SCHEDULE 14A INFORMATION
                  PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
                       THE SECURITIES EXCHANGE ACT OF 1934


Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[   ]    Preliminary Proxy Statement
[   ]    Confidential, for Use of the Commission Only
         (as permitted by Rule 14a-6(e) (2))
[ X ]    Definitive Proxy Statement
[   ]    Definitive Additional Materials
[   ]    Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12

                                  Newgold, Inc.
                (Name of Registrant as Specified In Its Charter)

                                       N/A
     (Name of Person(s) Filing Proxy Statement if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[ X ]    No fee required
[   ]    Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 
         0-11.

         (1)  Title of each class of securities to which transaction applies:
         (2)  Aggregate number of securities to which transaction applies: N/A
         (3)  Per unit price or other underlying  value of transaction  computed
              pursuant to Exchange Act Rule 0-11
              (Set forth the amount on which the  filing fee is  calculated  and
              state how it was determined): N/A
         (4)  Proposed maximum aggregate value of transaction: N/A
         (5)  Total fee paid: N/A

[   ]    Fee paid previously with preliminary materials.
[   ]    Check box if any part of the fee is offset as  provided  by  Exchange
         Act Rule  0-11(a)(2)  and identify the filing for which the  offsetting
         fee was paid  previously.  Identify the previous filing by registration
         statement number, or the Form or Schedule and the date of its filing.
         
         (1)  Amount Previously Paid:
         (2)  Form, Schedule or Registration Statement No.:
         (3)  Filing Party:
         (4)  Date Filed:













                                  NEWGOLD, INC.

                    NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

                                 MARCH 29, 2005


TO THE SHAREHOLDERS

         NOTICE IS  HEREBY  GIVEN  that a Special  Meeting  of  Shareholders  of
Newgold,  Inc.,  a  California  corporation  (the  "Company"),  will  be held on
Tuesday,  March 29,  2005 at 3:00 p.m.,  local time at the  Company's  corporate
counsel's office at Weintraub  Genshlea  Chediak Sproul,  400 Capitol Mall, 11th
floor 95814 for the following purposes:

         1.       To approve an  amendment  to the  Newgold,  Inc.  Articles  of
                  Incorporation  to affect an increase in the authorized  shares
                  of common stock issuable by the Company to 250,000,000 shares.

         2.       No other  business may properly come before the meeting or any
                  adjournment thereof.

         The  foregoing  item of business is more fully  described  in the Proxy
Statement accompanying this Notice.

         Only  shareholders  of record at the close of business on February  22,
2005 are entitled to notice of, and to vote at, the meeting and any  adjournment
thereof.

         All shareholders are cordially invited to attend the meeting in person.
However,  to assure your  representation at the meeting,  you are urged to mark,
sign,  date and return the  enclosed  proxy card as  promptly as possible in the
postage prepaid envelope  enclosed for that purpose.  Any shareholder  attending
the meeting may vote in person even if such shareholder returned a proxy.

                                              Sincerely,

                                              /s/ SCOTT DOCKTER
                                              ----------------------------------
                                              Scott Dockter, President

Shingle Springs, California
March 3, 2005


















                                  NEWGOLD, INC.

                                 P. O. BOX 1626
                        SHINGLE SPRINGS, CALIFORNIA 95682
                                 (530) 672-1116

                                 PROXY STATEMENT


                               GENERAL INFORMATION

NEITHER  THE  SECURITIES  AND  EXCHANGE  COMMISSION  NOR  ANY  STATE  SECURITIES
COMMISSION  HAS APPROVED OR  DISAPPROVED  OF THE  TRANSACTION  DISCUSSED IN THIS
DOCUMENT; PASSED UPON THE MERITS OR FAIRNESS OF THE TRANSACTION;  OR PASSED UPON
THE ADEQUACY OR ACCURACY OF THE DISCLOSURES IN THIS DOCUMENT. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.

The enclosed  proxy  materials  are being  delivered on behalf of Newgold,  Inc.
(referred to in this Proxy  Statement as "Newgold," the "Company,"  "we," "our,"
or "us") in connection  with a Special  Meeting of  Shareholders,  including any
adjournment  or  postponement  thereof (the "Special  Meeting").  The meeting is
scheduled to be held on March 29, 2005  Capitol  Mall,  11th Floor,  Sacramento,
California.

The sole matter to be considered at this Special  Meeting is a proposal to amend
Newgold's  Articles  of  Incorporation  to affect an  increase  in the number of
shares of common stock authorized to be issued by Newgold to 250,000,000  which,
if approved, will enable us to have additional shares available for issuance for
various corporate purposes.

We are  mailing  this  Proxy  Statement,  together  with a form of proxy and our
Annual Report on Form 10-KSB  pursuant to Section 13 or 15(d) of the  Securities
Exchange  Act of 1934 (the "1934  Act") for the year ended  January  31, 2004 as
amended  (the "2004  Annual  Report")  to  shareholders  entitled to vote at the
Special  Meeting.  This Proxy  Statement  is  intended  to be mailed on or about
March 10, 2005.

SHAREHOLDER VOTE REQUIRED

Under Delaware law, the amendment to the Articles of Incorporation to accomplish
the increase in authorized  shares of common stock requires the affirmative vote
of a majority of the shares of common stock  outstanding and entitled to vote at
the meeting.

EFFECTIVE DATE

The  increase in  authorized  shares  would be  effective  upon the filing of an
amendment  to our  Articles  of  Incorporation  with the  Secretary  of State of
Delaware.  It is  anticipated  that this filing will be made as soon as possible
following the approval by shareholders at the Special Meeting.

SHAREHOLDERS ENTITLED TO VOTE AT THE SPECIAL MEETING







                                        1

Only  shareholders  of record at the close of business on February 22, 2005 will
be  entitled  to vote at the Special  Meeting.  On February  22, 2005 there were
48,777,841 shares of our common stock outstanding,  each of which is entitled to
one vote.

HOW TO VOTE YOUR SHARES

Your vote is important.  Your shares can be voted at the Special Meeting only if
you are present in person or  represented  by proxy.  Even if you plan to attend
the meeting,  we urge you to vote now by completing  and submitting the attached
proxy card. If you own your shares in record name, you may cast your vote simply
by marking your proxy card,  and then dating,  signing,  and returning it in the
postage-paid envelope provided.

Shareholders who hold their shares beneficially in street name through a nominee
(such as a bank or broker) should follow the  instructions you receive from your
nominee to vote these shares.

HOW TO REVOKE YOUR PROXY

You may revoke your proxy at any time before it is voted at the Special  Meeting
by:

     o   Properly executing and delivering a later-dated proxy;

     o   Voting by ballot at the meeting; or

     o   Sending a written notice of revocation to the inspectors of election in
         care of the Secretary of the Company at the address listed above.

VOTING AT THE SPECIAL MEETING

Voting by proxy will in no way limit your right to vote at the  Special  Meeting
if you later decide to attend in person. If you hold your shares in street name,
you must obtain a proxy executed in your favor from your nominee (such as a bank
or broker) to be able to vote at the meeting.

Your shares will be voted at the meeting as directed by the instructions on your
proxy  card if:  (1) you are  entitled  to vote,  (2) your  proxy  was  properly
executed,  (3) we received your proxy prior to the Special Meeting,  and (4) you
did not revoke your proxy prior to the vote.

THE BOARD'S RECOMMENDATIONS

If you send a properly executed proxy card without specific voting instructions,
your shares  represented by that proxy will be voted as recommended by our board
of directors:

     o   FOR Proposal 1, the approval of the increase in the  authorized  shares
         of common  stock,  which  includes  the  approval  of an  amendment  to
         Newgold's  Articles  of  Incorporation  to affect the  increase  in our
         authorized common stock.







                                        2

VOTES REQUIRED TO PROVIDE QUORUM NECESSARY TO HOLD THE SPECIAL MEETING

The presence at the Special Meeting (in person or by proxy) of the holders of at
least a majority of the shares  outstanding  on the record  date,  February  22,
2005,  is  necessary  to have a quorum  allowing  us to conduct  business at the
meeting.

Broker "no-votes" and abstentions will have the effect of a negative vote on the
proposal to amend  Newgold's  Articles of  Incorporation  (Proposal  1).  Broker
"no-votes"  occur when a nominee (such as a bank or broker) returns a proxy, but
does not have the authority to vote on a particular  proposal because it has not
received voting instructions from the beneficial owner.


                                   PROPOSAL 1

 AMENDMENT OF OUR ARTICLES OF INCORPORATION TO EFFECT AN INCREASE IN THE NUMBER
OF SHARES OF COMMON STOCK AUTHORIZED TO BE ISSUED BY THE COMPANY FROM 50,000,000
                              TO 250,000,000 SHARES

PURPOSE OF THE INCREASE IN AUTHORIZED SHARES OF COMMON STOCK

We currently are authorized to issue up to 50,000,000 shares of common stock. As
of October 31, 2004 we had issued and  outstanding a total of 47,606,174  shares
of common stock. In order for us to have sufficient  shares available for future
business needs, we are seeking  shareholder  approval to increase the authorized
number of shares we can issue from 50,000,000 to  250,000,000.  This increase in
authorized shares requires amending our Articles of Incorporation in Delaware.

The  increased  authorized  shares  of  common  stock  will  enable  us to  have
sufficient  shares  available to issue in conjunction  with (i) possible  future
mining property or business  acquisitions;  (ii) for the conversion of debt into
equity;  (iii)  future  employee  incentive  plans  pursuant to which  stocks or
options could be granted;  and (iv) the raising of additional  equity capital to
fund business operations.

A currently proposed  transaction of a mining or business  acquisition for which
shares of our common stock may be issued is the proposed joint venture involving
two  separate  leasehold  mining  interests  in Lander  County,  Nevada.  If the
transaction closes,  Newgold may issue common stock in order to meet our funding
requirements of the joint venture.

