U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K Mark One [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended May 31, 2009 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to _______ COMMISSION FILE NO. 0-51583 GENEVA RESOURCES INC. ______________________________________________ (Name of small business issuer in its charter) NEVADA 98-0441019 _______________________________ ___________________ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2533 N. CARSON STREET, SUITE 125 CARSON CITY, NEVADA 89706 ________________________________________ (Address of principal executive offices) (775) 348-9330 ___________________________ (Issuer's telephone number) Securities registered pursuant to Section Name of each exchange on which 12(b) of the Act: registered: NONE Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK, $0.001 ____________________ (Title of Class) Check whether the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. [ ] Check whether the issuer (i) 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 (ii) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files. Yes [ ] No [ ] Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-K contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X] State issuers revenues for its most recent fiscal year $ -0-. State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of a specified date within the past 60 days. August 31, 2009: $2,312,212 ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS N/A Check whether the issuer has filed all documents and reports required to be filed by Section 12, 13 and 15(d) of the Securities Exchange Act of 1934 after the distribution of securities under a plan confirmed by a court. Yes[ ] No[ ] APPLICABLE ONLY TO CORPORATE REGISTRANTS State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date. Class Outstanding as of August 31, 2009 Common Stock, $0.001 38,536,862 DOCUMENTS INCORPORATED BY REFERENCE If the following documents are incorporated by reference, briefly describe them and identify the part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (i) any annual report to security holders; (ii) any proxy or information statement; and (iii) any prospectus filed pursuant to Rule 424(b) or (c) of the Securities Act of 1933 (the "Securities Act"). The listed documents should be clearly described for identification purposes (e.g. annual reports to security holders for fiscal year ended December 24, 1990). N/A Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X] -2- GENEVA RESOURCES, INC. FORM 10-K INDEX Item 1. Business 4 Item 1A. Risk Factors 10 Item 2. Properties 19 Item 3. Legal Proceedings 19 Item 4. Submission of Matters to a Vote of Security Holders 21 Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 21 Item 6. Selected Financial Data 24 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation 26 Item 8. Financial Statements and Supplemental Data 34 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 50 Item 9A. Controls and Procedures 50 Item 9B. Other Information 51 Item 10. Directors, Executive Officers and Corporate Governance 51 Item 11. Executive Compensation 54 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 55 Item 13. Certain Relationships and Related Transactions and Director Independence 57 Item 14. Principal Accountant Fees and Services 57 Item 15. Exhibits and Financial Statement Schedules 57 -3- Statements made in this Form 10-K that are not historical or current facts are "forward-looking statements" made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 (the "Act") and Section 21E of the Securities Exchange Act of 1934. These statements often can be identified by the use of terms such as "may," "will," "expect," "believe," "anticipate," "estimate," "approximate" or "continue," or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management's best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events. AVAILABLE INFORMATION Geneva Resources, Inc. files annual, quarterly, current reports, proxy statements, and other information with the Securities and Exchange Commission (the "Commission"). You may read and copy documents referred to in this Annual Report on Form 10-K that have been filed with the Commission at the Commission's Public Reference Room, 450 Fifth Street, N.W., Washington, D.C. You may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. You can also obtain copies of our Commission filings by going to the Commission's website at http://www.sec.gov PART I ITEM 1. BUSINESS BUSINESS DEVELOPMENT Geneva Resources, Inc. was incorporated under the laws of the State of Nevada on April 5, 2004 under the name "Revelstoke Industries, Inc." for the purpose of reclaiming and stabilizing land in preparation for construction in Canada. Effective November 27, 2006, we changed our name to "Geneva Gold Corp.". Subsequently, effective February 28, 2007, we changed our name to "Geneva Resources, Inc.". We are currently engaged in the business of exploration of precious metals with a focus on the exploration and development of gold deposits in North America and internationally. The shares of common stock of Geneva Resources Inc. trade on the Over-the-Counter Bulletin Board under the symbol "GVRS:OB". Please note that throughout this Annual Report, and unless otherwise noted, the words "we," "our," "us," the "Company," or "Geneva Resources," refers to Geneva Resources, Inc. -4- TRANSFER AGENT Our transfer agent is Transfer Online Co., Inc. 317, SW Alder Street, 2nd Floor, Portland, Oregon 97204. CURRENT BUSINESS OPERATIONS We are currently engaged in the business of exploration of precious metals with a focus on the exploration and development of gold deposits in North America and internationally. As of the date of this Annual Report, our mineral interests consist mainly of option agreements on exploration stage properties as discussed below. We have not established any proven or probable reserves on our mineral property interests. MINERAL PROPERTIES VILCORO GOLD PROPERTY On January 22, 2007, we entered into a letter of intent with St. Elias Mines Ltd. ("St Elias"), pursuant to which St. Elias proposed to grant to us an option to acquire not less than an undivided 66% legal, beneficial and registerable interest in certain mining leases in Peru including St. Elias' option to earn a 95% interest in the Vilcoro Gold Property project comprised of approximately 600 hectares in Peru (collectively, the "Vilcoro Properties"). On February 23, 2007, we entered into a formal property option agreement (the "Vilcoro Option Agreement") with St. Elias pursuant to which St. Elias granted to us an option to acquire not less than the undivided 66% legal, beneficial and registerable interest in the Vilcoro Properties (the "Vilcoro Option"). On December 1, 2007, we entered into an extension agreement with St. Elias (the "December 2007 Extension Agreement"). The December 2007 Extension Agreement acknowledged that in accordance with the terms and provisions of the Vilcoro Option Agreement, we must incur and pay exploration expenditures of not less than $500,000 prior to January 17, 2008 (the "Exploration Expenditures"), and provided us an extension until March 31, 2008 to incur and pay such Exploration Expenditures. On March 28, 2008, we entered into a second extension agreement with St. Elias (the "March 2008 Extension Agreement"), which provided us with an extension until June 30, 2008 to incur and pay such Exploration Expenditures. On June 4, 2008, we entered into a third extension with St. Elias (the "June 2008 Extension Agreement"), which provides us with an indefinite extension to pay such Exploration Expenditures based on the Operator's work schedule. Under the terms of the Vilcoro Option Agreement and in order to exercise the Vilcoro Option, we were required to make the following non-refundable cash payments to St. Elias aggregating $350,000 as follows: (i) $50,000 within five business days from the execution of the Vilcoro Option Agreement, which as of the date of this Report, was paid; (ii) $100,000 due on or before the 12-month anniversary of execution of the Vilcoro Option Agreement (which was paid); and (iii) $200,000 due on or before the 24-month anniversary of execution of the Vilcoro Option Agreement. -5- In accordance with the terms and provisions of the Vilcoro Option Agreement, we were further required to: (i) issue to St. Elias 50,000 shares of our restricted common stock on or before the 12-month anniversary of execution of the Vilcoro Option Agreement (which as of the date of this Report have been issued); and (ii) incur costs totaling $2,5000,000 as follows: (a) expenditures of $500,000 were to be incurred on or before the 12-month anniversary of execution of the Vilcoro Option Agreement of which $551,000 had been advanced from inception of the agreement until the date of this Report (which date was subsequently extended indefinitely based on the June 2008 Extension Agreement); (b) second expenditure of $750,000 was to be incurred on or before the 24-month anniversary of execution of the Vilcoro Option Agreement; and (iii) third expenditure of $1,250,000 was to be incurred on or before the 36-month anniversary of execution of the Vilcoro Option Agreement. Under further terms of the Vilcoro Option Agreement: (i) St. Elias would have been the operator (the "Operator") of the Vilcoro Properties and would have received an 8% operator fee on all exploration expenditures; (ii) once we exercised the Vilcoro Option, we agreed to pay 100% of all on-going exploration, development and production costs until commercial production (the "Production Costs"); and (iii) we would have had the right to receive 100% of any cash flow from commercial production of the Vilcoro Properties until we recouped the Production Costs after which the cash flow would have been allocated 66% to us and 34% to St. Elias. PHASE I EXPLORATION PROGRAM. We were previously engaged in our Phase I exploration program. The Vilcoro Property comprised approximately 1,600 hectares and lay along the game geological belt of Tertiary rocks that host deposits in northern Peru, such as Newmont's Yanacocha Mine and Barrick's Pierina deposit. A total of 256 channel samples and 28 check samples had been collected from outcrops, trenches and underground workings, which sample preparation and analytical work was undertaken at ALS Chemex SA Laboratory (an ISO-certified facility) in Lima Peru, using standard industry practice fire assay with an atomic absorption finish. Most of the channel samples were three to five meters long. This work defined two mineralized trends referred to as the Main Trend and the South Trend. Six individual mineralized zones (Zones 1 through 6) had been identified within the Main Trend and three individual mineralized zones (Zones A through C) had been identified within the South Trend. The South Trend laid approximately 200 meters to the south of the Main Trend and comprised an east-west alignment (parallel to the Main Trend) of mineralized hydrobreccia occurrences in three zones. On approximately April 9, 2008, we received a technical report (the "Technical Report") in accordance with the provisions of National Instrument 43-101 of the Canadian Securities Administrators on the Vilcoro Properties. The Technical Report was authored by John A. Brophy, P.Geo., who has thirty-two years of continuous geological experience on exploring for a variety of commodities including gold, copper, zinc, lead, uranium and silver. Based on the contents of the Technical Report, management was pleased with the evidence of disseminated mineralization on the Vilcoro Properties with average ore grades of 0.8 g/t, and previously continued fieldwork at Vilcoro Properties with emphasis on additional trenching between the individual zones on the Main Trend. The Technical Report is available on our website at WWW.GENEVARESOURCESINC.COM. -6- LITIGATION AND STATEMENT OF CLAIM. On November 6, 2008, we filed a Writ of Summons and Statement of Claim (collectively, the "Statement of Claim") against St. Elias and John A. Brophy ("Brophy") in the Supreme Court of British Columbia. The Statement of Claim relates to the Property Option Agreement. The Statement of Claim alleges the following claims: (i) in tort against Brophy alleging non-disclosure of material facts and complete and accurate information relating to the ownership of the Vilcoro Property and to the ownership of the adjacent property, including failing to disclose that Brophy and his wife had an interest in the Vilcoro Property and the adjacent property, which entitles us to rescind the Property Option Agreement and return of an aggregate of $150,000 paid to St. Elias under the Property Option Agreement, an aggregate of $486,000 paid in exploration expenditures, and 50,000 shares of our common stock issued to St. Elias; (ii) breach of the Property Option Agreement relating to the failure by St. Elias to provide to us all data and information in its possession or under its control relating to St. Elias' exploration activities on and in the vicinity of the Vilcoro Properties; and (iii) breach of the Technical Services Agreement by failure of St. Elias to timely prepare and provide a budget or work programs or to expeditiously advance the work on the Vilcoro Properties and diversion by St. Elias of money, time and resources. On December 23, 2008, a statement of defense was filed by St. Elias and Brophy denying the majority of the allegations made by us in our Statement of Claim. In addition, St. Elias and Brophy also filed a counter claim against us for abuse of process and punitive damages. All allegations of by us, St. Elias and Brophy remain to be proved in court. See "Item 3. Legal Proceedings." SAN JUAN PROPERTY On approximately November 16, 2006, we entered into a property option agreement (the "Petaquilla Option Agreement") with Petaquilla Minerals Ltd. ("Petaquilla"). In accordance with the terms and provisions of the Petaquilla Option Agreement, Petaquilla granted to us the sole and exclusive option (the "Option") to acquire up to a 70% undivided interest in and to five exploration concessions situated in the Republic of Panama (the "San Juan Property"), which are owned and controlled by Petaquilla's wholly-owned Panamanian subsidiary. During 2007, certain disputes arose between us and Petaquilla which were resolved during 2008 by way of a settlement agreement (the "Settlement"), mutual release and the ultimate termination of the Petaquilla Option Agreement. Pursuant to the terms of the Settlement: (i) Petaquilla shall issue 100,000 shares of its common stock to us, subject to pooling and release in four equal monthly tranches commencing no later than December 31, 2008 and certain other conditions, (ii) the 4,000,000 shares of the restricted common stock previously issued by us to Petaquilla shall be returned to us; and (iii) the $100,000 previously paid by us in order to exercise the initial portion of the Option shall be returned to us. As of May 31, 2008, we received $100,000 and the return of the 4,000,000 restricted shares of our common stock with an estimated fair value of $5,440,000. In addition, we recorded the 100,000 common shares of Petaquilla, with an estimated fair value of $270,000, as accounts receivable as of May 31, 2008. The total proceeds of $5,810,000 was included in amounts recorded as gain on settlements during 2008. -7- During fiscal year ended May 31, 2009, the Company received the 100,000 shares receivable from Petaquilla, previously valued at $270,000. The 100,000 shares received had an estimated fair value of $55,000 ($0.55 per share) as of May 31, 2009. PROPOSED FUTURE BUSINESS OPERATIONS Our current strategy is to complete further acquisition of other mineral property opportunities which fall within the criteria of providing a geological basis for development of mining initiatives that can provide near term revenue potential and production cash flows to create expanding reserves. We anticipate that our ongoing efforts, subject to adequate funding being available, will continue to be focused on successfully concluding negotiations for additional interests in mineral properties. We plan to build a strategic base of producing mineral properties. Our ability to continue to complete planned exploration activities and expand acquisitions and explore mining opportunities is dependent on adequate capital resources being available and further sources of debt and equity being obtained. DEVELOPMENT OF MINERAL PROPERTIES The requirement to raise further funding for mineral exploration and development beyond that obtained for the next six month period may be dependent on the outcome of geological and engineering testing occurring over this interval on potential properties. If future results provide the basis to continue development and geological studies indicate high probabilities of sufficient mineral production quantities, we will attempt to raise capital to further our programs, build production infrastructure, and raise additional capital for further acquisitions. This includes the following activity: o Target further leases for exploration potential and obtain further funding to acquire new development targets. o Review all available information and studies. o Digitize all available factual information. o Completion of a NI 43-101 Compliant Report with a qualified geologist familiar with mineralization in the respective area. o Determine feasibility and amenability of extracting the minerals. o Create investor communications materials, corporate identity. o Raise funding for mineral development. -8- COMPETITION We operate in a highly competitive industry, competing with other mining and exploration companies, and institutional and individual investors, which are actively seeking metal and mineral based exploration properties throughout the world together with the equipment, labour and materials required to exploit such properties. Many of our competitors have financial resources, staff and facilities substantially greater than ours. The principal area of competition is encountered in the financial ability to cost effectively acquire prime metal and minerals exploration prospects and then exploit such prospects. Competition for the acquisition of metal and minerals exploration properties is intense, with many properties available in a competitive bidding process in which we may lack technological information or expertise available to other bidders. Therefore, we may not be successful in acquiring and developing profitable properties in the face of this competition. No assurance can be given that a sufficient number of suitable metal and minerals exploration properties will be available for acquisition and development. MINERALS EXPLORATION REGULATION Our minerals exploration activities are, or will be, subject to extensive foreign laws and regulations governing prospecting, development, production, exports, taxes, labor standards, occupational health, waste disposal, protection and remediation of the environment, protection of endangered and protected species, mine safety, toxic substances and other matters. Minerals exploration is also subject to risks and liabilities associated with pollution of the environment and disposal of waste products occurring as a result of mineral exploration and production. Compliance with these laws and regulations may impose substantial costs on us and will subject us to significant potential liabilities. Changes in these regulations could require us to expend significant resources to comply with new laws or regulations or changes to current requirements and could have a material adverse effect on our business operations. Exploration and production activities are subject to certain environmental regulations which may prevent or delay the commencement or continuance of our operations. In general, our exploration and production activities are subject to certain foreign regulations, and may be subject to Nigeria, Canadian, Peru, or federal, state and local laws and regulations, relating to environmental quality and pollution control. Such laws and regulations increase the costs of these activities and may prevent or delay the commencement or continuance of a given operation. Compliance with these laws and regulations does not appear to have a future material effect on our operations or financial condition to date. Specifically, we may be subject to legislation regarding emissions into the