fc_posam1-80708.htm
As filed with the Securities and Exchange Commission on July 23, 2008

Registration No. 333-145016


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
POST-EFFECTIVE AMENDMENT NO. 1
FORM S-1
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
 
FIRSTGOLD CORP.
(Name of Small Business Issuer in Its Charter)
   
Delaware
(State or Other Jurisdiction of Incorporation or Organization)
1081
(Primary Standard Industrial Classification Code Number)
16-1400479
(I.R.S. Employer
Identification No.)
   
3108 Ponte Morino Drive, Suite 210
Cameron Park, CA  95682
(530) 677-5974
(Address and Telephone Number of Principal Executive Offices)
 
3108 Ponte Morino Drive, Suite 210
Cameron Park, CA  95682
 (Address of Principal Place of Business or Intended Principal Place of Business)
 
A. Scott Dockter
3108 Ponte Morino Drive, Suite 210
Cameron Park, CA  95682
(530) 677-5974
(Name, Address and Telephone Number of Agent For Service)
 
Copy to:
Roger D. Linn, Esq.
Duncan Linn & Wade
2261 Lava Ridge Court, Roseville, CA  95661
(916) 797-7436
 

Approximate Date of Commencement of Proposed Sale to the Public: as soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  [X]
 
 
 
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  [   ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  [   ]

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  [   ]

 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One):
 
 
Large accelerated filer _____
Accelerated filer _____
  
 
 
 
  
 
Non-accelerated filer _____
Smaller reporting company     X    
  
 
 

CALCULATION OF REGISTRATION FEE

Title of Each Class of
Securities to be Registered
Amount to be
Registered(3)
Proposed Maximum Offering Price Per Share (1)
Proposed Maximum
Aggregate Offering Price (1)
Amount of
Registration Fee
Common Stock
$.001 par value
10,969,973
$0.60
$6,581,984
$202.07
Common Stock
$.001 par value issuable upon conversion of convertible debenture
1,868,810 (2)
$0.60
$1,121,286
$34.42
Common Stock
$.001 par value issuable upon exercise of warrants
7,796,805
 
$0.60
$4,678,083
 
$143.62
TOTAL    
20,635,588
$0.60
$12,381,353
$380.11(4)

(1)  
The proposed maximum offering price per share is estimated solely for purpose of calculating the registration fee in accordance with Rule 457(c) on the basis of the average of the high and low sales price as reported by the Over-the-Counter Bulletin Board on October 24, 2007.
 
(2)  
Includes estimated number of shares of common stock underlying Convertible Debentures as provided under the Securities Purchase Agreements dated October 10, 2006 between the Registrant and three individual investors.
 
(3)  
If, as a result of stock splits, stock dividends or similar transactions, the number of securities purported to be registered on this registration statement increases, the provisions of Rule 416 under the Securities Act of 1933 shall apply, and this registration statement shall be deemed to cover any such additional shares of common stock.
 
(4)  
Fees previously paid.
 
 
 
 
The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
TABLE OF CONTENTS
 
 
PART I - INFORMATION REQUIRED IN PROSPECTUS 
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PART II
II-1
   
INFORMATION NOT REQUIRED IN PROSPECTUS 
II-1
   
SIGNATURES
II-11
 
 
PART I - INFORMATION REQUIRED IN PROSPECTUS
 
The information in this prospectus is not complete and may be changed.  The Selling Security Holders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective.  This prospectus is not an offer to sell securities, and we are not soliciting an offer to buy these securities, in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED July 23, 2008.

PROSPECTUS

FIRSTGOLD CORP.

20,635,588 Shares of Common Stock


This prospectus relates to the disposition by certain selling stockholders identified in this prospectus (the “Selling Stockholders”) of up to an aggregate of 20,635,588 shares of Common Stock, par value $0.001 per share (“Common Stock”) which includes (i) up to 10,969,973 shares of common stock; (ii) up to 1,868, 810 shares issuable upon the conversion of convertible debentures and any accrued interest; and (iii) 7,796,805 shares issuable upon the exercise of warrants.  All of such shares of Common Stock are being offered for resale by the Selling Stockholders.

The prices at which the Selling Stockholders may sell shares will be determined by the prevailing market price for the shares or in negotiated transactions.  We will not receive any of the proceeds from the sale of these shares by the Selling Stockholders.  However, we will receive proceeds from the exercise of warrants if exercised by the Selling Stockholder.

We will bear all costs relating to the registration of the Common Stock, other than any Selling Stockholder’s legal or accounting costs or commissions.

Our Common Stock is quoted on the Over-the-Counter (“OTC”) bulletin board under the symbol “FGOC”.  On May 30, 2008, the closing price of our Common Stock on the Over-the-Counter Bulletin Board was $0.48 per share.
 
Our principal executive offices are located at 3108 Ponte Morino Drive, Suite 210, Cameron Park, CA  95682 and our telephone number is (530) 677-5974.

 
INVESTING IN THE COMMON STOCK OFFERED HEREIN INVOLVES A HIGH DEGREE OF RISK.  YOU SHOULD PURCHASE SHARES ONLY IF YOU CAN AFFORD A COMPLETE LOSS OF YOUR INVESTMENT.  YOU SHOULD CONSIDER CAREFULLY THE “RISK FACTORS” CONTAINED IN THIS PROSPECTUS BEGINNING ON PAGE 5.


NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE.  ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The date of this prospectus is ______________, 2008.
 

 
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TABLE OF CONTENTS

 
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2

ABOUT THIS PROSPECTUS

We have not authorized anyone to provide information different from that contained in this prospectus.  This prospectus is not an offer to sell nor is it seeking an offer to buy these securities in any jurisdiction where such offer or sale is not permitted.  The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the Common Stock.  In this prospectus, references to “Firstgold,” the “Company,” “we,” “us” and “our” refer to Firstgold Corp., a Delaware corporation.
 
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements in this prospectus and in any prospectus supplement we may file relate to future events concerning our business and to our future revenues, operating results, and financial condition. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “forecast,” “predict,” “propose,” “potential,” or “continue” or the negative of those terms or other comparable terminology.
 
Any forward looking statements contained in this prospectus or any prospectus supplement are only estimates or predictions of future events based on information currently available to our management and management’s current beliefs about the potential outcome of future events. Whether these future events will occur as management anticipates, whether we will achieve our business objectives, and whether our revenues, operating results, or financial condition will improve in future periods are subject to numerous risks. The section of this prospectus captioned “Risk Factors,” beginning on page 4, provides a summary of the various risks that could cause our actual results or future financial condition to differ materially from forward-looking statements made in this prospectus. The factors discussed in this section are not intended to represent a complete list of all the factors that could adversely affect our business, revenues, operating results, or financial condition. Other factors that we have not considered may also have an adverse effect on our business, revenues, operating results, or financial condition, and the factors we have identified could affect us to a greater extent than we currently anticipate. Before making any investment in our securities, we encourage you to carefully read the information contained under the caption “Risk Factors,” as well the other information contained in this prospectus and any prospectus supplement we may file.




 
 
 
 
 
 
 
 
 
 
 
 
 
 
3
PROSPECTUS SUMMARY
 

The following summary is qualified in its entirety by the information contained elsewhere in this prospectus.  You should read the entire prospectus, including “Risk Factors” and the financial statements before making an investment decision.
 
Issuer:
  
Firstgold Corp.
3108 Ponte Morino Drive, Suite 210
Cameron Park, CA  95682
(530) 677-5974
  
       
Description of Business:
  
Firstgold’s business is the acquisition, exploration and, if warranted, development of various mining properties located in the state of Nevada with the objective of identifying, mining and processing gold and silver ore deposits.  Firstgold plans to carryout comprehensive exploration and development programs on its properties which currently consists of various mineral leases associated with the Relief Canyon Mine located near Lovelock, Nevada.  A description of our business begins on page 22 of this prospectus.
 
On October 24, 2006 Firstgold entered into a Mineral Lease Agreement to explore and, if warranted, develop up to 25,000 acres of property located in Elko County, Nevada.
 
On July 9, 2007 Firstgold completed staking claims on approximately 4,200 acres in the Horse Creek area of Nevada.
 
On January 11, 2008, we entered into a lease to explore approximately 2,300 acres of potentially mineralized ground located near Fairview, Nevada.
 
On February 22, 2008 we entered into a lease to explore approximately 3,300 acres of potentially mineralized ground located near Winnemucca, Nevada.
  
       
The Offering:
  
This offering relates to the resale of shares of our Common Stock that were acquired upon conversion of outstanding Secured Convertible Debentures and upon exercise of outstanding warrants.  The selling stockholders and the number of shares that may be sold by each are set forth beginning on page 61 of this prospectus.
  
       
Shares:
  
 20,635,588 shares of our Common Stock.  A description of our Common Stock is set forth on page 60 of this prospectus.
  
       
Manner of Sale:
  
The shares of our Common Stock may be sold from time to time by the selling stockholders in open market or negotiated transactions at prices determined from time to time by the selling stockholders.  A description of the manner in which sales may be made is set forth in this prospectus beginning on page 67 of this prospectus.
  
       
Use of Proceeds:
  
We will not receive any of the proceeds from the sale of our Common Stock by the Selling Stockholders. However, we will receive proceeds from the exercise of warrants.
  
       
Risk Factors:
  
The securities offered hereby involve a high degree of risk and will result in immediate and substantial dilution.  A discussion of additional risk factors relating to our stock, our business and this offering begins on page 5 of this prospectus.
  
 
 
 
 
 
4
RISK FACTORS
 
Please carefully consider the specific factors set forth below as well as the other information contained in this prospectus before purchasing shares of our Common Stock.  This prospectus contains forward-looking statements that involve risks and uncertainties. Our actual results may differ significantly from the results discussed in the forward-looking statements.
 
Risks Related to Our Business
 
We have a limited operating history and have not generated a profit since we recommenced operations, consequently our long term viability cannot be assured.
 
We were inactive from July 2001 to February 2003 at which time we resumed our mining related activities and have incurred losses in each reporting period since recommencing operations.
 
Our prospects for financial success are difficult to forecast because we have a relatively limited operating history and have not yet commenced exploration at two of our mining properties and have conducted limited exploration at the Relief Canyon mining property.  Our prospects for financial success must be considered in light of the risks, expenses and difficulties frequently encountered by exploration stage mining companies initiating exploration of unproven properties.  Our business could be subject to any or all of the problems, expenses, delays and risks inherent in the establishment of a gold and silver exploration enterprise, including limited capital resources, possible delays in mining explorations and development, failure to identify commercially viable gold or silver deposits, possible cost overruns due to price and cost increases in exploration and ore processing, uncertain gold and silver market prices, inability to accurately predict mining results and attract and retain qualified employees.  Therefore, there can be no assurance that our exploration or mining will be successful, that we will be able to achieve or maintain profitable operations or that we will not encounter unforeseen difficulties that may deplete our capital resources more rapidly than anticipated.
 
We may need additional financing to expand our business plan.
 
We had cash in the amount of $1,168,620 and working capital of $412,146 as of April 30, 2008. While we have generated some revenue from renting out our drilling rigs and crew from time to time we have not generated revenues from our mining operations.  Our business plan calls for substantial investment and cost in connection with the acquisition and exploration of our mineral properties owned or currently under lease.  While we believe we have sufficient funds to carry out our current plans at Relief Canyon, unforeseen expenses, an expanded exploration plan or establishing future mining operations could require additional operating capital.  We do not currently have any arrangements for additional financing and we can provide no assurance to investors that we will be able to find additional financing if required.  Obtaining additional financing would be subject to a number of factors, including market prices for minerals, investor acceptance of our properties, and investor sentiment.  These factors may make the timing, amount, terms or conditions of additional financing unfavorable to us.  The most likely source of future funds would be through the sale of additional equity capital and loans.  Any sale of additional shares will result in dilution to existing stockholders while incurring additional debt will result in encumbrances on our property and future cash flows.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5
Because there is no assurance when we will generate mining revenues, we may deplete our cash reserves and not have sufficient outside sources of capital to complete our exploration or mining programs.
 
We have not earned any revenues as of the date of this prospectus from mining operations and have never been profitable.  To date we have been involved primarily in financing activities and limited exploration activities.  We do not have an interest in any revenue generating properties.  Prior to our being able to generate revenues, we will incur substantial operating and exploration expenditures without realizing any revenues.  We therefore expect to incur significant losses into the foreseeable future.  Our net loss for the fiscal year ended January 31, 2008 was $7,632,537 and our net loss for the three months ended April 30, 2008 was $2,595,314.
 
Due to our continuing losses from business operations, our most recent independent auditor’s report dated May 15, 2008, includes a “going concern” explanation relating to the fact that our continued operations are dependent upon obtaining additional working capital either through significantly increasing revenues or through outside financing.  While we were operating with a cash reserve of approximately $1,168,000, as of April 30, 2008, we have not yet generated any revenues from mining operations.  Our cash reserves will be used to primarily fund ongoing plans at Relief Canyon.  However, our inability to generate increased revenues could eventually inhibit our ability to continue in business or achieve our business objectives.
 
Because of the speculative nature of exploration of natural resource properties, there is substantial risk that we will not find commercially viable gold or silver ore deposits which would reduce our realization of revenues.
 
There is no assurance that any of the claims we explore or acquire will contain commercially exploitable reserves of gold or silver minerals.  Exploration for natural resources is a speculative venture involving substantial risk.  Hazards such as unusual or unexpected geological formations and other conditions often result in unsuccessful exploration efforts.  Success in exploration is dependent upon a number of factors including, but not limited to, quality of management, quality and availability of geological expertise and availability of exploration capital.  Due to these and other factors, no assurance can be given that our exploration programs will result in the discovery of new mineral reserves or resources.
 
We may not have access to all of the supplies and materials we need for exploration, which could cause us to delay or suspend operations.
 
Demand for drilling equipment and limited industry suppliers may result in occasional shortages of supplies, and certain equipment such as drilling rigs that we need to conduct exploration activities.  While we currently operate five mobile drilling rigs, we have not negotiated any long term contracts with any suppliers of products, equipment or services.  If we cannot find the trained employees and equipment when required, we will have to suspend or curtail our exploration plans until such services and equipment can be obtained.
 
We have no known ore reserves and we cannot predict when and if we will find commercial quantities of mineral ore deposits.  The failure to identify and extract commercially viable mineral ore deposits will affect our ability to generate revenues.
 
 
 
 
 
 
 
 
 
 
 
 
6
We have no known ore reserves and there can be no assurance that any of the mineral claims we are exploring contain commercial quantities of gold or silver.  Even if we identify commercial reserves, we cannot predict whether we will be able to mine the reserves on a profitable basis, if at all.
 
If we are unable to hire and retain key personnel, we may not be able to implement our business plan.
 
Firstgold is substantially dependent upon the continued services of A. Scott Dockter, its Chief Operating Officer and James Kluber, its Chief Financial Officer.  We have an employment agreement with Mr. Dockter and Mr. Kluber which expire in January, 2009, but do not have either key person life insurance or disability insurance on them.  While both Mr. Dockter and Mr. Kluber expect to spend the majority of their time assisting Firstgold and its business, there can be no assurance that their services will remain available to Firstgold.  If either Mr. Dockter’s or Mr. Kluber’s services are not available to Firstgold, Firstgold will be materially and adversely affected.  While both Mr. Dockter and Mr. Kluber have three year employment agreements, through 2009, and both Mr. Dockter and Mr. Kluber have been significant stockholders of Firstgold and each considers his investment of time and money in Firstgold of significant personal value, there is no assurance that both men will remain employed through the end of their current employment contract.   Our success is also largely dependent on our ability to hire highly qualified personnel.  This is particularly true in the highly technical business such as mineral exploration.  These individuals are in high demand and we may not be able to retain the personnel we need.  In addition, we may not be able to afford the high salaries and fees demanded by qualified personnel, or may lose such employees after they are hired.  Failure to hire key personnel when needed, or on acceptable terms, to carryout our exploration and mining programs would have a significant negative effect on our business.
 
Because the probability of many of the individual mining prospects explored will not show commercially viable amounts of gold or silver ore deposits, substantial amounts of funds spent on exploration will not result in identifiable reserves.
 
The probability of our exploration program identifying individual prospects having commercially significant reserves cannot be predicted.  It is likely that many of the properties explored will not contain any commercially significant reserves.  As such substantial funds will be spent on exploration which may identify only a few, if any, claims having commercial development potential.
 
Our mining claims could be contested which would add significant costs and delays to our exploration programs.
 
Our mining property rights currently consist of 146 mill site and unpatented mining claims at the Relief Canyon Mine and recently staked claims on approximately 4,200 acres of land in the Horse Creek area of Nevada and three parcels of leased properties in Nevada. The validity of unpatented mining claims and staked claims are often uncertain and are always subject to contest.  Unpatented mining claims are generally considered subject to greater title risk than patented mining claims, or real property interests that are owned in fee simple. If our claims on a particular property are successfully challenged, we may not be able to develop or retain our interests on that property, which could reduce our future revenues.
 
 
 
 
 
 
 
 
 
 
 
 
 
7
Mining operations are subject to extensive federal and state regulation which increases the costs of compliance and possible liability for non-compliance.
 
Mining is subject to extensive regulation by state and federal regulatory authorities.  State and federal statutes regulate environmental quality, safety, exploration procedures, reclamation, employees’ health and safety, use of explosives, air quality standards, pollution of stream and fresh water sources, noxious odors, noise, dust, and other environmental protection controls as well as the rights of adjoining property owners.  We believe that we are currently operating in compliance with all known safety and environmental standards and regulations applicable to our Nevada properties or are in the process of remediating our property to be compliant.  However, there can be no assurance that our compliance could be challenged or that future changes in federal or Nevada laws, regulations or interpretations thereof will not have a material adverse affect on our ability to resume and sustain exploration operations.
 
Mining operations are subject to various risks and hazards which could result in significant costs or hinder ongoing operations.
 
The business of gold mining is subject to certain types of risks, including environmental hazards, industrial accidents, and theft.  We carry insurance against certain property damage loss (including business interruption) and comprehensive general liability insurance.  While we will maintain insurance consistent with industry practice, it is not possible to insure against all risks associated with the mining business, or prudent to assume that insurance will continue to be available at a reasonable cost.  We have not obtained environmental liability insurance because such coverage is not considered by management to be cost effective.
 
Compliance with corporate governance and public disclosure regulations may result in additional expenses.  
 
Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002, and new regulations issued by the Securities and Exchange Commission, are creating uncertainty for companies, which could result in compliance deficiencies. In order to comply with these regulations, we may need to invest substantial resources to comply with evolving standards, and this investment would result in increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities.
 
Our officers and directors have limited liability and have indemnification rights
 
Our Certificate of Incorporation and by-laws provide that we will indemnify our officers and directors against losses sustained or liabilities incurred which arise from any transaction in that officer’s or director’s respective managerial capacity unless that officer or director violates a duty of loyalty, did not act in good faith, engaged in intentional misconduct or knowingly violated the law, approved an improper dividend, or derived an improper benefit from the transaction.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8
Risks Related to Our Stock
 
Our Stock Price is Volatile.
 
The market price of a share of our Common Stock has fluctuated significantly in the past and may continue to fluctuate significantly in the future.  During the fiscal year 2008, ended January 31, 2008, the high and low sales prices of a share of Firstgold common stock as reported on the OTCBB were $0.97 and $0.33 respectively.  During the fiscal quarter ended April 30, 2008, the high and low sales prices of a share of Firstgold Common Stock as reported on the OTCBB were $0.70 and $0.48, respectively.  The market price of a share of our Common Stock may continue to fluctuate in response to a number of factors, including:
We may need to raise funds through debt or equity financings in the future, which would dilute the ownership of our existing stockholders and possibly subordinate certain of their rights to the rights of new investors or creditors.
 
We may choose to raise additional funds in debt or equity financings if they are available to us on terms we believe reasonable to increase our working capital, strengthen our financial position or to make acquisitions.  Any sales of additional equity or convertible debt securities would result in dilution of the equity interests of our existing stockholders, which could be substantial. Additionally, if we issue shares of preferred stock or convertible debt to raise funds, the holders of those securities might be entitled to various preferential rights over the holders of our Common Stock, including repayment of their investment, and possibly additional amounts, before any payments could be made to holders of our Common Stock in connection with an acquisition of the Company.  Such additional debt, if authorized, would create rights and preferences that would be senior to, or otherwise adversely affect, the rights and the value of our Common Stock. Also, new investors may require that we and certain of our stockholders enter into voting arrangements that give them additional voting control or representation on our board of directors.
 
 
 
 
 
 
 
 
 
9
Inadequate market liquidity may make it difficult to sell our stock.
 
There is currently a public market for our Common Stock, but we can give no assurance that there will always be such a market.  Only a limited number of shares of our Common Stock are actively traded in the public market and we cannot give assurance that the market for our stock will develop sufficiently to create significant market liquidity.  An investor may find it difficult or impossible to sell shares of our Common Stock in the public market because of the limited number of potential buyers at any time.  In addition, the shares of our Common Stock are not eligible as a margin security and lending institutions may not accept our Common Stock as collateral for a loan.
 
The application of the “penny stock regulation” could adversely affect the market price of our Common Stock
 
Penny stocks generally are equity securities with a price of less than $5.00 per share other than securities registered on certain national securities exchanges or quoted on the NASDAQ Stock Market, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system.  Our securities may be subject to “penny stock rules” that impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 together with their spouse).  For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of such securities and have received the purchaser’s written consent to the transaction prior to the purchase.  Consequently, the “penny stock rules” may restrict the ability of broker-dealers to buy and sell our securities and may have the effect of reducing the level of trading activity of our Common Stock in the secondary market.
 
We may engage in future acquisitions that dilute our stockholders and cause us to incur debt or assume contingent liabilities.
 
As part of our strategy, we expect to review opportunities to acquire or participate in the exploration of other mining properties that would complement our current exploration or mining program, or that may otherwise offer growth opportunities. In the event of any future acquisitions, we could:
These acquisitions also involve numerous risks, including:
 
10
Risks Relating to Our Current Financing Arrangement
 
We have significant "equity overhang" which could adversely affect the market price of our Common Stock and impair our ability to raise additional capital through the sale of equity securities.
 
As of May 1, 2008, Firstgold had 130,717,460 shares of Common Stock outstanding and convertible debentures which are convertible into up to 1,444,444 shares of our Common Stock.  Additionally, warrants to purchase a total of 47,545,756 shares and options to purchase 4,650,000 shares of our Common Stock were outstanding as of May 1, 2008.  The possibility that substantial amounts of our outstanding Common Stock may be sold by investors or the perception that such sales could occur, often called "equity overhang," could adversely affect the market price of our Common Stock and could impair our ability to raise additional capital through the sale of equity securities in the future.
 
If an event of default occurs under the Secured Convertible Debenture dated May 1, 2008, or the Security Agreement relating to the Debenture, the Debenture Holder could take possession of all our mining rights held in the Relief Canyon property.
 
In connection with the issuance of the Secured Convertible Debenture dated May 1, 2008, as amended, we executed a Security Agreement in favor of 2171216 Ontario, Inc. granting them a first priority security interest in all of our leasehold interests and mining rights to the Relief Canyon property as well as any equipment or improvements located on such property. The Security Agreement states that if an event of default occurs under the Secured Convertible Debenture or Security Agreement, 2171216 Ontario, Inc. has the right to take possession of the collateral, to operate our business using the collateral, and have the right to assign, sell, lease or otherwise dispose of and deliver all or part of the collateral, at public or private sale or otherwise to satisfy our obligations under these agreements.
 
We may not be able to pay our debt and other obligations and our assets may be seized as a result.
 
We have not established a sinking fund nor do we intend to set aside sufficient funds to repay our outstanding debt, including certain Debentures, at maturity.  Consequently, we may not generate the cash flow required or have sufficient funds available to pay our liabilities as they become due.  We may not have sufficient cash reserves to repay the Debentures at such time, which would cause an event of default under the Debentures and may force us to declare bankruptcy.  If we raise additional funds to repay the Debentures by selling equity securities, the relative equity ownership of our existing investors could be diluted and new investors could obtain terms more favorable than previous investors.
 
 
 
 
 
 
 
 
 
11
TRANSACTIONS WITH CORNELL CAPITAL PARTNERS, L.P. AND OTHER CONVERTIBLE DEBENTURE HOLDERS
 
On September 26, 2006, we entered into a Securities Purchase Agreement with Cornell Capital Partners, LP (“Cornell Capital”), which Agreement was later amended on November 1, 2006 pursuant to which we agreed to issue up to an aggregate principal amount of $3,000,000 of convertible secured debentures to be issued and funded in three separate issuances of $1,000,000 each and documented in three convertible secured debentures. In October 2006 we issued three debentures in the aggregate principal amount of $650,000 to other investors (collectively, the “Debentures”).
 
Each Debenture has a term of three years during which time we intend to commence production at the Relief Canyon Mine.  The anticipated resources from any such future production is planned to enable us to repay these amounts within the repayment period.  In the event that we were unsuccessful in commencing operations at the Relief Canyon Mine or any of our other mining properties, or if revenues from any such future production was less than anticipated, then it would be unclear whether cash flow from operations would be sufficient to repay these amounts.
 
It has been represented to us that none of the Selling Security Holders have an existing short position in our common stock.
 
Prior Transaction with Selling Security Holders
 
Prior to the September 26, 2006 financing transaction, on January 27, 2006, we entered into a Securities Purchase Agreement with Cornell Capital pursuant to which we agreed to issue up to an aggregate principal amount of $1,000,000 of convertible secured debentures to be issued and funded in three separate issuances of $600,000, $200,000 and $200,000 with each disbursement documented by a convertible secured debenture.  Convertible debentures were issued on January 27, 2006 ($600,000 principal amount); March 9, 2006 ($200,000 principal amount); and July 17, 2006 ($200,000 principal amount).  By September 15, 2006, Cornell Capital had converted all three convertible debentures and $30,947.95 of accrued interest into a total of 4,040,168 shares of our restricted common stock.
 
Cornell Capital was also issued warrants exercisable into 2,500,000 shares of Firstgold common stock.  1,250,000 warrants are exercisable at $0.20 per share and 1,250,000 warrants are exercisable at $0.30 per share.  The warrants expire on January 27, 2010. In October 2006 Cornell Capital assigned 125,000 of its warrants exercisable at $0.20 and 125,000 of its warrants exercisable at $0.30 to an unrelated third party.  On March 6, 2007 Cornell Capital exercised its warrants as to 1,125,000 shares at an exercise price of $0.20 per share for total proceeds to Firstgold of $225,000. On March 30, 2007 Cornell Capital assigned its warrants with an exercise price of $0.30 for the remaining 1,125,000 shares to an unrelated third party. All of the Firstgold shares acquired by Cornell Capital through the conversion of its convertible debentures and exercise of 1,125,000 warrants were resold pursuant to a previous registration statement by March 31, 2007.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
12
We had no prior relationship or arrangement with any of the other convertible debenture investors other than Cornell Capital.
 
 Current Convertible Debentures
 
The first $1,000,000 convertible secured debenture in the most recent financing (the “Closing Debenture”) has been issued and was funded on September 26, 2006.
 
The second $1,000,000 convertible debenture (the “Filing Debenture”) was issued and funded on December 1, 2006 upon the filing a previous registration statement (the “Registration Statement”) with the Securities and Exchange Commission (“SEC”) registering shares of common stock pursuant to a Registration Rights Agreement between us and Cornell Capital dated September 26, 2006 (the “Rights Agreement”).  The third $1,000,000 convertible secured debenture (the “Final Debenture”) was issued and funded on March 16, 2007.
 
As of the date of this prospectus, all of Cornell Capital’s Debentures have been fully converted with accrued interest at the Fixed Conversion Price into 7,080,450 shares of Firstgold common stock.
 
In addition to the convertible debentures issued to Cornell Capital, Firstgold issued an additional $650,000 principal amount of convertible debentures to a limited number of other investors.  These latter debentures have similar terms and conditions as those issued to the Cornell Capital except the conversion provision is only at the Fixed Conversion Rate of $0.45 per share.
 
Based on the foregoing, the remaining $650,000 of Debentures will be convertible at the option of holder at any time up to maturity at a conversion price equal to $0.45. The Debentures have a three-year term and accrue interest at 8% per year payable in cash or our common stock.  If paid in stock, the stock will be valued at the rate equal to the conversion price of the Debentures in effect at the time of payment.  Interest and principal payments on the Debentures accrue until converted or, if not converted, are due on the maturity date of each Debenture.
 
Although not covered by this registration statement, on May 1, 2008, we issued a Convertible Debenture in the principal amount of $1,100,00 being interest at 10% per annum (the “May 08 Debenture”).  The Debenture is convertible into Firstgold common stock at a conversion rate of $0.80 per share.  The Debenture is due and payable on January 1, 2009.  In conjunction with the issuance of the Debenture, Firstgold issued warrants to purchase 1,100,000 shares of its common stock at an exercise price of $1.00 per share.  The warrants have a term of 18 months.
 
Warrants
 
On September 26, 2006, as amended on November 1, 2006, we also issued to Cornell Capital two warrants for a total of 3,500,000 shares of our common stock (each a “Warrant” and collectively the “Warrants”) with the aggregate exercise price of $1,575,000 if exercised on a cash basis and if we are not in default on any of the Debentures.  The “A Warrant” is exercisable for 2,000,000 shares of our common stock at $0.45 per share, expiring November 1, 2010.  The “B Warrant” was originally exercisable for 1,500,000 shares of our common stock at $0.60 per share, expiring four years after the issuance date of the Warrants.  However, on March 16, 2007 an Amended and Restated “B Warrant” was issued covering 1,500,000 shares at an exercise price of $0.45 per share, expiring on November 1, 2010.
 
 
 
 
 
 
 
 
 
 
13
If the Warrants are exercised on a cashless basis, we would receive no proceeds from their exercise by Cornell Capital.
 
The other selling shareholders hold warrants to purchase up to 4,296,805 shares of Firstgold common stock at an exercise price $0.65 per share. These warrants include 271,156 penalty warrants issued on October 16, 2007. The warrants are exercisable for a period of 18 months after the issuance date of April 12, 2007.
 
The following table summarizes the value of each of the Warrants assuming the holders exercise them on a cash basis and we are not in default the Debentures.
 
Warrant
Market Price
on Date of Conversion (1)
Conversion Price
on Date of Sale (2)
Total Shares Underlying the Warrant (3)
Total Value of Shares
at Market Price (4)
Total Value of Shares
at Exercise Price (5)
Total Possible Discount to Market Price (6)
A Warrant
$0.36
$0.45
2,000,000
$720,000
$900,000
$0
B Warrant
$0.36
$0.45
1,500,000
$540,000
$675,000
$0
Other Selling Shareholders
$0.57
$0.45
4,296,805
$2,449,179
$1,933,562
$515,617
_________________________
 
(1)
Closing market price per share of our common stock on the assumed date of the exercise of the Warrants which is the date the securities were issued.
(2)
Exercise price per share of our common stock on the date of the exercise and issuance of the Warrants.  The exercise price of the Warrants is fixed pursuant to the terms of each of the Warrants except that each of the Warrants contain anti-dilution protections which in certain circumstances, may result in a reduction to the exercise price.
(3)
Total number of shares of common stock underlying each Warrant assuming full conversion as of the assumed date of the conversion of the Warrants.  Upon certain anti-dilution adjustments of the exercise price of the Warrants, the number of shares underlying the Warrants may also be adjusted such that the proceeds to be received by us would remain constant.
(4)
Total market value of the shares of common stock underlying each Warrant assuming full exercise of each Warrant as of the assumed date of the exercise of the Warrants (9/21/07) based on the market price of the common stock on the date of the exercise of the Warrants.
(5)
Total value of shares of common stock underlying each Warrant assuming full exercise of each Warrant as of the assumed date of the conversion of the Warrants and based on the conversion price.
(6)
Discount to market price calculated by subtracting the result in footnote (5) from the result in footnote (4).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
14
Registration Rights Agreement
 
Pursuant to the Amended Registration Rights Agreement with Cornell Capital, we agreed to register for resale under the Securities Act of 1933, as amended, up to 18,750,000 shares of common stock issuable upon conversion of the Debentures and upon exercise of the Warrants, and to file such Registration Statement within thirty (30) days after November 1, 2006.  We were also required to register up to 2,191,227 shares on behalf of the other convertible debenture/warrant holders.  We filed a Registration Statement with the SEC on December 1, 2006.  We were also required to use our reasonable best efforts to have that Registration Statement declared effective by February 28, 2007.  However, for administrative reasons we withdrew that prior Registration on May 18, 2007.  In addition, due to certain subsequent amendments to the Cornell Capital investment and subsequent private sales, we are now only required to register 8,504,553 shares of common stock issued upon conversion of the Debentures including accrued interest on such Debentures prior to conversion and upon exercise of the Warrants.  The value of the total number of shares of common stock that we are required to register pursuant to the Amended Registration Rights Agreement with Cornell Capital, based on the market price of our common stock on September 21, 2007 ($0.62) was approximately $5,273,000.
 
We paid structuring fees to Yorkville Advisors, LLC (“Yorkville”), the manager of Cornell Capital, of $20,000, and a due diligence fee of $5,000. We also agreed to pay Cornell Capital a fee of 9% of the aggregate principal amount of Debentures then issued and outstanding.  We made no payments in conjunction with the sale of convertible debentures to other investors.
 
Payments and Premiums to Debenture Holders
 
Line 1 of the following table summarizes the potential payments we would have been required to pay to Cornell Capital and affiliates of Cornell Capital without giving effect to the conversions of $450,000 on July 13, 2007, and $1,000,000 on September 13, 2007.  For purposes of this table, we have assumed that the entire $3,000,000 aggregate principal amount of the Debentures were issued and sold on September 26, 2006.  Line 2 of the following table summarizes the potential payments to other Debenture holders.
 
Maximum Commitment Fee (1)
Structuring and Due Diligence Fees (2)
Maximum Interest Payments (3)
Maximum Redemption Premiums (4)
Maximum Liquidated Damages (5)
Total Maximum Payments (6)
Total Net Proceeds to Company (7)
$270,000
$25,000
$720,000
$372,000
$450,000
$1,837,000
$1,985,000
$0
$0
$156,000
$80,600
$97,500
$334,100
$494,000
________________________
 
(1)
We agreed to pay Cornell Capital a commitment fee equal to 9% of the $3,000,000 purchase price of the Debentures issued pursuant to the Agreement on a pro rata basis as the Debentures were issued.  As of the filing of this Registration Statement, $3,000,000 of the Debentures have been issued and we paid Cornell Capital $270,000 in commitment fees.
(2)
Pursuant to the Agreement, we paid Yorkville an aggregate of $20,000 in structuring and $5,000 in due diligence fees in connection with the transactions contemplated by the Agreement.
(3)
Maximum amount of interest that can accrue assuming all the Debentures remaining outstanding until the maturity date. We may pay accrued interest in either cash or, at our option, in shares of our common stock.
 
 
 
 
 
 
 
 
 
 
15
 
(4)
Under certain circumstances we have the right to redeem the full principal amount of the Debentures prior to the maturity date by repaying the principal and accrued interest plus a redemption premium of 10% of such principal and accrued interest.  This represents the maximum redemption premium we would pay assuming we redeem all of the Debentures prior to maturity with the redemption premium.
(5)
Maximum amount of liquidated damages we may be required to pay for the twelve months following the sale of all the Debentures.
(6)
Total maximum payments that we may be required to make for the twelve months following the sale of all the Debentures and assuming that we made all of the payments described in footnotes 1 through 5.
(7)
Total net proceeds to us assuming that we were not required to make any payments as described in footnotes 4 and 5.
 
Security Agreement
 
The May 2008 Debenture is secured by a Security Agreement with 2171216 Ontario, Inc..  The obligation is secured by all our property and mining rights held in the Relief Canyon Mine property, as affirmed by a Memorandum of Security Agreement and UCC-1 as filed with the County Recorder of Pershing County, Nevada.
 
Use of Proceeds
 
We plan to use the proceeds for general corporate purposes and for working capital.  We sold $650,000 principal amount of debentures to three investors without fees or deductions. The following table summarizes the potential proceeds available to us pursuant to the latest financing with Cornell Capital and three additional investors. For purposes of this table, we have assumed that all of the $3,000,000 aggregate principal amount of convertible secured debentures were issued and sold on September 26, 2006 and that Cornell Capital exercises all of the Warrants on a cash basis.
 