Newgold  intends  to issue  shares  of its  common  stock for  various  business
purposes. Currently Newgold is negotiating a proposed acquisition of an interest
in an industrial  mineral mining project  located in Amador County,  California.
This site includes  commercial amounts of aggregate,  clay, silica sand and coal
for use in the greater Sacramento area.

With  regard to the  conversion  of  outstanding  debt,  the  Company has issued
Convertible Notes Payable to two of its officers.  The notes bear interest at 8%
per year and are due September 30, 2005.  The notes and any interest  accrued on
the notes are  convertible  into common  shares of the  Company at a  conversion
price of $0.15 per share.  In  connection  with the loans,  warrants to purchase
5,798,140  and  1,395,007  shares of common  stock have been issued to the Chief
Executive Officer and the Chief Financial  Officer,  respectively.  The warrants
were  issued  at $0.15  per share  and  expire  in five  years  from the date of
issuance.  Additionally  the  Company  has  issued  Notes  Payable  to the Chief
Executive  Officer for additional  advances made during the current fiscal year.
The notes bear interest at 8% per year. In connection  with the loans,  warrants
to purchase  141,540 

                                        3

shares of common stock have been issued.  The warrants  were issued at $0.15 per
share and  expire in five  years from the date of  issuance.  These  convertible
notes are  expected to be  converted  into shares of Newgold  restricted  common
stock when and if sufficient shares are available for such conversion.

Although no other arrangements  currently exist with creditors of Newgold, it is
possible  that in the future  additional  debts of the Company may be  converted
into common shares.

With regard to incentive plans,  currently there are no employee incentive plans
pursuant  to which  stocks or options  could be  granted;  however  the  Company
expects to establish such plans in the future.

The Company's  operating plan calls for placing its existing  mining claims into
production  by the end of calendar  2005. To achieve this goal we expect to make
the following  capital  expenditures  in fiscal year 2006 for which we intend to
fund through the issuance of debt or common stock securities:

     o   We expect to make capital  expenditures  of between $2.5 million and $4
         million,  including  costs related to the resumption of mine operations
         and production at the Relief Canyon mine

     o   We expect exploration,  research and development expenditures in fiscal
         2006 will total between $500,000 and $1 million.

     o   Additional funding or the utilization of other venture partners will be
         required  for  ongoing  mining   operations,   exploration,   research,
         development and operating expenses.  In the past we have been dependent
         on funding  from the private  placement  of our  securities  as well as
         loans from  related  parties as the sole sources of capital to fund our
         operations.  We expect to continue  to access the capital  markets in a
         similar manner until we are able to produce adequate cash flows to fund
         our operating plan.

Shares of the Company's common stock,  once authorized,  can be issued from time
to time at the direction of the Company's Board of Directors.

EFFECT OF INCREASING THE AUTHORIZED SHARES OF COMMON STOCK

The  issuance of  additional  shares of the  Company's  common stock will have a
dilutive effect on the  outstanding  shares of common stock.  Additionally,  the
effect of issuing  additional  shares could  potentially  have an  anti-takeover
effect  if a tender  offer  was made to the  Company's  shareholders.  The Board
believes  that  increasing  the number of  authorized  shares of common stock to
250,000,000  will  give the  Company  sufficient  shares  to meet the  Company's
business needs for the foreseeable future.

RESERVATION OF RIGHTS

Although we are requesting  shareholder  approval of the proposed  amendments to
our  Articles of  Incorporation,  our board of  directors  reserves the right to
decide,  in its  discretion,  to withdraw  the proposed  increase in  authorized
shares amendment from the agenda of the Special Meeting prior to any shareholder
vote  thereon.  Although  the board of  directors  presently  believes  that the
proposed amendment is in the best interests of Newgold and our shareholders, and
thus has recommended a vote FOR the proposed  amendment,  the board of directors
nonetheless  believes that it is prudent to 

                                        4

recognize  that,  between the date of this Proxy  Statement  and the date of the
Special Meeting,  factual circumstances could possibly change such that it might
not be appropriate  or desirable to effect the increase in authorized  shares at
that time. If the Board of Directors decides to withdraw the proposed  amendment
from the agenda of the Special  Meeting,  the Board of Directors will notify the
shareholders of such decision promptly by mail and cancel the Special Meeting.

                                  OTHER MATTERS

Our  board of  directors  is not  aware  of other  matters  that are  likely  or
permitted to be brought before the Special Meeting.  However,  in the event that
any other matters properly come before the Special Meeting, the persons named in
the enclosed proxy are expected to vote the shares  represented by such proxy on
such matters in accordance with their best judgment.

                             ADDITIONAL INFORMATION

FINANCIAL AND OTHER INFORMATION

The  most  recent  statements  of  operations  data  and  financial  information
regarding the Company are  available in our Quarterly  Report on Form 10-QSB for
the quarter ended October 31, 2004,  as filed with the  Securities  and Exchange
Commission on December 30, 2004. Additional information regarding the Company is
available in our 2004 Annual Report on Form 10-KSB as filed with the  Securities
and Exchange Commission on December 8, 2004.

DELIVERY OF DOCUMENTS TO SECURITY HOLDERS SHARING AN ADDRESS

In order to  economize  on the cost of  soliciting  this  proxy,  only one proxy
statement  is being  delivered to multiple  security  holders who share the same
mailing address unless the Company has received  contrary  instructions from one
or more of those security holders.  However,  the Company  undertakes to deliver
promptly upon written or oral request, a separate copy of the proxy statement to
any security  holder at a shared address to which a single copy of the documents
was  delivered.  Additional  copies  of the  proxy  statement  and  proxy can be
requested  from the  Investor  Relations  address  listed  below.  Likewise,  if
shareholders  receiving  multiple  copies of the proxy statement wish to request
that only a single copy be sent in the future,  the  shareholder can contact the
Investor Relations at the address set forth below.

COST OF PROXY SOLICITATION

We will pay the cost of preparing,  assembling and mailing this proxy soliciting
material and Notice of Special  Meeting of  Shareholders.  Solicitation by mail,
telephone,  facsimile,  or personal  solicitation  may also be undertaken by our
directors, executive officers, or regular employees, for which they will receive
no additional  compensation.  Brokerage houses and other nominees,  fiduciaries,
and custodians nominally holding shares of Newgold common stock as of the record
date will be requested to forward proxy  soliciting  material to the  beneficial
owners  of such  shares,  and  will be  reimbursed  by us for  their  reasonable
expenses.

                                        5

                              AVAILABLE INFORMATION

We are subject to the informational  requirements of the Securities Exchange Act
of 1934 and in accordance  therewith  file reports,  proxy  statements and other
information with the Securities and Exchange  Commission.  These reports,  proxy
statements  and other  information  can be  inspected  and  copied at the public
reference facilities of the Securities and Exchange Commission at Room 1024, 450
Fifth Street, N.W., Judiciary Plaza, Washington,  D.C. Copies of these materials
can also be  obtained  at  prescribed  rates by writing to the Public  Reference
Section of the  Securities  and Exchange  Commission at 450 Fifth Street,  N.W.,
Judiciary  Plaza,  Washington,  D.C.  20549.  In addition,  such reports,  proxy
statements and other  information are available from the Edgar filings  obtained
through   the   Securities   and   Exchange    Commission    Internet    Website
(http://www.sec.gov.).

OUR ANNUAL REPORT ON FORM 10-KSB

Our 2004 Annual Report, including the financial statements,  which we filed with
the Securities and Exchange  Commission,  is being mailed to all shareholders of
record as Appendix A to this Proxy Statement.

Shareholders  can also view a copy of our 2004 Annual Report and Form 10-KSB and
the quarterly  reports on Form 10-QSB for the three,  six and nine month periods
ended April 30, 2004,  July 31, 2004 and October 31, 2004 (File No.  0-20722) on
the Securities and Exchange  Commission's  Internet website  (www.sec.gov) or by
contacting  our Investor  Relations  Department.  Copies are available  from the
Company upon request and without charge. Please write to or call:

Investor Relations
Newgold, Inc.
P.O. Box 1626
Shingle Springs, CA  95682
(530) 672-1116 Email: scott@newgold.com

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The financial statements and accompanying footnotes contained in our 2004 Annual
Report on Form 10-KSB and Quarterly Report on Form 10-QSB for the quarters ended
April 30,  2004,  July 31,  2004 and  October  31,  2004,  are  incorporated  by
reference  in this  Proxy  Statement.  Any  statement  contained  in a  document
incorporated  by  reference or referred to herein shall be deemed to be modified
or  superseded  for  purposes  of this  Proxy  Statement  to the  extent  that a
statement  contained  herein  modifies or supersedes  such  statement.  Any such
statement so modified or superseded  shall not be deemed,  except as so modified
or superseded, to constitute a part of this Proxy Statement.

Dated:  March 3, 2005

By order of the Board of Directors

/s/ JAMES KLUBER                                            
--------------------------------------------
James Kluber, Secretary



                                                            

                                                           NEWGOLD, INC.
                                               2005 SPECIAL MEETING OF SHAREHOLDERS
                                    THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned  hereby appoints the Board of Directors,  as Proxies with the power of substitution and hereby  authorizes them to
represent and to vote as designated below all of the shares of Common Stock of Newgold,  Inc. held of record by the undersigned on
February 18, 2005,  at the special  meeting of  shareholders  to be held on March 29, 2005,  or any  adjournment  or  postponement
thereof.

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED  SHAREHOLDER.  IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED AS RECOMMENDED BY OUR BOARD OF DIRECTORS.

