WASHINGTON, D.C. 20549

                                   FORM 10-QSB

                             Quarterly Report Under
                       the Securities Exchange Act of 1934

                        For Quarter Ended: June 30, 2002

                             Commission File Number:

                              Pacific Spirit, Inc.
        (Exact name of small business issuer as specified in its charter)

         (State or other jurisdiction of incorporation or organization)


                        (IRS Employer Identification No.)

                                11640-96 A Avenue
                             Vancouver, B.C., Canada

                    (Address of principal executive offices)

          (Former name or former address, if changed since last report)

                                   (Zip Code)
                                 (604) 760-1400

                           (Issuer's Telephone Number)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 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 ____.

The number of shares of the registrant's only class of common stock issued and
outstanding, as of June 30, 2002 was 1,356,000 common shares.



     The un-audited financial statements for the three-month period ended June
30, 2002 are attached hereto.


     The following discussion should be read in conjunction with our audited
financial statements and notes thereto included herein. In connection with, and
because we desire to take advantage of, the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995, we caution readers regarding
certain forward looking statements in the following discussion and elsewhere in
this report and in any other statement made by, or on our behalf, whether or not
in future filings with the Securities and Exchange Commission. Forward looking
statements are statements not based on historical information and which relate
to future operations, strategies, financial results or other developments.
Forward looking statements are necessarily based upon estimates and assumptions
that are inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond our control and many
of which, with respect to future business decisions, are subject to change.
These uncertainties and contingencies can affect actual results and could cause
actual results to differ materially from those expressed in any forward looking
statements made by, or our behalf. We disclaim any obligation to update forward
looking statements.

History And Organization

         Pacific Spirit, Inc. (the "Company") was recently incorporated under
the laws of the state of Nevada on May 4, 2001. We have not commenced business
operations and we are considered an exploration stage enterprise. To date, our
activities have been limited to organizational matters, obtaining a geologist's
report and the preparation and filing of the registration statement of which
this prospectus is a part. In connection with the organization of our company,
the founding shareholder of our company contributed an aggregate of $25,000 cash
in exchange for 2,500,000 shares of common stock. We have no significant assets,
and we are totally dependent upon the successful completion of this offering and
receipt of the proceeds there from, of which there is no assurance, for the
ability to commence our proposed business operations.

Proposed Business

     On June 7, 2001, Pacific Spirit acquired a 30 year mineral lease from
Nevada Mine Properties II, Inc., the owner of six unpatented lode mineral
claims, sometimes referred to as the "Del Oro" property in Nevada. There is no
affiliation between Pacific Spirit and the lessor. An unpatented claim is one in
which more assessment work is necessary before all mineral rights can be
claimed. We are presently in the pre-exploration stage and there is no assurance
that a commercially viable mineral deposit exists in our property until
exploration is done and a comprehensive evaluation concludes economic and legal

         Under the terms of the mineral lease, Pacific Spirit may extend the
initial term for one additional period of 30 years by giving the owner notice of
such extension not less than thirty days prior to the expiration of the initial
term or any extension thereof. Pacific Spirit has the exclusive possession of
the property for mining purposes during the term of the lease.

         If Pacific Spirit fails to comply with any of the provisions of the
lease and does not initiate and diligently pursue steps to correct the default
within thirty days after notice has been given to it by owner specifying with
particularity the nature of the default, then upon the expiration of the
thirty-day period, all rights of Pacific Spirit under the lease terminate and
all liabilities and obligations of Pacific Spirit except royalties then due
terminate. Any default claimed with respect to the payment of money may be cured
by the deposit in escrow of the amount in controversy (not including claimed
consequential, special, exemplary, or punitive damages) and giving of notice of
the deposit to the owner, the amount to remain in escrow until the controversy
is resolved by decision of a court or otherwise. If Pacific Spirit by notice to
owner disputes the existence of a default, then the lease shall not terminate
unless Pacific Spirit does not initiate and diligently pursue steps to correct
the default within thirty days after the existence of a default has been
determined by decision of a court or otherwise.

