of the warrants has been included in capital
stock.
 
 During
the year ended December 31, 2007, the Company issued warrants relating to unit
private placements granting holders the right purchase 4,932,500 shares of
common stock.  The Company estimated the total fair market value of
these warrants to be $210,300 at the date of grant, using the same methods and
assumptions employed above in valuing the stock options. The exercise prices on
these warrants range from $0.16 to $0.60 per share. The warrants were
exercisable immediately upon issuance and the expiration dates range between one
year and five years after issuance.
 
 The
warrants exercisable at June 30, 2008 had no intrinsic value.
 
 A summary
of the Company’s stock purchase warrants is presented below:
 
 Number
      of
                Warrants
              Weighted
      average
                exercise
      price
              Weighted
      average
                remaining
      life (years)$Balance,
      December 31, 2007
              10,697,000
              0.31
              1.24Exercised
              (737,833)Expired
              (3,689,167)Issued
              4,050,702
              0.269
              2.0Balance,
      June 30, 2008
              10,320,702
              0.322
              1.58
 NOTE
7:                
      SUPPLEMENTAL CASH FLOW INFORMATION
AND
 NONCASH
INVESTING AND FINANCING ACTIVITIES
 Six
      months
                ended
                June
      30, 2008
              Six
      months
                ended
                June
      30, 2007$
              $Interest
      paid
              -
              -Income
      taxes paid
              -
              -
 
 NOTE
8:                      SUSEQUENT
EVENT
 
 Subsequent
to June 30, 2008 the Company issued 100,000 shares valued at $15,000 due on the
Willow Creek Project.  Refer to 3.
 
  18
  Item
2. Management’s Discussion And Analysis Or Plan Of Operation
 
 Forward-Looking
Statements and Associated Risks.
 
 Except
for statements of historical facts, this report contains forward-looking
statements involving risks and uncertainties. You can identify these statements
by forward-looking words including “believes,” “considers,”
“intends,”  “expects,” “may,” “will,” “should,” “forecast, “ or
“anticipates,” or the equivalents of those words or comparable terminology, and
by discussions of strategies that involve risks and uncertainties.
Forward-looking statements are not guarantees of our future performance or
results, and our actual results could differ materially from those anticipated
in these forward-looking statements. We wish to caution readers to consider the
important factors, among others, that in some cases have affected, and in the
future could affect our actual results and could cause actual consolidated
results for future fiscal years to differ materially from those expressed in any
forward-looking statements made by us or on our behalf. These factors include
without limitation, our ability to obtain capital and other financing in the
amounts and at the times needed, identification of suitable exploration
properties for acquisition, the successful discovery of gold, silver or other
precious metals in quantities economically feasible for profitable production,
changes in gold and silver prices, changes in the political climate for gold and
silver exploration, and other risk factors listed from time to time in our
Securities and Exchange Commission reports, including in particular the factors
and discussions under the heading “Risk Factors” in the Annual Report on Form
10-KSB for the year ended December 31, 2007  that was filed with the
Securities and Exchange Commission on March 31, 2008.
 
 Overview
of Business
 
 We are a North Carolina corporation
formed in 1983. From our inception until 1992, we were engaged in the
exploration for, and production of, gold and other precious metals and the
evaluation of gold properties in North Carolina and South Carolina. From 1983 we
were engaged in exploration and from early 1985 until May 1992, we were also
engaged in the mining and production of gold and silver at our Haile Mine
Property near Kershaw, South Carolina. In May 1992, we entered into a joint
venture at our Haile Mine Property with AGI. Our operations ceased at the Haile
Mine Property in 1994. We did not again become engaged in exploration activities
until 2004, when we relocated our principal place of business to Reno, Nevada.
Since October 2003, we have been an exploration stage company engaged in the
acquisition and exploration of mineral properties. We have now entered into
seven option and earn-in agreements on seven different exploration properties in
the state of Nevada. Our plan is to conduct exploration for gold and silver at
each of these properties and at other properties we may enter into agreements on
to assess whether they possess economic deposits of gold and/or silver, which
can be recovered at a profit. We do not intend to build an exploration staff,
but rather to work with competent exploration groups who can manage the
exploration activities with our funding, although in some cases we may conduct
exploration on our own using contractors. We do not know whether a commercially
viable ore body will be located on any of our mineral claims or leased
properties. Our current plans are limited to research and exploration in the
state of Nevada.
  Going
Concern
 