                                                NEWGOLD, INC. 2005 SPECIAL MEETING


       1.     AMENDMENT TO THE ARTICLES OF INCORPORATION TO EFFECT      [ ]     FOR           [ ]     AGAINST        [ ]     ABSTAIN
       AN INCREASE IN THE NUMBER OF SHARES OF COMMON STOCK 
       AUTHORIZED FROM 50,000,000 TO 250,000,000


       2.     IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
       BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.

                                           Date                          , 2005
                                               --------------------------
                                                                                ----------------------------------------------------
Check appropriate box                                                                               NO. OF SHARES
Indicate changes below:

Address Change?  [ ]                 Name Change?  [ ]
                                                                                ----------------------------------------------------


---------------------------------------------------------------
                                                                 SIGNATURE(S) IN BOX
                                                                                   
                                                                 Please sign exactly as name appears hereon.  When shares are held
                                                                 by joint  tenants,  both should  sign.  When signing as attorney,
                                                                 executor,  administrator,  trustee or guardian,  please give full
                                                                 title as such. If a  corporation,  please sign in full  corporate
                                                                 name by President or other authorized  officer. If a partnership,
                                                                 please   sign  in   partnership   name  by   authorized   person.
---------------------------------------------------------------


                           ADDENDUM TO PROXY STATEMENT
--------------------------------------------------------------------------------
                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                        ---------------------------------

                                   FORM 10-KSB

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

                        ---------------------------------

     For the Fiscal Year Ended                  Commission File Number
          January 31, 2004                              0-20722

                                  NEWGOLD INC.

                Delaware                                16-1400479
--------------------------------------   ---------------------------------------
        (State of Incorporation)             (I.R.S. Employer Identification)

                          Principal Executive Offices:
                                  P.O. Box 1626
                            Shingle Springs, CA 95682
                            Telephone: (530) 672-1116

      Securities registered pursuant to Section 12(b) of the Exchange Act:

  Title of Each Class               Name of Each Exchange on Which Registered
-----------------------           ---------------------------------------------
        None                                        None

      Securities registered pursuant to Section 12(g) of the Exchange Act:

  Title of Each Class               Name of Each Exchange on Which Registered
-----------------------           ---------------------------------------------
     Common Stock                              $0.001 Par Value

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 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     X
                   -----------              ------------

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation  S-B is not  contained  in  this  form,  and no  disclosure  will  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-KSB
or any amendment to this Form 10-KSB. [ ]

The issuer's revenues for its most recent fiscal year was approximately $  -0-
                                                                        --------

As of  April  30,  2004,  the  aggregate  value  of the  voting  stock  held  by
non-affiliates  of the  Registrant,  computed by reference to the average of the
bid and ask  price on such  date was  approximately  $9,304,177  based  upon the
average price of $0.209/share.

As of April 30, 2004, the Registrant had outstanding 47,606,174 shares of common
stock.

Transitional Small Business Disclosure Format:    Yes  [ ]   No  [X]

                       Documents Incorporated by Reference

Certain  exhibits  required by Item 13 have been  incorporated by reference from
the Company's previously filed Form 8-K's, Form 10-QSB and Form 10-KSB.

--------------------------------------------------------------------------------


















































                                TABLE OF CONTENTS
                                                                         Page of
                                                                          Report
                                                                         -------

PART I.........................................................................1
         ITEM 1.      DESCRIPTION OF BUSINESS..................................1
         ITEM 2.      DESCRIPTION OF PROPERTY.................................15
         ITEM 3.      LEGAL PROCEEDINGS.......................................15
         ITEM 4.      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.....16

PART II.......................................................................17
         ITEM 5.      MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER   
                      MATTERS.................................................17
         ITEM 6.      MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF   
                      OPERATION...............................................18
         ITEM 7       FINANCIAL STATEMENTS....................................25
         ITEM 8.      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON   
                      ACCOUNTING AND FINANCIAL DISCLOSURE.....................25
         ITEM 8A.     CONTROLS AND PROCEDURES.................................25
         ITEM 8B.     OTHER INFORMATION.......................................26

PART III......................................................................27
         ITEM 9.      DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL   
                      PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
                      ACT.....................................................27
         ITEM 10.     EXECUTIVE COMPENSATION..................................28
         ITEM 11.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND   
                      MANAGEMENT AND RELATED STOCKHOLDER MATTERS..............31
         ITEM 12.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTION...........32
         ITEM 13.     EXHIBITS................................................33
         ITEM 14.     PRINCIPAL ACCOUNTANT FEES AND SERVICES..................34

SIGNATURES....................................................................35



























                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

GENERAL
Newgold,  Inc.  has  embarked on a business  strategy  whereby it will invest in
and/or manage gold mining and other mineral producing properties. Newgold, Inc.,
("Newgold"  or the  "Company")  is a  public  company  that in the past has been
engaged in the mining and processing of gold and silver ore and the exploration,
acquisition and development of gold-bearing properties in the continental United
States.  Currently,  Newgold's  principal  assets include various mineral leases
associated with the Relief Canyon mine located near Lovelock,  Nevada along with
various items of mining equipment located at that site.

HISTORY
The Company  originally  was  incorporated  as Newgold,  Inc.  under the laws of
Nevada on September 1, 1993.  The Company began  operations as Newgold,  Inc., a
Delaware  corporation,  on November 21, 1996, on the effective date of a reverse
merger  between  itself  and a company  known as  Warehouse  Auto  Centers  Inc.
("WAC"), a public company, which had previously filed in States Bankruptcy Court
for the Western District of New York. Pursuant to the plan of reorganization and
merger  (the  "Plan"),  (i) WAC which was the  surviving  corporation  for legal
purposes,  changed its name to Newgold  Inc.  (Delaware),  (ii) the  outstanding
shares of Newgold (Nevada) were converted into the right to receive an aggregate
of 12,000,000 shares or approximately 69% of the post merger  outstanding common
stock of Newgold  (Delaware),  (iii) each outstanding share of WAC was converted
into the right to receive 1/65 share of the common stock of Newgold  (Delaware),
for an  aggregate  of 51,034  shares or less than 1% of the post merger for each
$42 of debt,  for an  aggregate  of  63,374  shares  or less than 1% of the post
merger  outstanding  common stock,  and (v) post petition  creditors  received 1
share of stock  for each $1 of debt,  for an  aggregate  of  191,301  shares  or
approximately  1% of the post merger  outstanding  common  stock.  The Plan also
required an amendment to the Newgold  (Delaware)  capital  structure to increase
the number of shares  authorized to 50,000,000  and to reduce the  corresponding
par value to $.001.

In  connection  with the Plan,  Newgold  (Delaware)  raised  $4,707,000  of cash
through  the  issuance  of  convertible  debtor   certificates.   Shortly  after
confirmation of the Plan, the debtor  certificates  were exchanged for 5,135,130
shares of common stock  (including  428,130 shares issued in lieu of paying cash
for  underwriter's  fees)  representing  approximately  29% of the  post  merger
outstanding  common stock.  An additional  bonus of 513,514 shares was issued to
investors and  underwriters  during the year ended January 31, 1998 for delay in
the effective date of the Company's stock trading.

For  accounting  purposes,  Newgold  (Nevada)  has been  treated as the acquirer
(reverse  acquisition).  Accordingly,  historical  financial statements prior to
November  21,  1996 are  those of  Newgold  (Nevada).  There  were no  assets or
liabilities acquired in this transaction and there is










                                        1

no impact on the  statement of  operations.  All  references to the "Company" or
"Newgold"  refer to the merged  entity  operating  as Newgold,  Inc., a Delaware
corporation.

Until the beginning of 2000,  Newgold had followed the above described  business
activity  focusing on the mining and  processing  of gold and silver ore. At the
beginning of 2000,  Newgold's  business  strategy became focused on investing in
Internet  start-up  companies.  That strategy was not successful and by mid-2001
Newgold had  abandoned  such  investments.  From  approximately  July 2001 until
February 2003 Newgold had been  inactive.  During the period of inactivity  ASDi
LLC, owned by A. Scott Dockter who is also the Chairman and CEO of Newgold,  has
made the  necessary  expenditures  to maintain the current  status of the Relief
Canyon mining claims.

The Company's  mailing address is PO Box 1626 Shingle Springs CA 95682;  and its
telephone number is (530)672-1116.

THE COMPANY

Newgold,  Inc., a Delaware  corporation,  has been  engaged in the  acquisition,
development and exploration of gold-bearing properties in the continental United
States.  In fiscal  1999 the Company  placed its only  remaining  property,  the
Relief  Canyon  Mine,  located  in  Pershing  County,  Nevada,  on  a  care  and
maintenance status,. During fiscal 2000, the Company executed a contract to sell
the Relief Canyon Mine to A. Scott Dockter, Chairman of the Company; however the
sale was never completed and the asset remains the current  property of Newgold.
It is now the  Company's  intention to resume  mining at the Relief Canyon mine.
See Business below for further detail.

The  Company's   independent   accountants   have  included  a  "going  concern"
explanatory  paragraph in their report dated  November 7, 2004, on the Company's
financial  statements  for the fiscal year ended  January 31,  2004,  indicating
substantial doubt about the Company's ability to continue as a going concern. If
the  Company's  new  strategy is not  successful  or if  insufficient  funds are
available to carry out the  Company's  development  plan,  then the Company will
have no other recourse than to seek protection of the Federal Bankruptcy Courts.

For  financial  information  regarding  the  Company,  see  "Item  7:  Financial
Statements and Supplementary Data."