environment, water discharges and storage and disposition of hazardous wastes. However, such laws and regulations, whether foreign or local, are frequently changed and we are unable to predict the ultimate cost of compliance. Generally, environmental requirements do not appear to affect us any differently or to any greater or lesser extent than other companies in the industry and our current operations have not expanded to a point where either compliance or cost of compliance with environmental regulation is a significant issue for us. Costs have not been incurred to date with respect to compliance with environmental laws but such costs may be expected to increase with an increase in scale and scope of exploration. Minerals exploration operations are subject to comprehensive regulation which may cause substantial delays or require capital outlays in excess of those anticipated causing an adverse effect on our business operations. Minerals -9- exploration operations are subject to foreign, federal, state, and local laws relating to the protection of the environment, including laws regulating removal of natural resources from the ground and the discharge of materials into the environment. Minerals exploration operations are also subject to federal, state, and local laws and regulations which seek to maintain health and safety standards by regulating the design and use of drilling methods and equipment. Various permits from government bodies are required for drilling operations to be conducted; no assurance can be given that such permits will be received. Environmental standards imposed by federal, state, or local authorities may be changed and any such changes may have material adverse effects on our activities. Moreover, compliance with such laws may cause substantial delays or require capital outlays in excess of those anticipated, thus causing an adverse effect on us. Additionally, we may be subject to liability for pollution or other environmental damages which we may elect not to insure against due to prohibitive premium costs and other reasons. As of the date of this Annual Report, we have not been required to spend any material amount on compliance with environmental regulations. However, we may be required to do so in future and this may affect our ability to expand or maintain our operations. RESEARCH AND DEVELOPMENT ACTIVITIES No research and development expenditures have been incurred, either on our account or sponsored by customers, during the past three years. EMPLOYEES We do not employ any persons on a full-time or on a part-time basis. Marcus Johnson is our President and Chief Executive Officer and D. Bruce Horton is our Chief Financial Officer. These individuals are primarily responsible for all our day-to-day operations. Other services are provided by outsourcing, consultant, and special purpose contracts. ITEM 1A. RISK FACTORS An investment in our common stock involves a number of very significant risks. You should carefully consider the following risks and uncertainties in addition to other information in evaluating our company and its business before purchasing shares of our common stock. Our business, operating results and financial condition could be seriously harmed due to any of the following risks. The risks described below are all of the material risks that we are currently aware of that are facing our company. Additional risks not presently known to us may also impair our business operations. You could lose all or part of your investment due to any of these risks. RISKS RELATED TO OUR BUSINESS WE WILL NEED TO RAISE ADDITIONAL FINANCING TO COMPLETE FURTHER EXPLORATION. We will require significant additional financing in order to continue our exploration activities and our assessment of the commercial viability of our precious metal and mineral properties in Peru. Furthermore, if the costs of our planned exploration programs are greater than anticipated, we may have to seek additional funds through public or private share offerings or arrangements with corporate partners. There can be no assurance that we will be successful in our efforts to raise these required funds, or on terms satisfactory to us. The -10- continued exploration of current and future mineral properties and the development of our business will depend upon our ability to establish the commercial viability of our precious metal and mineral properties and to ultimately develop cash flow from operations and reach profitable operations. We currently are in the exploration stage and we have no revenue from operations and we are experiencing significant negative cash flow. Accordingly, the only other sources of funds presently available to us are through the sale of equity. We presently believe that debt financing will not be an alternative to us as all of our properties are in the exploration stage. Alternatively, we may finance our business by offering an interest in any of our mineral properties to be earned by another party or parties carrying out further exploration and development thereof or to obtain project or operating financing from financial institutions, neither of which is presently intended. If we are unable to obtain this additional financing, we will not be able to continue our exploration activities and our assessment of the commercial viability of our precious metal and mineral properties. Further, if we are able to establish that development of our precious metal and mineral properties is commercially viable, our inability to raise additional financing at this stage would result in our inability to place our mineral properties into production and recover our investment. We may not discover commercially exploitable quantities of precious metals or minerals on our properties that would enable us to enter into commercial production, and achieve revenues and recover the money we spend on exploration. Our properties do not contain reserves in accordance with the definitions adopted by the Securities and Exchange Commission, and there is no assurance that any exploration programs that we out will establish reserves. All of our precious metal and mineral properties are in the exploration stage as opposed to the development stage and have no known body of economic mineralization. The known mineralization at these projects has not yet been determined, and may never be determined to be economic. We plan to conduct further exploration activities on our precious metal and mineral properties, which future exploration may include the completion of feasibility studies necessary to evaluate whether a commercial mineable mineral exists on any of our properties. There is a substantial risk that these exploration activities will not result in discoveries of commercially recoverable quantities of minerals. Any determination that our properties contain commercially recoverable quantities of minerals may not be reached until such time that final comprehensive feasibility studies have been concluded that establish that a potential mine is likely to be economic. There is a substantial risk that any preliminary or final feasibility studies carried out by us will not result in a positive determination that our mineral properties can be commercially developed. OUR EXPLORATION ACTIVITIES ON OUR MINERAL PROPERTIES MAY NOT BE COMMERCIALLY SUCCESSFUL, WHICH COULD LEAD US TO ABANDON OUR PLANS TO DEVELOP THE PROPERTY AND OUR INVESTMENTS IN EXPLORATION. Our long-term success depends on our ability to establish commercially recoverable quantities of ore on our mineral properties that can then be developed into commercially viable mining operations. Mineral exploration is highly speculative in nature, involves many risks and is frequently non-productive. These risks include unusual or unexpected geologic formations, and the inability to obtain suitable or adequate machinery, equipment or labor. The success of mineral exploration is determined in part by the following factors: o identification of potential mineralization based on superficial analysis; -11- o availability of government-granted exploration permits; o the quality of management and geological and technical expertise; and o the capital available for exploration. Substantial expenditures are required to establish proven and probable reserves through drilling and analysis, to develop processes to extract minerals, and to develop the mining and processing facilities and infrastructure at any chosen site. Whether a mineral deposit will be commercially viable depends on a number of factors, which include, without limitation, the particular attributes of the deposit, such as size, grade and proximity to infrastructure; metal prices, which fluctuate 09-8 widely; and government regulations, including, without limitation, regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. We may invest significant capital and resources in exploration activities and abandon such investments if it is unable to identify commercially exploitable mineral reserves. The decision to abandon a project may reduce the trading price of our common stock and impair our ability to raise future financing. We cannot provide any assurance to investors that we will discover or acquire any mineralized material in sufficient quantities on any of our properties to justify commercial operations. Further, we will not be able to recover the funds that we spend on exploration if we are not able to establish commercially recoverable quantities of precious metals or minerals on our properties. OUR BUSINESS IS DIFFICULT TO EVALUATE BECAUSE WE HAVE A LIMITED OPERATING HISTORY. In considering whether to invest in our common stock, you should consider that our inception was April 5, 2004 and, as a result, there is only limited historical financial and operating information available on which to base your evaluation of our performance. In addition, we have only recently acquired or will acquire our primary minerals exploration prospects located in Peru and Nigeria with limited experience in early stage exploration efforts. WE HAVE A HISTORY OF OPERATING LOSSES AND THERE CAN BE NO ASSURANCES WE WILL BE PROFITABLE IN THE FUTURE. We have a history of operating losses, expect to continue to incur losses, and may never be profitable, and we must be considered to be in the exploration stage. Further, we have been dependent on sales of our equity securities and debt financing to meet our cash requirements. We have incurred comprehensive losses totaling $7,045,821 from April 5, 2004 (inception) to May 31, 2009. As of May 31, 2009, we had an accumulated deficit of $6,830,821 and incurred comprehensivelosses of $907,865 during fiscal year ended May 31, 2009. Further, we do not expect positive cash flow from operations in the near term. There is no assurance that actual cash requirements will not exceed our estimates. In particular, additional capital may be required in the event that: (i) the costs to acquire additional mineral exploration claims are more than we currently anticipate; (ii) exploration and or future potential mining costs for additional claims increase beyond our expectations; or (iii) we encounter greater costs associated with general and administrative expenses or offering costs. -12- FUTURE PARTICIPATION IN AN INCREASED NUMBER OF MINERALS EXPLORATION PROSPECTS WILL REQUIRE SUBSTANTIAL CAPITAL EXPENDITURES. The uncertainty and factors described throughout this section may impede our ability to economically discover, acquire, develop and/or exploit mineral prospects. As a result, we may not be able to achieve or sustain profitability or positive cash flows from operating activities in the future. The financial statements for the fiscal years ended May 31, 2009 and May 31, 2008 have been prepared "assuming that the Company will continue as a going concern," which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business. Our ability to continue as a going concern is dependent on raising additional capital to fund our operations and ultimately on generating future profitable operations. There can be no assurance that we will be able to raise sufficient additional capital or eventually have positive cash flow from operations to address all of our cash flow needs. If we are not able to find alternative sources of cash or generate positive cash flow from operations, our business and shareholders will be materially and adversely affected. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation - Going Concern." WE WILL REQUIRE ADDITIONAL FUNDING IN THE FUTURE. Based upon our historical losses from operations, we will require additional funding in the future. If we cannot obtain capital through financings or otherwise, our ability to execute our exploration programs will be greatly limited. Our current plans require us to make capital expenditures for the exploration of our minerals exploration properties. Historically, we have funded our operations through the issuance of equity and short-term debt financing arrangements. We may not be able to obtain additional financing on favorable terms, if at all. Our future cash flows and the availability of financing will be subject to a number of variables, including potential production and the market prices of certain minerals. Further, debt financing could lead to a diversion of cash flow to satisfy debt-servicing obligations and create restrictions on business operations. If we are unable to raise additional funds, it would have a material adverse effect upon our operations. AS PART OF OUR GROWTH STRATEGY, WE INTEND TO ACQUIRE ADDITIONAL PRECIOUS METALS AND MINERALS EXPLORATION PROPERTIES. Such acquisitions may pose substantial risks to our business, financial condition, and results of operations. In pursuing acquisitions, we will compete with other companies, many of which have greater financial and other resources to acquire attractive properties. Even if we are successful in acquiring additional properties, some of the properties may not produce positive results of exploration, or we may not complete exploration of such prospects within specified time periods, which may cause the forfeiture of the lease in that prospect. There can be no assurance that we will be able to successfully integrate acquired properties, which could result in substantial costs and delays or other operational, technical, or financial problems. Further, acquisitions could disrupt ongoing business operations. If any of these events occur, it would have a material adverse effect upon our operations and results from operations. -13- WE ARE RELATIVELY A NEW ENTRANT INTO THE PRECIOUS METALS AND MINERALS EXPLORATION AND DEVELOPMENT INDUSTRY WITHOUT PROFITABLE OPERATING HISTORY. Since inception, our activities have been limited to organizational efforts, obtaining working capital and acquiring and developing a very limited number of properties. As a result, there is limited information regarding production or revenue generation. As a result, our future revenues may be limited. The business of minerals exploration and development is subject to many risks and if gold or other precious metals or other minerals are found in economic production quantities, the potential profitability of future possible mining ventures depends upon factors beyond our control. The potential profitability of mining mineral properties if economic quantities of minerals are found is dependent upon many factors and risks beyond our control, including, but not limited to: (i) unanticipated ground and water conditions and adverse claims to water rights; (ii) geological problems; (iii) metallurgical and other processing problems; (iv) the occurrence of unusual weather or operating conditions and other force majeure events; (v) lower than expected grades of minerals; (vi) accidents; (vii) delays in the receipt of or failure to receive necessary government permits; (viii) delays in transportation; (ix) labor disputes; (x) government permit restrictions and regulation restrictions; (xi) unavailability of materials and equipment; and (xii) the failure of equipment or processes to operate in accordance with specifications or expectations. THE RISKS ASSOCIATED WITH EXPLORATION AND DEVELOPMENT AND, IF APPLICABLE, MINING COULD CAUSE PERSONAL INJURY OR DEATH, ENVIRONMENTAL DAMAGE, DELAYS IN MINING, MONETARY LOSSES AND POSSIBLE LEGAL LIABILITY. We are not currently engaged in mining operations because we are in the exploration phase and have not yet any proved minerals reserves. We do not presently carry property and liability insurance. Cost effective insurance contains exclusions and limitations on coverage and may be unavailable in some circumstances. THE MINERAL EXPLORATION AND MINING INDUSTRY IS HIGHLY COMPETITIVE AND THERE IS NO ASSURANCE THAT WE WILL BE SUCCESSFUL IN ACQUIRING THE LEASES. The mineral exploration and mining industry is intensely competitive, and we compete with other companies that have greater resources. Many of these companies not only explore for and produce certain minerals, but also market certain minerals and other products on a regional, national or worldwide basis. These companies may be able to pay more for productive mineral properties and exploratory prospects or define, evaluate, bid for and purchase a greater number of properties and prospects than our financial or human resources permit. In addition, these companies may have a greater ability to continue exploration activities during periods of low mineral market prices. Our larger competitors may be able to absorb the burden of present and future foreign, federal, state, local and other laws and regulations more easily than we can, which would adversely affect our competitive position. Our ability to acquire additional properties and to discover productive prospects in the future will be dependent upon our ability to evaluate and select suitable properties and to consummate transactions in a highly competitive environment. In addition, because we have fewer financial and human resources than many companies in our industry, we may be at a disadvantage in bidding for exploratory prospects and producing mineral properties. -14- THE MARKETABILITY OF NATURAL RESOURCES WILL BE AFFECTED BY NUMEROUS FACTORS BEYOND OUR CONTROL WHICH MAY RESULT IN US NOT RECEIVING AN ADEQUATE RETURN ON INVESTED CAPITAL TO BE PROFITABLE OR VIABLE. The marketability of natural resources which may be acquired or discovered by us will be affected by numerous factors beyond our control. These factors include macroeconomic factors, market fluctuations in commodity pricing and demand, the proximity and capacity of natural resource markets and processing equipment, governmental regulations, land tenure, land use, regulation concerning the importing and exporting of certain minerals and environmental protection regulations. