FORM 20-F/A-3

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F/A

Amendment No. 3

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2009

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

SHELL COMPANY PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report __________________

Commission file number: 00 0-29922

TOMBSTONE EXPLORATION CORPORATION

(Exact name of Registrant as specified in its charter)

Not Applicable

(Translation of Registrant's name into English)

Canada

(Jurisdiction of incorporation or organization)

6529 East Freiss Dr., Scottsdale, AZ 85254

(Address of principal executive offices)

Copy of communications to:

Carrillo Huettel, LLP

3033 Fifth Avenue, Suite 400

San Diego, CA 92103

Telephone: (619) 546-6100

Facsimile: (619) 546-6060

Securities registered or to be registered pursuant to Section 12(b) of the Act.


Title of Class	Name of exchange on which registered
Not Applicable	Not Applicable

Securities registered or to be registered pursuant to Section 12(g) of the Act

Common Shares Without Par Value

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

Not Applicable

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

There were 59,287,533 Common Shares without par value issued and outstanding as at December 31, 2009.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes . No X .

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes . No .

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes X . No .

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

Large accelerated filer . Accelerated filer . Non-accelerated filer X .

Indicate by check mark which financial statement item the registrant has elected to follow.

X . ITEM 17 . ITEM 18

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes . No X .

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes . No X .

TABLE OF CONTENTS


PART III		5
Item 17	Financial Statements	5
Item 19	Exhibits	6
SIGNATURE		7

EXPLANATORY NOTE:

On July 18, 2011, the Registrant filed Amendment No. 1 to its Form 20-F for the fiscal year ended December 31, 2009. There was an inadvertent error contained in the Consolidated Statements of Operations relating to the audited financials for the year ended December 31, 2008 with respect to the Net Loss Per Share and the Weighted Average Shares Outstanding. On July 19, 2011, the Registrant filed Amendment No. 2 to correct each of those numbers as it relates to the audited financials for the year ended December 31, 2008 only. This Amendment No. 3 is being filed to label the cumulative column on our financial statements as “unaudited” and to provide a revised audit opinion from our independent registered public accounting firm removing all references to the cumulative financial data.

PART III

Item 17.

Financial Statements

Balance sheets of the Company as at December 31, 2009 and 2008, and the Statements of Operations and Stockholders Equity (Deficiency) and Cash Flows for each of the years ended December 31, 2009, 2008, and 2007 and for the period from re-entry into the Development Stage January 1, 2006 to December 31, 2009.

Item 19.

Exhibits

Exhibits Required by Form 20-F


Exhibit
Number	Description of Exhibit	Filing
1.01	Certificate of Incorporation under the Canada Business Corporations Act dated October 30, 1997.	Incorporated herein by reference to our Annual Report on Form 20-F filed with the SEC on August 19, 2002.
1.02	Bylaws	Incorporated herein by reference to our Annual Report on Form 20-F filed with the SEC on August 19, 2002.
1.03	Certificate of Name Change dated June 5, 2000.	Incorporated herein by reference to our Annual Report on Form 20-F filed with the SEC on August 19, 2002.
1.04	Certificate of Name Change dated September 17, 2004	Incorporated herein by reference to our Annual Report on Form 20-F filed with the SEC on August 15, 2005.
1.05	Certificate of Name Change dated February 5, 2007.	Incorporated herein by reference to our Current Report on Form 6-K filed with the SEC on February 8, 2007.
2.01	Form of Securities Purchase Agreement	Incorporated herein by reference to our Annual Report on Form 20-F filed with the SEC on July 17, 2007.
2.02	Form of Subscription Agreement and Form of Warrant for Private Placement	Incorporated herein by reference to our Current Report on Form 6-K filed with the SEC on December 20, 2007.
2.03	Form of U.S. Private Placement Subscription Agreement.	Incorporated herein by reference to our Current Report on Form 6-K filed with the SEC on September 12, 2008.
2.04	Form of Non-U.S. Private Placement Subscription Agreement	Incorporated herein by reference to our Current Report on Form 6-K filed with the SEC on September 12, 2008.
4.01	Asset Purchase Agreement between Pure Capital Incorporated and Red Hawk Exploration and Development, Inc. dated November 27, 2006.	Incorporated herein by reference to our Annual Report on Form 20-F filed with the SEC on August 9, 2007.
4.02	Purchase Agreement by and between Tombstone Exploration Corporation and Donald Heck dated February 27, 2007.	Incorporated herein by reference to our Current Report on Form 6-K filed with the SEC on March 8, 2007.
4.03	Employment Agreement by and between Tombstone Exploration Corporation and Alan Brown dated January 1, 2009.	Incorporated herein by reference to our Annual Report on Form 20-F filed with the SEC on July 10, 2009.
4.04	Consulting Agreement between Tombstone Exploration Corporation and Steve Radvak dated April 28, 2010.	Incorporated herein by reference to our Annual Report on Form 20-F filed with the SEC on July 16, 2010.
4.05	Stock Purchase Agreement between Tombstone Exploration Corporation and Eurogas, Inc. dated April 28, 2010.	Incorporated herein by reference to our Annual Report on Form 20-F filed with the SEC on July 16, 2010.
4.06	Exploration and Mining Lease and Option to Purchase Agreement by and between Tombstone Exploration Corporation through its subsidiary, American Eagle Minerals Inc., and Mountain Gold Exploration, Inc. and Lane A. Griffin and Associates dated May 27, 2010.	Incorporated herein by reference to our Current Report on Form 6-K filed with the SEC on July 14, 2010.
8.01	Subsidiaries of the Registrant	Incorporated herein by reference to our Annual Report on Form 20-F filed with the SEC on July 16, 2010.
11.01	Code of Ethics	Incorporated herein by reference to our Annual Report on Form 20-F filed with the SEC on July 17, 2007.
12.01	Certification of Chief Executive Officer of the Company required by rule 13A-14(A) or rule 15D-14(A) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith.
12.02	Certification of Chief Financial Officer of the Company required by rule 13A-14(A) or rule 15D-14(A) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith.
13.01	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith.

