UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
x
QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
   
 
For the quarterly period ended June 30, 2008.
   
o
TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
   
 
For 1934 for the transition period from                 to                .
   
Commission file number 000-31585

DIAMOND DISCOVERIES INTERNATIONAL CORP.
(Exact name of small business issuer as specified in its charter)

Delaware
06-1579927
(State or other jurisdiction of incorporation or organization)
(IRS Employer Identification No.)

45 Rockefeller Plaza, Suite 2000
New York, NY 10111
(Address of principal executive offices)

(212) 332-8016
(Issuer’s telephone number)

Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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   o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):

Large accelerated filer   o   Accelerated filer   o   Non-accelerated filer   o   Smaller Reporting Company   x

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS

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

APPLICABLE ONLY TO CORPORATE ISSUERS

The number of shares outstanding of Registrant’s common stock, as of August 19, 2008 is 363,966,830.

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

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

DIAMOND DISCOVERIES INTERNATIONAL CORP.
(An Exploration Stage Company)

CONDENSED CONSOLIDATED BALANCE SHEET
June 30, 2008
(Unaudited)
 
ASSETS
       
         
Current assets:
       
Cash
 
$
7,042
 
Other current assets
   
37,266
 
 
 
 
44,308
 
         
Property and equipment, net
   
95,142
 
Other assets
   
37,348
 
         
Total
 
$
176,798
 
         
LIABILITIES AND STOCKHOLDERS’ DEFICIT
       
         
Liabilities:
       
         
Notes payable - current portion
 
$
1,517,627
 
         
Accounts payable
   
206,623
 
Advances from stockholders
   
279,452
 
Total current liabilities
   
2,003,702
 
         
Stockholders’ deficit:
       
Preferred stock, par value $.001 per share; 20,000,000 shares authorized; none issued
   
—
 
Common stock, par value $.001 per share; 480,000,000 shares authorized; 363,966,830 shares issued and
outstanding
   
363,967
 
Additional paid-in capital
   
16,819,541
 
Deficit accumulated during the exploration stage
   
(17,908,084
)
Accumulated other comprehensive income (loss)
   
(890,803
)
Unearned compensation
   
(211,525
)
Total stockholders’ deficit
   
(1,826,904
)
         
Total
 
$
176,798
 

See Notes to Condensed Consolidated Financial Statements
 
2


DIAMOND DISCOVERIES INTERNATIONAL CORP.
(An Exploration Stage Company)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
SIX AND THREE MONTHS ENDED JUNE 30, 2008 AND 2007 AND PERIOD
FROM APRIL 24, 2000 (DATE OF INCEPTION) TO JUNE 30, 2008
(Unaudited)
 
   
Six Months
Ended June 30,
 
Three Months
June 30,
       
     
2008
   
2007
   
2008
   
2007
   
Cumulative
 
                                 
Revenues
 
$
—
 
$
—
 
$
—
 
$
—
 
$
—
 
                                 
Operating expenses:
                               
Exploration costs
   
—
   
78,298
   
—
   
20,000
   
3,737,362
 
Reimbursements of exploration costs
   
—
   
(58,956
)
 
—
   
—
   
(1,205,635
)
Exploration costs, net of
reimbursements
   
—
   
19,342
   
—
   
20,000
   
2,531,727
 
General and administrative
expenses
   
406,095
   
540,469
   
267,575
   
247,880
   
15,675,244
 
Totals
   
406,095
   
559,811
   
267,575
   
267,880
   
18,206,971
 
                                 
Operating loss
   
( 406,095
)
 
(559,811
)
 
( 267,575
)
 
(267,880
)
 
(18,206,971
)
                                 
Other income (expenses)
                               
Gain on modification of debt
   
—
   
—
   
—
   
—
   
1,193,910
 
Interest expense
   
—
   
—
   
—
   
—
   
(895,023
)
                                 
Net loss
 
$
( 406,095
)
$
(559,811
)
$
( 267,575
)
$
(267,880
)
$
(17,908,084
)
                                 
Basic net loss per common share
       
$
—
 
$
—
 
$
—
 
 
 
 
                                 
Basic weighted average common
shares Outstanding
   
361,091,830
   
305,216,830
   
363,966,830
   
305,216,830
       

See Notes to Condensed Consolidated Financial Statements.

3
DIAMOND DISCOVERIES INTERNATIONAL CORP.
(An Exploration Stage Company)
 
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
SIX MONTHS ENDED JUNE 30, 2008 AND PERIOD FROM APRIL 24, 2000
(DATE OF INCEPTION) TO JUNE 30, 2008
 
                       
Deficit
   
Accumulated
                         
                       
Accumulated
   
other
                         
                  Additional      
during the
   
comprehensive
 
Subscriptions
             
     
Preferred stock
   
Common stock
   
paid-in
   
exploration
   
income
 
receivable
   
Unearned
     
     
Shares
   
Amount
   
Shares
   
Amount
   
capital
   
stage
   
(loss)
   
Shares
   
Amount
   
compensation
   
Total
 
Issuance of shares to
founders effective
as of April 24, 2000
   
—
  $ —    
4,850,000
 
$
4,850
 
$
—
 
$
—
   
—
   
—
 
$
—
 
$
—
 
$
4,850
 
Issuance of shares as
payment for legal
services
   
—
   
—
   
150,000
   
150
   
3,600
   
—
   
—
   
—
   
—
   
—
   
3,750
 
Issuance of shares in
connection with
acquisition of
mineral permits
   
—
   
—
   
2,000,000
   
2,000
   
48,000
   
—
   
—
   
—
   
—
   
—
   
50,000
 
Subscription for
purchase of
10,000,000 shares
   
—
   
—
   
10,000,000
   
10,000
   
240,000
   
—
   
—
   
10,000,000
   
(250,000
)
 
—
   
—
 
Proceeds from
issuance of
common stock
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
(1,000,000
)
 
25,000
   
—
   
25,000
 
Net loss
   
—
   
—
   
—
   
—
   
—
   
(713,616
)
 
—
   
—
   
—
   
—
   
(713,616
)
Balance, December
31, 2000
   
—
   
—
   
17,000,000
   
17,000
   
291,600
   
(713,616
)
       
9,000,000
   
(225,000
)
 
