UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

T

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

For the Fiscal Year Ended December 31, 2007

OR

£

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

Commission File No. – 000- 29595

TARA GOLD RESOURCES CORP.

 (Name of Small Business Issuer in its charter)

Nevada		90-0316566
(State of incorporation)		(IRS Employer Identification No.)
2162 Acorn Court Wheaton, IL		60187
(Address of Principal Executive Office)		(Zip Code)

Registrant's telephone number, including Area Code:   (630) 462-2079

Securities registered pursuant to Section 12(b) of the Act:    None

Securities registered pursuant to Section 12(g) of the Act: (Title of Class) Common Stock

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes £   No T  

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes £   No T  

Indicate by check mark whether the registrant (1) has filed all reports 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  £    No T

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes  £   No £

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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K  T

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer £		Non-accelerated filer £(Do not check if a smaller reporting company)
Accelerated filer £		Smaller reporting company T

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act):

Yes  £    No T

The aggregate market value of the voting stock held by non-affiliates of the Company on June 30, 2009 was approximately $13,955,000.

As of May 31, 2010, the Company had 102,807,618 outstanding shares of common stock.

Documents incorporated by reference:

None

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

         This report includes "forward-looking statements". All statements other than statements of historical facts included in this report, regarding the Company’s financial position, business strategy, plans and objectives, are forward-looking statements.  Although the Company believes that the expectations reflected in the forward-looking statements and the assumptions upon which such forward-looking statements are based are reasonable, it can give no assurance that such expectations and assumptions will prove to have been correct.

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ITEM 1.  BUSINESS

Tara Gold (The Company) was incorporated in 1999 in Nevada as Westnet Communications Group, Inc.  On April 1, 2001 Tara Gold acquired MerchantPark Communications, Inc. for shares of its common stock.  After this acquisition Tara Gold’s operations involved the development of software which could be used by small businesses for web-site development and hosting.

In March 2002 Tara Gold’s discontinued its software development operations and was inactive until early 2004.  In November 2003 Tara Gold changed its name to American Stellar Energy, Inc., and in early 2004 began acquiring oil and gas properties.  In 2005 Tara Gold sold its oil and gas properties after it determined that these properties were not economical.

In May 2005 Tara Gold, through its subsidiary Corporacion Amermin S.A. de C.V., began acquiring mining properties in Mexico.  In May 2006, Tara Gold formed Tara Minerals Corp., which owns 99.9% of American Metal Mining.  Tara Minerals Corp. also owns 90% of the common stock of Adit Resources Corp. (“Adit”), which in turns owns 99.9% of American Copper Mining, S.A. de C.V. (“ACM”), which was established in December 2006.  Adit was organized in June 2009 and ACM was acquired by Adit in June 2009.  Corporacion Amermin, Adit and ACM focus on gold mining concessions.  American Metal Mining focuses on industrial minerals, e.g. copper, zinc.  Corporacion Amermin, American Metal Mining and ACM are Mexican corporations. All of Tara Gold’s operations in Mexico are conducted through its Mexican subsidiaries.  At May 31, 2010, Tara Gold owned 72.5% of the outstanding common stock of Tara Minerals Corp.

Tara Gold’s plan is to acquire low-cost properties that have the potential to yield high returns.  After acquiring a property and selecting a possible exploration area through its own efforts or with others, Tara Gold will typically compile reports, past production records and geologic surveys concerning the area.  Tara Gold will then undertake a field exploration program to determine whether the area merits work.  Initial field exploration on a property normally consists of geologic mapping and geochemical and/or geophysical surveys, together with selected sampling to identify host environments that may contain specific mineral occurrences.  If an area shows promise, geologic drilling programs may be undertaken to further define the existence of any economic mineralization.  If such mineralization is delineated, further work may be undertaken to estimate ore reserves, evaluate the feasibility for the development of the mining project, obtain permits for commercial development, and, if the project appears to be economically viable, proceed to place the deposit into commercial production.

The capital required for exploration and development of mining properties is substantial.  Tara Gold plans to finance its future operations through joint venture arrangements with third parties (generally providing that the third party will obtain a specified percentage of Tara Gold’s interest in a certain property in exchange for the expenditure of a specified amount), the sale by Tara Gold of interests in properties, and by the sale of its common stock.    

The exploration and development of properties that are joint ventured with third parties are managed by one of the joint venture participants which is designated as the operator.  The operator of a mining property generally provides all labor, equipment, supplies and management on a cost plus fee basis and generally must perform specific tasks over a specified time period.  Separate fees may be charged to the joint ventures by the operator and, once certain conditions are met, the joint ventures are typically required to pay the costs in proportion to their interests in the property.    

In connection with the acquisition of a property, Tara Gold may conduct limited reviews of title and related matters and obtains representations regarding ownership.  Although Tara Gold plans to conduct reasonable investigations (in accordance with standard mining practice) of the validity of ownership, it may be unable to acquire good and marketable title to its properties.

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As of December 31, 2007 Tara Gold had an interest in the mining properties listed below.  Subsequent to December 31, 2007 Tara Gold sold its interests in the San Miguel, Santa Cruz and Lluvia de Oro prospects and dropped the La Millionaria and Curcurpe prospects.  There is no assurance that any of Tara Gold’s remaining properties will be capable of producing precious metals in commercial quantities.

In Mexico land size is denominated in hectares and weight is denominated in tonnes.  One hectare is equal to approximately 2.47 acres and one tonne is equal to 2,205 pounds.

La Currita Prospect

Tara Gold acquired the La Currita property in May 2005 from Minera Tres de Mayo, S.A.  In consideration for the assignment of its interest in this prospect, Tara Gold paid Minera Tres de Mayo $1,200,000, plus $180,000 of value-added tax.

On May 30, 2006 Tara Gold signed an agreement with Raven Gold Corp. providing Raven the option to acquire a 25% interest in the La Currita prospect.  In May 2007 Tara Gold and Raven amended the option agreement.  Pursuant to the terms of the new option agreement Raven acquired a 25% interest in the La Currita prospect by paying $600,000, and delivering 500,000 shares of its restricted common stock to Tara Gold.

Raven could increase its interest in the property to 40% by:

·

Delivering an additional 500,000 shares of its restricted common stock to Tara Gold, which shares were delivered on June 19, 2007.

·

Spending $1,375,000 on direct exploration (as opposed to indirect such as management and overhead) on or before May 30, 2008.

Raven defaulted on its obligations required by the joint venture agreement and the agreement with Raven was terminated in 2008.

In December 2008, Tara Gold signed an option agreement to Coeur d’Alene Mines Corporation which gave Coeur d’Alene the right to acquire a 100% interest in the concession from Tara Gold and all data in Tara Gold’s possession and control. In 2009 the option was terminated.

The La Currita property covers 65 hectares and is located in Chihuahua approximately 400 km southwest of the city of Chihuahua, northern Mexico.  The property is situated on the western edge of the Sierra Madre Occidental in the Temoris mining district.  The La Currita property includes four mines and a floatation mill.  

The La Currita mines were in production between 1983 and 1998.  Mining operations resumed in early January 2007 and had terminated by October 2008.

Currently, Tara Gold is looking for a joint venture partner which would be willing to fund the development of this prospect.  In the alternative, Tara Gold, depending on its ability to raise additional capital, will continue the development of this prospect with its own funds.

San Miguel Prospect

Tara Gold acquired the San Miguel property in May 2005 from Minera Navajoa, S.A. for $700,000, plus an extension/option payment of $22,000.    

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Pursuant to the terms of an August 2005 agreement, Paramount Gold Mining Corp. acquired a 70% interest in the San Miguel prospect by:

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Paying Tara Gold $250,000;

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Paying $150,000 directly to Minerva Navajoa;

·

Issuing 718,519 shares of its common stock to Tara Gold; and

·

Spending $2.5 million on a trenching, drilling and sampling program on the property.

Paramount was the operator of the property and, Tara Gold and Paramount were required to jointly approve any exploration or development program concerning the property.

The San Miguel property is comprised of 276 hectares and is located in Chihuahua, Mexico in the Temoris mining district, which is part of the Sierra Madre Occidental.  

As of December 31, 2007 the San Miguel joint venture ownership was 70% Paramount, 30% the Company.  

In 2008, Tara Gold disputed certain amounts billed by Paramount. In October 2008, the dispute was eliminated when Paramount purchased Tara Gold’s 30% interest in this prospect for 7,000,000 shares of its common stock.  The shares of Paramount were received in the second quarter of 2009.