Total Gross
Proceeds Payable to
Company
Total Maximum
Payments by
Company (1)
Net Proceeds to
Company (2)
Total Possible
Profit to Debenture Holders(3)
Percentage of Return on Investment
(Payments + Discounts) ÷ Net Proceeds (4)
         
$5,561,052
$2,171,100
$3,389,952
$1,121,954
97%
_________________________
 
(1)
Total maximum payments payable by us.
(2)
Total net proceeds to us calculated by subtracting the result in column (2) from the result in column (1).
(3)
Total possible profit to Debenture Holders based on the aggregate discount to market price of the conversion of the Debentures and Warrants.
(4)
Percentage equal to the total amount of possible payments to Debenture Holders under the Debentures ($2,171,100) plus total possible discount to the market price of the shares underlying the Debentures ($1,121,954) divided by the net proceeds to us resulting from the sale of the Debentures ($3,389,952).
 
 
 
 
 
 
 
 
 
16
Effect on Shares Outstanding
 
Firstgold transacted one prior financing with Cornell Capital effective as of January 27, 2006.  The table below summarizes the number of shares originally registered in the prior transaction.
 
Number of Shares Outstanding Prior to Current
Transaction
Number of Shares Outstanding Prior to 2006 Transaction held by non-affiliates (1)
Number of Previously Registered Shares on Behalf of all Selling
Shareholders(2)
Number of Shares Registered on Behalf of all Selling
Shareholders
Percentage of Public Float (1)
Number of Shares Still Held on Behalf of Selling Shareholders
Number of Shares Sold in Registered Resale Transactions by Selling Shareholders
Number of Shares Registered for Resale of Selling Shareholder in the Current Transaction(3)
Per Share Market price of Firstgold stock on January 26, 2006
Per Share market price of Firstgold common stock on Sept. 21, 2007
63,104,072
52,240,675
7,000,000
33.550.025
64.2%
7,000,000
5,165,168
20,635,588
$0.21
$0.62
___________________________
 
(1)
Represents the number of shares of common stock of the Company issued and outstanding as of January 27, 2006 (prior to the transaction with Cornell) held by persons other than Cornell, affiliates of Cornell and affiliates of the Company.
 
(2)
Represents the total number of shares of common stock of the Company previously registered on behalf of Cornell and/or Cornell’s affiliates prior to this registration statement being filed. on behalf of Cornell Capital.
 
(3)
Includes 8,504,553 shares of common stock of the Company registered in the current registration statement filed on behalf of Cornell Capital.
 
The following table summarizes the number of shares being registered in the current transaction with Cornell Capital.
 
Number of Shares Outstanding Prior to Current Transactions Held by Non-Affiliates (1)
Number of Previously Registered Shares on Behalf of Selling Stockholders (2)
Number of Shares Still Held on Behalf of Selling Stockholders (3)
Number of Shares Sold in Registered Resale Transactions by Selling Share-holders
Percentage of Public Float(4)
Number of Shares Registered for Resale of Selling Shareholder in the Current Transaction
59,104,675
6,540,168
24,880,569
5,165,168
23%
20,635,588
___________________________
 
(1)
Represents the number of shares of common stock of the Company issued and outstanding as of September 26, 2006 (prior to the transaction with Cornell) held by persons other than Cornell, affiliates of Cornell and affiliates of the Company.
 
(2)
Represents the total number of shares of common stock of the Company previously registered on behalf of Cornell and/or Cornell’s affiliates prior to this registration statement and reflects the deregistration of 20,009,857 shares on behalf of Cornell.
 
(3)
Represents the total number of shares of common stock of the Company held by Selling Security Holders.
 
(4)
Percentage based upon 96,842,019 shares held by non-affiliates as of September 21,2007.
 
 
17
Copies of Agreements
 
Incorporated by reference to the Registration Statement to which this prospectus relates (see “Exhibits” below) are copies of all agreements between us and:
These documents include the following, which have been filed with the SEC as indicated:
 
(1)
  
● Securities Purchase Agreement between Firstgold Corp. and Cornell Capital Partners LP
(2)
  
● Amendment to Securities Purchase Agreement
(1)
  
● Secured Convertible Debenture for 1,000,000 (“Closing Debenture”)
(3)
  
● Secured Convertible Debentures for $1,000,000 (“Filing Debenture”)
(4)
  
● Secured Convertible Debenture for $1,000,000 (“Final Debenture”)
(1)
  
● Registration Rights Agreement between Firstgold Corp. and Cornell Capital Partners LP
(2)
  
● Amendment to Registration Rights Agreement
(3)
  
● Pledge and Escrow Agreement with Cornell Capital and Amendment
 5)
  
● Transfer Agent Instruction
(1)
  
● “A Warrant” Agreement between Firstgold Corp. and Cornell Capital Partners LP
(1)
  
● “B” Warrant Agreement between Firstgold Corp. and Cornell Capital Partners LP
(4)
  
● Amended and Restated “B” Warrant Agreement between Firstgold Corp. and Cornell Capital Partners LP
(3)
  
● Amendments to A and B Warrants
(3)
  
● Amended Memorandum of Security Agreement
(6)
  
● Amendment to Investor Registration Agreement
(7)
  
● Warrants dated April 17, 2007
(8)
  
● Form of Subscription Agreement for Regulation S offering in April 2007
________________________________________
 
18
 
 (1)
Filed as exhibit to Report on Form 8-K filed on September 29, 2006
 
(2)
Filed as exhibit to Amended Report on Form 8-K filed on November 24, 2006
 
(3)
Filed as exhibit to Amendment No. 1 to Registration Statement on Form SB-2, #333.139052filed on February 8, 2007
 
(4)
Filed as exhibit to Report on Form 8-K filed on March 22, 2007
 
(5)
Filed as exhibit to Amendment No. 2 to Registration Statement on Form SB-2, #333.139052, filed April 16, 2007.
 
(6)
Filed as exhibit to Registration Statement on Form SB-2 #333-145016 filed August 1, 2007.
 
(7)
Incorporated by reference to Registrant’s Form 8-K filed on May 11, 2007.
 
(8)
Filed as exhibit to Amendment No. 2 to Form SB-2 #333-145016 filed November 7, 2007.
 

USE OF PROCEEDS
 
The Shares offered by this prospectus are being registered for the account of the selling stockholders.  We will not receive any proceeds from the sale of Common Stock by the selling stockholders or the conversion of the Convertible Debentures. Proceeds from the exercise of warrants will be used for working capital.
 
 
MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES.

Market for Our Common Stock
 
In July 1997, our Common Stock was approved for quotation on the Over-the-Counter (“OTC”) Bulletin Board where it traded under the symbol “NGLD” until June 2001.  In June 2001, our Common Stock was moved to the “Pink Sheets” published by the Pink Sheets LLC (previously National Quotation Bureau, LLC).  On June 7, 2005, our Common Stock was again approved for quotation on the OTC Bulletin Board with its symbol of “NGLD.”  Due to our name change to Firstgold Corp., effective December 1, 2006 our trading symbol was changed to “FGOC.”  As of May 1, 2008 the closing bid price of our Common Stock was $0.49 per share.
 
In January 2008, Firstgold filed an application to become listed on the Toronto Stock Exchange (“TSX”).  This application had been pending with the TSX while Firstgold satisfied various listing requirements including securing additional capital. On May 12, 2008 the TSX approved Firstgold’s application for listing its common shares and effective May 14, 2008 Firstgold’s shares became listed for trading under the symbol “FGD”.
 
Price Range of Our Common Stock
 
A public trading market having the characteristics of depth, liquidity and orderliness depends upon the existence of market makers as well as the presence of willing buyers and sellers, which are circumstances over which we do not have control.  The following table sets forth the high and low sales prices reported by the OTC Bulletin Board for our Common Stock in the periods indicated.  The quotations below reflect inter-dealer prices, without retail mark-up, markdown or commission, and may not represent actual transactions.
 
19
 
FIRSTGOLD CORP. COMMON STOCK
Low
High
     
Year Ending January 31, 2009
    
     
First Quarter (February-April)
$0.48
$0.70
     
Year Ending January 31, 2008
 
 
     
Fourth Quarter (November-January)
$0.625
$0.97
Third Quarter (August-October)
$0.52
$0.69
Second Quarter (May-July)
$0.56
$0.72
First Quarter (February-April)
$0.33
$0.73
     
Year Ending January 31, 2007
    
     
Fourth Quarter (November-January)
$0.255
$0.39
Third Quarter (August-October)
$0.30
$0.47
Second Quarter (May-July)
$0.19
$0.53
First Quarter (February-April)
$0.14
$0.245

Stockholders
 
As of January 31, 2008, there were approximately 1,145 holders of record of our Common Stock.  This amount does not include stockholders whose shares are held in street name.
 
Dividend Policy
 
We have never declared or paid any cash dividends on our Common Stock.  We currently anticipate that we will retain all future earnings for the expansion and operation of our business and do not anticipate paying cash dividends in the foreseeable future.
 
Securities Authorized For Issuance Under Equity Compensation Plans
 
On July 26, 2006, our Board of Directors adopted the 2006 Stock Option Plan which was submitted to and approved by stockholders at the 2006 annual stockholders meeting held on November 17, 2006. Under the terms of the 2006 Plan, we may grant options to purchase up to 5,000,000 shares of our common stock which can include Incentive Stock Options issued to employees and Nonstatutory Stock Options issuable to employees or consultants providing services to Firstgold on such terms as are determined by our board of directors.  Our Board administers the 2006 Plan.  Under the 2006 Plan, options vest not less than 20% per year and have 10-year terms (except with respect to 10% stockholders which have five-year terms).  
 
20
If an option holder terminates his/her employment with us or becomes disabled or dies, the option holder or his/her representative will have a certain number of months to exercise any outstanding options.  If we sell substantially all of our assets or are a party to a merger or consolidation in which we are not the surviving corporation, then we have the right to accelerate unvested options and will give the option holder written notice of the exercisability and specify a time period in which the option may be exercised.  All options will terminate in their entirety to the extent not exercised on or prior to the date specified in the written notice unless an agreement governing any change of control provides otherwise.  As of January 31, 2008, options to purchase 4,650,000 shares of common stock had been issued as follows:  750,000 options issued to A. Scott Dockter; 400,000 options issued to James Kluber; 750,000 options issued to Terrence Lynch; 1,000,000 options issued to Stephen Akerfeldt; 500,000 options issued to each of Donald Heimler, Fraser Berrill and Kevin Bullock; and 250,000 options issued to an employee for the purchase of Firstgold restricted common stock.  At the 2007 Annual Stockholders Meeting held on September 20, 2007, stockholders approved an increase in the shares issuable under the 2006 Plan to 10,000,000 shares.
 
Equity Compensation Plan Information

Plan Category
Number of securities to be issued upon exercise of outstanding options, warrants and rights as of January 31, 2008
Weighted-average exercise price of outstanding options, warrants and right
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column
(a))
 
(a)
(b)
(c)
Equity compensation plans to be approved by security holders
4,650,000
$  0.62
5,350,000
Equity compensation plans not approved by security holders
N/A
    
TOTAL    
4,650,000
$  0.62
5,350,000

 
Shares Issuable Upon Conversion of Convertible Debentures
 
The $650,000 principal balance of Convertible Debentures are convertible into shares of our Common Stock at a per share conversion rate of $0.45.
 
The $1,100,000 principal balance of the May 2008 Convertible Debenture is convertible into shares of our Common Stock at a per share conversion rate of $0.80.
 
Repurchase of Equity Securities
 
None
 
 
 
 
 
 
 
 
 
 
21
BUSINESS
 
General
 
Firstgold Corp. (“we,” “us,” “our” or “Firstgold”) has a business strategy whereby it will invest in, explore and if warranted, conduct mining operations of its current mining properties and other mineral producing properties.  Firstgold is a public company that in the past has been engaged in the acquisition and exploration of gold-bearing properties in the continental United States.  Currently, Firstgold’s principal assets include various mineral leases associated with the Relief Canyon Mine located near Lovelock, Nevada along with various items of mining equipment and improvements located at that site.  Firstgold has also secured rights to explore approximately 25,000 acres of property located in Elko County, Nevada, and has staked claims on approximately 4,200 acres of land at the Horse Creek exploration project near Winnemucca, NV, claims on approximately 3,300 acres of land located at it Honorine Gold exploration project near Winnemucca, NV, and claims on approximately 2,300 acres of land at its Fairview-Hunter exploration project, near Fairview, NV.
 
From 1995 until the beginning of 2000, Firstgold had followed the above described business activity focusing on the exploration and mining of gold and silver ore deposits.    With the fall of the precious metal markets, Firstgold attempted to redevelop its business strategy, and from approximately July 2001 until February 2003 Firstgold discontinued all business activity.  During the period of inactivity, ASDi LLC, an entity controlled by A. Scott Dockter who is also the Chief Operating Officer of Firstgold, made the necessary expenditures to maintain the current status of the Relief Canyon mining claims.  In February 2003, Firstgold resumed its business of acquiring, exploring and if warranted developing its mining properties.
 
Firstgold's mailing address is 3108 Ponte Morino Drive, Suite 210, Cameron Park, CA  95682 and its telephone number is (530) 677-5974.
 
The Company
 
Firstgold Corp., a Delaware corporation, has been engaged in the acquisition and exploration of gold-bearing properties in the continental United States since 1995.  In fiscal 1999 Firstgold placed its only remaining property, the Relief Canyon Mine, located in Pershing County, Nevada, on a care and maintenance status.  During fiscal 2000, Firstgold executed a contract to sell the Relief Canyon Mine to A. Scott Dockter, then Chairman of Firstgold; however the sale was never completed and the asset remains the property of Firstgold.  It is now Firstgold’s intention to resume mining at the Relief Canyon Mine.  See “Business” below for further detail.
 
Firstgold’s independent accountants have included a “going concern” explanatory paragraph in their report dated May 15, 2008 on Firstgold’s financial statements for the fiscal year ended January 31, 2008, indicating substantial doubt about Firstgold’s ability to continue as a going concern (See Note 2 of Financial Footnotes).  If Firstgold’s exploration program is not successful or if insufficient funds are available to carry out Firstgold’s business plans, then Firstgold will not be able to execute its business plan.
 
 
 
 
 
 
 
 
 
 
 
 
 
22
For financial information regarding Firstgold, see “Financial Statements.”
 
Business
 
Firstgold is an “exploration stage” company engaged in the search and/or verification of ore deposits (reserves) in its property.  Our business will be to acquire, explore and, if warranted, develop various mining properties located in the state of Nevada.  We plan to carryout comprehensive exploration and, if warranted, development programs on our properties.  While we currently plan to fund and conduct these activities ourselves, in the future we may engage in joint venture, royalty or partnership arrangements pursuant to which other companies would agree to finance and carryout the exploration and possible future development programs on our mining properties.  Our current plan will require the hiring of various mining employees to perform exploration and mining activities for our various mining properties.
 
Properties
 
Relief Canyon Mine
 
The Relief Canyon Mine is an open-pit, heap leaching operation located approximately 110 miles northeast of Reno, Nevada.  Firstgold held 50 unpatented mining claims covering approximately 1000 acres until October 2004 at which time Firstgold completed re-staking the Relief Canyon mill site and lode claims.  Firstgold currently holds a total of 146 claims including 120 mill site claims and 26 unpatented mining claims.  The annual payments to maintain these claims are approximately $15,600.  The mine is readily accessible by improved roads.  Water for mining and processing operations is provided by two wells located on the property in close proximity to the mine and processing facilities.  Power is provided by a local rural electric association and phone lines are present at the mine site.  Relief Canyon is located in the Humboldt Range, a mining district in Pershing County, Nevada.
 
Background and History
 
On January 10, 1995, Firstgold purchased the Relief Canyon mine from J.D. Welsh & Associates for $500,000.  The mine at that time consisted of 39 unpatented lode mining claims covering approximately 780 acres and a lease for access to an additional 800 acres contiguous to the 39 claims located on Firstgold’s property.  When first acquired, the property included a building containing five carbon tanks and a boiler for carbon strip solution, four detoxified leach pads, a preg pond for gold bearing solution, a barren pond for solution from which gold had been removed, water rights, and various permits.  From acquisition through November 1997, Firstgold refurbished the processing facilities by the purchase and installation of all equipment required to process the gold bearing leach solution when the mine was returned to production in 1997.  During 1997, Firstgold staked an additional 402 claims.  However, subsequent to January 31, 1998, Firstgold reduced the total claims to 50 (covering approximately 1,000 acres).  In 1999 Firstgold placed the mine in a care and maintenance status.
 
If mining operations are not resumed at the Relief Canyon mine, it is possible Firstgold may be required to reclaim the mine.  Reclamation consists of recontouring the four heaps to a 3:1 slope, sale and removal of the building and its contents, evaporation of all water in both ponds and burial of the building foundation and floor within the ponds' liners under the soil contained in the pond berms.  Finally, native vegetation must be re-established in all areas of disturbance.  A cash bond has been posted which will cover the cost of these reclamation activities.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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During 1996, Repadre Capital Corporation (“Repadre”) purchased for $500,000 a net smelter return royalty (Repadre Royalty). Repadre was to receive a 1.5% royalty from production at each of the Relief Canyon Mine and Mission Mines. In July 1997, an additional $300,000 was paid by Repadre for an additional 1% royalty from the Relief Canyon Mine. In October, 1997, when the Mission Mine lease was terminated, Repadre exercised its option to transfer the Repadre Royalty solely to the Relief Canyon Mine resulting in a total 4% royalty. The total amount received of $800,000 has been recorded as deferred revenue in the accompanying financial statements.
 
Plan for Relief Canyon
 
Based on past exploration by us and work done by others, we believe the Relief Canyon Mine presents the potential for gold bearing ore deposits which will hopefully be validated through further exploration of additional mining claims.
 
The Relief Canyon properties include 146 millsite claims and unpatented mining claims contained in about 1,000 acres.
 
Firstgold’s operating plan is to place the most promising mining targets into production during the 2008 calendar year, and use the net proceeds from these operations, if any, to fund expanded exploration and, if warranted, development of its entire property holdings.  By this means, Firstgold intends to progressively enlarge the scope and scale of the mining and processing operations, thereby increasing Firstgold’s annual revenues and eventually its net profits.
 
Firstgold’s goals for environmental protection and reclamation are for minimal environmental disturbance during mining, and reclamation and/or restoration of the disturbed area after mining ceases.  The economics of Firstgold’s operations will permit this environmentally responsible plan of operations.
 
We will initially focus on exploring the North Relief Canyon mining property.  We recently posted a $652,800 reclamation bond with the Nevada Bureau of Mining Regulations and Reclamation (“BMRR”) which allows us to apply for new permits for mining and processing on the property.  Posting the reclamation bond completes the Activities of Compliance mandated by the Bureau of Land Management (“BLM”) and Nevada Department of Environmental Protection (“NDEP”) before any work can commence.  We have completed all of the environmental work required by NDEP in the Administrative Order of Consent issued May 2005 (the AOC).  The purpose of the AOC is to bring the Relief Canyon mine up to current environmental compliance.
 
On September 25, 2006 we submitted our “Plan of Operations” for the Relief Canyon Mining Project to the NDEP.  The Plan contains extensive details on how the mine will operate if and when production is achieved.  The Plan includes an intention to reprocess the existing heaps containing approximately 8 million tons of ore and the construction of a new heap leach pad.  The Plan also includes facilities and processes which are compliant with our “Green Initiative” to construct and operate an environmentally conscience project.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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On October 19, 2006 we received notice from the NDEP that we would be allowed to attach our current Plan of Operations as an amendment to a previous Plan of Operations submitted in 1996.  This consolidation of Plans is expected to significantly reduce the processing time and documentation necessary to secure our production permit from the NDEP which will allow us to commence processing ore at the Relief Canyon Mining Project.  On April 9, 2007 we received notice from the NDEP that Firstgold’s 1996 Plan of Operation had been reinstated, and that the NDEP was processing the amendment.  With this approval, Firstgold is allowed to proceed at Relief Canyon with onsite construction, drilling, operations and, if deemed appropriate, production, subject to final determination and posting of reclamation bonds.
 
To assist us in this effort, we have retained Dyer Engineering Consultants, Inc. as our lead engineering firm for the permitting and compliance engineering work at the Relief Canyon and other exploration projects in Nevada.
 
Currently, we can proceed with the permits to commence full scale exploration and mining activities.  The estimated time for completing the permitting process is between six months to nine months.  However, upon posting the reclamation bond, we are able to carry on limited operations pending full permitting for full mining operations.
 
Description of Past Exploration and Existing Exploration Efforts
 
Over 400 historic reverse circulation holes have been drilled at the Relief Canyon project.  Of the 400 holes drilled, 106 had intercepts of gold bearing ore structures of 0.1 gold/ton content.
 
The mineral zone of Relief Canyon is open ended on three sides.  It is projected that ongoing drilling will increase the size of possible reserves.  Most of the drilling to date was targeted for open pit mining, resulting in shallow holes which did not test for possible deeper ore deposits.  A significant number of deep holes were drilled on the North end of the property.
 
In late May 2007 we completed 57 drill holes on existing heaps at Relief Canyon using sonic drilling. The patented sonic drill head works by sending high frequency resonant vibrations down the drill string of the drill bit while the operator controls the frequencies to suit the specific conditions of the soil/rock geology. This round of drilling was intended to improve our understanding of the mineral content in the existing heap leach pads.  We have also completed 83 reverse circulation drill holes in the existing pit area. Fire assays have been returned on the first 174 of these holes which are designed to evaluate three specific exploration target areas.
 
We have retained SRK Engineering to perform a resource evaluation of the Relief Canyon Property.
 
Firstgold owns 3 reverse circulation drill rigs and two diamond core drill rigs.  In addition to providing exploration drilling to Firstgold, these drilling rigs, along with operating crews, have been contracted out from time to time to other nearby mining operations.  This rental activity produced $551,279 of revenue during fiscal 2008.
 

 

 
 
 
 
 
 
 
 
 
 
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Ore Processing Facilities
 
In October 2006, we commenced revitalization of our process solution ponds.  The existing Pregnant and Barren ponds, which were converted to secondary overflow containment, have been cleaned and relined with the latest technology of fluid containment.  In keeping with our “Green Initiative,” this will include new leak detection equipment and protocols.  In addition, a new enclosed solution transmission system will be constructed between the site of the proposed heap leach pad and the existing solution ponds.  Upon completion, we plan to process approximately 8 million metric tons of existing lower grade oxide ores by heap leaching.  Heap leaching consists of stacking crushed or run-of-mine ore in impermeable ponds, where a weak cyanide solution is applied to the top surface of the heaps to absorb the gold.
 
An ore processing facility, with capacity to process up to 20,000 tons of material per day, is presently under construction at the property site.  A new jaw crushing unit is also currently being erected.  Planned construction will commence on the new heap leach pad, pending approval and issuance of the proper permit from NDEP.  This permit is in the final stages of evaluation, having completed its public commentary period.
 
Antelope Peak
 
On October 24, 2006, we entered into a Mineral Lease Agreement with the owners of approximately 25,000 acres of property located in Elko County, Nevada (the “Antelope Peak” property).  The Lease allows Firstgold the exclusive right to explore for and, if warranted, develop gold, silver and barite minerals on the leased property.  The Lease has an initial term of five (5) years; however the term can be automatically extended thereafter for so long as Firstgold is engaged in mining operations.
 
To date we have performed an Aerial Ground Magnetic Survey which allows our geologists to identify targets for more detailed exploration.  We have also conducted extensive ground sampling on the property.
 
Horse Creek
 
On July 9, 2007, we completed staking claims on approximately 4,200 acres of potentially mineralized ground Humboldt County, Nevada.  We have conducted preliminary sampling of the area.  During the course of the property evaluation, rock chip samples were collected. This sampling has shown the potential presence of intrusion-related gold systems. The next phase of this project will be to conduct extensive mapping of the area’s bedrock geology.  Additionally, we plan to conduct an airborne geophysical survey to map the magnetic character of the rocks.  Geochemical exploration efforts will continue with more rock chip sampling as well as an in-depth soil sampling survey.
 
Fairview-Hunter
 
On January 11, 2008 we secured claims on approximately 2,300 acres of potentially mineralized ground near Fairview, Nevada.  We are conducting preliminary sampling of the area.  During the course of the property evaluation, rock chip samples were collected.  The next phase of this project will be to conduct extensive mapping of the area’s bedrock geology.  Additionally, we plan to conduct an airborne geophysical survey to map the magnetic character of the rocks.  Geochemical exploration efforts will continue with more rock chip sampling as well as an in-depth soil sampling survey.
 
 
 
 
 
 
 
 
 
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Honorine Gold
 
On February 22, 2008, we secured claims on approximately 3,300 acres of potentially mineralized ground north of Winnemucca, Nevada.  We are conducting preliminary sampling of the area.  During the course of the property evaluation, rock chip samples were collected.  The next phase of this project will be to conduct extensive mapping of the area’s bedrock geology.  Additionally, we plan to conduct an airborne geophysical survey to map the magnetic character of the rocks.  Geochemical exploration efforts will continue with more rock chip sampling as well as an in-depth soil sampling survey.
 
Crescent Red Caps LLC
 
In early 2005 we entered into a Letter of Intent to form a joint venture to acquire the exploration rights to certain properties which consisted of two leases of unpatented mining claims located in northeastern Nevada, approximately 60 miles southwest of Elko, Nevada in Lander County for which ASDi LLC was the lessee.  In furtherance of this intended joint venture on January 25, 2006 ASDi LLC and Firstgold entered into an Operating Agreement for the Crescent Red Caps LLC, a Nevada limited liability company (“Crescent Red Caps LLC”) formed for the intended purpose of exploring the properties. The terms of the Operating Agreement for Crescent Red Caps LLC provided for Firstgold to own an initial 22.22% interest in the LLC and be the Manager and the remaining 77.78% interest to be held by ASDi LLC, a California limited liability company owned by A. Scott Dockter, COO of Firstgold.  Additionally, by the terms of the Operating Agreement, Firstgold, by making expenditures over three years (January 2006 - January 2009) aggregating $2,700,000, could acquire a 66.66% overall interest in the Crescent Red Caps LLC.  Firstgold would then have the opportunity to purchase the remaining Crescent Red Caps LLC interest held by ASDi LLC based on the results of the exploration work contemplated by these additional expenditures.
 
On October 13, 2006 and November 1, 2006 the lessors gave notices of termination of the two leases.  The lessors claimed that the proposed assignment of the leases by ASDi LLC to Crescent Red Caps LLC was either ineffective or in breach of the leases.  ASDi LLC disputed the lease terminations and on February 8, 2007, the lessors filed a lawsuit seeking to terminate the leases (see the section “Legal Proceedings” below). As a result of the recent settlement of this litigation ASDi LLC, Firstgold and Crescent Red Caps LLC relinquished all rights to any interest in the above leases or properties.  Firstgold had not yet expended any significant amounts on its exploration program on the properties prior to this lease dispute.
 
Mining Support Services
 
Outside Drilling Services
 
Increased activity in the mining industry in Nevada has resulted in a shortage of available drilling equipment and qualified drilling personnel.  While our priority is to drill on our own projects with our five drill rigs, from time to time we lease some of our drilling rigs and crew to other nearby mining operations.  We expect this outside drilling activity to continue for the foreseeable future.  As of April 30, 2008 we had invested approximately $2,283,000 for property, plant and equipment related to our drilling services.
 
 
 
 
 
 
 
 
 
 
 
 
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New Assay Laboratory
 
There is also a shortage of qualified laboratories in Nevada to perform required mineral assay work on a timely basis, again due to the increased activity in the mining industry.  Accordingly, we are in the process of completing our own laboratory facility in Lovelock, Nevada.  The laboratory will be located in approximately 10,000 sq. ft. of existing building space and fully equipped to allow us to obtain assay results on a timely basis and to perform assay work for other nearby mining operations.  The laboratory is expected to be operational in the third fiscal quarter.  As of April 30, 2008 we had invested approximately $612,000 for property, plant and equipment related to our laboratory facility.
 
Industry Overview
 
The gold mining and exploration industry has experienced several factors recently that are favorable to Firstgold as described below.
 
The spot market price of an ounce of gold has increased from a low of $253 in February 2001 to a high of $1,011 in March 2008.  The price was $923 as of January 31, 2008 and $853 as of May 1, 2008.  This current price level has made it economically more feasible to produce gold as well as made gold a more attractive investment for many.  Accordingly, the gross margin per ounce of gold produced per the historical spot market price range above provides significant profit potential if we are successful in identifying and mining gold at the Relief Canyon mine.
 
By industry standards, there are generally four types of mining companies.  Firstgold is considered an “exploration stage” company.  Typically, an exploration stage mining company is focused on exploration to identify new, commercially viable gold deposits.  “Junior mining companies” typically have proven and probable reserves of less then one million ounces of gold, generally produces less then 100,000 ounces of gold annually and / or are in the process of trying to raise enough capital to fund the remainder of the steps required to move from a staked claim to production.  “Mid-tier” and large mining (“senior”) companies may have several projects in production plus several million ounces of gold in reserve.
 
Generally gold reserves have been declining for a number of years for the following reasons:
Reversing the decline in lower gold reserves is a long term process.  Due to the extended time frame it takes to explore, develop and bring new production on line, the large mining companies are facing an extended period of lower gold reserves.  Accordingly, junior companies that are able to increase their gold reserves more quickly should directly benefit with an increased valuation.
 
 
 
 
 
 
 
 
 
 
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Additional factors causing higher gold prices over the past two years have come from a weakened United States dollar.  Reasons for the lower dollar compared to other currencies include the historically low US interest rates, the increasing US budget and trade deficits and the general worldwide political instability caused by the war on terrorism.
 
Competition
 
Of the four types of mining companies, we believe junior companies represent the largest group of gold companies in the public stock market.  All four types of mining companies may have projects located in any of the gold producing continents of the world and many have projects located near the Relief Canyon mine in Nevada.  Many of our competitors have greater exploration, production, and capital resources than we do, and may be able to compete more effectively in any of these areas.  Firstgold’s inability to secure capital to fund current exploration and possible future production capacity, would establish a competitive cost disadvantage in the marketplace which would have a material adverse effect on its operations and potential profitability.
 
We also compete in the hiring and retention of experienced employees.  Consequently, though unlikely, it is possible that we may not be able to hire or retain qualified miners or operators in the numbers or at the times desired.
 
Employees
 
As of January 31, 2008, we had 61 full-time employees.  Employees include a Mine Manager, Chief Geologist and Senior Geologist, a Lead Driller and a Plant Metallurgist. We anticipate hiring additional employees during the current year to work on the mining sites in Nevada as our exploration program continues.  While skilled equipment and operations personnel are in demand, we believe we will be able to hire the necessary workers to sustain our exploration program.  Our employees are not expected to be subject to a labor contract or collective bargaining agreement.  We consider our employee relations to be good.
 
Consulting services, relating primarily to geologic and geophysical interpretations, and relating to such metallurgical, engineering, and other technical matters as may be deemed useful in the operation of our exploration activities, will be provided by independent contractors.
 
Government Controls and Regulations
 
Our exploration, mining and processing operations are subject to various federal, state and local laws and regulations governing prospecting, exploration, development, production, labor standards, occupational health, mine safety, control of toxic substances, and other matters involving environmental protection and employment.  United States environmental protection laws address the maintenance of air and water quality standards, the preservation of threatened and endangered species of wildlife and vegetation, the preservation of certain archaeological sites, reclamation, and limitations on the generation, transportation, storage and disposal of solid and hazardous wastes, among other things.  There can be no assurance that all the required permits and governmental approvals necessary for any mining project with which we may be associated can be obtained on a timely basis, or maintained.  Delays in obtaining or failure to obtain government permits and approvals may adversely impact our operations.  The regulatory environment in which we operate could change in ways that would substantially increase costs to achieve compliance.  In addition, significant changes in regulation could have a material adverse effect on our operations or financial position.
 
 
 
 
 
 
 

 
 
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Outlined below are some of the more significant aspects of governmental controls and regulations which materially affect our interests in the Relief Canyon, Horse Creek and Antelope Peak properties.
 
Regulation of Mining Activity
 
Firstgold’s mining activities, including exploration, and possible future development and production activities are subject to environmental laws, policies and regulations.  These laws, policies and regulations affect, among other matters, emissions to the air, discharges to water, management of waste, management of hazardous substances, protection of natural resources, protection of endangered species, protection of antiquities and reclamation of land.  The mines are also subject to numerous other federal, state and local laws and regulations.  At the federal level, the mines are subject to inspection and regulation by the Division of Mine Safety and Health Administration of the Department of Labor (“MSHA”) under provisions of the Federal Mine Safety and Health Act of 1977.  The Occupation and Safety Health Administration (“OSHA”) also has jurisdiction over certain safety and health standards not covered by MSHA.  Mining operations and all future exploration and development will require a variety of permits.  Although we believe the permits can be obtained in a timely fashion, permitting procedures are complex, costly, time consuming and subject to potential regulatory delay.  We do not believe that existing permitting requirements or other environmental protection laws and regulations would have a material adverse effect on our ability to explore and eventually operate the mines.  However, we cannot be certain that future changes in laws and regulations would not result in significant additional expenses, capital expenditures, restrictions or delays associated with the operation of our properties.  We cannot predict whether we will be able to obtain new permits or whether material changes in permit conditions will be imposed.  Granting new permits or the imposition of additional conditions could have a material adverse effect on our ability to explore and operate the mining properties in which we have an interest.
 
On June 9, 2005, we received permission from the NDEP to commence designated environmental activities previously requested by us.  In January 2006, we made a cash deposit of $243,204 to cover future reclamation costs as required by the NDEP for the Relief Canyon Mine.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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In September 2006, we submitted our “Application for Water Pollution Control Permit and Design Report” for the Relief Canyon project with the NDEP.  This document provides the BLM and NDEP with information regarding the characteristics of the site, proposed management of process fluids, monitoring and tentative plans for the eventual closure of operations.  In addition, this fulfills Nevada state requirements and illustrates the plan to prevent undue degradation of public lands while the Relief Canyon Mining Project is in operation.
 
On October 19, 2006 we received notice from the NDEP that we would be allowed to attach our current Plan of Operations for Relief Canyon submitted on September 15, 2006 as an amendment to the previous Plan of Operations submitted in 1996.  This consolidation of Plans is expected to significantly reduce the processing time and documentation necessary to secure our production permit from the NDEP for the Relief Canyon project.  We were also required to increase the reclamation cost deposit from $243,204 to $613,500 which was placed in a blocked account with our bank in Sacramento, California in March 2007.  On April 9, 2007 we received notice from the NDEP that Firstgold’s Plan of Operation had been reinstated.  With this approval, Firstgold is allowed to commence onsite operations subject to final determination and posting of reclamation bonds.
 
On November 16, 2006, the NDEP notified Firstgold of certain violations that had occurred pertaining to the unauthorized release of water from one of the overflow containment ponds at the Relief Canyon mining site in early November 2006. On August 14, 2007, Firstgold was notified that a fine of $9,000 had been assessed for these violations.  Firstgold paid the fine in full on August 21, 2007. Such violation and fine is not expected to affect the permitting process or exploration program at the Relief Canyon Mine site.
 
Legislation has been introduced in prior sessions of the U.S. Congress to make significant revisions to the U.S. General Mining Law of 1872 that would affect our unpatented mining claims on federal lands, including a royalty on gold production.  It cannot be predicted whether any of these proposals will become law.  Any levy of the type proposed would only apply to unpatented federal lands and accordingly could adversely affect the profitability of portions of any future gold production from the Relief Canyon mine.
 
The State of Nevada, where our mine properties are located, adopted the Mined Land Reclamation Act (the “Nevada Act”) in 1989 which established design, operation, monitoring and closure requirements for all mining facilities.  The Nevada Act has increased the cost of designing, operating, monitoring and closing mining facilities and could affect the cost of operating, monitoring and closing existing mine facilities.  The State of Nevada also has adopted reclamation regulations pursuant to which reclamation plans must be prepared and financial assurances established for existing facilities.  The financial assurances can be in the form of cash placed on deposit with the State or reclamation bonds underwritten by insurance companies.  We prepared a specific reclamation plan of the Relief Canyon Mine and began implementation of the plan in April 2005.  This work was completed in the summer of 2005.  As a result of completing the work, the State of Nevada reduced the financial assurance amount to $243,204 which we have deposited in a blocked account with our bank in Sacramento, California.  In March 2007, we increased the reclamation cost deposit to $613,500 and in October, 2007, we increased the deposit to $652,800.  We have now completed the Activities of Compliance required by BLM and NDEP which was a prerequisite to the issuance of mining permits.  Our ability to commence full mining operations at the Relief Canyon Mine is subject to our obtaining all necessary mining permits.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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Environmental Regulations
 
Legislation and implementation of regulations adopted or proposed by the United States Environmental Protection Agency (“EPA”), the BLM and by comparable agencies in various states directly and indirectly affect the mining industry in the United States.  These laws and regulations address the environmental impact of mining and mineral processing, including potential contamination of soil and water from tailings, discharges and other wastes generated by mining process.  In particular, legislation such as the Clean Water Act, the Clean Air Act, the Federal Resource Conservation and Recovery Act (“RCRA”), and the National Environmental Policy Act require analysis and/or impose effluent standards, new source performance standards, air quality standards and other design or operational requirements for various components of mining and mineral processing, including gold-ore mining and processing.  Such statutes also may impose liability on us for remediation of waste we have created.
 