         Under the terms of the lease, Pacific Spirit is obligated to pay
royalties of 4% of the net returns from all minerals sold or processed. In
addition, Pacific Spirit must pay a minimum annual royalty as follows, of which
the first payment of $5,000 has already been made:

                  Anniversary Date                  Amount
                 June 7, 2002                      $ 8,000.00
                 June 7, 2003                      $16,000.00
                 June 7, 2004                      $24,000.00
                 June 7, 2005                      $50,000.00
                 June 7, 2006 and thereafter       $50,000.00

         Our business activities to date have been restricted to obtaining a
report from our mining engineer, Sam S. Arentz, III, and preparing this
offering. According to Mr. Arentz's report, the six Del Oro claims were staked
in 1986 by wx syndicate who completed 12 shallow air track drill holes which
returned gold assays in the amount of 0.019 Ounces per ton over 10 feet to 0.010
Ounces per ton over 50 feet.

         In 1992, Equinox Resources assumed the operations of the wx Syndicate.
The Del Oro claims were leased in 1993 to Cameco U. S., Inc. which conducted
magnetic surveys, rock and limited soil sampling and then drilled 4,610 feet in
eleven reverse circulation drill holes. This drilling returned anomalous gold
assays to 0.012 ounces per ton over 25 feet north of the present claim position.
Cameco surrendered their lease in 1994 to Nevada Mine Properties, Inc. (a
subsidiary of Hecla Mining Co.). Subsequently Nevada Mine Properties
quit-claimed the property to Nevada Mine Properties II,Iinc (no association with

         In 1995 Newhawk Gold Mines LTD. Acquired a land position in the area
which included a lease on the Del Oro Property. A regional soil grid survey in
1996 resulted in a three-hole 1,850 foot reverse circulation drill program
testing the roots beneath the previously drilled air track targets. Drill
intercepts returned 0.017 ounces per ton of gold over 15 feet. The leased
property has been maintained by Nevada Mine Properties II, Inc. Since 1998. In
June 2001, Pacific Spirit Inc. leased the six claims from Nevada Mine Properties
II, Inc.

      Mr. Arentz recommends a two phase program to explore the Del Oro Property.
Phase 1 includes additional claim staking followed by geologic mapping and rock
chip and soil sampling. A five hole, 2,500 foot reverse circulation drill
program is proposed for phase 1. If drilling intersects gold values in the 0.05
To 0.10 Ounces per ton range over thicknesses of tens of feet, then
consideration would be given toward a phase 2 effort which would include an

additional 5000 feet of reverse circulation drilling.


                                                     ESTIMATED COSTS (US$)
Claim Acquisition                                                 2,000.
Rock and Soil Sampling and Assays                                 2,500.
Geologic Mapping                                                  3,000.
Drilling + Assays (2,500' @ $15 / Ft)                            37,500.
Reclamation                                                       5,000.
Report Preparation                                                3,000.


                                                     ESTIMATED COSTS (US$)
Drilling + Assays (5000' @ $15 / Ft)                             75,000.
Reclamation                                                       5,000.
Report Preparation                                                3,000.

Location and Access

     The Del Oro Property is Located in Sections 29, 30, and 31, Township 31
North, Range 38 East, MDB&M, Pershing county, Nevada. The claims are situated in
the Goldbanks Mining District approximately 28 miles south of Winnemucca,
Nevada. Access from Winnemucca is south along the Grass Valley paved / gravel
road for approximately 22 miles, turning southwest onto a dirt road toward the
east range about one mile north of Leach Hot Springs. The dirt road runs
generally down-slope toward the southwest for approximately four miles, then
changes to a south-southeast direction and begins upslope for approximately
three miles here the road enters unnamed drainage and continues approximately
two and one half miles southwest onto the north side line of the claims.

Our Proposed Exploration Program

     We must conduct exploration to determine what amount of minerals, if any,
exist on our properties, and if any minerals which are found can be economically
extracted and profitably processed. Our exploration program is designed to
economically explore and evaluate our claims.