Santa Cruz

The Santa Cruz prospect was sold to Paramount, along with Tara Gold’s interest in the San Miguel prospect.   Paramount will issue 350,000 shares of its common stock to Tara Gold when defects in title to this prospect have been resolved.  As of May 31, 2010, the title defects had been resolved but Paramount had not issued the 350,000 shares to Tara Gold.

Las Minitas Prospect

Tara Gold acquired the Las Minitas property in March 2006 from Isidor Hernandez Pompa.  In consideration for the assignment of his interest in this prospect Tara Gold, pursuant to a December 2007 amended agreement, agreed to pay Mr. Pompa $2,150,000, plus $322,500 in value-added tax, according to the following schedule:

2007

$   287,500

2008

172,500

2009

172,500

2010

402,500

2011

690,000

2012

      747,500

$ 2,472,500

On June 1, 2006 Tara Gold signed a non-binding letter of intent with Raven Gold Corp. providing Raven option to acquire a 20% interest in the Las Minitas prospect by, among other requirements, making option payments to Tara Gold and the remaining property payments.

In April 2007 Tara Gold and Raven agreed to terminate their joint venture with respect to the Las Minitas prospect.  The termination agreement between Tara Gold and Raven did not require Tara Gold to refund $475,000 previously paid by Raven to Tara Gold.

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In 2007 Tara Gold signed an agreement with Pershimco Resources Ltd. providing Pershimco the option to acquire a 75% interest in the Las Minitas prospect.  In March 2008 Tara Gold and Pershimco agreed to terminate their joint venture with respect to the Las Minitas prospect.  The termination agreement between Tara Gold and Pershimco did not require Tara Gold to refund $570,000 previously paid by Pershimco to Tara Gold.

The Las Minitas prospect is 79.52 square kilometres in size and is located in Sonora, Mexico, approximately 40 kilometers northwest of the town of Alamos.  The property lies at the western edge of the Sierra Madre Occidental gold-silver belt.

As of May 31, 2010 Tara Gold was negotiating an amendment to its agreement with Mr. Pompa.

Lluvia de Oro Prospect

Tara Gold acquired the Lluvia de Oro property in March 2006 from Atotonilco Construcciones,  S.A.  In consideration for the assignment of its interest in this prospect Tara Gold paid $4,000,000, plus a value-added tax of $600,000, to Atotonilco Construcciones, S.A. according to the following schedule:

2007

$  2,127,500

2008

    2,472,500

$  4,600,000

All amounts due to Atotonilco Construcciones, S.A. have been paid in full.

On April 4, 2006 Tara Gold signed an agreement, as amended on September 12, 2006, with Northwest Mining, formerly known as Columbia Metals Corporation, providing Northwest the right to acquire a 100% interest in the Lluvia de Oro prospect by:

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paying $550,000 to Tara Gold;

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paying all remaining property payments;

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issuing 1,000,000 shares of its common stock to Tara Gold;

·

reserving a 20% net cash flow interest in favor of Tara Gold.

The net cash flow interest entitled Tara Gold to 20% of the revenue from the operation of the property, less all expenses associated with maintaining and operating the property.  

By December 2008 Northwest had made all required payments and title to this prospect was conveyed to Northwest in September 2009.

In December 2009, Tara Gold sold its 20% interest in Lluvia de Oro to Northwest for $200,000 in cash. Northwest will issue 2,500,000 shares of its common stock to Tara Gold when, during any three-month period, it sells 3,750 ounces of gold produced from this prospect.

La Millionaria Prospect

Pursuant to a June 2005 agreement, which was amended in October 2006, Tara Gold acquired four concessions, which comprise the “La Millionaria” property, from an unrelated third party.  

On October 24, 2006 Tara Gold signed a non-binding letter of intent with Gold and Silver Minerals Corp. (“GSMC”) providing GSMC the option to acquire a 25% interest in the La Millionaria prospect. In June 2007 Tara Gold and GSMC agreed to terminate their joint venture with respect to the La

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Millonaria prospect. The termination agreement between Tara Gold and GSMC did not require Tara Gold to refund $105,000 previously paid by GSMC to Tara Gold.

In November 2007 Tara Gold entered into an agreement with La Camera Mining, Inc. which allowed La Camera to earn a 70% interest in the La Millionaria prospect.  In July 2008 the agreement with La Camera Mining was terminated.

The La Millionaria prospect was acquired from Minas de Topago, S.A. de C.V.  Minas de Topago was also the owner of the Centanario prospect, which is part of the Don Roman groupings now owned by Tara Minerals.  In June 2009 the La Millionaria prospect was returned to Minas de Topago in return for a $195,956 reduction in future payments due with respect to the Centanario prospect.

Curcurpe Prospect

In April 2007 Tara Gold entered into an agreement with Carlos Arnold Acuna Aranda for the purchase of five concessions, known as “Curcurpe”.  The purchase price for the concessions was $2,000,000, plus a value-added tax of $300,000 and was payable over a four-year period.

In November 2007 Tara Gold entered into an agreement with La Camera Mining, Inc. which allowed La Camera to earn a 70% interest in the Curcurpe prospect.  In June 2008, the agreement with La Camera Mining was terminated.

In July 2008 the Curcurpe prospect was returned to Mr. Acuna.

Dos Amigos/Unification Rey de Oro Prospects

In October 2006 Tara Gold purchased 97% of a Mexican corporation named Compañía Minera La Escuadra, S.A. de C.V.  At the time of this acquisition, the primary assets of Compania Minera la Escuadra were the Dos Amigos and Unification Rey de Oro mining prospects.  In September 2008, Tara Gold returned Compañía Minera La Escuadra, S.A. de C.V. to its original owners. As of December 31, 2007 Compania Minera La Escuadra, S.A. de C.V., net of liabilities were classified as assets for disposition.

The Dos Amigos and Unification Rey de Oro prospects were later acquired by Tara Gold’s subsidiary, Adit Resources, as part of the Picacho Group of concessions.

La Estrella Prospect

In January 2006 Tara Gold entered into an agreement to purchase the La Estrella mining property for $400,000.  Tara Gold has paid $24,000 toward the purchase price but the seller of the property has not complied with his obligations under the purchase agreement.  Tara Gold is reviewing the situation with its legal advisors in Mexico.

La Virginia Prospect

In February 2007 Tara Gold entered into an agreement to purchase the La Virginia mining property for $600,000.  Tara Gold has paid $5,500 toward the purchase price but the seller of the property has not complied with his obligations under the purchase agreement.  Tara Gold is reviewing the situation with its legal advisors in Mexico.

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Tara Minerals Corp.

Tara Gold owns 72.5% of the outstanding common stock of Tara Minerals Corp.  As of May 31, 2010 Tara Minerals Corp. had a 100% ownership in the Don Roman group of concessions which are described below.

Don Roman Groupings

The Don Roman Groupings, comprised of 7,032 hectares, were acquired in October 2006 and November 2008 from unrelated third parties for approximately $2,846,229, plus value added taxes of approximately $460,311. The Don Roman Groupings consist of the Pilar, Don Roman, Las Nuvias, and the Centanario mining prospects

The remaining payments for the Don Roman Groupings are due according to the following schedule:

2010

$     892,854

2011

546,673

2012

       692,330

$  2,131,857

The Don Roman Groupings projects are located approximately 25 kilometres from the town of Choix, Sinaloa State, Mexico.  The properties are accessed by driving a 4x4 vehicle on Sinaloa State maintained roads along the north side of the Rio Fuerte River to the village of Altamira, located in the center of the La Reforma Mining District.  From Altamira, the road trends due north to the village of Mocoribo.  The properties can then be reached by hiking two kilometers from the village.

Preliminary and continuing evaluation of the Don Roman Groupings has identified numerous mineralized systems at various locations on the property, some of which include a series of parallel NE trending lead, zinc, silver structures that can be traced for more than 300 meters; an abandoned lead, zinc, silver mine; and historic vein-type gold mineralization.  A number of these mineralized structures lie within a complex suite of volcanic-granitic and sedimentary (carbonate) rocks.  Preliminary evaluation of the property has indicated the potential for five separate mineral systems each having varying mineral characteristics.  Initial sampling has indicated the potential for two lead, zinc, silver systems; two gold/copper systems; and one iron ore, gold, copper system.

Permits needed to move towards continued active mining, assessing exploitation options and costs associated with the design of various mining and recovery systems have been obtained.  Mining and processing equipment have been purchased and the plant, which will be capable of processing a minimum of 400 tonnes per day, has begun test ore runs on one of three circuits.  Water rights for the property have been acquired and a 3" water pump and 4.5 km water line has been completed from Huites water reservoir.  High voltage electrical service has been supplied to an electrical substation which will supply power to operate the Plant.

