NWPG Newport Gold Inc (PK)

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

FORM 10-QSB

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Newport Gold, Inc.

INDEX

 

			Page No.
PART 1 - FINANCIAL INFORMATION			5
	ITEM 1.  FINANCIAL STATEMENTS		5
	ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION		15
		Forward Looking Information	15
		Our Proposed Plan of Operation	15
		Off-balance sheet arrangements	17
		Revenues	17
		Expenses	17
		Liquidity and Capital Resources Liquidity	17
	ITEM 3: CONTROLS AND PROCEDURES		18
		(a) Evaluation of Disclosure Controls and Procedures	18
		(b) Internal control over financial reporting	18
		Changes in Internal Controls	19
	ITEM 3A(T): CONTROLS AND PROCEDURES		19
PART II - OTHER INFORMATION			19
	ITEM 1. LEGAL PROCEEDINGS		19
	ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		19
		Unregistered Sales of Equity Securities	19
		Use of Proceeds	19
	ITEM 3. DEFAULTS UPON SENIOR SECURITIES		19
	ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS		19
	ITEM 5. OTHER INFORMATION		19
	ITEM 6.  EXHIBITS		20
		Exhibits	20
	SIGNATURES		21

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PART 1 - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

The information in this report for the Three and Six months ended June 30, 2008, is unaudited but includes all adjustments (consisting only of normal recurring accruals, unless otherwise indicated) which Newport Gold, Inc. ("Newport" or the "Company") considers necessary for a fair presentation of the financial position, results of operations, changes in stockholders' equity and cash flows for the period.

The condensed consolidated financial statements should be read in conjunction with Newport's financial statements and the notes thereto contained in Newport's Audited Financial Statements for the year ended December 31, 2007, in the Form 10KSB and filed with the SEC on April 15, 2008.

Interim results are not necessarily indicative of results for the full fiscal year.

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See notes to condensed consolidated financial statements.

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See notes to condensed consolidated financial statements.

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See notes to condensed consolidated financial statements.

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NEWPORT GOLD, INC.
(An Exploration Stage Company)
Condensed Consolidated Statements of Stockholders' Equity (Continued)
Period from July 16, 2003 (Inception) through June 30, 2008
(US Dollars)

See notes to condensed consolidated financial statements.

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NEWPORT GOLD, INC.
(An Exploration Stage Company)
Condensed Consolidated Statements of Cash Flows
(US Dollars)

See notes to condensed consolidated financial statements.

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NEWPORT GOLD, INC.
(An Exploration Stage Company)
Notes to Condensed Consolidated Financial Statements
Six Months Ended June 30, 2008 and 2007 and the Period from July 16, 2003 (Inception) to June 30, 2008
(US Dollars)
(Unaudited)

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1.         OPERATIONS AND BASIS OF PRESENTATION
 

       The Company was incorporated under the laws of Nevada on July 16, 2003, and is involved in the acquisition, exploration and development of mineral and energy properties. The Company is currently evaluating opportunities both in the mineral sector and otherwise. The Company is in the exploration stage and follows the provisions of Statement No. 7 of the Financial Accounting Standards Board (“FASB”).
 

       These condensed consolidated financial statements include the accounts of the Company and its wholly-owned Canadian subsidiary, 2038052 Ontario Inc., incorporated under the laws of the province of Ontario, Canada. All inter-company transactions and balances have been eliminated.

2.         GOING-CONCERN

These condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America on a going-concern basis. This presumes funds will be available to finance on-going development, operations and capital expenditures and the realization of assets and the payment of liabilities in the normal course of operations for the foreseeable future.

 

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NEWPORT GOLD, INC.
(An Exploration Stage Company)
Notes to Condensed Consolidated Financial Statements
Six Months Ended June 30, 2008 and 2007 and the Period from July 16, 2003 (Inception) to June 30, 2008
(US Dollars)
(Unaudited) 

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2.         GOING-CONCERN (Continued)
 

The general business strategy of the Company is to explore and research an existing mineral property and to potentially acquire further claims either directly or through the acquisition of operating entities. The continued operations of the Company depends upon the recoverability of mineral property reserves, confirmation of the Company’s interest in the underlying mineral claims, the ability of the Company to obtain necessary financing to complete the development of these claims and upon the future profitable production of the claims. Management intends to raise additional capital through share issuances to finance operations and invest in the resource properties as described in note 3.
 