     We do not claim to have any minerals or reserves whatsoever at this time on
any of our claims. We intend to implement an exploration program and to proceed
in the following two phases:

     Phase 1 will begin with research of the available geologic literature,
personal interviews with geologists, mining engineers and others familiar with
the prospect sites.

     When research is completed, our initial work will be augmented with
geologic mapping, geophysical testing and geo-chemical testing of our claims.
When available, existing workings, like trenches, prospect pits, shafts or
tunnels will be examined. If an apparent mineralized zone is identified and
narrowed down to a specific area by the studies, we will begin drilling the

         Once drilling is performed samples are taken and then analyzed for
economically potential minerals that are known to have occurred in the area.
Careful interpretation of this available data collected from the various tests
aid in determining whether or not the prospect has current economic potential
and whether further exploration is warranted. Phase 1 will take about three
months and cost up to $53,000.

     Phase 2 involves an initial examination of the underground characteristics
of the mineralization structure that was identified by Phase 1 of exploration.
Phase 2 is aimed at identifying any mineral deposits of potential economic
importance. The methods employed are

     -    more extensive drilling
     -    more advanced geophysical work

         Drilling identifies the continuity and extent of mineralization, if
any, below the surface. After a thorough analysis of the data collected in Phase
2, we will decide if the property warrants a Phase 3 study. Phase 2 will take
about six months and cost up to $83,000. We do not intend to interest other
companies in the property if we find mineralized materials.

Competitive Factors

     The mineral industry is fragmented. We compete with other exploration
companies looking for a variety of mineral reserves. We may be one of the
smallest exploration companies in existence. Although we will be competing with
other exploration companies, there is no competition for the exploration or
removal of minerals from our property. Readily available markets exist in North
America and around the world for the sale of minerals. Therefore, we intend to
explore mining claims to the production point in which major mining production
companies would seriously consider pursuing the property as a valuable and
significant acquisition.


         Our exploration activities will be subject to the Federal Land Policy
And Management Act of 1976 in addition to surface management regulations issued
in 1980 by the Bureau of Land Management in the Code of Federal Regulations.
These statutes and regulations are designed to protect public lands from
unnecessary or undue degradation and to ensure that areas disturbed during the
search for and extraction of mineral resources are reclaimed. BLM rules and
regulations governing mining on federal lands include the preparation of a Draft
Environmental Impact Statement, public hearings and approval of a final
Environmental Impact Statement. The final Environmental Impact Statement will
address county and state needs and requirements and covers issues and permit
requirements concerning air quality, heritage resources, geology, energy, noise,
soils, surface and ground water, wetlands, use of hazardous chemicals,
vegetation, wildlife, recreation, land use, socioeconomic impact, scenic
resources, health and welfare, transportation and reclamation. Bonding
requirements for our exploration activities are developed from the final
Environmental Impact Statement.

         We will follow these procedures for exploration and, if development is
warranted on the property, will file final plans of operation before we start
any mining operations. We anticipate no discharge of water into active stream,
creek, river, lake or any other body of water regulated by environmental law or
regulation. No endangered species will be disturbed. Restoration of the
disturbed land will be completed according to law. All holes, pits and shafts
will be sealed upon abandonment of the property. It is difficult to estimate the
cost of compliance with the environmental law since the full nature and extent
of our proposed activities cannot be determined until we start our operations

and know what that will involve from an environmental standpoint.

         The initial drill program outlined in Phase I will be conducted on BLM
lands. The BLM will require the submittal of a plan of operation which would be
used as the basis for the bonding requirement, water permit and reclamation
program. The reclamation program could include both surface reclamation and
drill hole plugging and abandonment. The amount of the bonding would be based
upon an estimate by the BLM related to the cost of reclamation if done by an
independent contractor. It is estimated the bonding requirement would be
$5000.00. The water permit and fee is included in the reclamation cost which is
estimated to be $1000.00.