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in us not receiving an adequate return on invested capital to be profitable or viable. MINERAL MINING OPERATIONS ARE SUBJECT TO COMPREHENSIVE REGULATION, WHICH MAY CAUSE SUBSTANTIAL DELAYS OR REQUIRE CAPITAL OUTLAYS IN EXCESS OF THOSE ANTICIPATED, CAUSING AN ADVERSE EFFECT ON OUR BUSINESS OPERATIONS. If economic quantities of certain minerals are found on any lease owned by us in sufficient quantities to warrant mining operations, such mining operations are subject to foreign, federal, state, and local laws relating to the protection of the environment, including laws regulating removal of natural resources from the ground and the discharge of materials into the environment. Mineral mining operations are also subject to foreign, federal, state, and local laws and regulations which seek to maintain health and safety standards by regulating the design and use of mining methods and equipment. Various permits from government bodies are required for mining operations to be conducted; no assurance can be given that such permits will be received. Environmental standards imposed by federal, provincial, or local authorities may be changed and any such changes may have material adverse effects on our activities. Moreover, compliance with such laws may cause substantial delays or require capital outlays in excess of those anticipated, thus resulting in an adverse effect on us. Additionally, we may be subject to liability for pollution or other environmental damages which we may elect not to insure against due to prohibitive premium costs and other reasons. To date we have not been required to spend material amounts on compliance with environmental regulations. However, we may be required to do so in the future and this may affect our ability to expand or maintain our operations. MINERALS EXPLORATION AND DEVELOPMENT AND MINING ACTIVITIES ARE SUBJECT TO CERTAIN ENVIRONMENTAL REGULATIONS, WHICH MAY PREVENT OR DELAY THE COMMENCEMENT OR CONTINUANCE OF OUR OPERATIONS. Minerals exploration and development and future potential uranium mining operations are or will be subject to stringent federal, state, provincial, and local laws and regulations relating to improving or maintaining environmental quality. Our global operations are also subject to many environmental protection laws. Environmental laws often require parties to pay for remedial action or to pay damages regardless of fault. Environmental laws also often impose liability with respect to divested or terminated operations, even if the operations were terminated or divested of many years ago. -15- Future potential mineral mining operations and current exploration activities are or will be subject to extensive laws and regulations governing prospecting, development, production, exports, taxes, labor standards, occupational health, waste disposal, protection and remediation of the environment, protection of endangered and protected species, mine safety, toxic substances and other matters. Mineral mining is also subject to risks and liabilities associated with pollution of the environment and disposal of waste products occurring as a result of mineral exploration and production. Compliance with these laws and regulations will impose substantial costs on us and will subject us to significant potential liabilities. COSTS ASSOCIATED WITH ENVIRONMENTAL LIABILITIES AND COMPLIANCE MAY INCREASE WITH AN INCREASE IN FUTURE SCALE AND SCOPE OF OPERATIONS. We believe that our operations currently comply, in all material respects, with all applicable environmental regulations. However, we are not fully insured at the current date against possible environmental risks. ANY CHANGE IN GOVERNMENT REGULATION/ADMINISTRATIVE PRACTICES MAY HAVE A NEGATIVE IMPACT ON OUR ABILITY TO OPERATE AND OUR PROFITABILITY. The laws, regulations, policies or current administrative practices of any government body, organization or regulatory agency in Peru, Canada or Nigeria or any other applicable jurisdiction, may be changed, applied or interpreted in a manner which will fundamentally alter our ability to carry on business. The actions, policies or regulations, or changes thereto, of any government body or regulatory agency, or other special interest groups, may have a detrimental effect on us. Any or all of these situations may have a negative impact on our ability to operate and/or our profitability. WE MAY BE UNABLE TO RETAIN KEY EMPLOYEES OR CONSULTANTS OR RECRUIT ADDITIONAL QUALIFIED PERSONNEL. Our extremely limited personnel means that we would be required to spend significant sums of money to locate and train new employees in the event any of our employees resign or terminate their employment with us for any reason. Due to our limited operating history and financial resources, we are entirely dependent on the continued service of Marcus Johnson, our President/Chief Executive Officer and a director, and D. Bruce Horton, our Chief Financial Officer and a director. Further, we do not have key man life insurance on any of these individuals. We may not have the financial resources to hire a replacement if any of our officers were to die. The loss of service of any of these employees could therefore significantly and adversely affect our operations. OUR OFFICERS AND DIRECTORS MAY BE SUBJECT TO CONFLICTS OF INTEREST. Our officers and directors serve only part time and are subject to conflicts of interest. Each of our executive officers and directors serves only on a part time basis. Each devotes part of his working time to other business endeavors, including consulting relationships with other corporate entities, and has responsibilities to these other entities. Such conflicts include deciding how much time to devote to our affairs, as well as what business opportunities should be presented to us. Because of these relationships, our officers and directors may be subject to conflicts of interest. -16- NEVADA LAW AND OUR ARTICLES OF INCORPORATION MAY PROTECT OUR DIRECTORS FROM CERTAIN TYPES OF LAWSUITS. Nevada law provides that our officers and directors will not be liable to us or our stockholders for monetary damages for all but certain types of conduct as officers and directors. Our Bylaws permit us broad indemnification powers to all persons against all damages incurred in connection with our business to the fullest extent provided or allowed by law. The exculpation provisions may have the effect of preventing stockholders from recovering damages against our officers and directors caused by their negligence, poor judgment or other circumstances. The indemnification provisions may require us to use our limited assets to defend our officers and directors against claims, including claims arising out of their negligence, poor judgment, or other circumstances. RISKS RELATED TO OUR COMMON STOCK Sales of a substantial number of shares of our common stock into the public market by certain stockholders may result in significant downward pressure on the price of our common stock and could affect your ability to realize the current trading price of our common stock. SALES OF A SUBSTANTIAL NUMBER OF SHARES OF OUR COMMON STOCK IN THE PUBLIC MARKET BY CERTAIN STOCKHOLDERS COULD CAUSE A REDUCTION IN THE MARKET PRICE OF OUR COMMON STOCK. As of the date of this Annual Report, we have 38,536,862 shares of common stock issued and outstanding. Of the total number of issued and outstanding shares of common stock, certain stockholders are able to resell certain shares of our common stock pursuant to an SB-2 registration statement declared effective on November 18, 2005. As a result of this registration statement, an aggregate of 11,025,000 (post-forward share split) shares our common stock were issued and are available for immediate resale which could have an adverse effect on the price of our common stock. See "Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities". As of the date of this Annual Report, there are 8,475,071 outstanding shares of our common stock that are restricted securities as that term is defined in Rule 144 under the Securities Act. Although the Securities Act and Rule 144 place certain prohibitions on the sale of restricted securities, restricted securities may be sold into the public market under certain conditions. Any significant downward pressure on the price of our common stock as the selling stockholders sell their shares of our common stock could encourage short sales by the selling stockholders or others. Any such short sales could place further downward pressure on the price of our common stock. THE TRADING PRICE OF OUR COMMON STOCK ON THE OTC BULLETIN BOARD HAS BEEN AND MAY CONTINUE TO FLUCTUATE SIGNIFICANTLY AND STOCKHOLDERS MAY HAVE DIFFICULTY RESELLING THEIR SHARES. Our common stock commenced trading on approximately December 1, 2006 on the OTC Bulletin Board and the trading price has fluctuated. In addition to volatility associated with Bulletin Board securities in general, the value of your investment could decline due to the impact of any of the following factors upon the market price of our common stock: (i) disappointing results from our -17- discovery or development efforts; (ii) failure to meet our revenue or profit goals or operating budget; (iii) decline in demand for our common stock; (iv) downward revisions in securities analysts' estimates or changes in general market conditions; (v) technological innovations by competitors or in competing technologies; (vi) lack of funding generated for operations; (vii) investor perception of our industry or our prospects; and (viii) general economic trends. In addition, stock markets have experienced price and volume fluctuations and the market prices of securities have been highly volatile. These fluctuations are often unrelated to operating performance and may adversely affect the market price of our common stock. As a result, investors may be unable to sell their shares at a fair price and you may lose all or part of your investment. ADDITIONAL ISSUANCES OF EQUITY SECURITIES MAY RESULT IN DILUTION TO OUR EXISTING STOCKHOLDERS. Our Articles of Incorporation authorize the issuance of 200,000,000 shares of common stock. The Board of Directors has the authority to issue additional shares of our capital stock to provide additional financing in the future and the issuance of any such shares may result in a reduction of the book value or market price of the outstanding shares of our common stock. If we do issue any such additional shares, such issuance also will cause a reduction in the proportionate ownership and voting power of all other stockholders. As a result of such dilution, if you acquire shares of our common stock, your proportionate ownership interest and voting power could be decreased. Further, any such issuances could result in a change of control. OUR COMMON STOCK IS CLASSIFIED AS A "PENNY STOCK" UNDER SEC RULES WHICH LIMITS THE MARKET FOR OUR COMMON STOCK. Because our stock is not traded on a stock exchange or on the NASDAQ National Market or the NASDAQ Small Cap Market, and because the market price of the common stock has fluctuated and may trade at times at less than $5 per share, the common stock may be classified as a "penny stock." SEC Rule 15g-9 under the Exchange Act imposes additional sales practice requirements on broker-dealers that recommend the purchase or sale of penny stocks to persons other than those who qualify as an "established customer" or an "accredited investor." This includes the requirement that a broker-dealer must make a determination that investments in penny stocks are suitable for the customer and must make special disclosures to the customers concerning the risk of penny stocks. Many broker-dealers decline to participate in penny stock transactions because of the extra requirements imposed on penny stock transactions. Application of the penny stock rules to our common stock reduces the market liquidity of our shares, which in turn affects the ability of holders of our common stock to resell the shares they purchase, and they may not be able to resell at prices at or above the prices they paid. A DECLINE IN THE PRICE OF OUR COMMON STOCK COULD AFFECT OUR ABILITY TO RAISE FURTHER WORKING CAPITAL AND ADVERSELY IMPACT OUR OPERATIONS. A decline in the price of our common stock could result in a reduction in the liquidity of our common stock and a reduction in our ability to raise additional capital for our operations. Since our operations to date have been principally financed through the sale of equity securities, a decline in the price of our common stock could have an adverse effect upon our liquidity and our continued -18- operations. A reduction in our ability to raise equity capital in the future would have a material adverse effect upon our business plan and operations, including our ability to continue our current operations. If our stock price declines, we may not be able to raise additional capital or generate funds from operations sufficient to meet our obligations. CERTAIN OF OUR DIRECTORS AND OFFICERS ARE OUTSIDE THE UNITED STATES WITH THE RESULT THAT IT MAY BE DIFFICULT FOR INVESTORS TO ENFORCE WITHIN THE UNITED STATES ANY JUDGMENTS OBTAINED AGAINST CERTAIN OF OUR DIRECTORS OR OFFICERS. Certain of our directors and officers are nationals and/or residents of countries other than the United States, and all or a substantial portion of such persons' assets are located outside the United States. As a result, it may be difficult for investors to effect service of process on our directors or officers, or enforce within the United States or Canada any judgments obtained against us or our officers or directors, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof. Consequently, you may be effectively prevented from pursuing remedies under U.S. federal securities laws against them. In addition, investors may not be able to commence an action in a Canadian court predicated upon the civil liability provisions of the securities laws of the United States. ITEM 2. DESCRIPTION OF PROPERTIES We lease our principal office space located at 2533 N. Carson Street, Suite 125, Carson City, Nevada 89706. The office space is for corporate identification, mailing, and courier purposes only and costs us approximately $185 monthly. The office and services related thereto may be cancelled at any time with a thirty day notice. ITEM 3. LEGAL PROCEEDINGS STATEMENT OF CLAIM On November 6, 2008, we filed a Writ of Summons and Statement of Claim (collectively, the "Statement of Claim") against St. Elias and John A. Brophy ("Brophy") in the Supreme Court of British Columbia. The Statement of Claim relates to the Property Option Agreement. The Statement of Claim alleges the following claims: (i) in tort against Brophy alleging non-disclosure of material facts and complete and accurate information relating to the ownership of the Vilcoro Property and to the ownership of the adjacent property, including failing to disclose that Brophy and his wife had an interest in the Vilcoro Property and the adjacent property, which entitles us to rescind the Property Option Agreement and return of an aggregate of $150,000 paid to St. Elias under the Property Option Agreement, an aggregate of $486,000 paid in exploration expenditures, and 50,000 shares of our common stock issued to St. Elias; (ii) breach of the Property Option Agreement relating to the -19- failure by St. Elias to provide to us all data and information in its possession or under its control relating to St. Elias' exploration activities on and in the vicinity of the Vilcoro Properties; and (iii) breach of the Technical Services Agreement by failure of St. Elias to timely prepare and provide a budget or work programs or to expeditiously advance the work on the Vilcoro Properties and diversion by St. Elias of money, time and resources. On December 23, 2008, a statement of defense was filed by St. Elias and Brophy denying the majority of the allegations made by us in our Statement of Claim. In addition, St. Elias and Brophy also filed a counter claim against us for abuse of process and punitive damages. All allegations by us of St. Elias and Brophy remain to be proved in court. PETAQUILLA OPTION AGREEMENT On February 27, 2007, we received notice pursuant to a news release from Petaquilla that the board of directors of Petaquilla resolved to rescind the Petaquilla Option Agreement. We are current in our obligations under the Petaquilla Option Agreement and dispute the alleged rescission and have advised Petaquilla that the Option is in good standing. Therefore, in accordance with the terms and provisions of the Petaquilla Option Agreement, we filed a notice with the British Columbia International Commercial Arbitration Centre (the "BCICAC") seeking arbitration. On March 5, 2007, we filed a Statement of Claim with the BCICAC seeking specific performance of the Petaquilla Option Agreement and damages. On April 10, 2007, Petaquilla filed a Statement of Defense. On March 14, 2008, we entered into the Settlement. Pursuant to the terms and provisions of the Settlement: (i) Petaquilla shall issue 100,000 shares of its common stock to us, which shares shall be released from pool in four equal monthly tranches beginning on the first commercial pour of gold at the Molejon Gold Mine or December 31, 2008, whichever comes first, and which shares shall be subject to a two business day right of first refusal for Petaquilla to find a buyer or five business days if the sale is private; (ii) the 4,000,000 shares of the restricted common stock previously issued by us to Petaquilla in accordance with the terms and provisions of the First Option shall be returned to us (which as of the date of this Annual Report has been returned); and (iii) the $100,000 paid by us on approximately November 17, 2006 in order to exercise the initial portion of the Option returned to us. On April 11, 2008, we entered into the Release pursuant to which the terms of the Settlement were acknowledged. In accordance with the terms and provisions of the Release, the parties agreed to release each other and their respective directors, officers, employees, agents and assigns from any and all causes of action, claims and demands of any nature or kind whatsoever arising up to the present date relating to the Petaquilla Option Agreement and to any of the subject matter of the arbitration proceedings. It is anticipated that the pending arbitration proceedings will be dismissed with the British Columbia International Commercial Arbitration Center. As of May 31, 2008, we received $100,000 and the return of the 4,000,000 restricted shares of our common stock with an estimated fair value of $5,440,000. In addition, we recorded the 100,000 common shares of Petaquilla, -20- with an estimated fair value of $270,000, as accounts receivable as of May 31, 2008. The total proceeds of $5,810,000 was included in amounts recorded as gain on settlements during 2008. During fiscal year ended May 31, 2009, the Company received the 100,000 shares receivable from Petaquilla, previously valued at $270,000. The 100,000 shares received had an estimated fair value of $55,000 ($0.55 per share) as of May 31, 2009. CEASE TRADE ORDER OF THE BRITISH COLUMBIA SECURITIES COMMISSION Our shares of common stock are registered under Section 12(g) of the Securities Exchange Act of 1934, as amended. We, therefore, file annual and other reports with the Securities and Exchange Commission. On November 29, 2007, we received a cease trade order (the "CTO") from the British Columbia Securities Commission (the "BCSC"), which is limited to the Province of British Columbia, for not filing a technical report under Canadian National Instrument 43-101 STANDARDS OF DISCLOSURE FOR MINERAL PROJECTS ("NI 43-101") respecting certain previous disclosure regarding certain of our material property interests. As a consequence of the CTO, we are now seeking legal advice in connection with this matter and expect to be in communication with the BCSC promptly in order to determine the exact manner in which we will be able to satisfy the requirements of NI 43-101, as required by the parameters as set forth for foreign issuers under Canadian National Instrument 71-102 CONTINUOUS DISCLOSURE AND OTHER EXEMPTIONS RELATING TO FOREIGN ISSUERS. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS During fiscal year ended May 31, 2009, no matters were submitted to our stockholders for approval. ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES MARKET FOR COMMON EQUITY Shares of our common stock commenced trading on the OTC Bulletin Board under the symbol "GVRS:OB" on approximately December 1, 2006. The market for our common stock is limited, and can be volatile. The following table sets forth the high and low bid prices relating to our common stock on a quarterly basis for the periods indicated as quoted by the NASDAQ stock market. These quotations reflect inter-dealer prices without retail mark-up, mark-down, or commissions, and may not reflect actual transactions. -21- QUARTER ENDED HIGH BID LOW BID May 31, 2009 $0.02 $0.02 February 28, 2009 $0.04 $0.03 November 30, 2008 $0.06 $0.06 August 31, 2008 $0.35 $0.35 May 31, 2008 $1.20 $1.20 February 29, 2008 $1.20 $1.15 November 30, 2007 $1.35 $1.26 August 31, 2007 $1.47 $1.40 As of August 31, 2009, we had 22 shareholders of record, which does not include shareholders whose shares are held in street or nominee names. We believe that there are approximately 250 beneficial owners of our common stock. DIVIDEND POLICY No dividends have ever been declared by the Board of Directors on our common stock. Our losses do not currently indicate the ability to pay any cash dividends, and we do not indicate the intention of paying cash dividends either on our common stock in the foreseeable future. SECURITIES AUTHORIZED FOR ISSUANCE UNDER COMPENSATION PLANS We have one equity compensation plan, the Geneva Resources 2007 Stock Incentive Plan (the "2007 Plan"). The table set forth below presents information relating to our equity compensation plans as of the date of this Annual Report: EQUITY PLAN COMPENSATION INFORMATION WEIGHTED-AVERAGE NUMBER OF SECURITIES NUMBER OF SECURITIES TO EXERCISE PRICE OF REMAINING AVAILABLE FOR BE ISSUED UPON EXERCISE OUTSTANDING FUTURE ISSUANCE UNDER OF OUTSTANDING OPTIONS, OPTIONS, WARRANTS EQUITY COMPENSATION PLANS WARRANTS AND RIGHTS AND RIGHTS (EXCLUDING COLUMN (A)) PLAN CATEGORY (A) (B) (C) EQUITY COMPENSATION PLANS APPROVED BY SECURITY HOLDERS Not applicable EQUITY COMPENSATION PLANS NOT APPROVED BY SECURITY HOLDERS Stock Options 1,850,000 $ 1.04 3,150,000 Total Options 1,850,000 $ 1.04 3,150,000 -22- 2007 PLAN On May 9, 2007, our Board of Directors authorized and approved the adoption of the 2007 Plan effective May 9, 2007, under which an aggregate of 5,000,000 of our shares may be issued. The purpose of the 2007 Plan is to enhance our long-term stockholder value by offering opportunities to our directors, officers, employees and eligible consultants to acquire and maintain stock ownership in order to give these persons the opportunity to participate in our growth and success, and to encourage them to remain in our service. The 2007 Plan is to be administered by our Board of Directors or a committee appointed by and consisting of one or more members of the Board of Directors, which shall determine (i) the persons to be granted Stock Options under the 2007 Plan; (ii) the number of shares subject to each option, the exercise price of each Stock Option; and (iii) whether the Stock Option shall be exercisable at any time during the option period up to ten (10) years or whether the Stock Option shall be exercisable in installments or by vesting only. The 2007 Plan provides authorization to the Board of Directors to grant Stock Options to purchase a total number of shares of our common stock not to exceed 5,000,000 shares as at the date of adoption by the Board of Directors of the 2007 Plan. At the time a Stock Option is granted under the 2007 Plan, the Board of Directors shall fix and determine the exercise price at which shares of our common stock may be acquired. In the event an optionee ceases to be employed by or to provide services to us for reasons other than cause, retirement, disability or death, any Stock Option that is vested and held by such optionee generally may be exercisable within three months after the effective date that his position ceases, and after such three month period any unexercised Stock Option shall expire. In the event an optionee ceases to be employed by or to provide services to us for reasons of retirement, disability or death, any Stock Option that is vested and held by such optionee generally may be exercisable within up to one-year after the effective date that his position ceases, and after such one-year period any unexercised Stock Option shall expire. No Stock Options granted under the Stock Option Plan will be transferable by the optionee, and each Stock Option will be exercisable during the lifetime of the optionee subject to the option period up to ten (10) years or limitations described above. Any Stock Option held by an optionee at the time of his death may be exercised by his estate within one (1) year of his death or such longer period as the Board of Directors may determine. The exercise price of a Stock Option granted pursuant to the 2007 Plan shall be paid in full to us by delivery of consideration equal to the product of the Stock Option in accordance with the requirements of the Nevada Revised Statutes. Any Stock Option settlement, including payment deferrals or payments deemed made by way of settlement of pre-existing indebtedness, may be subject to such conditions, restrictions and contingencies as may be determined. OTHER AWARDS The 2007 Plan further provides that, subject to the provisions of the 2007 Plan, the Board of Directors may grant to any key individuals who are our employees eligible to receive options one or more incentive stock options to purchase the number of shares of common stock allotted by the Board of Directors (the "Incentive Stock Options"). The 2007 Plan further provides that subject to -23- provisions of the 2007 Plan, the Board of Directors may grant to any key individuals who are our employees eligible to receive options restricted or unrestricted stock awards (collectively, "Stock Awards"), restricted stock units ("Units"), stock appreciation rights ("SARs"), and/or a dividend equivalent right ("Dividend Right"). During fiscal year ended May 31, 2009, there were no options granted under the 2007 Plan. RECENT SALES OF UNREGISTERED SECURITIES As of the date of this Annual Report and during fiscal year ended May 31, 2009, to provide capital, we sold stock in private placement offerings, issued stock in exchange for our debts or pursuant to contractual agreements as set forth below. PRIVATE PLACEMENT OFFERING During fiscal year ended May 31, 2008, we received an aggregate of $400,000 towards a private placement offering of 400,000 Units at $1.00 per Unit. Each Unit consists of one common share in our capital stock. The 400,000 shares of our restricted common stock were issued in reliance upon the transactional exemption provided by Section 4(2) or Regulation S under the Securities Act of 1933, as amended (the "Securities Act"). The investor understood the economic risk of an investment in the securities, and that the investor had the opportunity to ask questions of and receive answers from our management concerning any and all matters related to acquisition of the securities. No underwriter was involved in the transaction. ITEM 6. SELECTED FINANCIAL DATA The following selected financial information is qualified by reference to, and should be read in conjunction with our financial statements and the notes thereto, and "Management's Discussion and Analysis of Financial Condition and Results of Operation" contained elsewhere herein. The selected income statement data for fiscal years ended May 31, 2009 and May 31, 2008 and the selected balance sheet data as of May 31, 2009 and May 31, 2008 are derived from our audited consolidated financial statements which are included elsewhere herein. -24- FOR THE PERIOD FISCAL YEARS ENDED FROM APRIL 5, 2004 MAY 31, 2009 AND (INCEPTION) TO MAY 31, 2008 MAY 31, 2009 ____________________________ __________________ STATEMENT OF OPERATIONS DATA REVENUES $ -0- $ -0- $ 46,974 DIRECT COSTS -0- -0- 56,481 GROSS MARGIN (LOSS) -0- -0- (9,507) GENERAL AND ADMINISTRATIVE EXPENSES Office and general $ 16,770 $ 58,506 $ 143,695 Consulting fees 178,907 140,000 696,934 Marketing expenses -0- 18,495 894,738 Management fees - 475,500 1,241,406 Mineral property 90,000 550,452 8,258,312 expenditures Professional fees 276,891 383,585 957,614 NET OPERATING LOSS (562,568) (1,626,538) (12,202,206) OTHER INCOME (EXPENSES) (130,297) 5,513,072 5,371,385 NET INCOME (LOSS) FOR (692,865) 3,886,534 (6,830,821) THE PERIOD COMPREHENSIVE INCOME (215,000) -0- (215,000) (LOSS) COMPREHENSIVE INCOME $ (907,865) $ 3,886,534 $ (7,045,821) (LOSS) FOR THE PERIOD BALANCE SHEET DATA TOTAL ASSETS $ 222,085 $ 444,366 TOTAL LIABILITIES 2,203,490 1,517,906 STOCKHOLDERS EQUITY (DEFICIT) $(1,981,405) $(1,073,540) -25- ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION The summarized financial data set forth in the table below is derived from and should be read in conjunction with our audited financial statements for the period from inception (April 5, 2004) to fiscal year ended May 31, 2009, including the notes to those financial statements which are included in this Annual Report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to those discussed below and elsewhere in this Annual Report, particularly in the section entitled "Risk Factors". Our audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles. We are an exploration stage company and have generated limited revenue to date. The above table sets forth selected financial information for the periods indicated. We have incurred recurring losses to date. Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation. We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities. RESULTS OF OPERATION Our comprehensive loss during fiscal year ended May 31, 2009 was approximately ($907,865) compared to comprehensive income of $3,886,534 for fiscal year ended May 31, 2008 (a decrease in comprehensive income of $2,978,669). During fiscal years ended May 31, 2009 and May 31, 2008, respectively, we did not generate any revenue. During fiscal year ended May 31, 2009, we incurred general and administrative expenses in the aggregate amount of $562,568 compared to $1,626,538 incurred during fiscal year ended May 31, 2008 (a decrease of $1,063,970). The operating expenses incurred during fiscal year ended May 31, 2009 consisted of: (i) office and general of $16,770 (2008: $58,506); (ii) consulting fees of $178,907 (2008: $140,000); (iii) marketing expenses of $-0- (2008: $18,495); (iv) management fees $-0- (2008: $475,500); (v) mineral property expenditures of $90,000 (2008: -26- $550,452); and (vi) professional fees of $276,891 (2008: $383,585). The decrease in expenses incurred during fiscal year ended May 31, 2009 compared to fiscal year ended May 31, 2008 resulted primarily from a decrease in management fees and a decrease in mineral property expenditures based upon the current status of the scale and scope of exploratory and acquisition programs. General and administrative expenses generally include corporate overhead, financial and administrative contracted services, marketing and consulting costs. This resulted in a net operating loss of ($562,568) during fiscal year ended May 31, 2009 compared to a net operating loss of ($1,626,538) during fiscal year ended May 31, 2008. During fiscal year ended May 31, 2009, we recorded total other expense in the amount of ($160,297) relating to interest expense and other income of a $30,000 gain on extinguishment of accrued liability compared to total other income recorded during fiscal year ended May 31, 2008 consisting of $5,590,784 in net gain on settlement and ($77,712) in interest expense. During fiscal year ended May 31, 2009, we also recorded a comprehensive loss of ($215,000) relating to the change in market value of available for sale securities consisting of the Petaquilla shares of common stock compared to $-0- during fiscal year ended May 31, 2008. This resulted in comprehensive loss for fiscal year ended May 31, 2009 of ($907,865) compared to comprehensive income for fiscal year ended May 31, 2008 of $3,886,534. The decrease in comprehensive income (loss) during fiscal year ended May 31, 2009 compared to fiscal year ended May 31, 2008 is attributable primarily to the recording of the $5,590,784 during fiscal year ended May 31, 2008 relating to net gain on settlement. This resulted from the $100,000 received and the return of the 4,000,000 restricted shares of our common stock with a estimated fair value of $5,440,000. In addition, the Company recorded the 100,000 common shares of Petaquilla, with an estimated fair value of $270,000, as accounts receivable as of May 31, 2008. The total proceeds of $5,810,000 was included in amounts recorded as gain on settlements during fiscal year ended May 31, 2008. The basic weighted average number of shares outstanding was 38,428,369 at May 31, 2009 compared to 40,377,652 at May 31, 2008. LIQUIDITY AND CAPITAL RESOURCES FISCAL YEAR ENDED MAY 31, 2009 Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation. -27- As at May 31, 2009, our current assets were $57,075 and our current liabilities were $2,203,490, resulting in a working capital deficit of $2,146,415. As at May 31, 2009, our total assets were $222,085 compared to total assets of $444,366 as at May 31, 2008. Total assets as at fiscal year ended May 31, 2009 consisted of: (i) $2,075 in cash; (ii) $55,000 in available for sale securities and (ii) $165,010 in deposit on property. As at May 31, 2009, our current liabilities were $2,203,490 compared to current liabilities of $1,517,906 as at May 31, 2008. Our current liabilities consisted of: (i) $215,591 in accounts payable and accrued liabilities; and (ii) $1,987,899 in shareholder's loan and accrued interest. The increase in current liabilities was primarily due to the increase in shareholder's loan and accrued loan interest relating to the scale and scope of business activity. Stockholders' deficit increased from ($1,073,540) as at May 31, 2008 to ($1,981,405) as at May 31, 2009. We have not generated positive cash flows from operating activities. For fiscal year ended May 31, 2009, net cash flow used in operating activities was ($547,281) compared to net cash flow used in operating activities of ($1,191,393) for fiscal year ended May 31, 2008. Net cash flow used in operating activities during fiscal year ended May 31, 2009 consisted primarily of a net loss of ($692,865) adjusted by ($30,000) in recovery of non-cash management fees. Net cash flow used in operating activities was further changed by $15,287 in accounts payable and accrued liabilities and $160,297 in accrued interest on shareholder's loan. During fiscal year ended May 31, 2009, net cash flow provided by financing activities was $540,000 compared to net cash flow from financing activities of $1,195,000 for fiscal year ended May 31, 2008. Net cash flow provided from financing activities during fiscal year ended May 31, 2009 pertained primarily to $540,000 received as proceeds from shareholder advances. OPERATION AND FUNDING Existing working capital, further advances and possible debt instruments, anticipated warrant exercises, further private placements, and anticipated cash flow are expected to be adequate to fund our operations over the next six months. We have no lines of credit or other bank financing arrangements. Generally, we have financed operations to date through the proceeds of the private placement of equity and debt securities. In connection with our business plan, management anticipates that administrative expenses will decrease as a percentage of revenue as our revenue increases over the next twelve months. Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations. During fiscal year ended May 31, 2008, we received $400,000 towards a planned private placement of units to be offered at $1.00 per unit. Each unit was to consist of one share of our restricted common stock and one warrant to acquire an additional share of common stock at an exercise price of $1.50 for twelve -28- months (the "Units(s)"). During February 2008, we revised the terms of the private placement of Units, which are now to be offered at $1.00 per unit consisting of one share of restricted common stock. The private placement offering is under Regulation S of the Securities Act. MATERIAL COMMITMENTS As of the date of this Report and other than as disclosed below, we do not have any material commitments for fiscal year 2008/2009. SHAREHOLDER LOAN On November 14, 2006, one of our shareholders advanced to Petaquilla an aggregate of $100,000 on our behalf. Additional advances of $303,500 and $795,000 were received during fiscal years ended May 31, 2007 and May 31, 2008, respectively. During fiscal year ended May 31, 2009, an additional $540,000 was advanced by the same shareholder under the same terms and conditions. These amounts are unsecured, accrue interest at 10% per annum and have no established terms of repayment. As at May 31, 2009, we owe an aggregate of $1,987,899 in principal and accrued interest. PURCHASE OF SIGNIFICANT EQUIPMENT We do not intend to purchase any significant equipment during the next twelve months. OFF-BALANCE SHEET ARRANGEMENTS As of the date of this Annual Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. GOING CONCERN The independent auditors' report accompanying our May 31, 2009 and May 31, 2008 financial statements contains an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements have been prepared "assuming that we will continue as a going concern," which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business. RECENT ACCOUNTING PRONOUNCEMENTS In June 2009, the FASB issued SFAS No. 168, THE FASB ACCOUNTING STANDARDS CODIFICATION AND THE HIERARCHY OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES--A REPLACEMENT OF FASB STATEMENT NO. 162 ("SFAS 168"). SFAS 168 replaces SFAS No. 162, THE HIERARCHY OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, and establishes the FASB Accounting Standards Codification ("Codification") as the source of authoritative accounting principles recognized by the FASB to be applied by -29- nongovernmental entities in the preparation of financial statements in conformity with GAAP. Rules and interpretive releases of the Securities and Exchange Commission ("SEC") under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. The FASB will no longer issue new standards in the form of Statements, FASB Staff Positions, or Emerging Issues Task Force Abstracts; instead the FASB will issue Accounting Standards Updates. Accounting Standards Updates will not be authoritative in their own right as they will only serve to update the Codification. The issuance of SFAS 168 and the Codification does not change GAAP. SFAS 168 becomes effective for interim and annual periods ending after September 15, 2009. Management does not expect the adoption of SFAS 168 to have a material impact on our financial position, cash flows and results of operations In June 2009, the FASB issued SFAS No. 167, AMENDMENTS TO FASB INTERPRETATION NO. 46(R), ("SFAS 167"). The amendments include: (1) the elimination of the exemption for qualifying special purpose entities, (2) a new approach for determining who should consolidate a variable-interest entity, and (3) changes to when it is necessary to reassess who should consolidate a variable-interest entity. SFAS 167 is effective for the first annual reporting period beginning after November 15, 2009 and for interim periods within that first annual reporting period. The Company will adopt SFAS 167 in fiscal 2010. The Company does not expect that the adoption of SFAS 167 will have a material impact on the financial statements. In June 2009, the FASB issued SFAS No. 166, ACCOUNTING FOR TRANSFERS OF FINANCIAL ASSETS, AN AMENDMENT TO SFAS NO. 140, ("SFAS 166"). SFAS 166 eliminates the concept of a "qualifying special-purpose entity," changes the requirements for derecognizing financial assets, and requires additional disclosures in order to enhance information reported to users of financial statements by providing greater transparency about transfers of financial assets, including securitization transactions, and an entity's continuing involvement in and exposure to the risks related to transferred financial assets. SFAS 166 is effective for fiscal years beginning after November 15, 2009. The Company will adopt SFAS 166 in fiscal 2010. The Company does not expect that the adoption of SFAS 166 will have a material impact on the financial statements. In June 2009, the FASB issued SFAS No. 165, SUBSEQUENT EVENTS, ("SFAS No. 165"). SFAS 165 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. SFAS 165 applies to both interim financial statements and annual financial statements. SFAS 165 is effective for interim or annual financial periods ending after June 15, 2009. SFAS 165 does not have a material impact on our financial statements. In May 2008, the FASB issued SFAS No. 163, ACCOUNTING FOR FINANCIAL GUARANTEE INSURANCE CONTRACTS ("SFAS 163"). SFAS 163 clarifies how SFAS 60, ACCOUNTING AND REPORTING BY INSURANCE ENTERPRISES applies to financial guarantee insurance contracts issued by insurance enterprises, including the recognition and measurement of premium revenue and claim liabilities. It also requires expanded disclosures about financial guarantee insurance contracts. SFAS 163 is effective for our interim period commencing June 1, 2009, except for disclosures about an insurance enterprise's risk-management activities, which were effective for our interim period commencing June 1, 2008. Management does not expect the adoption of SFAS 163 to have a material impact on our financial position, cash flows and results of operations. -30- In March 2008, the FASB issued SFAS No. 161, DISCLOSURES ABOUT DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES ("SFAS 161"). SFAS 161 is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity's financial position, financial performance, and cash flows. SFAS 161 achieves these improvements by requiring disclosure of the fair values of derivative instruments and their gains and losses in a tabular format. It also provides