BUSINESS

The Company's  business will be to acquire,  explore and, if warranted,  develop
various mining properties  located in the state of Nevada.  The Company plans to
carryout  comprehensive  exploration and development programs on its properties.
While the Company may fund and conduct these  activities  itself,  the Company's
current plan is to outsource most of these activities through the use of various
joint  venture,  royalty or  partnership  arrangements  pursuant  to which other
companies  would agree to finance and carryout the  exploration  and development










                                        2

programs on the Company's mining properties. Consequently, the Company's current
plan will not require the hiring of significant  amounts of mining employees but
will require a smaller group of employees to monitor and/or supervise the mining
and exploration  activities of other entities in exchange for royalties or other
revenue sharing arrangements.

PROPERTY

Relief Canyon Mine

The  Relief  Canyon  Mine  is  an  open-pit,  heap  leaching  operation  located
approximately 110 miles northeast of Reno,  Nevada.  The Company currently holds
50  unpatented  mining claims  covering  approximately  1000 acres.  The mine is
readily  accessible  by  improved  roads.  Water for  mining and  processing  of
operations is provided by two wells  located on the property in close  proximity
to the mine  and  processing  facilities.  Power is  provided  by a local  rural
electric association and phone lines are present at the mine site. Relief Canyon
is located in the Humboldt Range, a mining district of Nevada.

Background and History

The Relief Canyon gold deposit was discovered by Duval Corporation, ("Duval") in
1981.  Lacana  Mining,  ("Lacana")  purchased the property  from Duval,  drilled
additional  holes to  establish  reserves,  and  commenced  mining in 1984 as an
open-pit cyanide heap leach operation.  In 1986, Pegasus Gold, Inc. ("Pegasus"),
purchased  the  mine  from  Lacana,  drilled  additional  holes  for a total  of
approximately  400 with  approximately  120,000 linear feet to confirm reserves,
and mined a cumulative total of approximately 6.3 million tons of ore containing
an average of 0.035 ounces of gold per ton from 1986-1989. Pegasus ceased mining
activities  in 1989 and  began  the  reclamation  process  of the mine site from
1990-1992.

In 1993, Pegasus sold the Relief Canyon Mine to its reclamation contractor, J.D.
Welsh &  Associates  ("Welsh").  Welsh  continued to rinse the heaps to detoxify
them of  their  cyanide  content  and  recovered  minor  amounts  of gold in the
process.  By December 1994, Welsh had completed  detoxification of the heaps and
was required  only to submit  quarterly  water  quality  reports to the state of
Nevada for the next five years.

On January 10, 1995, the Company purchased the mine from Welsh for $500,000. The
mine at that  time  consisted  of 39  unpatented  lode  mining  claims  covering
approximately  780  acres  and a lease for  access  to an  additional  800 acres
contiguous to the 39 claims  located on the Company's  property.  Located on the
property  are, a building  containing  five carbon tanks and a boiler for carbon
strip  solution,  four  detoxified  leach  pads,  a preg  pond for gold  bearing
solution,  a barren pond for solution  from which gold had been  removed,  water
rights, and various permits. From acquisition through November 1997, the Company
refurbished  the processing  facilities by the purchase and  installation of all
equipment  required to process the gold bearing leach solution when the mine was
returned to  production.  During  1997,  the Company  staked an  additional  402









                                        3

claims.  However,  subsequent to January 31, 1998, the Company reduced the total
claims to 50 (covering approximately 1,000 acres).

There also was a sub-lease  (the  "Santa Fe Lease") to fee simple real  property
entered  into  between  Welsh and Santa Fe Gold  Company,  which has merged with
Newmont  Gold Company  ("Santa  Fe").  Welsh  assigned the Santa Fe Lease to the
Company at its base annual  lease  payment of $12,500,  plus an advance  royalty
payment of a similar  amount.  The Santa Fe Lease required that Santa Fe consent
to any assignment  however Santa Fe never consented  formally to the assignment.
Santa Fe previously had accepted the Company's lease and royalty payments and it
is the Company's position that such acceptance  constituted consent.  Subsequent
to the signing of the  contract  for sale,  the  parties  reduced the amount due
Welsh to $450,000  because of Welsh's  inability to secure Santa Fe's acceptance
of assignment of the Santa Fe Lease.

On October  19,  1998,  Santa Fe  terminated  the Welsh lease as a result of the
Company's  inability  to  maintain  the  required  insurance  and the  Company's
inability  to post a  reclamation  bond for the  property.  The Company does not
believe the loss of the Santa Fe property  will  adversely  affect the Company's
mining plans.

If mining operations are not resumed, it is possible the Company may be required
to reclaim the mine.  Reclamation  consists of recontouring  the four heaps to a
3:1 slope, sale and removal of the building and its contents, evaporation of all
water in both ponds and burial of the building  foundation  and floor within the
ponds'  liners  under the soil  contained  in the pond  berms.  Finally,  native
vegetation must be re-established in all areas of disturbance.

Repadre  Capital  Corporation  ("Repadre")  purchased  a 3% Net  Smelter  Return
("NSR").  Royalty that was allocated to two properties  owned by the Company for
$500,000  during 1996 (the "Repadre  royalty").  These funds were applied to the
Company's  ongoing  reserve  confirmation  and  expansion  program at the Relief
Canyon Mine. Under the terms of the Repadre  royalty,  Repadre had the option to
reallocate  the Repadre  royalty to the Relief  Canyon  Mine.  In 1997,  Repadre
purchased  an  additional  1% NSR  royalty  (total of 4%  royalty) on the Relief
Canyon mine by payment of $300,000 to the Company.  The Company has recorded the
total payments received of $800,000 as deferred revenue.

PLAN FOR RELIEF CANYON PRODUCTION

The  Company is an  "exploration  stage"  company  engaged in the search  and/or
verification  of ore deposits  (reserves) in its property.  Current ore deposits
under  Company  control at the Relief  Canyon Mine are  estimated by the Company
(based on past  exploration  by the  Company and work done by others) to contain
significant amounts of gold bearing ore. The Company believes there is potential
for  additional  gold  bearing  ore  deposits  through  validation  of  previous
exploration data and through further exploration of additional mining claims.

As of January 31, 2004 the Company's  properties  include 50  unpatented  mining
claims contained in about 1,000 acres.









                                        4

The Company's  operating plan is to place the most promising mining targets into
production  during the 2005 fiscal  year,  and use the net  proceeds  from these
operations to fund expanded  exploration  and development of its entire property
holdings.  By this means, the Company intends to progressively enlarge the scope
and scale of the mining and processing  operations,  thereby increasing both the
Company's annual revenues and its net profits.

The key to the financial  viability of the Company's  initial  operations is the
ability to substantiate suspected areas of gold bearing ore and the advantage of
over  165,000  feet  of  exploration  drilling.   Newgold  constructed  the  ADR
(Absorbtion Desorbtion Recovery) process infrastructure for a heap leach process
and it is in-place on the property.

Initially,  a 350 ton  per day ore  processing  facility  (the  "mill")  will be
constructed  on-site  to  treat  the gold  bearing  ore.  The  mill  will be fed
principally by ore from the North end of the property.  This high-grade  deposit
will be developed by an  underground  mine,  accessed by a decline.  The decline
will be portaled off in the existing  North pit and driven at a 15 percent grade
to the North East.  Regular  production  is planned to  commence in 2005,  at an
initial rate of 350 tons per day increasing to 700 tons per day by late 2005.

Use of an  underground  mine to remove ore, while being more expensive than open
pit mining,  minimizes the surface disturbance at the site, and will, initially,
avoid the need to mine ore from surface pits.  Underground  mining  methods will
significantly  reduce  ore  dilution  and  surface  disturbance.  The ore can be
selectively mined leaving the waste rock in place. Milling the selected mine ore
substantially  decreases recovery time and increases  percentages producing gold
that is available  for immediate  sale.  Waste rock removed will be deposited in
the  existing  pit  (excavated  by previous  miners),  thereby  contributing  to
reclamation  of these  surface  pits.  After  the  deposits  are  mined  out and
operations  cease, the entire disturbed  surface  including the mill site can be
reclaimed and restored.

The Company's goals for environmental protection and reclamation are for minimal
environmental  disturbance  during mining, and reclamation and/or restoration of
the  disturbed  area  after  mining  ceases.  The  economics  of  the  Company's
operations will permit this environmentally responsible plan of operations.

The  Company  will  focus on  placing  the North  Relief  mining  property  into
production through the North Pit decline at a rate of 122,500 st/yr. Permits for
mining  and  processing  are being  applied  for and should be in place by early
2005. A reclamation bond will be posted and the property brought into compliance
with  the  Bureau  of  Land   Management   ("BLM")  and  Nevada   Department  of
Environmental  Protection  ("NDEP") before any work can commence.  Permitting an
underground  mine in an existing open pit involves a shorter  permit time due to
minimal surface disturbance  requirements.  The maximum amount of time estimated
for the  permitting  process is 180 days.  The mill  construction  will begin in
2005, and is expected to be functional in 90 days.











                                        5

DESCRIPTION OF PAST EXPLORATION AND EXISTING DEVELOPMENT EFFORTS

The  Northern  ore  zone of the  property  contains  several  drill  holes  with
intercepts  of 5ft to  over  50ft of plus  0.2  oz/t  gold  ore.  Most of  these
intercepts are 400 feet below the surface making open pit mining  un-economical.
This ore zone is over 1,250 feet long,  250 feet wide and  contains  several ore
horizons.  Accessing the ore in this area first is deemed appropriate because of
the  location  of the ore  relative  to the North pit.  The portal area would be
approximately  150 feet below the undisturbed  surface saving up to 1000 feet of
decline.  The North pit was also chosen for the portal  location  because of the
stability of the pit walls, rock type, and safety of the mining  personnel.  All
waste rock will be placed in the  bottom of the pit thus  reducing  truck  cycle
time.  Gold bearing ore is expected to be encountered  after  approximately  890
feet of  decline.  Economical  lower  grade ore is exposed on the surface of the
North pit and requires an open pit mine plan with a bond before mining.