Gold mining and processing operations by an entity would generate large quantities of solid waste which is subject to regulation under the RCRA and similar state laws.  The majority of the waste which is produced by such operations is “extraction” waste that EPA has determined not to regulate under RCRA's "hazardous waste" program.  Instead, the EPA is developing a solid waste regulatory program specific to mining operations under the RCRA.  Of particular concern to the mining industry is a proposal by the EPA entitled “Recommendation for a Regulatory Program for Mining Waste and Materials Under Subtitle D of the Resource Conservation and Recovery Act” (“Strawman II”) which, if implemented, would create a system of comprehensive Federal regulation of the entire mine site.  Many of these requirements would be duplicates of existing state regulations.  Strawman II as currently proposed would regulate not only mine and mill wastes but also numerous production facilities and processes which could limit internal flexibility in operating a mine.  To implement Strawman II the EPA must seek additional statutory authority, which is expected to be requested in connection with Congress' reauthorization of RCRA.
 
We also are subject to regulations under (i) the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA" or “Superfund”) which regulates and establishes liability for the release of hazardous substances and (ii) the Endangered Species Act (“ESA”) which identifies endangered species of plants and animals and regulates activities to protect these species and their habitats.  Revisions to “CERCLA” and “ESA” are being considered by Congress; however, the impact of these potential revisions on us is not clear at this time.
 
The Clean Air Act, as amended, mandates the establishment of a Federal air permitting program, identifies a list of hazardous air pollutants, including various metals and cyanide, and establishes new enforcement authority.  The EPA has published final regulations establishing the minimum elements of state operating permit programs.  Firstgold will be required to comply with these EPA standards to the extent adopted by the State of Nevada.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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In addition, we are required to mitigate long-term environmental impacts by stabilizing, contouring, resloping, and revegetating various portions of a site.  While a portion of the required work was performed concurrently with prior operations, completion of the environmental mitigation occurs once removal of all facilities has been completed.  These reclamation efforts are conducted in accordance with detailed plans which have been reviewed and approved by the appropriate regulatory agencies.  We have made the necessary cash deposits and we made provision to cover the estimated costs of such reclamation as required by permit.
 
We believe that our current exploration activities  at the Relief Canyon Mine, are in substantial compliance with federal and state regulations and is consistent with our Green Initiative approach to environmental impact and that no further significant capital expenditures for environmental control facilities will be required unless and until production resumes at the site.
 
 
DESCRIPTION OF PROPERTY

Firstgold’s executive office is located at 3108 Ponte Morino Drive, Suite 210, Cameron Park, California 95682.  Firstgold also owns and maintains an office at 1055 Cornell Avenue, Lovelock, Nevada 89419.
 
Mining Property Rights
 
Relief Canyon Property
 
Our mining property rights are represented by 146 unpatented mill site and mining lode claims which were re-staked in October 2004 and June 2006.  Unpatented mining claims are generally considered subject to greater title risks than patented mining claims or real property interests that are owned in fee simple.  To remain valid, such unpatented claims are subject to annual maintenance fees.  As of January 31, 2008, we were current in the payment of such maintenance fees.
 
Dalton Livestock and Winchell Ranch Mineral Lease
 
On October 24, 2006, we entered into a Mineral Lease Agreement with the owners of approximately 25,000 acres of property located in Elko County, Nevada (the “Antelope Peak” property).  The Lease allows Firstgold the exclusive right to explore for and, if warranted, develop gold, silver and barite minerals on the leased property.  The Lease includes exploration, mining and access rights, deposit of waste material, mineral processing and water rights.  The Lease has an initial term of five (5) years; however the term can be automatically extended thereafter for so long as Firstgold is engaged in mining operations.
 
Firstgold paid $20,000 upon the signing of the Lease and is required to pay rent of $50,000 per year.  Firstgold is required to expend the following sums for exploration work on the premises: first year - $150,000; second year - $450,000; third year - $1,000,000; fourth year - $1,500,000; and fifth year - $2,000,000.  In addition, should mining operations be commenced, the Lessors would be entitled to a percentage of net smelter returns ranging from 2% to 5% depending on the price of gold. A finder’s fee of 2,000,000 common shares and 2,000,000 warrants to purchase common shares at a price of $0.50 per common share were issued to an unrelated third party at the date of signing the Lease.  The warrants have a term of three years.
 
 
 
 
 
 
 
 
 
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Horse Creek Property
 
On  July 9, 2007, we completed staking claims on approximately 4,200 acres of ground in the Horse Creek area located approximately 100 miles Northeast of Reno, Nevada.  These claims are staked claims on property owned by the U.S. Bureau of Land Management (“BLM”).  Such staking of claims is permitted on U.S. Government property; however such claims must be filed with the BLM and any significant drilling or development activity will be subject to the review and approval of the BLM and NDEP. Upon conclusion of all mineral exploration and mining operations, if any, Firstgold is required to restore the property.
 
Fairview-Hunter
 
On January 11, 2008 we entered into a Mineral Lease Agreement with the Randall Stoeberl, dba RSgold of approximately 2,300 acres of potentially mineralized ground near Fairview, Nevada (“Fairview-Hunter” property).  The Lease allows Firstgold the exclusive right to explore for and, if warranted, develop gold, silver and barite minerals on the leased property.  The Lease includes exploration, mining and access rights, deposit of waste material, mineral processing, and water rights.  The Lease has an initial term of ten (10) years; however the term can be automatically extended thereafter for so long as Firstgold is engaged in mining operations.
 
Firstgold paid $25,000 upon the signing of the Lease and is required to pay rent of $25,000 the first year, with payments increasing each subsequent year by $5,000, with a maximum annual payment of $50,000.  Firstgold is required to complete an initial 2000 feet of drilling in the first year, with no specified obligations thereafter.   In addition, should mining operations be commenced, the Lessors would be entitled to 3% of net smelter returns.
 
These claims are staked claims on property owned by the U.S. Bureau of Land Management (“BLM”), and controlled by Randall Stoeberl.  Such staking of claims is permitted on U.S. Government property; however such claims must be filed with the BLM and any significant drilling or development activity will be subject to the review and approval of the BLM and NDEP.
 
Honorine Gold
 
On February 22, 2008, we entered into a Mineral Lease Agreement with the Randall Stoeberl, dba RSgold of approximately 3,300 acres of property located in Humboldt County, Nevada (the “Honorine Gold” property).  The Lease allows Firstgold the exclusive right to explore for and, if warranted, develop gold, silver and barite minerals on the leased property.  The Lease includes exploration, mining and access rights, deposit of waste material, and mineral processing.  The Lease has an initial term of ten (10) years; however the term can be automatically extended thereafter for so long as Firstgold is engaged in mining operations.
 
Firstgold paid $15,000 upon the signing of the Lease and is required to pay rent of $15,000 the first year, with payments increasing each subsequent year by $15,000, with a maximum annual payment of $50,000.  Firstgold is required to complete an initial 2000 feet of drilling in the first year, with no specified obligations thereafter.   In addition, should mining operations be commenced, the Lessors would be entitled to 5% of net smelter returns.
 
 
 
 
 
 
 
 
 
 
 
 
 
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These claims are staked claims on property owned by the U.S. Bureau of Land Management (“BLM”), and controlled by Randall Stoeberl.  Such staking of claims is permitted on U.S. Government property; however such claims must be filed with the BLM and any significant drilling or development activity will be subject to the review and approval of the BLM and NDEP.
 

MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
 
For more detailed financial information, please refer to the audited January 31, 2008 Financial Statements included in this Form 10-KSB.
 
Caution about forward-looking statements
 
This Registration Statement includes “forward-looking” statements about future financial results, future business changes and other events that haven’t yet occurred.  For example, statements like we “expect,” we “anticipate” or we “believe” are forward-looking statements.  Investors should be aware that actual results may differ materially from our expressed expectations because of risks and uncertainties about the future.  We do not undertake to update the information in this Registration Statement if any forward-looking statement later turns out to be inaccurate.  Details about risks affecting various aspects of Firstgold’s business are discussed throughout this Registration Statement and should be considered carefully.
 
Plan of Operation for the Next Twelve Months
 
Certain key factors that have affected our financial and operating results in the past will affect our future financial and operating results.  These include, but are not limited to the following:
 
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Results of Operation
 
Our current business strategy is to invest in, explore and if warranted, conduct mining operations of our current mining properties and other mineral producing properties.  Firstgold is a public company that in the past has been engaged in the acquisition and exploration of gold-bearing properties in the continental United States.  Currently, our principal assets include various mineral leases associated with the Relief Canyon Mine located near Lovelock, Nevada along with various items of mining equipment and improvements located at that site.  We have also entered into a mineral lease to explore approximately 25,000 acres of property located in Elko County, Nevada.
 
Operating Results for the Fiscal Years Ended January 31, 2008 and 2007
 
Although we commenced efforts to re-establish our mining business early in fiscal year 2004, no mining operations have commenced and no revenue from mining production has been recognized during the fiscal years 2007 and 2008, respectively.  However, we recognized $551,279 of revenue from the leasing of some of our drilling rigs and crew to other nearby mining operations. We have granted a 4% net smelting return royalty to a third party related to the Relief Canyon mining property which has been recorded as an $800,000 deferred option income.
 
During the fiscal year ended January 31, 2008 we spent $2,195,024 on exploration, reclamation and maintenance expenses related to our mining properties.  Exploration, reclamation and maintenance expenses expended during the year ended January 31, 2007 were $132,166.  These expenses relate primarily to exploration costs and property improvements at our Relief Canyon mining claims.  We expended $2,261,816 on retro fitting the on-site mill facility and $2,098,686 for acquisition of mining equipment.  We incurred operating expenses of $5,715,150 during the year ended January 31, 2008. Of this amount, $2,065,464 reflects director, officer and staff compensation and related payroll taxes during the year, $1,651,672 reflect fees for outside professional services, and $645,509 for promotional expense.  A large portion of the outside professional services reflects legal and accounting work pertaining to our annual and quarterly SEC reporting, preparation of two SB-2 registration statements occurring in fiscal year 2008 and litigation expenses related to the Red Caps and Crescent Valley leases.  
 
 
 
 
 
 
 
 
 
 
 
 
 
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During the year ended January 31, 2007 we incurred operating expenses of $1,955,816 of which $850,869 represents director, officer and staff compensation and related payroll taxes during the year, $445,940 reflect fees for outside professional services and $396,361 for promotional expenses.  It is anticipated that both mining costs and operating expenses will increase significantly as we resume our exploration program and mining operations.
 
We incurred interest expense of $869,444 during the year ended January 31, 2008 which compares to interest expenses of $596,975 incurred during the year ended January 31, 2007.  The amount of loans outstanding on average was higher during fiscal year 2008 compared to fiscal year 2007, which was primarily the result of the increase in convertible debentures on average during fiscal 2008.  The higher interest expense during fiscal year 2008 was primarily due to the increase in accretion of warrants issued in fiscal years 2007 and 2008 as a debt discount as well as the write-off of balances of derivative liabilities upon conversion of convertible debt in fiscal 2008.
 
In conjunction with the Convertible Debentures issued during fiscal years 2007 and 2008, we allocated the proceeds received between convertible debt and the detachable warrants based upon the relative fair market values on the date the proceeds were received.  Subsequent to the initial recording, the change in the fair value of the detachable warrants, determined under the Black-Scholes option pricing formula, and the change in the fair value of the embedded derivative in the conversion feature of the convertible debentures are recorded as adjustments to the liabilities at January 31, 2008 and 2007.  This resulted in $703,992 of expense relating to the change in the fair value of Firstgold’s stock reflected in the change in the fair value of the warrants and derivatives (noted above) and is included as other income (expense).  This expense was $616,493 for the fiscal year ending January 31, 2007.
 
Our total net loss for the year ended January 31, 2008 increased to $7,632,537compared to a net loss of $4,728,070 incurred for the fiscal year ended January 31, 2007.  The larger net loss in fiscal year 2008 reflects the substantial increase in operating expenses as we pursue our exploration programs and reactivate our mining activities, the increase in operating expense from additional staffing levels as well as costs associated with capital raising activities and litigation, coupled with the limited revenues recognized during fiscal year 2008.
 
Operating Results for the Fiscal Quarter Ended April 30, 2008 and 2007
 
Although we commenced efforts to re-establish our mining business early in fiscal year 2004, no mining operations have commenced and no revenues from mining operations have been recognized during the quarters ended April 30, 2008 and 2007, respectively.  We have granted a 4% net smelting return royalty to a third party related to the Relief Canyon mining property which has been recorded as an $800,000 deferred option income.  During the first quarter of fiscal year 2009 we recognized revenue of $275,793 from the leasing of drill rigs and crew to other nearby mining operations.

During the quarter ended April 30, 2008 we spent $1,391,411 for exploration, reclamation and maintenance expenses related to our mining properties.  Reclamation and maintenance expenses expended during the same quarter ended April 30, 2007 were $126,681.  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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These expenses relate primarily to exploration, maintenance and retention costs required to maintain our mining claims.  The increase in costs was due to extensive building and facility expansion at the Relief Canyon mine and significant exploration drilling.  During the quarter ended April 30, 2008 we expended approximately $56,250 on preliminary exploration activities at the Antelope Peak, Horse Creek, Fairview-Hunter and Honorine Gold properties.  We incurred operating expenses of $1,466,154 during the quarter ended April 30, 2008.  Of this amount, $78,299 reflects promotion expense, $228,460 reflects officer and director compensation during the quarter and $394,378 reflect fees for outside professional services.  $259,798 of the outside professional services reflects legal costs associated with the litigation involving the Crescent Red Caps LLC.    We incurred operating expenses of $985,685 during the quarter ended April 30, 2007.  Of this amount, $222,933 reflects outside director compensation expense, $188,769 reflects promotion expense, $93,500 reflects officer compensation and related payroll taxes during the quarter and $124,533 reflect fees for outside professional services.  
 
A large portion of the outside professional services reflects legal and accounting work pertaining to our annual and quarterly reporting on Form 10-KSB and Form 10-QSB occurring in fiscal year 2008 as well as the preparation and filing of a Form SB-2.  It is anticipated that both mining costs and operating expenses will increase significantly as we continue our exploration program and prepare for mining operations.

We incurred interest expense of $34,606 during the quarter ended April 30, 2008 which compares to interest expenses of $247,959 incurred during the same quarter of 2007.  The principal balance of loans outstanding during the first quarter of fiscal year 2009 decreased by $2,827,609 to $950,797 compared to a principal balance of $3,778,406 outstanding at the end of the first quarter of fiscal year 2008, which was primarily the result of a decrease in convertible debentures.  The decrease in interest expense during the quarter ended April 30, 2008 was primarily due to the decrease in the principal balance of loans outstanding during the period offset by the write-off of unamortized debt costs related to convertible debt which was converted in full during the period.
 
Our total net loss for the quarter ended April 30, 2008 decreased to $2,595,314 compared to a net loss of $2,977,614 incurred for the same quarter ended April 30, 2007.  The larger net loss in the first quarter of fiscal 2008 reflects the increase in the adjustment to fair value of derivatives of $1,623,255.  In addition, the decrease in net loss for the quarter ended April 30, 2008 reflects the net sales revenue recognized during the quarter compared to no revenues recorded in the same quarter of 2007.

Liquidity and Capital Resources

We have incurred significant operating losses since inception and during the three months ended April 30, 2008 which has resulted in an accumulated deficit of $33,986,454 as of April 30, 2008.  At April 30, 2008, we had cash and other current assets of $1,897,342 compared to $1,125,613 at January 31, 2008 and net working capital of $412,145 as of April 30, 2008.  Since the resumption of our business in February 2003, we have been dependent on borrowed or invested funds in order to finance our ongoing operations.  As of April 30, 2008, we had outstanding debentures and notes payable in the gross principal amount of $950,797 (net balance of $817,624 after $(148,480) of deferred financing costs) which reflects a decrease in the gross principal balance of $2,827,609 compared to notes payable in the gross principal amount of $3,778,406, (net balance of $5,958,845 after $(2,365,659) of note payable discount and deferred financing costs and $4,546,098 of derivative liabilities) as of April 30, 2007.
 
 
 
 
 
 
 
 
 
 

 
 
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On January 25, 2006, Firstgold entered into a joint venture with ASDi, LLC to develop two Nevada mining properties known as the Red Caps Project (“Red Caps”) and Crescent Valley Project (“Crescent Valley”).  Pursuant to the Operating Agreement for the Crescent Red Caps LLC, ASDi LLC was to contribute the Red Caps and Crescent Valley mining leases to the Crescent Red Caps LLC in exchange for Firstgold issuing 2.5 million shares of its common stock and warrants to purchase 2.5 million shares of Firstgold common stock at an exercise price of $0.40 per share and a term of three years to ASDi LLC.  Pursuant to the joint venture, Firstgold initially owned a 22.22% interest in the Crescent Red Caps LLC, a Nevada limited liability company and ASDi LLC held a 77.78% interest.  Firstgold was to expend up to $1,350,000 on each project over the next three years.  Due to the settlement of litigation relating to these mining leases, the joint venture has been terminated prior to Firstgold having spent any significant amounts for exploration expenses relating to these properties.  However, Firstgold incurred approximately $1,100,000 in legal expenses relating to this litigation.
 
Our primary sources of operating capital have been debt and equity financings. In January, 2006 we entered into a Securities Purchase Agreement which resulted in proceeds from the issuance of convertible debentures as follows: $600,000 on January 27, 2006; $200,000 on March 12, 2006; and $200,000 on July 18, 2006.
 
On September 26, 2006 we entered into another Securities Purchase Agreement which resulted in proceeds from the issuance of convertible debentures as follows: $1,000,000 on September 26, 2006; $1,000,000 on December 1, 2006; and $1,000,000 on March 16, 2007.
 
On October 10, 2006 we issued convertible debentures raising proceeds of $650,000.
 
On April 12, 2007 we received net proceeds of $2,374,200 from the sale of Units in Canada.
 
On May 18, 2007 we received gross proceeds of $337,500 upon the issuance of units consisting of Firstgold common stock and warrants.
 
On June 22, 2007 we received net proceeds of $7,885,972 upon the issuance of units consisting for Firstgold common stock and warrants sold in Canada.
 
During February, March and April of 2008, Firstgold received gross proceeds of $8,042,897 upon the private placement of Units consisting of 12,373,689 shares of common stock and warrants to purchase 6,186,845 shares of common stock at an exercise price of $0.80 per share.   The warrants have a term of 18 months.

On May 1, 2008, we issued a Convertible Debenture in the principal amount of $1,100,000 and bearing interest or 10% per annum. The transaction included the issuance of warrants to purchase 1,100,000 shares of Firstgold common stock at an exercise price of $1.00 per share.
 
 
 
 
 

 
 
 
 
 
 
 
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By attempting to resume mining operations, we will require approximately $10 million to $20 million in working capital above the amounts realized during calendar year 2008 to bring the Relief Canyon Mine into full production and carry out planned exploration on our other properties.  We believe we have sufficient working capital to fund our current business plan for Relief Canyon.  However, should additional funds become necessary, our intention would be to pursue several possible funding opportunities including the sale of additional securities, entering into joint venture arrangements, or incurring additional debt.
 
Due to our continuing losses from business operations, the independent auditor’s report dated May 15, 2008, includes a “going concern” explanation relating to the fact that Firstgold’s continuation is dependent upon obtaining additional working capital either through significantly increasing revenues or through outside financing.  As of January 31, 2008, Firstgold’s principal commitments included its obligation to pay ongoing maintenance fees on 146 unpatented mining claims and the annual minimum rent due on the Winchell Ranch mineral lease and mortgage payments relating to its offices in Lovelock, Nevada.
 
It is likely that we will need to raise additional capital to fund the long-term or expanded development, promotion and conduct of our mineral exploration.  Due to our limited cash flow, operating losses and limited assets, it is unlikely that we could obtain financing through commercial or banking sources.  Consequently, any future capital requirements will be dependent on cash infusions from our major stockholders or other outside sources in order to fund our future operations.  Prior to the transactions with Cornell Capital Partners, Firstgold’s president had paid a substantial portion of Firstgold’s expenses since restarting its business in February 2003.  Although we believe that our creditors and investors would continue to fund Firstgold’s expenses if such became necessary based upon their significant debt and/or equity interest in Firstgold, there is no assurance that such investors would continue to pay our expenses in the future.  If adequate funds are not available in the future, through public or private financing as well as borrowing from other sources, Firstgold might not be able to establish or sustain its mineral exploration or mining program.
 
Recent Financing Transaction
 
On September 26, 2006, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) and other agreements, which were amended on November 1, 2006, with Cornell Capital Partners LP in connection with the private placement of convertible debentures, in the aggregate principal amount of $3,000,000 and bearing interest at 8% per annum (the “Debentures”).  The Debentures were issued for $1,000,000 on September 26, 2006, $1,000,000 on December 1, 2006, and $1,000,000 on March 16, 2007.  Each Debenture had a three (3) year term from the date of issue unless they were converted into shares of Firstgold Common Stock or were repaid prior to the expiration dates.  The conversion rate was adjustable and at any conversion date, would be the lower of $0.4735 per share (and subsequently reduced to $0.45 per share) or 95% of the Market Conversion Price.  Consequently, the number of shares of Firstgold Common Stock into which the Debentures could have been converted would never be less than 6,666,666 shares but could have been substantially more if the average market price of Firstgold’s Common Stock fell below $0.45.  On July 13, 2007, Cornell Capital converted $450,000 principal amount of the third Debenture at the Fixed Conversion Rate of $0.45 per share into 1,000,000 shares of Firstgold common stock.  On September 13, 2007, Cornell Capital converted the first $1,000,000 Debenture at the Fixed Conversion Rate of $0.45 per share into 2,222,222 shares of Firstgold common stock.  As of October 31, 2007, Cornell Capital had converted the balance of its Debentures with accrued interest at the Fixed Conversion Rate of $0.45 per share into 3,858,228 shares of Firstgold Common Stock.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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Firstgold paid a Commitment Fee to Cornell Capital Partners, LP of 9% of gross proceeds or a total of $270,000.  Firstgold also paid Yorkshire Advisors, LLC (an affiliate of Cornell Capital Partners) a due diligence fee of $5,000 and a Structuring Fee of $20,000.  Net proceeds to Firstgold from this financing were approximately $2,705,000.
 
In conjunction with the Purchase Agreement, we entered into an Investor Registration Rights Agreement (the “Registration Rights Agreement”).  The Registration Rights Agreement requires us to register at least 18,750,000 shares of our Common Stock to cover the conversion of the Debentures (assuming conversion prices substantially below $0.4735) and 3,500,000 shares of our Common Stock issuable upon conversion of warrants (the “Warrants”) granted to the Debenture holder.  We are required to keep this Registration Statement effective until the Debentures have been fully converted, repaid, or becomes due and the Warrants have been fully exercised or expire.  Both the Debentures and the Warrants are currently convertible or exercisable, respectively.
 
In conjunction with the Purchase Agreement, we entered into a Security Agreement (the “Security Agreement”).  The Security Agreement creates a secured interest in favor of the Debenture holder in our mining interest and assets in the Relief Canyon Mine property.  This security interest was created by recordation of an Amended Memorandum of Security Agreement filed in Pershing County, Nevada on November 15, 2006.  Consequently, if a default would occur under the Debenture, the Debenture holder could take over or sell all of our interests, business and assets associated with the Relief Canyon Mine.
 
In conjunction with the Purchase Agreement, we granted warrants to purchase 2,000,000 shares of Firstgold Common Stock exercisable at $0.45 per share and 1,500,000 shares exercisable at $0.60 per share.  However, on March 16, 2007, the exercise price of the $0.60 per share warrants was changed to an exercise price of $0.45 per share.  The Warrants have a term of four years.  The exercise price may be reduced if shares of Firstgold’s Common Stock are sold at a price below the Warrant exercise price.
 
On October 10, 2006 we received $650,000 upon the issuance of Convertible Debentures with certain investors which bear interest at 8% per annum and are convertible into shares of Firstgold common stock at the Fixed Conversion Price of $0.4735 per share (and subsequently reduced to $0.45 per share) which would equal approximately 1,372,756 if the entire principal were converted into Firstgold common stock.  In conjunction with the Convertible Debentures, we granted 746,843 warrants to purchase shares of Firstgold Common Stock, 426,767 exercisable at $0.45 per share and 320,076 exercisable at $0.60 per share.  The Warrants have a term of four years.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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On April 12, 2007 we received gross proceeds of $2,552,900 upon the issuance of Units consisting of 5,673,110 shares of our common stock and warrants to purchase 2,836,555 shares of our common stock at an exercise price of $0.65 per share. The warrants have a term of 18 months. Due to the fact that these Units were not registered in an effective resale prospectus by October 15, 2007, an additional 542,310 “penalty shares” and 271,156 “penalty warrants” were issued to these investors and included in this prospectus.
 
On May 18, 2007 we received gross proceeds of $337,500 upon the issuance of Units consisting of 749,998 shares of our common stock and warrants to purchase 375,002 shares of our common stock at an exercise price of $0.65 per share.  The warrants have a term of 18 months.
 
On June 22, 2007, we received gross proceeds of $8,479,539.45 upon the issuance of Units at $0.45 per Unit consisting of 18,843,421 shares of our common stock and Warrants to purchase 9,421,711 shares of our common stock at an exercise price of $0.65 per share. The warrants have a term of 18 months. Due to the fact that these Units were not registered in an effective resale prospectus by November 15, 2007, an additional 1,884,342 “penalty shares” and 942,171 “penalty warrants” were issued to these investors.
 
During February, March and April, we conducted private placements in which we raised gross proceeds of $8,042,897 upon the issuance of Units at $0.65 per Unit consisting of 12,373,689 shares of our common stock and warrants to purchase 6,186,845 shares of our common stock at an exercise price of $0.80 per share.  The warrants have a term of 18 months.
 
On May 1, 2008, we issued a Convertible Debenture in the principal amount of $1,100,000 and bearing interest or 10% per annum. The transaction included the issuance of warrants to purchase 1,100,000 shares of Firstgold common stock at an exercise price of $1.00 per share.
 
Off-Balance Sheet Arrangements
 
During the fiscal quarter ended April 30, 2008, Firstgold did not engage in any off-balance sheet arrangements as defined in Item 303(c) of the SEC’s Regulation S-B.
 
Critical Accounting Policies
 
Our discussion and analysis of our financial condition and results of operation are based upon our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States.  The preparation of financial statements requires management to make estimates and disclosures on the date of the financial statements.  On an on-going basis, we evaluate our estimates, including, but not limited to, those related to revenue recognition.  We use authoritative pronouncements, historical experience and other assumptions as the basis for making judgments.  Actual results could differ from those estimates.  We believe that the following critical accounting policies affect our more significant judgments and estimates in the preparation of our financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
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Exploration Stage Company
 
Effective January 1, 1995 (date of inception), Firstgold is considered an exploration stage company as defined in SFAS No. 7.  Firstgold’s exploration stage activities consist of the development of several mining properties located in Nevada.  Sources of financing for these exploration stage activities have been primarily debt and equity financing.  Firstgold has, at the present time, not paid any dividends and any dividends that may be paid in the future will depend upon the financial requirements of Firstgold and other relevant factors.
 
Valuation of long-lived assets
 
Long-lived assets, consisting primarily of property and equipment, patents and trademarks, and goodwill, comprise a significant portion of our total assets.  Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that their carrying values may not be recoverable.  Recoverability of assets is measured by a comparison of the carrying value of an asset to the future net cash flows expected to be generated by those assets.  The cash flow projections are based on historical experience, management’s view of growth rates within the industry, and the anticipated future economic environment.
 
Factors we consider important that could trigger a review for impairment include the following:
 
 
(a)
significant underperformance relative to expected historical or projected future operating results,
 
 
(b)
significant changes in the manner of our use of the acquired assets or the strategy of our overall business, and
 
 
(c)
significant negative industry or economic trends.
 
When we determine that the carrying value of long-lived assets and related goodwill and enterprise-level goodwill may not be recoverable based upon the existence of one or more of the above indicators of impairment, we measure any impairment based on a projected discounted cash flow method using a discount rate determined by our management to be commensurate with the risk inherent in our current business model.
 
Deferred Reclamation Costs
 
In August 2001, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 143, “Accounting for Asset Retirement Obligations,” which established a uniform methodology for accounting for estimated reclamation and abandonment costs.  The statement was adopted February 1, 2003.  The reclamation costs will be allocated to expense over the life of the related assets and will be adjusted for changes resulting from the passage of time and revisions to either the timing or amount of the original present value estimate.
 
Prior to adoption of SFAS No. 143, estimated future reclamation costs were based principally on legal and regulatory requirements.  Such costs related to active mines were accrued and charged over the expected operating lives of the mines using the units of production method based on proven and probable reserves.  Future remediation costs for inactive mines were accrued based on management’s best estimate at the end of each period of the undiscounted costs expected to be incurred at a site.  Such cost estimates included, where applicable, ongoing care, maintenance and monitoring costs.  Changes in estimates at inactive mines were reflected in earnings in the period an estimate was revised.
 
 
 
 
 
 
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Exploration Costs
 
Exploration costs are expensed as incurred.  All costs related to property acquisitions are capitalized.
 
Mine Development Costs
 
Mine development costs consist of all costs associated with bringing mines into production, to develop new ore bodies and to develop mine areas substantially in advance of current production. The decision to develop a mine is based on assessment of the commercial viability of the property and the availability of financing. Once the decision to proceed to development is made, development and other expenditures relating to the project will be deferred and carried at cost with the intention that these will be depleted by charges against earnings from future mining operations. No depreciation will be charged against the property until commercial production commences. After a mine has been brought into commercial production, any additional work on that property will be expensed as incurred, except for large development programs, which will be deferred and depleted.
 
Reclamation Costs
 
Reclamation costs and related accrued liabilities, which are based on our interpretation of current environmental and regulatory requirements, are accrued and expensed, upon determination.
 
Based on current environmental regulations and known reclamation requirements, management has included its best estimates of these obligations in its reclamation accruals.  However, it is reasonably possible that our best estimates of our ultimate reclamation liabilities could change as a result of changes in regulations or cost estimates.
 
Valuation of Derivative Instruments
 
FAS No. 133 "Accounting for Derivative Instruments and Hedging Activities" requires bifurcation of embedded derivative instruments and measurement of their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Black Scholes model as a valuation technique.  Derivative liabilities are adjusted to reflect fair value at each period end, with any increase or decrease in the fair value being recorded in results of operations as Adjustments to Fair Value of Derivatives. In addition, the fair values of freestanding derivative instruments such as warrants are valued using Black Scholes models.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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Stock-Based Compensation
 
We currently account for the issuance of stock options to employees using the fair market value method according to SFAS No. 123R, Share-Based Payment.
 
Recent Accounting Pronouncements
 
In February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid Financial Instruments”, which amends SFAS No. 133, “Accounting for Derivatives Instruments and Hedging Activities” and SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities”.  SFAS No. 155 amends SFAS No. 133 to narrow the scope exception for interest-only and principal-only strips on debt instruments to include only such strips representing rights to receive a specified portion of the contractual interest or principle cash flows.  SFAS No. 155 also amends SFAS No. 140 to allow qualifying special-purpose entities to hold a passive derivative financial instrument pertaining to beneficial interests that itself is a derivative instrument.  Firstgold is currently evaluating the impact of this new Standard but believes that it will not have a material impact on Firstgold’s financial position, results of operations, or cash flows.
 
In March 2006, the FASB issued SFAS No. 156, “Accounting for Servicing of Financial Assets” which provides an approach to simplify efforts to obtain hedge-like (offset) accounting.  This Statement amends FASB Statement No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities”, with respect to the accounting for separately recognized servicing assets and servicing liabilities.  The Statement (1) requires an entity to recognize a servicing asset or servicing liability each time it undertakes an obligation to service a financial asset by entering into a servicing contract in certain situations; (2) requires that a separately recognized servicing asset or servicing liability be initially measured at fair value, if practicable; (3) permits an entity to choose either the amortization method or the fair value method for subsequent measurement for each class of separately recognized servicing assets or servicing liabilities; (4) permits at initial adoption a one-time reclassification of available-for-sale securities to trading securities by an entity with recognized servicing rights, provided the securities reclassified offset the entity’s exposure to changes in the fair value of the servicing assets or liabilities; and (5) requires separate presentation of servicing assets and servicing liabilities subsequently measured at fair value in the balance sheet and additional disclosures for all separately recognized servicing assets and servicing liabilities.  SFAS No. 156 is effective for all separately recognized servicing assets and liabilities as of the beginning of an entity’s fiscal year that begins after September 15, 2006, with earlier adoption permitted in certain circumstances.  The Statement also describes the manner in which it should be initially applied.  Firstgold does not believe that SFAS No. 156 will have a material impact on its financial position, results of operations or cash flows.
 
In July 2006, the FASB released FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes,” an interpretation of FASB Statement No. 109 (FIN 48).  FIN 48 clarifies the accounting and reporting for uncertainties in income tax law.  This interpretation prescribes a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax returns.  This statement is effective for fiscal years beginning after December 15, 2006.  The Company is currently in the process of evaluating the expected effect of FIN 48 on its results of operations and financial position.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Issues No. 157, “Fair Value Measurements” (“SFAS 157”), which defines the fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements.  This statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years.  Early adoption is encouraged, provided that the Company has not yet issued financial statements for that fiscal year, including any financial statements for an interim period within that fiscal year. The Company is currently evaluating the impact SFAS 157 may have on its financial condition or results of operations.
 
In September 2006, the FASB issued SFAS No. 158, “Employer’s Accounting for Defined Benefit Pension and Other Post Retirement Plans.”  SFAS No. 158 requires employers to recognize in its statement of financial position an asset or liability based on the retirement plans over or under funded status.  SFAS No. 158 is effective for fiscal years ending after December 15, 2006.  The Company is currently evaluating the effect that the application of SFAS No. 158 will have on its results of operations and financial condition.
 
In September 2006, the United States Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements” (“SAB 108”).  This SAB provides guidance on the consideration of the effects of prior year misstatements in quantifying current year misstatements for the purpose of a materiality assessment. SAB 108 establishes an approach that requires quantification of financial statement errors based on the effects on each of the company’s balance sheets, statements of operations and related financial statement disclosures.  The SAB permits existing public companies to record the cumulative effect of initially applying this approach in the first year ending after November 15, 2006 by recording the necessary correcting adjustments to the carrying values of assets and liabilities as of the beginning of that year with the offsetting adjustment recorded to the opening balance of retained earnings.  Additionally, the use of the cumulative effect transition method requires detailed disclosure of the nature and amount of each individual error being corrected through the cumulative adjustment and how and when it arose.  The Company is currently evaluating the impact SAB 108 may have on its results of operations and financial condition.
 
In October 2006, the Emerging Issues Task Force (“EITF”) issued EITF 06-3, “How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement (That is, Gross versus Net Presentation)” to clarify diversity in practice on the presentation of different types of taxes in the financial statements.  The Task Force concluded that, for taxes within the scope of the issue, a company may adopt a policy of presenting taxes either gross within revenue or net.  That is, it may include charges to customers for taxes within revenues and the charge for the taxes from the taxing authority within cost of sales, or, alternatively, it may net the charge to the customer and the charge from the taxing authority.  If taxes subject to EITF 06-3 are significant, a company is required to disclose its accounting policy for presenting taxes and the amounts of such taxes that are recognized on a gross basis.  The guidance in this consensus is effective for the first interim reporting period beginning after December 15, 2006 (the first quarter of our fiscal year 2007).  We do not expect the adoption of EITF 06-3 will have a material impact on our results of operations, financial position or cash flow.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (SFAS 159). Under the provisions of SFAS 159, companies may choose to account for eligible financial instruments, warranties and insurance contracts at fair value on a contract-by-contract basis.  Changes in fair value will be recognized in earnings each reporting period. SFAS 159 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years.  Firstgold is required to and plans to adopt the provisions of SFAS 159 beginning in the first quarter of 2008.  Firstgold is currently assessing the impact of the adoption of SFAS 159.