 The report of our independent auditors
in our December 31, 2007 financial statements includes an explanatory paragraph
indicating that there is substantial doubt about our ability to continue as a
going concern due to recurring losses from operations, an accumulated deficit of
$16,372,420 and a working capital deficit of $218,116 at December 31, 2007. Our
ability to continue as a going concern will be determined by our ability to
raise adequate funds and conduct one or more successful exploration programs.
Our financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
   19
  Critical
Accounting Policies
  The preparation of financial statements
in conformity with accounting principles generally accepted in the United States
of America requires management to make a wide variety of estimates and
assumptions that affect: (1) the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities as of the date of the financial
statements, and (2) the reported amounts of revenues and expenses during the
reporting periods covered by the financial statements. Our management routinely
makes judgments and estimates about the effect of matters that are inherently
uncertain. As the number of variables and assumptions affecting the future
resolution of the uncertainties increases, these judgments become even more
subjective and complex. We have identified certain accounting policies that are
most important to the portrayal of our current financial condition and results
of operations. Our significant accounting policies are disclosed in Note 2 of
the Notes to the Financial Statements.
   Results
of Operations
  Discussion
of Revenues
  We have no revenues at this time and
have not had any revenues in recent years, because we are an exploration
company. We do not anticipate that significant revenues will be achieved until
we either:
  
              locate
      one or more economic mineral deposits which could then be put into
      production, from which we would then be able to extract gold or silver at
      a profit; or
  
              enter
      into a joint venture arrangement on one or more of our leased properties;
      or
  
              consummate
      a merger or acquisition with an operating
  company.
  There is no guaranty that our
exploration activities will locate viable gold and/or silver reserves, or if an
economic mineral deposit were discovered that we would be able to commence
commercial production, or that if we do locate viable mineralization that we
would be able to secure the funding necessary to proceed with the mining and
production of the ore.
  Expenses for the Six Month Period
ending June 30, 2008 vs. June 30, 2007
 Expenses for the Three Month Period
ending June 30, 2008 vs . June 30, 2007
  Exploration,
geological and geophysical costs increased by $299,647, or 1,312%  to
$322,481 for the three months ended June 30, 2008 as compared to $22,833 for the
three months ended June 30, 2007.  The principal reason for this
increase was due to an increase in exploration activity on various properties of
$94,148 and a write-off of the lease payments on abandoned projects of
$205,500.  The
Antelope Ridge and Dome HiHo projects were abandoned during the second quarter
because the exploration results to date were not sufficiently encouraging to
warrant further drilling and exploration.
  Exploration,
geological and geophysical costs increased by $290,140, or 273%  to
$396,442 for the six months ended June 30, 2008 as compared to $106,302 for the
six months ended June 30, 2007.  The principal reason for this
increase was due to an increase in exploration activity on various properties of
$84,640 and a write-off of the lease payments on abandoned projects of
$205,500. The
Antelope Ridge and Dome HiHo projects were abandoned during the second quarter
because the exploration results to date were not sufficiently encouraging to
warrant further drilling and exploration.
  Management
fees increased by $26,904, or 39.6%, to $94,850 for the three months ended June
30, 2008 as compared to $67,946 for the three months ended June 30,
2007.  The principal reason for this change for the three month period
was due to an increase of $19,000 in  management and directors’ fees
due to an increase in the monthly fees paid to the president,
$2,100  paid to directors for meetings and an increase
of  $5,804 in recording the expense of vested options.
  Management fees increased by $8,806, or
4.97%, to $186,117 for the six months ended June 30, 2008 as compared to
$177,311 for the six months ended June 30, 2007.  The principal reason
for this change for the six month period was due to an increase of $33,000 in
management and directors’ fees due to an increase in the monthly fees paid to
the president, $2,600 paid to directors for meetings, and a decrease of
$26,794  in recording the expense of vested options on fully vested
options.
  For the three months ended June 30,
2008, professional fees decreased $3,452, or (6.44)%,  to $50,196 as
compared to $53,648 for the three months ended June 30, 2008.  This
change for the three month period is due to a decrease in legal
fees.
   20
  For the six months ended June 30, 2008,
professional fees decreased $7,945, or (6.98)%,  to $105,936 as
compared to $113,880 for the six months ended June 30, 2008.  This
change for the six month period is due to an increase in legal fees of $4,872
and a decrease in accounting  fees of $12,816.
  Depreciation
expense decreased by $249, or (53.55%), to $216 for the three months ended June
30, 2008 as compared to $465 for the three months ended June 30,
2007.  The principal reason for this change is attributable to some
equipment becoming fully depreciated.
  Depreciation
expense decreased by $498, or (53.55%), to $432 for the six months ended June
30, 2008 as compared to $930 for the six months ended June 30,
2007.  The principal reason for this change is attributable to some
equipment becoming fully depreciated.
   Liquidity and Financial Condition
  Cash
and Working Capital
  We had an accumulated deficit of
($16,372,420) from our inception in 1983 to December 31, 2007, and an
accumulated deficit of ($17,185,331) at June 30, 2008. We have no contingencies
or long-term obligations except for our work commitments under our seven (7)
option and earn-in agreements on our leased properties. All of these agreements
can be terminated by us upon either 30 or 60 days notice.
  We had a
cash balance of $165,877 on December 31, 2007 and a cash balance of $12,256 on
June 30, 2008.  For the six month period ending June 30, 2008, we had
net cash outflows of $153,621.
  The cash
flows used in operations for the six month period ended June 30, 2008 were
$748,644 compared with $274,445 for the same period in 2007.  Cash
flows used in operations for the six month period ended June 30, 2008 consisted
primarily of a net loss of $812,912 including stock based compensation
of  $102,517 and the write-off of leases on abandoned projects of
$205,500, with changes in working capital assets and liabilities consisting of a
net increase in prepaid expenses of $223,547, which included a cash advance of
$230,996 for future exploration costs on a mineral property, and a decrease in
accounts payable and accrued liabilities of $20,654.
 