SIGNATURES

The Company certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

TOMBSTONE EXPLORATION CORPORATION

(Company)

/s/ ALAN BROWN

ALAN BROWN

President and Director

DATED on the 9th day of August, 20 11

Tombstone Exploration Corporation

(An Exploration Stage Company)

December 31, 2009


	Index

Report of Independent Registered Public Accounting Firm	F-1

Consolidated Balance Sheets	F-2

Consolidated Statements of Operations	F-3

Consolidated Statements of Cash Flows	F-4

Consolidated Statement of Stockholders’ Deficit	F-5

Notes to the Consolidated Financial Statements	F-6

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

Tombstone Exploration Corporation

(An Exploration Stage Company)

We have audited the accompanying consolidated balance sheets of Tombstone Exploration Corporation (An Exploration Stage Company) (the “Company”) as of December 31, 2009 and 2008 and the related statements of operations, stockholders' deficit and cash flows for the years ended December 31, 2009, 2008, and 2007. 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 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 includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Tombstone Exploration Corporation as of December 31, 2009 and 2008 and the results of its operations and cash flows for the periods described above 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. The Company has suffered recurring losses and negative cash flows from operations. These matters raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that may result should the Company be unable to continue as a going concern. See note 1 to the financial statements for further information regarding this uncertainty.

As discussed in Note 9 to the financial statements, the Company has restated its financial statements as of and for the years ended December 31, 2007, 2008, and 2009. These misstatements were the result of errors discovered during the conduct of audit procedures performed for the audit of the year ended December 31, 2007. These restatements for the year ended December 31, 2007 required the updating of the financial statements for the years ended December 31, 2008 and 2009. No material errors related to the years ended December 31, 2009 or 2008 were detected and as a result no changes are being made for transactions occurring during this period.

/s/ M&K CPAS, PLLC

www.mkacpas.com

Houston, Texas

July 16, 2010(with the exception of Note 9, and the audit of the statements of operations and cash flows for the period ending December 31, 2007 which is as of July 18, 2011)

F-1

Tombstone Exploration Corporation

(An Exploration Stage Company)

Consolidated Balance Sheets

(expressed in U.S. dollars)

(Restated – Note 10)


	December 31, 2009 (restated) $	December 31, 2008 (restated) $

ASSETS

Current Assets

Cash	1,525	8,625

Total Current Assets	1,525	8,625

Property and Equipment	61,079	75,149

Total Assets	62,604	83,774


LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current Liabilities

Accounts Payable	5,717	21,464

Accrued Liabilities	–	5,680

Due to Related Parties	306,304	157,326

Loan Payable	59,810	–

Derivative Liability	42,214	180,941

Total Liabilities	414,045	365,411

Stockholders’ Deficit

Common Stock Authorized: unlimited common shares, with no par value Issued and outstanding: 59,287,533 and 41,810,865 common shares, respectively	15,023,850	12,227,850

Common Stock Subscribed	64,000	1,403,500

Additional Paid-In Capital	5,014,842	4,966,842

Accumulated Deficit	(8,538,759)	(8,538,759)

Accumulated Deficit During the Exploration Stage	(11,915,374)	(10,341,070)

Total Stockholders’ Deficit	(351,441)	(281,637)

Total Liabilities and Stockholders’ Deficit	62,604	83,774

(The accompanying notes are an integral part of these consolidated financial statements)

F-2

Tombstone Exploration Corporation

(An Exploration Stage Company)

Consolidated Statements of Operations

(expressed in U.S. dollars)

(Restated – Note 10)


	For the Year Ended December 31, 2009 (restated)	For the Year Ended December 31, 2008 (restated)	For the Year Ended December 31, 2007 (restated)	Accumulated from January 1, 2006 (Date of Inception) to December 31, 2009 (restated and unaudited)
	$	$	$	$

Revenue	–	–	–	–


Expenses

Accretion Expense	48,000	–	–	48,000
Consulting Services	917,876	1,193,774	553,140	2,724,790
General and Administrative	137,604	499,543	1,128,107	6,806,500
Impairment of property and equipment	–	–	8,033	8,033
Management Fees	120,000	112,987	507,013	740,000
Mineral Properties	49,423	355,721	910,000	1,315,144
Professional Fees	440,128	476,575	119,281	1,061,776

Total Expenses	1,713,031	2,638,600	3,225,574	12,704,243

Other Income (Expenses)

Gain on Forgiveness of Debt	–	–	–	834,390
Gain (Loss) on Fair Value of Derivatives	138,727	(57,401)	(123,540)	(42,214)
Interest Expense	–	–	(3,307)	(3,307)

	138,727	(57,401)	(126,847)	788,869

Loss from Continuing Operations	(1,574,304)	(2,696,001)	(3,352,421)	(11,915,374)