LEGAL PROCEEDINGS
 
On February 8, 2007, a complaint was filed against ASDi, LLC, Crescent Red Caps LLC, Firstgold, and Scott Dockter by the Lessors of the Crescent Valley and Red Caps mining properties.  The complaint was filed in the Sixth Judicial District Court of Lander County, Nevada (Case No. 9661).  In the complaint the plaintiffs allege that ASDi, LLC wrongfully assigned its lessee rights in the Crescent Valley and Red Caps mining properties to Crescent Red Caps LLC (of which Firstgold is the Managing Member).  The complaint sought the termination of the leasehold rights granted to ASDi, LLC and quiet title and punitive damages.  The complaint also sought an order against Firstgold restricting public claims of ownership or control of the mining properties. ASDi, LLC and Firstgold believed the leases were not assigned and that any transfer of the leases or mining claims was not wrongful nor required the Lessors’ consent. Consequently, ASDi, LLC and Firstgold pursued a vigorous defense of this action.  On April 3, 2007, a preliminary hearing was held in which the defendants sought a Summary Judgment to have the leasehold termination notices declared void.  The Court did not grant the defendants’ motion thus requiring the matter to proceed to trial on the merits. In addition, on May 11, 2007, the Court entered a preliminary injunction against public claims of ownership of any interest in the leases or the mining property by defendants. On June 7, 2007, the plaintiffs filed a Motion For Order to Show Cause claiming that defendants had violated the injunction based upon certain statements made on Firstgold’s website and certain disclosures made in Firstgold’s annual report on Form 10-KSB and should be found in contempt of the injunction. A hearing on the Motion to Show Cause was held on November 20, 2007 and on January 4, 2008 the Court ruled in Defendant’s favor finding no contempt of the injunction.  In late March, 2008 the parties reached a settlement agreement and the case was dismissed by the Court on April 4, 2008.  As a result of the Settlement, Firstgold paid $150,000 to Plaintiffs and Firstgold, ASDi LLC and Crescent Red Caps LLC relinquished all right, title and interest in the Red Caps and Crescent Valley leases to the Plaintiffs.  Consequently, Firstgold no longer has any interest in these leases and will not pursue any further exploration activity on such leased property.
 
On September 24, 2007, a complaint was served on Firstgold by Swartz Private Equity, LLC.  The complaint was filed in the District Court for the Western District of New York (Case No. 07CV6447).  In the complaint, plaintiff alleges that pursuant to an Investment Agreement dated October 4, 2000, and entered into with Firstgold’s former management, it is entitled to the exercise of certain warrants in the amount of 1,911,106 shares of Firstgold common stock or the equivalent cash value of $0.69 per share and a termination fee of $200,000.  Firstgold filed an answer to the complaint on December 3, 2007 and expects to vigorously defend this action.  The lawsuit is now in the discovery phase.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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On January 30, 2008, a complaint was served on Firstgold by Park Avenue Consulting Group, Inc.  The complaint was filed in the Supreme Court of the State of New York but was subsequently removed to the Federal District Court for the Southern District of New York (Case No. 08CV01850).  In the complaint, plaintiff alleges that pursuant to a Retainer Agreement entered into on September 1, 2000 and an Addendum thereto entered into on September 7, 2000, it is entitled to the issuance of warrants to purchase 1,000,000 shares of Firstgold stock, a monthly retainer fee of 50,000 shares of Firstgold stock and a monthly cash retainer fee, a $50,000 finder’s fee, and other damages to be proven at trial.  Firstgold filed an Answer on April 15, 2008 and on May 5, 2008 filed a Counterclaim seeking reimbursement of all costs of this lawsuit.  Firstgold expects to vigorously defend this action.
 
 
MANAGEMENT
 
Directors and Executive Officers,
 
The following table sets forth information about the directors and executive officers of Firstgold together with the principal positions and offices with Firstgold held by each:

Name of Person
Age
Position and Office Presently Held With Firstgold
Director Since
       
Stephen Akerfeldt
63
Director and Chairman
2006
A. Scott Dockter
51
Chief Operating Officer
  
James W. Kluber
57
Chief Financial Officer and Secretary
  
Terrence Lynch
48
Director
2006
Donald Heimler
65
Director
2007
Fraser Berrill
58
Director
2007
Kevin Bullock
43
Director
2007

Biographical information for directors and executive officers:

Stephen Akerfeldt was appointed to the Board of Directors on September 12, 2006 and became Chairman in June 2007 and Chief Executive Officer on January 4, 2008. Mr. Akerfeldt is currently a member of the board of Jura Energy Corporation which is an oil and gas exploration company based in Calgary, Canada.  In 1998 he became part owner and currently serves as a director and president of Ritz Plastics Inc. which produces plastic injection molded parts used primarily in the automotive industry.  In 1991, Mr. Akerfeldt and certain partners acquired two major chains of dry cleaning operations in the Toronto, Ontario marketplace which were then sold in 2003.  Mr. Akerfeldt has worked as a business consultant to various companies and entrepreneurs since the mid-1990’s.  From 1987 to 1990 Mr. Akerfeldt was Vice-Chairman and Chief Financial Officer of Magna International Inc. a multi-billion dollar public company auto parts manufacturer.  Mr. Akerfeldt joined the accounting firm of Coopers and Lybrand in 1965 and from 1974 through 1987 he was a partner in the firm’s Toronto office.  His accounting practice included a broad range of clients including investment dealers, public mining companies, insurance companies, public oil and gas producers and manufacturing companies, both public and private.  Mr. Akerfeldt holds a Bachelor of Arts degree from the University of Waterloo and became a chartered accountant with the Institute of Chartered Accountants of Ontario in 1970.
 
 
 
 
 
 
 
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A. Scott Dockter served as Chief Executive Officer since December 2000 and Chairman from December 2000 until June 2007.  Mr. Dockter resigned from the Board on December 21, 2007 and resigned as President and CEO on January 4, 2008 He now serves as Chief Operating Officer of Firstgold.  Mr. Dockter had previously served as Firstgold’s CEO and President from November 1996 until February 2000.   Mr. Dockter has been self-employed in the business sector since 1978 and in addition to working full time with Firstgold, he currently operates two private  businesses  through ASD CORP and ASDi LLC.  He has held a Class A General Engineering and Contracting License for more than 20 years, operating his businesses in California, Nevada and Montana, specializing in earth moving, mining, pipeline projects, structures, dams, industrial parks and sub divisions.  Mr. Dockter has directed his companies in large landfill operations, underground concrete structures projects, large excavations, reclamation projects and others, which include state and local municipal projects.  Mr. Dockter has also been a real estate developer, worked on oil & gas projects and has spent 15 years in the mining industry.  He has personally owned mines, operated mines, constructed mine infrastructures (physical, production and process) and produced precious metals
 
James W. Kluber has been the Chief Financial Officer and Secretary of Firstgold since February 2000 and a director from April 2000 to June 2007.  Mr. Kluber has served as a senior financial consultant in a variety of service and technology environments with special focus on high growth companies and restructuring operations.  He has successfully raised capital for companies in a variety of markets, utilizing public and private equity as well as securitized and unsecured debt to accomplish funding requirements.  From December 2001 to September 2003, Mr. Kluber was the CFO and until October 2005 was the interim CFO of NutraCea a public company involved in the development and distribution of products based on the use of stabilized rice bran.  During 2004, Mr. Kluber served as interim CFO for M&A Medical Holdings, Inc. a manufacturer of medical devices.  Additionally, he was the Senior Vice President and CFO from 1996 to 1999 for RealPage, Inc. a leading provider of software and services to the real estate industry.  From 1993 to 1996 he served as Vice President of Financial Operations for two New York Stock Exchange listed companies sponsored by Security Capital Group, ProLogis Trust and Archstone Communities.
 
Terrence Lynch was appointed to the Board of Directors in July 2006.  Since December 2006 he has been president of Resort Owners Group which specializes in resort home sales.  Since October 2005, Mr. Lynch has been a partner with Kingsmill Capital Partners, a financial advisory firm specializing in advising both public and private early stage growth companies.  Prior to joining Kingsmill Capital he spent fifteen years operating start up companies in industrial products, oil & gas, and media.  Experienced in developing the necessary financial structure to maximize a company’s ability to secure growth capital, Mr. Lynch has raised corporate capital via debentures, limited partnerships, and royalty financing in addition to conventional equity placements.  From August 2004 to March 2006, Mr. Lynch served as CEO of Star Digital, a media and internet development firm.  From September 2001 to August 2004, Mr. Lynch served as CEO of Probrandz Media, a media and internet development firm.  Mr. Lynch graduated in 1981 from St. Francis Xavier University with a joint honors degree in Economics and a BBA.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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Donald Heimler was appointed to the Board on January 9, 2007. His career spanned 29 years with Scotia Capital Inc. (Scotia McLeod, McLeod Young Weir), as Director, Institutional Equities where he successfully managed several of the firm’s largest clients by the time he retired in October 2006.  Previous to that he was the chief accountant of a chain of optical stores under the corporate umbrella of Imperial Optical.  He attended the University of Western Ontario, enrolled in the Certified General Accounting program and has successfully completed many investment industry accredited courses.
 
Fraser Berrill was appointed to the Board on June 26, 2007. Mr. Berrill is currently the CEO and President of Renasant Financial Partners, which is a publicly held financial services and technology trading organization.  He also serves as a Trustee of Vicwest Income Fund and a number of private companies.  From 1991 to 2000, Mr. Berrill was Senior Vice-President, Corporate Development of publicly held Acklands Limited, which sold its industrial distribution and auto parts assets to WW Grainger and Carquest transforming into Morguard Corporation.  Positions held prior to that included Vice-President, Corporate Development for the Paja Group and President of the Sherman group of companies.  In addition, Mr. Berrill was a member of litigation team for Osler, Hoskin & Harcourt LLP from 1975 to 1981.
 
Kevin Bullock was appointed to the Board of directors on December 21, 2007.  Mr. Bullock currently serves as President, CEO and a Director of Volta Resources Inc. (a mining and mineral exploration company listed on the Toronto Venture Exchange formerly Goldcrest Resources Ltd.).  Prior to joining Volta Resources in August 2003 he was the Vice President, Corporate Development of Kirkland Lake Gold Inc. (formerly Foxpoint Resources Ltd.) from November 2001 to August 2003 ..  Prior thereto, he was Managing Director, Mining Division of Cook Engineering, Thunder Bay, Ontario, from January 2001 to November 2001.  Mr. Bullock has served as a member of the advisory board of Orezone Resources Inc. since June, 1999.  Mr. Bullock served as Vice President of Brandon Gold Corporation from June 1997 to September 1999 and as Manager of Operations for IAMGOLD Corporation from January 1995 to June 1997.  He is currently also a director of Young Shannon Gold Mines Ltd., Rolling Rock Resources and Kingsmill Capital Ventures.  Mr. Bullock is a professional engineer and received is B.Eng. Degree from Laurentian University in Sudbury, Ontario.  He is a member of the Canadian Institute of Mining and Metullargy, the Professional Engineers of Ontario and the Society of Mining Engineers.
 
The current Directors will serve and hold office until the next annual stockholders' meeting or until their respective successors have been duly elected and qualified.  Firstgold’s executive officers are appointed by the Board of Directors and serve at the discretion of the Board.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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Corporate Governance
 
Our board of directors has five directors and has established an Audit Committee, a Compensation Committee, and a Nominating & Corporate Governance Committee as its standing committees.  Our board does not have an executive committee or any committee performing similar functions.  We are not currently listed on a national securities exchange or on an inter-dealer quotation system that has requirements that a majority of the board of directors be independent, however, the board has determined that all of our directors, are “independent” under the definition set forth in the listings of the NASDAQ Stock Market, Inc., which is the definition our board has chosen to use for the purposes of determining independence.  In addition, our board has determined that all members of its Audit Committee, in addition to meeting the standards for independence set forth in the listing standards of the NASDAQ Stock Market, Inc., also meet the criteria for independence for audit committee members set forth in the Securities Exchange Act of 1934, as amended, including the rules and regulations promulgated thereunder.
 
Family Relationships
 
There are no family relationships between any director or executive officer.
 
Board Meetings and Committees
 
Our Board of Directors held 11 meetings during the fiscal year ended January 31, 2008 and acted by unanimous written consent on 1 occasion.  Each nominee who was a director during fiscal 2008 participated in at least 75% or more of the aggregate number of the meetings of the Board held during the time that such nominee was a director and any committee on which he served. On October 21, 2006, the Board created an Audit Committee and on January 31, 2007, the Board voted to create a Compensation Committee and a Nominating & Corporate Governance Committee.  Charters for those committees have been approved by the Board.
 
The Audit Committee consists of Donald Heimler as our Audit Committee financial expert and chairman of the Audit Committee along with Terry Lynch and Fraser Berrill. Each of Messrs. Lynch and Berrill were considered independent directors as defined the applicable NASDAQ Stock Market listing standards and by the Sarbanes-Oxley Act of 2002 and related regulation of the Securities and Exchange Commission.  Stephen Akerfeldt served as chairman of the Audit Committee until January 4, 2008 when Mr. Akerfeldt assumed the position of CEO. At that time Mr. Akerfeldt resigned from the Audit Committee and was replaced by Donald Heimler.  The Audit Committee facilitates and maintains open communications among the Board, the Audit Committee, senior management and Firstgold’s independent auditors.  The Audit Committee also serves as an independent and objective party to monitor Firstgold’s financial reporting process and internal control system.  In addition, the Audit Committee reviews and evaluates the efforts of Firstgold’s independent auditors.  The Audit Committee meets periodically with management and Firstgold’s independent auditors.  The Audit Committee held 3 meetings in fiscal year 2008.  The Board has determined that the chairman of the Audit Committee, Mr. Heimler, meets the SEC’s definition of audit committee financial expert.  The Audit Committee has a written charter.
 
The Compensation Committee, consisting of Terry Lynch, chairman, Kevin Bullock, and Donald Heimler, establishes salary, incentive and other forms of compensation for Firstgold’s Chief Executive Officer, and authorizes stock option issuances for Firstgold.  The Compensation Committee meets periodically with management of Firstgold.  The Compensation Committee, held two meetings in fiscal year 2008.  The Compensation Committee has a written charter.
 
 
 
 
 
 
 
 
 
 
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The Board has also established a Nominating & Corporate Governance Committee.  The Nominating & Corporate Governance Committee, consisting of Fraser Berrill, Chairman, Kevin Bullock, and Donald Heimler, evaluates potential candidates for membership on the Board and may consider such factors as it deems appropriate.  These factors may include judgment, skill, diversity, integrity, experience with businesses and other organizations of comparable size, the interplay of the candidate’s experience with the experience of other Board members and the extent to which the candidate would be a desirable addition to the Board and any committees of the Board.  While the Board has not established any specific minimum qualifications for director nominees, the Board believes that demonstrated leadership, as well as significant years of service, in an area of endeavor such as business, law, public service, the mining industry or academia, is a desirable qualification for service as a director of Firstgold.  The Committee also evaluates the performance of Board members and monitors Directors compliance with applicable rules and regulations of the Securities and Exchange Commission and other regulatory agencies.  The Nominating and Corporate Governance Committee has a written charter.
 
The Board has a policy with respect to the consideration of director candidates recommended by stockholders.  Any stockholder may make recommendations to the Board for membership on the Board by sending a written statement of the qualifications of the recommended individual to: Secretary, Firstgold Corp, 3108 Ponte Morino Drive, Suite 210, Cameron Park, CA  95682.  Such recommendations should be received no later than sixty (60) days prior to the annual meeting for which the stockholder wishes his or her recommendation to be considered.  The Board will evaluate candidates recommended by stockholders on the same basis as it evaluates other candidates, including the following criteria:
The fact that a proposed director nominee meets some or all of the above criteria will not obligate the Nominating & Corporate Governance Committee Board to nominate or recommend the candidate for director in the proxy materials.
 
Stockholder Communication Policy
 
Stockholders may send communications to the Board or individual members of the Board by writing to them, care of Secretary, Firstgold Corp., 3108 Ponte Morino Drive, Suite 210, Cameron Park, California 95682, who will forward the communication to the intended director or directors.  If the stockholder wishes the communication to be confidential, then the communication should be appropriately marked to maintain confidentiality.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
52
Code of Business Conduct and Ethics
 
The Board has adopted a Code of Business Conduct and Ethics that applies to all directors, officers and employees of Firstgold.  Firstgold will provide any person, without charge, a copy of this Code.  Requests for a copy of the Code may be made by writing to Firstgold at 3108 Ponte Morino Drive, Suite 210, Cameron Park, California 95682.  Attention: Secretary.
 
EXECUTIVE COMPENSATION
 
The following table sets forth the compensation of Firstgold’s Principal Executive Officer during the last two complete fiscal years and each officer who received annual compensation in excess of $100,000 during the last completed fiscal year.
 
SUMMARY COMPENSATION TABLE
Name & Position
Fiscal Year
Salary
($)
Bonus
($)
Stock Awards
($)
Option Awards
($)
Non-Equity Incentive Plan Compensation
($)
Nonqualified Deferred Compensation Earnings
($)
All Other Compensation
($)
Total
($)
Scott Dockter
2008
180,000
-0-
-0-
94,667
-0-
-0-
12,000(3) (5)
286,667
(PEO) (1)
                  
 
2007
180,000
-0-
-0-
132,297
-0-
-0-
12,000(3) (4)
324,297
                   
Jim Kluber
2008
160,000
-0-
-0-
-0-
-0-
-0-
6,000(2)
166,000
(CFO)
                  
 
2007
160,000
-0-
-0-
106,886
-0-
-0-
6,000(2)
272,886

 
(1)  
Mr. Dockter resigned as CEO on January 4, 2008 at which time he became COO.
(2)  
Amount reflects a home office allowance.
(3)  
Amount reflects a $1,000 per month car allowance.
(4)  
The Firstgold Board, with Mr. Dockter abstaining, approved the extension of the expiration date from January 31, 2007 to April 15, 2007 of certain warrants to acquire 2,000,000 shares of Firstgold common stock held by Mr. Dockter.  On April 15, 2007, Mr. Dockter exercised these warrants with a cash payment.
(5)  
Amount reflects payments pursuant to the Aircraft Time Sharing Agreement.

2006 Stock Option Plan

Our Board of Directors adopted the 2006 Stock Option Plan on July 26, 2006.  The 2006 Plan was submitted to and approved by stockholders at the 2006 annual stockholders meeting held on November 17, 2006.  Under the terms of the 2006 Plan, we may grant up to 5,000,000 options which can include Incentive Stock Options issued to employees and Nonstatutory Stock Options issuable to employees or consultants providing services to Firstgold on such terms as are determined by our board of directors.  The Board’s Compensation Committee administers the 2006 Plan.  Under the 2006 Plan, options vest not less than 20% per year and have 10-year terms (except with respect to 10% stockholders which have five-year terms).  If an option holder terminates his/her employment with us or becomes disabled or dies, the option holder or his/her representative will have a certain number of months to exercise any outstanding vested options.  
 
53
If we sell substantially all of our assets, are a party to a merger or consolidation in which we are not the surviving corporation, then we have the right to accelerate unvested options and will give the option holder written notice of the exercisability and specify a time period in which the options may be exercised.  All options will terminate in their entirety to the extent not exercised on or prior to the date specified in the written notice unless an agreement governing any change of control provides otherwise. Stockholders voting at the 2007 Annual Stockholders meeting held on September 20, 2007 approved an increase in the shares issuable under the 2006 Plan to a total of 10,000,000.

Options/SAR Grants in Last Fiscal Year

The following table sets forth certain information with respect to options or SAR grants of Common Stock during the fiscal year ended January 31, 2008 to the Named Executive Officers.


Name
Number of Securities Underlying Options Granted
Percent of Total Options Granted to Employees at January 31, 2008
Average
Exercise or Base Price
($ Per Share)
Expiration Dates
         
Scott Dockter
750,000
16%
$0.65
July 27, 2011,
December 21, 2012
James Kluber
400,000
9%
$0.50
July 27, 2016
Terrence Lynch
750,000
16%
$0.55
July 30, 2016,
October 21, 2016,
March 28, 2017
Stephen Akerfeldt
1,000,000
22%
$0.66
September 11, 2016
March 28, 2017,
June 26, 2017,
December 21, 2017
Donald Heimler
500,000
11%
$0.58
January 8, 2017,
March 28, 2017
Fraser Berrill
500,000
11%
$0.65
June 26, 2017
Kevin Bullock
500,000
11%
$0.85
December 21, 2017



 
 
 
 
 
 
 
 
54
Outstanding Equity Awards at Fiscal Year-End

The following table provides information on all restricted stock and stock option awards held by our named executive officers as of January 31, 2008. All outstanding equity awards are in shares of our common stock.

 
   
Option Awards
  
Stock Awards
Name
  
Number of
Securities Underlying Unexercised Options (#) 
Exercisable
  
Number of Securities Underlying Unexercised Options (#)  
Unexercised
-able
  
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options
(#)
  
Option Exercise Price
($)  
  
Option Expiration Date
  
Number of Shares or Units of Stock That Have Not Vested
(#)  
Market Value of Shares or Units of Stock That Have Not Vested
($)  
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested
(#)  
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested
($) 
Scott Dockter
    
250,000
  
250,000
    
 
  
$0.50
    
07/2011
          
     
125,000
  
125,000
    
0
  
$0.94
    
12/2012
          
                                     
James Kluber
    
200,000
  
200,000
    
0
  
$0.50
    
07/2016
          
                                     
Terrence Lynch
    
250,000
  
0
    
 
  
$0.50
    
07/2016
          
     
125,000
  
125,000
    
0
  
$0.65
    
03/2017
          
                                     
Stephen Akerfeldt
    
250,000
  
0
    
0
  
$0.50
    
09/2016
          
     
125,000
  
125,000
    
0
  
$0.65
    
03/2017
          
     
125,000
  
125,000
    
0
  
$0.65
    
06/2017
          
     
125,000
  
125,000
    
0
  
$0.85
    
12/2017
          
                                     
Donald Heimler
    
250,000
  
0
    
0
  
$0.50
    
01/2017
          
                                     
Fraser Berrill
    
125,000
  
125,000
    
0
  
$0.65
    
03/2017
          
     
125,000
  
125,000
              
06/2017
          
                                     
Kevin Bullock
    
125,000
  
125,000
    
0
  
$0.85
    
12/2017
          

 
Employment Agreements
 
On February 1, 2006, we entered into an employment agreement with A. Scott Dockter to serve as our chief executive officer for Firstgold, Inc.  Pursuant to the agreement, Mr. Dockter will receive an annual salary of $180,000 and an automobile expense allowance of $1,000 per month.  In addition, Mr. Dockter will be eligible to participate in any discretionary bonuses or employee stock option plans which may be adopted in the future.  The employment agreement has a term of three years.  On May 8, 2008 Mr. Dockter entered into a new Employment Agreement as Chief Operating Officer of Firstgold. Among other things, Mr. Dockter’s annual salary was increased to $225,000. The new Agreement expires on January 31, 2009 and may be automatically renewed for successive one year terms.
 
On February 1, 2006, we entered into an employment agreement with James W. Kluber to serve as our chief financial officer of Firstgold, Inc.  Pursuant to the agreement, Mr. Kluber will receive an annual salary of $160,000 and an office expense allowance of $500 per month.  In addition, Mr. Kluber will be eligible to participate in any future discretionary bonuses or employee stock option plans which may be adopted in the future.  The employment agreement has a term of three years.
 
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On January 4, 2008 we entered into an employment agreement with Steve Akerfeldt as Chief Executive Officer of Firstgold.  Mr. Akerfeldt will receive an annual salary of $250,000.  The Agreement expires on January 31, 2009 and may be automatically renewed for successive one-year terms.
 
Employee Pension, Profit Sharing or Other Retirement Plans
 
We do not have a defined benefit pension plan or profit sharing plan.  However, in April 2008 we adopted a 401k retirement savings plan.  The Plan is available to all Firstgold employees and is voluntary. The Plan does not provide for any matching or other contributory obligation by Firstgold. Firstgold will pay the administrative costs of implementing and operating the Plan.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
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Compensation of Directors
 
The following table sets forth the compensation of Firstgold’s Directors paid during fiscal year 2008 for services as a Director.
 
DIRECTOR COMPENSATION
 
Name
Fees Earned or Paid in Cash
($)
Stock Awards
($)
Option Awards
($)
Non-Equity Incentive Plan Compensation
($)
Nonqualified Deferred Compensation Earnings
($)
All Other Compensation
($)
Total
($)
               
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
               
Scott Dockter(1)
--
  
$94,667
      
$ 94,667
Terrence Lynch
$38,500(2)
  
$61,311
      
$ 99,811
Stephen Akerfeldt
$31,000(2)
  
$219,936
      
$250,936
Donald Heimler
$ 61,000(2)
  
$61,311
      
$122,311
Fraser Berrill
46,000
  
$116,086
      
$162,086
Kevin Bullock
    
$201,164
      
$201,164
 
(1)      
Employees are not separately compensated as a Director
(2)      
Outside directors receive annual compensation of $10,000 per year and $1,500 for each Board and/or Committee meeting attended.


Limitation of Liability and Indemnification Matters

Firstgold’s bylaws provide that it will indemnify its officers and directors, employees and agents and former officers, directors, employees and agents unless their conduct is finally adjudged as grossly negligent or to be willful misconduct.  This indemnification includes expenses (including attorneys’ fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred by these individuals in connection with such action, suit, or proceeding, including any appeal thereof, subject to the qualifications contained in Delaware law as it now exists.  Expenses (including attorneys’ fees) incurred in defending a civil or criminal action, suit, or proceeding will be paid by Firstgold in advance of the final disposition of such action, suit, or proceeding upon receipt of an undertaking by or on behalf of the director, officer, employee or agent to repay such amount, unless it shall ultimately be determined that he or she is entitled to be indemnified by Firstgold as authorized in the bylaws.  This indemnification will continue as to a person who has ceased to be a director, officer, employee or agent, and will benefit their heirs, executors, and administrators.  These indemnification rights are not deemed exclusive of any other rights to which any such person may otherwise be entitled apart from the bylaws.  Delaware law generally provides that a corporation shall have the power to indemnify persons if they acted in good faith in a manner reasonably believed to be in, or not opposed to, the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe the conduct was unlawful.  In the event any such person is judged liable for negligence or misconduct, this indemnification will apply only if approved by the court in which the action was pending.  Any other indemnification shall be made only after the determination by Firstgold’s Board of Directors (excluding any directors who were party to such action), by independent legal counsel in a written opinion, or by a majority vote of stockholders (excluding any stockholders who were parties to such action) to provide such indemnification.  Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the “1933Act”) may be permitted to directors, officers and controlling persons of Firstgold pursuant to the foregoing provisions, or otherwise, Firstgold has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the 1933 Act and is, therefore, enforceable.

57
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
The following table sets forth the number of shares of Firstgold’s Common Stock beneficially owned as of May 1, 2008 by, (i) each executive officer and director of Firstgold; (ii) all executive officers and directors of Firstgold as a group; and (iii) owners of more than 5% of Firstgold’s Common Stock.


Name and Address of Beneficial Owner
Position
Number of Shares Beneficially Owned
Percent
Officers and Directors
      
A. Scott Dockter
3108 Ponte Morino Drive, Suite 210
Sacramento, CA  95814
 COO
16,424,487(1)
13%
       
James Kluber
169 Elliott Road
Centerville, MA 02632
CFO, Executive Vice President, and Secretary
2,992,091(2)
2.5%
       
Terrence Lynch
1130 Morrison Heights
Oakville, Ontario Canada L6J 4J1
Director
471,000(3)
*%
       
Stephen Akerfeldt
93 Sheppard Avenue East
North York, Ontario, Canada M2N3A3
CEO & Chairman
906,667(4)
1%
       
Donald Heimler
75 Airdrie Road
Toronto, Ontario, Canada
M4G 1M1
Director
672,500(5)
1%
 
 
 
 
 
 
 
 
 
58
 
Name and Address of Beneficial Owner
Position
Number of Shares Beneficially Owned
Percent
Officers and Directors
      
Fraser Berrill
3672 County Road #8
Picton, Ontario, Canada
K0K 2T0
Director
635,000(6)
1%
       
Kevin Bullock
36 Emeline Circle
Markham, Ontario Canada
L3P4G4
Director
250,000(7)
*%
       
All officers and directors as a group (6 individuals)
  
22,351,745
18.2%
       
Stockholders owning 5% or more
      
       
1346049 Ontario LTD
22 St. Clair Avenue East
18th Floor
Toronto, Ontario, Canada M4T 2S3
  
13,332,132 (8)
11%
* Represents less than 1%.

 
(1)
Amount includes 900,000 shares owned by ASDi LLC, 6,401,946 shares issuable under stock warrants and options exercisable within 60 days of May 1, 2008 and 2,500,000 warrants held by ASDi LLC (of which Mr. Dockter is the Manager Member) exercisable within 60 days of May 1, 2008. Does not include 375,000 unvested options.
 
(2)
Amount includes 1,595,007 shares issuable under stock warrants and options exercisable within 60 days of April 18, 2008.  Does not include 200,000 unvested options.
 
(3)
Amount includes 750,000 of shares issuable under options granted to Mr. Lynch since he has been a director of Firstgold exercisable within 60 days of May 1, 2008. Amount also includes 96,000 shares of common stock held jointly with Mr. Lynch’s wife. Does not include 125,000 unvested options.
 
(4)
Amount includes 1,000,000 shares issuable under options to purchase 1,000,000 shares granted during the time the person has been a director of Firstgold.  Amount includes 55,000 shares issuable under stock warrants exercisable within 60 days of May 1, 2008. Does not include 375,000 unvested options.
 
(5)
Amount includes 500,000 shares issuable under options to purchase 500,000 shares granted during the time the person has been a director of Firstgold.  Amount also includes 82,500 shares issuable under stock warrants exercisable within 60 days of May 1, 2008. Does not include 125,000 unvested options.
 
(6)
Amount includes 500,000 shares issuable under options to purchase 500,000 shares granted during the time the person became a director of Firstgold. Amount also includes 150,000 shares issuable under stock warrants exercisable within 60 days of May 1, 2008. Does not include 125,000 unvested options.
 
(7)
Amount includes 250,000 shares issuable under options to purchase 500,000 shares granted at the time the person became a director of Firstgold.  50% of the options are exercisable immediately while the balance vests on the first anniversary date. Does not include 125,000 unvested options.
 
(8)
Amount includes 4,444,044 shares issuable under stock warrants exercisable within 60 days of May 1, 2008.  The 1346049 Ontario LTD holdings include stock and warrants held by Trapeze Capital Corp. and Trapeze Asset Management Inc. The responsible executive officer for each entity is Randall Abramson.


As a condition to listing the Firstgold shares on the TSX, Mr. Dockter was required to place all shares of Firstgold stock beneficially owned by him into a Voting Trust and Escrow held by Equity Transfer & Trust Company of Toronto, Canada. Pursuant to the Voting Trust and Escrow Agreement dated May 8, 2008, Mr. Dockter will be allowed to vote his shares representing no more than 9.9% of the votes eligible to be cast on any matter subject to stockholder approval. The Agreement also limits Mr. Dockter’s ability to acquire additional Firstgold stock in the open marked however he is permitted to exercise warrants owned at the time the Agreement was entered into and stock options currently owned or granted in the future pursuant to the Firstgold Stock Option Plan. The Agreement has a term of three years.
 
59
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
On January 25, 2006, Firstgold entered into a joint venture with ASDi, LLC to explore various Nevada mining properties. ASDi LLC is owned and managed by A. Scott Dockter, the then President and CEO of Firstgold.  The joint venture was to be operated through a newly formed Nevada limited liability company called Crescent Red Caps, LLC.  The terms of the Operating Agreement provide for ASDi LLC to contribute the leases covering two mining properties located in Nevada in exchange for Firstgold issuing 2.5 million shares of its Common Stock and warrants to purchase 2.5 million shares of Firstgold Common Stock at an exercise price of $0.40 per share for a term of three years to ASDi, LLC.  Firstgold initially owned a 22.22% interest in the Crescent Red Caps LLC and ASDi, LLC held a 77.78% interest.  By expending up to $1,350,000 on each project over the next three years, Firstgold could have increased its interest in the Crescent Red Caps LLC to 66.66%.  Thereafter, Firstgold had the right to purchase the remaining interest in the Crescent Red Caps LLC held by ASDi, LLC at a price to be determined by the results of the exploration work conducted.  Firstgold was the Manager of the Crescent Red Caps LLC.  Due to the April 4, 2008 settlement of litigation regarding these Nevada mining properties, the leases held by ASDi LLC have been relinquished back to the property owners and the joint venture terminated.  In addition to the shares and warrants previously issued to ASDi LLC, Firstgold paid approximately $1,100,000 in litigation expenses representing all of the litigation costs relating to these properties and paid $150,000 in final settlement of the litigation.
 
On December 1, 2006, Firstgold entered into an Aircraft Time Sharing Agreement (the “Agreement”) with its CEO and President A. Scott Dockter.  Pursuant to the Agreement, Mr. Dockter will make his private airplane available for use by Firstgold at a rental rate of $200 per hour plus designated expenses.  The Agreement has a term of 10 years.  Firstgold made an advance payment under the Agreement of $120,000 on December 9, 2006. As of January 31, 2008 Firstgold had utilized $6,360 of the advance payment in plane usage.  The rental rate being charged is deemed to be significantly less then the rates obtainable from an unaffiliated third party.  The Agreement and advance payment were approved by the Firstgold Board with Mr. Dockter abstaining.
 
In April 2007, Kingsmill Capital Partners assisted Firstgold in a private placement which was conducted in Canada and raised gross proceeds of $2,552,900.  For Kingsmill’s participation as a selling agent in the private placement, it received selling commissions of $178,703.  Terrence Lynch, a director of Firstgold, is an officer of Kingsmill but did not receive any compensation as such from this completed Firstgold private placement.  However, CBKT Media is Mr. Lynch’s family owned entity which in turn owns a 25% interest in Kingsmill.  Consequently, CBKT Media may receive some portion of the selling commissions paid by Firstgold to the extent net profits of Kingsmill are distributed to its partners.  The amount of any such distribution cannot be determined at this time, but is expected to be less than $45,000.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
60
Should a transaction, proposed transaction, or series of transactions involve one of our officers or directors or a related entity or an affiliate of a related entity, or holders of stock representing 5% or more of the voting power (a “related entity”) of our then outstanding voting stock, the transactions must be approved by the unanimous consent of our board of directors.  In the event a member of the board of directors is a related party, that member will abstain from the vote

DESCRIPTION OF SECURITIES
 
We are authorized to issue 250,000,000 shares of Common Stock, $.001 par value per share.  We are not authorized to issue any preferred stock currently.  We had 130,717,460 shares of our Common Stock and no shares of preferred stock outstanding as of May 1, 2008.
 
Common Stock
 
The holders of outstanding shares of Common Stock are entitled to receive dividends out of assets or funds legally available for the payment of dividends at such times and in such amounts as the board from time to time may determine.  The Common Stock is not entitled to pre-emptive rights and is not subject to conversion or redemption.  Upon liquidation, dissolution or winding up of our business, the assets legally available for distribution to stockholders are distributable ratably among the holders of the Common Stock after payment of liquidation preferences, if any, on any outstanding preferred or Common Stock or other claims of creditors.  Each outstanding share of Common Stock is duly and validly issued, fully paid and non-assessable.
 
The holders of Firstgold Common Stock are entitled to one vote for each share held on all matters submitted to a vote of Firstgold stockholders.  Under certain circumstances, California law permits the holders of Firstgold Common Stock to assert their right to cumulate their votes for the election of directors, in which case holders of less than a majority of the outstanding shares of Firstgold Common Stock could elect one or more of Firstgold’s directors. Holders of Firstgold Common Stock have no preemptive, subscription, or redemption rights.
 
Securities Convertible into Common Stock
 
Firstgold issued convertible debentures, in the aggregate principal amount of $3,650,000 and bearing interest at 8% per annum during 2007 (the “2007 Debentures”).  Each 2007 Debenture has a three (3) year term from the date of issue unless they are converted into shares of Firstgold Common Stock or are repaid prior to the expiration dates.  The conversion rate was adjustable and at any conversion date, would be the lower of $0.45 per share or 95% of the Market Conversion Price.  However $3,000,000 of 2007 Debentures has been converted at $0.45 with the remaining Debentures all convertible at $0.45.  During 2008 Firstgold has issued one debenture in the aggregate principal amount of $1,100,000 and bearing interest at 10% per annum (the “May 08 Debenture”).  The May 08 Debenture has a nine (9) month term from the date of issue, unless it is converted into shares of Firstgold Common Stock or repaid prior to the maturity date.  The conversion rate is $0.80 per share.  As of May 1, 2008 only $1,750,000 in principal amount of Debentures remained outstanding. Accrued interest may also be converted into shares of Firstgold Common Stock at the respective conversion rates.
 