Based on drill hole analysis,  the Company  believes there could be gold bearing
ore exposed at the surface,  extending south of the North Pit and extending East
of the  South  Pit.  The  Company  believes  a new  open  pit can be  mined in a
relatively  short period of time and much of the ore is expected to be processed
through the proposed new mill.

Over 400 reverse circulation holes were drilled at the Relief Canyon project. Of
the 400 holes drilled,  106 had  intercepts of 0.1 au/t or better.  Additionally
there are numerous holes with several feet of 0.09 - 0.099 au/t content.

The ore zone of Relief Canyon is open ended on three sides. It is projected that
additional drilling will increase the size of the probable reserve.  Most of the
drilling to date was  targeted for open pit mining,  resulting in shallow  holes
overlooking  deep ore.  A  significant  number of deep  holes  with 0.3 oz/t and
better were drilled on the North end of the property.  This area is targeted for
initial  underground mining  development.  Additional  exploration holes will be
drilled as  underground  mining  advances  throughout  the  various ore zones to
determine future development.

Typically, grade values of the Relief Canyon drill holes are reduced as a result
of finds  being  lost down the hole or vented  out as dust.  Actual  mining  and
recovery of gold in the milling  process  will  determine  the loss if any which
could be as much as 30%.

PROPOSED UNDERGROUND MINING EFFORTS

The goal of Newgold's  mining  program at Relief Canyon is to locate  high-grade
gold deposits that are minable by underground methods.

The  Company's  initial plans for mining will focus on recovery of gold from the
North  end of the  property.  As  ground  is being  broken  for the mill a short
distance away (1,500 feet), the main haulage decline will be portaled off at the
extreme  east end of the North  pit.  This  site was 










                                        6

chosen because of safety concerns and it leaves enough room in the bottom of the
pit to store waste. The portal would be on the 5,160 ft level of the pit leaving
approximately  40 feet of storage area (56,000 tons on the level).  The pit wall
immediately  above and on each side of the  portal  area will be  stabilized  by
bolting  wire mesh to the  rock,  prior to  actual  mining.  After the walls are
secure,  a 10 ft x 10 ft decline  will be driven North 55 East 350 feet at a 15%
(15ft drop/100ft of decline). At 350 feet, a left turn will be cut to access the
North  Central ore block.  The main  haulage  (MH) ramp will  continue  N55E for
another 260 feet where a right hand turn of 180 degrees will be driven with a 50
foot  radius  back to the S55W  direction.  Mining  will  continue  on the North
Central ramp and the MH simultaneously.  The North Central Block (NCB) ramp will
turn around at 180  degrees at a 50 foot radius and is planned to continue  down
400 feet to the 5,050 foot level of the mine.  Mining  this block will  commence
immediately  with a series of crosscuts driven across the ore-body to define its
geometry.  There are  several  drill holes that  encountered  minable ore at the
5,050  foot level of the mine.  Drill  holes also  encountered  minable  ore two
hundred feet further  North on the 5,000 level and  additional  ore minable from
the 4,900 foot level is also indicated.

While  the  5,000  foot  level is being  mined  and  explored,  the MH ramp will
continue 1,322 feet to the 4,900 foot level.  Drill holes suggested  minable ore
on 4,700 foot  level of this hole as well.  The MH ramp will  continue  North an
estimated 500 feet,  hopefully  developing several ore intercepts along the way.
At 500 feet  another  spiral  will be  driven  600 feet  back to the  South,  to
identify the ore on the 4,800 foot level.

The next target area of mining is back to the  southeast of the North ore block.
Access would be from the MH 4900 level.  Drill samples in the East ore block are
in jasperoid beds, which can be substantially  large and extend for thousands of
feet. The surface topography in this area is steep and rugged.  This zone can be
easily drilled from various drill stations cut during underground development of
the ore body.

Mining  will  continue  throughout  the  ore  zones  targeting  intercept  after
intercept.  Typically,  in a flat-bed mining  environment,  the mining method of
choice is stope and  pillar.  Due to the  nature  of the ore zone,  the  Company
believes  a  minimal  amount of  development  work  will be  required.  Burn-cut
headings  25 feet to 35 feet will be driven  through  the ore body.  Slab-rounds
will be driven off of burn-cut rounds leaving 25 feet by 25 feet pillars behind.
When the ore is depleted,  pillars that can be removed safely will be removed in
a retreat method. Normally, pillars are left in low-grade or waste rock.

Underground  mining  equipment  will  consist of 3 yard muckers and 10 ton Elmac
dump trucks.  Diesel driven  two-machine  jumbos will be used to drill 8' to 12'
rounds. ANFO will be used for blasting.  Blasting techniques will be modified to
minimize  damage to pillars.  Trucking  2,700 feet from the North end of the ore
zone will require about 15  minutes/round  trip (40 tons per  hour/truck) to the
mill. Trucking 4,300 feet of decline from the South end of the mine will require
about 20 minutes/round  trip (30 tons per hour/truck).  A minimum of four trucks
and two muckers will be required to meet production  demands when the mine is in
full production (est. 245,000 tons year).








                                        7

ORE PROCESSING

Some  gold-bearing  sulfide ores may be processed  through a flotation plant. In
flotation, ore is finely ground, turned into slurry, then placed in a tank known
as  a  flotation   cell.   Chemicals  are  added  to  the  slurry   causing  the
gold-containing  sulfides to float in air bubbles to the top of the tank,  where
they can be separated from waste particles that sink to the bottom. The sulfides
are removed  from the cell and  converted  into a  concentrate  that can then be
processed  in an  autoclave  or  roaster to  recover  the gold.  The ore is then
processed through an oxide mill.

Higher-grade  oxide ores are processed  through  mills,  where the ore is ground
into a fine powder and mixed with water in slurry,  which then passes  through a
cyanide  leaching  circuit.  Lower  grade  oxide ores are  processed  using heap
leaching.  Heap  leaching  consists of stacking  crushed or  run-of-mine  ore on
impermeable pads, where a weak cyanide solution is applied to the top surface of
the heaps to dissolve the gold. In both cases, the gold-bearing solution is then
collected and pumped to facilities to remove the gold by collection on carbon or
by zinc precipitation directly from leach solutions.

It is  Newgold's  intentions  to process  gold ore at the Relief  Canyon mine by
refining  and  producing  dore  bars to be sent to an  external  refinery  to be
refined into pure gold.

If the Company is successful in obtaining  adequate  additional funds to finance
its mining and  exploration  activities as well as fund its current  operations,
and it can quickly  obtain the necessary  approvals to begin mining  operations,
then it should  be able to  become a  producing  operator  generating  cash flow
within a short period of time.  These prospects to produce cash flow and to fund
its growth potential in the near term would distinguish  Newgold from many other
mining companies of similar size that face a longer time horizon to reach such a
position.

INDUSTRY OVERVIEW

The gold  mining  and  exploration  industry  has  experienced  several  factors
recently that are favorable to Newgold as follows.

The spot market  price of an ounce of gold has  increased  from a low of $253 in
February 2001 to a high of $432 in March 2004. The price was $429 as of November
1, 2004. This price increase has made it  economically  more feasible to produce
gold as well as made gold a more attractive  investment for many. The Company is
projecting  a cash cost per ounce of gold  produced  in a range of $170 to $210.
Accordingly, the gross margin per ounce of gold produced per the historical spot
market price range above should provide  adequate  profitability  for Newgold to
successfully mine gold at the Relief Canyon mine.

By industry standards,  Newgold is considered a "junior mining company" in size.
Typically junior mining companies have proven and probable reserves of less then
one million ounces of gold,  generally produces less then 100,000 ounces of gold
annually and / or are in the process of








                                        8

trying to raise enough  capital to fund the  remainder of the steps  required to
move from a staked claim to  production.  Mid-tier  and large mining  ("senior")
companies may have several projects in production plus several million ounces of
gold in reserve while  exploration  stage mining companies usually just focus on
finding new gold deposits.

Generally  gold  reserves  have  been  declining  for a number  of years for the
following reasons:

     o   The  extended  period  of low gold  prices  from  1996 to 2001  made it
         economically  unfeasible  to explore for new  deposits  for most mining
         companies.
     o   The demand for and production of gold products have exceeded the amount
         of new reserves added over the last several consecutive years.

Reversing the decline in lower gold reserves is a long term process.  Due to the
extended  time frame it takes to explore,  develop and bring new  production  on
line,  the large mining  companies  are facing an extended  period of lower gold
reserves.  Accordingly,  junior  companies  that are able to increase their gold
reserves should directly benefit with an increased valuation.

Additional  factors causing higher gold prices over the past two years have come
from a weakened  United States dollar.  Reasons for the lower dollar compared to
other currencies  include the historically low US interest rates, the increasing
US budget and trade  deficits and the general  worldwide  political  instability
caused by the war on terrorism.

COMPETITION

There are  generally  considered  four types of mining  companies:  exploration,
junior,  mid-tier and large companies.  Junior  companies  represent the largest
group of gold companies in the public stock market.  All four types of companies
may have projects  located in any of the gold producing  continents of the world
and many have projects  located near the Relief  Canyon mine in Nevada.  Many of
Newgold's  competitors  have  greater  exploration,   production,   and  capital
resources  than it does,  and may be able to compete more  effectively in any of
these areas. The Company's inability to generate capital to fund exploration and
production capacity  near-term,  would establish a competitive cost disadvantage
in the marketplace  which would have a material  adverse effect on the Company's
operations and profits.

The Company also competes in the hiring and retention of experienced  employees.
Consequently,  the  Company  may not be able to  hire  qualified  miners  in the
numbers or at the times desired.