—
   
(630,016
)
Proceeds from
issuance of
common stock
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
(9,000000
)
 
225,000
   
—
   
225,000
 
Net loss
   
—
   
—
   
—
   
—
   
—
   
(1,021,190
)
 
—
   
—
   
—
   
—
   
(1,021,190
)
Balance, December
31, 2001
   
—
   
—
   
17,000,000
   
17,000
   
291,600
   
(1,734,806
)
       
—
   
—
   
—
   
(1,426,206
)
Proceeds from private
placements of
units of common
stock and warrants
   
—
   
—
   
1,685,000
   
1,685
   
756,565
   
—
   
—
   
51,758
   
(23,291
)
 
—
   
734,959
 
Net loss
   
—
   
—
   
—
   
—
   
—
   
(877,738
)
 
—
   
—
   
—
   
—
   
(877,738
)
Balance, December
31, 2002
   
—
   
—
   
18,685,000
   
18,685
   
1,048,165
   
(2,612,544
)
       
51,758
   
(23,291
)
 
—
   
(1,568,985
)
Issuance of shares as
payment for
accounts payable
   
—
   
—
   
3,000,000
   
3,000
   
295,423
   
—
   
—
   
—
   
—
   
—
   
298,423
 
Issuance of shares as
payment for
services
   
—
   
—
   
6,715,000
   
6,715
   
1,368,235
   
—
   
—
   
—
   
—
   
—
   
1,374,950
 
Issuance of stock
options
   
—
   
—
   
—
   
—
   
1,437,000
   
—
   
—
   
—
   
—
   
(1,437,000
)
 
—
 
Issuance of shares as
payment for
advances from
stockholders
   
—
   
—
   
7,500,000
   
7,500
   
767,500
   
—
   
—
   
—
   
—
   
—
   
775,000
 
Issuance of shares as
payment for notes
payable
   
—
   
—
   
1,810,123
   
1,810
   
124,898
   
—
   
—
   
—
   
—
   
—
   
126,708
 
Proceeds from
issuance of
common stock
   
—
   
—
   
6,000,000
   
6,000
   
444,000
   
—
   
—
   
4,000,000
   
(281,250
)
 
—
   
168,750
 
Proceeds from
issuance of
common stock in
connection with
exercise of stock
options
   
—
   
—
   
10,050,000
   
10,050
   
292,450
   
—
   
—
   
—
   
—
   
—
   
302,500
 
Amortization of
unearned
compensation
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
169,744
   
169,744
 
Net loss
   
—
   
—
   
—
   
—
   
—
   
(3,222,057
)
 
—
   
—
   
—
   
—
   
(3,222,057
)
Foreign currency
translation
adjustment
   
—
   
—
   
—
   
—
   
—
   
—
   
(360,900
)
 
—
   
—
   
—
   
(360,900
)
Total comprehensive
loss ($3,582,957)
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
—
 
Balance, December
31, 2003
   
—
   
—
   
53,760,123
   
53,760
   
5,777,671
   
(5,834,601
)
 
(360,900
)
 
4,051,758
   
(304,541
)
 
(1,267,256
)
 
(1,935,867
)
Issuance of shares as
payment for
services
   
—
   
—
   
16,842,000
   
16,842
   
1,614,858
   
—
   
—
   
—
   
—
   
—
   
1,631,700
 
Proceeds from
issuance of
common stock
   
—
   
—
   
4,000,000
   
4,000
   
384,832
   
—
   
—
   
524,207
   
(56,754
)
 
—
   
332,078
 
Issuance of shares as
payment for
accounts payable
   
—
   
—
   
1,400,000
   
1,400
   
138,600
   
—
   
—
   
—
   
—
   
—
   
140,000
 
Issuance of stock
options
   
—
   
—
   
—
   
—
   
1,139,000
   
—
   
—
   
—
   
—
   
(1,139,000
)
 
—
 
Proceeds from
issuance of
common stock in
connection with
exercise of stock
options
   
—
   
—
   
31,125,000
   
31,125
   
395,125
   
—
   
—
   
—
   
—
   
—
   
426,250
 
4
 
Forgiveness of stock
subscriptions
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
(4,575,965
)  
361,295
   
—
   
361,295
 
Amortization of
unearned
compensation
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
529,423
   
529,423
 
Net loss
   
—
   
—
   
—
   
—
   
—
   
(3,724,106
)  
  —
   
—
   
—
   
—
   
(3,724,106
)
Foreign currency
translation
a djustment
   
—
   
—
   
—
   
—
   
—
   
—
   
(131,269
)
 
—
   
—
   
—
   
(131,269
)
Total comprehensive
loss ($3,855,375)
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
—
 
 
Balance, December
31, 2004
   
—
   
—
   
107,127,123
   
107,127
   
9,450,086
   
(9,558,707
)
 
(492,169
)
 
—
   
—
   
(1,876,833
)
 
(2,370,496
)
 
Issuance of shares as
payment for
services
   
—
   
—
   
6,000,000
   
6,000
   
204,000
   
—
   
—
   
—
   
—
   
—
   
210,000
 
Proceeds from
issuance of
common stock
   
—
   
—
   
69,883,657
   
69,884
   
2,376,044
   
—
   
—
   
—
   
—
   
—
   
2,445,928
 
Issuance of shares as
payment for
accounts payable
   
—
   
—
   
36,481,050
   
36,481
   
1,156,386
   
—
   
—
   
—
   
—
   
—
   
1,192,867
 
Issuance of stock
options
   
—
   
—
   
—
   
—
   
1,218,500
   
—
   
—
   
—
   
—
   
(1,218,500
)  
  —
 
Proceeds from
issuance of
common stock in
connection with
exercise of stock
options
   
—
   
—
   
28,125,000
   
28,125
   
253,125
   
—
   
—
   
—
   
—
   
—
   
281,250
 
Amortization of
unearned
compensation
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
889,960
   
889,960
 
Net loss
   
—
   
—
   
—
   
—
   
—
   
(3,419,547
)  
  —
   
—
   
—
   
—
   
(3,419,547
)
Foreign currency
translation
adjustment
   
—
   
—
   
—
   
—
   
—
   
—
   
(151,691
)
 
—
   
—
   
—
   
(151,691
)
Total comprehensive
loss ($3,571,238)
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
—
 