 
 
 
 
 
 
 
 
61
Warrants to Purchase Common Stock
 
As of May 1, 2008, Firstgold had 47,545,756 warrants outstanding issued in conjunction with various financing transactions.  The warrants have exercise terms of 18-months to five years and are exercisable at prices ranging from $0.15 to $1.00 per share.
 
Transfer Agent
 
Transfer Online, Inc., Portland Oregon, serves as a transfer agent for the shares of Firstgold Common Stock.
 
SELLING SECURITY HOLDERS
 
The selling stockholders and the shares of Firstgold common stock being registered represent (i) shares underlying convertible debentures and shares underlying warrants issued pursuant to a Securities Purchase Agreement dated September 26, 2006 between Firstgold and Cornell Capital Partners and Securities Purchase Agreements dated October 10, 2006 with three other investors and (ii) shares and shares underlying warrants issued in the April 2007 private placement of Units, each Unit comprised of one share of Firstgold Common Stock and one-half warrant to purchase an additional share of Firstgold Common Stock.  Each of these transactions included Registration Rights for the investors.

Prior relationship and/or arrangements between Firstgold and any selling stockholder are as follows:

Cornell Capital Partners, L.P. – Firstgold had previously issued an aggregate of $1,000,000 principal amount of convertible debentures and warrants pursuant to a January 2006 securities transaction.  Also, as a result of the September 2006 securities transaction, Cornell Capital has the right (i) to participate in any future financing transactions up to $5,000,000 for a period of 18 months after the September 26, 2006; and (so long as at least $200,000 of convertible debentures remain outstanding) (ii) approve any offering of securities at a price below the then quoted bid price for that security on a trading market; and (iii) approve any merger, reorganization or sale of Firstgold.

Terrence Lynch – Terrence Lynch has been a director of Firstgold since September, 2006 and is a member of a company which holds an interest in Kingsmill Capital Partners.  See “Certain Relationships and Related Transactions” at page 59 above.

Douglas McLellan – Mr. McLellan is the president of McLellan Group which has provided certain video production and website content services to Firstgold.  All services were rendered at standard market rates.

The table below lists the selling stockholders and other information regarding the beneficial ownership of the Common Stock by each of the selling stockholders.  The first column lists the name of each selling stockholder.  The second column lists the number of shares of Common Stock beneficially owned by each selling stockholder as of May 1, 2008. The third column lists the number of shares of Common Stock that may be resold under this prospectus.
 
 
 
 
 
 
 
 
 
 
62
The fourth and fifth columns list the number of shares of Common Stock owned and the percentage of Common Stock owned after the resale of the Common Stock registered under this prospectus.  No selling stockholder has, or has had within the past three years, any position, office, or other material relationship with Firstgold other than their status of creditors and/or stockholders of Firstgold.  All of the shares being registered represent shares underlying convertible debentures or warrants which were sold to a small number of investors pursuant to the private placement exemption provided by Sections 4(2) or Section 4(6) of the Securities Act of 1933 or sold outside the United States pursuant to Regulation S under the Securities Act of 1933.  Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission, and includes voting and investment power with respect to such shares. Shares of Common Stock issuable upon conversion of a convertible debenture and shares of Common Stock subject to options or warrants that are currently exercisable or exercisable within 60 days after May 1, 2008 are deemed to be beneficially owned by the person holding such options for the purpose of computing the percentage ownership of such person but are not treated as outstanding for the purpose of computing the percentage ownership of any other stockholder.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
63
 
   
Common Shares
  
Common Shares
  
Common Shares
   
Beneficially Owned
  
Offered by this
  
Beneficially Owned
Name of Selling Stockholder
  
Prior to Offering
  
Prospectus
  
After Offering
                 
           
Number
  
Percentage
Cornell Capital Partners, LP
  
8,504,553(1)
  
8,504,553
  
-0-
  
*
Maxim Nudelmann
  
3,442,930 (2)
  
3,442,930
  
----
  
*
R. Bruce McFarlane
  
201,199(3)
  
201,199
  
----
  
*
EFG Bank
  
1,134,798(4)
  
1,134,798
  
----
  
*
Kingsmill Capital Partners Inc
  
567,311
  
567,311
  
-0-
  
*
David Mitchell, President
                
                 
Peter Beck
18 Brooke Avenue
Toronto, Ontario
M5M 2J6
  
82,500
  
82,500
  
-0-
  
*
                 
Glenn J. Briggs
7196 McNiven Road
RR3
Campbellville, Ontario
L0P 1B0
  
330,000
  
330,000
  
-0-
  
*
                 
Gary Carter
1452 Spring Road
Mississauga, Ontario
L5J 1M9
  
49,500
  
49,500
  
-0-
  
*
                 
Guy A Daniel
314 – 7500 Minonu Boulevard
Richmond, B.C.
V6Y 3J6
  
16,500
  
16,500
  
-0-
  
*
                 
Jack Frymer
136 Rose Green Drive
Thornhill, Ontario
L4A 7X5
  
363,000
  
363,000
  
-0-
  
*
 
64
 
   
Common Shares
  
Common Shares
  
Common Shares
   
Beneficially Owned
  
Offered by this
  
Beneficially Owned
Name of Selling Stockholder
  
Prior to Offering
  
Prospectus
  
After Offering
                 
Hamilton Resources Limited
16 Lobraico Lane
Stouffville, Ontario
L4A 7X5
ATTN: Al Hamilton, President
  
366,666
  
366,666
  
-0-
  
*
                 
Lankdark Corporation Ltd.
1211 – 77 Harbour Square
Toronto, Ontario
M5J 2S2
  
132,000
  
132,000
  
-0-
  
*
                 
ATTN: Richard Cuttai, President
Fred Leith
702 – 2662 Bloor Street West
Toronto, Ontario
M5X 2Z7
  
82,500
  
82,500
  
-0-
  
*
                 
Andrew Libera
425 – 115 First Street
Collingwood, Ontario
L9Y 4W3
  
165,000
  
165,000
  
-0-
  
*
                 
Steve Lynch
841 Porter Street
Coquittam, B.C.
V3J 5B9
  
412,500
  
412,500
  
-0-
  
*
                 
Douglas McLellan
1 Governor’s Road
Toronto, Ontario
M4W 2E9
  
90,750
  
90,750
  
-0-
  
*
                 
Shawn Pardy
324 Cundles Road East
Barrie, Ontario
L4M 7E5
  
49,500
  
49,500
  
-0-
  
*
                 
DGY Management Inc.
64 Millwick Drive
Toronto, Ontario
M9L 1Y3
ATTN:  David Younan, President
  
82,500
  
82,500
  
-0-
  
*
 
65
 
   
Common Shares
  
Common Shares
  
Common Shares
   
Beneficially Owned
  
Offered by this
  
Beneficially Owned
Name of Selling Stockholder
  
Prior to Offering
  
Prospectus
  
After Offering
                 
Quinn Capital Corporation
209 – 637 Lakeshore Boulevard
Toronto, Ontario
M5V 3J6
ATTN: Timothy A. Quinn, President
  
165,000
  
165,000
  
-0-
  
*
                 
Mark Shearer
2811 West 6th Avenue
Vancouver, M.C.
V6K 1X2
  
33,000
  
33,000
  
-0-
  
*
                 
Tom Siklos
22 Baby Point Road
Toronto, Ontario
W6S 2E9
  
33,000
  
33,000
  
-0-
  
*
                 
Matthew Stanimir
2585 West 8th Avenue
Vancouver, B.C.
V6K 2B3
  
33,000
  
33,000
  
-0-
  
*
                 
William Stanimir
4672 Cloverlly Walk
West Vancouver, B.C.
V7W 1V5
  
82,500
  
82,500
  
-0-
  
*
                 
Samuel Stern
269 Kingsdale Avenue
Toronto, Ontario
M2N 3X5
  
4,163,550
  
1,100,550
  
3,063,000(5)
  
2.8
                 
Stillbridge Ventures Inc.
1668 Wedmore Way
Mississauga, Ontario
L5J 2J8
  
66,000
  
66,000
  
-0-
  
*
                 
ATTN: David Mitchell, President
Tor Williams
22 Glenvale Boulevard
East York, Ontario
M4G 2V1
  
366,666
  
366,666
  
-0-
  
*
 
66
 
   
Common Shares
  
Common Shares
  
Common Shares
   
Beneficially Owned
  
Offered by this
  
Beneficially Owned
Name of Selling Stockholder
  
Prior to Offering
  
Prospectus
  
After Offering
                 
Ziata Moneta Il finencna druzba d.d.
Svetozarenvska Ulica 12
2000 Marlbor
Slovenya
  
2,383,332
  
2,383,332
  
-0-
  
*
Attn: Peter Zoric, CEO
Julian Baldry in Trust
708 – 2111 Lakeshore Blvd. West
Toronto, Ontario
  
198,000
  
198,000
  
-0-
  
*
ATTN: Julian Baldry, Trustee
Peter M. Haw
99 O’Brien Avenue
Stouffville, Ontario
L4A 4J8
  
18,333
  
18,333
  
-0-
  
*
Michel Stannard
910 – Dallas Road
Victornia, b.C.
V8V 4Z9
  
82,500
  
82,500
  
-0-
  
*
                 
                 
   
23,698,588
  
20,635,588
  
3,063,000
  
2.8
 
 
* Represents holdings of less than one percent
 
(1)
Amount includes 3,500,000 shares of common stock underlying warrants immediately exercisable.  Yorkville Advisors, LLC, which is the investment advisor and general partner of Cornell Capital Partners, has sole dispositive, investment and voting power for all the shares.  The address for Cornell Capital Partners is 101 Hudson Street, Suite 3700, Jersey City, New Jersey 07303.  The general partner of Cornell Capital Partners is Yorkville Advisors, LLC.  The President of Yorkville Advisors, LLC is Mark Angelo who exercises voting and disposition power with respect to these shares.
 
(2)
Amount includes 1,150,000 shares which is the estimated maximum number of shares of common stock issuable upon conversion of a Convertible Debentures and accrued interest beneficially owned by Mr. Nudelmann, and 459,596 shares of common stock underlying warrants which are immediately exercisable.  The address for Maxim Nudelmann is Keithstr. 31, Berlin, Germany 10787.
 
(3)
Estimated maximum number of  shares of common stock issuable upon conversion of a Convertible Debenture and accrued interest (143,750 shares) beneficially owned by Mr. McFarlane, and 57,449 shares of common stock underlying warrants which are immediately exercisable.  The address for R. Bruce McFarlane is 2020 Pumphill Way, Calgary, Alberta Canada.
 
(4)
Amount includes 575,000 shares which is the estimated maximum number of shares of common stock issuable upon conversion of a Convertible Debenture and accrued interest beneficially owned by EFG Bank, and 229,798 shares of common stock underlying warrants which are immediately exercisable.  The address for EFG Bank is Quar de Seujet 24, P.O. Box 2391, 1211 Geneva 2 Switzerland.  The First Vice President of EFG Bank is Herve Siegrist who exercises voting and dispositive power with respect to shares held by EFG Bank.
 
67
 
(5)
In addition to the shares being offered in this Prospectus, an additional 1,125,000 shares have been registered on Mr. Sterns’ behalf in another registration statement filed by Firstgold.
 
PLAN OF DISTRIBUTION
 
Each of the selling stockholders, and any of their donees, pledgees, transferees or other successors-in-interest selling shares of Firstgold Common Stock or interests in shares of Firstgold Common Stock received after the date of this prospectus from a selling stockholder as a gift, pledge, partnership distribution or other transfer, may, from time to time, sell, transfer or otherwise dispose of any or all of their shares of Common Stock or interests in shares of Common Stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions.  These dispositions may be at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale, or at negotiated prices.  A selling stockholder will act independently of Firstgold in making decisions with respect to the timing, manner and size of each sale.
 
Each of the selling stockholders may use any one or more of the following methods when selling shares:
Broker-dealers engaged by the selling stockholders may arrange for other brokers-dealers to participate in sales.  Broker-dealers may receive commissions or discounts from the selling stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated.  Each selling stockholder does not expect these commissions and discounts relating to its sales of shares to exceed what are customary in the types of transactions involved.
 
68
In connection with the sale of our Common Stock or interests therein, the selling stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the Common Stock in the course of hedging the positions they assume.  The selling stockholders may also sell shares of our Common Stock short and deliver these securities to close out their short positions, or loan or pledge the Common Stock to broker-dealers that in turn may sell these securities.  The selling stockholders may also enter into options or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
 
The selling stockholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be “underwriters” within the meaning of the Securities Act of 1933 (the “Securities Act”) in connection with such sales.  In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.  Discounts, concessions, commissions and similar selling expenses, if any, that can be attributed to the sale of securities will be paid by the selling stockholders and/or the purchasers.  Each selling stockholder has informed Firstgold that it does not have any agreement or understanding, directly or indirectly, with any person to distribute the Common Stock.
 
Firstgold is required to pay certain fees and expenses incurred by it incident to the registration of the shares.  Firstgold has agreed to indemnify the selling stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.
 
Because selling stockholders may be deemed to be “underwriters” within the meaning of the Securities Act, they will be subject to the prospectus delivery requirements of the Securities Act.  In addition, any securities covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than under this prospectus.  Each selling stockholder has advised us that they have not entered into any agreements, understandings or arrangements with any underwriter or broker-dealer regarding the sale of the shares.  There is no underwriter or coordinating broker acting in connection with the proposed sale of the shares by the selling stockholders.
 
We agreed to keep this prospectus effective until the earlier of (i) September 26, 2009 (ii) the date on which the shares may be resold by the selling stockholders pursuant to Rule 144(k) under the Securities Act or any other rule of similar effect or (iii) all of the shares have been sold pursuant to the prospectus or Rule 144 under the Securities Act or any other rule of similar effect.  The resale shares will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale shares may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
69
Under applicable rules and regulations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), any person engaged in the distribution of the shares may not simultaneously engage in market making activities with respect to our Common Stock for a period of two business days prior to the commencement of the distribution.  In addition, the selling stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of shares of our Common Stock by the selling stockholders or any other person.  We will make copies of this prospectus available to the selling stockholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale.
 
DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
 
Our Bylaws, subject to the provisions of Delaware Corporation Law, contain provisions which allow the corporation to indemnify any person against liabilities and other expenses incurred as the result of defending or administering any pending or anticipated legal issue in connection with service to us if it is determined that person acted in good faith and in a manner which he reasonably believed was in the best interest of the corporation.  Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons, we have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
 
LEGAL MATTERS
 
The validity of the shares offered under this registration statement is being passed upon by Cota Duncan & Cole, Roseville, California.
 
EXPERTS
 
Our financial statements for the fiscal year ended January 31, 2007 included in this prospectus have been so included in reliance on the report of Hunter, Flemmer Renfro & Whitaker, LLP independent registered public accounting firm, given on that firm's authority as experts in auditing and accounting.
 
Our financial statements for the fiscal year ended January 31, 2008 included in this prospectus have been so included in reliance on the report of Hunter & Renfro LLP independent registered public accounting firm, given on that firm's authority as experts in auditing and accounting.
 
CHANGE OF INDEPENDENT ACCOUNTANTS
 
On December 16, 2006, we received notification from our then current independent registered public accountants, Singer Lewak Greenbaum & Goldstein LLP (“SLGG”), Certified Public Accountants, that SLGG was resigning as our independent public accountants.  On January 5, 2007, Firstgold’s Audit Committee took action to appoint the accounting firm of Hunter Flemmer Renfro & Whitaker LLP (“HFRW”) as our new independent accountants and HFRW accepted the appointment on January 16, 2007.  As of June 1, 2007, HFRW became Hunter & Renfro LLP (“H&R”) with Randy Renfro continuing as Firstgold’s principal accountant.  H&R”S address is 455 Capitol Mall, Suite 235, Sacramento, CA  95814.

 
 
 
 
 
 
 
70
WHERE YOU CAN FIND MORE INFORMATION
 
We have filed with the SEC a registration statement on Form SB-2 (File Number 333-145016) under the Securities Act of 1933 regarding the shares of Common Stock offered hereby.  This prospectus does not contain all of the information found in the registration statement, portions of which are omitted as permitted under the rules and regulations of the SEC.  For further information regarding us and the securities offered by this prospectus, please refer to the registration statement, including its exhibits and schedules.  Statements made in this prospectus concerning the contents of any contract, agreement or other document filed as an exhibit to the registration statement are summaries of the terms of those documents.  The registration statement of which this prospectus forms a part, including its exhibits and schedules, may be inspected and copied at the public reference room maintained by the SEC at 100 F Street, N.E., Washington, D.C.  20549.  You may obtain information on the operation of the public reference room by calling the SEC at 1-800-SEC-0330.
 
The SEC maintains a web site on the Internet at www.sec.gov.  Our registration statement and other information that we file with the SEC are available at the SEC’s website.
 
We intend to make available to our stockholders annual reports (on Form 10-KSB) containing our audited consolidated financial statements and make available quarterly reports (on Form 10-QSB) containing our unaudited interim consolidated financial information for the first three fiscal quarters of each of our fiscal years.

 
If you are a stockholder, you may request a copy of these filings at no cost by contacting us at:

Firstgold Corp.
3108 Ponte Morino Drive, Suite 210
Cameron Park, CA  95682
(530) 677-5974
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
71
FINANCIAL STATEMENTS

FIRSTGOLD, INC.
 
FINANCIAL STATEMENTS
 
 INDEX TO FINANCIAL STATEMENTS    
     
 FOR THE YEARS ENDED JANUARY 31, 2008 and 2007    
     
 Report of Independent Registered Public Accounting Firm  
F-1
     
 
F-2
     
 
F-4
     
 
F-5
     
 
F-8
     
 
F-11
     
 FOR THE QUARTERS ENDED April 30, 2008 and 2007    
     
 
F-31
     
 
F-33
     
 
F-34
     
 
F-37
 
72
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders
Firstgold Corp.

We have audited the balance sheets of Firstgold Corp. (a development stage company) (the “Company”) as of January 31, 20078 and 2007, and the related statements of operations, comprehensive loss, shareholders' deficit, and cash flows for each of the two years in the period ended January 31, 2008 and the period from January 1, 1995 to January 31, 2008.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the 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.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide 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 Firstgold Corp. as of January 31, 2008, and the results of its operations and its cash flows for each of the two years in the period ended January 31, 2008, and the period from January 1, 1995 to January 31, 2008 in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 2 to the financial statements, the Company has incurred a net loss of $7,632,537 and had negative cash flow from operations of $4,832,217.  In addition, the Company had an accumulated deficit of $31,391,142 and a shareholders’ surplus of $5,174,290 at January 31, 2008.  These factors, among others, as discussed in Note 2 to the financial statements, raise substantial doubt about the Company's ability to continue as a going concern.  Management's plans in regard to these matters are also described in Note 2.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

HUNTER & RENFRO, LLP
Sacramento, California
May 15, 2008
 
 
 
F-1
 
FIRSTGOLD CORP.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
 
   
January 31,
    
January 31,
  
   
2008
    
2007
  
ASSETS
  
             
Current assets:
            
Cash
   $ 383,223     $ 150,647  
Receivables
     196,811       114,737  
Deposits
     295,281       7,368  
Prepaid expense
     250,298       140,000  
                 
    Total current assets
     1,125,613       412,752  
                 
Property, plant and equipment, net of accumulated depreciation of    $205,084 and $20,850 at January 31, 2008 and 2007, respectively
     8,438,997       928,029  
                 
Other Assets
                
Restricted cash
     674,850       250,981  
Deferred reclamation costs
     680,326       641,026  
                 
  Total other assets
     1,355,176       892,007  
                 
      Total assets
   $ 10,919,786     $ 2,232,788  
 

LIABILITIES AND SHAREHOLDERS' DEFICIT

Current liabilities
            
Accounts payable
   $ 2,730,596     $ 598,788  
Accrued expenses
     538,987       1,198,174  
Notes payable
     356,417       130,249  
                 
  Total current liabilities
     3,626,000       1,927,211  
                 
Long-term liabilities
                
Convertible debenture and related derivative liabilities
                
  net of unamortized discount of $0 and $402,135 and deferred
                
  financing costs of $148,480 and $1,382,642 at
                
  January 31, 2008 and 2007,respectively
     501,520       3,110,344  
Accrued reclamation costs
     680,326       641,026  
Deferred revenue
     937,650       800,000  
                 
  Total long-term liabilities
     2,119,496       4,551,370  
                 
    Total liabilities
     5,745,496       6,478,581  
 
The accompanying notes are an integral part of these financial statements
F-2
FIRSTGOLD CORP.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
 
   
January 31,
 
  
January 31,
  
   
2008
    
2007
  
             
Commitments and contingencies
            
             
Shareholders' surplus (deficit)
            
Common stock, $0.001 par value
            
250,000,000 shares authorized at January 31, 2008 and 2007, respectively
            
  117,432,317 and 77,839,601 shares issued and outstanding at
            
  January 31, 2008 and 2007, respectively
     117,432       77,839  
Additional paid in capital
     36,447,996       19,434,973  
Deficit accumulated during the exploration stage
     (31,391,142 )     (23,758,605 )
                 
    Total shareholders' surplus (deficit)
     5,174,290       (4,245,793 )
                 
      Total liabilities and shareholders' surplus (deficit)
   $ 10,919,786     $ 2,232,788  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements
F-3
FIRSTGOLD CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
For the Years Ended January 31, 2008 and 2007
 
             
For the Period 
  
     
For the Years  Ended 
      
From January 1, 
  
     
January 31, 
      
1995 to January 
  
     
2008 
      
2007 
      
31, 2008 
  
                         
Net Sales
   $ 551,279     $ -     $ 551,279  
                         
Exploration and maintenance costs
     (2,195,024 )     (1,591,497 )     (4,089,352 )
                         
Gross loss
     (1,643,745 )     (1,591,497 )     (3,538,073 )
Operating expenses
     (5,715,150 )     (1,955,816 )     (21,582,974 )
                         
Loss from operations
     (7,358,895 )     (3,547,316 )     (25,121,050 )
                         
Other income (expense)
                        
Interest income
     191,919       14,065       278,671  
Dividend income
                     30,188  
Other income
                     6,565  
Gain on settlement of obligations
     1,107,875       18,649       1,126,524  
Adjustments to fair value of derivatives
     (703,992 )     (616,493 )     (1,357,903 )
Interest expense
     (869,444 )     (596,975 )     (3,875,456 )
Loss from joint venture
                     (859,522 )
Loss on sale of marketable securities
                     (281,063 )
Bad debt expense
                     (40,374 )
Loss on disposal of plant, property
                        
  and equipment
                     (334,927 )
Loss on disposal of bond
                     (21,000 )
                         
Total other income (expense)
     (273,642 )     (1,180,754 )     (5,328,297 )
                         
Net loss
     (7,632,537 )   $ (4,728,070 )   $ (30,449,347 )
                         
Basic and diluted loss per share
   $ (0.07 )   $ (0.07 )        
                         
Basic and diluted weighted-average
                        
 shares outstanding
     100,162,546       71,416,951          
 
The accompanying notes are an integral part of these financial statements
F-4
FIRSTGOLD CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF SHAREHOLDERS' DEFICIT
For the Years Ended January 31, 2008 and 2007
and for the Period from January 1, 1995 to January 31, 2008
 
         
Additional
    
Other Com-
              
   
Common Stock
    
Paid in
    
prehensive
          
Accumulated
  
   
Shares
    
Amount
    
Capital
    
(Loss)
    
Deficit
    
Total
  
                                     
Balance December 31, 1994
     6,768,358     $ 6,768       -       -     $ (636,084 )   $ (629,316 )
                                                 
Net loss
                                     (233,877 )     (233,877 )
                                                 
Balance December 31, 1995
     6,768,358       6,768       -       -       (869,961 )     (863,193 )
                                                 
Shares issued to creditors and shareholders
                                                
  of Warehouse Auto Centers, Inc.
     305,709       306       305,403       -       (305,709 )     -  
Shares issued to investors and underwriters
     5,135,130       5,135       4,701,835                       4,706,970  
Shares issued to purchase Washington Gulch
     3,800,000       3,800       177,200                       181,000  
Shares issued in exchange for net profits interest
     1,431,642       1,432       440,605                       442,067  
Shares issued to others
     21,000       221       220,779                       221,000  
Shares issued to Repadre
     100,000       100       99,900                       100,000  
Shares issued to repurchase 50% interest
                                                
  in Relief Canyon
     1,000,000       1,000       999,000                       1,000,000  
Net loss for the period January 1, 1996
                                                
  to January 31, 1997
                                     (1,803,784 )     (1,803,784 )
                                                 
Balance January 31, 1997
     18,761,839       18,762       6,944,722       -       (2,979,454 )     3,984,030  
                                                 
Shares issued to Warehouse Auto Centers, Inc.
                                                
  shareholders subsequently cancelled
     (25,242 )     (25 )     (25,217 )                     (25,242 )
Shares issued to others
     12,500       13       4,987                       5,000  
Additional shares issued to investors and
                                                
  underwriters for delay in share trading
     513,514       513       204,487                       205,000  
Shares issued to Repadre
     200,000       200       199,800                       200,000  
Net loss
                                     (5,883,309 )     (5,883,309 )
                                                 
Balance January 31, 1998
     19,462,611       19,463       7,328,779       -       (8,862,763 )     (1,514,521 )
                                                 
Shares issued in exchange for rent
     15,000       15       5,985                       6,000  
Shares issued to IBK
     5,616,977       5,617       542,383                       548,000  
Shares issued in exchange for property
     150,000       150       55,350                       55,000  
Net loss
                                     (753,219 )     (753,219 )
Balance January 31, 1999
     25,244,588       25,245       7,932,497       -       (9,615,982 )     (1,658,240 )
                                                 
Three-for-two stock split
     12,672,441       12,671       (12,671 )                     -  
Shares issued in exchange for debt conversion
     3,205,674       3,206       1,279,065                       1,282,271  
Net loss
                                     (919,735 )     (919,735 )
 
The accompanying notes are an integral part of these financial statements
F-5
 
  FIRSTGOLD CORP.
  (A DEVELOPMENT STAGE COMPANY)
   STATEMENTS OF SHAREHOLDERS' DEFICIT
  For the Years Ended January 31, 2008 and 2007
   and for the Period from January 1, 1995 to January 31, 2008
                                                 
Balance January 31, 2000
     41,122,703       41,122       9,198,891       -       (10,535,717 )     (1,295,704 )
                                                 
Shares issued for cash
     1,796,000       1,796       663,204                       665,000  
Additional shares issued for delay in registration
     239,200       239       (239 )                     -  
Shares issued for offering costs
     120,000       120       (60,120 )                     (60,000 )
Shares issued for legal settlement
     1,000,000       1,000       649,000                       650,000  
Shares issued for services
     78,271       78       69,922                       70,000  
Net loss
                                     (2,382,723 )     (2,382,723 )
                                                 
Balance January 31, 2001
     44,356,174       44,356       10,520,657       -       (12,918,440 )     (2,353,427 )
                                                 
Shares issued for cash
     2,500,000       2,500       147,500                       150,000  
Warrants issued with debt
                     20,000                       20,000  
Net loss
                                     (1,502,366 )     (1,502,366 )
                                                 
Balance January 31, 2002
     46,856,174       46,856       10,688,157       -       (14,420,806 )     (3,685,793 )
                                                 
Shares issued upon exercise of warrants
     550,000       550       54,450                       55,000  
Offering costs
                     (1,467 )                     (1,467 )
Warrants issued with debt
                     13,574                       13,574  
Net loss
                                     (215,533 )     (215,533 )
                                                 
Balance January 31, 2003
     47,406,174       47,406       10,754,714       -       (14,636,339 )     (3,834,219 )
                                                 
Shares issued upon exercise of warrants
     200,000       200       19,800                       20,000  
Warrants issued with debt
                     63,918                       63,918  
Other comprehensive loss
                             (204,820 )             (204,820 )
Net loss
                                     (470,823 )     (470,823 )
                                                 
Balance January 31, 2004
     47,606,174       47,606       10,838,432       (204,820 )     (15,107,162 )     (4,425,944 )
                                                 
Shares issued for cash
     671,667       672       100,078                       100,750  
Offering costs
                     (124,337 )                     (124,337 )
Warrants issued with common stock
                     124,337                       124,337  
Warrants issued with debt
                     1,284,234                       1,284,234  
Sale of marketable securities
                             204,820               204,820  
Net loss
                                     (1,278,140 )     (1,278,140 )
                                                 
Balance January 31, 2005
     48,277,841       48,278       12,222,744       -       (16,385,302 )     (4,114,280 )

The accompanying notes are an integral part of these financial statements
F-6

  FIRSTGOLD CORP.
  (A DEVELOPMENT STAGE COMPANY)
   STATEMENTS OF SHAREHOLDERS' DEFICIT
  For the Years Ended January 31, 2008 and 2007
  and for the Period from January 1, 1995 to January 31, 2008
                                       
Shares issued for cash
     5,000,000       5,000       1,070,000                     1,075,000  
Shares issued in exchange for
                                              
  debt conversion
     12,326,231       12,326       1,836,609                     1,848,935  
Shares issued to purchase 22%
                                              
  interest in Crescent Red Caps LLC
     2,500,000       2,500       497,500                     500,000  
Warrants issued with investment in joint venture
                     359,523                     359,523  
Warrants issued for services
                     15,690                     15,690  
Net loss for the period February
                                              
  1, 2005 to January 31, 2006
                                     (2,645,231 )     (2,645,231 )
                                                 
Balance, January 31, 2006
     68,104,072       68,104       16,002,066      
  -
       (19,030,535 )     (2,960,365 )
                                                 
Shares issued for cash
     1,428,500       1,428       237,846                   239,275  
Shares issued in exchange for
                                            
  debt conversion
     6,207,029       6,207       1,550,263                   1,556,263  
Stock issued for services
     2,000,000       2,000       738,000                   740,000  
Warrants issued for services
                     373,905                   373,905  
Stock issued in settlement of litigation
     100,000       100       38,900                   39,000  
Warrants issued with debt
                     173,114                   173,114  
Stock options issued
                     322,879                   322,879  
Net loss for the period February
                                            
  1, 2006 to January 31, 2007
                                   (4,828,780 )     (4,828,780 )
                                               
Balance, January 31, 2007
     77,839,601     $ 77,839       19,434,973       -       (23,859,315 )     (4,346,501 )
                                                 
Shares issued for cash
     25,266,529       25,267       10,190,498                       10,215,765  
                                                 
Shares issued in exchange for
                                                
  debt conversion
     7,080,450       7,080       5,060,004                       5,067,084  
Stock issued for services
     277,000       277       168,154                       168,431  
Shares issued upon exercise of warrants
     4,380,180       4,380       810,114                       814,494  
Shares issued upon exercise of stock options
     61,906       62       (62 )                     -  
Additional shares issued for delay in registration
     2,526,651       2,527       (2,527 )                     -  
Stock options issued
     -       -       786,842                       786,842  
Net loss for the period February
                                                
  1, 2007 to January 31, 2008
                                     (7,632,537 )     (7,632,537 )
                                                 
Balance, January 31, 2008
     117,432,317     $ 117,432       36,447,996               (31,391,142 )     5,174,290  
 
The accompanying notes are an integral part of these financial statements
F-7
 
  (A DEVELOPMENT STAGE COMPANY)
   STATEMENTS OF CASH FLOWS
  For the Years Ended January 31, 2008 and 2007
                      and for the Period from January 1, 1995 to January 31, 2008
 
               
For the Period
             
From January 1,
   
For the Years Ended January 31,
    
1995 to January
Cash flows from operating activities
                
   Net loss
     (7,632,537 )   $ (4,728,070 )   $ (30,449,347 )
   Adjustments to reconcile net loss to net cash
                          
      used in operating activities
                          
         Accretion of warrants issued as a debt discount
     43,278       13,512       1,287,774  
         Accretion of beneficial conversion
     -       -       107,468  
         Accretion of debt discount
     279,438       248,962       224,004  
         Adjustments to  fair value of derivatives
     703,992       616,493       653,910  
Loss from joint venture
     -       -       859,522  
         Loss on sale of marketable securities
     -       -       281,063  
         Depreciation and amortization
     210,572       64,278       179,885  
         Loss on disposal of property, plant and equipment
     -       -       334,927  
         Impairment in value of property, plant and equipment
     -       -       807,266  
         Loss on disposal of bond
     -       -       21,000  
         Impairment in value of Relief Canyon Mine
     -       -       3,311,672  
         Impairment in value of joint  investments
     -       -       490,000  
         Bad debt
     -       -       40,374  
         Assigned value of stock and warrants exchanged for services
     168,431       1,387,073       1,888,331  
         Assigned value of stock options issue for compensation
     786,842       49,711       49,711  
         Gain on write off of note payable
     -       -       (7,000 )
         Judgment loss accrued
     -       -       250,000  
         (Increase) decrease in
                          
            Restricted cash
     (423,869 )     (7,777 )     (243,204 )
            Receivables
     (82,074 )     (113,415 )     (30,737 )
            Deposits
     (287,913 )     (7,368 )     (53,868 )
            Deferred reclamation costs
     39,300       370,290       175,548  
 
The accompanying notes are an integral part of these financial statements
F-8
 
            Prepaid expenses
     (110,298 )     (140,000 )     (146,900 )
            Reclamation bonds
     -       -       185,000  
            Other assets
     -       -       (1,600 )
         Increase (decrease) in
                          
            Accounts payable
     2,131,808       (199,445 )     408,044  
            Accrued expenses
     (659,187 )     (209,744 )     2,077,485  
               Net cash used by operating activities
     (4,832,217 )     (2,655,050 )     (9,767,839 )
Cash flows from investing activities
                          
   Proceeds from sale of marketable securities
     -       -       34,124  
   Investment in marketable securities
     -       -       (315,188 )
   Advances from shareholder
     -       -       7,436  
   Contribution from joint venture partner
     -       -       775,000  
   Purchase of joint venture partner interest
     -       -       (900,000 )
   Capital expenditures
     (7,695,202 )     (929,681 )     (3,826,219 )
   Proceeds from disposal of property, plant and equipment
                     278,783  
   Investments in joint ventures
     -       -       (490,000 )  
   Note receivable
     -       -       (268,333 )  
   Repayment of note receivable
     -       -       268,333    
               Net cash used by investing activities
     (7,695,202 )     (929,681 )     (4,436,064 )  
Cash flows from financing activities
                          
   Proceeds from the issuance of common stock
     12,396,177       651,288       7,559,253    
   Proceeds from notes payable
     250,685       2,841,500       5,554,548    
   Principal repayments of notes payable
     (24,517 )     (457,634 )     (2,037,706 )  
   Repayment of advances to affiliate
     -       -       (231,663 )  
   Deferred revenue
     137,650       -       800,000    
                           
               Net cash provided by financing activities
     12,759,995       3,035,154       11,644,432    
                  Net increase (decrease) in cash
     232,576       (549,577 )     693,537    
Cash, beginning of year
     150,647       700,224       6,687    
Cash, end of year
   $ 383,223     $ 150,647     $ 263,871    
 
 
The accompanying notes are an integral part of these financial statements
F-9
 
Supplemental cash flow information for the years ended January 31, 2006 and 2005 and January 1, 1995 THROUGH January 31, 2008 as follows:
  
   
         
For the Period
  
         
From January 1,
  
   
For the Years Ended January 31,
    
1995 to January
  
   
2008
    
2007
     31, 2008  
                     
Cash paid for interest
   $ -     $ -     $ 161,107  
Cash paid for income taxes
   $ -     $ -     $ -  
                         
Non Cash Investing and Financing Activities:
                        
   Conversion of related party note payable to common
   stock,including interest payable of $446,193
   $ -     $ 244,678     $ 2,093,573  
Conversion of convertible debentures to common stock,
  including interest of $217,151
   $ 3,186,203     $ 1,173,406     $ 4,359,609  
  Issuance of warrants as financing costs in connection
  with convertible debt
   $ -     $ 173,114     $ 2,093,573  
  Issuance of common stock as payment for
  settlement of liabilities
   $ -     $ 206,375     $ 2,093,573  
                         
                         

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements
F-10
NOTE 1 - ORGANIZATION AND LINE OF BUSINESS
 
Firstgold Corp. has a business strategy whereby it will invest in, explore and if warranted, conduct mining operations of its current mining properties and other mineral producing properties.  Firstgold is a public company that in the past has been engaged in the acquisition and exploration of gold-bearing properties in the continental United States.  Currently, Firstgold’s principal assets include various mineral leases associated with the Relief Canyon Mine located near Lovelock, Nevada along with various items of mining equipment and improvements located at that site.  Firstgold has also secured rights to explore approximately 25,000 acres of property located in Elko County, Nevada and has staked claims on approximately 4,200 acres of land in the Horse Creek area of Nevada.
 