         The estimate for Phase II reclamation and bonding is based on the
assumption that we have completed the Phase I reclamation and that the $5000.00
Phase I bond is still in place. Based upon this assumption, it is estimated that
an additional bond of $5,000.00 would be required for Phase II for a total
bonding requirement of $10,000.00.

         Following the completion of a feasibility study at the completion of
Phase II, we would be subjected to the BLM rules and regulations governing
mining on federal lands including a draft environmental impact statement or EIS,
public hearings and a final EIS. The final EIS would address county and state
needs and requirements and would cover issues and permit requirements
concerning: air quality, heritage resources, geology, energy, noise, soils,
surface and ground water, wetlands, use of hazardous chemicals, vegetation,
wildlife, recreation, land use, socioeconomic impact, scenic resources, health
and welfare, transportation and reclamation. Bonding requirements for mining are
developed from the final EIS. A draft EIS would be submitted following a
feasibility study that could only be performed at the completion of Phase II of
the exploration plans. It is impossible to know at this time how long it would
take to obtain a final EIS because we can not yet say what the feasibility study
will reveal.

         We are in compliance with all laws and will continue to comply with the
laws in the future. We believe that compliance with the laws will not adversely
affect our business operations. Pacific Spirit anticipates that it will be
required to post bonds in the event the expanded work programs involve extensive
surface disturbance.


         Initially, we intend to use the services of subcontractors for manual
labor exploration work on our properties. Pacific Spirit will consider hiring
technical consultants as funds from this offering and additional offerings or
revenues from operations in the future permit. At present, our only employee is
Mr. Solota.


     Initially, we intend to use the services of subcontractors for manual labor
exploration work on our properties. Pacific Spirit will consider hiring
technical consultants as funds from this offering and additional offerings or
revenues from operations in the future permit. At present, our only employee is
Mr. Sotola.

Employees and Employment Agreements

     At present, we have no employees, other than Mr. Peter Sotola, our

president and sole director who has received no compensation for his services.
Mr. Sotola does not have an employment agreement with us. We presently do not
have pension, health, annuity, insurance, stock options, profit sharing or
similar benefit plans; however, we may adopt plans in the future. There are
presently no personal benefits available to any employees.


     We are a start-up, exploration stage company and have not yet generated or
realized any revenues from our business operations.

     Our auditors have issued a going concern opinion. This means that our
auditors believe there is doubt that we can continue as an on-going business for
the next twelve months unless we obtain additional capital to pay our bills.
This is because we have not generated any revenues and no revenues are
anticipated until we begin removing and selling minerals. Accordingly, we must
raise cash from sources other than the sale of minerals found on our property.
Our only other source for cash at this time is investments by others in our
company. We must raise cash to implement our project and stay in business.

         To meet our need for cash we are attempting to raise money from this
offering. There is no assurance that we will be able to raise enough money
through this offering to stay in business. Whatever money we do raise will be
applied first to exploration and then if reserves are found, to development, if
warranted. If we do not raise all of the money we need from this offering, we
will have to find alternative sources, like a second public offering, a private
placement of securities, or loans from our officers or others. At the present
time, we have not made any arrangements to raise additional cash, other than
through this offering. If we need additional cash and cannot raise it, we will
either have to suspend operations until we do raise the cash, or cease
operations entirely.

     We will be conducting research in connection with the exploration of our
property. We are not going to buy or sell any plant or significant equipment. We
do not expect a change in our number of employees.

Limited Operating History; Need for Additional Capital

     There is no historical financial information about our company upon which
to base an evaluation of our performance. We are an exploration stage company
and have not generated any revenues from operations. We cannot guarantee we will
be successful in our business operations. Our business is subject to risks
inherent in the establishment of a new business enterprise, including limited
capital resources, possible delays in the exploration of our properties, and
possible cost overruns due to price and cost increases in services.

     To become profitable and competitive, we must conduct research and
exploration of our properties. We are seeking equity financing to provide for
the capital required to implement our research and exploration phases.