 
Balance, December
31, 2005
   
—
   
—
   
247,616,830
   
247,617
   
14,658,141
   
(12,978,254
)
 
(643,860
)
 
—
   
—
   
(2,205,373
)
 
(921 ,729
)
 
Issuance of shares as
payment for
services
   
—
   
—
   
46,000,000
   
46,000
   
1,334,000
   
—
   
—
   
—
   
—
   
—
   
1,380,000
 
Proceeds from
issuance of
common stock
   
—
   
—
   
100,000
   
100
   
3,400
   
—
   
—
   
—
   
—
   
—
   
3,500
 
Issuance of stock
options
   
—
   
—
   
—
   
—
   
150,000
   
—
   
—
   
—
   
—
   
(150,000
)  
  —
 
Proceeds from
issuance of
common stock in
connection with
 exercise of stock
options
   
—
   
—
   
11,500,000
   
11,500
   
103,500
   
—
   
—
   
—
   
—
   
—
   
115,000
 
Amortization of
unearned
compensation
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
1,142,674
   
1,142,674
 
Net loss
   
—
   
—
   
—
   
—
   
—
   
(3,053,173
)  
—
   
—
   
—
   
—
   
(3,053,173
)
Foreign currency
translation
adjustment
   
—
   
—
   
—
   
—
   
—
   
—
   
(48,535
)
 
—
   
—
   
—
   
(48,535
)
Total comprehensive
loss ($2,731,674)
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
—
 
 
Balance, December
31, 2006
   
—
   
—
   
305,216,830
   
305,217
   
16,249,041
   
(16,031,427
)
 
(692,395
)
 
—
   
—
   
(1,212,699
)
 
(1,382,263
)
 
Issuance of shares as
payment for
services
   
—
   
—
   
52,000,000
   
52,000
   
416,000
   
—
   
—
   
—
   
—
   
—
   
468,000
 
Issuance of stock
options
   
—
   
—
   
—
   
—
   
10,000
   
—
   
—
   
—
   
—
   
(10,000
)  
  —
 
Proceeds from
issuance of
common stock in
connection with
exercise of stock
options
   
—
   
—
   
1,000,000
   
1,000
   
9,000
   
—
   
—
   
—
   
—
   
—
   
10,000
 
Amortization of
unearned
compensation
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
784,560
   
784,560
 
Net loss
   
—
   
—
   
—
   
—
   
—
   
(1,470,562
)    
—
   
—
   
—
   
—
   
(1,470,562
)
Foreign currency
translation
adjustment
   
—
   
—
   
—
   
—
   
—
   
—
   
(244,177
)
 
—
   
—
   
—
   
(244,177
)
Total comprehensive
loss ($1,714,739)
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
—
 
 
Balance, December
31, 2007
   
—
   
—
   
358,216,830
   
358,217
   
16,684,041
   
(17,501,989
)
 
(936,572
)
 
—
   
—
   
(438,139
)
 
(1,834,442
)
 
Proceeds from
issuance of
common stock
   
—
   
—
   
5,750,000
   
5,750
   
135,500
   
—
   
—
   
—
   
—
   
—
   
141,250
 
Amortization of
unearned
compensation
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
226,614
   
226,614
 
Net loss
   
—
   
—
   
—
   
—
   
—
   
(406,095
)  
  —
   
—
   
—
   
—
   
(406,095
)
Foreign currency
translation
adjustment
   
—
   
—
   
—
   
—
   
—
   
—
   
45,769
   
—
   
—
   
—
   
45,769
 
Total comprehensive
loss ($395,326)
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
—
   
—
 
 
Balance, June 30,
2008
   
—
 
$
—
   
363,966,830
 
$
363,967
 
$
16,819,541
 
$
(17,908,084
)
$
(890,803
)
 
—
 
$
—
 
$
(211,525
)
$
(1,826,904
)
 
See Notes to Condensed Consolidated Financial Statements.
 
5
 
DIAMOND DISCOVERIES INTERNATIONAL CORP.
(An Exploration Stage Company)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2008 AND 2007 AND PERIOD FROM
APRIL 24, 2000 (DATE OF INCEPTION) TO JUNE 30, 2008
(Unaudited)

 
 
Six Months
Ended June 30,  
     
     
2008
   
2007
   
Cumulative
 
                     
Operating activities:
                   
Net loss
 
$
(406,095
)
$
(559,811
)
$
(17,908,084
)
Adjustments to reconcile net loss to net cash used in operating activities:
                   
Costs of services paid through issuance of common stock
   
—
   
—
   
5,073,250
 
Amortization of unearned compensation
   
226,614
   
398,779
   
3,742,975
 
Amortization of discount on note payable
   
—
   
—
   
45,107
 
Forgiveness of stock subscription
   
—
   
—
   
361,295
 
Gain on modification of debt
   
—
   
—
   
(1,193,910
)
Cost of mineral permits paid through issuance of common stock
   
—
   
—
   
50,000
 
Loss on disposal of property and equipment
   
—
   
—
   
4,147
 
Depreciation
   
23,862
   
23,158
   
148,793
 
Changes in operating assets and liabilities -
                   
Other assets
   
—
   
—
   
(54,795
)
Accounts payable
   
14,697
   
4,613
   
2,875,090
 
Accrued expenses
   
—
   
—
   
—
 
Net cash used in operating activities
   
(140,922
)
 
(133,261
)
 
(6,856,132
)
                     
Investing activities
                   
Purchases of property and equipment
   
—
   
—
   
(252,733
)
Proceeds from sale of property and equipment
   
—
   
—
   
10,000
 
Net cash used in investing activities
   
—
   
—
   
(242,733
)
                     
Financing activities:
                   
Advances from stockholders, net
   
37,501
   
151,423
   
1,737,319
 
Proceeds from issuance of notes payable, net of payments
   
(35,000
)
 
—
   
212,123
 
Proceeds from issuance of common stock
   
141,250
   
—
   
5,156,465
 
Net cash provided by financing activities
   
143,751
   
151,423
   
7,105,907
 
                     
Net increase (decrease) in cash
   
2,829
   
18,162
   
7,042
 
                     
Cash, beginning of period
   
4,213
   
1,435
   
—
 
                     
Cash, end of period
 
$
7,042
 
$
19,597
 
$
7,042
 

See Notes to Condensed Consolidated Financial Statements.