From 1995 until the beginning of 2000, Firstgold had followed the above described business activity focusing on the exploration and mining of gold and silver ore deposits.  At the beginning of 2000, Firstgold’s business strategy became focused on investing in Internet start-up companies.  That strategy was not successful and by mid-2001 Firstgold had abandoned such investments.  From approximately July 2001 until February 2003 Firstgold had been inactive.  During the period of inactivity, ASDi LLC, an entity controlled by A. Scott Dockter who is also the Chief Operating Officer of Firstgold, made the necessary expenditures to maintain the current status of the Relief Canyon mining claims.  In February 2003, Firstgold resumed its business of acquiring, exploring and if warranted developing its mining properties.
 
Merger
 
In November 1996, Newgold, Inc. of Nevada (Old Newgold) was merged into Warehouse Auto Centers, Inc. (WAC), a public company, which had previously filed an involuntary petition under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Western District of New York.  Pursuant to the plan of reorganization and merger (the Plan), (i) WAC which was the surviving corporation for legal purposes, changed its name to Newgold Inc.  (the Company),  (ii) the outstanding shares of Old Newgold were converted into the right to receive an aggregate of 12,000,000 shares or approximately 69% of the post merger outstanding common stock of the Company, (iii) each outstanding share of WAC was converted into the right to receive 1/65 share of the common stock of the Company, for an aggregate of 51,034 shares or less than 1% of the post merger outstanding common stock, (iv) unsecured trade debts and other unsecured pre-petition liabilities were paid in full via the issuance of one share of the Company’s stock, for each $42 of debt, for an aggregate of 63,374 shares or less than 1% of the post merger outstanding common stock, and (v) post petition creditors received 1 share of stock for each $1 of debt, for an aggregate of 191,301 shares or approximately 1% of the post merger outstanding common stock.  The Plan also required an amendment to the Company’s capital structure to increase the number of shares authorized to 50,000,000 and to reduce the corresponding par value to $.001.
 
In connection with the Plan, the Company raised $4,707,000 of cash through the issuance of convertible debtor certificates.  Shortly after confirmation of the Plan, the debtor certificates were exchanged for 5,135,130 shares of common stock (including 428,130 shares issued in lieu of paying cash for underwriter’s fees) representing approximately 29% of the post merger outstanding common stock.  An additional bonus of 513,514 shares was issued to investors and underwriters during the year ended January 31, 1998 for delay in the effective date of the Company’s stock trading.
 
F-11
 
For accounting purposes, Old Newgold has been treated as the acquirer (reverse acquisition). Accordingly, the historical financial statements prior to November 21, 1996 are those of Old Newgold.  There were no assets or liabilities acquired in this transaction and there is no impact on the statement of operations.
 
NOTE 2 - GOING CONCERN
 
These financial statements have been prepared on a going concern basis.  During the years ended January 31, 2008 and 2007 and the period from January 1, 1995 to January 31, 2008, Firstgold incurred net losses of approximately $7,632,537, $2,645,231and $30,550,057, respectively.  In addition, while Firstgold had a total shareholders’ surplus of $5,174,290 it has been in the development stage since inception and through January 31, 2008.  The Company's ability to continue as a going concern is dependent upon its ability to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. The outcome of these matters cannot be predicted with any certainty at this time.  Since inception, the Company has satisfied its capital needs by issuing equity securities.
 
Management plans to continue to provide for its capital needs during the year ending January 31, 2009 by issuing equity securities or incurring additional debt financing, with the proceeds to be used to re-establish mining operations at Relief Canyon as well as improve its working capital position.  These financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern.
 
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Development Stage Company
 
Effective January 1, 1995 (date of inception), the Company is considered a development stage Company as defined in SFAS No. 7.  The Company’s development stage activities consist of the development of several mining properties located in Nevada. Sources of financing for these development stage activities have been primarily debt and equity financing.  The Company has, at the present time, not paid any dividends and any dividends that may be paid in the future will depend upon the financial requirements of the Company and other relevant factors.
 
Cash and Cash Equivalents
 
For the purpose of the statements of cash flows, the Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.
 
Restricted Cash
 
Restricted cash represents a certificate of deposit with Umpqua Bank to serve as collateral for a reclamation bond with the Nevada Department of Environmental Protection at the Relief Canyon Mine.
 
F-12
 
Marketable Securities Available for Sale
 
Investments in equity securities are classified as available-for-sale. Securities classified as available for sale are marked to market at each period end. Changes in value on such securities are recorded as a component of Other comprehensive income (loss). If declines in value are deemed other than temporary, losses are reflected in Net income (loss).
 
Property and Equipment
 
Depreciation, depletion and amortization of mining properties, mine development costs and major plant facilities will be computed principally by the units-of-production method based on estimated proven and probable ore reserves.  Proven and probable ore reserves reflect estimated quantities of ore which can be economically recovered in the future from known mineral deposits.  Such estimates are based on current and projected costs and prices.  Other equipment is depreciated using the straight-line method principally over the estimated useful life of the respective asset.
 
Deferred Reclamation Costs
 
In August 2001, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 143, “Accounting for Asset Retirement Obligations,” which established a uniform methodology for accounting for estimated reclamation and abandonment costs.  The statement was adopted February 1, 2003.  The reclamation costs will be allocated to expense over the life of the related assets and will be adjusted for changes resulting from the passage of time and revisions to either the timing or amount of the original present value estimate.
 
Prior to adoption of SFAS No. 143, estimated future reclamation costs were based principally on legal and regulatory requirements.  Such costs related to active mines were accrued and charged over the expected operating lives of the mines using the Units Of Production method based on proven and probable reserves.  Future remediation costs for inactive mines were accrued based on management’s best estimate at the end of each period of the undiscounted costs expected to be incurred at a site.  Such cost estimates included, where applicable, ongoing care, maintenance and monitoring costs.  Changes in estimates at inactive mines were reflected in earnings in the period an estimate was revised.
 
Exploration Costs
 
Exploration costs are expensed as incurred.  All costs related to property acquisitions are capitalized.
 
Mine Development Costs
 
Mine development costs consist of all costs associated with bringing mines into production, to develop new ore bodies and to develop mine areas substantially in advance of current production. The decision to develop a mine is based on assessment of the commercial viability of the property and the availability of financing.  Once the decision to proceed to development is made, development and other expenditures relating to the project will be deferred and carried at cost with the intention that these will be depleted by charges against earnings from future mining operations.  No depreciation will be charged against the property until commercial production commences.  After a mine has been brought into commercial production, any additional work on that property will be expensed as incurred, except for large development programs, which will be deferred and depleted.
 
F-13
 
Financing Costs
 
Financing costs, including interest, are capitalized when they arise from indebtedness incurred to finance development and construction activities on properties that are not yet subject to depreciation or depletion.  Capitalization is based upon the actual interest on debt specifically incurred or on the average borrowing rate for all other debt except where shares are issued to fund the cost of the project.
 
Depreciation, Depletion and Amortization
 
Assets other than mining properties and mineral rights are depreciated using the straight-line method over their estimated useful lives.  Capitalized development costs are amortized on the units of production method considering proven and probable reserves.  Depreciation and depletion rates are subject to periodic review to ensure that asset costs are amortized over their useful lives.
 
Impairment
 
Mining projects and properties are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable.  If estimated future cash flows expected to result from the use of the mining project or property and its eventual disposition are less than the carrying amount, impairment is recognized based on the estimated fair value of the mining project or property.  Fair value generally is based on the present value of estimated future net cash flows for each mining project or property, calculated using estimates of proven and probable mineable reserves, geological resources, future prices, operating costs, capital requirements and reclamation costs.  A provision for impairment in valuation of development costs and property, plant and equipment amounted to $800,000 for the year ended January 31, 2002 and was charged to operating expense.  After these adjustments all development costs and property, plant and equipment have been fully written off.
 
Management’s estimates of future cash flows are subject to risks and uncertainties.  Therefore, it is reasonably possible that changes could occur which may affect the recoverability of the Company’s investment in mineral properties.
 
Risks Associated with Gold Mining
 
The business of gold mining is subject to certain types of risks, including environmental hazards, industrial accidents, and theft.  While the Company maintains insurance consistent with industry practice, it is not possible to insure against all risks associated with the mining business, or prudent to assume that insurance will continue to be available at a reasonable cost.  The Company has not obtained environmental liability insurance because such coverage is not considered by management to be cost effective.
 
F-14
 
Reclamation Costs
 
Reclamation costs and related accrued liabilities, which are based on the Company’s interpretation of current environmental and regulatory requirements, are accrued and expensed, upon determination.
 
Based on current environmental regulations and known reclamation requirements, management has included its best estimates of these obligations in its reclamation accruals.  However, it is reasonably possible that the Company’s best estimates of its ultimate reclamation liabilities could change as a result of changes in regulations or cost estimates.
 
Valuation of Derivative Instruments
 
FAS No. 133 "Accounting for Derivative Instruments and Hedging Activities" requires bifurcation of embedded derivative instruments and measurement of their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Black Scholes model as a valuation technique.  Derivative liabilities are adjusted to reflect fair value at each period end, with any increase or decrease in the fair value being recorded in results of operations as Adjustments to Fair Value of Derivatives. In addition, the fair values of freestanding derivative instruments such as warrants are valued using Black Scholes models.
 
Revenue Recognition
 
Revenues will be recognized when deliveries of gold are made, title and risk of loss passes to the buyer and collectibility is reasonably assured.  Deferred revenue represents non-refundable cash received in exchange for royalties on net smelter returns on the Relief Canyon Mine.  Deferred revenue will be amortized to earnings based on estimated production in accordance with the royalty agreement.
 
Fair Value of Financial Instruments
 
The Company's financial instruments include cash and cash equivalents and accounts payable - trade.  The carrying amounts for these financial instruments approximate fair value due to their short maturities.
 
Comprehensive Income
 
The Company utilizes SFAS No. 130, "Reporting Comprehensive Income."  This statement establishes standards for reporting comprehensive income and its components in a financial statement.  Comprehensive income as defined includes all changes in equity (net assets) during a period from non-owner sources.  Examples of items to be included in comprehensive income, which are excluded from net income, include foreign currency translation adjustments, minimum pension liability adjustments, and unrealized gains and losses on available-for-sale marketable securities.  Comprehensive income is presented in the Company's financial statements since the Company did have unrealized gain (loss) of from changes in equity from available-for-sale marketable securities.
 
F-15
 
Income Taxes
 
The Company accounts for income taxes under the liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns.  Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income.  Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
 
As of January 31, 2008, the deferred tax assets related to the Company’s net operating loss carry-forwards are fully reserved.  Due to the provisions of Internal Revenue Code Section 382, the Company may not have any net operating loss carry-forwards available to offset financial statement or tax return taxable income in future periods as a result of a change in control involving 50 percentage points or more of the issued and outstanding securities of the Company.
 
Estimates
 
The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.  Actual results could differ from those estimates.
 
Loss Per Share
 
The Company utilizes SFAS No. 128, "Earnings per Share."  Basic loss per share is computed by dividing loss available to common shareholders by the weighted-average number of common shares outstanding.  Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.  Common equivalent shares are excluded from the computation if their effect is anti-dilutive.
 
The following common stock equivalents were excluded from the calculation of diluted loss per share since their effect would have been anti-dilutive:
 
   
2008
    
2007
  
             
 Warrants     39,257,146       26,592,866  
 
Concentrations of Credit Risk
 
Financial instruments which potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents.  The Company places its cash and cash equivalents with high credit, quality financial institutions.  At times, such cash and cash equivalents may be in excess of the Federal Deposit Insurance Corporation insurance limit of $100,000.  The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents.
 
F-16
 
Recent Accounting Pronouncements
 
In February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid Financial Instruments”, which amends SFAS No. 133, “Accounting for Derivatives Instruments and Hedging Activities” and SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities.”  SFAS No. 155 amends SFAS No. 133 to narrow the scope exception for interest-only and principal-only strips on debt instruments to include only such strips representing rights to receive a specified portion of the contractual interest or principle cash flows.  SFAS No. 155 also amends SFAS No. 140 to allow qualifying special-purpose entities to hold a passive derivative financial instrument pertaining to beneficial interests that itself is a derivative instrument.  The Company has evaluated the impact of this new Standard and determined that it did not have a material impact on the Company’s financial position, results of operations, or cash flows.
 
In March 2006, the FASB issued SFAS No. 156, “Accounting for Servicing of Financial Assets” (“SFAS NO. 156”), which provides an approach to simplify efforts to obtain hedge-like (offset) accounting.  This Statement amends FASB Statement No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities”, with respect to the accounting for separately recognized servicing assets and servicing liabilities.  The Statement (1) requires an entity to recognize a servicing asset or servicing liability each time it undertakes an obligation to service a financial asset by entering into a servicing contract in certain situations; (2) requires that a separately recognized servicing asset or servicing liability be initially measured at fair value, if practicable; (3) permits an entity to choose either the amortization method or the fair value method for subsequent measurement for each class of separately recognized servicing assets or servicing liabilities; (4) permits at initial adoption a one-time reclassification of available-for-sale securities to trading securities by an entity with recognized servicing rights, provided the securities reclassified offset the entity’s exposure to changes in the fair value of the servicing assets or liabilities; and (5) requires separate presentation of servicing assets and servicing liabilities subsequently measured at fair value in the balance sheet and additional disclosures for all separately recognized servicing assets and servicing liabilities.  SFAS No. 156 is effective for all separately recognized servicing assets and liabilities as of the beginning of an entity’s fiscal year that begins after September 15, 2006, with earlier adoption permitted in certain circumstances.  The Statement also describes the manner in which it should be initially applied.  The Company has evaluated the impact of this new standard and has determined that it did not have a material impact on its financial position, results of operations or cash flows.
 
In July 2006, the FASB released FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes”, an interpretation of FASB Statement No. 109 (FIN 48). FIN 48 clarifies the accounting and reporting for uncertainties in income tax law.  This interpretation prescribes a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax returns. This statement is effective for fiscal years beginning after December 15, 2006.  The Company has evaluated the impact of this new standard and determined that it did not have a material impact on its results of operations and financial position.
 
In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Issues No. 157, “Fair Value Measurements” (“SFAS 157”), which defines the fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements.  This statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years.  Early adoption is encouraged, provided that the Company has not yet issued financial statements for that fiscal year, including any financial statements for an interim period within that fiscal year. The Company is currently evaluating the impact SFAS 157 may have on its financial condition or results of operations.
 
F-17
 
In September 2006, the FASB issued SFAS No. 158, “Employer’s accounting for Defined Benefit Pension and Other Post Retirement Plans”.  SFAS No. 158 requires employers to recognize in its statement of financial position an asset or liability based on the retirement plan’s over or under funded status.  SFAS No. 158 is effective for fiscal years ending after December 15, 2006. The Company is currently evaluating the effect that the application of SFAS No. 158 will have on its results of operations and financial condition.
 
In September 2006, the United States Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements” (“SAB 108”). This SAB provides guidance on the consideration of the effects of prior year misstatements in quantifying current year misstatements for the purpose of a materiality assessment.  SAB 108 establishes an approach that requires quantification of financial statement errors based on the effects on each of the company’s balance sheets, statements of operations and related financial statement disclosures.  The SAB permits existing public companies to record the cumulative effect of initially applying this approach in the first year ending after November 15, 2006 by recording the necessary correcting adjustments to the carrying values of assets and liabilities as of the beginning of that year with the offsetting adjustment recorded to the opening balance of retained earnings. Additionally, the use of the cumulative effect transition method requires detailed disclosure of the nature and amount of each individual error being corrected through the cumulative adjustment and how and when it arose.  The Company is currently evaluating the impact SAB 108 may have on its results of operations and financial condition.
 
In October 2006, the Emerging Issues Task Force (“EITF”) issued EITF 06-3, “How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement (That is, Gross versus Net Presentation)” to clarify diversity in practice on the presentation of different types of taxes in the financial statements.  The Task Force concluded that, for taxes within the scope of the issue, a company may adopt a policy of presenting taxes either gross within revenue or net.  That is, it may include charges to customers for taxes within revenues and the charge for the taxes from the taxing authority within cost of sales, or, alternatively, it may net the charge to the customer and the charge from the taxing authority. If taxes subject to EITF 06-3 are significant, a company is required to disclose its accounting policy for presenting taxes and the amounts of such taxes that are recognized on a gross basis.  The guidance in this consensus is effective for the first interim reporting period beginning after December 15, 2006 (the first quarter of our fiscal year 2007). The Company does not expect the adoption of EITF 06-3 will have a material impact on Firstgold’s results of operations, financial position or cash flow.
 
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (SFAS 159).  Under the provisions of SFAS 159, Companies may choose to account for eligible financial instruments, warranties and insurance contracts at fair value on a contract-by-contract basis. Changes in fair value will be recognized in earnings each reporting period. SFAS 159 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years.  The Company is required to and plans to adopt the provisions of SFAS 159 beginning in the first quarter of 2008. The Company is currently assessing the impact of the adoption of SFAS 159.
 
In December 2007, the FASB issued SFAS No. 141R, Business Combinations, the purpose of which is to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial reports about a business combination and its effects. SFAS No. 141R retains the fundamental provisions of SFAS No. 141, which it replaces, but is broader in scope than SFAS No. 141. This statement is effective for the Company beginning February 1, 2009. Earlier application is prohibited. The Company is currently assessing the potential impact that adoption of SFAS No. 141R will have on its financial statements.

F-18
 
NOTE 4 - PROPERTY AND EQUIPMENT

Property and equipment was recorded at $8,644,081 and $948,879 at January 31, 2008 and 2007, respectively.  Depreciation expense was $184,234 and $20,850 for the years ended January 31, 2008 and 2007, respectively

NOTE 5 - NOTES PAYABLE

Notes payable consist of the following at January 31, 2008:
 
Mortgage note payable
   $ 100,000  
The note bears interest at 10% per year and was paid off in April 2008. The loan is secured by a 3,000 square foot improved office building located in Lovelock, NV.
 
Commercial equipment loan
     192,691  
The loan bears interest at 9% per year and is due December 2012. The loan is secured by certain pieces of equipment which were acquired with the proceeds of the loan.
 
Equipment notes payable  
     68,241  
The first note does not bear any interest and is due in December 2010. The second note bears interest at 8.6% and is due June 2011. The loans are secured by a Caterpillar loader and backhoe.
      
Total notes payable
   $ 360,932  
 
                                                     
Interest expense was $869,444, $596,975 and $3,875,456 for the years ended January 31, 2008 and 2007, and the period from January 1, 1995 to January 31, 2008, respectively.
 
NOTE 6 – CONVERTIBLE DEBENTURE
 
September 26, 2006 Convertible Debenture
 
On September 26, 2006, Firstgold entered into a Securities Purchase Agreement (the “Purchase Agreement”) and other agreements, as amended on November 1, 2006, in connection with the private placement of convertible debentures, in the aggregate principal amount of $3,000,000 and bearing interest at 8% per annum (the “Debenture”).  The Debentures were funded $1,000,000 on September 26, 2006, $1,000,000 upon the filing of a resale registration statement with the SEC on December 1, 2006 and $1,000,000 on March.15, 2007.  Of the $1,000,000 funded on September 26, 2006, $120,000 was paid for various loan fees and closing costs; of the $1,000,000 funded December 1, 2006, $90,000 was paid for various loan fees and closing costs; and of the $1,000,000 funded March 19, 2007, $90,000 was paid for various loan fees and closing costs.  On July 13, 2007 $450,000 of the Debenture dated March 15, 2007 was converted into 1,000,000 shares of common stock. On September 13, 2007 the $1,000,000 Debenture dated September 26, 2006 was converted into 2,222,222 shares of common stock. On October 12, 2007 $450,000 of the Debenture dated December 1, 2006 was converted into 1,000,000 shares of common stock. On October 16, 2007 $450,000 of the Debenture dated December 1, 2006 was converted into 1,000,000 shares of common stock. On October 30, 2007 1,444,444 shares of common stock were issued in conversion of the remaining $650,000 in principal of outstanding Secured Convertible Debentures.  An additional 413,784 shares of common stock was issued in conversion of $186,203 of accrued interest on the Secured Convertible Debentures.
 
F-19
 
October 10, 2006 Convertible Debentures

On October 10, 2006, Firstgold issued convertible debentures in the aggregate principal amount of $650,000 and bearing interest of 8% per annum.  The Debentures and accrued interest are convertible into shares of Firstgold common stock at a conversion rate of $0.45 per share.  The Debentures are due and payable three years from the date of issue unless they are converted into shares of the Company’s common stock or are repaid prior to their expiration date.  Additionally, the investors were issued warrants to purchase an aggregate of 746,843 shares of Firstgold common stock with 426,767 warrants exercisable at $0.45 per share and 320,076 warrants exercisable at $0.60 per share.  The warrants expire four years from the date of issuance.  The warrants were issued as financing costs and total deferred financing cost of $173,114 was recorded in relation to this debt.

NOTE 7 - COMMITMENTS AND CONTINGENCIES

Except for the advance royalty and rent payments noted below, the Company is not obligated under any capital leases or non-cancelable operating lease with initial or remaining lease terms in excess of one year as of January 31, 2008.  However, minimum annual royalty payments are required to retain the lease rights to the Company’s properties.
 
Relief Canyon Mine
 
The Company purchased the Relief Canyon Mine from J.D. Welsh Associates (Welsh) in January 1995.  The mine consisted of 39 claims and a lease for access to an additional 800 acres contiguous to the claims. During 1997, the Company staked an additional 402 claims. Subsequent to January 31, 1998, the Company reduced the total claims to 50 (approximately 1,000 acres).  The annual payment to maintain these claims is $5,000.  As part of the original purchase of Relief Canyon Mine, Welsh assigned the lease from Santa Fe Gold Corporation (Santa Fe) to the Company. The lease granted Santa Fe the sole right of approval of transfer to any subsequent owner of the Relief Canyon Mine. Santa Fe had accepted lease and minimum royalty payments from the Company, but has declined to approve the transfer.  Due to Welsh’s inability to transfer the Santa Fe lease, the original purchase price of $500,000 for Relief Canyon Mine was reduced by $50,000 in 1996 to $450,000.
 
Subsequent to January 31, 1998, the lease was terminated by Santa Fe. Management believes loss of the Santa Fe lease will have no material adverse affect on the remaining operations of the mine operation or the financial position of the Company.
 
During 1996, Repadre Capital Corporation (“Repadre”) purchased for $500,000 a net smelter return royalty (Repadre Royalty). Repadre was to receive a 1.5% royalty from production at each of the Relief Canyon Mine and Mission Mines. In July 1997, an additional $300,000 was paid by Repadre for an additional 1% royalty from the Relief Canyon Mine. In October, 1997, when the Mission Mine lease was terminated, Repadre exercised its option to transfer the Repadre Royalty solely to the Relief Canyon Mine resulting in a total 4% royalty. The total amount received of $800,000 has been recorded as deferred revenue in the accompanying financial statements.
 
F-20
 
Litigation
 
On February 4, 2000, a complaint was filed against Firstgold by Sun G. Wong in the Superior Court of Sacramento County, California (Case No. 00AS00690).  In the complaint, Mr. Wong claims that he was held liable as a guarantor of Firstgold in a claim brought by Don Christianson in a breach of contract action against Firstgold.  On September 26, 2006, the parties signed a Settlement Agreement to resolve this lawsuit. Pursuant to the Settlement Agreement, Firstgold paid Mr. Wong $125,000 and issued him 100,000 shares of common stock on October 4, 2006 and made a final payment of $50,000 to Mr. Wong on January 3, 2007.  An Acknowledgment of Satisfaction of Judgment has been filed by Mr. Wong.
 
On February 8, 2007, a complaint was filed against ASDi, LLC, Crescent Red Caps LLC, Firstgold, and Scott Dockter by the Lessors of the Crescent Valley and Red Caps mining properties.  The complaint was filed in the Sixth Judicial District Court of Lander County, Nevada (Case No. 9661). In the complaint the plaintiffs allege that ASDi, LLC wrongfully assigned its lessee rights in the Crescent Valley and Red Caps mining properties to Crescent Red Caps LLC (of which Firstgold is the Managing Member).  In late March, 2008 the parties reached a settlement agreement and the case was dismissed by the Court on April 4, 2008.  As a result of the Settlement, Firstgold paid $150,000 to Plaintiffs and Firstgold, ASDi LLC and Crescent Red Caps LLC relinquished all right, title and interest in the Red Caps and Crescent Valley leases to the Plaintiffs.  Consequently, Firstgold no longer has any interest in these leases and will not pursue any further exploration activity on such leased property.
 
On September 24, 2007, a complaint was served on Firstgold by Swartz Private Equity, LLC.  The complaint was filed in the District Court for the Western District of New York (Case No. 07CV6447).  In the complaint, plaintiff alleges that pursuant to an Investment Agreement dated October 4, 2000, and entered into with Firstgold’s former management, it is entitled to the exercise of certain warrants in the amount of 1,911,106 shares of Firstgold common stock or the equivalent cash value of $0.69 per share and a termination fee of $200,000.  Firstgold filed an answer to the complaint on December 3, 2007 and expects to vigorously defend this action.  The lawsuit is now in the discovery phase.
 
On January 30, 2008, a complaint was served on Firstgold by Park Avenue Consulting Group, Inc.  The complaint was filed in the Supreme Court of the State of New York but was subsequently removed to the Federal District Court for the Southern District of New York (Case No. 08CV01850).  In the complaint, plaintiff alleges that pursuant to a Retainer Agreement entered into on September 1, 2000, it is entitled to $100,000 in retainer fees, $43,874 in expenses, and 850,000 shares of common stock during the term of the agreement.  Firstgold is currently evaluating this lawsuit and expects to vigorously defend this action.
 
The Company is involved in various other claims and legal actions arising in the ordinary course of business.  In the opinion of management, the ultimate dispositions of these matters will not have a material adverse effect on the Company’s financial position, results or operations or liquidity.
 
F-21
 
NOTE 8 - SHAREHOLDERS' DEFICIT

The following common stock transactions occurred during the period from January 1, 1995 to January 31, 2008:
 
Common Stock
 
In January 1996 3,800,000 shares were issued to purchase the rights to the Washington Gulch property.  The site was acquired from a former officer of the Company.  The property consists of a mill site located in Montana. The value of the common stock issued on the property was recorded at the cash value of the net monetary assets received which amounted to $181,000.
 
In June, 1996 the Company exchanged several “net profits interests” for shares of common stock of the Company.  A net profit interest is a royalty based on the profit remaining after recapture of certain operating, capital and other costs as defined by agreement. Net profits interests sold for $442,037 were repurchased for 1,431,642 shares of common stock.
 
In October 1996 the Company issued 1,000,000 shares, valued at $1 per share, to Casmyn Corp. as partial consideration for the repurchase of their 50% interest in the Relief Canyon Mine.
 
In November 1996, the Company sold 100,000 shares in exchange for $100,000 in cash to Repadre Capital Corporation.
 
In November 1996, Newgold, Inc. of Nevada (Old Newgold) was merged into Warehouse Auto Centers, Inc. (WAC), a public company, which had previously filed an involuntary petition under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Western District of New York.  Pursuant to the plan of  reorganization and merger (the Plan), (i) WAC which was the surviving  corporation for legal purposes,  changed its name to Newgold, Inc. (the Company),  (ii) the outstanding shares of Old Newgold were converted into the right to receive an aggregate of 12,000,000 shares or approximately  69% of the post  merger  outstanding  common  stock  of the  Company,  (iii)  each outstanding  share of WAC was converted  into the right to receive 1/65 share of the common stock of the Company, for an aggregate of 51,034 shares or less than 1% of the post merger outstanding common stock, (iv) unsecured trade debts and other unsecured pre-petition liabilities were paid in full via the issuance of one share of the Company's stock for each $42 of debt, for an aggregate of 63,374 shares or less than 1% of the post merger  outstanding common stock, and (v) post petition 1 share of stock for each $1 of  debt,  for an aggregate of 191,301 shares or approximately 1% of the post merger outstanding  common  stock.  The Plan also required an amendment to the Company's capital structure to increase the number of shares authorized to 50,000,000 and to reduce the corresponding par value to $.001.
 
In connection with the Plan, the Company raised $4,707,000 of cash through the issuance of convertible debtor certificates.  Shortly after confirmation  of the Plan, the debtor certificates were exchanged for 5,135,130 shares of common stock (including  428,130 shares issued in lieu of paying cash for underwriter's fees) of the Company representing approximately 29% of the post merger outstanding common stock.
 
In the bankruptcy reorganization of WAC, all creditors were issued stock in settlement of accounts payable. During fiscal 1998 post petition creditors had the option of receiving cash in lieu of stock. Five creditors returned 25,242 shares to the Company, resulting in a charge to stockholders' deficit of $25,242.
 
In May 1997, the Company issued 12,500 shares to a note holder in payment of a $5,000 note, which had originally been issued in exchange for an agreement to defer filing a judgment for collection of the $200,000 note.
 
F-22
 
The Company's stock was approved by NASD for trading on July 7, 1997. On May 27, 1997, the investors in the WAC bankruptcy reorganization, which had been approved by the court on November 21, 1996, were issued a ten-percent bonus of 470,700 shares for the delay in trading. An additional 42,814 shares were issued to the investment bankers for a total of 513,514 shares. A total of $205,000 was credited to stockholders' deficit for the transaction.
 
In October 1997 Repadre Capital Corp. exercised warrants to purchase 200,000 shares 1997 at $1.00 per share.
 
The employment contract for the corporate counsel stipulated the Company would pay the rent for a law office. In March 1998, the Company issued 15,000 shares in lieu of cash for six months rent. General and administrative expense was charged $6,000 for the rent. The corporate counsel's office was subsequently relocated to the Company's headquarters.
 
In April 1998, the Company closed a Regulation S offering for 5,480,000 shares to raise $548,000 at $.10 per share. In connection with this offering 136,977 shares were issued as commission to brokers.
 
As an alternative to gold mining, the Board of Directors approved an exploration program for a calcium bentonite mine located in southern California. In payment of a purchase option on the mine, the Company issued 150,000 shares of stock to the mine owner in May 1998. The Company charged $55,500 to exploration expense for the option.  After completing the due diligence on the mine property, the Company abandoned development of the mine in August 1998.
 
On June 8, 1999 the Board of Directors approved a three-for-two stock split, effected in the form of a 50% stock dividend, payable to stockholders of record on June 10, 1999.
 
In January 2000 the Board of Directors, agreed that various creditors of the Company would settle their debt through conversion of the debt into equity by issuing stock at a price of $0.40 per share. In total, $1,282,271 of debt was converted into 3,205,674 shares of stock.  $477,977 or 1,194,943 shares were for amounts owed to the Chairman of the Company; $328,733 or 821,833 shares were for amounts owed to two directors and $475,561 or 1,188,898 shares were for amounts owed to other shareholders.
 
In February 2000, the Company closed a private placement offering or 1,196,000 shares to raise $598,000 at $.50 per share. Additionally, a warrant was issued with each share to purchase an additional share of common stock at $1 per share. The warrants expired four years from the         original date of closing. In connection with this offering $60,000 was paid as commission to brokers in the form of 120,000 shares of common stock and were accounted for as offering costs.  Due to the registration of the shares not being completed, as a penalty the Company issued an additional 239,200 to the investors in August 2000.
 
In April 2000, the Company issued 78,271 shares of common stock in exchange for services related to an Internet interview and broadcast with the Chairman and Chief Executive Officer of the Company.
 
In April 2000, a $200,000 note payable and a $250,000 judgment payable were settled and paid off in full by a shareholder of the company. The total balances due including interest and legal fees had grown to approximately $650,000 at the time of settlement. The shareholder has received an additional 1,000,000 shares of stock as reimbursement for the payment of these amounts on behalf of the Company.
 
F-23
 
In October 2000 the Company issued 600,000 shares of common stock to an investor for $67,000.
 
In February 2001 the Company issued 2,500,000 shares of common stock to an investor for $150,000.
 
In January 2003 warrants to purchase 550,000 shares of common stock were exercised at a price of $0.10 per share.  The original exercise price was $1.00 however the investors and the Company renegotiated the exercise price to $0.10 per share.
 
In February 2003 warrants to purchase 200,000 shares of common stock were exercised at a price of $0.10 per share.  The original exercise price was $1.00 however the investor and the Company renegotiated the exercise price to $0.10 per share.
 
In January 2005 the Company issued 671,667 shares of common stock at a price of $0.15 per share to four investors for total proceeds of $100,750.  Additionally, 671,667 warrants to purchase common stock at a price of $0.30 per share were issued to the investors.  The warrants expire three years from the date of issuance.
 
In March 2005 a Special Meeting of Shareholders of Firstgold was held for the purpose of amending the Articles of Incorporation to affect an increase in the authorized shares of common stock issuable to 250,000,000 shares.  At the meeting the proposal was approved by the shareholders, with a total of 31,392,611 shares voting in favor of the amendment, 411,711 voting against the amendment and 10,207 shares abstained from voting.
 
In February 2005 Firstgold issued 500,000 shares of common stock at a price of $0.15 per share to an investor for total proceeds of $75,000.  Additionally, 500,000 warrants to purchase common stock at a price of $0.30 per share were issued to the investor.  The warrants expire three years from the date of issuance.
 
In April 2005 Firstgold issued 2,000,000 shares of common stock at a price of $0.25 per share to investors for total proceeds of $500,000.  Additionally, 1,000,000 warrants to purchase common stock at a price of $0.50 per share were issued to the investors.  The warrants expire three years from the date of issuance.
 
In June 2005, the Company issued 50,000 shares of common stock and 50,000 warrant to purchase common stock in exchange for services related to website development for the Company.
 
In July 2005 Firstgold issued 12,326,231 shares of common stock at a price of $0.15 per share to the Chief Executive Officer according to the terms of existing notes payable to the officer.  The issuance resulted in the repayment of principal and interest totaling $1,848,935.
 
In January 2006 Firstgold issued 2,500,000 shares of common stock at a price of $0.20 per share to ASDi LLC, an entity controlled and managed by the Chief Executive Officer in exchange for a 22.22% interest in a newly formed entity, Crescent Red Caps Joint Venture (see Note 8).  Additionally, 2,500,000 warrants to purchase common stock at a price of $0.40 per share were issued to ASDi LLC.  The warrants expire three years from the date of issuance.
 
F-24
 
In January 2006 Firstgold issued 2,500,000 shares of common stock at a price of $0.20 per share to an investor for total proceeds of $500,000.  Additionally, 2,500,000 warrants to purchase common stock at a price of $0.40 per share were issued to the investor.  The warrants expire three years from the date of issuance.
 
In March 2006 Firstgold issued 500,000 shares of common stock at a price of $0.20 per share to an investor for total proceeds of $100,000.  Additionally, 500,000 warrants to purchase common stock at a price of $0.40 per share were issued to the investor.  The warrants expire three years from the date of issuance.
 
In June 2006 Firstgold issued upon conversion 450,050 shares of common stock at a price of $0.202 per share and 1,904,037 shares of common stock at a price of $0.263 to a convertible debenture holder according to the terms of two existing convertible debentures.  The issuance resulted in the repayment of principal totaling $600,000 owed by Firstgold to the convertible debenture holder.
 
In October 2006 Firstgold issued 100,000 shares of restricted common stock to one person in partial settlement of an existing litigation matter.
 
In October 2006 a finder’s fee of 2,000,000 common shares and 2,000,000 warrants to purchase common shares at a price of $0.50 per common share were issued to an unrelated third party for their work associated with the Antelope Peak mineral lease.
 
In January 2007 Firstgold issued 1,630,9181 shares of common stock at a price of $0.15 per share to the Chief Financial Officer according to the terms of existing notes payable to the officer.  The issuance resulted in the repayment of principal and interest totaling $244,638.
 
In January 2007 Firstgold issued 535,643 shares of restricted common stock to one person in settlement of an existing note payable, accrued interest and accrued wages and bonus totaling $357,422.
 
In March 2007 warrants to purchase 1,125,000 shares of common stock were exercised at a price of $0.20 per share.
 
In April 2007 warrants to purchase 2,340,013 shares of common stock were exercised by the Chief Executive Officer at a price of $0.15 per share.
 
In April 2007 Firstgold received net proceeds of $2,374,200 upon the issuance of Units consisting of 5,673,110 shares of common stock and warrants to purchase 2,836,555 shares of common stock at an exercise price of $0.65 per share.   An additional 567,311 shares and warrants to purchase 283,656 shares were issued on October 16, 2007 because the original Units were not registered for resale by October 15, 2007.