The Company has a working capital deficit of $545,840 (December 31, 2007 - $371,166), has accumulated losses during the exploration stage of $1,418,192 (December 31, 2007 - $1,197,819), has not generated any operating revenue to date, and has no capital resources presently available to meet obligations, which normally can be expected to be incurred by similar companies. These factors raise substantial doubt about the Company’s ability to continue as a going-concern, which is dependent on the Company’s ability to obtain and maintain an appropriate level of financing on a timely basis and to achieve sufficient cash flows to cover obligations and expenses. The outcome of the above matters cannot be predicted at this time. These financial statements do not give effect to any adjustments to the amounts and classifications of assets and liabilities, which might be necessary should the Company be unable to continue as a going-concern.

3.         RESOURCE PROPERTIES
 

(a)           On June 18, 2003, the Company entered into an option agreement to acquire nine mineral claims consisting of 47 units, each unit consisting of approximately 25 hectares, title to which is held by an unrecorded warranty deed. The mineral claims are located 25 kilometres northeast of the city of Grand Forks, British Columbia, Canada, known as the Burnt Basin mineral claims numbered 393541, 393542, and 393681 to 393687. The option agreement is subject to an underlying agreement dated July 29, 2002 between the property owners and the optionor.
 

Under the terms of the option agreement, the Company can acquire a 100% undivided interest in the property, subject to two separate net smelter return royalties (“NSR”) (totaling 2%), and cash and share payments totaling $12,364 (Cdn $17,000) (paid) and 225,000 shares of common stock (issued). The Company also had to incur exploration expenses totaling $243,000 (Cdn $250,000) (paid) over a three-year period, ending June 18, 2006 (extended to June 18, 2008).

The first NSR consists of a 1% NSR payable to the property owner capped at $245,000 (Cdn $250,000), that will be provided by making annual $9,800 (Cdn $10,000) prepaid NSR payments beginning in September, 2003, $42,816 (Cdn $50,000) paid to December 31, 2007). A further 1% NSR is payable to the optionor. One-half of the latter 1% NSR may be bought out for the sum of $491,000 (Cdn $500,000).

To date, the Company has not performed any drilling on the property, but has performed aerial and ground geophysics , soil sampling , rock sampling and power trenching. The Company is presently in the pre-exploration state and there is no assurance that a commercially viable mineral deposit exists in the property until further exploration is done and a comprehensive evaluation concludes economic and legal feasibility. The Company intends to develop mineral deposits it finds, or enter into a joint venture with another mining company with more experience at that stage of operation.

 

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NEWPORT GOLD, INC.
(An Exploration Stage Company)
Notes to Condensed Consolidated Financial Statements
Six Months Ended June 30, 2008 and 2007 and the Period from July 16, 2003 (Inception) to June 30, 2008
(US Dollars)
(Unaudited) 

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3.         RESOURCE PROPERTIES (Continued)
 

(b)            By an agreement dated November 17, 2006, the Company acquired an option to earn a 20%

interest of a 50% interest held by the optionors in certain mineral exploration rights located in Inner Mongolia, China. The option agreement is subject to an underlying agreement dated February 1, 2006 between the vendor and the optionors.

In order to earn its interest in the property, the Company issued 2,200,000 common shares to the optionors and an additional 300,000 common shares to the vendor of the property.

The common shares were valued by the Company at $0.10 per share. The Company also granted a total of 2.2% NSR to the optionors on all metals produced from the optionors’ interest in the property. The optionors also granted the Company a first right of refusal on acquiring the remainder of their 50% interest for a period of one year.

In addition to the 2,200,000 common shares issued as noted above, the company must issue an additional 500,000 common shares to the vendor by February 1, 2009 and incur $750,000 of exploration expenditures, $250,000 in the first year (extended to February 1, 2008 in consideration of 100,000 common shares of the Company, fair valued at $0.45 per share).

By agreement dated August 7, 2007, the Company exercised its option to earn the remaining 30% option interest in the property.  In order to earn the additional 30% option interest in the property, the Company issued 3,011,500 common shares to the Optionors.  These shares were issued at $0.60 per share, a price determined to be fair value.

On January 15, 2008, the Company received an extension on completing $500,000 of exploration expenditures required by February 1, 2008 in its option agreement dated November 17, 2006 regarding the Inner Mongolia Property to February 1, 2009 in consideration for 100,000 shares of the Company.  The 100,000 common shares were issued at $0.33 per share, a price determined to be fair value.

On January 28, 2008, the Company issued 300,000 common shares, at a price of $0.20 per share, a price determined to be fair value, as required under the option agreement dated November 17, 2006.