6
 
DIAMOND DISCOVERIES INTERNATIONAL CORP.
(An Exploration Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1 - Business and basis of presentation:

The condensed consolidated financial statements include the accounts of Diamond Discoveries International Corp., which was incorporated in the State of Delaware on April 24, 2000, and its wholly owned subsidiary Diamond Discoveries Canada, Inc. (collectively, the “Company”). All intercompany accounts and transactions have been eliminated in consolidation. The Company is engaged in activities related to the exploration for mineral resources in Canada. It conducts exploration and related activities through contracts with third parties.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring accruals, necessary to present fairly the financial position of the Company as of June 30, 2008, its results of operations for the six and three months ended June 30, 2008 and 2007, its changes in stockholders’ deficit for the six months ended June 30, 2008, its cash flows for the six months ended June 30, 2008 and 2007 and the related cumulative amounts for the period from April 24, 2000 (date of inception) to June 30, 2008. Pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”), certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed in or omitted from these financial statements unless significant changes have taken place since the end of the most recent fiscal year. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of December 31, 2007 and for the periods ended December 31, 2007 and 2006 and the notes thereto (the “Audited Financial Statements”) and the other information included in the Company’s Annual Report on Form 10-KSB (the “Form 10-KSB”) for the year ended December 31, 2007 that was previously filed with the SEC.

The results of operations for the six and three months ended June 30, 2008 are not necessarily indicative of the results to be expected for the full year ending December 31, 2008.

As further explained in Note 3 in the Audited Financial Statements, the Company acquired its mineral permits for property in the “Torngat Fields” located in the Province of Quebec, Canada. The Company intends to develop the permits from early stage exploration through completion of the exploration phase. Prior to any further exploration decisions, a mineral deposit must be appropriately assessed. Gathering this data usually takes several years. Once the appropriate data has been gathered, management will determine whether and how to proceed. The Company has discovered tiny diamonds in samples taken from the property and has contracted with Watts, Griffis & McOuat (“WGM”) and Prospecting Geophysics Ltd. (“PGL”) to conduct surveys and exploration at the property to begin to enable it to determine whether it can extract and produce diamonds from this kimberlite.

Other than contracting with WGM and PGL to conduct exploration and gather data on its behalf, the Company had not conducted any operations or generated any revenues as of June 30, 2008. Accordingly, it is considered an “exploration stage company” for accounting purposes. In addition to exploration costs, the Company incurs general and administrative expenses which consist primarily of professional fees relating to corporate filings and consulting and other expenses incurred in operating our business.

The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. However, in addition to not generating any revenues, the Company had a working capital deficit of approximately $1,959,000 and a stockholders’ deficit of approximately $1,827,000 as of June 30, 2008. Management believes that the Company will not generate any revenues during the twelve month period subsequent to June 30, 2008 in which it will be gathering and evaluating data related to the permits for the Torngat Fields. Since its inception, the Company has received total consideration of $7,105,907 as a result of proceeds from shareholder advances, the issuance of notes payable and the sales of common stock. Management believes that the Company will still need total additional financing of approximately $1,500,000 to continue to operate as planned during the twelve month period subsequent to June 30, 2008. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.
 
7

Management plans to obtain such financing through private offerings of debt and equity securities. However, management cannot assure that the Company will be able to obtain any or all of the additional financing it will need to continue to operate through at least June 30, 2009 or that, ultimately, it will be able to generate any profitable commercial mining operations. If the Company is unable to obtain the required financing, it may have to curtail or terminate its operations and liquidate its remaining assets and liabilities.

The accompanying condensed consolidated financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue its operations as a going concern.

Note 2 - Net earnings (loss) per share:

The Company presents “basic” earnings (loss) per share and, if applicable, “diluted” earnings per share pursuant to the provisions of Statement of Financial Accounting Standards No. 128, “Earnings per Share”. Basic earnings (loss) per share is calculated by dividing net income or loss by the weighted average number of common shares outstanding during each period. The calculation of diluted earnings per share is similar to that of basic earnings per share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if all potentially dilutive common shares, such as those issuable upon the exercise of stock options and warrants, were issued during the period.

Since the Company had a net loss for the six and three months ended June 30, 2008 and 2007, the assumed effects of the exercise of the warrants to purchase 95,576,849 shares of common stock that were issued in 2005 and the application of the treasury stock method would have been anti-dilutive. Therefore, there is no diluted per share amounts in the 2008 and 2007 statements of operations.

Note 3 - Refundable tax credit:

The Company is eligible for a refundable tax credit given by the Province of Quebec to encourage mineral exploration in the province. Eligible expenses include exploration expenses within Quebec.

The Company files a tax return claiming the refundable tax credit. However, the Quebec government subjects the return to a review process which may result in a substantial adjustment to the initial claimed credit prior to issuing an assessment of the refundable tax credit. Due to the uncertainty of the amount approved by the Quebec government, the Company’s policy is to record the refundable tax credit at such time that it has been notified by the Quebec government of an assessment. During the six and three months ended June 30, 2008, the Company did not receive any refunds under the program. During the six and three months ended June 30, 2007, the Company received refunds under the program of $58,956 and $—, respectively.

Note 4 - Property and equipment:

Property and equipment is stated at cost. Depreciation is calculated using the straight-line method over the estimated useful lives of such assets. Expenditures for maintenance and repairs are charged to expense as incurred.

At June 30, 2008, major classes of property and equipment are as follows:

 
         
Estimated
 
 
         
Useful
 
     
2008
   
Lives
 
Drilling equipment
 
$
237,856
   
5 years
 
Less accumulated depreciation
   
(142,714
)
     
               
Property and equipment, net
 
$
95,142
       
 
Depreciation expense for the six and three months ended June 30, 2008 was $23,862 and $11,923, respectively, and for the six and three months ended June 30, 2007 was $23,158 and $11,791, respectively.