In May 2007 warrants to purchase 54,667 shares of common stock were exercised at a price of $0.1875 per share.
 
F-25
 
In May 2007 Firstgold received net proceeds of $337,500 upon the issuance of Units consisting of 749,999 shares of common stock and warrants to purchase 375,002 shares of common stock at an exercise price of $0.65 per share.  An additional 74,998 shares and warrants to purchase 37,499 shares were issued on November 19, 2007 because the original Units were not registered for resale by November 18, 2007.

In June 2007 Firstgold received net proceeds of $7,798,141 upon the issuance of Units consisting of 18,843,421 shares of common stock and warrants to purchase 9,421,711 shares of common stock at an exercise price of $0.65 per share. An additional 1,884,342 shares and warrants to purchase 942,171 shares were issued on November 16, 2007 because the original Units were not registered for resale by November 15, 2007.
 
In June 2007 50,000 common shares and 127,000 warrants to purchase common shares at a price of $0.30 per common share were issued to an unrelated third party for their work associated with the raising of capital for Firstgold.
 
In July 2007 Firstgold issued upon conversion 1,000,000 shares of common stock at a price of $0.45 per share.  The issuance resulted in the repayment of principal totaling $450,000 owed by Firstgold to the convertible debenture holder.
 
In July 2007, 25,000 stock options were exercised on a cashless basis at a price of $0.63 by an employee which resulted in 18,651 shares being issued.
 
In September 2007 Firstgold issued upon conversion 2,222,222 shares of common stock at a price of $0.45 per share.  The issuance resulted in the repayment of principal totaling $1,000,000 owed by Firstgold to the convertible debenture holder.
 
In September 2007 warrants to purchase 93,500 shares of common stock were exercised at a price of $0.1875 per share.
 
In September 2007, 75,000 stock options were exercised on a cashless basis at a price of $0.61 by an employee, which resulted in 43,255 shares being issued.
 
In October 2007 Firstgold issued upon conversion 3,858,228 shares of common stock at a price of $0.45 per share to a convertible debenture holder according to the terms of three existing convertible debentures.  The issuance resulted in the repayment of principal totaling $1,550,000 and accrued interest of $186,203 owed by Firstgold to the convertible debenture holder.
 
In January 2008 warrants to purchase 767,000 shares of common stock were exercised at a price of $0.30 per share.
 
Warrants
 
Firstgold has issued common stock warrants to officers of Firstgold as part of past financing transactions.  Firstgold has also issued warrants as part of past and present convertible debt transactions (see Note 7).  Firstgold has also issued warrants as part of the issuance of common stock (see this Note 9).
 
The fair market value of these warrants issued during the years ended January 31, 2008 and 2007 was determined to be $3,224,944 and $603,743, respectively, and was calculated under the Black-Scholes option pricing model with the following assumptions used:
 
F-26
 
 
2007
2006
 Expected life  
3 - 4 years
3 - 4 years
 Risk free interest rate
4.75% - 4.84%  
4.75% - 4.84%
 Volatility  
86% - 160%
86% - 160%%
 Expected dividend yield
None
None
 
The fair value of these warrants is being amortized to interest expense over one and three years, the original life of the loans.  Total amortization expense for the years ended January 31, 2008 and 2007 and the period from January 1, 1995 to January 31, 2008 was approximately $43,278, $13,517 and $1,331,052, respectively.
 
The following table presents warrant activity through January 31, 2008:
 
   
Number of Shares
    
Weighted Average Exercise Price
  
Outstanding at January 31, 2000
     -     $ -  
Granted
     3,746,000       0.55  
Exercised
     -       -  
Canceled or expired
     -       -  
Outstanding at January 31, 2001 and 2002
     3,746,000       0.55  
Granted
     452,463       0.15  
Exercised
     (550,000 )     (0.10 )
Canceled or expired
     -       -  
Outstanding at January 31, 2003
     3,648,463       0.43  
Granted
     1,265,766       0.15  
Exercised
     (200,000 )     (0.10 )
Canceled or expired
     (996,000 )     (1.00 )
Outstanding at January 31, 2004
     3,718,229       0.15  
Granted
     8,006,354       0.16  
Exercised
     -       -  
Canceled or expired
     -       -  
Outstanding at January 31, 2005
     11,724,583       0.16  
Granted
     8,800,000       0.37  
Exercised
     -       -  
Canceled or expired
     -       -  
Outstanding at January 31, 2006
     20,524,583       0.25  
Granted
     6,746,783       0.50  
Exercised
     (928,500 )     (0.15 )
Canceled or expired
     -       -  
Outstanding at January 31, 2007
     26,342,866       0.32  
                 
Granted
     17,558,743       0.65  
Exercised
     (4,344,463 )     (0.19 )
Cancelled or expired
     (300,000 )     (0.30 )
                 
Outstanding at January 31, 2008
     39,257,146     $ 0.47  
Exercisable at January 31, 2008
     39,257,146     $ 0.47  
Weighted average remaining contractual term
  
14 months
          

F-27
 
NOTE 9 - INCOME TAXES
 
As of January 31, 2008, the Company had net operating loss carry-forwards of approximately $19,483,716 available to reduce future Federal taxable income which, if not used, will expire at various dates through January 31, 2028.  Due to changes in the ownership of the Company, the utilization of these loss carry-forwards may be subject to substantial annual limitations.  Deferred tax assets (liabilities) are comprised of the following at January 31, 2008:
 
Deferred Tax Assets
      
Net Operating Loss Carry-forwards
   $ 7,814,423  
Contribution Carryover
     16,029  
Accrued Interest Payable
     29,234  
Accrued Payroll
     172,068  
Accrued Payroll Tax
     32,023  
Amortization DiffBook/Tax
     970,159  
Accrued Accounts Payable
     60,769  
Capital Loss Difference
     120,416  
Stock compensation
     61,143  
Other
     272  
Less valuation allowance
     (8,625,782 )
Total Deferred Tax Assets
     650,754  
Deferred Tax Liability
        
State Taxes
     (650,754 )
Total Deferred Tax Liabilities
     (650,754 )
         
Net deferred tax assets
   $ -  
The net change in the total valuation allowance for the year ended January 31, 2008 was $1,656,386.  The valuation allowance is provided to reduce the deferred tax asset to a level which, more likely than not, will be realized.
 
F-28
 
The expected Federal income tax benefit, computed based on the Company’s pre-tax losses at January 31, 2008 and the statutory Federal income tax rate, is reconciled to the actual tax benefit reflected in the accompanying financial statements as follows:
 
   
2008
    
2007
  
Statutory regular federal income benefit rate
    
34.00%
      
34.00%
State taxes
    
8.84%
      
8.84%
Change in valuation allowance
    
(42.84)%
      
(42.84)%
      Total
    
0.00%
      
0.00%
  

Previous to June 21, 1996, the stockholder of the Company elected under Internal Revenue Code Section 1362 to have the Company taxed as an S Corporation.  As such, all Federal and substantially all State income tax attributes passed through the Company directly to the stockholder until that date.
 
NOTE 10 - RELATED PARTY TRANSACTIONS
 
Joint Venture with Officer
 
On January 25, 2006, Firstgold entered into a joint venture with ASDi, LLC to develop two Nevada mining properties known as the Red Caps Project and Crescent Valley Project. The Red Caps and Crescent Valley lessee was ASDi, LLC, which is owned and managed by the Chief Operating Officer of Firstgold.  The terms of the joint venture provided for ASDi to contribute the Red Caps and Crescent Valley leases to the LLC in exchange for Firstgold issuing 2.5 million shares of its Common Stock to ASDi.  Additionally, 2,500,000 warrants to purchase common stock at a price of $0.40 per share were issued to ASDi LLC.  On February 8, 2007, a complaint was filed against ASDi, LLC, Crescent Red Caps LLC, Firstgold, and Scott Dockter by the Lessors of the Crescent Valley and Red Caps mining properties.  The complaint was filed in the Sixth Judicial District Court of Lander County, Nevada (Case No. 9661).  In the complaint the plaintiffs allege that ASDi, LLC wrongfully assigned its lessee rights in the Crescent Valley and Red Caps mining properties to Crescent Red Caps LLC (of which Firstgold was the Managing Member).  The complaint sought the termination of the leasehold rights granted to ASDi, LLC and quiet title and punitive damages.  In late March, 2008 the parties reached a settlement agreement and the case was dismissed by the Court on April 4, 2008.  As a result of the Settlement, Firstgold paid $150,000 to Plaintiffs and Firstgold, ASDi LLC and Crescent Red Caps LLC relinquished all right, title and interest in the Red Caps and Crescent Valley leases to the Plaintiffs.  Consequently, Firstgold no longer has any interest in these leases and will not pursue any further exploration activity on such leased property.
 
Prepayment of Airplane Time from Officer
 
In December 2006 Firstgold purchased 600 hours of airplane usage from the Chairman and Chief Executive Officer of Firstgold for $120,000 at a rate of $200 per hour.  The airplane is to be used by Firstgold for commuting to and from Nevada to the various mine sties and the Lovelock, NV office.  Based on current market rental rates for similar planes Firstgold believes that the current market hourly rate is substantially above its contract rate of $200 per hour.
 
Advance to Officer
 
In January 2007 Firstgold made a temporary travel advance of $100,000 to the Chairman and Chief Executive Officer.  This amount had been fully repaid by May 2007.
 
F-29
 
NOTE 11 - SUBSEQUENT EVENTS
 
On March 26, 2008, Firstgold extended an irrevocable Letter of Credit effective March 26, 2008 from Umpqua Bank in favor of the U.S. Department of Interior, Bureau of Land Management to an aggregate amount of U.S. $613,500 and represents the revised reclamation bond for the Relief Canyon Mine. The letter of credit is secured by a certificate of deposit in the amount of $674,850.
 
During the first quarter ended April 30, 2008 of fiscal 2009, Firstgold received net proceeds of $7,791,398 upon the issuance of Units consisting of 12,835,143 shares of common stock and warrants to purchase 6,417,571 shares of common stock at an exercise price of $0.80 per share
 
On May 1, 2008 a $1,100,000 Convertible Debenture was closed of which $115,000 was paid for various fees and closing costs. The Debenture is for a term of 20 months, bears interest at 10% and is convertible into common shares of Firstgold at a conversion price of $1.00 per share. Additionally, warrants to purchase $1,100,000 worth of common stock at a price of $1.00 per common share with a term of 30 months were issued to the Debenture holder.
 
On May 14, 2008 Firstgold began trading on the Toronto Stock Exchange under the symbol of “FGD”.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-30
 
FIRSTGOLD CORP.
INDEX TO UNAUDITED FINANCIAL STATEMENTS
FOR THE QUARTERS ENDED APRIL 30, 2008 AND 2007
 
 
Page
 
F-32
   
 
F-34
   
 
F-35
   
F-38

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
F-31
 
FIRSTGOLD CORP.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
 
   
April 30,
    
January 31,
  
   
2008
    
2008
  
   
(unaudited)
        
ASSETS
  
             
Current assets:
            
Cash
  
$
1,168,620
    
$
383,223
  
Receivables
    
58,383
      
196,811
  
Deposits
    
98,968
      
295,281
  
Prepaid expense
    
282,009
      
242,577
  
Inventory
    
289,362
      
7,721
  
                 
Total current assets
    
1,897,342
      
1,125,613
  
                 
Property, plant and equipment, net of accumulated depreciation of    $310,271 and $205,084 at April 30 and January 31, 2008, respectively
    
10,704,704
      
8,438,997
  
                 
Other Assets
                
Restricted cash
    
674,850
      
674,850
  
Deferred reclamation costs
    
680,326
      
680,326
  
                 
Total other assets
    
1,355,176
      
1,355,176
  
                 
Total assets
  
$
13,957,222
    
$
10,919,786
  


LIABILITIES AND SHAREHOLDERS' DEFICIT

Current liabilities
            
Accounts payable
  
$
798,622
    
$
2,730,596
  
Accrued expenses
    
570,310
      
538,987
  
Notes payable
    
116,264
      
163,726
  
                 
Total current liabilities
    
1,485,196
      
3,433,309
  
                 
Long-term liabilities
                
Convertible debenture net of deferred  financing  costs of
                
$133,172 and $148,480 at April 30 and January 31, 2008, respectively
    
701,360
      
694,211
  
Accrued reclamation costs
    
680,326
      
680,326
  
Deferred revenue
    
800,000
      
937,650
  
                 
Total long-term liabilities
    
2,181,686
      
2,312,187
  
                 
Total liabilities
    
3,666,882
      
5,745,496
  

F-32
 
FIRSTGOLD CORP.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
 
   
April 30,
    
January 31,
  
   
2008
    
2008
  
   
(unaudited)
        
             
Commitments and contingencies
            
             
Shareholders' surplus (deficit)
            
Common stock, $0.001 par value
            
250,000,000 shares authorized at April 30 and January 31, 2008, respectively
            
130,256,006 and 117,432,317 shares issued and outstanding at
            
April 30 and January 31, 2008, respectively
    
130,256
      
117,432
  
Additional paid in capital
    
44,146,538
      
36,447,996
  
Deficit accumulated during the exploration stage
    
(33,986,454
)
    
(31,391,142
)
                 
Total shareholders' surplus (deficit)
    
10,290,340
      
5,174,290
  
                 
Total liabilities and shareholders' surplus
  
$
13,957,222
    
$
10,919,786
  
 
 
 
 
 
 
 
 
 
 
 
 
 
F-33
 
FIRSTGOLD CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
For the Three Months Ended April 30, 2008 and 2007
and for the Period from January 1, 1995 to April 30, 2008
 
               
For the Period
  
               
From January 1,
  
   
For the Three Months Ended April 30,
    
1995 to April 30,
  
   
2008
    
2007
    
2008
  
Net sales
  
$
275,793
    
$
-
    
$
827,072
  
                         
Exploration and maintenance costs
    
(1,391,411
)
    
(126,681
)
    
(5,480,763
)
                         
Gross loss
    
(1,115,618
)
    
(126,681
)
    
(4,653,691
)
                         
Operating expenses
    
(1,466,154
)
    
(985,685
)
    
(23,049,128
)
                         
Loss from operations
    
(2,581,772
)
    
(1,112,366
)
    
(27,702,822
)
                         
Other income (expense)
                        
Interest income
    
21,063
      
5,966
      
299,734
  
Dividend income
    
-
      
-
      
30,188
  
Other income
    
-
      
-
      
6,565
  
Adjustments to fair value of derivatives
    
-
      
(1,623,255
)
    
(2,277,166
)
Interest expense
    
(34,605
)
    
(247,959
)
    
(3,910,061
)
Loss from joint venture
    
-
      
-
      
(859,522
)
Loss on sale of marketable securities
    
-
      
-
      
(281,063
)
Bad debt expense
    
-
      
-
      
(40,374
)
Loss on disposal of plant, property
                        
 and equipment
    
-
      
-
      
(334,927
)
Loss on disposal of bond
    
-
      
-
      
(21,000
)
                         
Total other income (expense)
    
(8,795
)
    
(1,865,248
)
    
(5,341,839
)
                         
Net loss
  
$
(2,595,314
)
  
$
(2,977,614
)
  
$
(33,044,661
)
                         
Basic and diluted loss per share
  
$
(0.02
)
  
$
(0.04
)
        
                         
Basic and diluted weighted-average
  shares outstanding
    
125,370,254
      
80,160,412
          

F-34

 FIRSTGOLD CORP.
 (A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
For the Three Months Ended April 30, 2008 and 2007
and for the Period from January 1, 1995 to January 31, 2008
 
       
For the Period
  
   
For the Three Months Ended April 30,
    
From January 1, 1995
  
   
2008
    
2007
    
to April 30, 2008
  
Cash flows from operating activities
                  
Net loss
  
$
(2,595,314
)
  
$
(2,977,614
)
  
$
(33,044,661
)
Adjustments to reconcile net loss to net cash
                        
used in operating activities:
                        
Accretion of warrants issued as a debt discount
    
10,553
      
10,533
      
1,341,606
  
Accretion of beneficial conversion
    
-
      
-
      
107,468
  
Accretion of debt discount
    
-
      
150,931
      
531,110
  
Adjustments to  fair value of derivatives
    
-
      
1,623,255
      
1,357,904
  
Loss from joint venture
    
-
      
-
      
859,522
  
Loss on sale of marketable securities
    
-
      
-
      
281,063
  
Depreciation and amortization
    
109,942
      
39,649
      
509,399
  
Loss on disposal of property, plant and equipment
    
-
      
-
      
334,927
  
Impairment in value of property, plant and equipment
    
-
      
-
      
807,266
  
Loss on disposal of bond
    
-
      
-
      
21,000
  
Impairment in value of Relief Canyon Mine
    
-
      
-
      
3,311,672
  
Impairment in value of joint  investments
    
-
      
-
      
490,000
  
Bad debt
    
-
      
-
      
40,374
  
Assigned value of stock and warrants exchanged for services
    
-
      
183,933
      
2,108,452
  
Assigned value of stock options issue for compensation
    
59,311
      
27,063
      
895,864
  
Gain on write off of note payable
    
-
      
-
      
(7,000
)
Judgment loss accrued
    
-
      
-
      
250,000
  
(Increase) decrease in:
                        
Restricted cash
    
-
      
(423,869
)
    
(674,850
)
Receivables
    
138,428
      
100,000
      
(54,383
)
Deposits
    
196,313
      
-
      
(94,468
)
Deferred reclamation costs
    
-
      
-
      
214,848
  
Prepaid expenses
    
(39,432
)
    
12,481
      
(284,909
)
Inventory
    
(281,641
)
    
(7,721
)
    
(289,362
)
Reclamation bonds
    
-
      
-
      
185,000
  
Other assets
    
-
      
-
      
(1,600
)
Increase (decrease) in:
                        
Accounts payable
    
(1,931,974
)
    
75,800
      
517,662
  
Accrued expenses
    
(31,323
)
    
55,220
      
1,063,320
  
                         
Net cash used by operating activities
    
(4,302,491
)
    
(1,130,319
)
    
(19,160,132
)
 
F-35
 
FIRSTGOLD CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
For the Three Months Ended April 30, 2008 and 2007
and for the Period from January 1, 1995 to January 31, 2008
 
Cash flows from investing activities
                        
Proceeds from sale of marketable securities
    
-
      
-
      
34,124
  
Investment in marketable securities
    
-
      
-
      
(315,188
)
Advances from shareholder
    
-
      
-
      
7,436
  
Contribution from joint venture partner
    
-
      
-
      
775,000
  
Purchase of joint venture partner interest
    
-
      
-
      
(900,000
)
Capital expenditures
    
(2,370,894
)
    
(357,035
)
    
(13,966,483
)
Proceeds from disposal of property, plant and equipment
    
-
      
-
      
278,783
  
Investments in joint ventures
    
-
      
-
      
(490,000
)
Note receivable
    
-
      
-
      
(268,333
)
Repayment of note receivable
    
-
      
-
      
268,333
  
                         
Net cash used by investing activities
    
(2,370,894
)
    
(357,035
)
    
(14,576,328
)
                         
Cash flows from financing activities
                        
Proceeds from the issuance of common stock
    
7,652,064
      
2,908,349
      
28,258,782
  
Proceeds from notes payable
    
-
      
910,000
      
8,646,733
  
Principal repayments of notes payable
    
(111,586
)
    
(1,843
)
    
(2,631,443
)
Repayment of advances to affiliate
    
-
      
-
      
(231,663
)
Deferred revenue
    
(137,650
)
    
-
      
800,000
  
                         
Net cash provided by financing activities
    
7,402,828
      
3,816,506
      
34,842,409
  
                         
Net increase  in cash
    
785,397
      
2,329,152
      
1,175,307
  
                         
Cash, beginning of year
    
383,223
      
150,647
      
6,687
  
                         
Cash, end of year
  
$
1,168,620
    
$
2,479,799
    
$
1,168,620
  
 
F-36
 
FIRSTGOLD CORP.
(A DEVELOPMENT STAGE COMPANY)
 STATEMENTS OF CASH FLOWS
For the Three Months Ended April 30, 2008 and 2007
and for the Period from January 1, 1995 to April 30, 2008

 
Supplemental cash flow information for the three months ended April 30, 2008 and 2007 and January 1, 1995 through April 30, 2008 as follows:
  
   
     
For the Period
  
     
From January 1,
  
   
For the Three Months Ended April 30,
    
1995 to April
  
   
2008
    
2007
      
30, 2008
  
                     
Cash paid for interest
  
$
-
    
$
-
    
$
161,107
  
Cash paid for income taxes
  
$
-
    
$
-
    
$
-
  
                         
Non Cash Investing and Financing Activities:
                        
Conversion of related party note payable to common stock, including interest payable of $446,193
  
$
-
    
$
244,678
    
$
2,093,573
  
Conversion of convertible debentures to common stock, including interest of $217,151
  
$
3,186,203
    
$
1,173,406
    
$
4,359,609
  
Issuance of warrants as financing costs in connection with convertible debt
  
$
-
    
$
173,114
    
$
2,093,573
  
Issuance of common stock as payment for settlement of liabilities
  
$
-
    
$
206,375
    
$
2,093,573
  

 
 
 
 
 
 
 
 
 
 
 
 

F-37
 
FIRSTGOLD CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
For the Three Months Ended April 30, 2008


NOTE 1 - ORGANIZATION AND LINE OF BUSINESS

Firstgold Corp. has been in the business of acquiring, exploring, developing, and producing gold properties.  Firstgold had rights to mine properties in Nevada and Montana.  Its primary focus was on the Relief Canyon mine located near Lovelock, Nevada, where it has performed development and exploratory drilling and was in the process of obtaining permits to allow operation of the Relief Canyon Mine.  In December 1997, Firstgold placed the Relief Canyon Mine on care and maintenance status.  From mid-2001 until the beginning of 2003 Firstgold was essentially inactive, only continuing with some of the care and maintenance at Relief Canyon, as provided for by a non-affiliate company owned by the Chief Operating Officer of Firstgold.

Firstgold has embarked on a business strategy whereby it will invest in and/or manage the exploration of gold and other mineral producing properties.  Currently, Firstgold’s principal assets include various mineral leases associated with the Relief Canyon mine located near Lovelock, Nevada along with various items of mining equipment located at that site.  Firstgold’s business will be to acquire, explore and, if warranted, develop various mining properties located in the state of Nevada.  Firstgold plans to carryout comprehensive exploration and development programs on its properties.  Firstgold plans to conduct these activities itself, although some activities may be outsourced.  Consequently, Firstgold's current plan will require the hiring of significant amounts of mining employees to carry out its future mining and current exploration activities.

NOTE 2 - GOING CONCERN

These financial statements have been prepared on a going concern basis.  During the years ended January 31, 2008 and 2007 and the period from January 1, 1995 to January 31, 2008, Firstgold incurred net losses of approximately $7,632,537, $4,728,070,  and $30,449,347, respectively.  In addition, Firstgold has been in the exploration stage since inception and through April 30, 2008.  Information for the three months ended April 30, 2008 include a net loss of $2,595,314 negative cash flows from operations of $4,302,491 and an accumulated shareholders’ surplus of $10,290,340.  The Company's ability to continue as a going concern is dependent upon its ability to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due.  The outcome of these matters cannot be predicted with any certainty at this time.  Since inception, the Company has satisfied its capital needs by issuing equity and debt securities.

Management plans to continue to provide for its capital needs during the year ending January 31, 2009 by issuing equity securities or incurring additional debt financing, with the proceeds to be used to re-establish mining operations at Relief Canyon as well as improve its working capital position.  These financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should Firstgold be unable to continue as a going concern.
 
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation
These financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”).  Certain information and footnotes normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been condensed or omitted pursuant to these rules and regulations.  These consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in Firstgold’s Form 10-KSB, as filed with the SEC for the year ended January 31, 2008.

Exploration Stage Company
Effective January 1, 1995 (date of inception), the Company is considered a development stage Company as defined in SFAS No. 7.  The Company’s development stage activities consist of the development of several mining properties located in Nevada. Sources of financing for these development stage activities have been primarily debt and equity financing.  The Company has, at the present time, not paid any dividends and any dividends that may be paid in the future will depend upon the financial requirements of the Company and other relevant factors.

Cash and Cash Equivalents
For the purpose of the statements of cash flows, Firstgold considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.
 
F-38
 
Restricted Cash
Restricted cash represents a certificate of deposit with Umpqua Bank to serve as collateral for a reclamation bond with the Nevada Department of Environmental Protection at the Relief Canyon Mine.

Deferred Reclamation Costs
In August 2001, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 143, “Accounting for Asset Retirement Obligations,” which established a uniform methodology for accounting for estimated reclamation and abandonment costs.  The statement was adopted February 1, 2003.  The reclamation costs will be allocated to expense over the life of the related assets and will be adjusted for changes resulting from the passage of time and revisions to either the timing or amount of the original present value estimate.

Prior to adoption of SFAS No. 143, estimated future reclamation costs were based principally on legal and regulatory requirements.  Such costs related to active mines were accrued and charged over the expected operating lives of the mines using the UOP method based on proven and probable reserves.  Future remediation costs for inactive mines were accrued based on management’s best estimate at the end of each period of the undiscounted costs expected to be incurred at a site.  Such cost estimates included, where applicable, ongoing care, maintenance and monitoring costs.  Changes in estimates at inactive mines were reflected in earnings in the period an estimate was revised.

Valuation of Derivative Instruments
FAS No. 133 "Accounting for Derivative Instruments and Hedging Activities" requires bifurcation of embedded derivative instruments and measurement of their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Black Scholes model as a valuation technique.  Derivative liabilities are adjusted to reflect fair value at each period end, with any increase or decrease in the fair value being recorded in results of operations as Adjustments to Fair Value of Derivatives. In addition, the fair values of freestanding derivative instruments such as warrants are valued using Black Scholes models.

Revenue Recognition
Revenues will be recognized when deliveries of gold are made, title and risk of loss passes to the buyer and collectibility is reasonably assured.  Deferred revenue represents non-refundable cash received in exchange for royalties on net smelter returns on the Relief Canyon Mine.  Deferred revenue will be amortized to earnings based on estimated production in accordance with the royalty agreement.
 
Risks Associated with Gold Mining
The business of gold mining is subject to certain types of risks, including environmental hazards, industrial accidents, and theft.  Prior to suspending operations, Firstgold carried insurance against certain property damage loss (including business interruption) and comprehensive general liability insurance.  While Firstgold maintained insurance consistent with industry practice, it is not possible to insure against all risks associated with the mining business, or prudent to assume that insurance will continue to be available at a reasonable cost.  Firstgold has not obtained environmental liability insurance because such coverage is not considered by management to be cost effective.  Firstgold currently carries no insurance on any of its properties due to the current status of the mine and Firstgold’s current financial condition.

Comprehensive Income
Firstgold utilizes SFAS No. 130, “Reporting Comprehensive Income.”  This statement establishes standards for reporting comprehensive income and its components in a financial statement.  Comprehensive income as defined includes all changes in equity (net assets) during a period from non-owner sources.  Examples of items to be included in comprehensive income, which are excluded from net income, include foreign currency translation adjustments, minimum pension liability adjustments, and unrealized gains and losses on available-for-sale marketable securities.  Comprehensive income is presented in Firstgold's financial statements since Firstgold did have unrealized gain (loss) from changes in equity from available-for-sale marketable securities.

Estimates
The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.  Actual results could differ from those estimates.
F-39
 
Loss Per Share
Firstgold utilizes SFAS No. 128, “Earnings per Share.”  Basic loss per share is computed by dividing loss available to common shareholders by the weighted-average number of common shares outstanding.  Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.  Common equivalent shares are excluded from the computation if their effect is anti-dilutive.

The following common stock equivalents were excluded from the calculation of diluted loss per share since their effect would have been anti-dilutive:
  
   
2008  
    
2007  
  
Warrants
    
47,455,918
      
39,500,976
  
Stock options
    
5,421,038
      
3,750,000
  

Recent Accounting Pronouncements
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (SFAS 159).  Under the provisions of SFAS 159, Companies may choose to account for eligible financial instruments, warranties and insurance contracts at fair value on a contract-by-contract basis. Changes in fair value will be recognized in earnings each reporting period. SFAS 159 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years.  The Company is required to and plans to adopt the provisions of SFAS 159 beginning in the first quarter of 2008. The Company is currently assessing the impact of the adoption of SFAS 159.
 
NOTE 4 - PROPERTY AND EQUIPMENT

Property and equipment was recorded at $11,014,975 and $1,305,914 at April 30, 2008 and 2007, respectively.  Depreciation expense was $105,187 and $24,789 for the three months ended April 30, 2008 and 2007, respectively

NOTE 5 - NOTES PAYABLE

Notes payable consist of the following at April 30, 2008:

Equipment notes payable
  
$
60,298
  
The first note does not bear any interest and is due in December 2010.  The second note bears interest at 8.6% and is due June 2011.  The loans are secured by a Caterpillar loader and backhoe.
  
         
Insurance premium note payable
    
55,966
  
The note bears interest at 5.6%, is payable in monthly installments of $6,218 and is due February 2009.
  
         
Total notes payable
  
$
116,264
  

Firstgold recorded interest expense of $34,605 and $247,959 for the three months ended April 30, 2008 and 2007, respectively.
 
F-40
 
NOTE 6 – CONVERTIBLE DEBENTURES

September 26, 2006 Convertible Debenture
On September 26, 2006, Firstgold entered into a Securities Purchase Agreement (the “Purchase Agreement”) and other agreements, as amended on November 1, 2006, in connection with the private placement of convertible debentures, in the aggregate principal amount of $3,000,000 and bearing interest at 8% per annum (the “Debenture”).  The Debentures were funded $1,000,000 on September 26, 2006, $1,000,000 upon the filing of a resale registration statement with the SEC on December 1, 2006 and $1,000,000 on March 15, 2007.  Of the $1,000,000 funded on September 26, 2006, $120,000 was paid for various loan fees and closing costs; of the $1,000,000 funded December 1, 2006, $90,000 was paid for various loan fees and closing costs; and of the $1,000,000 funded March 19, 2007, $90,000 was paid for various loan fees and closing costs.  
 
The Debentures are due and payable three years after the issue date unless it is converted into shares of common stock or is repaid prior to its expiration date.  The conversion rate is adjustable and at any conversion date, will be the lower of $0.45 per share or 95% of the Market Conversion Price.  On July 13, 2007 $450,000 of the Debenture dated March 15, 2007 was converted into 1,000,000 shares of common stock. On September 13, 2007 the $1,000,000 Debenture dated September 26, 2006 was converted into 2,222,222 shares of common stock. On October 12, 2007 $450,000 of the Debenture dated December 1, 2006 was converted into 1,000,000 shares of common stock. On October 16, 2007 $450,000 of the Debenture dated December 1, 2006 was converted into 1,000,000 shares of common stock. On October 30, 2007 1,444,444 shares of common stock were issued in conversion of the remaining $650,000 in principal of outstanding Secured Convertible Debentures.  An additional 413,784 shares of common stock was issued in conversion of $186,203 of accrued interest on the Secured Convertible Debentures.

October 10, 2006 Convertible Debentures

On October 10, 2006, Firstgold issued convertible debentures in the aggregate principal amount of $650,000 and bearing interest of 8% per annum.  The Debentures and accrued interest are convertible into shares of Firstgold common stock at a conversion rate of $0.45 per share.  The Debentures are due and payable three years from the date of issue unless they are converted into shares of the Company’s common stock or are repaid prior to their expiration date.  Additionally, the investors were issued warrants to purchase an aggregate of 746,843 shares of Firstgold common stock exercisable at $0.45 per warrant.  The warrants were issued as financing costs and total deferred financing cost of $173,114 was recorded in relation to this debt.

NOTE 7 - COMMITMENTS AND CONTINGENCIES

Except for the advance royalty and rent payments noted below, Firstgold is not obligated under any capital leases or non-cancelable operating lease with initial or remaining lease terms in excess of one year as of April 30, 2008.  However, minimum annual royalty payments are required to retain the lease rights to Firstgold’s properties.

Relief Canyon Mine
Our mining property rights are represented by 146 unpatented mill site and mining lode claims which were re-staked in October 2004 and June 2006.  Unpatented mining claims are generally considered subject to greater title risks than patented mining claims or real property interests that are owned in fee simple.  To remain valid, such unpatented claims are subject to annual maintenance fees.  As of April 30, 2008, we were current in the payment of such maintenance fees.

During 1996, Repadre Capital Corporation (“Repadre”) purchased for $500,000 a net smelter return royalty (Repadre Royalty).  Repadre was to receive a 1.5% royalty from production at each of the Relief Canyon Mine and Mission Mines. In July 1997, an additional $300,000 was paid by Repadre for an additional 1% royalty from the Relief Canyon Mine.  In October, 1997, when the Mission Mine lease was terminated, Repadre exercised its option to transfer the Repadre Royalty solely to the Relief Canyon Mine resulting in a total 4% royalty.  The total amount received of $800,000 has been recorded as deferred revenue in the accompanying financial statements.

On February 8, 2007, a complaint was filed against ASDi, LLC, Crescent Red Caps LLC, Firstgold, and Scott Dockter by the Lessors of the Crescent Valley and Red Caps mining properties.  The complaint was filed in the Sixth Judicial District Court of Lander County, Nevada (Case No. 9661). In the complaint the plaintiffs allege that ASDi, LLC wrongfully assigned its lessee rights in the Crescent Valley and Red Caps mining properties to Crescent Red Caps LLC (of which Firstgold is the Managing Member).  
 
F-41
 
In late March, 2008 the parties reached a settlement agreement and the case was dismissed by the Court on April 4, 2008.  As a result of the Settlement, Firstgold paid $150,000 to Plaintiffs and Firstgold, ASDi LLC and Crescent Red Caps LLC relinquished all right, title and interest in the Red Caps and Crescent Valley leases to the Plaintiffs.  Consequently, Firstgold no longer has any interest in these leases and will not pursue any further exploration activity on such leased property.
 
On September 24, 2007, a complaint was served on Firstgold by Swartz Private Equity, LLC.  The complaint was filed in the District Court for the Western District of New York (Case No. 07CV6447).  In the complaint, plaintiff alleges that pursuant to an Investment Agreement dated October 4, 2000, and entered into with Firstgold’s former management, it is entitled to the exercise of certain warrants in the amount of 1,911,106 shares of Firstgold common stock or the equivalent cash value of $0.69 per share and a termination fee of $200,000.  Firstgold filed an answer to the complaint on December 3, 2007 and expects to vigorously defend this action.  The lawsuit is now in the discovery phase.
 
On January 30, 2008, a complaint was served on Firstgold by Park Avenue Consulting Group, Inc.  The complaint was filed in the Supreme Court of the State of New York but was subsequently removed to the Federal District Court for the Southern District of New York (Case No. 08CV01850).  In the complaint, plaintiff alleges that pursuant to a Retainer Agreement entered into on September 1, 2000, it is entitled to $100,000 in retainer fees, $43,874 in expenses, and 850,000 shares of common stock during the term of the agreement.  Firstgold is currently evaluating this lawsuit and expects to vigorously defend this action.
 
Firstgold is involved in various other claims and legal actions arising in the ordinary course of business.  In the opinion of management, the ultimate dispositions of these matters will not have a material adverse effect on Firstgold’s financial position, results of operations or liquidity.

NOTE 8 - SHAREHOLDERS' SURPLUS

Common Stock
In February 2008 warrants to purchase 250,000 shares of common stock were exercised at an average exercise price of $0.25 per share.
 
In February 2008 Firstgold received proceeds of $3,450,975 upon the issuance of Units consisting of 5,309,193 shares of common stock and warrants to purchase 2,654,460 shares of common stock at an exercise price of $0.80 per share.   The warrants have a term of 18 months.

In March 2008 Firstgold received proceeds of $4,261,822 upon the issuance of Units consisting of 6,556,650 shares of common stock and warrants to purchase 3,278,325 shares of common stock at an exercise price of $0.80 per share.   The warrants have a term of 18 months.

In April 2008 Firstgold received proceeds of $330,100 upon the issuance of Units consisting of 507,846 shares of common stock and warrants to purchase 253,923 shares of common stock at an exercise price of $0.80 per share.   The warrants have a term of 18 months.

In April 2008 warrants to purchase 200,000 shares of common stock were exercised at an exercise price of $0.50 per share.
 