 The cash
flows used in investing activities for the six month period ended June 30, 2008
were $59,339 compared to $110,000 for the same period in 2007. Cash flows used
in investing activities consisted of a lease payment of $30,000 and the purchase
of reclamation bonds of  $29,339 on the Company’s mineral
properties.
 
 Net cash
flows provided by equity financing activities were $650,450 versus $376,768
during the same period in 2007.  During the six month period ended
June 30, 2008, $3,932 was advanced to related parties. During the same period in
2007, the Company used $9,000 of proceeds realized on equity financings to repay
related party advances.
   Internal
and External Sources of Liquidity
  Over the next 12 months period, we plan
to fund our operations through issuances of Common Stock or Common Stock with
warrants.  In the event our exploration is successful and mining
eventually commences on one or more of our leased properties, we could then
commence receiving revenues from the sale of gold and/or silver produced on
these properties.
  21
  Contractual
Obligations
  We have no commitments for capital
expenditures.
 We do not engage in hedging
transactions and we have no hedged mineral resources.
  We were and are committed to making
certain exploration work expenditures, lease and option payments, and claims
maintenance payments on properties signed at June 30, 2008 over the forthcoming
12 months period.
  Bullion
Mountain Project:
  
              Required
      work expenditure by 6/30/08; $20,000 of which $24,458 has already been
      expended; In September, 2007, this agreement was amended and the time for
      completing the remaining work obligation was extended
      indefinitely.
  
              Current
      claims maintenance: $5,843 has been paid by December,
  2007
  
              Annual
      payment:  $10,000 was paid in November,
  2007.
  Trinity Silver
Project:
  
              Required
      work expenditure: $200,000, of which $625,921 has already been
      expended.
  
              Current
      claims maintenance:  $19,329 has been paid by June 30,
      2008
  
              Annual
      payments:  $0.
  Pasco Canyon Gold
Project:
  
              Required
      work expenditure:  $51,144  has already been
      completed. Further work postponed pending receipt of drill permit from
      U.S. Forest Service.
  
              Current
      claims maintenance: $6,416 has been paid by June 30,
  2008.
  
              Annual
      payments; $0.
  Dutch Flat Gold
Project:
  
              Required
      work expenditure:  $200,000 by June 30, 2008, of which $528,065
      was expended at June 30, 2008.
  
              Current
      claims maintenance; $14,250 has been paid by June 30,
  2008.
  
              Annual
      payments; $0.
  PPM
Miranda Gold Project:
  
              Required
      work expenditure for first year; $175,000, of which $91,531 has already
      been expended.
  
              Current
      claims maintenance:  $17,801 has been paid by June 30,
      2008.
  
              Annual
      payments; $0.
  Willow
Creek Project:
  
                Option
      and Earn-in Agreement has been signed:  Initial signing fee of
      $10,000 was paid in December, 2007.  A cash advance of $300,000
      was deposited for the first year’s exploration costs. As at June 30, 2008,
      the cash on deposit was $230,997, and $69,003 of those funds had been
      expended along with an additional $11,205 for a total expenditure of
      $80,207.
 Morgan Pass
Project:
 
                On
      May 20, 2008, a Letter of Intent was signed on the Morgan Pass
      Project.  The Agreement has not yet been signed. Minimal funds
      of $9,732 have been expended.
 All of
these property agreements can be terminated on 30 to 60 days advance
notice.
  Off-Balance
Sheet Arrangements
  We have no off-balance sheet
arrangements.
 
 We do not
engage in hedging transactions and we have no hedged resources.
 
  22
  Item
3. Controls And Procedures
 
 (A)           Evaluation
of Disclosure Controls and Procedures
 
 Disclosure
controls and procedures are designed to ensure that information required to be
disclosed in the reports filed or submitted by us under the Securities Exchange
Act of 1934 is recorded, processed, summarized and reported, within the time
periods specified in the rules and forms of the Securities and Exchange
Commission. Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to be
disclosed in the reports filed under the Securities Exchange Act of 1934 is
accumulated and communicated to our management, including our principal
executive and financial officers, as appropriate, to allow timely decisions
regarding required disclosure.
 