GOVERNMENT CONTROLS AND REGULATIONS

Newgold's  exploration,  mining and processing operations are subject to various
federal,   state  and  local  laws  and   regulations   governing   prospecting,
exploration, development, production, labor standards, occupational health, mine
safety, control of toxic substances,  and other matters involving  environmental
protection and employment.  United States environmental  protection 







                                        9

laws  address  the  maintenance  of  air  and  water  quality   standards,   the
preservation  of threatened and endangered  species of wildlife and  vegetation,
the preservation of certain archaeological sites,  reclamation,  and limitations
on the generation,  transportation,  storage and disposal of solid and hazardous
wastes,  among other  things.  There can be no  assurance  that all the required
permits and governmental  approvals  necessary for any mining project with which
we may be associated can be obtained on a timely basis, or maintained. Delays in
obtaining or failure to obtain  government  permits and  approvals may adversely
impact the Company's  operations.  The  regulatory  environment in which Newgold
operates could change in ways that would substantially increase costs to achieve
compliance. In addition, significant changes in regulation could have a material
adverse effect on Newgold's operations or financial position.

Outlined below are some of the more significant aspects of governmental controls
and regulations  which materially  affect the Company's  interests in the Relief
Canyon mine.

Regulation of Mining Activity

The Relief Canyon mine, including care and maintenance, exploration, development
and  production  activities,  is subject to  environmental  laws,  policies  and
regulations. These laws, policies and regulations regulate, among other matters,
emissions to the air,  discharges to water,  management of waste,  management of
hazardous substances,  protection of natural resources, protection of endangered
species,  protection of  antiquities  and  reclamation of land. The mine also is
subject to numerous other federal, state and local laws and regulations.  At the
federal level,  the mine is subject to inspection and regulation by the Division
of Mine Safety and Health  Administration  of the  Department of Labor  ("MSHA")
under  provisions  of the  Federal  Mine  Safety  and  Health  Act of 1977.  The
Occupation and Safety Health Administration  ("OSHA") also has jurisdiction over
certain safety and health standards not covered by MSHA.  Mining  operations and
all future  exploration  and  development  will  require a variety  of  permits.
Although the Company  believes the permits can be obtained in a timely  fashion,
permitting  procedures  are  complex,  costly,  time  consuming  and  subject to
potential   regulatory  delay.  The  Company  does  not  believe  that  existing
permitting  requirements or other environmental  protection laws and regulations
would  have a  material  adverse  effect on its  ability  to  operate  the mine.
However,  the  Company  cannot  be  certain  that  future  changes  in laws  and
regulations  would  not  result  in  significant  additional  expenses,  capital
expenditures,  restrictions  or  delays  associated  with the  operation  of the
Company's property.  The Company cannot predict whether it will be able to renew
its existing permits or whether  material changes in existing permit  conditions
will be imposed. Non-renewal of existing permits or the imposition of additional
conditions  could have a material  adverse  effect on the  Company's  ability to
operate the Relief Canyon mine.

Legislation has been  introduced in prior sessions of the U.S.  Congress to make
significant  revisions to the U.S.  General Mining Law of 1872 that would affect
the Company's unpatented mining claims on federal lands,  including a royalty on
gold  production.  It cannot be predicted  whether any of these  proposals  will
become law. Any levy of the type proposed would only 








                                       10

apply to unpatented  federal lands and accordingly  could  adversely  affect the
profitability of portions of the gold production from the Relief Canyon mine

The State of Nevada,  where the Company's mine property is located,  adopted the
Mined Land Reclamation Act (the "Nevada Act") in 1989 which established  design,
operation,  monitoring and closure  requirements for all mining facilities.  The
Nevada  Act has  increased  the cost of  designing,  operating,  monitoring  and
closing mining facilities and could affect the cost of operating, monitoring and
closing  existing  mine  facilities.  The  State  of  Nevada  also  has  adopted
reclamation regulations pursuant to which reclamation plans must be prepared and
financial  assurances   established  for  existing  facilities.   The  financial
assurances  can be in the form of cash  placed  on  deposit  with  the  State or
reclamation bonds underwritten by insurance  companies.  The State of Nevada has
requested financial assurances from the Company in the amount of $464,000. While
the Company has appealed this amount,  it has been fully accrued as  reclamation
costs in the Financial Statements.  Mining operations cannot commence until such
financial assurances have been provided.

Environmental Regulations

Legislation and implementation of regulations  adopted or proposed by the United
States  Environmental  Protection  Agency  ("EPA"),  the BLM  and by  comparable
agencies in various states directly and indirectly affect the mining industry in
the United States.  These laws and regulations address the environmental  impact
of mining and mineral processing,  including potential contamination of soil and
water from tailings  discharges and other wastes generated by mining  companies.
In particular,  legislation  such as the Clean Water Act, the Clean Air Act, the
Federal  Resource  Conservation  and Recovery Act  ("RCRA"),  the  Environmental
Response,  Compensation and Liability Act and the National  Environmental Policy
Act require analysis and/or impose effluent  standards,  new source  performance
standards,  air quality  antimycin  standards  and other  design or  operational
requirements for various components of mining and mineral processing,  including
gold-ore mining and processing.  Such statutes also may impose  liability on the
Company for remediation of waste it has created.

Gold  mining  and  processing  operations  by an  entity  would  generate  large
quantities  of solid  waste  which is subject to  regulation  under the RCRA and
similar  state  laws.  The  majority  of the waste  which was  produced  by such
operations is  "extraction"  waste that EPA has determined not to regulate under
RCRA's "hazardous waste" program.  Instead,  the EPA is developing a solid waste
regulatory  program specific to mining  operations under the RCRA. Of particular
concern to the mining industry is a proposal by the EPA entitled "Recommendation
for a Regulatory  Program for Mining Waste and Materials Under Subtitle D of the
Resource  Conservation  and Recovery Act" ("Strawman II") which, if implemented,
would create a system of  comprehensive  Federal  regulation  of the entire mine
site.  Many  of  these  requirements  would  be  duplicates  of  existing  state
regulations.  Strawman II as currently proposed would regulate not only mine and
mill wastes but also numerous  production  facilities and processes  which could
limit internal flexibility in operating a mine. To implement Strawman II the EPA
must seek additional 









                                       11

statutory  authority,  which is  expected to be  requested  in  connection  with
Congress' reauthorization of RCRA.

The  Company  also  is  subject  to  regulations  under  (i)  the  Comprehensive
Environmental  Response,  Compensation  and Liability  Act of 1980  ("CERCLA" or
"Superfund")  which  regulates  and  establishes  liability  for the  release of
hazardous   substances  and  (ii)  the  Endangered  Species  Act  ("ESA")  which
identifies  endangered species of plants and animals and regulates activities to
protect  these species and their  habitats.  Revisions to "CERCLA" and "ESA" are
being considered by Congress,  however,  the impact of these potential revisions
on the Company is not clear at this time.

Moreover, the Clean Air Act, as recently amended,  mandates the establishment of
a Federal air permitting program, identifies a list of hazardous air pollutants,
including various metals and cyanide, and establishes new enforcement authority.
The EPA has published final  regulations  establishing  the minimum  elements of
state  operating  permit  programs.  The states had until  November  15, 1993 to
submit their permit programs to the EPA for review and approval. Until the state
regulations  are promulgated and approved by the EPA, the full impact of the new
regulations on the Company cannot accurately be predicted.

In addition, the Company is required to mitigate long-term environmental impacts
by stabilizing,  contouring,  resloping,  and revegetating various portions of a
site. While a portion of the required work was performed concurrently with prior
operations,  completion of the  environmental  mitigation occurs once removal of
all facilities has been completed.  These  reclamation  efforts are conducted in
accordance  with  detailed  plans which have been  reviewed  and approved by the
appropriate  regulatory agencies.  The Company has posted security bonds and has
made provision to cover the estimated  costs of such  reclamation as required by
permit.

The  Company  believes  that its care and  maintenance  operation,  as it exists
today, is in substantial  compliance with federal and state regulations and that
no further significant capital expenditures for environmental control facilities
will be required until production resumes at the site.

MINING PROPERTY RIGHTS

The Company's  mining property  rights are  represented by 50 unpatented  mining
lode  claims.  Unpatented  mining  claims are  generally  considered  subject to
greater title risks than patented mining claims or real property  interests that
are owned in fee simple.  To remain valid, such unpatented claims are subject to
annual  maintenance fees. As of January 31, 2004, the Company was current in the
payment of such maintenance fees.

EMPLOYEES

On April 30, 2004, Newgold had two full-time and one part-time employees located
in Cameron  Park,  California  and Dallas,  Texas.  Newgold's  employees are not
subject to a labor  contract or  collective  bargaining  agreement.  The Company
considers its employee relations to be good.








                                       12

Consulting   services,   relating   primarily   to  geologic   and   geophysical
interpretations, and also relating to such metallurgical, engineering, and other
technical  matters  as may  be  deemed  useful  in the  operation  of  Newgold's
business, will be provided by independent contractors.

FACTORS AFFECTING NEWGOLD'S BUSINESS

The Company has been relatively inactive since April 2001.  Consequently,  it is
only  recently  reactivating  its  business  operations  and  has  generated  no
revenues,  other than dividend income, since its inception. As a result, Newgold
has only a limited operating history upon which to evaluate its future potential
performance.  The Company's  prospects  must be considered in light of the risks
and  difficulties  encountered by new companies  which have not yet  established
their business operations.

The Company  will need  additional  funds to finance its mining and  exploration
activities  as well as fund its current  operations.  It  currently  has no cash
reserves and a working capital deficit and is unable to fund its operations from
revenues.  Consequently,  its ability to meet its  obligations  in the  ordinary
course of business is dependent upon its ability to raise  additional  financing
through public or private equity financings, establish increasing cash flow from
operations,  enter into joint  ventures  or other  arrangements  with  corporate
sources, or secure other sources of financing to fund operations.