8

Note 5 - Notes payable:

In November 2005, the Company and Prospecting Geophysics Ltd. (“PGL”) entered into an agreement whereby the amount due to PGL was converted to a non-interest bearing note payable totaling $1,500,000 (Canadian). The note is secured with the permits identified in Note 3 in the Audited Financial Statements. In connection with the agreement, the Company recorded a gain on the modification of debt of $1,193,910. The Company recorded the note using a 12% discount rate. The Company was unable to make the scheduled payments ($600,000 Canadian) during 2006 under this note payable and therefore the note is effectively in default. As such, the entire balance of the note payable is shown as being currently due in the accompanying consolidated balance sheet.

Note 6 - Advances from stockholders:

Advances from stockholders of $279,452 at June 30, 2008 were non-interest bearing and due on demand.

Note 7 - Income taxes:

In June 2006, the Financial Accounting Standards Board (“ FASB”) issued Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109,” which clarifies the accounting for uncertainty in income taxes in accordance with FASB Statement No. 109, “Accounting for Income Taxes.”  FIN 48 prescribes a recognition threshold and measurement attribute for the measurement and financial statement recognition of a tax position taken or expected to be taken in a tax return.  The interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.  The Company adopted FIN 48 effective January 1, 2007. The implementation of FIN 48 did not an impact on the Company’s consolidated results of operations, financial position or liquidity.

As of June 30, 2008, the Company had net operating loss carryforwards of approximately $18,799,000 available to reduce future Federal taxable income which will expire through 2022. The Company had no other material temporary differences as of that date. Due to the uncertainties related to, among other things, the changes in the ownership of the Company, which could subject those loss carryforwards to substantial annual limitations, and the extent and timing of its future taxable income, the Company offset the deferred tax assets of approximately $7,520,000 attributable to the potential benefits from the utilization of those net operating loss carryforwards by an equivalent valuation allowance as of June 30, 2008.

The Company had also offset the potential benefits from net operating loss carryforwards by an equivalent valuation allowance as of December 31, 2007. As a result of the increases in the valuation allowance of approximately $144,000 and $125,000 in the six and three months ended June 30, 2008, respectively, $276,000 and $154,000 in the six and three months ended June 30, 2007, respectively, and $7,520,000 in the period from April 24, 2000 to June 30, 2008, the Company did not recognize any credits for income taxes in the accompanying condensed statements of operations to offset its pre-tax losses in any of those periods.

Note 8 - Stockholders’ deficit:

Stock Option Plans

2005 Plan

On November 14, 2005, the Company adopted the Diamond Discoveries International Corp. 2005 Stock Incentive Plan (the “2005 Plan”). Under the 2005 Plan, 35,000,000 shares of common stock are reserved for issuance. The purpose of the 2005 Plan is to provide incentives for officers, directors, consultants and key employees to promote the success of the Company, and to enhance the Company’s ability to attract and retain the services of such persons. Options granted under the 2005 Plan may be either: (i) options intended to qualify as “incentive stock options” under Section 422 of the Internal Revenue Code of 1986; or (ii) non-qualified stock options. Stock options may be granted under the 2005 Plan for all employees and consultants of the Company, or employees of any present or future subsidiary or parent of the Company. The 2005 Plan is administered by the Board of Directors. The Compensation Committee is empowered to interpret the 2005 Plan and to prescribe, amend and rescind the rules and regulations pertaining to the 2005 Plan. Options granted under the 2005 Plan generally vest over three years. No option is transferable by the optionee other than by will or the laws of descent and distribution and each option is exercisable, during the lifetime of the optionee, only by the optionee. The Compensation Committee may not receive options.

Any incentive stock option that is granted under the 2005 Plan may not be granted at a price less than the fair market value of the Company’s Common Stock on the date of grant (or less than 110% of the fair market value in the case of holders of 10% or more of the total combined voting power through all classes of stock of the Company or a subsidiary or parent of the Company.) Non-qualified stock options may be granted at the exercise price established by the Compensation Committee, which may be less than the fair market value of the Company’s Common Stock on the date of grant.

9
 
Each option granted under the 2005 Plan is exercisable for a period not to exceed ten years from the date of grant (or five years in the case of a holder of more than 10% of the total combined voting power of all classes of stock of the Company or a subsidiary or parent of the Company) and shall lapse upon expiration of such period, or earlier upon termination of the recipient’s employment with the Company, or as determined by the Compensation Committee.

2004 Plan

On September 30, 2004, the Company adopted the Diamond Discoveries International Corp. 2004 Stock Incentive Plan (the “2004 Plan”). Under the 2004 Plan, 35,000,000 shares of common stock are reserved for issuance. The purpose of the 2004 Plan is to provide incentives for officers, directors, consultants and key employees to promote the success of the Company, and to enhance the Company’s ability to attract and retain the services of such persons. Options granted under the 2004 Plan may be either: (i) options intended to qualify as “incentive stock options” under Section 422 of the Internal Revenue Code of 1986; or (ii) non-qualified stock options. Stock options may be granted under the 2004 Plan for all employees and consultants of the Company, or employees of any present or future subsidiary or parent of the Company. The 2004 Plan is administered by the Board of Directors. The Compensation Committee is empowered to interpret the 2004 Plan and to prescribe, amend and rescind the rules and regulations pertaining to the 2004 Plan. Options granted under the 2004 Plan generally vest over three years. No option is transferable by the optionee other than by will or the laws of descent and distribution and each option is exercisable, during the lifetime of the optionee, only by the optionee.

Any incentive stock option that is granted under the 2004 Plan may not be granted at a price less than the fair market value of the Company’s Common Stock on the date of grant (or less than 110% of the fair market value in the case of holders of 10% or more of the total combined voting power through all classes of stock of the Company or a subsidiary or parent of the Company.) Non-qualified stock options may be granted at the exercise price established by the Compensation Committee, which may be less than the fair market value of the Company’s Common Stock on the date of grant.

Each option granted under the 2004 Plan is exercisable for a period not to exceed ten years from the date of grant (or five years in the case of a grant of an incentive stock option to a holder of more than 10% of the total combined voting power of all classes of stock of the Company or a subsidiary or parent of the Company) and shall lapse upon expiration of such period, or earlier upon termination of the recipient’s employment with the Company, or as determined by the Compensation Committee.