(c)        On February 26, 2008, the Company acquired 50% of TMBW International Resources Corporation's Mac Property, a 331-hectare gold property located approximately 55 kilometres southeast of Vernon, British Columbia, for 1,800,000 common shares of the Company. The Company will also assume all obligations to the original vendors. The Company  issued the 1,800,000 shares to TMBW International Resources Corporation at a price of $0.05, a price determined to be fair value.

4.         RELATED PARTY TRANSACTIONS
 

(i) As of June 30, 2008, the total balance owing for investor relations by the son of the president of the Company was $48,239 (December 31, 2007 - $48,239). The amount owed is without interest or stated terms of repayment and is unsecured .

(ii) As of June 30, 2008, the president is owed $277,859 (December 31, 2007 - $145,339), which is included in due to related parties. The amount owed is without interest or stated terms of repayment and is unsecured.

 

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NEWPORT GOLD, INC.
(An Exploration Stage Company)
Notes to Condensed Consolidated Financial Statements
Six Months Ended June 30, 2008 and 2007 and the Period from July 16, 2003 (Inception) to June 30, 2008
(US Dollars)
(Unaudited) 

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 4.         RELATED PARTY TRANSACTIONS (continued)

All transactions with related parties are in the normal course of operations and are measured at the exchanged amount, which is the amount of consideration agreed to between the parties.

5.         LOAN PAYABLE

The loan is unsecured, without interest or stated terms of repayment .

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Forward Looking Information

This section of the prospectus includes a number of forward- looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this prospectus. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.

Our Proposed Plan of Operation

General

The following discussion and analysis should be read in conjunction with the financial statements, including the notes thereto, appearing elsewhere in this document.

Plan of Operations

Burnt Basin Property

Newport has obtained an option to acquire nine mineral claims consisting of 47 units consiting of approximately 25 hectres (the "Burnt Basin Property"). The mineral claims are located 25 kilometres northeast of the city of Grand Forks, British Columbia, Canada.  These mineral claims entitle us to the minerals located on the Burnt Basin Property subject to the option agreement. However, since title to the Burnt Basin Property is in the name of Mr. John Carson, should he choose to transfer title to a third party, Newport would lose the mineral claims. Newport entered into the option agreement with Steve Baran June 18, 2003. Mr. Baran is not related to Newport.

Newport Gold Inc. has now earned a 100% interest in the Burnt Basin  Property, subject to a separate NSR payment.

A large number of mineral occurrences occur on the Burnt Basin Property, most of which have seen limited or no recent exploration. The known showings belong to 3 main styles, including zinc-lead (+/- silver, copper) mineralization in argillaceous limestone, gold-silver quartz veins, and auriferous massive pyrrhotitepyrite mineralization.

Examples of zinc-lead (+/- silver, copper) mineralization include the Eva Bell, Halifax, Ennismore, Hastings, Ajax and Breckle showings. The bulk of the previous exploration on the property, primarily done in the 1960’s and 1970’s, was directed at this type of mineralization. Detailed geological mapping is needed to determine which model best explains the mineralization, and in particular, whether mineralization has undergone the same degree of deformation as the host rocks.  This mapping is expected to be completed through further extensive trenching and rock sampling. 

Significant gold values (in the 15-30 g/t Au range) occur at the Molly Gibson showing. As with the zinc-lead (+/- silver, copper) showings described above, previous workers have classified the Molly Gibson mineralization as contact metasomatic, or skarn type mineralization. Newport believes that a better interpretation is that the mineralization represents a deeper portion of the same mineralizing system as the massive sulfide/oxide showings.

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Several showings were discovered on the Burnt Basin property during Newport Gold’s 2007 work program, which were unknown from previous work or were referenced in the historic literature but had not been located and sampled during previous work programs. Three significant new discoveries in outcrop include the Gold Knoll, Unexpected and Ajax showings. None of these discoveries have been tested by trenching or drilling. Follow-up is needed at all of these new discoveries, in order to assess their significance.

The 2007 soil geochemical and ground magnetometer surveys were both successful at outlining anomalies which require follow-up. A large strong zinc-lead-copper soil anomaly in the Eva Bell-Halifax area ranges from 150 to 300 meters in width, and, assuming continuity across the Manitou crown grant, exceeds 1 kilometer in length. A zinc-lead soil anomaly, approximately 100 by 400 meters in size, occurs in the vicinity of the Ennismore showing. A strong northwest trending mag high anomaly in the Breckle – Upper Eva Bell area is another high priority target for follow-up.