more information about an entity's liquidity by requiring disclosure of derivative features that are credit risk-related. Finally, it requires cross-referencing within footnotes to enable financial statement users to locate important information about derivative instruments. SFAS 161 will be effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008 and will be adopted by us beginning in the first quarter of fiscal 2010. Management has not determined the effect that adopting this statement would have on our financial position, cash flows or results of operations. In December 2007, the FASB issued SFAS No. 160, NONCONTROLLING INTEREST IN CONSOLIDATED FINANCIAL STATEMENTS, AN AMENDMENT OF ARB NO. 51 ("SFAS No. 160"), which will change the accounting and reporting for minority interests and will be recharacterized as noncontrolling interests and classified as a component of equity within the consolidated balance sheets. SFAS No. 160 is effective as of the beginning of an entity's first fiscal year beginning on or after December 15, 2008. Earlier adoption is prohibited. Management has not determined the effect that adopting this statement would have on our financial position, cash flows or results of operations. In December 2007, the FASB issued SFAS No. 141 (Revised 2007), BUSINESS COMBINATIONS ("SFAS No. 141R"). SFAS No. 141R will change the accounting for business combinations. Under SFAS No. 141R, an acquiring entity will be required to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. SFAS No. 141R will change the accounting treatment and disclosure for certain specific items in a business combination. SFAS No. 141R applies prospectively to business combinations for which the acquisition date is on or after the beginning of the entity's first annual reporting period beginning on or after December 15, 2008. Accordingly, any business combinations completed by us prior to June 1, 2009 will be recorded and disclosed following existing GAAP. Management has not determined the effect that adopting this statement would have on our financial position, cash flows or results of operations. In February 2007, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 159, THE FAIR VALUE OPTION FOR FINANCIAL ASSETS AND FINANCIAL LIABILITIES - INCLUDING AN AMENDMENT OF FASB STATEMENT NO. 115 ("SFAS No. 159"). This statement permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. This Statement is expected to expand the use of fair value measurement, which is consistent with the Board's long-term measurement objectives for accounting for financial instruments. This statement is effective as of the beginning of our first fiscal year that begins after November 15, 2007, although earlier adoption is permitted. We have determined that the adoption of SFAS No. 159 during the year did not have any material impact on our financial position, cash flows or results of operations. -31- In September 2006, FASB issued SFAS No. 157, FAIR VALUE MEASUREMENTS ("SFAS No. 157"). This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), expands disclosures about fair value measurements, and applies under other accounting pronouncements that require or permit fair value measurements. SFAS No. 157 does not require any new fair value measurements. However, the FASB anticipates that for some entities, the application of SFAS No. 157 will change current practice. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, which for us is the fiscal year beginning June 1, 2008. We have determined that the adoption of SFAS No. 157 during the year did not have any material impact on our financial position, cash flows or results of operations as our available for sale securities would otherwise have been carried at fair value in accordance with SFAS No. 115, ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY SECURITIES. The following disclosures are required by SFAS No. 157 in connection with assets and liabilities whose carrying amounts are subject to fair value measures: Fair Value Measurements at May 31, 2009 ______________________________________________________________ Quoted Prices in Significant Other Significant Other Active Market Observable Inputs Unobservable Inputs May 31, 2009 (Level 1) (Level 2) (Level 3) ______________________________________________________________________________________________________ Available for sale securities $ 55,000 $ 55,000 $ - $ - ______________________________________________________________________________________________________ Total $ 55,000 $ 55,000 $ - $ - ====================================================================================================== In connection with our available for sale securities, to May 31, 2009, no realized or unrealized gains and losses have been recorded in operations and all unrealized gains and losses have been recorded as components of accumulated other comprehensive income (loss). In April 2008, the FASB issued FSP No. FAS 142-3, "Determination of the Useful Life of Intangible Assets" ("FSP FAS 142-3"). In determining the useful life of intangible assets, FSP FAS 142-3 removes the requirement to consider whether an intangible asset can be renewed without substantial cost of material modifications to the existing terms and conditions and, instead, requires an entity to consider its own historical experience in renewing similar arrangements. FSP FAS 142-3 also requires expanded disclosure related to the determination of intangible asset useful lives. FSP FAS 142-3 is effective for financial statements issued for fiscal years beginning after December 15, 2008. Management has not determined the effect that adopting this statement would have on our financial position, cash flows or results of operations. In May 2008, the FASB issued FSP Accounting Principles Board Opinion No. 14-1, "Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)" ("FSP 14-1"). FSP 14-1 requires -32- issuers of convertible debt instruments that may be settled in cash to separately account for the liability and equity components in a manner that will reflect the entity's nonconvertible debt borrowing rate when interest cost is recognized in periods subsequent to adoption. Upon adoption of FSP 14-1, we will allocate a portion of the proceeds received from the issuance of convertible notes between a liability and equity component by determining the fair value of the liability component using our non-convertible debt borrowing rate. The difference between the proceeds of the notes and the fair value of the liability component will be recorded as a discount on the debt with a corresponding offset to paid-in-capital. The resulting discount will be accreted by recording additional non-cash interest expense over the expected life of the convertible notes using the effective interest rate method. The provisions of FSP 14-1 are to be applied retrospectively to all periods presented upon adoption and are effective for fiscal years beginning after December 15, 2008 and interim periods within those fiscal years. Management has not determined the effect that adopting this statement would have on our financial position, cash flows or results of operations. -33- ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA GENEVA RESOURCES, INC. (AN EXPLORATION STAGE COMPANY) FINANCIAL STATEMENTS MAY 31, 2009 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM BALANCE SHEETS STATEMENTS OF OPERATIONS STATEMENT OF STOCKHOLDERS' EQUITY STATEMENTS OF CASH FLOWS NOTES TO FINANCIAL STATEMENTS REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM -34- DeJoya Griffith & Company, LLC __________________________________________ CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To The Board of Directors and Stockholders Geneva Resources, Inc. Carson City, Nevada We have audited the accompanying balance sheets of Geneva Resources, Inc. (An Exploration Stage Company) as of May 31, 2009 and 2008, and the related statements of operations, stockholders' deficit, and cash flows for the years then ended and from inception (April 5, 2004) to May 31, 2009. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements based on our audit. We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Geneva Resources, Inc. (An Exploration Stage Company) as of May 31, 2009 and 2008, and the results of their operations and cash flows for the years then ended and from inception (April 5, 2004) to May 31, 2009 in conformity with accounting principles generally accepted in the United States. The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations, which raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. DE JOYA GRIFFITH & COMPANY, LLC /s/ DE JOYA GRIFFITH & COMPANY, LLC _______________________________ DeJoya Griffith & Company, LLC Henderson, Nevada August 26, 2009 ________________________________________________________________________________ 2580 Anthem Village Drive, Henderson, NV 89052 Telephone (702) 563-1600 * Facsimile (702) 920-8049 -35- GENEVA RESOURCES, INC. (AN EXPLORATION STAGE COMPANY) BALANCE SHEETS May 31, 2009 May 31, 2008 (Audited) (Audited) _______________________________________________________________________________ ASSETS CURRENT ASSETS Cash $ 2,075 $ 9,356 Available for sale securities (Note 3 (b)) 55,000 - Other receivable - 270,000 _______________________________________________________________________________ TOTAL CURRENT ASSETS 57,075 279,356 Deposit on property 165,010 165,010 _______________________________________________________________________________ TOTAL ASSETS $ 222,085 $ 444,366 =============================================================================== LIABILITIES AND STOCKHOLDERS' DEFICIT CURRENT LIABILITIES Accounts payable and accrued liabilities $ 215,591 $ 230,304 Shareholder's loan and accrued interest (Note 7) 1,987,899 1,287,602 _______________________________________________________________________________ TOTAL CURRENT LIABILITIES 2,203,490 1,517,906 TOTAL LIABILITIES 2,203,490 1,517,906 _______________________________________________________________________________ GOING CONCERN CONTINGENCY AND COMMITMENTS (Notes 1 and 8) STOCKHOLDERS' DEFICIT Capital stock (Note 4) Authorized 200,000,000 shares of common stock, $0.001 par value, Issued and outstanding 38,536,862 shares of common stock (May 31, 2008 -38,136,862) 38,537 38,137 Additional paid-in capital 5,025,879 4,626,279 Private placement subscriptions - 400,000 Accumulated other comprehensive loss (215,000) - Deficit accumulated during the exploration stage (6,830,821) (6,137,956) _______________________________________________________________________________ TOTAL STOCKHOLDERS' DEFICIT (1,981,405) (1,073,540) _______________________________________________________________________________ TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 222,085 $ 444,366 =============================================================================== The accompanying notes are an integral part of these financial statements -36- GENEVA RESOURCES, INC. (AN EXPLORATION STAGE COMPANY) STATEMENTS OF OPERATIONS April 5, 2004 Year ended Year ended (inception) to May 31, 2009 May 31, 2008 May 31, 2009 ____________________________________________________________________________________________________ REVENUE $ - $ - $ 46,974 ____________________________________________________________________________________________________ DIRECT COSTS - - 56,481 ____________________________________________________________________________________________________ GROSS MARGIN (LOSS) - - (9,507) ____________________________________________________________________________________________________ GENERAL AND ADMINISTRATIVE EXPENSES Office and general 16,770 58,506 143,695 Consulting fees 178,907 140,000 696,934 Marketing expenses - 18,495 894,738 Management fees - 475,500 1,241,406 Mineral property expenditures (Note 3) 90,000 550,452 8,258,312 Professional fees 276,891 383,585 957,614 ____________________________________________________________________________________________________ TOTAL GENERAL & ADMINISTRATION EXPENSES (562,568) (1,626,538) (12,192,699) ____________________________________________________________________________________________________ NET OPERATING LOSS (562,568) (1,626,538) (12,202,206) ____________________________________________________________________________________________________ OTHER INCOME (EXPENSES) Gain on extinguishment of accrued liability (Note 9) 30,000 - 30,000 Net gain on settlements - 5,590,784 5,590,784 Interest expense (160,297) (77,712) (249,399) ____________________________________________________________________________________________________ TOTAL OTHER INCOME (EXPENSE) (130,297) 5,513,072 5,371,385 ____________________________________________________________________________________________________ NET INCOME (LOSS) (692,865) 3,886,534 (6,830,821) ____________________________________________________________________________________________________ COMPREHENSIVE LOSS Change in market value of available for sale securities (215,000) - (215,000) ____________________________________________________________________________________________________ COMPREHENSIVE LOSS $ (907,865) $ 3,886,534 $ (7,045,821) ==================================================================================================== INCOME (LOSS) PER COMMON SHARE - BASIC $ (0.02) $ 0.10 ================================================================================ INCOME (LOSS) PER COMMON SHARE - DILUTED $ (0.02) $ 0.10 ================================================================================ COMPREHENSIVE LOSS PER COMMON SHARE - BASIC $ (0.01) $ 0.10 ================================================================================ COMPREHENSIVE LOSS PER COMMON SHARE - DILUTED $ (0.01) $ 0.10 ================================================================================ WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC 38,428,369 40,377,652 ================================================================================ WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - DILUTED 38,428,369 40,798,515 ================================================================================ The accompanying notes are an integral part of these financial statements -37- GENEVA RESOURCES, INC. (AN EXPLORATION STAGE COMPANY) STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) FOR THE PERIOD FROM APRIL 5, 2004 (INCEPTION) TO MAY 31, 2009 Deficit Common Stock Accumulated Accumulated _____________________ Additional Private Other During the Number of Amount Paid-in Placement Comprehensive Development shares Capital Subscriptions loss Stage Total ________________________________________________________________________________________________________________________________ Shares issued for cash - at $0.0004 per share, April 5, 2004 23,100,000 $ 138 $ 9,029 $ - $ - $ - $ 9,167 Net loss for the period - - - - - (5,427) (5,427) ________________________________________________________________________________________________________________________________ Balance, May 31, 2004 23,100,000 138 9,029 - - (5,427) 3,740 Shares issued for cash - at $0.00238 per share, November 30, 2004 27,300,000 162 64,838 - - - 65,000 Net loss for the period - - - - - (66,246) (66,246) ________________________________________________________________________________________________________________________________ Balance, May 31, 2005 50,400,000 300 73,867 - - (71,673) 2,494 Shares issued for cash - at $0.00595 per share, December 8, 2005 16,800,000 100 99,900 - - - 100,000 Reclassification for stock split - May 1, 2006 (Note 4) - 16,400 (16,400) - - - - Net loss for the period - - - - - (65,081) (65,081) ________________________________________________________________________________________________________________________________ Balance, May 31, 2006 67,200,000 16,800 157,367 - - (136,754) 37,413 Shares returned to treasury - September 27, 2006 (30,000,000) - - - - - - Reclassification for stock split, - December 1, 2006 (Note 4) - 20,400 (20,400) - - - - Shares issued for Property Option Agreement - December 1, 2006 (Note 3 & 4) 4,000,000 4,000 7,396,000 - - - 7,400,000 Stock based compensation (Note 5) - - 965,671 - - - 965,671 Net loss for the period - - - - - (9,887,736) (9,887,736) ________________________________________________________________________________________________________________________________ Balance, May 31, 2007 41,200,000 41,200 8,498,638 - - (10,024,490) (1,484,652) Shares issued for Property Option Agreements - October 15, 2007 and January 31, 2008 (Note 3 & 4) 60,000 60 79,940 - - - 80,000 Subscription proceeds received (Note 4) - - - 400,000 - - 400,000 Shares returned pursuant to Petaquilla settlement - March 14, 2008 (Note 3 & 4) (4,000,000) (4,000) (5,436,000) - - - (5,440,000) Shares issued for debt settlement - at $1.00 per share, May 29, 2008 (Note 4) 876,862 877 1,095,201 - - - 1,096,078 Stock based compensation (Note 5) - - 388,500 - - - 388,500 Net income for the period - - - - - 3,886,534 3,886,534 ________________________________________________________________________________________________________________________________ Balance, May 31, 2008 38,136,862 $38,137 $4,626,279 $ 400,000 $ - $(6,137,956) $(1,073,540) ________________________________________________________________________________________________________________________________ Shares issued for cash at $1.00 per share - September 9, 2008 400,000 400 399,600 (400,000) - - - Unrealized loss on marketable securities - - - - (215,000) (215,000) Net loss - - - - - (692,865) (692,865) ________________________________________________________________________________________________________________________________ Balance, May 31, 2009 (audited) 38,536,862 $38,537 $5,025,879 $ - $(215,000) $(6,830,821) $(1,981,405) ================================================================================================================================ The accompanying notes are an integral part of these financial statements -38- GENEVA RESOURCES, INC. (AN EXPLORATION STAGE COMPANY) STATEMENTS OF CASH FLOWS April 5, 2004 Year ended Year ended (inception) to May 31, 2009 May 31, 2008 May 31, 2009 _____________________________________________________________________________________________ CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) for the period $ (692,865) $ 3,886,534 $ (6,830,821) Adjustments to reconcile net loss to net cash used in operating activities: Non-cash mineral property expenditures (recoveries) - 15,000 7,415,000 Non-cash net gain on settlement - (5,490,784) (5,490,784) Non-cash gain on extinguishment of accrued liability (30,000) (30,000) Stock-based compensation - 388,500 1,354,171 Changes in operating assets and liabilities: Increase in deposits - (100,010) (100,010) Accrued interest on shareholder's loan 160,297 77,712 249,399 Due to related parties - 69,000 116,500 Accounts payable and accrued liabilities 15,287 (37,345) 1,005,953 _____________________________________________________________________________________________ NET CASH USED IN OPERATING ACTIVITIES (547,281) (1,191,393) (2,310,592) _____________________________________________________________________________________________ CASH FLOWS FROM FINANCING ACTIVITIES Proceeds on sale and subscriptions of common stock - 400,000 574,167 Proceeds from shareholder advances 540,000 795,000 1,738,500 _____________________________________________________________________________________________ NET CASH PROVIDED BY FINANCING ACTIVITIES 540,000 1,195,000 2,312,667 _____________________________________________________________________________________________ NET INCREASE (DECREASE) IN CASH (7,281) 3,607 2,075 CASH, BEGINNING 9,356 5,749 - _____________________________________________________________________________________________ CASH, ENDING $ 2,075 $ 9,356 $ 2,075 ============================================================================================= SUPPLEMENTAL CASH FLOW INFORMATION AND NONCASH INVESTING AND FINANCING ACTIVITIES Cash paid during the period for: Interest $ - $ - $ - ============================================================================================= Income taxes $ - $ - $ - ============================================================================================= Shares issued for settlement of liability $ - $ 1,096,078 $ 1,096,078 ============================================================================================= Shares issued as deposit on option to purchase in mineral properties $ - $ 65,000 $ 65,000 ============================================================================================= Other receivable due (received) in shares $ (270,000) $ 270,000 $ - ============================================================================================= The accompanying notes are an integral part of these financial statements -39- GENEVA RESOURCES, INC. (AN EXPLORATION STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS MAY 31, 2009 AND 2008 ________________________________________________________________________________ NOTE 1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION ________________________________________________________________________________ The Company was incorporated in the State of Nevada on April 5, 2004. The Company was initially formed to engage in the business of reclaiming and stabilizing land in preparation for construction in the United States of America. On November 27, 2006, the Company filed Articles of Merger with the Secretary of State of Nevada in order to effectuate a merger whereby the Company (as Revelstoke Industries, Inc.) would merge with its wholly-owned subsidiary, Geneva Gold Corp. This merger became effective as of December 1, 2006 and the Company changed its name to Geneva Gold Corp. On March 1, 2007, the Company (Geneva Gold Corp.) merged with its wholly-owned subsidiary, Geneva Resources, Inc., pursuant to Articles of Merger that the Company filed with the Nevada Secretary of State. This merger became effective March 1, 2007 and the Company changed its name to Geneva Resources, Inc. During 2007, the Company entered the business of exploration of precious metals with a focus on the exploration and development of gold deposits in North America and Internationally. During this period the Company entered into Option Agreements to obtain mineral leases in Canada, Panama, Peru and Nigeria. The Company has a fiscal year of May 31. On May 5, 2006, the Company completed a forward stock split by the issuance of 42 new shares for each 1 outstanding share of the Company's common stock. On October 13, 2006, the Company completed a forward stock split by the issuance of 4 new shares for each 1 outstanding share of the Company's stock. GOING CONCERN To date the Company has generated minimal revenues from its business operations and has incurred operating losses since inception of $6,830,821. As at May 31, 2009, the Company has a working capital deficit of $2,146,415. The Company requires additional funding to meet its ongoing obligations and to fund anticipated operating losses. The ability of the Company to continue as a going concern is dependant on raising capital to fund its initial business plan and ultimately to attain profitable operations. Accordingly, these factors raise substantial doubt as to the Company's ability to continue as a going concern. The Company intends to continue to fund its mineral exploration business by way of private placements and advances from related parties as may be required. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ________________________________________________________________________________ RECLASSIFICATION- DUE TO RELATED PARTY Certain reclassifications have been made in the prior year's financial statements. During 2008, the Company had accrued and unpaid an amount $30,000 payable to a former director. During the current year, the Company recorded this as an extinguishment of accrued liabilities. BASIS OF PRESENTATION These financial statements are presented in United States dollars and have been prepared in accordance with generally accepted accounting principles in the United States of America. USE OF ESTIMATES AND ASSUMPTIONS Preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the period. Accordingly, actual results could differ from those estimates. MINERAL PROPERTY EXPENDITURES The Company is primarily engaged in the acquisition, exploration and development of mineral properties. Mineral property acquisition costs are capitalized in accordance with EITF 04-2 when management has determined that probable future benefits consisting of a contribution to future cash inflows have been identified and adequate financial resources are available or are expected to be available as required to meet the terms of property acquisition and budgeted exploration and development expenditures. Mineral property acquisition costs are expensed as incurred if the criteria for capitalization are not met. In the event that mineral property -40- GENEVA RESOURCES, INC. (AN EXPLORATION STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS MAY 31, 2009 AND 2008 ________________________________________________________________________________ NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) ________________________________________________________________________________ acquisition costs are paid with Company shares, those shares are recorded at the estimated fair value at the time the shares are due in accordance with the terms of the property agreements. Mineral property exploration costs are expensed as incurred. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves and pre-feasibility, the costs incurred to develop such property are capitalized. Estimated future removal and site restoration costs, when determinable are provided over the life of proven reserves on a units-of-production basis. Costs, which include production equipment removal and environmental remediation, are estimated each period by management based on current regulations, actual expenses incurred, and technology and industry standards. Any charge is included in exploration expense or the provision for depletion and depreciation during the period and the actual restoration expenditures are charged to the accumulated provision amounts as incurred. As of the date of these financial statements, the Company has incurred only property option payments and exploration costs which have been expensed. To date the Company has not established any proven or probable reserves on its mineral properties. ASSET RETIREMENT OBLIGATIONS The Company has adopted the provisions of SFAS No. 143 "Accounting for Asset Retirement Obligations," which establishes standards for the initial measurement and subsequent accounting for obligations associated with the sale, abandonment or other disposal of long-lived tangible assets arising from the acquisition, construction or development and for normal operations of such assets. The adoption of this standard has had no effect on the Company's financial position or results of operations. As of May 31, 2009, any potential costs relating to the ultimate disposition of the Company's mineral property interests are not yet determinable. INCOME TAXES The Company follows the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax balances. Deferred tax assets and liabilities are measured using enacted or substantially enacted tax rates expected to apply to the taxable income in the years in which those differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment or substantive enactment. As at May 31, 2009, the Company had net operating loss carryforwards, however, due to the uncertainty of realization, the Company has provided a full valuation allowance for the deferred tax assets resulting from these loss carryforwards. Deferred income taxes are reported for timing differences between items of income or expense reported in the financial statements and those reported for income tax purposes in accordance with SFAS No. 109, "Accounting for Income Taxes," which requires the use of the asset/liability method of accounting for income taxes. Deferred income taxes and tax benefits are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for tax loss and credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company provides for deferred taxes for the estimated future tax effects attributable to temporary differences and carry-forwards when realization is more likely than not. AVAILABLE FOR SALE SECURITIES The Company holdings in marketable securities classified as available-for-sale are carried at fair value. The carrying value of marketable securities is reviewed each reporting period for declines in value that are considered to be other-than temporary and, if appropriate, the investments are written down to their estimated fair value. Realized gains and losses and declines in value judged to be other-than-temporary on available for sale securities are included in the Company's statements of operations. Unrealized gains and unrealized losses deemed temporary are included in accumulated other comprehensive income (loss). -41- GENEVA RESOURCES, INC. (AN EXPLORATION STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS MAY 31, 2009 AND 2008 ________________________________________________________________________________ NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) ________________________________________________________________________________ NET INCOME (LOSS) PER SHARE The Company computes income (loss) per share in accordance with SFAS No. 128, "Earnings per Share" which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic income (loss) per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted income (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. FOREIGN CURRENCY TRANSLATION The financial statements are presented in United States dollars. In accordance with SFAS No. 52, "Foreign Currency Translation", foreign denominated monetary assets and liabilities are translated to their United States dollar equivalents using foreign exchange rates which prevailed at the balance sheet date. Revenue and expenses are translated at average rates of exchange during the period. Related translation adjustments are reported as a separate component of stockholders' equity, whereas gains or losses resulting from foreign currency transactions are included in results of operations. To May 31, 2009, the Company has not recorded any translation adjustments into stockholders' equity. STOCK-BASED COMPENSATION On June 1, 2006, the Company adopted the fair value recognition provisions of Financial Accounting Standards Board ("FASB") Statement No. 123(R), SHARE-BASED PAYMENT, ("SFAS 123(R)"). The Company adopted SFAS 123(R) using the modified-prospective-transition method. Under this method, compensation cost recognized for the year ended May 31, 2007 includes: a) compensation cost for all share-based payments granted prior to, but not yet vested as of May 31, 2006, based on the grant-date fair value estimated in accordance with the original provisions of SFAS 123, and b) compensation cost for all share-based payments granted subsequent to May 31, 2006, based on the grant-date fair value estimated in accordance with the provisions of SFAS 123(R). In addition, deferred stock compensation related to non-vested options is required to be eliminated against additional paid-in capital upon adoption of SFAS 123(R). The results for the prior periods were not restated. The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with SFAS No. 123(R) and the conclusions reached by the Emerging Issues Task Force ("EITF") in Issue No. 96-18. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by EITF 96-18. FAIR VALUE OF FINANCIAL INSTRUMENTS In accordance with the requirements of SFAS No. 107, the Company has determined the estimated fair value of financial instruments using available market information and appropriate valuation methodologies. The fair value of financial instruments classified as current assets or liabilities approximate their carrying value due to the short-term maturity of the instruments. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS In June 2009, the FASB issued SFAS No. 168, "The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles--a replacement of FASB Statement No. 162" ("SFAS 168"). SFAS 168 replaces SFAS No. 162, THE HIERARCHY OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, and establishes the FASB Accounting Standards Codification ("Codification") as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with GAAP. Rules and interpretive releases of the Securities and Exchange Commission ("SEC") under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. The FASB will no longer issue new standards in the form of Statements, FASB Staff Positions, or Emerging Issues Task Force Abstracts; instead the FASB will issue Accounting Standards Updates. Accounting Standards Updates will not be authoritative in their own right as they will only serve to update the Codification. The issuance of SFAS 168 and the Codification does not change GAAP. SFAS 168 becomes effective for interim and annual periods ending after September 15, 2009. Management does not expect the adoption of SFAS 168 to have a material impact on the Company's financial position, cash flows and results of operations. -42- GENEVA RESOURCES, INC. (AN EXPLORATION STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS MAY 31, 2009 AND 2008 ________________________________________________________________________________ NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) ________________________________________________________________________________ RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (CONTINUED) In June 2009, the FASB issued SFAS No. 167, "Amendments to FASB Interpretation No. 46(R)," ("SFAS 167"). The amendments include: (1) the elimination of the exemption for qualifying special purpose entities, (2) a new approach for determining who should consolidate a variable-interest entity, and (3) changes to when it is necessary to reassess who should consolidate a variable-interest entity. SFAS 167 is effective for the first annual reporting period beginning after November 15, 2009 and for interim periods within that first annual reporting period. The Company will adopt SFAS 167 in fiscal 2010. The Company does not expect that the adoption of SFAS 167 will have a material impact on the financial statements. In June 2009, the FASB issued SFAS No. 166, "Accounting for Transfers of Financial Assets, an amendment to SFAS No. 140," ("SFAS 166"). SFAS 166 eliminates the concept of a "qualifying special-purpose entity," changes the requirements for derecognizing financial assets, and requires additional disclosures in order to enhance information reported to users of financial statements by providing greater transparency about transfers of financial assets, including securitization transactions, and an entity's continuing involvement in and exposure to the risks related to transferred financial assets. SFAS 166 is effective for fiscal years beginning after November 15, 2009. The Company will adopt SFAS 166 in fiscal 2010. The Company does not expect that the adoption of SFAS 166 will have a material impact on the financial statements. In June 2009, the FASB issued SFAS No. 165, "Subsequent Events," ("SFAS No. 165"). SFAS 165 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. SFAS 165 applies to both interim financial statements and annual financial statements. SFAS 165 is effective for interim or annual financial periods ending after June 15, 2009. SFAS 165 does not have a material impact on our financial statements. In May 2008, the FASB issued SFAS No. 163, "Accounting for Financial Guarantee Insurance Contracts" ("SFAS 163"). SFAS 163 clarifies how SFAS 60, ACCOUNTING AND REPORTING BY INSURANCE ENTERPRISES applies to financial guarantee insurance contracts issued by insurance enterprises, including the recognition and measurement of premium revenue and claim liabilities. It also requires expanded disclosures about financial guarantee insurance contracts. SFAS 163 is effective for the Company's interim period commencing June 1, 2009, except for disclosures about an insurance enterprise's risk-management activities, which were effective for the Company's interim period commencing June 1, 2008. Management does not expect the adoption of SFAS 163 to have a material impact on the Company's financial position, cash flows and results of operations. In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities" ("SFAS 161"). SFAS 161 is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity's financial position, financial performance, and cash flows. SFAS 161 achieves these improvements by requiring disclosure of the fair values of derivative instruments and their gains and losses in a tabular format. It also provides more information about an entity's liquidity by requiring disclosure of derivative features that are credit risk-related. Finally, it requires cross-referencing within footnotes to enable financial statement users to locate important information about derivative instruments. SFAS 161 will be effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008 and will be adopted by the Company beginning in the first quarter of fiscal 2010. Management has not determined the effect that adopting this statement would have on the Company's financial position, cash flows or results of operations. In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interest in Consolidated Financial Statements, an amendment of ARB No. 51" ("SFAS No. 160"), which will change the accounting and reporting for minority interests and will be recharacterized as noncontrolling interests and classified as a component of equity within the consolidated balance sheets. SFAS No. 160 is effective as of the beginning of an entity's first fiscal year beginning on or after December 15, 2008. Earlier adoption is prohibited. Management has not determined the effect that adopting this statement would have on the Company's financial position, cash flows or results of operations. In December 2007, the FASB issued SFAS No. 141 (Revised 2007), "Business Combinations" ("SFAS No. 141R"). SFAS No. 141R will change the accounting for business combinations. Under SFAS No. 141R, an acquiring entity will be required to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. SFAS No. 141R will change the accounting treatment and disclosure for certain specific items in a -43- GENEVA RESOURCES, INC. (AN EXPLORATION STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS MAY 31, 2009 AND 2008 ________________________________________________________________________________ NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) ________________________________________________________________________________ RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (CONTINUED) business combination. SFAS No. 141R applies prospectively to business combinations for which the acquisition date is on or after the beginning of the entity's first annual reporting period beginning on or after December 15, 2008. Accordingly, any business combinations completed by the Company prior to June 1, 2009 will be recorded and disclosed following existing GAAP. Management has not determined the effect that adopting this statement would have on the Company's financial position, cash flows or results of operations. In September 2006, FASB issued SFAS No. 157, "Fair Value Measurements" ("SFAS No. 157"). This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), expands disclosures about fair value measurements, and applies under other accounting pronouncements that require or permit fair value measurements. SFAS No. 157 does not require any new fair value measurements. However, the FASB anticipates that for some entities, the application of SFAS No. 157 will change current practice. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, which for the Company is the fiscal year beginning June 1, 2008. The Company has determined that the adoption of SFAS No. 157 during the year did not have any material impact on the Company's financial position, cash flows or results of operations as the Company's available for sale securities would otherwise have been carried at fair value in accordance with SFAS No. 115, ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY SECURITIES. The following disclosures are required by SFAS No. 157 in connection with assets and liabilities whose carrying amounts are subject to fair value measures: Fair Value Measurements at May 31, 2009 ______________________________________________________________ Quoted Prices in Significant Other Significant Other Active Market Observable Inputs Unobservable Inputs May 31, 2009 (Level 1) (Level 2) (Level 3) ______________________________________________________________________________________________________ Available for sale securities $ 55,000 $ 55,000 $ - $ - ______________________________________________________________________________________________________ Total $ 55,000 $ 55,000 $ - $ - ====================================================================================================== In connection with the Company's available for sale securities, to May 31, 2009, no realized or unrealized gains and losses have been recorded in operations and all unrealized gains and losses have been recorded as components of accumulated other comprehensive income (loss). NOTE 3 -MINERAL EXPLORATION PROPERTIES ________________________________________________________________________________ (A) VILCORO GOLD PROPERTY On February 23, 2007, the Company entered into a Property Option Agreement with St. Elias Mines Ltd., ("St. Elias") a publicly traded company on the TSX-V exchange, to acquire not less than an undivided 66% legal, beneficial and registerable interest in certain mining leases in Peru comprised of approximately 600 hectares in Peru. On December 1, 2007, the Company entered into an extension agreement with St. Elias (the "December Extension Agreement"). The December Extension Agreement (i) acknowledges that in accordance with the terms and provisions of the Property Option Agreement, the Company must incur and pay exploration expenditures of not less than $500,000 prior to January 17, 2008, and (ii) provides an extension until March 31, 2008 to incur and pay such Exploration Expenditures. On June 4, 2008, an indefinite extension was granted by St. Elias to pay such Exploration Expenditures, based on the Operator's work on schedule. Under the terms of the Property Option Agreement, and in order to exercise its Option to acquire the properties, the Company is required to make the following non-refundable cash payments to St. Elias totaling $350,000 in the following manner: -44- GENEVA RESOURCES, INC. (AN EXPLORATION STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS MAY 31, 2009 AND 2008 ________________________________________________________________________________ NOTE 3 -MINERAL EXPLORATION PROPERTIES (CONTINUED) ________________________________________________________________________________ (A) VILCORO GOLD PROPERTY (CONTINUED) 1. Payment of $50,000 in cash (paid). 2. The second payment of $100,000 cash and 50,000 shares of the Company's common stock are due on or before the twelve-month anniversary of the signing of the Property Option Agreement (paid). 3. The third payment of $200,000 cash is due on or before the twenty-fourth-month anniversary of the signing of the Property Option Agreement. The Company is also required to incur costs totaling $2,500,000 as follows: 1. expenditures of $500,000 are to be incurred on or before the twelve month anniversary (subsequently indefinitely extended as described above) of the signing of the Property Option Agreement. ($551,000 was incurred from the inception of the agreement through May 31, 2009) 2. expenditures of $750,000 are to be incurred on or before the twenty-fourth-month anniversary of the signing of the Property Option Agreement; and 3. expenditures of $1,250,000 are to be incurred on or before the thirty-sixth-month anniversary of the signing of the Property Option Agreement. Also under the terms of the Property Option Agreement, St. Elias will be the operator of the properties and will receive an 8% operator fee on all exploration expenditures. Once the Company exercises the Option, the Company agrees to pay 100% of all ongoing exploration, development and production costs until commercial production and the Company has the right to receive 100% of any cash flow from commercial production of the properties until it has recouped its production costs, after which the cash flow will be allocated 66% to the Company and 34% to St. Elias. On November 10, 2008, the Company commenced legal proceedings in the Supreme Court of British Columbia, Canada against each of St. Elias and John Brophy P. Geol. The Company is seeking rescission of the property option agreement and the return of all funds and shares advanced by the Company to St. Elias. The Company alleges that St. Elias failed to properly discharge its duty as an operator of the Vilcoro Property and also alleges that each of St. Elias and John Brophy failed to provide the Company complete and accurate information relating to the ownership of the Vilcoro Property and to the ownership of the adjacent property, including failing to disclose that John Brophy and his wife had an interest in the Vilcoro Property and the adjacent property. The Company also has alleged that St. Elias used some of the exploration funds provided by the Company to fund the exploration of the adjoining property. A statement of Defense was filed by St. Elias and John Brophy on December 23, 2008, denying the majority of the allegations made by Geneva Resources. In addition St. Elias and John Brophy also filed a counter claim against Geneva for abuse of process and punitive damages. All allegations of Geneva, St. Elias and John Brophy remain to be proved in Court. During the period, the Company recorded a mineral property recovery of $50,000 in connection with the return of funds originally paid into trust to fund exploration activities. (B) SAN JUAN PROPERTY On November 16, 2006, the Company entered into a Property Option Agreement with Petaquilla Minerals Ltd ("Petaquilla"). Petaquilla therein granted the Company the sole and exclusive option to acquire up to a 70% undivided interest in and to five exploration concessions situated in the Republic of Panama owned and controlled by Petaquilla's wholly-owned subsidiary. During 2007, certain disputes arose between the Company and Petaquilla which were resolved during 2008 by way of a settlement agreement (the "Settlement"), mutual release and the ultimate termination of the original option agreement. Pursuant to the terms of the Settlement: (i) Petaquilla shall issue 100,000 shares of its common stock to the Company, subject to pooling and release in four equal monthly tranches commencing no later than December 31, 2008 and certain other conditions, (ii) the 4,000,000 shares of the restricted common stock previously issued by the Company to Petaquilla shall be returned to the Company; and (iii) the $100,000 previously paid by the Company in order to exercise the initial portion of the Option shall be returned to the Company. -45- GENEVA RESOURCES, INC. (AN EXPLORATION STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS MAY 31, 2009 AND 2008 ________________________________________________________________________________ NOTE 3 -MINERAL EXPLORATION PROPERTIES (CONTINUED) ________________________________________________________________________________ (B) SAN JUAN PROPERTY (CONTINUED) As of May 31, 2008, the Company had received $100,000 and the return of the 4,000,000 restricted shares of the Company's common stock with an estimated fair value of $5,440,000. In addition, the Company recorded the 100,000 common shares of Petaquilla, with an estimated fair value of $270,000, as accounts receivable as of May 31, 2008. The total proceeds of $5,810,000 was included in amounts recorded as gain on settlements during 2008. During the year the Company received the 100,000 common shares receivable from Petaquilla, previously valued at $270,000. The 100,000 shares received had an estimated fair value of $55,000 ($0.55 per share) as of May 31, 2009. NOTE 4 - STOCKHOLDERS' DEFICIT ________________________________________________________________________________ The Company's capitalization is 200,000,000 common shares with a par value of $0.001 per share. On January 12, 2007, shareholders consented to increase the authorized share capital of the Company from 50,000,000 shares of common stock to 200,000,000 shares of common stock with the same par value of $0.001 per share. On May 1, 2006, a majority of shareholders and the directors of the Company approved a special resolution to undertake a forward stock split of the common stock of the Company on a 42 new shares for 1 old share basis whereby 16,400,000 common shares were issued pro-rata to shareholders of the Company as of the record date on May 1, 2006. On September 27, 2006, four founding shareholders returned 30,000,000 of their restricted founders' shares, previously issued at prices ranging from $0.0004 - $0.00225 per share, to treasury and the shares were subsequently cancelled by the Company. The shares were returned to treasury for no consideration to the founding shareholders. On October 13, 2006, a majority of the Board of Directors approved by way of a stock dividend to undertake a forward stock split of the common stock of the Company on a 4 new shares for 1 old share basis whereby 27,900,000 common shares were issued pro-rata to shareholders of the Company as of October 13, 2006. All references in these financial statements to number of common shares, price per share and weighted average number of common shares outstanding prior to the 42:1 forward split and the 4:1 forward split have been adjusted to reflect these stock splits on a retroactive basis, unless otherwise noted. On December 1, 2006, the Company issued 4,000,000 common shares valued at $7,400,000 in connection with the San Juan Property Option Agreement In August 2007, the Company received $400,000 towards a planned private placement of Units to be offered at $1.00 per unit with each unit consisting of one common share and one warrant to acquire an additional common shares, exercisable at $1.50 for twelve months. On February 29, 2008, the Company changed the terms of the planned private placement of Units now to be offered at $1.00 per unit with each unit consisting of one common share only. The 400,000 shares were issued on September 9, 2008. On October 15, 2007, the Company issued 10,000 common shares with a fair value of $15,000 as a finder's fee payment in connection with the Vilcoro Gold Property Option Agreement. On January 31, 2008, the Company issued 50,000 common shares to St. Elias Mines Ltd. with a fair value of $65,000 in connection with the Vilcoro Gold Property Option Agreement (Refer Note 3a). On March 14, 2008, the Company returned to treasury the 4,000,000 common shares with a fair value of $5,440,000 in connection with the settlement with Petaquilla (Refer to Note 3b). On May 29, 2008, the Company issued 86,500 common shares at $1.25 per share totaling $108,125, in settlement of $86,500 in debt owed by the Company to the president of the Company (Refer to Note 6), resulting in a $21,625 loss on the debt settlement. -46- GENEVA RESOURCES, INC. (AN EXPLORATION STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS MAY 31, 2009 AND 2008 ________________________________________________________________________________ NOTE 4 - STOCKHOLDERS' DEFICIT (CONTINUED) ________________________________________________________________________________ On May 29, 2008, the Company issued 790,362 common shares at $1.25 per share totaling $987,953, in settlement of $790,362 in debt owed by the Company to a supplier of the Company, resulting in a $197,591 loss on the debt settlement. On September 9, 2008, the Company issued 400,000 common shares at $1.00 per share for proceeds of $400,000 which were received during the year ended May 31, 2008. NOTE 5 - STOCK OPTION PLAN ________________________________________________________________________________ On May 9, 2007, the Board of Directors of the Company ratified, approved and adopted a Stock Option Plan for the Company in the amount of 5,000,000 shares with an exercisable period up to 10 years. In the event an optionee ceases to be employed by or to provide services to the Company for reasons other than cause, any Stock Option that is vested and held by such optionee may be exercisable within up to ninety calendar days after the effective date that his position ceases. No Stock Option granted under the Stock Option Plan is transferable. Any Stock Option held by an optionee at the time of his death may be exercised by his estate within one year of his death or such longer period as the Board of Directors may determine. On May 9, 2007, the Board of Directors of the Company ratified and approved under the Company's existing Stock Option Plan the issuance of 1,500,000 shares for ten years at $1.00 per share. On May 9, 2007, the Company granted 1,500,000 stock options to officers, directors and consultants of the Company at $1.00 per share. The term of these options are ten years. The total fair value of these options at the date of grant was $965,671, and was estimated using the Black-Scholes option pricing model with an expected life of 10 years, a risk free interest rate of 4.49%, a dividend yield of 0% and expected volatility of 164% and was recorded as a stock based compensation expense in the year ended May 31, 2007. On April 28, 2008, the Company granted 350,000 stock options to a director of the Company at $1.20 per share. The term of these options are ten years. The total fair value of these options at the date of grant was $388,500 and was estimated using the Black-Scholes option pricing model with an expected life of 10 years, a risk free interest rate of 3.86%, a dividend yield of 0% and expected volatility of 126% and has been recorded as a stock based compensation expense in the year ended May 31, 2008. A summary of the Company's stock options as of May 31, 2009, and changes during the year then ended is presented below: Weighted Weighted average average remaining exercise Contractual Number of Price per life Options share (in years) _______________________________________________________________________ OUTSTANDING AT MAY 31, 2007 1,500,000 $ 1.00 9.94 Granted during the year 350,000 1.20 - Exercised during the year - - - _______________________________________________________________________ OUTSTANDING AT MAY 31, 2008 1,850,000 1.04 9.12 Granted during the year - - - Exercised during the year - - - _______________________________________________________________________ OUTSTANDING AT MAY 31, 2009 1,850,000 $ 1.04 8.12 _______________________________________________________________________ -47- GENEVA RESOURCES, INC. (AN EXPLORATION STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS MAY 31, 2009 AND 2008 ________________________________________________________________________________ NOTE 6 - RELATED PARTY TRANSACTIONS ________________________________________________________________________________ On May 29, 2008, the Company issued 86,500 common shares at $1.25 per share totaling $108,125, in settlement of $86,500 in debt owed by the Company to the president of the Company resulting in a $21,625 loss on the debt settlement. During the year ended May 31, 2009, the Company incurred no management fees to officers and directors (May 31, 2008 - $475,500). The above transactions have been in the normal course of operations and, in management's opinion, undertaken with similar terms and conditions as transactions with unrelated parties. NOTE 7 - SHAREHOLDER'S LOAN ________________________________________________________________________________ On November 14, 2006, a significant shareholder of the Company advanced $100,000 on behalf of the Company regarding a previous property option agreement. Additional advances of $303,500 and $795,000 were received during the years ended May 31, 2007 and May 31, 2008, respectively. During the year ended May 31, 2009, an additional $540,000 was advanced by the same shareholder under the same terms and conditions. These amounts are unsecured, bear interest at 10% per annum, and have no set terms of repayment. The total amount outstanding as of May 31, 2009 including accrued interest is $1,987,899 (May 31, 2008 - $1,287,602). NOTE 8 - INCOME TAXES ________________________________________________________________________________ The Company has adopted the FASB No. 109 for reporting purposes. As of May 31, 2009 and May 31, 2008, the Company had net operating loss carry forwards of approximately $5,480,000 and $4,780,000 respectively that may be available to reduce future years' taxable income through 2029. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carryforwards. The applicable federal and state statutory tax rates used in determining the Company's income tax provisions deferred tax asset are as follows: 2009 2008 ________________________________________________________________________________ Federal income tax provision at statutory rate 35.0% 35.0% States income tax provision at statutory rates, net of federal income tax effect 0.0% 0.0% ________________________________________________________________________________ Total income tax provision 35.0% 35.0% ================================================================================ The actual income tax provisions differ from the expected amounts calculated by applying the combined federal and state corporate income tax rates to the Company's loss before income taxes. The components of these differences are as follows: 2009 2008 ________________________________________________________________________________ Federal net operating income (loss) $ (692,865) $ 3,886,534 Corporate tax rate 35.0% 35.0% ________________________________________________________________________________ Expected tax recovery (expense) 242,503 (1,360,287) Less: Non-deductible stock based compensation - (135,975) Change in valuation allowance (242,503) 1,496,262 ________________________________________________________________________________ Future income tax provision $ - $ - ================================================================================ -48- GENEVA RESOURCES, INC. (AN EXPLORATION STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS MAY 31, 2009 AND 2008 ________________________________________________________________________________ NOTE 8 - INCOME TAXES (CONTINUED) ________________________________________________________________________________ The Company's deferred tax assets are as follows: 2009 2008 ________________________________________________________________________________ Deferred tax assets Net operating loss carry forwards $ 1,916,828 $ 1,674,325 ________________________________________________________________________________ Total deferred tax assets 1,916,828 1,674,325 Valuation allowance (1,916,828) (1,674,325) ________________________________________________________________________________ Net deferred tax assets $ - $ - ================================================================================ The valuation allowance for deferred tax assets as of May 31, 2009 and May 31, 2008 was $1,916,828 and $1,674,325, respectively. In assessing the recovery of the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the periods in which those temporary differences become deductible. Management considers the scheduled reversals of future deferred tax assets, projected future taxable income, and tax planning strategies in making this assessment. As a result, management determined it was more likely than not the deferred tax assets would be realized as of May 31, 2009 and May 31, 2008. NOTE 9 - OTHER ________________________________________________________________________________ During 2009, the Company recorded an extinguishment of accrued liabilities of $30,000 relating to amounts previously accrued and unpaid to a former director, which management of the Company had determined such amounts are no longer owed. -49- ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None ITEM 9A. CONTROLS AND PROCEDURES EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES EVALUATION OF DISCLOSURE AND PROCEDURES As of May 31, 2009 which is the end of the fiscal period covered by this Annual Report, our Chief Executive Officer and Chief Financial Officer reviewed and evaluated the effectiveness of our disclosure controls and procedures, as defined in Exchange Act Rule 13a-15(e) and 15d-15(e). As of the end of the fiscal period covered by this Annual Report, based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective in ensuring that material information that we must disclose in our reports that we file or submit under the Securities Exchange Act of 1934, as amended, the "Exchange Act", is recorded, processed, summarized, and reported on a timely basis, and that information required to be disclosed by us in our reports that we file or submit under the Exchange Act is accumulated and communicated to our Chief Executive Officer and Chief Financial Officer as appropriate to allow timely decisions regarding required disclosure. MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Under the supervision and with the participation of our management, including the chief executive officer and chief financial officer, we evaluated the effectiveness of our internal control over financial reporting as of May 31, 2009. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control-Integrated Framework. This Annual Report does not include an attestation report of our registered public accounting firm De Joya Griffith & Company, LLC., Certified Public Accountants regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management's report in this Annual Report on Form 10-K. INHERENT LIMITATIONS ON EFFECTIVENESS OF CONTROLS We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives, and our Chief Executive Officer and our Chief Financial Officer have concluded that these controls and procedures are effective at the "reasonable assurance" level. -50- CHANGES IN INTERNAL CONTROLS There was no change in our internal control over financial reporting that occurred during this fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. AUDIT COMMITTEE REPORT The Board of Directors has established an audit committee. The members of the audit committee are Mr. Marcus Johnson and Mr. Betrand Taquet, Oone of the two members of the audit committee is "independent" within the meaning of Rule 10A-3 under the Exchange Act. The audit committee was organized on April 25, 2006 and operates under a written charter adopted by our Board of Directors. The audit committee has reviewed and discussed with management our audited financial statements as of and for fiscal year ended May 31, 2009. The audit committee has received and reviewed the written disclosures and the letter from De Joya Griffith & Company, LLC., Certified Public Accountants required by Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees, as amended. Based on the reviews and discussions referred to above, the audit committee has recommended to the Board of Directors that the audited financial statements referred to above be included in our Annual Report on Form 10-K for fiscal year ended May 31, 2009 filed with the Securities and Exchange Commission. ITEM 9B. OTHER INFORMATION Not applicable. ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE IDENTIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS NAME AGE POSITION WITH THE COMPANY Marcus Johnson 60 President/Chief Executive Officer and a Director D. Bruce Horton 62 Secretary/Treasurer, Chief Financial Officer and a Director Bertrand Taquet 44 Director -51- BUSINESS EXPERIENCE The following is a brief account of the education and business experience of each director, executive officer and key employee during at least the past five years, indicating each person's principal occupation during the period, and the name and principal business of the organization by which he or she was employed, and including other directorships held in reporting companies. MARCUS JOHNSON. Marcus Johnson has been our President/Chief Executive Officer/Principal Executive Officer and a director since March 2006. For the past ten years, Mr. Johnson has been active in management in both the private and public sectors as a consultant to management with an emphasis on investor relations and awareness. Mr. Johnson has performed consulting services for Intergold Corporation, now known as Lexington Resources, Inc., and Vega-Alantic Corporation, now known as Transax International Limited. Mr. Johnson is a professional architect and a member of the American Institute of Architects. Mr. Johnson has been the professional architectural consultant of record on various commercial projects and is a consultant to Exterior Research & Design LLC, where he is currently retained as an expert for determining architectural management standards. D. BRUCE HORTON. D. Bruce Horton has been our Secretary/Treasurer/Chief Financial Officer and a director since March 2006. During the past five years, Mr. Horton has been active in the financial arena in both the private and public sectors as an accountant and financial management consultant with an emphasis on corporate financial reporting, financing and tax planning. Mr. Horton has specialized in corporate management, re-organization, merger and acquisition, international tax structuring, and public and private financing for over thirty years. From 1972 through 1986, Mr. Horton was a partner in a public accounting firm. In 1986, Mr. Horton co-founded the Clearly Canadian Beverage Corporation, of which he was a director and chief financial officer from June 1986 to May 1997. He is a principal consultant in Calneva Financial Services Ltd. that provides accounting and financial management consulting services as well as investment banking services focusing on venture capital opportunities in Asia. Mr. Horton is also director and audit committee member to Uranium Energy Corp. (since March 2005) and Morgan Creek Energy Corp. BERTRAND TAQUET. Bertrand Taquet has over twenty-five years of experience as an exploration geologist having worked for multiple companies in areas of precious metal mining and exploration and production. From January 2007 through December 2007, Mr. Taquet was the senior geologist for NWT Uranium Corp. where he managed uranium exploration in the Niger and Ungava properties, the Ag Zn property in Mexico and other properties in Quebec, Africa. From approximately April 2005 through November 2006, Mr. Taquet engaged in gold mining and exploration consulting through BT Geoconsult for Auplata S.A.S. (French Guyana), Fancamp -52- Resources (Beauce, Quebec), and Cete Apave (French Guyana). From approximately January 2005 through April 2005, Mr. Taquet engaged in mining projects, feasibility studies and exploitation permit preparation for Auplata S.S.S., French Guyana and South America. From approximately November 1994 through December 2004, Mr. Taquet was involved as a project geologist in various gold and diamond exploration programs with Guyanor Resources Golden Star Resources. Mr. Taquet earned a DEA (equivalent to M.Sc.) in applied geology at USTL, Montpellier, France in 1983. FAMILY RELATIONSHIPS There are no family relationships among our directors or officers. INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS During the past five years, none of our directors, executive officers or persons that may be deemed promoters is or have been involved in any legal proceeding concerning: (i) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (ii) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (iii) being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction permanently or temporarily enjoining, barring, suspending or otherwise limiting involvement in any type of business, securities or banking activity; or (iv) being found by a court, the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law (and the judgment has not been reversed, suspended or vacated). COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT Section 16(a) of the Exchange Act requires our directors and officers, and the persons who beneficially own more than ten percent of our common stock, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Copies of all filed reports are required to be furnished to us pursuant to Rule 16a-3 promulgated under the Exchange Act. Based solely on the reports received by us and on the representations of the reporting persons, we believe that these persons have complied with all applicable filing requirements during the fiscal year ended May 31, 2009. COMMITTEES OF THE BOARD OF DIRECTORS AUDIT COMMITTEE As of the date of this Annual Report, Messrs. Johnson and Taquet have been appointed as members to our Audit Committee. One of the members is "independent" within the meaning of Rule 10A-3 under the Exchange Act. The Audit Committee operates under a written audit committee charter adopted by the Board of Directors on April 25, 2006. The Audit Committee's primary function is to provide advice with respect to our financial matters and to assist the Board of Directors in fulfilling its oversight responsibilities regarding finance, accounting, and legal compliance. The Audit Committee's primary duties and responsibilities will be to: (i) serve as an independent and objective party to monitor our financial reporting process -53- and internal control system; (ii) review and appraise the audit efforts of our independent accountants; (iii) evaluate our quarterly financial performance as well as our compliance with laws and regulations; (iv) oversee management's establishment and enforcement of financial policies and business practices; and (v) provide an open avenue of communication among the independent accountants, management and the Board of Directors. COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT Section 16(a) of the Exchange Act requires our directors and officers, and the persons who beneficially own more than ten percent of our common stock, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Copies of all filed reports are required to be furnished to us pursuant to Rule 16a-3 promulgated under the Exchange Act. Based solely on the reports received by us and on the representations of the reporting persons, we believe that these persons have complied with all applicable filing requirements during the fiscal year ended May 31, 2009. ITEM 11. EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE NON-QUALIFIED NON-EQUITY DEFERRED NAME AND STOCK OPTION INCENTIVE PLAN COMPENSATION ALL OTHER PRINCIPAL SALARY BONUS AWARDS AWARDS COMPENSATION EARNINGS COMPENSATION TOTAL POSITION YEAR ($) ($) ($) ($) (1) ($) ($) ($) ($) ________________________________________________________________________________________________________________________________ Marcus Johnson, President, 2009/2008 $ -0- -0- -0- $ -0- --- --- $ -0- $ -0- CEO 2007/2008 60,000 -0- -0- -0- --- --- 86,500 146,500 ________________________________________________________________________________________________________________________________ Bruce Horton, 2009/2008 -0- -0- -0- $ -0- --- --- -0- -0- CFO 2008/2007 -0- -0- -0- -0- --- --- -0- -0- ________________________________________________________________________________________________________________________________(1) This amount represents the fair value of these stock options at the date of grant which was estimated using the Black-Scholes option pricing model. STOCK OPTIONS/SAR GRANTS IN FISCAL YEAR ENDED MAY 31, 2009 There were no stock options granted to executive officers or directors during fiscal year ended May 31, 2009. -54- The following table sets forth information relating to compensation paid to our directors during fiscal year ended May 31, 2009: DIRECTOR COMPENSATION TABLE Change in Pension Value and Fees Non-Equity Nonqualified Earned or Incentive Deferred All Paid in Stock Option Plan Compensation Other Cash Awards Awards Compensation Earnings Compensation Total Name ($) ($) ($) (1) ($) ($) ($) ($) ______________________________________________________________________________________________________________________ Marcus Johnson -0- -0- -0- -0- -0- -0- -0- ______________________________________________________________________________________________________________________ D. Bruce Horton -0- -0- -0- -0- -0- -0- -0- ______________________________________________________________________________________________________________________ Stephen Jewett, prior -0- -0- -0- -0- -0- -0- -0- director ______________________________________________________________________________________________________________________ Bertrand Taquet -0- -0- -0- -0- -0- -0- -0- ______________________________________________________________________________________________________________________ Duncan Bain, prior director -0- -0- -0- -0- -0- -0- -0- ______________________________________________________________________________________________________________________ Mark Campbell, prior -0- -0- -0- -0- -0- -0- -0- director ______________________________________________________________________________________________________________________(1) This amount represents the fair value of these stock options at the date of grant which was estimated using the Black-Scholes option pricing model. EMPLOYMENT AND CONSULTING AGREEMENTS As of the date of this Annual Report, we do not have any written contractual arrangements with our executive officers. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS As of the date of this Annual Report, the following table sets forth certain information with respect to the beneficial ownership of our common stock by each stockholder known by us to be the beneficial owner of more than 5% of our common stock and by each of our current directors and executive officers. Each person has sole voting and investment power with respect to the shares of common stock, except as otherwise indicated. Beneficial ownership consists of a direct interest in the shares of common stock, except as otherwise indicated. As of the date of this Annual Report, there are 38,536,862 shares of common stock issued and outstanding. -55- NUMBER OF SHARES PERCENTAGE NAME AND ADDRESS OF BENEFICIAL OWNER(1) OWNED(1) OF CLASS(1) DIRECTORS AND OFFICERS: Marcus Johnson 6,686,500 (2) 17.35% 2533 N. Carson Street, Suite 125 Carson City, Nevada 89706 D. Bruce Horton 100,000 (3) 0.003% 2533 N. Carson Street, Suite 125 Carson City, Nevada 89706 Bertrand Taquet 350,000 (4) 0.0009% 2533 N. Caron Street, Suite 125 Carson City, Nevada 89706 All executive officers and directors 7,136,500 (5) 18.52% as a group (3 persons) 1. Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person's actual ownership or voting power with respect to the number of shares of common stock actually outstanding as of the date of this Annual Report. As of the date of this Annual Report, there are 38,536,862 shares issued and outstanding. 2. This figure includes: (i) 6,586,500 shares of restricted common stock; and (ii) 100,000 stock options which are exercisable at $1.00 per share expiring May 9, 2017 to acquire 100,000 shares of common stock. 3. This figure includes 100,000 stock options which are exercisable at $1.00 per share expiring on April 27, 2018 to acquire 100,000 shares of common stock. 4. This figure includes 350,000 stock options which are exercisable at $1.00 per share expiring on April 27, 2018 to acquire 350,000 shares of common stock. 5. This figure includes: (i) 6,586,500 shares of restricted common stock; and (ii) 550,000 stock options which are exercisable at $1.00 per share to acquire 550,000 shares of common stock. -56- CHANGES IN CONTROL We are unaware of any contract, or other arrangement or provision, the operation of which may at a subsequent date result in a change of control of our company. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE None of our directors, officers or principal stockholders, nor any associate or affiliate of the foregoing, have any interest, direct or indirect, in any transaction or in any proposed transactions, which has materially affected or will materially affect us during fiscal year ended May 31, 2009. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES During fiscal year ended May 31, 2009, we incurred approximately $40,500 in fees to our principal independent accountant for professional services rendered in connection with the audit of our financial statements for fiscal year ended May 31, 2009 and for the review of our financial statements for the quarters ended August 31, 2008, November 30, 2008 and February 28, 2009. During fiscal year ended May 31, 2008, we incurred approximately $40,000 in fees to our principal independent accountant for professional services rendered in connection with the audit of our financial statements for fiscal year ended May 31, 2008 and for the review of our financial statements for the quarters ended August 31, 2007, November 30, 2007 and February 28, 2008. During fiscal year ended May 31, 2009, we did not incur any other fees for professional services rendered by our principal independent accountant for all other non-audit services which may include, but is not limited to, tax-related services, actuarial services or valuation services. ITEM 15. EXHIBITS AND FINANCIAL SCHEDULES The following exhibits are filed as part of this Annual Report. EXHIBIT NUMBER DESCRIPTION OF EXHIBIT 3.1 Articles of Incorporation(1) 3.2 Bylaws(1) 3.2.1 Amended Bylaws (2) 10.1 2007 Stock Incentive Plan of Geneva Resources, Inc. -57- 10.2 Letter Agreement with Alantic Ltd. (1) 10.3 Mineral Property Option Agreement between War Eagle Mining Company Inc. and Revelstoke Industries Inc. dated October 20, 2006 (5) 10.4 San Juan Property Option Agreement between Petaquilla Minerals Ltd. and Revelstoke Industries Inc. dated November 16, 2006 (6) 10.5 Letter of Intent between Geneva Gold Corporation and St. Elias Mines Ltd. dated January 22, 2007 (7) 10.6 Vilcoro Property Option Agreement between St. Elias Mines Ltd. and Geneva Gold Corporation dated January 22, 2007 (8) 10.7 Property Financing and Operating Agreement between Allied Minerals and Geneva Resources Inc. dated April 24, 2007 (9) 10.8 Executive Services Agreement between Geneva Resources Inc. and Stacey Kivel dated May 24, 2007 (10) 16.1 Letter from Independent Registered Public Accounting Firm from MacKay LLP (3) 23.1 Independent Registered Public Accounting Filing Consent from MacKay LLP (4) 99.1 Press Release from Geneva Resources Inc. dated June 18, 2007 (11) 99.2 Press Release from Geneva Resources Inc. dated July 18, 2007 (12) 31.1 Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act. 31.2 Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act. 32.1 Certification of Chief Executive Officer and Chief Financial officer Under Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act. (1) Filed as an Exhibit to the Company's Registration Statement on Form SB-2 filed with the SEC on February 17, 2005 and incorporated herein by this reference. (2) Filed as an Exhibit to the Company's Quarterly Report on Form 10-QSB filed with the SEC on January 23, 2006 and incorporated herein by this reference. (3) Filed as an Exhibit to the Company's Current Report on Form 8-K filed with the SEC on August 15, 2006 and incorporated herein by this reference. (4) Filed as an Exhibit to the Company's Annual Report on Form 10-KSB filed with the SEC on September 13, 2006 and incorporated herein by this reference. (5) Filed as an Exhibit to the Company's Current Report on Form 8-K filed with the SEC on October 24, 2006 and incorporated herein by this reference. -58- (6) Filed as an Exhibit to the Company's Current Report on Form 8-K filed with the SEC on November 24, 2006 and incorporated herein by this reference. (7) Filed as an Exhibit to the Company's Current Report on Form 8-K filed with the SEC on January 26, 2007 and incorporated herein by this reference. (8) Filed as an Exhibit to the Company's Current Report on Form 8-K filed with the SEC on February 28, 2007 and incorporated herein by this reference. (9) Filed as an Exhibit to the Company's Current Report on Form 8-K filed with the SEC on May 11, 2007 and incorporated herein by this reference. (10) Filed as an Exhibit to the Company's Current Report on Form 8-K filed with the SEC on June 18, 2007 and incorporated herein by this reference. (11) Filed as an Exhibit to the Company's Current Report on Form 8-K filed with the SEC on June 18, 2007 and incorporated herein by this reference. (12) Filed as an Exhibit to the Company's Current Report on Form 8-K filed with the SEC on July 18, 2007 and incorporated herein by this reference. -59- SIGNATURES Pursuant to the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. GENEVA RESOURCES, INC. Dated: September 14, 2009 By: /s/ MARCUS JOHNSON _____________________________________ Marcus Johnson President/Chief Executive Officer Dated: September 14, 2009 By: /s/ D. BRUCE HORTON _____________________________________ D. Bruce Horton Chief Financial Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Dated: September 14, 2009 By: /s/ MARCUS JOHNSON ___________________ Marcus Johnson Director Dated: September 14, 2009 By: /s/ D. BRUCE HORTON ___________________ D. Bruce Horton Director Dated: September 14, 2009 By: /s/ BERTRAND TAQUET ___________________ Bertrand Taquet Director -60-