In October 2006, Tara Gold acquired the rights to three concessions, known as the “Don Roman Prospect”.  The sales price of the asset, as amended, is $521,739 plus value added tax of $78,261.  The purchase price was paid in full in January 2007.  

In January 2007, this concession was assigned to Tara Gold’s subsidiary Tara Minerals Corp. In the fourth quarter of 2009 Tara Minerals began extracting material from its Don Roman mine to process and produce lead/silver and zinc concentrates for sale to a third party.  During the first quarter 2010, Tara Minerals spent time and resources refining its recovery and concentrate production process, including the

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addition of a concentrate dryer, so that in April 2010 it was able to begin shipping high quality concentrates to a third party buyer.

Adit Resources Corp.

Tara Gold owns 72.5% of the outstanding common stock of Tara Minerals Corp.  Tara Minerals in turn owns 89.5% of the outstanding common stock of Adit Resources Corp.  Adit Resources owned a 100% interest in the mining prospect described below.  Although Adit believes that this property has deposits of gold and silver, the property is in the exploratory state, does not have any known reserves, and may never produce any of these metals in commercial quantities.

Picacho Prospect

Between October 2006 and January 2007 Tara Gold acquired eight mining claims known as the “Picacho prospect” from Emilio Acuña Peralta.  Under the terms of the agreement with Mr. Acuña, Tara Gold had the right to acquire a 100% interest in the property by making payments to Mr. Acuña totalling $7,000,000 over a five-year period.  Due to economic circumstances relating to the current recession, Tara Gold failed to make a payment due in November 2008.   In July 2009 Tara Minerals agreed to acquire the Picacho claims, which then included the Dos Amigos and Unification Rey de Oro prospects, from Mr. Acuña for $4,800,000, plus value-added tax of $720,000.  Tara Minerals paid $575,000 of the purchase price in June 2009.  The $575,000 paid to Mr. Acuña in June 2009 was borrowed from Tara Gold by Tara Minerals.  In December 2009 Adit paid an instalment of $278,500 (which included applicable value added taxes) toward the purchase.

In July 2009 Tara Minerals transferred the Picacho prospect to Adit.  In connection with the transfer of the prospect, Adit issued Tara Minerals a promissory note in the principal amount of $650,000 to compensate Tara Minerals for its down payment toward the purchase price of the property and to reimburse Tara Minerals for other amounts advanced on behalf of Adit.  The note is unsecured, bears interest at 3.25% per year, and is due and payable on June 30, 2011.  Adit has since repaid $200,000 towards this note.

On March 31, 2010 Adit and Mr. Acuna amended their agreement.  Under the revised arrangements Adit paid Mr. Acuna $500,000 in cash (plus $80,000 in value added taxes); and in consideration for the transfer of all technical data relating to the prospect, issued Mr. Acuna 320,000 shares of Adit’s common stock, which was valued at $2.50 per share, and 437,500 shares of Tara Minerals’ common stock, which was valued at $4.00 per share.  

Adit paid for the Tara Minerals shares by means of a note in the principal amount of $1,750,000.  The note bears interest at 6% per year and is be due and payable on March 31, 2012. At any time after July 1, 2010 Tara Minerals may convert the outstanding principal, plus accrued interest, into shares of Adit’s common stock.  Tara Minerals will receive one share of Adit’s common stock for each $1.00 of principal and interest converted.  

The Picacho Prospect, which includes mineral interests acquired from persons other than Emilio Acuna, has a surface area of approximately 7,060 hectares, and is located in the Northern Sierra Madre Gold Belt, 120 kilometers south of the U.S. border, in Sonora, Mexico.  The Picacho Prospect is located approximately 24 kilometres from the town of Bacoachi, Sonora State, Mexico where there is a national paved highway, the national power grid, and a 1200 meter airstrip. The town of Bacoachi has a population of approximately 1500, with most amenities needed to support Adit’s planned exploration and development program.

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The predominant rocks in the area are Late Cretaceous to mid-Tertiary andesitic flows, tuffs, and breccias overlain by Tertiary flows and tuffs and crosscut by rhyodacite intrusives.  The Picacho Mining District was reportedly discovered in 1898 with unrecorded gold and silver production between 1900 and 1935, primarily from the Picacho Mine. In the opinion of Adit, the district has needs thorough exploration using present day, industry standard, exploration methods, including geochemistry, geophysics, and geology. Adit feels that this area may potentially host precious metals that were never discovered or exploited due in part to market conditions, lack of technology, and lack of funding.  

There are approximately 2,000 meters of underground workings at the old Picacho mine and perhaps a few hundred meters of workings elsewhere on the property. Most of the Picacho mine workings that are on the vein have been sampled at 3 to 5 meter intervals.  

A review of past work and documentation of vein textures and mineralogy, including over 5300 meters of diamond drilling, suggest that the level of exposure in Picacho’s hydrothermal system is quite high, thus a precious metal zone could persist for several hundred, perhaps as much as 600 meters, below the surface.

While there are no well-defined reserves at Picacho, using the sampling of the underground workings and the drilling intercepts along the main portion of the Picacho vein, it has been possible to roughly define four mineralized zones. Three of the zones are 70 to 90 meters wide along strike, but the third zone appears to be at least 120 meters wide along strike and open to the north. The zone appears to widen with depth, with increasing grades.

Between June 2006 and May 2007, Tara Gold mined a small amount of ore containing gold and silica.  The mineralized ore was crushed at the mill and then sold to an unrelated third party.

Assuming Adit has the necessary funding or has an agreement with a joint venture partner with adequate funding, the following shows the timing and estimated cost of the present exploration plan for the Picacho Prospect property, with emphasis on the Picacho Vein:

Adit owns 99.9% of the capital stock of American Copper Mining S.A. de C.V., a Mexican corporation.  All of Adit’s operations in Mexico are conducted through American Copper Mining and all references to Adit include the operations of American Copper Mining.

United States Mining Laws and Regulations

In the United States, unpatented mining claims on unappropriated federal land may be acquired pursuant to procedures established by the Mining Law of 1872 and other federal and state laws.  These acts generally provide that a citizen of the United States (including corporations) may acquire a possessory right to develop and mine valuable mineral deposits discovered upon unappropriated federal lands, provided that such lands have not been withdrawn from mineral location, e.g., national parks, military reservations and lands designated as part of the National Wilderness Preservation System.  The validity of all unpatented mining claims is dependent upon inherent uncertainties and conditions.  These uncertainties relate to such non-record facts as the sufficiency of the discovery of minerals, proper posting and marking of boundaries, and possible conflicts with other claims not determinable from descriptions of record.  Prior

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to discovery of a locatable mineral thereon, a mining claim may be open to location by others unless the owner is in possession of the claim.  

The domestic exploration programs conducted by Tara Gold will be subject to federal, state and local environmental regulations.  The United States Forest Service and the Bureau of Land Management extensively regulate mining operations conducted on public lands.  Most operations involving the exploration for minerals are subject to existing laws and regulations relating to exploration procedures, safety precautions, employee health and safety, air quality standards, pollution of stream and fresh water sources, odor, noise, dust, and other environmental protection controls adopted by federal, state, and local governmental authorities as well as the rights of adjoining property owners.  Tara Gold may be required to prepare and present to federal, state, or local authorities data pertaining to the effect or impact that any proposed exploration or production of minerals may have upon the environment.  All requirements imposed by any such authorities may be costly and time-consuming, and may delay commencement or continuation of exploration or production operations.

Future legislation and regulations are expected to continue to emphasize the protection of the environment, and, as a consequence, the activities of Tara Gold may be more closely regulated to further the cause of environmental protection.  Such legislation and regulations, as well as future interpretation of existing laws, may require substantial increases in capital and operating costs to Tara Gold and may result in delays, interruptions, or a termination of operations, the extent of which cannot be predicted.

Mining operations in the United States are subject to inspection and regulation by the Mine Safety and Health Administration of the Department of Labor (MSHA) under provisions of the Federal Mine Safety and Health Act of 1977.

Tara Gold’s operations will also be subject to regulations under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (CERCLA or Superfund), which regulates and establishes liability for the release of hazardous substances, and the Endangered Species Act (ESA), which identifies endangered species of plants and animals and regulates activities to protect these species and their habitats. Tara Gold may incur expenditures for land reclamation pursuant to federal and state land restoration laws and regulations.  Under certain circumstances, Tara Gold may be required to close an operation until a particular problem is remedied or to undertake other remedial actions.