Discontinued Operations	–	–	–	(8,538,759)

Net Loss	(1,574,304)	(2,696,001)	(3,352,421)	(20,454,133)

Net Loss Per Share – Basic and Diluted Net Loss Per Share – Basic and Diluted	(0.03)	(0.07)	(0.11)

Weighted Average Shares Outstanding	53,755,100	40,343,975	29,770,000

(The accompanying notes are an integral part of these consolidated financial statements)

F-3

Tombstone Exploration Corporation

(An Exploration Stage Company)

Consolidated Statements of Cash Flows

(expressed in U.S. dollars)

(Restated – Note 10)


	For the Year Ended December 31, 2009 (restated)	For the Year Ended December 31, 2008 (restated)	For the Year Ended December 31, 2007 (restated)	Accumulated from January 1, 2006 (Date of Inception) to December 31, 2009 (restated and unaudited)
	$	$	$	$

Operating Activities

Net Loss For The Year	(1,574,304)	(2,696,001)	(3,352,421)	(11,915,374)

Adjustments to reconcile net income to net cash provided by operating activities:

Amortization Expense	14,070	17,715	16,024	47,809
Accretion Expense	48,000	–	–	48,000
Common stock issued for services	1,122,000	149,000	774,300	2,077,718
Common stock subscribed for services	64,000	1,403,500	–	1,467,500
Common stock issued for management fees	–	–	500,000	500,000
Impairment of Mineral Properties	–	–	910,000	910,000
Impairment of Property and Equipment	–	–	8,033	8,033
Gain on Forgiveness of Debt	–	–	–	(834,390)
Loss (Gain) on Fair Value of Derivatives	(138,727)	57,401	123,540	42,214
Stock-Based Compensation	–	–	–	4,952,286

Changes in operating assets and liabilities:

Prepaid Expenses	–	–	76,222	76,222
Accounts Payable and Accrued Liabilities	(21,427)	(29,709)	21,381	(163,570)

Net Cash Used In Operating Activities	(486,388)	(1,098,094)	(922,921)	(2,783,552)

Investing Activities

Acquisition of Mineral Properties	–	–	(10,000)	(110,000)
Purchase of property and equipment	–	–	(108,177)	(116,921)

Net Cash Used in Investing Activities	–	–	(118,177)	(226,921)

Financing Activities

Proceeds from issuance of common shares	270,500	800,000	885,000	2,055,500
Proceeds from loans payable	59,810	–	–	59,810
Proceeds from related parties, net	148,978	66,748	353,088	896,572

Net Cash Provided By Financing Activities	479,288	866,748	1,238,088	3,011,882
Increase (Decrease) in Cash	(7,100)	(231,346)	196,990	1,409
Cash – Beginning of Period	8,625	239,971	42,981	116
Cash – End of Period	1,525	8,625	239,971	1,525

Supplemental Disclosures
Interest paid	–	–	–	–
Income tax paid	–	–	–	–

Non-Cash Investing and Financing Activities
Cancellation of common shares	–	–	(400,000)	(420,756)
Common shares issued to acquire mineral properties	–	–	–	800,000
Common shares issued to settle debt and services	–	–	300,000	1,076,600
Common shares issued for finders fees	–	28,000	35,000	63,000

(The accompanying notes are an integral part of these consolidated financial statements)

F-4

Tombstone Exploration Corporation.

Consolidated Statement of Stockholders’ Equity (Deficit)

From January 1, 2006 to December 31, 2009

(expressed in U.S. dollars)

(Restated – Note 10)

(The accompanying notes are an integral part of these consolidated financial statements)

F-5

Tombstone Exploration Corporation

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

(expressed in U.S. dollars)

Nature of Operations and Continuance of Business

Tombstone Exploration Corporation (the “Company”) was incorporated under the Canada Business Corporations Act on October 30, 1997 as 3430502 Canada Ltd. On December 4, 1997, the Company changed its name to Four Crown Foods Inc., with its principal operations focused on the food and beverage retail business. In April 2000, the Company upon acquisition of the license rights to a domain registration, the Company discontinued its operations in the food and beverage retail industry and formally changed its name to Universal Domains Incorporated on June 5, 2000. In 2001, the Company withdrew from the domain registration business and acquired 100% of the issued and outstanding common shares of VCL Communications Corp. (“VCL”), a teleconferencing services company that targeted clients throughout North America. In November 2003, given the Company’s liabilities and the lack of profitability, the Company ceased all operations.

On September 20, 2004, the Company focused its operations on the exploration, development, production, and acquisition of crude oil and natural gas properties, changing its name to Pure Capital Incorporated. On November 1, 2006, the Company commenced negotiations to acquire several mining and mineral right claims which was closed on December 4, 2006 where the Company acquired 100% of the mineral claims located in Tombstone, Arizona in exchange for $100,000 and the issuance of 8,000,000 common shares of the Company. Effectively, on February 6, 2007, the Company changed its name to Tombstone Exploration Corporation to better reflect the Company’s current business objective and strategies. The Company is an exploration stage company, as defined by ASC 915, Development Stage Entities.

These consolidated financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has generated no revenues to date and has never paid any dividends and is unlikely to pay dividends or generate significant earnings in the immediate or foreseeable future. As at December 31, 2009, the Company did not record any revenues, had a working capital deficit of $412,520 and an accumulated deficit of $20,454,133. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability to raise equity or debt financing, and the attainment of profitable operations from the Company's future business. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company’s plan of action over the next twelve months is to raise capital financing to conduct exploration and drilling on its mineral property claims held in Tombstone, Arizona as well as exploring for new mineral property claims in the United States.

Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. The consolidated financial statements include the accounts of the Company and its subsidiary, Tombstone Mining and Exploration Corporation. All inter-company accounts and transactions have been eliminated. The Company’s fiscal year-end is December 31.

Use of Estimates

The preparation of these consolidated financial statements in conformity with generally accepted accounting principles in the United States 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the useful life and recoverability of long lived assets, stock-based compensation, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

F-6

Tombstone Exploration Corporation

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

(expressed in U.S. dollars)

Summary of Significant Accounting Policies (continued)

Cash and Cash Equivalents

The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents. As at December 31, 2009 and 2008, the Company had no cash equivalents.

Property and Equipment

Property and equipment are recorded at the lower of cost or net book value, and are amortized based on the following rates:


Asset Type		Amortization Method
Furniture and Fixtures		5 years straight line
Equipment		5 years straight line

Impairment of Long-Lived Assets

In accordance with ASC 360, Property Plant and Equipment, management tests long-lived assets to be held and used for recoverability whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.

Mineral Properties

The Company has been in the exploration stage since its formation on January 1, 2006 and has not yet realized any revenues from its planned operations. Mineral property acquisition and exploration costs are expensed as incurred. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs incurred to develop such property are capitalized. Such costs will be amortized using the units-of-production method over the estimated life of the probable reserve. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to operations.

Stock-Based Compensation

The Company records stock-based compensation in accordance with ASC 718, Share-Based Payments, using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued.

Revenue Recognition

The Company recognizes revenue from online advertising sales in accordance with Securities and Exchange Commission ASC 605, Revenue Recognition. The Company accounts for revenue as a principal using the guidance in ASC 605. Revenue consists of the sale of online advertising and is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the product is shipped, and collectibility is reasonably assured.

Income Taxes

Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted ASC 740, Accounting for Income Taxes, as of its inception. Pursuant to ASC 740, the Company is required to compute tax asset benefits for net operating losses carried forward. The potential benefits of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.

F-7

Tombstone Exploration Corporation

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

(expressed in U.S. dollars)

Summary of Significant Accounting Policies (continued)

Comprehensive Loss

ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at December 31, 2009 and 2008, the Company has no items that represent comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.

Basic and Diluted Net Income (Loss) Per Share

The Company computes net income (loss) per share in accordance with ASC 260, Earning per Share. ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive.

Financial Instruments

Pursuant to ASC 820, Fair Value Measurements and Disclosures and ASC 825, Financial Instruments, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 and 825 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 and 825 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company’s financial instruments consist principally of cash, accounts payable and accrued liabilities, amounts due to related parties, and notes payable to a related party. Pursuant to ASC 820 and 825, the fair value of our cash and cash equivalents is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

The Company’s operations are in Canada, which results in exposure to market risks from changes in foreign currency rates. The financial risk is the risk to the Company’s operations that arise from fluctuations in foreign exchange rates and the degree of volatility of these rates. Currently, the Company does not use derivative instruments to reduce its exposure to foreign currency risk.

F-8

Tombstone Exploration Corporation

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

(expressed in U.S. dollars)

Summary of Significant Accounting Policies (continued)

Foreign Currency Translation

The Company’s functional and reporting currency is the United States dollar. Monetary assets and liabilities denominated in foreign currencies are translated in accordance with ASC 830 Foreign Currency Translation Matters, using the exchange rate prevailing at the balance sheet date. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income. Foreign currency transactions are primarily undertaken in Canadian dollars. The Company has not, to the date of these financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

Recent Accounting Pronouncements

In January 2010, the FASB issued an amendment to ASC 820, Fair Value Measurements and Disclosure, to require reporting entities to separately disclose the amounts and business rationale for significant transfers in and out of Level 1 and Level 2 fair value measurements and separately present information regarding purchase, sale, issuance, and settlement of Level 3 fair value measures on a gross basis. This standard, for which the Company is currently assessing the impact, is effective for interim and annual reporting periods beginning after December 15, 2009 with the exception of disclosures regarding the purchase, sale, issuance, and settlement of Level 3 fair value measures which are effective for fiscal years beginning after December 15, 2010.

In January 2010, the FASB issued an amendment to ASC 505, Equity, where entities that declare dividends to shareholders that may be paid in cash or shares at the election of the shareholders are considered to be a share issuance that is reflected prospectively in EPS, and is not accounted for as a stock dividend. This standard is effective for interim and annual periods ending on or after December 15, 2009 and is to be applied on a retrospective basis. The adoption of this standard is not expected to have a significant impact on the Company’s financial statements.

In October 2009, the FASB issued an amendment to the accounting standards related to certain revenue arrangements that include software elements. This standard clarifies the existing accounting guidance such that tangible products that contain both software and non-software components that function together to deliver the product’s essential functionality, shall be excluded from the scope of the software revenue recognition accounting standards. Accordingly, sales of these products may fall within the scope of other revenue recognition standards or may now be within the scope of this standard and may require an allocation of the arrangement consideration for each element of the arrangement. This standard, for which the Company is currently assessing the impact, will become effective on January 1, 2011.