2003 Plan

On May 30, 2003, the Company adopted the Diamond Discoveries International Corp. 2003 Stock Incentive Plan (the “2003 Plan”). Under the 2003 Plan, 15,000,000 shares of common stock are reserved for issuance. The purpose of the 2003 Plan is to provide incentives for officers, directors, consultants and key employees to promote the success of the Company, and to enhance the Company’s ability to attract and retain the services of such persons. Options granted under the 2003 Plan may be either: (i) options intended to qualify as “incentive stock options” under Section 422 of the Internal Revenue Code of 1986; or (ii) non-qualified stock options. Stock options may be granted under the 2003 Plan for all employees and consultants of the Company, or employees of any present or future subsidiary or parent of the Company. The 2003 Plan is administered by the Board of Directors. The Compensation Committee is empowered to interpret the 2003 Plan and to prescribe, amend and rescind the rules and regulations pertaining to the 2003 Plan. Options granted under the 2003 Plan generally vest over three years. No option is transferable by the optionee other than by will or the laws of descent and distribution and each option is exercisable, during the lifetime of the optionee, only by the optionee.

Any incentive stock option that is granted under the 2003 Plan may not be granted at a price less than the fair market value of the Company’s Common Stock on the date of grant (or less than 110% of the fair market value in the case of holders of 10% or more of the total combined voting power through all classes of stock of the Company or a subsidiary or parent of the Company.) Non-qualified stock options may be granted at the exercise price established by the Compensation Committee, which may be less than the fair market value of the Company’s Common Stock on the date of grant.

Each option granted under the 2003 Plan is exercisable for a period not to exceed ten years from the date of grant (or five years in the case of a grant of an incentive stock option to a holder of more than 10% of the total combined voting power of all classes of stock of the Company or a subsidiary or parent of the Company) and shall lapse upon expiration of such period, or earlier upon termination of the recipient’s employment with the Company, or as determined by the Compensation Committee.

In February 2004, the Company issued options to acquire 1,000,000 shares of its common stock at an exercise price of $.10 per share to consultants and other non-employees. The options had an aggregate fair market value of $90,000 at the date of issuance as determined based on the Black-Scholes options-pricing model. Accordingly, the Company initially increased unearned compensation and additional paid-in capital by $90,000 to record the fair value of the options.
 
In December 2004, the Company issued options to acquire 33,975,000 shares of its common stock at an exercise price of $.01 per share to consultants and other non-employees. The options had an aggregate fair market value of $1,049,000 at the date of issuance as determined based on the Black-Scholes options-pricing model. Accordingly, the Company initially increased unearned compensation and additional paid-in capital by $1,049,000 to record the fair value of the options.

10
 
In July 2005, the Company issued options to acquire 1,150,000 shares of its common stock at an exercise price of $.01 per share to consultants and other non-employees. The options had an aggregate fair market value of $34,500 at the date of issuance as determined based on the Black-Scholes options-pricing model. Accordingly, the Company initially increased unearned compensation and additional paid-in capital by $34,500 to record the fair value of the options.

In December 2005, the Company issued options to acquire 30,000,000 shares of its common stock at an exercise price of $.01 per share to consultants and other non-employees. The options had an aggregate fair market value of $1,184,000 at the date of issuance as determined based on the Black-Scholes options-pricing model. Accordingly, the Company initially increased unearned compensation and additional paid-in capital by $1,184,000 to record the fair value of the options.

In January 2006, the Company issued options to acquire 5,000,000 shares of its common stock at an exercise price of $.01 per share to consultants and other non-employees. The options had an aggregate fair market value of $150,000 at the date of issuance as determined based on the Black-Scholes options-pricing model. Accordingly, the Company initially increased unearned compensation and additional paid-in capital by $150,000 to record the fair value of the options.

In October 2007, the Company issued 1,000,000 shares of its common stock in connection with the exercise of stock options. The options had an aggregate fair market value of $10,000 at the date of issuance as determined based on the Black-Scholes options-pricing model. Accordingly, the Company initially increased unearned compensation and additional paid-in capital by $10,000 to record the fair value of the options

There were no options granted during the six and three months ended June 30, 2008.

The Company recorded a charge of $226,614 and $114,144 to compensation expense to amortize unearned compensation for the six and three months ended June 30, 2008, respectively and $398,779 and $200,491 to compensation expense to amortize unearned compensation for the six and three months ended June 30, 2007, respectively.

The following table summarizes information with respect to options granted under the 2005 Plan, 2004 Plan and the 2003 Plan as of and for the six months ended June 30, 2008 and 2007.

   
2008
2007
 
   
Shares
   
Weighed
Average
Exercise
Price
   
Shares
   
Weighted
Average
Exercise
Price
 
                           
Options outstanding beginning of period
   
—
 
$
—
   
1,500,000
 
$
0.01
 
Options canceled
   
—
   
—
   
—
   
—
 
Options exercised
   
—
   
—
   
—
   
—
 
Options granted
   
—
   
—
   
—
   
—
 
                           
Options outstanding end of period
   
—
 
$
—
   
1,500,000
 
$
0.01
 
                           
Options exercisable end of period
   
—
 
$
—
   
1,500,000
 
$
0.01
 
                           
Options price range, end of period
 
$
0.01
       
$
0.01
       
Options price range for exercised shares
 
$
0.01
       
$
0.01
       
Options available for grant at end of period
   
3,700,000
         
3,200,000
       
Weighted average fair value of options granted during the period
 
$
—
       
$
—
       
Weighted average exercise price of options granted during the period
 
$
—
       
$
—
       

Warrants

In 2005, in connection with its private placement of common stock, the Company issued warrants to acquire 95,576,849 shares of its common stock at an exercise price of $.035 per share. The warrants expire on various dates during 2008.

Note 9 - Guarantee:

On March 14, 2003, the Company became a guarantor of a promissory note issued by one of its stockholders with an outstanding balance of approximately $101,200 that was originally scheduled to mature on July 31, 2003. The maturity dates of the promissory note and the guaranty have been extended to April 30, 2009.

11

Note 10 - New Accounting Pronouncements:

In September 2006, the FASB issued Statement of Financial Standards No. 157 (“SFAS No. 157”), “Fair Value Measurements,” which clarifies the definition of fair value, establishes a framework for measuring fair value, and expands the disclosures of fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. The adoption of SFAS 157 is not expected to have a material impact on the Company’s consolidated financial statements.