Mexican Mining Laws and Regulations

In Mexico, Article 27 of the Mexican Constitution grants the ownership of essentially all minerals to the Mexican nation.  The right to exploit those minerals is given to private parties through concessions issued by the Mexican government.  The current Mining Law of Mexico was enacted in 1992.  Concessions are granted on mining lots, the sides of which measure 100 meters, or a multiple of 100, except when adjoining lots (granted when there were no size requirements) require a smaller size.  An exploration concession is granted to the first applicant that meets the requirements of the Mining Law, the most important of which is that the claimed area is deemed to be “free land”.  Under the Mining Law, areas that are already covered by mining concessions or applications for mining concessions are not free, as well as reserved areas such as the coast and the seabed.

Exploration mining concession applications are filed at government offices.  Exploration concessions are valid for fifty years and give their holders the right to carry out exploration work and, if warranted, any mine on the concession put into production.

Mining concessions do not grant the holder right to enter or use the surface land of the mining lots.  It is therefore necessary to obtain the permission of the surface owner for that purpose.  Typically, a

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verbal authorization with no consideration is granted for prospecting and sample gathering.  A simple letter agreement or contract is normally used for drilling, trenching, or basic road building.  For more advanced exploration activities, a small monetary consideration is normally required.  In some cases the concessionaire is also required to make minor improvements which benefit the local community such as fixing a road or fence or building an earthen dam.  Building and operating a mine requires a more formal agreement.  If an agreement cannot be reached with the surface owner, the Mining Law gives the concessionaire the right to request a temporary occupation of the land or an expropriation (or an easement for the construction of roads, power lines, water pipes, etc.).  Compensation is set through an appraisal made by the federal government.

A concessionaire’s most important obligation is the performance of assessment work on the mining lots.  A minimum amount of assessment work measured in monetary terms must be performed each year, depending on the size of the mining lot and, for an exploration mining concession, the number of years elapsed since its issue, pursuant to minimum investment tables established by the Mexican government.  Assessment work may be done either through expenditures or the sale of minerals.  A report must be filed in May of every year regarding the work for the previous calendar year.  Lack of performance of the minimum work will result in the cancellation of the concession; payment to the government in lieu of required assessment of work is not allowed.

Concessionaires must comply with federal environmental regulations which generally require that mining activities be subject to an environmental impact statement authorization.  Normally an environmental impact statement authorization can be obtained in six to twelve months from the date of its filing.  However, mining operations which do not exceed levels established by the Mexican government are not required to file an environmental impact statement.

The Mining Law forbids concessionaires from removing mine timbering and supports and requires compliance with all safety rules promulgated by the Mexican government.

Mexican and foreign individuals, as well as Mexican corporations, are allowed to hold mining concessions.  Although foreign corporations may not hold mining concessions, foreign corporations may, however, own Mexican corporations.

General  

As of May 31, 2010, Tara Gold had three part-time employees, including its two officers.

Tara Gold’s offices are located at 2162 Acorn Court, Wheaton, IL 60187 and consist of approximately 150 square feet of space, which is supplied without charge by Francis Richard Biscan, Jr., Tara Gold’s President.  Tara Gold’s offices are expected to be adequate to meet its foreseeable future needs.    

Tara Gold’s website is www.taragoldresources.com.

ITEM 1A.

RISK FACTORS

Not applicable.

ITEM 1B.

UNRESOLVED STAFF COMMENTS

Not applicable.

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ITEM 2.  

DESCRIPTION OF PROPERTY

See Item 1.  

ITEM 3.  

LEGAL PROCEEDINGS.

In May 2005 Tara Gold borrowed $25,000 from Daniel Wilson.  At Mr. Wilson’s option, the loan, plus accrued interest, could be converted into 907,139 shares of Tara Gold’s common stock at any time prior to May 2006.  Subsequent to May 2006, Mr. Wilson attempted to convert his notes but was advised by Tara Gold that his conversion rights had expired.  Mr. Wilson also claims that he is owed 833,333 shares of Tara Gold’s common stock for providing consulting services with respect to Tara Gold’s mining properties.  In January 2007 Tara Gold filed a lawsuit against Mr. Wilson in the U.S. District Court for the Northern District of Illinois seeking a ruling that Tara Gold did not owe any shares to Mr. Wilson.  The lawsuit was settled in February 2008 by Tara Gold issuing 850,000 shares of its common stock to Mr. Wilson.

Other than the foregoing, Tara Gold is not involved in any legal proceedings and Tara Gold does not know of any legal proceedings which are threatened or contemplated.

ITEM 4.  

(REMOVED AND RESERVED)

ITEM 5.

MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND OTHER SHAREHOLDER MATTERS.

As of May 31, 2010 there were approximately 1,500 holders of Tara Gold’s common stock, which number includes shares held by banks, brokerage houses and securities depositories.  Prior to May 2010 the common stock of Tara Gold traded in the over-the-counter market, which is sometimes referred to as the “pink sheets”, under the symbol: TRGD. In May 2010 the Securities and Exchange Commission stopped the trading in Tara Gold’s common stock due to the fact that Tara Gold was delinquent in filing its 10-K and 10-Q reports. As a result of the SEC’s stop trading order Tara Gold’s common stock was removed from the Pink Sheets and now trades only on an unsolicited basis. Shown below are the high and low quotations for Tara Gold’s common stock for the periods indicated as reported by the FINRA.  The market quotations reflect inter-dealer prices, without retail mark-up, markdown or commissions and may not necessarily represent actual transactions.

Quarter Ending	High	Low
3/31/06	$ 0.24	$ 0.07
6/30/06	$ 0.59	$ 0.27
9/30/06	$ 0.38	$ 0.27
12/31/06	$ 1.32	$ 0.41
3/31/07	$ 1.40	$ 0.90
6/30/07	$ 1.14	$ 0.75
9/30/07	$ 0.99	$ 0.48
12/31/07	$ 0.78	$ 0.32

As of May 31, 2010 Tara Gold had 102,807,618 outstanding shares of common stock. As of that same date Tara Gold did not have any outstanding options, warrants or securities which were convertible into shares of Tara Gold’s common stock.

Holders of common stock are entitled to receive dividends as may be declared by Tara Gold’s Board of Directors. Tara Gold’s Directors are not restricted from paying any dividends but are not

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obligated to declare a dividend.  No dividends have ever been declared to private investors and it is not anticipated that dividends will ever be paid.

Trades of Tara Gold’s common stock are subject to Rule 15g-9 of the Securities and Exchange Commission, which rule imposes certain requirements on broker/dealers who sell securities subject to the rule to persons other than established customers and accredited investors.  For transactions covered by the rule, brokers/dealers must make a special suitability determination for purchasers of the securities and receive the purchaser's written agreement to the transaction prior to sale.  The Securities and Exchange Commission also has rules that regulate broker/dealer practices in connection with transactions in "penny stocks".  Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in that security is provided by the exchange or system).  The penny stock rules require a broker/ dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document prepared by the Commission that provides information about penny stocks and the nature and level of risks in the penny stock market.  The broker/dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker/dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer's account.  The bid and offer quotations, and the broker/dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation.  These disclosure requirements may reduce the level of trading activity in Tara Gold’s common stock.

During the year ended December 31, 2006 neither Tara Gold, nor any of Tara Gold’s officers or directors, purchased any shares of Tara Gold’s common stock.

ITEM 6.

SELECTED FINANCIAL DATA

Not applicable.

ITEM 7.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF OPERATION

In March 2002 Tara Gold discontinued its software development business and was inactive until early 2004 when it began acquiring oil and gas properties.  Revenues in 2004 and 2005 were from sales of oil and gas.  In 2005 Tara Gold sold its oil and gas properties after it determined that these properties were not economical.

In May 2005 Tara Gold began acquiring mining properties in Mexico.

During 2006 Tara Gold’s general and administrative expenses increased due to continued mining operations greater costs of flushing out our infrastructure of the Company, including increased consultants and professional fees.

During 2007 Tara Gold’s general and administrative expenses increased due to increased consultation and professional fees.  Included in operating and general and administrative expenses is a non-cash charge of $1,164,173 pertaining to the issuance of stock options at Tara Minerals Corp.

During the year ended December 31, 2006 Tara Gold’s operations used approximately $1,287,000 in cash.  During this same period Tara Gold paid approximately the following for investing and financing activities as reported on its statement of cash flows:

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·

$24,000 toward mining equipment and other equipment,

·

$382,000 in loans to unrelated third parties,

·

$87,000 for deposits on other mining properties, and

·

$1,857,000 toward the purchase of mining concessions.

These payments were offset by the following:

·

$3,115,000 in payments from Joint Venture partners, and

·

$1,760,000 from the sale of common stock for cash.