In October 2009, FASB issued an amendment to the accounting standards related to the accounting for revenue in arrangements with multiple deliverables including how the arrangement consideration is allocated among delivered and undelivered items of the arrangement. Among the amendments, this standard eliminated the use of the residual method for allocating arrangement considerations and requires an entity to allocate the overall consideration to each deliverable based on an estimated selling price of each individual deliverable in the arrangement in the absence of having vendor-specific objective evidence or other third party evidence of fair value of the undelivered items. This standard also provides further guidance on how to determine a separate unit of accounting in a multiple-deliverable revenue arrangement and expands the disclosure requirements about the judgments made in applying the estimated selling price method and how those judgments affect the timing or amount of revenue recognition. This standard, for which the Company is currently assessing the impact, will become effective on January 1, 2011.

In August 2009, FASB issued an amendment to the accounting standards related to the measurement of liabilities that are recognized or disclosed at fair value on a recurring basis. This standard clarifies how a company should measure the fair value of liabilities and that restrictions preventing the transfer of a liability should not be considered as a factor in the measurement of liabilities within the scope of this standard. This standard is effective for the Company on October 1, 2009. The adoption of this amendment did not have a material effect on the Company’s financial statements.

Reclassification

Certain reclassifications have been made to the prior period’s financial statements to conform to the current period’s presentation.

F-9

Tombstone Exploration Corporation

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

(expressed in U.S. dollars)

Property and Equipment


			Net Book Value
	Cost $	Accumulated Amortization $	December 31, 2009 $	December 31, 2008 $
Furniture and Fixtures	78,749	36,540	42,209	51,562
Equipment	38,172	19,302	18,870	23,587
	116,921	55,842	61,079	75,149

Common Shares

All common shares for non-cash purposes have been valued based on the end-of-day trading price of the Company’s common stock on the date of issuance.

Year Ended December 31, 2009

As at December 31, 2009, the Company authorized the issuance of 1,000,000 common shares with a fair value of $64,000 for consulting services.

On November 9, 2009, the Company issued 100,000 common shares with a fair value of $7,500 for professional consulting services and 500,000 common shares with a fair value of $37,500 for consulting services.

On November 9, 2009, the Company issued 833,334 common shares at $0.06 per share for proceeds of $50,000.

On September 18, 2009, the Company issued 1,410,000 common shares at $0.05 per share for proceeds of $70,500.

On August 12, 2009, the Company issued 500,000 common shares with a fair value of $43,500 for consulting services.

On July 21, 2009, the Company issued 500,000 common shares with a fair value of $43,500 for consulting services.

On June 12, 2009, the Company issued 1,500,000 common shares with a fair value of $130,500 for consulting services.

On April 16, 2009, the Company issued 500,000 common shares with a fair value of $40,000 for consulting services.

On April 14, 2009, the Company issued 1,000,000 common shares at $0.10 per share for proceeds of $100,000.

On March 19, 2009, the Company issued 500,000 common shares with a fair value of $39,500 for consulting services.

On March 19, 2009, the Company issued 833,334 common shares at $0.06 per share for proceeds of $50,000.

On February 17, 2009, the Company issued 350,000 common shares with a fair value of $78,750 for consulting services and 3,000,000 common shares with a fair value of $675,000 for investor relations.

On February 17, 2009, the Company issued 200,000 common shares for consulting services which were authorized during the year ended December 31, 2008 and recorded as common stock subscribed.

On February 12, 2009, the Company issued 5,250,000 common shares for consulting services which were authorized during the year ended December 31, 2008 and recorded as common stock subscribed.

Year Ended December 31, 2008

In November 2008, the Company issued 500,000 common shares of the Company for consulting services with a fair value of $40,000.

F-10

Tombstone Exploration Corporation

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

(expressed in U.S. dollars)

Common Shares (continued)

In October 2008, the Company authorized the issuance of 750,000 common shares of the Company for consulting services with a fair value of $75,000 and professional fees with a fair value of $37,500. These common shares were issued subsequent to year-end.

In September 2008, the Company issued 200,000 common shares of the Company for consulting services with a fair value of $32,000.

In August 2008, the Company issued 2,000,000 units in a private placement at $0.20 per unit for proceeds of $400,000. Each unit is comprised of one common share of the Company and one-half share purchase warrant, where each full share purchase warrant grants the warrant holder to purchase one additional common share of the Company at $0.40 per common share until August 31, 2011.

In July 2008, the Company authorized the issuance of 750,000 common shares of the Company for consulting services with a fair value of $180,000 and professional fees with a fair value of $90,000. These common shares were issued subsequent to year-end.

Year Ended December 31, 2008 (continued)

In June 2008, the Company issued 2,000,000 units in a private placement at $0.20 per unit for proceeds of $400,000. Each unit is comprised of one common share of the Company and one-half share purchase warrant, where each full share purchase warrant grants the warrant holder to purchase one additional common share of the Company at $0.40 per common share until June 30, 2011. In addition, the Company issued 140,000 units at $0.20 per unit for finders’ fees relating to the private placement.

In May 2008, the Company cancelled 4,000,000 common shares that were previously issued in January 2008.

In April 2008, the Company authorized the issuance of 750,000 common shares of the Company for consulting services with a fair value of $130,000 and professional fees with a fair value of $65,000. These common shares were issued subsequent to year-end.

In January 2008, the Company issued 200,000 common shares for website services with a fair value of $46,000.

In January 2008, the Company issued 250,000 common shares for consulting services with a fair value of $57,500.