In February 2007, the FASB issued Statement of Financial Standards No. 159 (“SFAS No. 159”), “The Fair Value Option for Financial Assets and Financial Liabilities,” which permits entities to choose to measure many financial instruments and certain other items at fair value. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The adoption of SFAS 159 is not expected to have a material impact on the Company’s consolidated financial statements.

In December 2007, the FASB issued Statement of Financial Standards No. 141(R) (“SFAS No. 141(R)”), “Business Combinations,” which revises the previously issued SFAS 141. SFAS No. 141(R) establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired. SFAS No. 141(R) also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. SFAS No. 141(R) is effective for financial statements issued for fiscal years beginning after December 15, 2008 and will be applied prospectively. The Company is currently evaluating the potential impact on its consolidated financial statements.

In December 2007, the FASB issued Statement of Financial Standards No. 160 (“SFAS No. 160”), “Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51.” SFAS No. 160 establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, the amount of consolidated net income attributable to the parent and to the noncontrolling interest, changes in a parent’s ownership interest, and the valuation of retained noncontrolling equity investments when a subsidiary is deconsolidated. SFAS No. 160 also establishes disclosure requirements that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. SFAS No. 160 is effective for financial statements issued for fiscal years beginning after December 15, 2008. FAS 160 will be applied prospectively, with a disclosure requirement for existing minority interests to be applied retrospectively. The Company is currently evaluating the potential impact on its consolidated financial statements.

Note 11 - Internal Controls:
 
    Our principal executive officer and principal financial officer have evaluated the effectiveness and design of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), as of June 30, 2008. Based on this evaluation, our principal executive and principal financial officers concluded that our disclosure controls and procedures were effective as of June 30, 2008. No change in internal control over financial reporting occurred during the quarter ended June 30, 2008 that has materially affected, or is reasonably likely to materially affect, such internal controls over financial reporting.
 
The effectiveness of our or any other system of disclosure controls and procedures and internal control over financial reporting is subject to certain limitations, including the exercise of judgment in designing, implementing and evaluating the controls and procedures, the assumptions used in identifying the likelihood of future events, and the inability to eliminate misconduct completely. As a result, our disclosure controls and procedures and internal control over financial reporting may not prevent all errors or improper acts or ensure that all material information will be made known to appropriate management in a timely fashion. Still, because of the substantial work performed in reviewing our controls and the enhanced procedures and controls we have implemented to help ensure the proper evaluation and disclosure of the financial information for the periods covered by this report, management, including the principal executive officer and principal financial officer, believes that the financial information for the periods covered by this report and the accompanying consolidated financial statements are fairly stated in all material respects.

* * *

12

Item 2. Management’s Discussion and Analysis or Plan of Operation

The following discussion and analysis should be read in conjunction with the condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q. The following discussion regarding us and our business and operations contains forward-looking statements. Such statements consist of any statement other than a recitation of historical fact, and can be identified by the use of such forward-looking terminology such as “may,” “expect,” “anticipate,” “estimate” or “continue” or the negative thereof or other variations thereon, or comparable terminology. The reader is cautioned that all forward-looking statements are necessarily speculative, and there are certain risks and uncertainties that could cause actual events or results to differ materially from those referred to in such forward-looking statements. The Company undertakes no obligation to release publicly the results of any future revisions it may take to forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Operations to Date

We were incorporated in the State of Delaware in April of 2000. We have not engaged in commercial operations since inception, and therefore have not realized any revenues from operations since inception. We do not expect to commence operations in the foreseeable future and do not expect to generate revenue in calendar year 2008.

For the six and three months ended June 30, 2008 and 2007 and the period from April 24, 2000 (date of inception) to June 30, 2008, we incurred $—, $—, $19,342, $20,000 and $2,531,727, respectively, in exploration costs, net of reimbursements, and $406,095, $267,575, $540,469, $247,880 and $15,675,244 in general and administrative expenses, respectively. General and administrative expenses consisted primarily of professional fees related to our corporate filings and consulting and other expenses incurred in operating our business. We incurred a net loss of approximately $406,000 or $— per share based on 361,091,830 weighted average shares outstanding for the six months ended June 30, 2008 and a net loss of approximately $268,000 or $— per share based on 363,966,830 weighted average shares outstanding for the three months ended June 30, 2008 compared to a net loss of approximately $560,000 or $— per share based on 305,216,830 weighted average shares outstanding for the six months ended June 30, 2007 and a net loss of approximately $268,000 or $— per share based on 305,216,830 weighted average shares outstanding for the three months ended June 30, 2007.

Going Concern

In connection with their report on our audited consolidated financial statements as of December 31, 2007, Rodefer Moss & Co, PLLC, our independent registered public accounting firm, expressed substantial doubt about our ability to continue as a going concern because such continuance is dependent upon our ability to raise capital.
 
We have explored, and continue to explore, all avenues possible to raise the funds required. We have no revenue-producing activity. We cannot continue our exploration efforts until we have raised sufficient capital.

Ultimately, we must achieve profitable operations if we are to be a viable entity. Although we believe that there is a reasonable basis to believe that we will successfully raise the needed funds to continue exploration, we cannot assure you that we will be able to raise sufficient capital to continue exploration, or that if such funds are raised, that exploration will result in a finding of commercially exploitable reserves, or that if exploitable reserves exist on our properties, that extraction activities can be conducted at a profit.

Cash Flow and Capital Resources

Through June 30, 2008, we have relied on the total consideration of $7,105,907 as a result of proceeds from shareholder advances, the issuance of notes payable and the sales of common stock to support our limited operations. As of June 30, 2008, we had a cash balance of $7,042.

We plan to seek additional equity or debt financing of up to $1,500,000 which we plan to use for the next phase of our exploration program to be conducted through December 31, 2008, as well as working capital purposes. We currently have limited sources of capital, including the public and private placement of equity securities and the possibility of issuance of debt securities to our stockholders. With virtually no assets, the availability of funds from traditional sources of debt will be limited, and will almost certainly involve pledges of assets or guarantees by officers, directors and stockholders. Stockholders have advanced funds to us in the past, but we cannot assure you that they will be a source of funds in the future. If we do not get sufficient financing, we may not be able to continue as a going concern and we may have to curtail or terminate our operations and liquidate our business (see Note 1 to financial statements).
 