 

During the year ended December 31, 2007, Tara Gold’s operations used approximately $4,622,000 in cash.  During this same period Tara Gold paid:

·

$143,000 for mining equipment, furniture and fixtures,

·

$415,000 for land and an office building,

·

$380,000 in loans to unrelated third parties,

·

$352,000 toward the purchase price of mining concessions, and

·

$318,000 for deposits on other mining properties.

These payments were offset by the following:

·

$638,000 in proceeds from the sale of marketable securities,

·

$375,000 in collections from notes receivable,

·

$5,049,000 in payments from Joint Venture partners, and

·

$3,140,000 from the sale of common stock for cash.

Tara Gold anticipates that its capital requirements for the twelve months ending May 31, 2011 will be:

Payments for mining properties	$                             700,000
General and administrative expenses	500,000
Total	$                          1,200,000

The capital requirements shown above do not include any capital required by Tara Minerals Corp. and subsidiaries, Tara Gold’s subsidiary, as that subsidiary raises its own capital.

Tara Gold does not anticipate that it will need to hire any additional employees prior to May 31, 2011.

Tara Gold does not have any commitments or arrangements from any person to provide Tara Gold with any additional capital.  If additional financing is not available when needed, Tara Gold may not continue to operate in its present mode, may need to cease operations or may not be able to maintain its required SEC filings.  

In 2007, Tara Gold’s cash flow was substantial due to its ability to joint venture its mining concessions. However, several of our joint venture partners defaulted on their agreements to provide funding. Due to these circumstances, Tara Gold decided to maintain its business operations and deferred filing Exchange Act reports for the short term.

See Note 1 to the financial statements included as part of this report for a description of Tara Gold’s significant accounting policies and recent accounting pronouncements.

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ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

ITEM 8.  

FINANCIAL STATEMENTS

See the financial statements attached to this report.  

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.

Effective October 13, 2006 Tara Gold dismissed Telford Sadovnick, P.L.L.C. (“Telford Sadovnick”) as Tara Gold’s independent auditors.  Telford Sadovnick audited Tara Gold’s financial statements for the fiscal years ended December 31, 2003 and 2004.  The reports of Telford Sadovnick for these fiscal years did not contain an adverse opinion, or disclaimer of opinion and were not qualified or modified as to audit scope or accounting principles.  However, the report of Telford Sadovnick for these fiscal years was qualified with respect to uncertainty as to Tara Gold’s ability to continue as a going concern.  

During Tara Gold’s two most recent fiscal years and subsequent interim period ended October 13, 2006 there were no disagreements with Telford Sadovnick on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of Telford Sadovnick would have caused it to make reference to such disagreements in its reports.

On October 13, 2006 Tara Gold appointed Mendoza Berger & Company, LLP to act as Tara Gold’s independent accountants.  

The change in Tara Gold’s auditors was recommended and approved by the board of directors of Tara Gold.  Tara Gold does not have an audit committee.

During the two most recent fiscal years and subsequent interim period ended October 13, 2006, Tara Gold did not consult with Mendoza Berger regarding the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on Tara Gold’s financial statements, or any matter that was the subject of a disagreement or a reportable event as defined in the regulations of the Securities and Exchange Commission.  

ITEM 9A. and 9A.(t)  CONTROLS AND PROCEDURES

Francis R. Biscan, Jr., Tara Gold’s Chief Executive Officer, and David A. Bizzaro, Tara Gold’s Principal Financial Officer, evaluated the effectiveness of Tara Gold’s disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934) as of the end of the period covered by this report, and in their opinion Tara Gold’s disclosure controls and procedures were ineffective.  

Management’s Report on Internal Control Over Financial Reporting

Tara Gold’s management is responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment of the effectiveness of internal control over financial reporting. As defined by the Securities and Exchange Commission, internal control over financial reporting is a process designed by, or under the supervision of Tara Gold’s principal executive and

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principal financial officers and implemented by its Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Tara Gold’s financial statements in accordance with U.S. generally accepted accounting principles.

Tara Gold’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of Tara Gold’s assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of our financial statements in accordance with U.S. generally accepted accounting principles, and that Tara Gold’s receipts and expenditures are being made only in accordance with authorizations of its management and directors; and (3) 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.

In connection with the preparation of Tara Gold’s financial statements, management undertook an assessment of the effectiveness of Tara Gold’s internal control over financial reporting, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, or the COSO Framework. Management’s assessment included an evaluation of the design of Tara Gold’s internal control over financial reporting and testing of the operational effectiveness of those controls.

 

Based on this evaluation, management has concluded that Tara Gold’s internal control over financial reporting was not effective as of December 31, 2007 due to our untimely filing of our financial reports.

 

There were no changes in Tara Gold’s internal controls over financial reporting that occurred during the fiscal year ended December 31, 2007 that have materially affected, or are reasonably likely to materially affect, Tara Gold’s internal control over financial reporting.

This annual report does not include an attestation report of Tara Gold’s independent registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by Tara Gold’s independent registered public accounting firm pursuant to temporary rules of the SEC that permit Tara Gold to provide only management’s report on internal control in this annual report.

ITEM 9B.

OTHER INFORMATION

Not applicable.

ITEM 10.    DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

Francis R. Biscan Jr. has been an officer and director of Tara Gold since August 2003.  Between 1997 and August 2003 Mr. Biscan was an independent financial consultant, providing advice to public and private companies in the areas of capital formation and mergers and acquisitions.  Mr. Biscan has also been an officer and director of Tara Minerals Corp., a subsidiary of Tara Gold, since May 2006.

David Bizzaro was appointed as the Company’s Principal Financial and Accounting Officer on May 12, 2010.  Mr. Bizzaro has been the managing partner of IFC Group, a firm which provides

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outsourced international controllership services to middle market companies, since January 2010.  Prior to that time Mr. Bizzaro held the following positions:

Clifford A. Brown has been an officer and director of Tara Gold since November 2004.  Mr. Brown resigned as Tara Gold’s Principal Financial and Accounting Officer in May 2010.  Since 1989 Mr. Brown has been the President of Clifford A. Brown and Co., a firm which provides accounting and consulting services and sells accounting software.  Since 1993 Mr. Brown has served as the treasurer and Board member of Restoration Ministries, Inc., a non-profit corporation with 33 different ministries in Chicago.  Mr. Brown has also been an officer and director of Tara Minerals Corp., a subsidiary of Tara Gold, since May 2006.

Each director holds office until the next annual meeting of shareholders and until their successor has been elected and qualified.  Tara Gold’s officers are elected by its Board of Directors and hold office until their resignation or removal by the Board of Directors.

None of Tara Gold’s directors are independent as that term is defined in section 803 of the listing standards of the NYSE Amex.

Tara Gold does not have a compensation committee or an audit committee.  David A. Bizzaro is Tara Gold’s financial expert.  However, since Mr. Bizzaro is an officer of Tara Gold he is not independent as that term is defined in section 803 of the listing standards of the NYSE Amex.

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Tara Gold has adopted a Code of Ethics applicable to its principal executive, financial, and accounting officers and persons performing similar functions.  Tara Gold’s Code of Ethics was filed as an exhibit to its annual report on Form 10-KSB for the year ended December 31, 2004.

ITEM 11.  EXECUTIVE COMPENSATION

The following table shows, in summary form, the compensation earned or received by (i) Tara Gold’s Chief Executive Officer and (ii) by each other executive officer of Tara Gold who earned or received in excess of $100,000 during the three years ended December 31, 2007.

*    Accrued as of December 31, 2006; paid in January 2007.

(1)

The dollar value of base salary (cash and non-cash) received.

(2)

The dollar value of bonus (cash and non-cash) received.

(3)

During the periods covered by the table, the value of Tara Gold’s shares issued as compensation for services calculated in accordance with FAS 123R.

(4)

The amount recognized for financial statement reporting purposes, and calculated in accordance with FAS 123R, for options awarded during the year.

(5)

All other compensation received that Tara Gold could not properly report in any other column of the table.  

In January 2008 Tara Gold entered into an employment agreement with Mr. Biscan which expired on January 1, 2009.  The employment agreement provided that Tara Gold would pay Mr. Biscan a salary of $276,000 during the term of the agreement and requires Tara Gold to pay for Mr. Biscan’s medical, dental, optical, life and disability insurance.  In the event there is a material reduction in Mr. Biscan’s authority, duties or activities, in the event Mr. Biscan’s offices are moved to a location which is not conducive to operating in North America, or in the event there is a change in the control of Tara Gold, then Mr. Biscan may resign from his position at Tara Gold and receive the remainder of his $276,000 salary.  For purposes of the employment agreement, a change in control includes the acquisition of more than 50% of the outstanding shares of Tara Gold’s common stock by a third party or a change in a majority of Tara Gold’s directors.