Warrants
The fair market value of warrants issued during the three months ended April 30, 2008 in conjunction with the issuance of common stock was determined to be $1,498,387 and was calculated under the Black-Scholes option pricing model with the following assumptions used:

Expected life
1.5 years
Risk free interest rate
1.53% to 2.19%
Volatility
63.39%
Expected dividend yield
None
 
F-42
 
The fair value of these warrants has been recorded as both a debit and credit to additional paid in capital.
 
The following table presents warrant activity from January 31, 2008 through April 30, 2008:
 
   
Number
of Shares
    
Weighted-
Average
Exercise
Price
  
             
Outstanding, January31, 2008
    
39,507,146
    
$
0.47
  
Exercised
    
(450,000
)
  
$
(0.36
)
Granted
    
8,398,772
    
$
0.80
  
Outstanding, April 30, 2008
    
47,455,918
    
$
0.53
  
Exercisable, April 30, 2008
    
47,455,918
    
$
0.53
  
 
Stock options
The 2006 Plan provides for the issuance of non-qualified or incentive stock options to employees, non-employee members of the board and consultants. The exercise price per share is not to be less than the fair market value per share of the Company’s common stock on the date of grant. The Board of Directors has the discretion to determine the vesting schedule. Options may be either immediately exercisable or in installments, but generally vest over a three-year period from the date of grant. In the event the holder ceases to be employed by the Company, all unvested options terminate and all vested installment options may be exercised within an installment period following termination. In general, options expire ten years from the date of grant. Stockholders voting at the 2007 Annual Stockholders meeting held on September 20, 2007 approved an increase in the shares issuable under the 2006 Plan to a total of 10,000,000.

Effective February 1, 2006, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 123(R), Share-Based Payment (SFAS 123(R)), which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors, including stock options based on their fair values. Firstgold had not previously issued any stock options prior to adoption of the 2006 Plan.  In March 2005, the SEC issued Staff Accounting Bulletin No. 107 (SAB 107) to provide guidance on SFAS 123(R). The Company has applied SAB 107 in its adoption of SFAS 123(R).

The Company adopted SFAS 123(R) using the modified prospective transition method as of and for the three months ended April 30, 2008. In accordance with the modified prospective transition method, the Company’s financial statements for prior periods have not been restated to reflect, and do not include, the impact of SFAS 123(R). Share-based compensation expense recognized is based on the value of the portion of share-based payment awards that is ultimately expected to vest. Share-based compensation expense recognized in the Company’s Statement of Operations during the three months ended April 30, 2008 includes compensation expense for share-based payment awards granted during the current fiscal year.

In conjunction with the adoption of SFAS 123(R), the Company elected to attribute the value of share-based compensation to expense using the straight-line method. Share-based compensation expense related to stock options and restricted stock grants was $59,311 for the three months ended April 30, 2008, and was recorded in the financial statements as operating expense.

For the three months ended April 30, 2008 the Company’s calculations were made using the Black-Scholes option pricing model with the following weighted average assumptions: expected life, 36 months following the grant date; stock volatility, 63.4%; risk-free interest rates of 1.77% to 2.19%; and no dividends during the expected term. As stock-based compensation expense recognized in the consolidated statement of operations pursuant to SFAS No. 123(R) is based on awards ultimately expected to vest, expense for grants beginning upon adoption of SFAS No. 123(R) on February 1, 2006 will be reduced for estimated forfeitures. SFAS No. 123(R) requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures are estimated based on historical experience.
 
F-43
 
A summary of the Company’s stock option activity is as follows:
 
                         
           
Weighted Ave.
    
Aggregate
  
   
# of Shares
    
Exercise Price
    
Intrinsic Value
  
                         
Outstanding as of January 31, 2008
    
4,650,000
    
$
0.61
    
$
0
  
Granted
    
   771,038
    
$
0.68
    
$
0
  
Exercised
    
0
    
$
0.00
          
Cancelled
    
0
    
$
0.00
          
                     
Outstanding as of April 30, 2008
    
5,421,038
    
$
0.62
    
$
0
  
                     
                         
Exercisable as of April 30, 2008
    
2,137,500
    
$
0.55
    
$
0
  
                     
 
          Additional information regarding options outstanding as of April 30, 2008 is as follows:
 
                                         
               
Options outstanding
    
Options exercisable
  
               
Weighted average
  
Weighted
            
Weighted
  
 
Range of
          
remaining
  
average
            
average
  
 
exercise
    
Number
  
contractual
  
exercise
    
Number
    
exercise
  
 
prices
    
outstanding
  
life (years)
  
price
    
exercisable
    
price
  
                                         
   
$0.35
      
250,000
  
8.75
  
$
0.35
      
125,000
    
$
0.35
  
   
$0.50
      
2,150,000
  
8.40
  
$
0.50
      
1,700,000
    
$
0.50
  
   
$0.65-$0.70
      
2,021,038
  
9.15
  
$
0.66
      
1,317,760
    
$
0.66
  
   
$0.85
      
750,000
  
9.50
  
$
0.85
      
375,000
    
$
0.85
  
   
$0.94
      
250,000
  
9.50
  
$
0.94
      
62,500
    
$
0.94
  
                                         
           
5,421,038
  
8.9
  
$
0.62
      
3,580,260
    
$
0.60
  
          
The weighted-average grant-date fair value of options granted during the three months ended April 30, 2008 was $0.68. At April 30, 2008 there was $418,447 of total unrecognized compensation costs related to non-vested stock options granted under the Plan, which will be recognized over a period not to exceed three years. At April 30, 2008, 4,578,962 shares were available for future grants under the Stock Option Plan.

NOTE 9 – SUBSEQUENT EVENT

In May 2008, Firstgold issued a convertible debenture in the principal amount of $1,000,000 and bearing interest of 10% per annum.  The Debenture and accrued interest are convertible into shares of Firstgold common stock at a conversion rate of $0.80 per share.  The Debentures are due and payable 20 months from the date of issue unless they are converted into shares of the Company’s common stock or are repaid prior to their expiration date.  Additionally, the investors were issued warrants to purchase an aggregate of 1,100,000 shares of Firstgold common stock exercisable at $0.80 per warrant.

 
F-44
 
PART II
 
 
INFORMATION NOT REQUIRED IN PROSPECTUS
 
Item 13.    Other Expenses of Issuance and Distributions.

The estimated expenses of this offering in connection with the issuance and distribution of the securities being registered are as follows:
 
Registration Fee
   $ 905  
Blue Sky Fees
     500  
Printing
     1,000  
Legal Fees and Expenses
     30,000  
Accounting Fees and Expenses
     25,000  
Miscellaneous
     1,552  
Total
   $ 58,957  
 
Item 14.    Indemnification of Directors and Officers.

Our Certificate of Incorporation provides that no director or officer of Firstgold, Corp. (the “Company”) shall be personally liable to the Company or its stockholders for monetary damages for any breach of fiduciary duty by such person as a director or officer, except for (i) breach of director’s duty of loyalty to the Company or its stockholders; (ii) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (iii) unlawful payment of dividends or unlawful stock purchase or redemption; or (iv) any transaction from which the director derived an improper personal benefit.  Our Bylaws provide, in pertinent part, that the Company shall indemnify any person made a party to or involved in any civil, criminal or administrative action, suit or proceeding by reason of the fact that such person is or was a director or officer of the Company, or of any corporation which such person served as such at the request of the Company, against expenses reasonably incurred by, or imposed on, such person in connection with, or resulting from, the exercise of such action, suit, proceeding or appeal thereon, except with respect to matters as to which it is adjudged in such action, suit or proceeding that such person was liable to the Company, or such other corporation, for negligence or misconduct in the performance of such person’s duties as a director or officer of the Company.  The determination of the rights of such indemnification and the amount thereof may be made, at the option of the person to be indemnified, by (i) order of the Court or administrative body or agency having jurisdiction over the matter for which indemnification is being sought; (ii) resolution adopted by a majority of a quorum of our disinterested directors; (iii) if there is no such quorum, resolution adopted by a majority of the committee of stockholders and disinterested directors of the Company; (iv) resolution adopted by a majority of the quorum of directors entitled to vote at any meeting; or (v) order of any Court having jurisdiction over the Company.  Such right of indemnification is not exclusive of any other right which such director or officer may have, and without limiting the generality of such statement, they are entitled to their respective rights of indemnification under any bylaws, agreement, vote of stockholders, provision of law, or otherwise in addition to their rights under the Company’s Bylaws.
 
 
 
 
 

 
 
II-1
Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the “Securities Act”) may be permitted to directors, officers and controlling persons of Firstgold pursuant to the foregoing provisions, or otherwise, Firstgold has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.

Item 15.    Recent Sales of Unregistered Securities.

During Firstgold’s current fiscal year ending January 31, 2009, it has issued the following securities pursuant to exemptions from registration under the Securities Act.

During February and March of 2008, Firstgold issued 12,019,843 units at a price of $0.65 per unit.  Each unit consisted of one share of Firstgold common stock and ½ warrant to purchase a share of Firstgold common stock at an exercise price of $0.80 per share.  Firstgold raised gross proceeds of $7,712,797 from the sale of the units.  From this amount, Firstgold paid a Selling Agent Fee of $539,896 and issued 1,201,984 broker warrants to the Selling Agent as compensation units.  The warrants expire eighteen (18) months from the date of issuance. These units were offered and sold exclusively to individuals residing or entities formed outside the United States and were not deemed to be “U.S. persons” as that term is defined under Regulation S.  Each investor represented that it was purchasing such shares for its own account.  Both the offer and the sale of the Firstgold shares were made outside the United States and were deemed to be “offshore transactions” as that term is defined under Regulation S under the Securities Act of 1933 (the “Securities Act”).  The share certificates contain a legend indicating that such shares can only be transferred in compliance with the provisions of Regulation S. In light of the foregoing, such sales were deemed exempt from registration pursuant to Regulation S of the Securities Act.  The shares were deemed to be “restricted shares” as defined in Rule 144 under the Securities Act.
 
The issuance of stock, warrants and debenture set forth below were made without any public solicitation to a limited number of investors or related individuals or entities.  Each investor represented to us that the securities were being acquired for investment purposes only and not with an intention to resell or distribute such securities.  Each of the individuals or entities had access to information about our business and financial condition and was deemed capable of protecting its own interests.  The stock, warrants and debenture were issued pursuant to the private placement exemption provided by Section 4(2) and Regulation D there under or Section 4(6) of the Securities Act.  These are deemed to be “restricted securities” as defined in Rule 144 under the Securities Act and the warrant certificates and stock certificates or debenture bear a legend limiting the resale thereof.
 
In April 2008, Firstgold issued 707,846 units at a price of $0.65 per unit.  Each unit consisted of one share of Firstgold common stock and ½ warrant to purchase a share of Firstgold common stock at an exercise price of $0.80 per share.  The warrants expire (18) months from the date of issuance.  Firstgold raised gross proceeds of $460,100 from the sale of the units and paid a finder’s fee of $32,207.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
II-2
During 2008 Firstgold has issued one debenture in the aggregate principal amount of $1,100,000 and bearing interest at 10% per annum (the “May 08 Debenture).  The May 08 Debenture has a nine (9) month term from the date of issue unless it is converted into shares of Firstgold Common Stock or repaid prior to the maturity date.  The conversion rate is $0.80 per share.
 
During Firstgold’s fiscal year ending January 31, 2008, it issued the following securities pursuant to exemptions from registration under the Securities Act.

On June 22, 2007, Firstgold issued 18,843,421 units at a price of $0.45 per unit.  Each unit consisted of one share of Firstgold common stock and ½ warrant to purchase a share of Firstgold common stock at an exercise price of $0.65 per share.  Firstgold raised gross proceeds of $8,479,539.45 from the sale of the units.  From this amount, Firstgold paid a Selling Agent Fee of $593,568 and issued 1,866,667 units to the Selling Agent as compensation units.  The warrants expire eighteen (18) months from the date of issuance. An additional 1,884,342 shares and warrants to purchase 942,171 shares were issued on November 16, 2007 because the original Units were not registered for resale by November 15, 2007.

On April 12, 2007, Firstgold issued 5,673,110 Units at a price of $0.45 per Unit.  Each Unit consisted of one share of Firstgold common stock and ½ warrant to purchase a share of Firstgold common stock at an exercise price of $0.65 per share.  The warrants expire eighteen (18) months from the date of issuance.  Firstgold raised net proceeds of $2,374,200 from the sale of the Units after paying a selling agent commission of $178,703. An additional 542,310 shares and warrants to purchase 271,156 shares were issued on October 16, 2007 because the original Units were not registered for resale by October 15, 2007.

The units referred to above were offered and sold exclusively to individuals residing or entities formed outside the United States and are not deemed to be “U.S. persons” as that term is defined under Regulation S.  Each investor represented that it is purchasing such shares for its own account.  Both the offer and the sale of the Firstgold shares were made outside the United States and are deemed to be “offshore transactions” as that term is defined under Regulation S.  The share certificates contain a legend indicating that such shares can only be transferred in compliance with the provisions of Regulation S.  In light of the foregoing, such sales were deemed exempt from registration pursuant to Regulation S of the 1933 Act.  The shares are deemed to be “restricted securities” as defined in Rule 144 under the 1933 Act. 

The following issuances of stock, warrants, and other equity securities were made without any public solicitation to a limited number of investors or related individuals or entities in separately negotiated transactions.  Each investor represented to us that the securities were being acquired for investment purposes only and not with an intention to resell or distribute such securities.  Each of the individuals or entities had access to information about our business and financial condition and was deemed capable of protecting their own interests.  The stock, warrants and other securities were issued pursuant to the private placement exemption provided by Section 4(2) or Section 4(6) of the Securities Act.  These are deemed to be “restricted securities” as defined in Rule 144 under the Securities Act and the warrant certificates and the stock certificates bear a legend limiting the resale thereof.
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
II-3
On May 18, 2007, Firstgold issued 749,998 Units at a price of $0.45 per Unit.  Each Unit consisted of one share of Firstgold common stock and ½ Warrant to purchase a share of Firstgold common stock at an exercise price of $0.65 per share.  The warrants expire eighteen (18) months from the date of issuance.  Firstgold raised gross proceeds of $337,500 from the sale of the Units.

On March 23, 2007, we issued options to purchase an aggregate of 250,000 shares of our common stock to each of our three independent Directors from the 2006 Stock Option Plan.  The options are exercisable at $0.65 per share and vest 50% at the time of issue, and 50% on the first anniversary of the issue date.  The options expire in 10 years.

During Firstgold's most recently completed fiscal year ending January 31, 2007, it issued the following securities pursuant to exemptions from registration under the Securities Act:

On January 31, 2007, Jim Kluber converted $209,251 of convertible debt and interest thereon into 1,630,918 shares of our common stock.  The conversion price was $0.15 per share.  The issuance of shares upon the conversion of debt was made pursuant to the private placement exemption provided by Section 4(2) of the Securities Act.  All shares issued are deemed to be “restricted securities” as defined in Rule 144 under the Securities Act and the stock certificate bear a legend restricting the resale thereof.

In January 2007, we issued options to purchase an aggregate of 250,000 shares of our common stock to a new director from our 2006 Stock Option Plan.  The options are exercisable at $0.50 per share.  The options fully vest after one year and expire in ten years.

On October 26, 2006 Firstgold issued 2,000,000 shares of restricted common stock and warrants to purchase 2,000,000 shares of restricted common stock immediately exercisable at a price of $0.50 per share. The shares and warrants were issued to one investor as a finder’s fee related to the Antelope Peak Lease.

On October 10, 2006, Firstgold issued convertible debentures in the aggregate principal amount of $650,000 and bearing interest of 8% per annum.  The Debentures and accrued interest are convertible into shares of Firstgold commons stock at a conversion rate of $0.4735 per share.  The Debentures are due and payable three years from the date of issue unless they are converted into shares of the Company’s common stock or are repaid prior to their expiration date.  Additionally, the investors were issued warrants to purchase an aggregate of 746,843 shares of Firstgold common stock with 426,767 warrants exercisable at $0.45 per share and 320,076 warrants exercisable at $0.60 per share.  The warrants expire four years from the date of issuance.  The convertible debentures and units were offered and sold exclusively to individuals residing or entities formed outside the United States and are not deemed to be “U.S. persons” as that term is defined under Regulation S.  Each investor represented that it is purchasing such shares for its own account.  Both the offer and the sale of the Firstgold shares were made outside the United States and are deemed to be “offshore transactions” as that term is defined under Regulation S.  The share certificates contain a legend indicating that such shares can only be transferred in compliance with the provisions of Regulation S.  In light of the foregoing, such sales were deemed exempt from registration pursuant to Regulation S of the 1933 Act.  The shares are deemed to be “restricted securities” as defined in Rule 144 under the 1933 Act. 
 
 
 

 
 
 
 
 
 
 
 
 
 
II-4
On October 4, 2006 Firstgold issued 100,000 shares of restricted common stock to one person in partial settlement of an existing litigation matter.

On September 26, 2006, Firstgold entered into a Securities Purchase Agreement (the “Purchase Agreement”) and a Registration Rights Agreement (the “Registration Rights Agreement”), as amended on November 1, 2006, in connection with a private placement of convertible debentures, in the aggregate principal amount of $3,000,000 and bearing interest of 8% per annum (the “Debentures”).  The Debentures were sold to one investor. The Debentures were funded $1,000,000 on September 26, 2006, $1,000,000 on December 1, 2006 and $1,000,000 on March 16, 2007.  The Debentures are due and payable three years from the date of issue unless they are converted into shares of the Company’s common stock or are repaid prior to their expiration date.  Additionally, pursuant to the Purchase Agreement, the investor was issued warrants (the “Warrants”) to purchase an aggregate of 3,500,000 shares of Firstgold common stock exercisable at $0.45 per share.  The Warrants have a term of four years and are immediately exercisable.

On September 15, 2006, Firstgold issued 1,523,229 shares of restricted common stock in conversion of the remaining $400,000 in principal of outstanding Secured Convertible Debentures held by Cornwell Capital Partners from a prior financing transaction.  An additional 117,852 shares of restricted common stock was issued in conversion of $30,948 of accrued interest on the Secured Convertible Debentures.

In September 2006, we issued options to purchase an aggregate of 250,000 shares of our common stock to one director from our 2006 Stock Option Plan.  The options are exercisable at $0.50 per share.  The options expire in ten years.

In July 2006, we issued options to purchase an aggregate of 1,350,000 shares of our common stock to three employees and one director from our newly adopted 2006 Stock Option Plan.  The options are exercisable at between $0.32 and $0.50 per share.  500,000 of these options expire in five years while the balance of options expires in ten years.

In June 2006, Firstgold issued 2,399,087 shares of restricted common stock in conversion of $600,000 in principal of outstanding Secured Convertible Debentures held by Cornell Capital Partners from a prior financing transaction.

In March 2006, Firstgold issued 500,000 shares of restricted common stock at a price of $0.20 per share to an investor for total proceeds of $100,000.  Additionally, 500,000 warrants to purchase common stock at a price of $0.40 per share were issued to the investor.  The warrants expire three years from the date of issuance.

In March 2006, $200,000 was funded per the terms of the Debenture referred to in paragraph (i) below.  Of the $200,000 funded $20,000 was paid for various loan fees and closing costs.  All of the original terms and conditions of the Debenture and related documents remain unchanged.
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
II-5
During Firstgold’s fiscal year ended January 31, 2006, it issued the following securities pursuant to exemptions from registration under the Securities Act:

On January 27, 2006, Firstgold entered into a Securities Purchase Agreement (the “Purchase Agreement”) and a Registration Rights Agreement (the “Registration Rights Agreement”) in connection with a private placement of a convertible debenture, in the principal amount of $1,000,000 and bearing interest of 8% per annum (the “Debenture”).  The Debenture will be funded $600,000 at the closing, $200,000 upon the filing of a resale registration statement with the Securities and Exchange Commission and $200,000 upon the registration statement being declared effective.  The Debenture is due and payable on January 27, 2009 unless it is converted into shares of the Company’s common stock or is repaid prior to its expiration date.  Additionally, pursuant to the Purchase Agreement, the investor was issued warrants (the “Warrants”) to purchase an aggregate of 2,500,000 shares of Firstgold common stock with 1,250,000 warrants exercisable at $0.20 per share and 1,250,000 warrants exercisable at $0.30 per share.  The Warrants have a term of four years and are immediately exercisable.

On January 27, 2006, Firstgold issued 2,500,000 shares of commons stock at a price of $0.20 per share to an investor for total proceeds of $500,000.  Additionally, 2,500,000 warrants to purchase common stock at a price of $0.40 per share were issued to the investor.  The warrants expire three years from the date of issuance.  The shares were offered and sold exclusively to individuals residing or entities formed outside the United States and are not deemed to be “U.S. persons” as that term is defined under Regulation S.  Each investor represented that it is purchasing such shares for its own account.  Both the offer and the sale of the Firstgold shares were made outside the United States and are deemed to be “offshore transactions” as that term is defined under Regulation S.  The share certificate contains a legend indicating that such shares can only be transferred in compliance with the provisions of Regulation S.  In light of the foregoing, such sales were deemed exempt from registration pursuant to Regulation S of the 1933 Act.  The shares are deemed to be “restricted securities” as defined in Rule 144 under the 1933 Act. 

On January 25, 2006, Firstgold entered into a joint venture with ASDi, LLC to explore Nevada mining properties. ASDi, LLC is owned and managed by A. Scott Dockter, President and CEO of Firstgold. The joint venture will be operated through a newly formed Nevada limited liability company called Crescent Red Caps, LLC. The terms of the joint venture provide for ASDi to contribute various mining properties to the LLC in exchange for Firstgold issuing 2.5 million shares of its common stock and warrants to purchase 2.5 million shares of Firstgold Common Stock at an exercise price of $0.40 per share for a term of three years to ASDi.  Firstgold will initially own a 22.22% interest in the LLC and ASDi will hold a 77.78% interest. By expending up to $1,350,000 on each project over the next three years, Firstgold can increase its interest in the LLC to 66.66%.  Thereafter, Firstgold has the right to purchase the remaining interest in the LLC held by ASDi at a price to be determined by the results of the exploration work conducted.  Firstgold will be the Manager of the LLC.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
II-6
 
Item 16.    Exhibits
 
Exhibit No. 
Description of Exhibit
   
2.1(4) 
Plan of Reorganization and Merger Agreement, dated as of July 23, 1999, between the Registrant and Business Web, Inc.
2.2(6)
First Amendment to Plan of Reorganization and Merger Agreement, dated as of October 31, 1999, between the Registrant and Business Web, Inc.
2.3(7) 
Termination Agreement, dated as of December 27, 1999, between the Registrant and Business Web, Inc.
3.1(2)
Certificate of Incorporation of the Registrant.
3.2(1) 
Certificate of Amendment to Certificate of Incorporation of the Registrant.
3.3(2)
Bylaws of the Registrant
4.1(9)
Convertible Debenture
4.1.(a)(13)
Form of Convertible Debenture dated September 26, 2006
4.2.(a)(9)
Form of Warrant - $0.20 exercise price
4.2.(b)(9)
Form of Warrant - $0.30 exercise price
4.3.(a)(15)
Convertible Debenture dated December 1, 2006
4.3.(b)(17)
Convertible Debenture dated March 16, 2007
4.4(13)
Form of Warrant dated September 26, 2006
4.4(a)(15) 
Warrants dated November 1, 2006
4.4(b) (15)
Warrants dated November 1, 2006
4.4.(a) (17)
Amended and Restated Warrant dated March 16, 2007
4.5(19) 
Warrants dated April 12, 2007 filed as Exhibits 10.26
4.6(20) 
Warrants dated June 22, 2007
5.1(22)
Opinion of Counsel
5.1(a) (23)
Updated Opinion of Counsel
10.1(3) 
Promissory Note between Firstgold and A. Scott Dockter, dated April 2, 1997, for the principal amount of $100,000.
10.2(3) 
Promissory Note between Firstgold and A. Scott Dockter, dated April 17, 1997, for the principal amount of $50,000.
10.3(3)
Promissory Note between Firstgold and A. Scott Dockter, dated April 30, 1997, for the principal amount of $20,000.
10.4(3)
Promissory Note between Firstgold and A. Scott Dockter, dated May 30, 1997, for the principal amount of $35,000
10.5(5)
Promissory Note between Firstgold and A. Scott Dockter, dated December 24, 1998, for the principal amount of $24,000.
10.6(7) 
Warrant to Purchase shares of Common Stock of Business Web, Inc.
10.7(9)
Securities Purchase Agreement dated January 27, 2006 by and among Firstgold and the investor named therein.
10.8(9)
Registration Rights Agreement dated January 27, 2006 by and among Firstgold and the investor named therein.
10.9(10)
Joint Venture Agreement dated January 25, 2006 between Firstgold, Inc. and ASDi, LLC
10.10(10)
Crescent Red Caps LLC - Operating Agreement
10.11(11)
Employment Agreement for A. Scott Dockter dated February 1, 2006
10.12(11)
Employment Agreement for James W. Kluber dated February 1, 2006
 
II-7
 
10.13(12)
Pledge and Escrow Agreement dated January 27, 2006 by and among Firstgold and the investor named therein.
10.14(15)
Firstgold, Inc. 2006 Stock Option Plan
10.15(13)
Securities Purchase Agreement dated September 26, 2006 by and among Firstgold and the investor named therein.
10.15.(a)(14)
Amendment Number 1 to Securities Purchase Agreement dated November 1, 2006.
10.16(13)
Registration Rights Agreement dated September 26, 2006 by and among Firstgold and the investor named therein.
10.16.(a)(21)
Modification to Registration Rights Agreement
10.16(b)(14)
Amendment No. 1 to Investor Registration Rights Agreement
10.17(15)
Amended Memorandum of Security Agreement
10.18(a)(15)
Pledge and Escrow Agreement dated September 26, 2006
10.18(b)(15)
Amendment to Pledge and Escrow Agreement dated November 1, 2006
10.19(16)
Transfer Agent Instructions
10.20(18)
Aircraft Time Sharing Agreement dated December 1, 2006
10.21(23)
Form of Subscription Agreement for Regulation S offering in April 2007
10.22 (24)
Employment Agreement for Stephen Akerfeldt.
10.23 (24)
Revised Employment Agreement for A. Scott Dockter.
10.24 (24)
Voting Trust and Escrow Agreement for A. Scott Dockter.
10.25 (24)
Form of Subscription Agreement for Regulation S offering in February 2008.
10.26(24)
Convertible Debenture dated May 1, 2008.
14(8)
Code of Business Conduct and Ethics.
23.1
Consent of Counsel (incorporated by reference to Exhibit 5.1 of this filing)
23.2*
Consent of Independent Registered Public Accounting Firm
____________________
*     Filed herewith
 
(1)
Incorporated by reference to the Registrant’s Annual Report on Form 10-KSB for the fiscal year ended January 31, 1996 filed with the Commission on January 22, 1997.
(2)
Incorporated by reference to the Registrant’s Registration Statement on Form SB-2 (File No. 33-49920) filed with the Commission on October 14, 1993.
(3)
Incorporated by reference to Registrant’s Annual Report on Form 10-KSB for the fiscal year ended January 31, 1997 filed with the Commission on June 30, 1997.
(4)
Incorporated by reference to Registrant’s Annual Report on Form 10-KSB for the fiscal year ended January 31, 1999 filed with the Commission on October 1, 1999.
(5)
Incorporated by reference to Registrant’s First Amendment to Annual Report on Form 10-KSB for the fiscal year ended January 31, 1999, filed with the Commission on October 20, 1999.
(6)
Incorporated by reference to Registrant’s Form 8-K filed with the Commission on November 2, 1999.
(7)
Incorporated by reference to Registrant’s Annual Report on Form 10-KSB for the fiscal year ended January 31, 2000 filed with the Commission on May 17, 2000.
 
II-8
 
(8)
Incorporated by reference to Registrant’s Annual Report on Form 10-KSB for the fiscal year ended January 31, 2005 filed with the Commission on May 2, 2005
(9)
Incorporated by reference to Registrant’s Form 8-K filed with the Commission on February 2, 2006
(10)
Incorporated by reference to Registrant’s Form 8-K/A filed with Commission on February 27, 2006.
(11)
Incorporated by reference to Registrant’s Registration Statement on Form SB-2 (File No. 333-132218) filed with the Commission on March 6, 2006.
(12)
Incorporated by reference to Registrant’s Amended Registration Statement on Form SB-2 (File No. 333-132218) filed with the Commission on June 12, 2006.
(13)
Incorporated by reference to Registrant’s Form 8-K filed with the Commission on September 28, 2006.
(14)
Incorporated by reference to Registrant’s Form 8-K/A filed with the Commission on November 24, 2006.
(15)
Incorporated by reference to Registrant’s First Amended Registration Statement on Form SB-2 (File No. 333-139052) filed with the Commission on February 8, 2007
(16)
Incorporated by reference to Registrant’s Second Amended Registration Statement on Form SB-2 (File No. 333-139052) filed with the Commission on April 16, 2007
(17)
Incorporated by reference to Registrant’s Form 8-K filed with the Commission on March 22, 2007.
(18) 
Incorporated by reference to Registrant’s Annual Report on Form 10-KSB for the fiscal year ended January 31, 2007, filed with the Commission on May 16, 2007.
 (19)
Incorporated by reference to Registrant’s Form 8-K filed with the Commission on May 11, 2007.
(20)
Incorporated by reference to Registrant’s Form 8-K filed with the Commission on June 28, 2007.
(21)
Filed as exhibit to Registration Statement on Form SB-2 #333-145016 filed August 1, 2007.
(22)
Filed as exhibit to Amendment No. 1 to Registration Statement on Form SB-2 #333-145016 filed September 27, 2007.
(23)
Filed as exhibit to Amendment No. 2 to Registration Statement on Form SB-2 #333-145016 filed November 7, 2007.
(24)
Filed as exhibit to Registrant’s Form 10-Q for the fiscal quarter ended April 30, 2008 filed with the Commission on June 23, 2008.
 
 
Item 17. 
Undertakings.

The undersigned registrant hereby undertakes:

(1)           To file, during any period in which it offers or sells securities, a post-effective amendment to this registration statement to:

(i)           Include any prospectus required by Sections 10(a)(3) of the Securities Act of 1933 (the “1933 Act”);

(ii)           Reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement.  Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective Registration Statement;

II-9
(iii)           Include any additional or changed material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

(2)           That, for the purpose of determining any liability under the 1933 Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the bona fide offering thereof.

(3)           To remove from registration by means of a post-effective amendment any of the securities that remain unsold at the end of the offering.

(4)           For determining liability of the undersigned small business issuer under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned small business issuer undertakes that in a primary offering of securities of the undersigned small business issuer pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned small business issuer will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i)           Any preliminary prospectus or prospectus of the undersigned small business issuer relating to the offering required to be filed pursuant to Rule 424;

(ii)           Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned small business issuer or used or referred to by the undersigned small business issuer;

(iii)           The portion of any other free writing prospectus relating to the offering containing material information about the undersigned small business issuer or its securities provided by or on behalf of the undersigned small business issuer; and

(iv)           Any other communication that is an offer in the offering made by the undersigned small business issuer to the purchaser.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the small business issuer pursuant to the foregoing provisions, or otherwise, the small business issuer has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.  

Each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430(B) or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness.  Provided; however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by referenced into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
 
 
 
 
 
 
 
 
 
 

 
II-10
 
SIGNATURES
 

In accordance with the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements of filing on Form S-1 and authorized this first amendment to registration statement to be signed on our behalf by the undersigned, in the City of Cameron Park, State of California on July 10, 2008.


FIRSTGOLD CORP.


By:  /s/ Stephen Akerfeldt        
Name: Stephen Akerfeldt
Title:  Chief Executive Officer

In accordance with the requirements of the Securities Act of 1933, this amended registration statement was signed by the following persons in the capacities and on the dates stated:


Signatures
Title
Date
     
/s/ Stephen Akerfeldt
Stephen Akerfeldt
Chief Executive Officer and
Director
July 10, 2008
     
/s/ A. Scott Dockter
A. Scott Dockter
Chief Operating Officer
July 15, 2008
     
/s/ James Kluber
James Kluber
Principal Accounting Officer, Principal Financial Officer, and
Secretary
July 9, 2008
     
/s/ Terrence Lynch
Terrence Lynch
Director
July 10, 2008
     
/s/ Kevin Bullock
Kevin Bullock
Director
July 14, 2008
     
/s/ Donald Heimler
Donald Heimler
Director
July 3, 2008
     
/s/ Fraser Berrill
Fraser Berrill
Director
July 8, 2008
 
 
 
 
 
 
 
 
 
II-11
EXHIBIT INDEX
 
 
 
Exhibit No. 
Description of Exhibit
   
2.1
Plan of Reorganization and Merger Agreement, dated as of July 23, 1999, between the Registrant and Business Web, Inc.
2.2
First Amendment to Plan of Reorganization and Merger Agreement, dated as of October 31, 1999, between the Registrant and Business Web, Inc.
2.3
Termination Agreement, dated as of December 27, 1999, between the Registrant and Business Web, Inc.
3.1
Certificate of Incorporation of the Registrant.
3.2
Certificate of Amendment to Certificate of Incorporation of the Registrant.
3.3
Bylaws of the Registrant
4.1
Convertible Debenture
4.1.(a)
Form of Convertible Debenture dated September 26, 2006
4.2.(a)
Form of Warrant - $0.20 exercise price
4.2.(b)
Form of Warrant - $0.30 exercise price
4.3.(a)
Convertible Debenture dated December 1, 2006
4.3.(b)
Convertible Debenture dated March 16, 2007
4.4
Form of Warrant dated September 26, 2006
4.4(a)
Warrants dated November 1, 2006
4.4(b)
Warrants dated November 1, 2006
4.4.(a)
Amended and Restated Warrant dated March 16, 2007
4.5
Warrants dated April 12, 2007 filed as Exhibits 10.26
4.6
Warrants dated June 22, 2007
5.1
Opinion of Counsel
5.1(a)
Updated Opinion of Counsel
10.1
Promissory Note between Firstgold and A. Scott Dockter, dated April 2, 1997, for the principal amount of $100,000.
10.2
Promissory Note between Firstgold and A. Scott Dockter, dated April 17, 1997, for the principal amount of $50,000.
10.3
Promissory Note between Firstgold and A. Scott Dockter, dated April 30, 1997, for the principal amount of $20,000.
10.4
Promissory Note between Firstgold and A. Scott Dockter, dated May 30, 1997, for the principal amount of $35,000
10.5
Promissory Note between Firstgold and A. Scott Dockter, dated December 24, 1998, for the principal amount of $24,000.
10.6
Warrant to Purchase shares of Common Stock of Business Web, Inc.
10.7
Securities Purchase Agreement dated January 27, 2006 by and among Firstgold and the investor named therein.
10.8
Registration Rights Agreement dated January 27, 2006 by and among Firstgold and the investor named therein.
10.9
Joint Venture Agreement dated January 25, 2006 between Firstgold, Inc. and ASDi, LLC
10.10
Crescent Red Caps LLC - Operating Agreement
10.11
Employment Agreement for A. Scott Dockter dated February 1, 2006
 
 
10.12
Employment Agreement for James W. Kluber dated February 1, 2006
10.13
Pledge and Escrow Agreement dated January 27, 2006 by and among Firstgold and the investor named therein.
10.14
Firstgold, Inc. 2006 Stock Option Plan
10.15
Securities Purchase Agreement dated September 26, 2006 by and among Firstgold and the investor named therein.
10.15.(a)
Amendment Number 1 to Securities Purchase Agreement dated November 1, 2006.
10.16
Registration Rights Agreement dated September 26, 2006 by and among Firstgold and the investor named therein.
10.16.(a)
Modification to Registration Rights Agreement
10.16(b)
Amendment No. 1 to Investor Registration Rights Agreement
10.17
Amended Memorandum of Security Agreement
10.18(a)
Pledge and Escrow Agreement dated September 26, 2006
10.18(b)
Amendment to Pledge and Escrow Agreement dated November 1, 2006
10.19
Transfer Agent Instructions
10.20
Aircraft Time Sharing Agreement dated December 1, 2006
10.21
Form of Subscription Agreement for Regulation S offering in April 2007
10.22
Employment Agreement for Stephen Akerfeldt.
10.23
Revised Employment Agreement for A. Scott Dockter.
10.24
Voting Trust and Escrow Agreement for A. Scott Dockter.
10.25
Form of Subscription Agreement for Regulation S offering in February 2008.
10.26
Convertible Debenture dated May 1, 2008.
14
Code of Business Conduct and Ethics.
23.1
Consent of Counsel (incorporated by reference to Exhibit 5.1 of this filing)
23.2*
Consent of Hunter & Renfro LLP, Independent Registered Public Accounting Firm
 
 
* Exhibits included in this Post-Effective Amendment No. 1 to S-1 Registration Statement