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Plan of Operation

Our business plan for the next year will consist of further exploration on the properties over which we hold the mineral exploration permits as well as preliminary marketing efforts. In June, 2005, the Company engaged McPhar Geosurveys Ltd. (“McPhar”) to conduct an airborne magnetic survey of the Torngat property. In July 2005, the Company engaged Watts, Griffis and McOuat (“WGM”), a geological and engineering consulting firm. WGM was retained to oversee and direct the continuing exploration of the Torngat property. The firm of Patterson, Grant and Watson Ltd. (“PGW”) reviewed the results of the airborne magnetic survey conducted by McPhar. PWG identified 40 targets, 10 first priority, 23 second priority targets and seven third priority targets. While some of the targets correlate to previously identified kimberlitic dykes, several targets are for new dykes not previously sampled. After their review of the report on the McPhar airborne magnetic survey, WGM outlined a program for exploration during the 2005 season. The primary objectives of the field program were:

 
1.
independent replication of previously reported diamonds recovered from three of the known kimberlite dykes;
 
2.
independent field sampling of drainages associated with airborne anomalies selected by PGW and sample sites selected by WGM to confirm prior results;
 
3.
ground magnetic confirmation of all potential targets that were readily accessible;
 
4.
rock chip sampling of newly discovered and previously untested dykes associated with airborne anomalies; and
 
5.
to the extent possible, test by drilling selected airborne anomalies with the diamond drill already available on the property.

In August 2005, the field exploration commenced with a crew of 12. The crew completed drilling of 2 of the targets identified by PGW. In addition, the crew collected 38 alluvial and rock chip samples from prospective dykes and drainages adjacent to the airborne anomalies and completed ground magnetic surveys covering 20 of the airborne anomalies. The alluvial and rock chip samples along with selected core samples were sent to Saskatchewan Research Council Geoanalytical Laboratory (“SRC”) for processing. The results of the sample processing will be available in a few months. Exploration of the Torngat property has been suspended for the winter months due to inclement weather. WGM continues to analyze and compile all the available geophysical, geological and geochemical data. On October 18 th , the Company was informed by WGM that all five objectives of the 2005 field program were achieved. Further field exploration of the Torngat property will not resume in 2008 while the Company continues to evaluate potential opportunities for joint ventures on property located in Quebec.

After consulting with WGM, we estimate that it will require approximately $1,500,000 to conduct any further exploration program through December 31, 2008. This amount will be used to pay for continued drilling of identified targets, prospecting and geological mapping, helicopter and airplane support, lodging and food for workers, pick-up truck rentals, assays, property taxes to the Quebec Department of Natural Resources and supervision. We plan to raise a minimum of $1,500,000 through one or more private offerings pursuant to Rule 506 or Regulation D or through an offshore offering pursuant to Regulation S; however, nothing in this annual report shall constitute an offer of any securities for sale. Such shares when sold will not have been registered under the Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. If we are unable to raise this amount, we will most likely cease all activity related to our exploration program, or at the very least, proceed on a reduced scale. We have to date relied on a small number of investors to provide us with financing for the commencement of our exploration program, including TVP Capital Corp., a principal stockholder. Amounts owed to these individuals are payable upon demand.

We employ one individual on a part time basis, who is an executive officer. We do not expect any significant changes in the number of employees within the next twelve months.

Item 3.   Quantitative and Qualitative Disclosures About Market Risk
 
Our activities are primarily carried out in Canada. As a result, our financial results are affected by factors such as changes in foreign currency exchange rates or weak economic conditions in foreign markets.
 
The recorded carrying amounts of cash and cash equivalents approximate fair value due to their short-term maturities.
 
Item 4.   Controls and Procedures
 
Review of Disclosure Controls and Procedures
 
Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness and design of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of June 30, 2008. Based on this evaluation, our principal executive and principal financial officers concluded that our disclosure controls and procedures were effective as of June 30, 2008. No change in internal control over financial reporting occurred during the quarter ended June 30, 2008 that has materially affected, or is reasonably likely to materially affect, such internal controls over financial reporting.
 
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The effectiveness of our or any other system of disclosure controls and procedures and internal control over financial reporting is subject to certain limitations, including the exercise of judgment in designing, implementing and evaluating the controls and procedures, the assumptions used in identifying the likelihood of future events, and the inability to eliminate misconduct completely.  As a result, our disclosure controls and procedures and internal control over financial reporting may not prevent all errors or improper acts or ensure that all material information will be made known to appropriate management in a timely fashion.  Still, because of the substantial work performed in reviewing our controls and the enhanced procedures and controls we have implemented to help ensure the proper evaluation and disclosure of the financial information for the periods covered by this report, management, including the principal executive officer and principal financial officer, believes that the financial information for the periods covered by this report and the accompanying consolidated financial statements are fairly stated in all material respects.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

None

Item 1A. Risk Factors.

There have been no material changes with respect to the risk factors previously disclosed in our 2007 10-K.
 
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

In April 2008, in connection with a private placement of its common stock, the Company issued 5,750,000 shares of its common stock for $141,250.

The sale and issuance of the aforementioned shares were exempt transactions under Section 4(2) of the Securities Act of 1933 as a transaction by an issuer not involving a public offering. At the time of sale, the persons who acquired these securities were all full, informed and advised about matters concerning us, including our business, financial affairs and other matters. The shareholders acquired the securities for their own account or their designees.
 
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 and Reports on Form 8-K.

Exhibits.

Exhibit
Number
 
Description of Document
31.1
 
Certification by the Chief Executive Officer pursuant to Rule 15d-14(a) of the Securities Exchange Act of 1934.
31.2
 
Certification by the Principal Financial and Accounting Officer pursuant to Rule 15d-14(a) of the Securities Exchange Act of 1934.
32.1
 
Certification by the Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
32.2
 
Certification by the Principal Financial and Accounting Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.

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SIGNATURES

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

 
By:
/s/ Antonio Sciacca
 
   
Antonio Sciacca,
Chairman, President, CEO, Director and Principal Executive Officer
 
       
       
 
Dated: August 19, 2008
 
       
 
By:
/s/ Edward C. Williams
 
   
Edward C. Williams,
Secretary, Treasurer, Director and Principal Accounting
Officer
 
       
       
 
Dated: August 19, 2008
 
     

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