Mr. Biscan’s employment agreement will also terminate upon the death or physical or mental disability of Mr. Biscan, in which case Mr. Biscan, or his legal representative, as the case may be, will be paid the salary provided by the employment agreement for a period of one year following Mr. Biscan’s death or disability.

In January 2008 Tara Gold entered into an employment agreement with Clifford A. Brown which expired on January 1, 2009.  The employment agreement provided that Tara Gold would pay Mr. Brown a salary of $96,000 during the term of the agreement and requires Tara Gold to pay for Mr. Brown’s medical insurance.  

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Tara Gold plans to sign an employment agreement to David A. Bizzaro subsequent to the filing of this document.

Stock Option and Bonus Plans

Tara Gold has adopted stock option and stock bonus plans.  A summary description of these plans follows.  In some cases these Plans are collectively referred to as the “Plans”.  

Incentive Stock Option Plan.  Tara Gold’s Incentive Stock Option Plan authorizes the issuance of shares of Tara Gold’s common stock to persons that exercise options granted pursuant to the Plan.  Only Tara Gold employees may be granted options pursuant to the Incentive Stock Option Plan.  The option exercise price is determined by Tara Gold’s directors but cannot be less than the market price of Tara Gold’s common stock on the date the option is granted.

Non-Qualified Stock Option Plan.  Tara Gold’s Non-Qualified Stock Option Plan authorizes the issuance of shares of Tara Gold’s common stock to persons that exercise options granted pursuant to the Plan.  Tara Gold’s employees, directors, officers, consultants and advisors are eligible to be granted options pursuant to the Plan, provided however that bona fide services must be rendered by such consultants or advisors and such services must not be in connection with the offer or sale of securities in a capital-raising transaction.  

Stock Bonus Plan.  Tara Gold’s Stock Bonus Plan allows for the issuance of shares of common stock to its employees, directors, officers, consultants and advisors.  However bona fide services must be rendered by the consultants or advisors and such services must not be in connection with the offer or sale of securities in a capital-raising transaction.

Summary.  The following lists, as of May 31, 2010, the options granted and the bonus shares issued pursuant to the Plans.  Each option represents the right to purchase one share of Tara Gold’ common stock.

Tara Gold plans to issue options to David A. Bizzaro.  The options, when issued, will permit Mr. Bizzaro to purchase up to 300,000 common shares of the subsidiaries of Tara Gold.  The exercise price of the options will be equal to the market price of Tara Gold’s common stock on the date the options are granted.

Tara Gold’ stock option and bonus plans have not been approved by its shareholders.

Long-Term Incentive Plans.  Tara Gold does not provide its officers or employees with pension, stock appreciation rights, long-term incentive or other plans and has no intention of implementing any of these plans for the foreseeable future.

Employee Pension, Profit Sharing or other Retirement Plans.  Tara Gold does not have a defined benefit, pension plan, profit sharing or other retirement plan, although it may adopt one or more of such plans in the future.

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Compensation of Directors.  Tara Gold’s directors do not receive any compensation pursuant to any standard arrangement for their services as directors.

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table shows the ownership of Tara Gold’s common stock. As of May 31, 2010 by each shareholder known by Tara Gold to be the beneficial owner of more than 5% of its outstanding shares, each director and executive officer and all directors and executive officers as a group.  Except as otherwise indicated, each shareholder has sole voting and investment power with respect to the shares they beneficially own.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

In 2004 Tara Gold borrowed $60,000 from Francis R. Biscan, Jr., Tara Gold’s President and Chief Executive Officer.  The loans were represented by promissory notes which, at the option of Mr. Biscan, could be converted at any time into shares Tara Gold’s common stock.  In 2006 Mr. Biscan converted these loans into 2,000,000 shares of Tara Gold’s common stock.

In 2005 Tara Gold borrowed $36,000 from Clifford A. Brown, its then Principal Financial Officer.  The loans were represented by promissory notes which, at the option of Mr. Brown, could be converted at any time into shares of Tara Gold’s common stock.  In 2006 Mr. Brown converted these loans into 1,200,000 shares of Tara Gold’s common stock.

During the year ended December 31, 2005 Tara Gold issued:

·

2,199,999 shares of its common stock to Mr. Biscan in payment of accrued salary of $96,000

·

882,986 shares of its common stock to Mr. Brown in payment of accrued salary of $30,000 and a bonus of $8,500.

Between August 2005 and March 2006 Tara Gold borrowed $324,500 from Mr. Biscan.  The loans were represented by promissory notes which, at the option of Mr. Biscan, could be converted at any time into shares Tara Gold’s common stock.  In March 2008 Mr. Biscan converted loans in the principal amount of $259,500 into 7,983,333 shares of Tara Gold’s common stock.  Tara Gold paid the remaining note of $65,000 with cash.

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In June 2009, Tara Minerals borrowed $1,695,000 from Tara Gold.  The loans bore interest at the prime rate plus 3.25%.  On December 31, 2009 Tara Gold converted the amounts loaned to Tara Minerals, plus accrued interest of $55,088, into 8,750,440 shares of Tara Minerals’ common stock.

In June, 2009 Tara Minerals acquired the Picacho claims for $4,800,000, plus value-added tax of $720,000.  Tara Minerals paid $575,000 of the purchase price in June, 2009.  The $575,000 paid in June 2009 was borrowed from Tara Gold.  In July 2009 Tara Minerals transferred the Picacho prospect to Adit.  In connection with the transfer of the prospect, Adit issued Tara Minerals a promissory note in the principal amount of $650,000 to compensate Tara Minerals for its down payment toward the purchase price of the property and to reimburse Tara Minerals for other amounts advanced on behalf of Adit.  The note is unsecured, bears interest at 3.25% per year, and is due and payable on June 30, 2011.  Adit has since repaid $200,000 towards this note.  

On March 31, 2010 Adit and the vendor of the property amended their agreement.  Under the revised agreement, Adit paid the vendor $500,000 in cash (plus applicable taxes); and issued the vendor 320,000 shares of Adit’s common stock and 437,500 shares of Tara Minerals’ common stock.  

Adit paid for the Tara Minerals shares by means of a note in the principal amount of $1,750,000.  The note bears interest at 6% per year and is due and payable on March 31, 2012. At any time after July 1, 2010 Tara Minerals may convert the outstanding principal, plus accrued interest, into shares of Adit’s common stock.  Tara Minerals will receive one share of Adit’s common stock for each $1.00 of principal and interest converted.

As of May 31, 2010, Tara Gold owned 72.5% of the outstanding shares of Tara Minerals Corp.

As of May 31, 2010, Tara Minerals owned 89.5% of the outstanding common stock of Adit Resources.

ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

On October 13, 2006 Tara Gold replaced its former independent auditors, Telford Sadovnick, P.L.L.C. with Mendoza Berger & Company, LLP.  Telford Sadovnick audited Tara Gold’s financial statements for the fiscal years ended December 31, 2003 and 2004.  Telford Sadovnick did not bill Tara Gold for any fees during the year ended December 31, 2006.  

Mendoza Berger audited Tara Gold’s financial statements for the years ended December 31, 2007 and 2006.  The following table shows the aggregate fees billed to Tara Gold during the years ended December 31, 2007 and 2006 by Mendoza Berger.

	2007	2006
Audit Fees	$ 150,979	$ 151,919
Audit-Related Fees	$ 0	$ 0
Financial Information Systems	$ 0	$ 0
Design and Implementation Fees	$ 0	$ 0
Tax Fees	$ 928	$ 25,334
All Other Fees	$ 2,531	$ 4,859

Audit fees represent amounts billed for professional services rendered for the audit of Tara Gold’s annual financial statements and the review of Tara Gold’s interim financial statements.  Before Mendoza Berger was engaged by Tara Gold to render these services, the engagement was approved by Tara Gold’s Directors.

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ITEM 15.  EXHIBITS

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(1)

Incorporated by reference to the same exhibit filed with the Company’s report on Form 10-KSB for the year ended December 31, 2004

(2)

Incorporated by reference to the same exhibit filed with the Company’s report on Form 10-KSB for the year ended December 31, 2005

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(3)

Incorporated by reference to the same exhibit filed with the Company’s report on Form 10-KSB for the year ended December 31, 2006

(4)

Filed with this report.

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TARA GOLD RESOURCES CORP.

TARA GOLD RESOURCES CORP. AND SUBSIDIARIES

(Formerly American Stellar Energy, Inc.)