 We
carried out an evaluation, under the supervision and with the participation of
our management, including our principal executive officer and principal
financial officer, of the effectiveness of the design and operation of our
disclosure controls and procedures as of the end of the period covered by this
report. Based upon and as of the date of that evaluation, our principal
executive officer and financial officers concluded that there were material
weaknesses in our internal controls, including those which relate to the review,
approval and reconciliation of accounting data and entries. We are addressing
these issues by reviewing and revising our internal accounting policies and
procedures.
 
 (B)           Changes
in Internal Controls
 
 There
were no changes in our internal controls or in other factors that could have
significantly affected those controls subsequent to the date of our most recent
evaluation.
    PART
II – OTHER INFORMATION
   Item
1. Legal Proceedings
 None.
 
 Item
2. Unregistered Sales of Equity Securities and Use of Proceeds
 
 2008:
 
 During
the three months ended June 30, 2008, the Company completed the following equity
transactions:
  In April, 2008,the Company completed a private
placement offering of 86,000 Units, consisting of one share of Common Stock and
one Common Stock Purchase Warrant at a price of $0.175 per Unit for proceeds of
$15,050. The Warrants are exercisable for a period of two years and entitle the
holder to purchase one share of Common Stock for $0.27 per Share.
  In April
2008, the Company completed a private placement offering of 312,500 Units,
consisting of one share of Common Stock and one Common Stock Purchase Warrant at
a price of $0.16 per Unit for proceeds of $50,000. The Warrants are exercisable
for a period of two years and entitle the holder to purchase one share of Common
Stock for $0.25 per Share.
  In April, 2008, 737,833 shares of
Common Stock were issued upon the exercise of certain warrants. The exercise
price of the warrants was $0.15, which resulted in gross proceeds in the amount
of $110,675.
  In May,
2008 a private placement offering of 3,203,331 Units, consisting of one share of
Common Stock (the “Shares”) and one share of a Common Stock Purchase Warrant
(the “Warrants”) at a price of $0.15 per Unit for proceeds of $480,500 less
broker commission of $43,245 for net proceeds of $437,255. The Warrants are
exercisable for a period of two years and shall entitle the holder to purchase
one share of Common Stock (the “Warrant Shares”) for $0.26 per Warrant Share. In
addition to the cash commission, the broker received a warrant exercisable for a
period of two years which shall entitle the broker to purchase 320,333 shares of
Common Stock for $0.15 per Warrant Share.
 23
 The
issuances of Common Stock was made by us in reliance upon the exemptions from
registration provided under Section 4(2) and 4(6) of the Securities Act and Rule
506 of Regulation D, promulgated by the SEC under federal securities laws and
comparable exemptions for sales to “accredited” investors under state securities
laws.  The original sale of the Warrants in the private placement was
made to accredited investors as defined in Rule 501(a) under the Securities Act,
no general solicitation was made by us or any person acting on our behalf; the
securities sold were subject to transfer restrictions, and the certificates for
those shares contain an appropriate legend stating that they have not been
registered under the Securities Act and may not be offered or sold absent
registration or pursuant to an exemption there from.
  
 
 Item
3. Defaults Upon Senior Securities
 None.
 
 Item
4. Submission Of Matters To A Vote Of Security Holders
 None.
 
 Item
5. Other Information
 None.
 
 Item
6. Exhibits
 
 Exhibit
    No.
              Description
              Location31.1
              Certification
      Pursuant to Section 302
              Provided
      herewith31.2
              Certification
      Pursuant to Section 302
              Provided
      herewith32.1
              Certification
      Pursuant to 18 U.S.C. Section 1350
              Provided
      herewith32.2
              Certification
      Pursuant to 18 U.S.C. Section 1350
              Provided
      herewith
 
  24
  
 SIGNATURES
 
 Pursuant to the requirements of Section
13 or 15(d) of the Securities and Exchange Act of 1934 the registrant has duly
caused this Quarterly Report of Piedmont Mining Company, Inc. on Form 10-QSB for
the period ended June 30, 2008 to be signed on its behalf by the undersigned,
thereunto duly authorized.
 PIEDMONT
      MINING COMPANY, INC.,
                a
      North Carolina CorporationDated
      August 14, 2008
              /s/
      Robert M. Shields, Jr.By:  Robert
      M. Shields, Jr.
                Its:  Chief
      Executive Officer (Principal
                Executive
      Officer) and Chief Financial Officer
                (Principal
      Financial Officer and Principal
                Accounting
      Officer)
 
 
 
 25