Regent Ventures Ltd RGVNF

NEWS #2 MD&A

[curtisprod]

REGENT VENTURES LTD. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS JUNE 30, 2007 Background The following discussion and analysis, prepared as of August 25, 2007, should be read together with the unaudited consolidated financial statements for the six months ended June 30, 2007 and related notes attached thereto, which are prepared in accordance with Canadian generally accepted accounting principles. All amounts are stated in Canadian dollars unless otherwise indicated. These unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Regent Ventures (Nevada) Inc. All inter-company transactions and balances have been eliminated. Statements in this report that are not historical facts are forward-looking statements involving known and unknown risks and uncertainties, which could cause actual results to vary considerably from these statements. Readers are cautioned not to put undue reliance on forward-looking statements. Additional information related to the Company is available for view on SEDAR at www.sedar.com. Description of Business The Issuer is a junior resource company engaged in the acquisition, exploration and development of mineral resources properties with its principal focus on gold and other precious metals. The Issuer currently holds interests in two mineral properties: the Red Mountain, situated in the Mayo Mining District, Yukon Territory and the Owyhee Property, situated near Mountain City in north Elko County, Nevada. The Issuer is a reporting issuer in British Columbia and Alberta and trades on the TSX Venture Exchange under the symbol REV. During fiscal 2006, the Company acquired a 45% interest in a private United Kingdom company that holds interests in two concessions in Poland: one an oil and natural gas concession in the Carpathian Mountains of Poland and the other a coalbed methane gas concession in the Upper Silesian basin of Poland. Red Mountain Property The Issuer holds a 100% interest in 218 claims comprising approximately 12,000 acres located in the Mayo Mining District, Yukon Territory, which makes up the Red Mountain Property. 68 of the claims, known as the BX Claims, are subject to a 0.5% royalty. The Red Mountain Property is situated in the Tintina Gold Belt of the Yukon and is being explored for gold mineralization. The Issuer acquired its initial interest in the Red Mountain Property in 1993 and to date has spent $3,309,471 on exploration of the Property and $196,631 on acquisition costs. To reconcile with the Issuer's financial statements, $1,555,692 of deferred exploration expenditures were written off in 2000 due to several years of inactivity on the property during adverse gold markets and the Issuer has received tax credits from the Yukon Territory over the last three years totaling $215,747 which have been offset against the expenditures in the Issuer's financial statements. The 2006 work program on the Red Mountain Property included five diamond drill holes totalling 1,162 metres of drilling and 270 kilometres of high-resolution, deep-penetrating, electromagnetic and magnetic - 1 - REGENT VENTURES LTD. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS JUNE 30, 2007 geophysical surveying carried out by Geotech Ltd. using the helicopter-borne VTEM system over the property at 100-metre spacings. Preliminary results from the VTEM survey indicate numerous new electromagnetic high anomalies, which may be associated with buried Tombstone Suite intrusions in the area. Further follow-up groundwork and additional data interpretation are necessary prior to defining drill targets from the VTEM survey. The diamond drilling focused on the 50/50 zone, the Saddle zone and the Gossan zone, located approximately 1.0 kilometre southwest of the Saddle zone. DDH No. 06-45 and DDH No. 06-46 were drilled to test coincident gold-silver-zinc-copper geochemical anomalies coupled with a coincident IP anomaly and the 50/50 fault surface expression. DDH No. 06-45 was lost at 96.1 metres and prior to intersecting the projection of the 50/50 structure. DDH No. 06-46 was drilled to a depth of 187.5 m and intersected the 50/50 structure at 165 m to 166.8 m, which yielded grades of 0.25 gram per tonne gold, 43.2 g/t Ag and 1.44 per cent Zn over the 1.8-metre width. DDH No. 06-47 was drilled in the Saddle zone area to test the down-dip extension of previously intersected gold veins associated with Tombstone Suite intrusion quartz monzonite dike swarms. Oblique low-angle faulting was interpreted to have laterally and vertically displaced these dikes. DDH No. 06-49 was positioned to intersect the postulated prefaulting location of the dikes