In January 2008, the Company issued 4,000,000 common shares for consulting and professional services with a fair value of $1,040,000.

In January 2008, the Company issued 75,000 common shares for website services with a fair value of $19,500.

aa)

In January 2008, the Company authorized the issuance of 3,000,000 common shares for consulting services and professional fees with a fair value of $520,000 and $260,000, respectively. These common shares were issued subsequent to year-end.

Year Ended December 31, 2007

bb)

In November 2007, the Company cancelled 4,000,000 common shares of the Company with a fair value of $400,000 for the cancellation of the business development agreement signed in November 2006.

cc)

In November 2007, the Company issued 3,043,000 common shares of the Company with a fair value of $304,300 to settle debt of $300,000 and for consulting services valued at $4,300.

dd)

In October 2007, the Company issued 2,500,000 common shares of the Company at $0.20 per common share for gross proceeds of $500,000 in a private placement financing. In addition, the Company issued 175,000 common shares of the Company valued at $35,000 as finders’ fees.

F-11

Tombstone Exploration Corporation

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

(expressed in U.S. dollars)

Common Shares (continued)

ee)

In June 2007, the Company issued 5,000,000 common shares of the Company at $0.10 per common share in accordance with the signed management agreement, with a fair value of $500,000 to the President of the Company as part of the management agreement.

ff)

In June 2007, the Company issued 1,700,000 common shares of the Company at $0.10 with a fair value of $170,000 to various consultants to satisfy consulting services and agreements valued at $170,000.

gg)

In May 2007, the Company issued 3,850,000 common shares of the Company to two investors at $0.10 per common share for proceeds of $385,000.

hh)

In March 2007, the Company issued 5,000,000 common shares of the Company at $0.10 per common share with a fair value of $500,000 to consultants for consulting services valued at $400,000 and fair value of professional fees valued at $100,000.

ii)

In March 2007, the Company issued 1,000,000 common shares of the Company with a fair value of $100,000 to consultants for consulting services valued at $100,000.

Share Purchase Warrants

The following table summarizes the continuity schedule for share purchase warrants:


	Number of Warrants	Exercise Price
Balance – December 31, 2006	8,000,000	0.10
Issued	1,337,500	0.40
Balance – December 31, 2007	9,337,500	$0.14
Issued	2,070,000	$0.40
Cancelled	(8,000,000)	$0.10
Balance – December 31, 2008 and 2009	3,407,500	$0.40

As at December 31, 2009, the following share purchase warrants were outstanding:


Number of Warrants	Exercise Price	Expiry Date
1,337,500	$0.40	October 3, 2010
1,070,000	$0.40	June 30, 2011
1,000,000	$0.40	August 31, 2011

3,407,500

Related Party Transactions

As at December 31, 2009, the Company owed $306,304 (2008 - $157,326) to the President of the Company for financing of day-to-day operations. The amounts owing are unsecured, non-interest bearing, and due on demand.

Derivative Liability

The Company records the fair value of the reset provision of its exercise price of share purchase warrants in accordance with ASC 815, Derivatives and Hedging. The exercise price of the warrants is $0.40 per share until October 3, 2010, and he reset provision allows for the exercise price to be reset to a value equal to a future issuance of common shares, stock options, warrants, or other equity instrument if the issuance or exercise price is less than $0.40 per share. The fair value of the derivatives was calculated using a multi-nominal lattice model performed by an independent qualified business valuator. The fair value of the derivative liability is revalued on each balance sheet date with corresponding gains and losses recorded in the consolidated statement of operations. As at December 31, 2009 and 2008, the Company recorded a derivative liability of $42,214 and $180,941respectively.

F-12

Tombstone Exploration Corporation

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

(expressed in U.S. dollars)

Convertible Note Payable

During the year ended December 31, 2008, the Company issued $59,810 of convertible notes payable. Under the terms of the note agreement, the amounts owing are unsecured, due interest at 10% per annum, due on demand, and convertible into common shares of the Company at the option of the note holder at a conversion price of $0.10 per share. In accordance with ASC 470, Debt – Debt with Conversions and Other Options, the Company determined that the multiple financial instruments issued in the convertible promissory notes resulted in a discount on the convertible notes of $48,000 that was recorded against the convertible note payable and a corresponding credit to additional paid-in capital. As at December 31, 2009, the Company has recognized accretion expense of $48,000 which increased the carrying value of the convertible note payable to $59,810.

Income Taxes

The Company has $6,773,400 of net operating losses to carryforward to offset taxable income in future years which expire through fiscal 2028. For the years ended December 31, 2009 and 2008, the valuation allowance established against the deferred tax assets increased by $566,110, and $891,240, respectively.

The components of the net deferred tax asset at December 31, 2009 and 2008, the statutory tax rate, the effective tax rate and the amount of the valuation allowance are indicated below:


	2009 $	2008 $	2007 $

Income (Loss) Before Taxes	(1,574,304)	(2,696,001)	(3,352,421)
Statutory rate	34%	34%	35%

Computed expected tax recovery	(535,263)	(916,640)	(1,173,347)
Non-deductible expenses	(30,847)	25,400	364,551
Change in valuation allowance	566,110	891,240	808,796

Reported income taxes	–	–	–


	2009 $	2008 $
Deferred tax asset
- Cumulative net operating losses	2,322,035	1,755,925
- Less valuation allowance	(2,322,035)	(1,755,925)

Net deferred tax asset	–	–

The following table lists the fiscal year in which the loss was incurred and the expiration date of the operating:


		Expiration
	Net	Date of
	Loss	Operating
Period Incurred	$	Losses

December 31, 2006	159,600	2026
December 31, 2007	2,310,000	2027
December 31, 2008	2,638,800	2028
December 31, 2009	1,665,000	2029

	6,773,400

F-13

Tombstone Exploration Corporation

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

(expressed in U.S. dollars)

10.