Further work is recommended for the Burnt Basin property, to explore for both zinc-lead (+/- silver, copper) mineralization and for gold mineralization on the property. A two-phase $1,100,000 work program is recommended. Phase 1 has a budget of $680,000 and includes trench and drill follow-up to test anomalies resulting from the 2007 exploration program. In addition, the Phase 1 program includes extending the 2007 grid to the south and west, to cover the Hastings, Molly Gibson and Ajax showings, and completing soil geochemical and ground magnetometer surveys over these areas. The Phase 2 program will involve follow-up diamond drilling to further test known showings, and to test any targets resulting from the Phase 1 program. Phase 2 has a budget of $420,000 and is in-part contingent on the results of the Phase 1 program.

To achieve our goals and objectives for the next 12 months, we plan to raise additional capital through private placements of our equity securities and, if available on satisfactory terms, debt financing.  If we are unsuccessful in obtaining new capital, our ability to continue our exploration programs and meet our current financial obligations could be adversely affected.

There are no proven or probably mineral reserves on the Burnt Basin Property at this time.

Mongolia Property

By an agreement dated November 17, 2006, Newport acquired an option to earn a 20% interest of a 50% interest held by the optionors in certain mineral exploration rights located in Inner Mongolia, China the “China Property”).

During the first quarter of 2008 Newport received a very preliminary geophysical report on the Tiejiangzie China Property in Inner Mongolia, China.  This report was prepared by Daniel Huang, our consulting geologist.  These results were sent to a Canadian geophysical company  for interpretation.  Newport intends to drill the China Property this year however the scope and size of the program will be based on the interpretation from the geophysical data which is not expected to be available until September 2008. 

The existing copper gold pit has been mined down in excess of 40 feet by local people.  Initial assays from the 2005, 2006 and 2007 field season suggest many copper gold targets that would be amenable to drilling but these need to be examined in conjunction with the geophysical anomalies in order to systematically pick the best drilling locations.    Outlining potential mineralization will require very selective drill targets and several field seasons.  

Noront Bataou, the Canadian foreign subsidiary, wholly owned by Newport’s joint venture partner in this project, Noront Resources Limited, is the company started by Noront and Newport to explore the China property.  It is important to note that the exploration license has been secured until 2010.

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Mac Gold Property

On February 26, 2008, Newport acquired 50% of TMBW International Resources Corporation's Mac Property, a 331-hectare gold property located approximately 55 kilometres southeast of Vernon, British Columbia, for 1,800,000 common shares of Newport. Newport also agreed to assume all obligations to the original vendors. Newport  issued the 1,800,000 shares to TMBW International Resources Corporation.

Study and careful examination of past drill intercepts has determined that metallurgical work is necessary before drill targets are selected.  In the early nineties a decline was driven to follow up on some encouraging drill holes.  It has been determined that this decline should be tested for its metallurgy as the gold mineralization that is present is refractory.  Newport intends to have Linda Caron, consulting geologist on the Burnt Basin property, follow up with a small program of rock sampling

The Mac Gold Property is readily accessible and does have decline access to an underground zone which assayed 10m of .42 oz/t gold.  Several consultants that have been contacted suggest that the mineralization would be amenable to favorable recoveries using known methods which currently process refractory gold ores.

Off-balance sheet arrangements

As of June 30, 2008, Newport has had no off-balance sheet arrangements.

Revenues

REVENUE - Newport has not generated any revenues for the quarter ended June 30, 2008, or since inception.

COMMON STOCK – Newport has issued 1,800,000 common shares during the most recent quarter.  As of the date of June 30, 2008 Newport has 20,386,500 common shares issued and outstanding.

Expenses

EXPENSES - Expenses for the six months ended June 30, 2008, was $220,373 as compared to $166,372 for the six months ended June 30,2007.

We expect continued increases in expenses during the next twelve months, as we continue to implement our business plan. We expect the increase to be primarily exploration related expenses, such as geological consulting fees, and expenditures on resoure properties.

For the six months ended June 30, 2008, $120,844 in geological consulting fees was incurred as compared to $121,655 incurred in the six month period ended June 30, 2007.  For the six  month period ended June 30, 2008, $39,328 expended on resource properties (nil- June 30, 2007).  For the six month period ended June 30, 2008, $55,980 was incurred in legal and accounting fees up from $35,279 having been incurred in the six month period ended June 30, 2007.  The increase in this category was primarily related to increases in accounting fees. 

Newport intends to carefully control its expenses and overall costs as it moves forward with the development of its business plan.