The  audit  report  of the  Company's  independent  auditors  includes  a "going
concern"  qualification.   In  the  auditor's  opinion,  the  Company's  limited
operating  history and the accumulated net deficit as of January 31, 2004, raise
substantial doubt about its ability to continue as a going concern.

The price of gold has  experienced  an  increase  in value  over the past  three
years,  generally  reflecting among other things declining interest rates in the
United States;  worldwide  instability  due to terrorism;  and a global economic
slump. Any significant  drop in the price of gold may have a materially  adverse
affect on the results of the Company's  operations unless the Company is able to
offset such a price drop by substantially increased production.

The  Company  prepares  estimates  of future  gold  production  for its  various
operations.  The  Company's  production  estimates are dependent on, among other
things, the accuracy of mineral reserve  estimates,  the accuracy of assumptions
regarding  ore grades  and  recovery  rates,  assumptions  pertaining  to ground
conditions  and  physical  characteristics  of ores,  such as  hardness  and the
presence or absence of particular metallurgical characteristics and the accuracy
of  estimated  rates and costs of mining  and  processing.  The  failure  of the
Company to achieve its  production  estimates  could have a material and adverse
effect on any or all of the Company's future cash flows, profitability,  results
of operations and financial condition.

The Company's  published figures for mineral  resources are only estimates.  The
Company  has no proven or  probable  reserves  and has no ability  to  currently
measure or prove its reserves other then relying on information  produced in the
1990's  and  thus  may be  unable  to  actually  recover  the  quantity  of gold
anticipated.  The Company can only estimate potential mineral resources







                                       13

which is a subjective  process which depends in part on the quality of available
data and the  assumptions  used and judgments  made in  interpreting  such data.
There is significant  uncertainty in any resource  estimate such that the actual
deposits  encountered or reserves validated and the economic viability of mining
the deposits may differ materially from the Company's estimates.

Gold  exploration  is highly  speculative  in nature.  Success in exploration is
dependent  upon a number of factors  including,  but not limited to,  quality of
management, quality and availability of geological expertise and availability of
exploration  capital.  Due to these and other factors, no assurance can be given
that the  Company's  exploration  programs  will result in the  discovery of new
mineral reserves or resources.

The Company's mining property rights consist of 50 unpatented mining claims. The
validity of unpatented mining claims is often uncertain and is always subject to
contest.  Unpatented mining claims are generally  considered  subject to greater
title risk than patented  mining  claims,  or real property  interests  that are
owned  in  fee  simple.  If  title  to a  particular  property  is  successfully
challenged,  the Company may not be able to retain its royalty interests on that
property, which could reduce its future revenues.

Mining is  generally  subject  to  regulation  by state and  federal  regulatory
authorities.  State and federal statutes regulate environmental quality, safety,
exploration  procedures,  reclamation,  employees'  health  and  safety,  use of
explosives, air quality standards,  pollution of stream and fresh water sources,
noxious odors, noise, dust, and other environmental  protection controls as well
as the rights of adjoining  property  owners.  The Company  believes that, it is
currently  operating  in  compliance  with all known  safety  and  environmental
standards and regulations applicable to its Nevada property.  However, there can
be no assurance that its  compliance  could be challenged or that future changes
in federal or Nevada laws, regulations or interpretations  thereof will not have
a material adverse affect on the Company's  ability to resume and sustain mining
operations.

The  business  of gold  mining is subject to certain  types of risks,  including
environmental  hazards,  industrial  accidents,  and theft.  Prior to suspending
operations,  the Company carried  insurance against certain property damage loss
(including business interruption) and comprehensive general liability insurance.
While the Company maintained insurance consistent with industry practice,  it is
not possible to insure against all risks associated with the mining business, or
prudent to assume that  insurance  will continue to be available at a reasonable
cost. The Company has not obtained  environmental  liability  insurance  because
such coverage is not considered by management to be cost effective.  The Company
currently  carries no  insurance  on any of its  properties  due to the  current
status of the mine and the Company's current financial condition.

The Company is substantially  dependent upon the continued  services of A. Scott
Dockter,  its  President.  The  Company  has no  employment  agreement  with Mr.
Dockter,  nor is there either key person life insurance or disability  insurance
on Mr.  Dockter.  While Mr.  Dockter  expects to spend the  majority of his time
assisting the Company,  there can be no assurance  that 








                                       14

Mr. Dockter's  services will remain  available to the Company.  If Mr. Dockter's
services are not available to the Company,  the Company will be  materially  and
adversely affected.  However, Mr. Dockter has been a significant  shareholder of
the Company since its  inception and considers his  investment of time and money
in the Company of significant personal value.

ITEM 2.  DESCRIPTION OF PROPERTY

The Company's office is located at 3090 Boeing Drive, Cameron Park, CA 95682.

The Company also owns 50 unpatented mining claims representing the Relief Canyon
mining property  located the Humboldt Range mining district in Nevada.  See Item
I, Business, Relief Canyon Mine.

ITEM 3.  LEGAL PROCEEDINGS

On  December  3, 1996,  plaintiff  Roy  Christiansen  filed a breach of contract
action against the Company in the Second Judicial District, Reno, Washoe County,
Nevada.  Plaintiff alleged that he was owed $250,000 relating to recovery of his
investment in a property subsequently acquired by the Company. It was discovered
during the pendency of this action that a former Secretary-Treasurer of Newgold,
Inc., (prior to the Company going public through its merger with Warehouse Auto)
signed a contract  in 1994 which  obligated  the  Company,  Newgold,  Inc.  (the
Delaware Corporation) to pay $250,000 to Christiansen, a former developer of the
Golden Asset project which Newgold  purchased and is located in Helena  Montana.
This obligation was unknown to the current principals of the Company. During the
course of litigation,  Plaintiff  moved the court for summary  judgment based on
this signed  agreement;  this motion was granted and a judgment for $250,000 was
entered  against  the  Company.  On May 11,  2000,  the Company  satisfied  this
judgment through the issuance of 350,000 shares of Common Stock to a shareholder
who subsequently settled this judgment.

On May 7, 1997 a  judgment  was  entered  against  the  Company on behalf of the
plaintiff,  Roger Primm, in the Second Judicial  District,  Reno, Washoe County,
Nevada in the amount of $212,500.  The underlying  lawsuit sought repayment of a
loan  made  by the  plaintiff  to the  Company;  loan  proceeds  were  used  for
development  purposes at the Company's mining  properties.  On May 11, 2000, the
Company satisfied this judgment through the issuance of 300,000 shares of Common
Stock to a shareholder who subsequently settled this judgment.

On  March  11,  1998,  one  of  the  Company's  former   consulting  firms,  JBR
Consultants,  instituted  a suit  against  the  Company  for  sums  due  under a
consultant  engineering  contract.  On August 19,  1998 the court for the Second
Judicial  District,  Washoe County,  Reno,  Nevada,  entered a default  judgment
against the Company for $28,815.  On September 25, 1999, the outstanding balance
of the judgment was paid in full.

On February 4, 2000, a complaint was filed against the Company by Sun G. Wong in
the Superior Court of Sacramento County, California (Case No. 00AS00690). In the
complaint,









                                       15

Mr. Wong  claims  that he was held  liable as a guarantor  of Newgold in a claim
brought by Don  Christianson  in a breach of contract  action  against  Newgold.
Despite the fact that Newgold settled the action with Mr.  Christianson  through
the issuance of 350,000 shares of Newgold common stock, Mr. Wong,  nevertheless,
paid  $60,000 to a third  party  claiming  to hold Mr.  Christianson's  judgment
pursuant to Mr. Wong's guaranty agreement.  Similarly,  Mr. Wong alleges that he
was held liable as a guarantor  for a debt of $200,000  owed by Newgold to Roger
Primm with regard to money borrowed by Newgold. Mr. Primm filed suit against the
Company  which was  settled  through the  issuance of 300,000  shares of Newgold
common stock.  Nevertheless,  Mr. Wong alleges that he remains liable to a third
party claiming to hold Mr. Primm's judgment for approximately  $200,000 pursuant
to his guaranty of such debt of Mr. Primm.

On December 29, 2000,  the superior  court  entered a default  judgment  against
Newgold in the amount of $400,553 with regard to the  Christianson  judgment and
an additional  $212,500 in regard to the Primm  judgment  against Mr. Wong.  The
Company believes that Mr. Wong was not obligated to pay any sums pursuant to his
guarantees with regard to the Christianson and Primm judgments  against Newgold.
Should Mr. Wong seek to assert these judgments against the Company,  the Company
cannot  predict the  outcome of any such  action or the amount of expenses  that
would be  ultimately  incurred  in  defending  any such  claims.  The Company is
currently  negotiating a settlement with Mr. Wong, however there is no assurance
that an acceptable settlement will be consummated.

On May 18, 2004 Paul Ngoyi filed a petition for involuntary  bankruptcy  against
Newgold (Case No.  BK-N-0451511).  Mr. Ngoyi claims to be the holder of both the
Christiansen  and Primm  judgments  against  Newgold and is claming that Newgold
cannot pay such judgments because it is insolvent. Newgold has filed for Summary
Judgment  alleging that Mr. Ngoyi's claims are invalid as the two judgments were
previously satisfied and that Newgold is not insolvent. A preliminary hearing on
the Summary  Judgment motion has not yet been scheduled.  The Company intends to
vigorously oppose the bankruptcy petition.


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

None.






















                                       16

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
         MATTERS.