(An Exploration Stage Company)

CONSOLIDATED FINANCIAL STATEMENTS

FOR

THE FISCAL YEARS ENDED DECEMBER 31, 2007 AND 2006

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	F-2
FINANCIAL STATEMENTS:
Consolidated Balance Sheets	F-3
Consolidated Statements of Operations and Comprehensive Loss	F-4
Consolidated Statements of Stockholders’ Equity (Deficit)	F-6
Consolidated Statements of Cash Flows	F-12
Notes to the Consolidated Financial Statements	F-15

F-1

---

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders'

of Tara Gold Resources Corp., Inc. (formerly American Stellar Energy, Inc.) and Subsidiaries

We have audited the accompanying consolidated balance sheet of Tara Gold Resources Corp., Inc. (formerly American Stellar Energy, Inc.) (an exploration stage company) (a Nevada corporation) as of December 31, 2007 and 2006, and the related consolidated statements of operations and comprehensive loss, stockholders' equity (deficit), and cash flows for each of the years then ended and the period from inception (December 5, 2000) through December 31, 2007. These consolidated 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. The financial statements of Tara Gold Resources Corp., Inc. from Inception December 5, 2000 through December 31, 2004, were audited by other auditors whose report dated December 9, 2005, expressed an unqualified opinion on those statements (the December 9, 2005 report was modified related to the uncertainty of the Company’s ability as a going concern), have been furnished to us.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated 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 audits 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 consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provides 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 Tara Gold Resources Corp, Inc. (formerly American Stellar Energy, Inc.) as of December 31, 2007 and 2006, and the results of its operations and its cash flows for each of the years then ended and for the period from inception (December 5, 2000) through December 31, 2007, in conformity with accounting principles generally accepted in the United States of America.

/s/ Mendoza Berger & Company, LLP

Mendoza Berger & Company, LLP

Irvine, CA

June 29^th, 2010

F-2

---

TARA GOLD RESOURCES CORP. AND SUBSIDIARIES

(An Exploration Stage Company)

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS OF U.S. DOLLARS)

See accompanying notes to these consolidated financial statements.

F-3

---

TARA GOLD RESOURCES CORP. AND SUBSIDIARIES

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS

(In thousands of U.S. Dollars)

See accompanying notes to these consolidated financial statements.

F-4

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TARA GOLD RESOURCES CORP. AND SUBSIDIARIES

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS

(In thousands of U.S. Dollars)

(Continued)

	For the Year Ended December 31,		From inception December 5, 2000 to December 31,
	2007	2006	2007
Net (loss) income per share – basic	$ (0.03)	$ 0.00
Weighted Average Number of Common Shares Outstanding
- basic	89,817,313	80,439,135
Net (loss) income per share – dilutive	$ (0.03)	$ 0.00
Weighted Average Number of Common Shares Outstanding
- dilutive	89,817,313	87,769,264

See accompanying notes to these consolidated financial statements.

 

F-5

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TARA GOLD RESOURCES CORP. AND SUBSIDIARIES

(An Exploration Stage Company)

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY (DEFICIT)

From inception (December 5, 2000) to December 31, 2007

(In thousands of U.S. Dollars, except share amounts)

F-6

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TARA GOLD RESOURCES CORP. AND SUBSIDIARIES

(An Exploration Stage Company)

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY (DEFICIT)

From inception (December 5, 2000) to December 31, 2007

(In thousands of U.S. Dollars, except share amounts)

 (Continued)

F-7

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TARA GOLD RESOURCES CORP. AND SUBSIDIARIES

(An Exploration Stage Company)

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY (DEFICIT)

From inception (December 5, 2000) to December 31, 2007

(In thousands of U.S. Dollars, except share amounts)

 (Continued)

F-8

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TARA GOLD RESOURCES CORP. AND SUBSIDIARIES

(An Exploration Stage Company)

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY (DEFICIT)

From inception (December 5, 2000) to December 31, 2007

(In thousands of U.S. Dollars, except share amounts)

 (Continued)

F-9

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TARA GOLD RESOURCES CORP. AND SUBSIDIARIES

(An Exploration Stage Company)

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY (DEFICIT)

From inception (December 5, 2000) to December 31, 2007

(In thousands of U.S. Dollars, except share amounts)

 (Continued)

F-10

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TARA GOLD RESOURCES CORP. AND SUBSIDIARIES

(An Exploration Stage Company)

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY (DEFICIT)

From inception (December 5, 2000) to December 31, 2007

(In thousands of U.S. Dollars, except share amounts)

 (Continued)

See accompanying notes to these consolidated financial statements.

F-11

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TARA GOLD RESOURCES CORP. AND SUBSIDIARIES

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

 (In thousands of U.S. Dollars)

	For the Year  Ended		From inception
	December 31,		December 5, 2000
	2007	2006	to Dec. 31, 2007
Cash flows from operating activities:
Net (loss) income	$           (2,441)	$             361	$                   (4,648)
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation and amortization	115	19	338
Allowance for doubtful accounts	278	(15)	290
Allowance for mining deposits deemed uncollectible	-	29	29
Common stock issued for services and other expenses	608	313	1,492
Stock based compensation and stock bonuses	1,290	-	1,290
Loss on deconsolidation of joint venture	195	-	195
Non-cash expense due to deconsolidation of joint venture	216	-	216
Gain on sale of joint venture interest	(2,046)	(1,259)	(2,862)
Gain on dissolution of joint venture	(4,460)	-	(4,460)
Gain on extinguishment of debt, net	(560)	(488)	(901)
Loss on disposal of oil & gas properties	-	-	8
Deferred tax liability (asset)	219	(650)	(431)
Minority interest in net income	(650)	(5)	(650)
Amortization of beneficial conversion	102	171	338
Loss on the disposal of assets	-	-	219
Realized loss on marketable securities	209	-	209
Common stock of subsidiary issued for services	750	-	750
Lawsuit settlement payable in stock	315	-	315
Changes in operating assets and liabilities:
Accounts receivable	13	(13)	-
Other receivable IVA	(563)	(218)	(750)
Other receivable	13	19	(7)
Prepaid expenses	2	-	2
Other current assets	(107)	43	(111)
Accounts payable and accrued expenses	1,930	377	2,567
Deferred joint venture income	(50)	29	(21)
Net cash used in operating activities	(4,622)	(1,287)	(6,583)
Cash flows from investing activities:
Purchase of fixed assets and proved oil & gas properties	-	-	(196)
Proceeds from sales of oil & gas properties	-	-	202
Purchase of mining equipment and furniture and fixtures	(143)	(23)	(244)
Purchase of land and office building	(415)	-	(415)
Proceeds from the sale of marketable securities	638	-	638
Purchase of mining concession	(352)	(540)	(1,051)
Deposits	(318)	(87)	(515)
Payment for construction in progress	(9)	-	(9)
Proceeds from note receivable payments	375	-	(7)
Loans to unrelated third parties	(380)	(382)	(380)
Cash in assets held for disposition	(3)	-	(3)
Net cash used in investing activities	(607)	(1,032)	(1,980)

F-12

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TARA GOLD RESOURCES CORP. AND SUBSIDIARIES

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

 (In thousands of U.S. Dollars)

 (Continued)

	For the Year  Ended		From inception
	December 31,		December 5, 2000
	2007	2006	to Dec. 31, 2007
Cash flows from financing activities:
Proceeds from short term convertible debt	-	-	(22)
Payments toward short term convertible debt	-	(5)	72
Payments toward notes payable	(4,929)	(1,317)	(6,622)
Payments toward long-term accrued liabilities	-	(95)	-
Change in due to/from related parties, net	124	91	699
Minority interest in net assets of consolidated subsidiaries	2,836	311	3,147
Payments from joint venture partners	5,049	3,115	8,164
Stock offering costs	-	-	(13)
Cash acquired in reverse acquisition	-	-	4
Common Stock issued for cash	3,140	1,760	5,753
Net cash provided by financing activities	6,220	3,860	11,182
Effect of exchange rate changes on cash	25	(32)	(13)
Cash and cash equivalents:
Net increase for the period	1,016	1,509	2,606
Beginning of the period	1,590	81	-
End of period	$ 2,606	$ 1,590	$ 2,606

F-13

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TARA GOLD RESOURCES CORP. AND SUBSIDIARIES

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

 (In thousands of U.S. Dollars, except per share amount)

 (Continued)

See accompanying notes to these consolidated financial statements.

F-14

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TARA GOLD RESOURCES, CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1.

Basis of Presentation and Organization and Significant Accounting Policies

Basis of Presentation and Organization

 Tara Gold Resources, Corp. (formerly American Stellar Energy, Inc.) (The Company) was incorporated on October 14, 1999 under the laws of the State of Nevada as Westnet Communication Group. By special resolution of the shareholders, American Stellar Energy, Inc. changed its name to Tara Gold Resources, Corp. on February 9, 2005.  