     We have no assurance that future financing will be available to us on
acceptable terms. If financing is not available on satisfactory terms, we may be
unable to continue, or expand our operations. Equity financing could result in
additional dilution to existing shareholders.

Results of Operations

From Inception on May 4, 2001

         On June 7, 2001 we acquired our first interest in un-patented lode
mineral claims. At this time we have not yet commenced the research and/or
exploration stage of our operations on that property. We have paid $5,000 for a
mining lease. As of December 31, 2001, the date of our latest audited financial
statements, we have experienced operating losses of $40,255.

Plan of Operations

     Since inception, we have used our common stock to raise money for our
property acquisition, for corporate expenses and to repay outstanding
indebtedness. Net cash provided by financing activities from inception on May 4,
2001 to May 31, 2001 was $25,000 as a result of proceeds received from our
president and sole director. Our business activities to date have been
restricted to obtaining a mining engineer's report and preparing this offering.

         Pacific Spirit 's plan of operations for the next twelve months is to
undertake Phase I of the drilling and exploration program. Phase I is estimated
to be cost $53,000.00 and therefore can not be completed unless more than 75% of
the offering is sold. If only 50% of the offering is sold, we will be able to
make an annual royalty payment, obtain permits, bonds and conduct land
preparation along with surveying, drill site location and some drilling, but we
will not be able to complete our exploration program or analyze the results. If
only 25% of our offering is sold, we will be able to pay the offering expenses
only. If less than 25% of the offering is sold we will become indebted for
offering expenses and we may have to cease operations entirely. We have no plan
to engage in any alternative business if Pacific Spirit ceases or suspends
operations as a result of not having enough money to complete any phase of the
exploration program.

         Phase I will involve drilling five holes to investigate the extent of
mineralization of the claims which will include additional claim staking
followed by geologic mapping and rock chip and soil sampling. Claim staking is
estimated to cost $2,000. Geological mapping, rock chip and soil sampling will
cost approximately $5,500. Drilling expenses are expected to about $37,500 and
reclamation about $5,000. Expenses associated with the geologist's report for
Phase I are anticipated to be approximately $3,000.

Liquidity and Capital Resources

         As of the date of this registration statement, we have yet to generate
any revenues from our business operations. Since our inception, Mr. Sotola has
paid $25,000 in cash in exchange for 2,500,000 shares of common stock. This
money has been utilized for organizational and start-up costs and as operating
capital. As of December 31, 2001 we had sustained operating losses $40,255.

         We will not able to conduct meaningful business operations unless we
sell at least 50% of this offering. In addition, unless more than 75% of the
offering is sold, we will not be able to complete Phase I. Assuming sufficient
funds are raised in this offering to complete Phase I, we will be able evaluate
within the next 12 months whether to proceed with Phase II. Should we decide to
proceed with Phase II, we will be required to raise an additional $83,000.00 in
addition to offering expenses.

         According to the terms or our mineral lease, we are obligated by June
7, 2002 to pay a minimum royalty of $8,000 followed by annual minimum royalty
payments thereafter of $16,000 in 2003, $24,000 in 2004, $50,000 in 2005 and
$50,000 every year thereafter. We will be required to renegotiate the terms of
the mineral lease in the event we are unable to raise sufficient funds in time
to meet these obligations.

                           PART II. OTHER INFORMATION


     There are no material legal proceedings to which we (or any of our officers
and directors in their capacities as such) is a party or to which our property
is subject and no such material proceedings is known by our management to be






     (a) Exhibits - NONE

(b)      Reports  on Form 8-K - NONE


In accordance with the requirements of the Securities and Exchange Act of 1934,
as amended, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

Dated: January 17, 2002                                       /s/ Peter Sotola
                                                                  Peter Sotola

                               PACIFIC SPIRIT INC.
                        (A Pre-exploration Stage Company)
                             INTERIM BALANCE SHEETS
                       June 30, 2002 and December 31, 2001
                             (Stated in US Dollars)