Restatement

The Company has restated its consolidated financial statements as of and for the years ended December 31, 2009, 2008, and 2007 to account for the following errors, all of which were related to the period ended December 31, 2007 or prior. No material errors related to the years ended December 31, 2009 or 2008 were detected and as a result no changes are being made for transactions occurring during this period. These errors were discovered as a result of the re-audit of the year ended December 31, 2007 by our new accounting firm:

recognition of a derivative liability on the issuance of share purchase warrants to account for the floating exercise price of the warrants subject to issuance/exercise price of future issuances of equity instruments at a value less than $0.40;

revision of capitalized cost, annual depreciation expense, and impairment testing of property and equipment;

cut-off errors in accounts payable; and

correction of foreign currency translation adjustment errors to reverse foreign currency gain and loss for an entity where the functional currency was reflected in the reporting currency.

December 31, 2009

Consolidated Balance Sheet


	As at December 31, 2009
	As Reported	Adjustment	Restated
	$	$	$
Assets
Property and Equipment	54,655	6,424	61,079
Total Assets	56,180	6,424	62,604
Liabilities
Derivative Liability	–	42,214	42,214
Total Liabilities	371,831	42,214	414,045
Stockholders’ Deficit
Accumulated Deficit	(20,418,343)	(35,790)	(20,454,133)
Total Stockholders’ Deficit	(315,651)	(35,790)	(351,441)
Total Liabilities and Stockholders’ Deficit	56,180	6,424	62,604

Consolidated Statement of Operations


	For the Year Ended December 31, 2009
	As Reported	Adjustment	Restated
	$	$	$
General and Administrative	137,197	407	137,604
Gain/Loss on Fair Value of Derivatives	–	138,727	138,727
Net Loss	(1,712,624)	138,320	(1,574,304)

Consolidated Statement of Cashflows


	For the Year Ended December 31, 2009
	As Reported	Adjustment	Restated
	$	$	$
Operating Activities
Net Loss for the Continuing Operations	(1,712,624)	138,320	(1,574,304)
Amortization Expense	13,663	407	14,070
Loss (Gain) on Fair Value of Derivatives	–	(138,727)	(138,727)

F-14

Tombstone Exploration Corporation

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

(expressed in U.S. dollars)

10.

Restatement (continued)

Consolidated Statement of Stockholders’ Deficit


	Balance – December 31, 2009
	As Reported	Adjustment	Restated
	$	$	$
Accumulated Deficit During the Exploration Stage	(11,879,584)	(35,790)	(11,915,374)

December 31, 2008

Consolidated Balance Sheet


	As at December 31, 2008
	As Reported	Adjustment	Restated
	$	$	$
Assets
Property and Equipment	68,318	6,831	75,149
Total Assets	76,943	6,831	83,774
Liabilities
Derivative Liability	–	180,941	180,941
Total Liabilities	184,470	180,941	365,411
Stockholders’ Deficit
Accumulated Deficit	(18,705,719)	(174,110)	(18,879,829)
Total Stockholders’ Deficit	(107,527)	(174,110)	(281,637)
Total Liabilities and Stockholders’ Deficit	76,943	6,831	83,774

Consolidated Statement of Operations


	For the Year Ended December 31, 2008
	As Reported	Adjustment	Restated
	$	$	$
Consulting Fees	1,200,194	(6,420)	1,193,774
General and Administrative	522,287	(22,744)	499,543
Gain/Loss on Fair Value of Derivatives	–	57,401	57,401
Management Fees	120,000	(7,013)	112,987
Professional Fees	477,970	(1,395)	476,575
Net Loss	(2,676,172)	(19,829)	(2,696,001)

Consolidated Statement of Cashflows


	For the Year Ended December 31, 2008
	As Reported	Adjustment	Restated
	$	$	$
Operating Activities
Net Loss for the Continuing Operations	(2,676,172)	19,829	(2,696,001)
Amortization Expense	17,308	407	17,715
Gain/Loss on Fair Value of Derivatives	–	57,401	57,401
Accounts Payable and Accrued Liabilities	(4,477)	(25,232)	(29,709)

F-15

Tombstone Exploration Corporation

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

(expressed in U.S. dollars)

10.

Restatement (continued)

Consolidated Statement of Stockholders’ Deficit


	Balance – December 31, 2008
	As Reported	Adjustment	Restated
	$	$	$
Accumulated Deficit During the Exploration Stage	(10,166,960)	(174,110)	(10,341,070)

December 31, 2007

Consolidated Statement of Operations


	For the Year Ended December 31, 2007
	As Reported	Adjustment	Restated
	$	$	$
Consulting Fees	555,648	(2,508)	553,140
General and Administrative	1,141,171	(13,064)	1,128,107
Impairment of Mineral Properties	893,620	16,380	910,000
Impairment of Property and Equipment	–	8,033	8,033
Management Fees	500,000	7,013	507,013
Professional Fees	119,217	64	119,281
Gain/Loss on Fair Value of Derivatives	–	123,540	123,540
Interest Expense	3,553	(246)	3,307
Net Loss	(3,213,209)	(139,212)	(3,352,421)