The Company is engaged in the acquisition, exploration and development of mineral resource properties in United States of America and Mexico. In May 2005, the Company acquired 97% of the common stock of Corporacion Amermin, S.A. de C.V., began acquiring mining properties in Mexico.  In May 2006, the Company established Tara Minerals Corp, which owns 99.9% of American Metal Mining (“AMM”).  In October 2006, the Company acquired 97% of the common stock of Compañía Minera La Escuadra, S.A. de C.V.  In October 2007, the Company acquired the remaining 3% of the common stock of Corporacion Amermin, S.A. de C.V. for 1,500,000 shares of the Company’s common stock valued at $600,000.  Corporacion Amermin and AMM are Mexican corporations. As of December 31, 2006 and 2007 the Company owned 85.5% and 82%, respectively, of the outstanding shares of Tara Minerals.

Our subsidiary Tara Minerals Corp. had a year end of October 31.  Included in this consolidation are the Tara Minerals Corp. year to date financial results as of October 31, 2007. The year end of Tara Minerals was changed to December 31 effective in 2008.

As used in these Notes to the Condensed Consolidated Financial Statements, the terms the “Company”, “we”, “us”, “our” and similar terms refer to Tara Gold Resources, Corp. and, unless the context indicates otherwise its consolidated subsidiaries.  The Company’s subsidiaries include Corporacion Amermin, S.A. de C.V., which operates in México (“Amermin”), Tara Minerals Corp. and Compañía Minera La Escuadra, S.A. de C.V. (“La Escuadra”).

The consolidated financial statements include the accounts of the Company, its subsidiaries and variable interest entities (“VIE”) over which control is achieved through means other than voting rights and we are considered the primary beneficiary.  The primary beneficiary of the VIE consolidates the entity if control is achieved through means other than voting rights such as certain capital structures and contractual relationships (see Note 4a).  All significant intercompany transactions and accounts have been eliminated in consolidation.  The consolidated financial statements of the Company have been prepared on the accrual basis of accounting and are in conformity with accounting principles generally accepted in the United States of America and prevailing industry practice.

The subsidiary’s functional currency is the Mexican Peso. As a result, the financial statements of the subsidiary have been re-measured from Mexican pesos into U.S. dollars using (i) current exchange rates for monetary asset and liability accounts, (ii) historical exchange rates for non-monetary asset and liability accounts, (iii) historical exchange rates for revenues and expenses associated with non-monetary assets and liabilities and (iv) the weighted average exchange rate of the reporting period for all other revenues and expenses. In addition, foreign currency transaction gains and losses resulting from U.S. dollar denominated transactions are eliminated. The resulting re-measurement loss is recorded to other comprehensive income.

Current and historical exchange rates are not indicative of what future exchange rates will be and should not be construed as such.

Relevant exchange rates used in the preparation of the financial statements of the subsidiaries are as follows for the years ended  December 31, 2007 and 2006 (denoted in Mexican pesos per one U.S. dollar):

F-15

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The Company’s significant accounting policies are:

Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Reclassifications

Certain reclassifications, which have no effect on net (loss) income, have been made in the prior period financial statements to conform to the current presentation.  

Cash Equivalents and Marketable Securities

The Company considers all highly-liquid investment instruments purchased with an original maturity of three months or less to be cash equivalents.  The Company had $2,605,844 and $1,590,261 cash equivalents at December 31, 2007 and 2006, respectively.

All investments with stated maturities of greater than three months are classified as marketable securities.  The Company had $2,708,046 and $1,632,500 in marketable securities at December 31, 2007 and 2006, respectively.  These marketable securities had a cost basis of $4,303,966 and $2,081,500 at December 31, 2007 and 2006, respectively. In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 130, “Reporting Comprehensive Income”, we have accounted for unrealized gain (loss) as a component of other comprehensive income. An unrealized loss of $1,146,920 and $449,000 was recorded in other comprehensive income for the years ended December 31, 2007 and 2006, respectively.

Concentrations

The Company maintains cash balances at highly-rated financial institutions in the United States.  Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $100,000.  The Company had one bank accounts and three bank account in excess of $100,000, as of December 31, 2007 and 2006, respectively.  The Company has not experienced any losses in these accounts.

Investments in Unconsolidated Entities

For investments in which the Company owns or controls from 20% to 50% of the voting shares, the equity method of accounting is used if the Company does not account for the entity as a VIE as previously defined.

Recoverable Value-Added Taxes (IVA) and Allowance for Doubtful Accounts

Impuesto al Valor Agregado taxes (IVA) are recoverable value-added taxes charged by the Mexican government on goods sold and services rendered at a rate of 15%. Under certain circumstances, these taxes are recoverable by filing a tax return. Amounts paid for IVA are tracked and held as receivables until the funds are remitted.  Periodically, management reviews the receivables for collectability and records an allowance for doubtful accounts for those amounts deemed not to be collectible from the Mexican government for a variety of reasons.

Each period we analyze our receivables for collectability.  When a receivable is determined to not be collectible we allow for the receivable until we are either assured of collection or assured that a write off is necessary.  As of December 31, 2007 we have allowed $292,729 in association with our receivable from Recoverable value added taxes from our Mexico subsidiaries as we have determined that the Mexican government may not allow the complete refund of these taxes.

F-16

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Property, equipment and mine development

Mining concessions and acquisitions are deferred until the properties are brought into production, at which time they will be amortized on the unit of production method based on estimated recoverable reserves. If it is determined that the deferred costs related to a property are not recoverable over its productive life, those costs will be written down to fair value as a charge to operations in the period in which the determination is made. The amounts at which mineral properties and the related deferred costs are recorded do not necessarily reflect present or future values.

The recoverability of the book value of each property will be assessed annually for indicators of impairment such as adverse changes to any of the following:

• estimated recoverable ounces of gold, silver or other industrial minerals

• estimated future commodity prices

• estimated expected future operating costs, capital expenditures and reclamation expenditures

A write-down to fair value will be recorded when the expected future cash flow is less than the net book value of the property or when events or changes in the property indicate that carrying amounts are not recoverable.  This analysis is completed as needed, and at least annually.  As of May 31, 2010 no events have occurred that require write-down of any assets and there are no indications that any impairments exist.

Certain mining plant and equipment included in mine development and infrastructure are depreciated on a straight-line basis over their estimated useful lives from 3 – 10 years.

Other non-mining assets are recorded at cost and depreciated on a straight-line basis over their estimated useful lives from 3 – 7 years.

Fair value of financial instruments

Financial instruments consist principally of cash, receivables, marketable securities, short-term liabilities and long-term debt. The estimated fair values of these instruments approximate their carrying value.

Accumulated other comprehensive income

Accumulated other comprehensive income includes foreign currency translation adjustments and unrealized gain or loss on marketable securities.

Revenue recognition

Revenue from the sale of bullion, concentrate and industrial metals is recognized when ownership passes to the

purchaser at which time the following conditions are met:

i)

persuasive evidence that an agreement exists.

ii)

the risks and rewards of ownership pass to the purchaser including delivery of the product.

iii)

the selling price is fixed and determinable.

iv)

collectivity is reasonably assured.

Reclamation and remediation costs (asset retirement obligations)

In August 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations”, which established a uniform methodology for accounting for estimated reclamation and abandonment costs. The statement was adopted January 1, 2004. Reclamation costs are allocated to expense over the life of the related assets and are periodically adjusted to reflect changes in the estimates present value resulting from the passage of time and revisions to the estimates of either the timing or amount of the reclamation and abandonment costs.

F-17

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Future remediation costs for reprocessing plant and buildings are accrued based on management’s best estimate at the end of each period of the undiscounted costs expected to be incurred at a site. Such cost estimates include, where applicable, ongoing care, maintenance and monitoring costs. Changes in estimates are reflected in earnings in the period an estimate is revised.  There were no reclamation and remediation costs accrued as of December 31, 2007 or December 31, 2006.

Exploration expenses

Exploration costs not directly associated with proving reserves on our mining concessions are charged to operations as incurred.

Impairment of long-lived assets

The Company reviews long-lived assets and certain identifiable intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.  

Loss per Share

Earnings per share is computed in accordance with SFAS No. 128 “Earnings per Share” as net income divided by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution that could occur from common shares issuable through stock options, warrants, convertible debt and other convertible securities.   

As of December 31, 2007 the Company has no potentially dilutive common shares due to our net loss position.  As of December 31, 2006 the Company had net income.  See below for our dilutive common share analysis.