                                                   ASSETS                        June 30,         December 31,
                                                                                   2002               2001
   Cash                                                                      $        2,024      $           29

   Accounts payable                                                                  17,247              14,534
   Advance from a director                                                            7,750                 750

                                                                                     24,997              15,284

                                            STOCKHOLDERS' DEFICIENCY
Preferred stock, $0.001 par value
     10,000,000 shares authorized, none outstanding
Common stock, $0.001 par value - Note 3
    100,000,000 shares authorized
      2,500,000 shares issued                                                         2,500               2,500
Paid in capital                                                                      22,500              22,500
Deficit accumulated during the pre-exploration stage                            (    47,973)        (    40,255)

                                                                                (    22,973)        (    15,255)

                                                                             $        2,024      $           29


                               PACIFIC SPIRIT INC.
                        (A Pre-exploration Stage Company)
                         INTERIM STATEMENT OF OPERATIONS
  for the three months ended June 30, 2001, the six months ended June 30, 2002
 and for the period May 4, 2001 (Date of Incorporation) to June 30, 2001 and 2002
                             (Stated in US Dollars)

                                                                 May 4, 2001                               May 4, 2001
                                            Three months           (Date of            Six months            (Date of
                                               ended          Incorporation) to          ended          Incorporation) to
                                              June 30,             June 30,             June 30,             June 30,
                                                2002                 2001                 2002                 2002
   Accounting and audit fees             $           3,628    $           1,746    $           5,128    $           9,610
   Bank charges                                        104                   50                  152                  304
   Exploration costs                                 2,258                  344                2,258                3,247
   Incorporation costs                                   -                  900                    -                  900
   Legal fees                                            -                    -                    -               21,534
   Management fees                                       -                1,000                    -                7,000
   Mineral lease advance royalty
    Note 3                                             -                5,000                    -                5,000
   Office                                                -                    -                    -                  253
   Transfer agent fees                                 180                    -                  180                  180

Net loss before other item                   (       6,170)      (        9,040)      (        7,718)      (       48,028)
Other item
   Interest income                                       -                   27                    -                   55

Net loss for the period                   $ (        6,170)    $ (        9,013)   $  (        7,718)   $  (       47,973)

Basic and diluted loss per share         $   (      0.002)    $  (       0.005)    $  (       0.003)

Weighted average number of shares
outstanding                                      2,500,000            1,885,965            2,500,000


                               PACIFIC SPIRIT INC.
                        (A Pre-exploration Stage Company)
                         INTERIM STATEMENT OF CASH FLOWS
                     for the six months ended June 30, 2002,
             and for the period May 4, 2001 (Date of Incorporation)
                           to June 30, 2002 and 2001
                             (Stated in US Dollars)

                                                                                   May 4, 2001          May 4, 2001
                                                               Six months            (Date of             (Date of
                                                                 ended          Incorporation) to    Incorporation) to
                                                                June 30,             June 30,             June 30,
                                                                  2002                 2001                 2002
Cash Flows from Operating Activities
   Net loss for the period                                 $  (        7,718)   $  (        9,013)   $  (       47,973)
   Change in non-cash working capital balance
   related to operations
     Prepaid expenses                                                      -      (         9,000)                   -
     Accounts payable                                                  2,713                  746               17,247

                                                              (        5,005)      (       17,267)      (       30,726)

Cash Flows from Financing Activities
   Capital stock issued                                                    -               25,000               25,000
   Advance from a director                                             7,000                    -                7,750

                                                                       7,000               25,000               32,750

Increase (decrease) in cash during the period                          1,995                7,733       (        2,024)

Cash (deficiency), beginning of the period                                29                    -                    -

Cash, end of the period                                    $ (         2,024)   $           7,733    $ (         2,024)

Supplemental disclosure of cash flow information
   Cash paid during the period for:
     Interest                                              $               -    $               -    $               -

     Income taxes                                          $               -    $               -    $               -


                               PACIFIC SPIRIT INC.
                        (A Pre-exploration Stage Company)
       for the period May 4, 2001 (Date of Incorporation) to June 30, 2002
                             (Stated in US Dollars)