Liquidity and Capital Resources Liquidity

As of June 30, 2008, Newport total cash on hand was $2,119 ($81,231 – June 30, 2007). Newport had

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$859,688 in liabilities ($456,326- June 30, 2007)  of which $326,098 ($193,578- June 30, 2007)  is owed due to related parties and $231,590($262,748- June 30, 2007) is owed for Accounts Payable.

Our cash reserves are not sufficient to meet our obligations for the next twelve-month period.  We will require additional funding in order to cover all anticipated administration costs and to proceed with our proposed exploration program on the Burnt Basin property, estimated to cost a minimum of $540,000 over the next twelve months.  We do not have any arrangements in place for any future equity financing and there is no guarantee we will be able to obtain the funding necessary to continue as a going concern.

ITEM 3: CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

Based on the management’s evaluation (with the participation our President and Chief Financial Officer), our President and Chief Financial Officer have concluded that as of June 30, 2008, the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange of 1934 (the "Exchange Act") are effective to provide reasonable assurance that the information required to be disclosed in this quarterly report on Form 10-QSB is recorded, processed, summarized and reported within the time period specified in Securities and Exchange Commission rules and forms. and that such information is accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.

(b) Internal control over financial reporting

Management's annual report on internal control over financial reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is intended to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Our internal control over financial reporting should include those policies and procedures that:

·      pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

·      provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with applicable GAAP, and that receipts and expenditures are being made only in accordance with authorizations of management and the Board of Directors; and

·      provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Under the supervision and with the participation of our management, including our President and Chief Executive Officer, and our Chief Financial Officer, we have evaluated the effectiveness of our internal control over financial reporting and preparation of our annual financial statements as of December 31, 2007 and based upon their evaluation determined our internal controls were not effective as the issuance of 3,011,500 common shares shares  in August 2007 was not recorded in the September 30, 2007 quarterly financial statements and this oversight was only discovered at the time of the preparation of the audited financial statements.   Our auditors have informed the Company that they considered the matter described above to be material weaknesses in the Company's internal controls over financial reporting. The Company has taken corrective action to address the material weakness identified and  filed an amended Form 10-QSB for the quarter ended September 30, 2007on May 16, 2008.

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Changes in Internal Controls

As stated above, based on the evaluation as of December 31, 2007, by our President and Chief Executive Officer, and our Chief Financial Officer we have concluded that there are material weaknesses in our current internal controls which we need to take immediate corrective action with regard to certain deficiencies and material weakness to ensure  the effectivness of  our internal controls going forward in the future. There were no changes to internal controls of the Company in the second quarter of 2008.

ITEM 3A(T): CONTROLS AND PROCEDURES

See Item 3A – Controls and Procedures above.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

To Newport's knowledge, no lawsuits were commenced against Newport during the six months ended June 30, 2008, nor did Newport commence any lawsuits during the same period. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Unregistered Sales of Equity Securities

On February 26, 2008, the Company acquired 50% of TMBW International Resources Corporation’s Mac Property, a 331-hectare gold property located approximately 55 kilometres southeast of Vernon, British Columbia, for 1,800,000 common shares of the Company. The Company will also assume all obligations to the original vendors. The Company issued the 1,800,000 shares to TMBW International Resources Corporation on April 30, 2008.

The issuance of  shares in the  transactions noted above was completed pursuant to Rule 903 of Regulation S of the Securities Act of 1933   on the basis that the issuance of the shares was completed in an offshore transaction, as defined in Rule 902(h) of Regulation S with a non U.S. person or entity, as defined in Regulation S, and the acquirer was not acquiring the shares for the account or benefit of a U.S. person.  All securities issued were endorsed with a restrictive legend.  These shares may not be offered or sold in the United States unless the securities are registered under the Securities Act of 1933 or pursuant to an exemption from the Securities Act of 1933 .

Use of Proceeds

Not Applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

 Not applicable.

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ITEM 5. OTHER INFORMATION

 Not applicable.

ITEM 6.  EXHIBITS

  Exhibits

The following Exhibits are furnished as part of this Form 10-QSB, pursuant to Item 601 of Regulation S-B.

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

                                   

	NEWPORT GOLD, INC.
Date: August 19, 2008	/s/ Derek Bartlett
By:	Derek Bartlett, President, CEO, Secretary, and a member of the   Board of Directors
Date: August 19, 2008	/s/ John Arnold
By:	John Arnold, Treasurer, Acting Chief Financial Officer, and   Principal Accounting Officer

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