to the north of the main Saddle zone area and was successful in intersecting these dikes. DDH No. 06-48 was drilled to test a coincident EM anomaly and IP anomaly within a 100-part-per-billion gold geochemical survey anomaly in the Gossan zone area. A summary of the assay results from the 2006 drilling program is set out in the following table: Drill Hole From (m) To (m) Width (m) Gold (g/t) Silver (g/t) Zinc (%) 06-45 41.0 41.7 0.7 - 169.0 - 06-46 165.0 166.8 1.8 0.25 43.2 1.44 06-47 4.8 5.9 1.1 0.18 61.2 - 16.3 22.4 6.1 0.86 - - incl. 19.7 20.6 0.9 4.03 - - 124.2 126.8 2.6 0.13 57.8 - 178.3 179.8 1.5 0.25 38.1 - 06-48 No Significant Assays 06-49 86.2 86.3 0.1 1.89 261.0 - The exploration program was carried out under the direction of the company's qualified person, Allan Doherty, PGeo, of Aurum Geological Consultants Inc., who has reviewed and approved the technical content of the foregoing. The drilling was contracted to E. Caron Diamond Drilling Ltd. of Whitehorse and the analytical work was performed by Echo Tech Laboratories of Kamloops, B.C. - 2 - REGENT VENTURES LTD. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS JUNE 30, 2007 Expenditures Exploration expenditures for the six months ended June 30, 2007 totalled $6,818 and the Company advanced $29,810 with regard to drilling expenses. Expenditure during the comparable period ending June 30, 2006 was $444,095. Expenditure as at June 30, 2007 and 2006 was as follows: Three Months Ended June 30, 2007 Six Months Ended June 30, 2007 Three Months Ended June 30, 2006 Six Months Ended June 30, 2006 Drilling - - 178,817 178,817 - paid to independent contractor. Field supplies and other 383 3,589 6,465 6,465 - paid to independent companies. Food, lodging and travel 1,615 3,229 7,116 7,116 - paid to contractor/related party. Geological consulting - - 15,000 15,000 - paid to independent companies. Staking - - 15,514 15,514 - paid to independent companies. Exploration - advance - - 221,183 221,183 - paid to independent contractor. 1,998 6,818 444,095 444,095 Owyhee Property In December, 2003, the Issuer had a subsidiary, Regent Ventures (Nevada) Inc., incorporated in the State of Nevada through which it acquired a 100% interest in twelve (12) patented mining claims located in the Cope Mining District, Northern Elko County, Nevada one-half mile from Mountain City, Nevada. The patented claims are subject to a 2% overriding royalty to the vendors. The Company acquired the interest through the payment of US$25,000 in cash and the issuance of 1,500,000 shares in the capital of the Company to the vendors. At December 31, 2005, as a result of the Company conducting no work on the property in the year and having no planned work program, the costs associated with the acquisition and exploration of the property were written-off. In the summer of 2006, the Company renewed its activities on the Owyhee Property by completing the registration of 51 located mineral claims to expand its holdings and planning a drilling program on the Property. As at December 31, 2006, the Company had advanced $130,287 in preparation of its planned exploration program and had expended $23,869 on exploration expenses. During the period ended March 31, 2007 the Company completed its exploration program on its Owyhee Property. The work program carried out on the property consisted of dozer trenching, sampling and completing seven reverse circulation drill holes comprising a total of 4,180 feet of drilling. During the current quarter ending June 30, 2007, the Company received the results of the drilling portion of the exploration program. The drilling program confirmed the occurrence of gold and silver mineralization along strike and at depth on the historic Protection vein zone. The Protection vein zone was traced by drilling and trenching over a strike length of 2,500 feet both near surface and at depth. The Owyhee vein zone is open to the northwest of the Protection vein for 2,300 feet. - 3 - REGENT VENTURES LTD. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS JUNE 30, 2007 Drilling results are as follows. Drill From To Au Ag hole (feet) (feet) g/t g/t ORH2v 40 45 1.988 >120 45 50 0.144 52.2 190 195 3.414 51.1 The remaining 21 samples tested for this hole all yielded gold values of less than 0.1 g/t and silver values of 20 g/t or less. ORH2A 50 55 0.180 4.60 80 85 0.256 2.00 90 95 1.684 9.60 95 100 0.160 1.20 The remaining seven samples tested for this hole all yielded gold values of less than 0.1 g/t and silver values of 3.90 g/t or less. ORH2B All 33 samples tested for this hole yielded gold values of less than 0.04 g/t and silver values of 5.60 g/t or less. ORH3 All 17 samples tested for this hole yielded gold values of less than 0.08 g/t and silver values of 2.60 g/t or less. ORH4 5 10 0.340 25.9 20 25 0.111 0.70 25 30 0.282 20.8 35 40 0.105 1.80 55 60 6.390 34.9 60 65 3.489 21.6 65 70 1.688 7.20 70 75 0.192 0.70 75 80 0.142 1.30 The remaining 31 samples from this hole yielded gold values of less than 0.09 g/t and silver values of 5.80 g/t or less. ORH5 5 10 0.113 1.50 10 15 0.313 31.8 15 20 0.400 43.4 215 220 0.149 16.3 220 225 0.203 21.8 The remaining 16 samples from this hole yielded gold values of less than 0.07 g/t and silver values of 17.5 g/t or less. - 4 - REGENT VENTURES LTD. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS JUNE 30, 2007 The mineralized zones are nearly a mile in length and remain open. Gold mineralization within the zones typically is granite-hosted and consists of multiple, subvertical five-to-10-foot-wide zones grading between 0.10 and 6.0 g/t gold. The exploration program was laid out by Jim Nyrehn, geologist, and overseen by the company's qualified person, Richard Addison, P.Eng. Lang drilling, a division of Boart Longyear, was the drilling contractor. All reclamation work has been completed Expenditures Exploration expenditures for the three months ended June 30, 2007 totalled $330,828. Expenditure during the comparable period ending June 30, 2006 was $Nil. Expenditure as at June 30, 2007 and 2006 was as follows: Three months Ended June 30, 2007 Six months Ended June 30, 2007 Three months Ended June 30, 2006 Six months Ended June 30, 2006 Drilling expenses - 309,053 - - Consulting 5,000 7,000 - - Food, lodging and travel 7 14,775 - - 5,007 325,821 - - Investment in McCallan Oil & Gas - Europe In March, 2006, the Company entered into a share purchase agreement with Hans Dietmann, of Vienna, Austria, (the “Vendor”) whereby the Vendor agreed to sell to the Company a 22.5% interest in McCallan Oil & Gas (UK) Ltd. (“McCallan”). At the time of the purchase, McCallan held a 51% interest in two joint operating agreements, one with respect to an oil and natural gas concession (the “Carpathian Concession”) comprising approximately 3,480 square kilometres in the Carpathian Mountains in Poland, and the other with respect to a coalbed methane gas concession (the “Silesian Concession”) comprising 115 square kilometres in the Upper Silesian basin of Poland (collectively the “Concessions”). Pursuant to the terms of the agreement, the Company paid $75,000 in cash and issued 2.25 million common shares to the Vendor at closing. The Company also agreed to issue up to 25 million additional common shares to the Vendor on the basis of one million common shares for each oil, natural gas or coal-bed methane gas well placed into commercial production by McCallan. In June, 2006, the Company entered into a second share purchase agreement with the Vendor to acquire an additional 22.5% interest in McCallan. Pursuant to the terms of the second agreement, the Company paid the Vendor $200,000 in cash and issued 1.3 million common shares at closing. The Company also agreed to issue up to 11.7 million additional common shares (the “Contingent Shares”) to the Vendor on the basis of 468,000 common shares for each oil, natural gas or coalbed methane gas well placed into commercial production by McCallan, to a maximum of 25 producing wells. Two million of the shares from the acquisition of the first 22.5% interest and 1.15 million of the shares from the acquisition of the second 22.5% interest were subject to escrow restrictions imposed by the TSX - 5 - REGENT VENTURES LTD. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS JUNE 30, 2007 Venture Exchange (the “Exchange”). On June 25, 2007, the Exchange advised that their requirements had been satisfied and the shares were released from escrow. Pursuant to the terms of the second agreement, the Vendor has also granted the Company an option to acquire a further 6% interest in the shares of McCallan in the event that McCallan enters into an agreement with a major energy company with respect to one of the Concessions. The Company can acquire the further 6% interest in McCallan, to take its interest to 51%, by immediately issuing the 11,700,000 Contingent Shares to the Vendor rather than releasing them on the earn-in basis under the acquisition terms above. Subsequent to the purchase agreements, McCallan acquired all of the shares of EuroGas Polska sp. z o. o. (“EuroGas”) which holds the Carpathian Concession subject to a prior joint operating agreement entered into by EuroGas with Polskie Gornictwo Naftowe i Gazownictwo SA (“PGNiG”), the exploration and production arm of Polish Oil and Gas Corporation, the Polish State Company (“POGC”). Negotiations were also entered into by EuroGas with PGNiG to make the joint interests to 50% each with PGNiG the operator. On or about November 24, 2006, McCallan advised the Company that the event triggering the option had occurred and the Company issued notice to the Vendor of its intent to exercise the option to acquire an additional 6% interest in the share capital of McCallan. Subsequent to giving the notice of intent to exercise, the Company has decided to defer the exercise of the option for the time being. Joint Venture of Oil and Gas Interests On November 27, 2006, it was announced that McCallan and its wholly-owned subsidiary, EuroGas, had signed Heads of Agreement with Aurelian Oil & Gas PLC (“Aurelian”), with respect to the farmout of part of Eurogas’ interest in the Carpathian Concession. Aurelian will earn a 25% beneficial interest in the Carpathian Concession, which will be operated by PGNiG. Aurelian, a British public company listed on the London Stock Exchange under symbol AUL, is an exploration and production company specializing in Central Europe. A new Mining Usufruct Agreement (“MUA”) was negotiated by the parties with PGNiG and the Polish licensing authorities, in conjunction with which, the Carpathian Concession was transferred from Eurogas to PGNiG. A new joint operating agreement (“JOA”) will be executed, under which PGNiG will hold the MUA and the Carpathian Concession on behalf of EuroGas and Aurelian. Originally the interests under the JOA were to be 50% to PGNiG and 25% to each of EuroGas and Aurelian. During the course of negotiations, PGNiG advised that their government policy required them as operators to hold at least 51%. Accordingly, the interests will now be: PGNiG (Operator) 51% Aurelian 25% Eurogas 24% As a result of these renegotiated interests, Aurelian, in consideration of maintaining its 25% interest, agreed to pay McCallan, on behalf of EuroGas, Euro$2,500,000 instead of the originally agreed US$2,500,000. Following closing, each party will bear its own share of the costs and expenses incurred under the JOA. Closing and signing of the new JOA by all parties occurred in the latter part of June, 2007. - 6 - REGENT VENTURES LTD. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS JUNE 30, 2007 The Carpathian Concessions, which cover 3,481.5 sq. kms., are located in the southeast of Poland in the heart of the Carpathian Mouontains where oil and gas have been produced since the mid-1850s. The Przemysl field, Poland’s largest gas field, with reserves of 2.43 tcf (70 bcm), lies adjacent to the northeast. Several oil and gas fields lie within the Carpathian Concession boundaries although these are not included as part of the Carpathian Concessions. These fields are mainly old and shallow, although one (Strachocina) has recently been converted for gas storage purposes. The existence of the fields, however, indicates the presence of an active hydrocarbon system, consistent with that of the producing Carpathian trend. Only six modern seismic lines exist within the entire Carpathian Concession area, but these do indicate the presence of potentially large hydrocarbon-bearing undrilled structures at depth. It is anticipated that new seismic will be undertaken and a well drilled during the first 3-year term of the new MUA. Expenditures The Company has paid $1,969,821, in cash and shares, with respect to the acquisition of the 45% interest in the share capital of McCallan. The amount includes due diligence expenses of $151,321. Related Party Transactions a) During the six-months ended June 30, 2007, the Company incurred or reimbursed the following to directors, officers and companies controlled by them: management fees of $30,000 (2006 - $25,500); and travel and promotion of $9,892 (2006 - $8,380). At June 30, 2007 a net amount of $72,565 (June 30, 2006 - $30,388) is due from these related parties for advances towards expenditures to be incurred on behalf of the Company. These amounts are unsecured, non-interest bearing and have no specific terms for repayment. b) During the six months ended June 30, 2007 the Company incurred $36,327 (2006 - $23,439) in professional fees to a law firm of which a director of the Company is a principal. As at June 30, 2007, the Company owed $68,330 (2006: $Nil) to this law firm. These amounts are unsecured and have no set terms of repayment. c) The above-noted transactions were recorded at exchange value, which was the amount of consideration established and agreed to by the related parties. SELECTED FINANCIAL DATA The following table sets out selected financial information for the periods indicated. Six Months Ended Years Ended December 31 June 30 June 30 - 7 - REGENT VENTURES LTD. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS JUNE 30, 2007 2007 2006 2006 2005 2004 $ $ $ $ $ OPERATIONS: Revenue Nil Nil 53 10,581 195 Net Loss 187,020 609,553 1,741,378 534,586 471,628 Basic and diluted loss per share 0.003 0.014 0.03 0.01 0.01 BALANCE SHEET Working capital (deficiency) 1,339,924 1,536,075 603,809 (230,968) (18,925) Total assets 5,537,429 3,825,751 4,562,044 917,989 1,278,884 Total Mineral property expenses 2,089,360 1,331,756 1,882,001 887,481 1,206,133 The Issuer's financial statements are prepared in accordance with generally accepted accounting principles applicable in Canada and the reporting currency is Canadian dollars. General and Administrative Discussion of Operating Results- three-months ended June 30, 2007 During the three months ended June 30, 2007 the Company incurred a net loss of $102,102 as compared to a net loss of $98,739 for the comparable period in 2006. The increase of $3,363 was due to increases in: office and general of $7,273; transfer agents and filing fees of $5,256; and consulting fees of $8,100 paid with respect to registering the Company’s securities on the Frankfurt Exchange; as offset by decreases in: professional fees of $6,366; property investigation cost of $7,551; travel and promotion of $3,241; and other miscellaneous net expense decreases of $108. These changes reflect a usual fluctuation in expenses by category from quarter to quarter. . Discussion of Operating Results- six-months ended June 30, 2007 During the six months ended June 30, 2007 the Company incurred a net loss of $187,020 as compared to a net loss of $609,553 for the comparable period in 2006. The decrease of $422,533 was due to decreases in: non-cash stock-based compensation of $461,048, calculated on incentive stock options granted during the period ended June 30, 2006, with no corresponding amount in the current period; property investigation costs of $7,551; interest expenses of $4,550; professional fees of $2,924 and travel and promotion expenses of $1,442; as offset by increases in: transfer agents and filing fees of $20,590; office and general of $17,646; consulting fees of $8,100; management fees of $4,500; telephone of $2,829; and other miscellaneous expense decreases of $1,317; all basically due to an overall increase in activity of the Company in this period over the same period last year. Management of the Company does not foresee any significant change to its administrative expenses during the coming quarter, however, the exploration expenses may vary depending on the work programs to be undertaken this year on the Red Mountain Property, Yukon Territory, and the Owyhee Property, Nevada, which have not yet been determined. SUMMARY OF QUARTERLY RESULTS The following table presents unaudited selected financial information for each of the last eight quarters - 8 - REGENT VENTURES LTD. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS JUNE 30, 2007 ended June 30, 2007. Jun. 30 2007 $ Mar. 31 2007 $ Dec. 31 2006 $ Sept. 30 2006 $ Jun. 30 2006 $ Mar. 31 2006 $ Dec. 31 2005 $ Sept. 30 2005 $ Total Revenues - - (77) 130 - - 150 10,3341 Net Loss 102,102 84,918 1,005,1354 126,690 98,739 510,8143 430,9782 21,560 Basic Loss/Share 0.001 0.001 0.01 0.01 0.01 0.01 0.01 0.00 Fully Diluted Loss/Share 0.001 0.001 0.01 0.01 0.00 0.01 0.1 0.00 1. During the period ended September 30, 2005 the Company traded in marketable securities resulting in a net profit of $ 10,289. 2. As at December 31, 2005, the Company wrote-off mineral property of $343,576. 3. Includes non-cash stock-based compensation expenses of $461,048. 4. Includes non-cash stock-based compensation expense of $938,602 and a recovery of accounts payable written-off of $104,495. Investor Relations No investor relations activities were undertaken by or on behalf of the Issuer during the period and no investor relations arrangements or contracts were entered into by the Issuer during the period. Liquidity and Capital Resources The Issuer has no operating revenues and finances its operations principally through the sale of shares in its capital. In the short term, directors of the Issuer have, in the past, provided cash advances to meet urgent operating needs. At December 31, 2006, the Company had a working capital of $603,809. During the period, the Company expended: $207,211 in cash on it operating activities; and $234,359 on investing activities, which includes, amongst other things, $207,359 in exploration of its Red Mountain and Owyhee Properties. On February 14, 2007, the Company announced that the remaining 5,775,000 warrants of the 8,000,000 issued at an exercise price of $0.20 per share pursuant to its private placement that closed February 7, 2006 have been exercised. On the exercise, the Company received $1,155,000 in additional working capital. As a result of these activities, at June 30, 2007, the Company had a working capital balance of $1,361,217. The Issuer owns the interests in the properties that it holds and accordingly has no contractual obligations for property expenditures. The only obligation then with respect to holding the properties is the regulatory - 9 - REGENT VENTURES LTD. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS JUNE 30, 2007 requirement for annual assessment work and, for some properties, annual taxes. The Issuer will have obligations for annual taxes with respect to the Owyhee Property, however, these are not significant and can be met by the Company from cash on hand. The Company’s capital needs are anticipated to be in the order of $70,000 per quarter to cover operating activities, which can be satisfied out of funds on hand. The Company is has received reports on both the Red Mountain and Owyhee Properties and will make recommendations for work programs for the coming year. Depending on the size of the recommended work programs, these capital requirements may be satisfied out of the working capital on hand, however, should the work programs exceed the working capital on hand, additional funds may be required. Any such additional funds would be raised through further private placement offerings of the Company’s securities, from the proceeds of the exercise of outstanding stock options or from the proceeds of exercise of share purchase warrants. There can be no assurance that the Issuer will be able to raise such additional funds in this manner. Internal Controls over Financial Reporting The certifying officers note that there has not been any change during the period covered by the interim filings in the Company’s internal control over financial reporting, however, they further note that due to the limited number of staff engaged by the Company, there is an inherent weakness in the system of internal controls due to the inability to achieve appropriate segregation of duties. The limited number of staff may also result in weaknesses with respect to accounting for complex and non-routine transactions due to a lack of technical resources, and a lack of controls governing computer systems and applications within the Company. While the Company has in place certain procedures to mitigate the risk of a material misstatement in the Company’s financial reporting, it is not possible to provide absolute assurance that this risk can be eliminated. Particulars of Outstanding Securities of the Issuer As at the date of this discussion, the Issuer had the following securities outstanding: Common Shares Date Number Outstanding August 25, 2007 70,152,255 Share Purchase Warrants The following share purchase warrants were outstanding entitling the holder to purchase one common share of the company for each warrant held: Number of Warrants Exercise Price Expiry Date 100,000 $0.35 September 11, 2007 2,200,000 $0.35 September 11, 2008 4,400,000 $0.35 September 19, 2008 - 10 - REGENT VENTURES LTD. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS JUNE 30, 2007 6,700,000 Incentive Stock Options Each outstanding Incentive Stock Option entitles the holder to acquire one previously unissued common share of the Issuer at the prices and for the periods of time set out in the table below: Number of Options Outstanding Exercise Price Expiry Date 3,050,000 $0.20 per share March 16, 2008 3,095,000 $0.30 per share November 30, 2008 6,145,000 Contingent liability As at June 30, 2007, the Company was issued a Writ and Statement of Claim for amounts owing, plus interest, totalling $106,142 from a creditor. The Company disputes the claim and has taken all necessary steps to defend the action. As at December 31, 2006, the amount in dispute, at that time $104,495, was written-off. Subsequent Events On August 1, 2007, the Company’s board of directors approved the extension for one year of the term of 6.4 million private placement warrants issued in September, 2006, and due to expire, as to two million warrants, on September 11, 2007, and as to 4.4 million warrants, on September 19, 2007. On August 8, 2007 the extension of the warrant term was accepted for filing by the TSX Venture Exchange. The warrants will now expire as follows: two million warrants will expire on September 11, 2008, and the 4.4 million warrants will expire on September 19, 2008. The warrants entitle the holder thereof to acquire one additional share of the company at a price of 35 cents per share. - 11 -