                                                                          Additional     During the Pre-
                                                 Common Shares              Paid-in        exploration
                                            Number         Par Value        Capital           Stage             Total

Capital stock issued for cash
                            at $0.01        2,500,000   $       2,500   $      22,500   $             -    $       25,000

Net loss for the period                             -               -               -     (      40,255)     (     40,255)

Balance, as at December 31, 2001            2,500,000           2,500          22,500     (      40,255)     (     15,255)

Net loss for the period                             -               -               -     (       7,718)     (      7,718)

Balance, as at June 30, 2002                2,500,000   $       2,500   $      22,500   $ (      47,973)   $ (     22,973)


                               PACIFIC SPIRIT INC.
                        (A Pre-exploration Stage Company)
       for the period May 4, 2001 (Date of Incorporation) to June 30, 2002
                             (Stated in US Dollars)

Note 1        Interim Reporting

     While   information   presented  in  the  accompanying   interim  financial
statements is unaudited,  it includes all adjustments  which are, in the opinion
of management,  necessary to present fairly the financial  position,  results of
operations and cash flows for the interim period presented.  All adjustments are
of a normal  recurring  nature.  It is suggested  that these  interim  financial
statements be read in conjunction with the company's December 31, 2001 financial

Note 2        Continuance of Operations

     The  financial  statements  have been  prepared  using  generally  accepted
accounting  principles  in the United States of America  applicable  for a going
concern which assumes that the Company will realize its assets and discharge its
liabilities in the ordinary course of business. As at June 30, 2002, the Company
has a working capital deficiency of $22,973, which is not sufficient to meet its
planned business objective or to fund mineral property  expenditures and ongoing
operations  for the next fiscal  year.  The Company  has  accumulated  losses of
$47,973  since its  commencement.  Its ability to continue as a going concern is
dependent  upon the ability of the Company to obtain the necessary  financing to
meet its  obligations  and pay its  liabilities  arising  from  normal  business
operations when they come due.

Note 3        Commitments

              (a) Mineral Property

     By a lease agreement  effective June 1, 2001 and amended June 25, 2002, the
Company was granted the  exclusive  right to explore and mine the Del Oro and NP
Claims located in Pershing County of the State of Nevada. The term of this lease
is for 30 years,  renewable for an additional 30 years so long as the conditions
of the  lease are met.  Minimum  payments  and  performance  commitments  are as

                  Minimum Advance Royalty Payments:

     The owner shall be paid a royalty of 4% of the net smelter returns from all
production.  In respect to this royalty,  the Company is required to pay minimum
advance royalty  payments of the following:  - $5,000 upon execution  (paid);  -
$8,000 on December 1, 2002;  - $16,000 on June 7, 2003 - $24,000 on June 7, 2004
- $50,000 on June 7, 2005 and thereafter

Note 3        Commitments (cont'd)

     The Company paid $1,500 to extend the due date of the $8,000 payment.

     The Company can reduce the net smelter return royalty to 0.5% by payment of
a buy-out price of $5,000,000.  Advance royalty payments made to the date of the
buy-out will be applied to reduce the buy-out price.

                  Performance Commitment:

     In the event  that the  Company  terminates  the lease  after June 1 of any
year, it is required to pay all federal and state mining claim  maintenance fees
for the next  assessment  year.  The Company is required to perform  reclamation
work  on  the  property  as  required  by  federal,  state  and  local  law  for
disturbances resulting from the Company's activities on the property.

              (b) Initial Public Offering

     The  Company has filed a SB-2  registration  statement,  which  includes an
initial  public  offering of 1,500,000  common  shares at $0.05 per share.  This
offering is subject to regulatory  approval.  This offering will remain open for
up to 150 days from the effective date of the offering.

     Subsequent to June 30, 2002, the Company  received $5,000 as  subscriptions
for 100,000 common shares at $0.05 per share pursuant to the above noted SB-2.