Consolidated Statement of Cashflows


	For the Year Ended December 31, 2007
	As Reported	Adjustment	Restated
	$	$	$
Operating Activities
Net Loss for the Continuing Operations	(3,213,209)	(139,212)	(3,352,421)
Amortization Expense	21,402	(5,378)	16,024
Impairment of Mineral Properties	900,000	10,000	910,000
Impairment of Property and Equipment	–	8,033	8,033
Gain/Loss on Fair Value of Derivatives	–	123,540	123,540
Accounts Payable and Accrued Liabilities	19,962	10,163	30,125
Net Cash Used in Operating Activities	(921,323)	7,146	(914,177)
Acquisition of Mineral Properties	–	(10,000)	(10,000)
Purchase of Property and Equipment	(107,028)	(9,893)	(116,921)
Net Cash Used in Investing Activities	(107,028)	(19,893)	(126,921)

Consolidated Statement of Stockholders’ Deficit


	Balance – December 31, 2007
	As Reported	Adjustment	Restated
	$	$	$
Accumulated Deficit During the Exploration Stage	(7,505,857)	(139,212)	(7,645,069)

F-16

Tombstone Exploration Corporation

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

(expressed in U.S. dollars)

11.

Subsequent Events

On April 8, 2010, the Company issued 1,000,000 common shares that were authorized at December 31, 2009 but not issued. Refer to Note 4(a).

On April 8, 2010, the Company issued 3,140,000 common shares to settle outstanding debt owing to the President of the Company of $157,326, 384,000 common shares to settle $19,200 of out-of-pocket expenses incurred by the President of the Company during fiscal 2009, and issued 1,000,000 common shares to settle outstanding management fees owed during the year ended December 31, 2009,

On April 13, 2010, the Company issued 2,500,000 units at $0.04 per unit for proceeds of $100,000. Each unit is comprised of one common share of the Company and one share purchase warrant which allows the warrant holder to purchase one additional common share at $0.10 per share for a period of three years from the date of purchase.

On June 21, 2010, the Company closed an Option and Lease Agreement (the “Agreement”) to acquire a mining lease and option with Mountain Gold Exploration Inc. for rights to a mineral property located in Mineral County, Nevada. Under the terms of the Agreement, the Company receives the rights for a ten year period in exchange for purchase price of $400,000.

F-17


	Common Stock		Additional Paid-In Capital	Common Stock Subscribed	Accumulated Deficit	Accumulated Deficit During the Development Stage (unaudited)	Total
	Shares	Par Value	Additional Paid-In Capital	Common Stock Subscribed	Accumulated Deficit		Total
	#	$	$	$	$	$	$
Balance – January 1, 2006 (Date of Inception)	1,568,324	7,468,288	56,800	–	(8,538,759)	–	(1,013,671)

Cancellation of common shares	(207,562)	(20,756)	20,756	–	–	–	–

Issuance of common shares for cash	1,000,000	100,000	–	–	–	–	100,000

Issuance of common shares for acquisition of mineral properties	8,000,000	800,000	–	–	–	–	800,000

Issuance of common shares for services	8,017,103	809,018	–	–	–	–	809,018

Issuance of share purchase warrants	–	–	4,952,286	–	–	–	4,952,286

Net loss for the year	–	–	–	–	–	(4,292,648)	(4,292,648)

Balance – December 31, 2006	18,377,865	9,156,550	5,029,842	–	(8,538,759)	(4,292,648)	1,354,985

Cancellation of common shares	(4,000,000)	(400,000)	–	–	–	–	(400,000)

Issuance of common shares for services	15,743,000	1,574,300	–	–	–	–	1,574,300

Issuance of common shares for cash at $0.10 per common share	3,850,000	385,000	–	–	–	–	385,000

Issuance of common shares for cash at $0.20 per common share	2,500,000	500,000	–	–	–	–	500,000

Issuance of common shares for finders fee	175,000	35,000	(35,000)	–	–	–	–

Net loss for the year	–	–	–	–	–	(3,352,421)	(3,352,421)

Balance – December 31, 2007	36,645,865	11,250,850	4,994,842	–	(8,538,759)	(7,645,069)	61,864

Issuance of common shares for services	1,025,000	149,000	–	–	–	–	149,000

Issuance of common shares for cash at $0.20 per common share	4,000,000	800,000	–	–	–	–	800,000

Issuance of common shares for finders’ fees	140,000	28,000	(28,000)	–	–	–	–

Common stock subscribed	–	–	–	1,403,500	–	–	1,403,500

Net loss for the year	–	–	–	–	–	(2,696,001)	(2,696,001)

Balance – December 31, 2008	41,810,865	12,227,850	4,966,842	1,403,500	(8,538,759)	(10,341,070)	(281,637)

Issuance of common shares for services	13,400,000	2,525,500	–	(1,403,500)	–	–	1,122,000

Issuance of common shares for cash	4,076,668	270,500	–	–	–	–	270,500

Common stock subscribed	–	–	–	64,000	–	–	64,000

Fair value of warrants issued	–	–	48,000	–	–	–	48,000

Net loss for the year	–	–	–	–	–	(1,574,304)	(1,574,304)

Balance – December 31, 2009	59,287,533	15,023,850	5,014,842	64,000	(8,538,759)	(11,915,374)	(351,441)