Commencing in July 1997, the Company's common stock was listed and traded on the
NASDAQ Electronic  Bulletin Board (OTCBB) under the symbol "NGLD".  Effective as
of June 2001,  the Company's  shares ceased to be traded on the OTCBB and, since
that  time  have  been  listed  in the Pink  Sheets(R)  which  is a  centralized
quotation   service  that  collects  and  published   market  maker  quotes  for
over-the-counter  securities.  Pink  Sheets is a  limited,  voluntary  reporting
service and does not include all transactions  regarding  Newgold.  Accordingly,
the following  information can only be considered a sample of transactions.  The
following  chart  sets forth the known high and low price on a bid basis for the
Company's  stock for each quarter  during the previous two years.  Prices are as
reported in the Pink Sheets(R)  published by the Pink Sheets LLC. The quotations
set forth below reflect inter-dealer prices,  without retail mark-up,  mark-down
or commissions and may not represent actual transactions.

         ----------------------------------------------- ---------- ----------
         Year Ended January 31, 2004                         Low       High

         ----------------------------------------------- ---------- ----------
         Fourth Quarter (November - January)               $0.001     $0.469
         ----------------------------------------------- ---------- ----------
         Third Quarter (August - October)                  $0.065     $0.159
         ----------------------------------------------- ---------- ----------
         Second Quarter (May-July)                         $0.04      $0.149
         ----------------------------------------------- ---------- ----------
         First Quarter (February - April)                  $0.049     $0.119
         ----------------------------------------------- ---------- ----------

         ----------------------------------------------- ---------- ----------
         Year Ended January 31, 2003                         Low       High

         ----------------------------------------------- ---------- ----------
         Fourth Quarter (November - January)               $0.001     $0.11
         ----------------------------------------------- ---------- ----------
         Third Quarter (August - October)                  $0.005     $0.04
         ----------------------------------------------- ---------- ----------
         Second Quarter (May - July)                       $0.01      $0.20
         ----------------------------------------------- ---------- ----------
         First Quarter (February - April)                  $0.01      $0.06
         ----------------------------------------------- ---------- ----------

As of April 30, 2004,  there were  approximately  1,015 holders of record of the
Company's Common Stock. This amount does not include shares held in street name.

DIVIDEND POLICY

The Company has never paid any cash  dividends on its common stock.  The Company
currently  anticipates  that it will retain all future  earnings  for use in its
business.  Consequently, it does not anticipate paying any cash dividends in the
foreseeable future.





                                       17

RECENT SALES OF UNREGISTERED SECURITIES

During the Company's fiscal year ended January 31, 2004, it issued the following
equity securities  pursuant to exemptions from registration under the Securities
Act of 1933 (the "1933 Act").

In February 2003, one person  exercised a warrant to purchase  200,000 shares of
the Company's common stock. The exercise price was $0.10/share

During the fiscal year ended January 31, 2003,  the Company issued the following
equity securities pursuant to exemptions from registration under the 1933 Act.

In Janauary 2003, three investors  exercised warrants to purchase 550,000 shares
of the Company's common stock. The exercise price was $0.10/share.

All of the above  issuances  were made  without  any public  solicitation,  to a
limited  number of  individuals  or entities and were  acquired  for  investment
purposes  only.  Each of the  individuals  or entities had access to information
about the Company and were deemed capable of protecting their own interests. The
warrants and shares  underlying the warrants were issued pursuant to the private
placement  exemption  provided by Section 4(2) of the 1933 Act. These are deemed
to be "restricted  securities" as defined in Rule 144 under the 1933 Act and the
certificates  evidencing  the shares bear a legend stating the  restrictions  on
resale.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
         OPERATION

For more detailed financial information, please refer to the audited January 31,
2004 Financial Statements included in this Form 10-KSB.

CAUTION ABOUT FORWARD-LOOKING STATEMENTS

This Form 10-KSB includes  "forward-looking"  statements  about future financial
results, future business changes and other events that haven't yet occurred. For
example,  statements  like we "expect,"  we  "anticipate"  or we  "believe"  are
forward-looking  statements.  Investors  should be aware that actual results may
differ  materially  from  our  expressed   expectations  because  of  risks  and
uncertainties about the future. We do not undertake to update the information in
this  Form  10-KSB  if  any  forward-looking  statement  later  turns  out to be
inaccurate.  Details  about risks  affecting  various  aspects of the  Company's
business  are  discussed  throughout  this Form 10-KSB and should be  considered
carefully.

PLAN OF OPERATION FOR THE NEXT TWELVE MONTHS

Certain key factors that have affected our  financial  and operating  results in
the past will affect our future financial and operating results.  These include,
but are not limited to the following:










                                       18

     o   Gold prices, and to a lesser extent, silver prices;

     o   Current gold deposits  under Company  control at the Relief Canyon Mine
         are estimated by the Company (based on past  exploration by the Company
         and work done by others).

         The  Company's  properties  now  include 50  unpatented  mining  claims
         contained in about 1000 acres.

         The  Company's  operating  plan is to  place  its  mining  claims  into
         profitable production by the end of 2005, and use the net proceeds from
         these  operations to fund ongoing  exploration  and  development of its
         property  holdings.  Through the use of joint  ventures,  royalties and
         partnerships,  the Company intends to  progressively  enlarge the scope
         and scale of the mining and processing  operations,  thereby increasing
         both the Company's  annual revenues and its net profits.  The Company's
         objective is to achieve  annual growth rates in revenue and net profits
         for the foreseeable future;

     o   The Company expects to make capital expenditures in fiscal year 2006 of
         between $2.5  million and $4 million,  including  costs  related to the
         resumption of mine operations and production at the Relief Canyon mine.

     o   Due to the  strengthening  of the gold market,  and consistent with the
         Company's exploration growth strategy, it expects exploration, research
         and development expenditures in 2005 will total between $500,000 and $1
         million.

     o   Additional funding or the utilization of other venture partners will be
         required for mining operations,  exploration, research, development and
         operating  expenses.  In the past the Company has been dependent on the
         funding from the private  placement of its  securities as well as loans
         from  related  parties  as the  sole  sources  of  capital  to fund its
         operations.

RESULTS OF OPERATION

The Company has only  recently  resumed  business  operations  after having been
inactive from July 2001 until February 2003.  Consequently,  comparisons between
the operating  results of the Company for the fiscal years 2003 and 2004 are not
as  relevant  as they  otherwise  would be if the  Company  had been  engaged in
business  operations during both fiscal years. In addition,  because the Company
is in the process of  reinstituting  its  business  and mining  operations,  the
results  of  operations  for the  last  two  fiscal  years  will  likely  not be
indicative  of  the  Company's  current  and  future  operations.   The  current
management  discussion  and  analysis  should  be read from the  context  of the
Company's recent resumption of its mining business.












                                       19

Operating Results for the Fiscal Years Ended January 31, 2004 and 2003
----------------------------------------------------------------------

Although the Company commenced efforts to re-establish its mining business early
in fiscal year 2004, no mining operations had commenced and no revenues had been
recognized  during the fiscal year 2004. The Company was inactive  during fiscal
year 2003 and, as a result,  generated no revenues from operations.  The Company
hopes to be able to commence  generating  revenues from mining operations during
the 2006 fiscal year.  The Company has granted a 4% net smelting  return royalty
to a third party which has been recorded as an $800,000 deferred option income.

In fiscal year 2004 the Company spent $37,916 on exploration expenses related to
the Relief Canyon mining  property.  This  compares to  exploration  expenses of
$11,135  expended  during  fiscal  2003.  These  expenses  relate  primarily  to
maintenance  and  retention  costs  required to maintain  the  Company's  mining
claims.  The Company incurred  operating expenses of $306,477 during fiscal year
2004. Of this amount, $220,000 reflects officer compensation and related payroll
taxes during the year,  $32,259  reflect  payroll  penalties and $28,805 reflect
fees for  outside  professional  services.  During  fiscal year 2003 the Company
incurred  operating  expenses  at $79,644 of which  $32,400  represents  officer
compensation and $30,583 reflecting  payroll  penalties.  It is anticipated that
both exploration costs and operating expenses will increase significantly as the
Company resumes its mining operations and exploration program.

The Company incurred  interest expense of $136,493 during fiscal year 2004 which
compares  to  interest  expenses of  $144,879incurred  during  fiscal year 2003.
Although the amount of loans  outstanding  during 2004 increased  slightly,  the
overall interest rate on such borrowing decreased.

The Company's total net loss for fiscal year 2004 increased to $470,823 compared
to a net loss of $215,533  incurred for fiscal year 2003. The larger net loss in
fiscal year 2004 reflects the substantial  increase in operating  expenses and a
lack of revenues recognized during fiscal year 2004.

LIQUIDITY AND CAPITAL RESOURCES

The Company has incurred significant operating losses during the last two fiscal
years which has resulted in an accumulated  deficit of $15,107,162 as of the end
of fiscal year 2004.  At January 31, 2004,  the Company had cash and  marketable
securities of $116,335 and a net working  capital  deficit of $4,181,390.  Since
the  resumption of its business in February 2003, the Company has been dependent
on borrowed or invested funds in order to finance its ongoing operations.  As of
January 31, 2004, the Company had $1,581,721 of outstanding  notes payable which
reflects a small increase compared to notes payable of $1,455,896 outstanding as
of January 31, 2003.

During  fiscal year 2004 the Company  borrowed an  additional  $338,943 from and
repaid $171,942 to its President and Chief Executive Officer at an interest rate
of 8% per year. This amount  increased the Company's  total  indebtedness to its
President to $1,402,742.  Principal and 









                                       20

interest due to the President as well as notes payable to four other individuals
are due on demand of the holder.

By   attempting  to  resume   mining   operations,   the  Company  will  require
approximately  $3 million to $5 million in additional  working capital above the
current working capital deficiency to bring the mine into full production. It is
the  Company's  intention  to  pursue  several  possible  funding  opportunities
including the sale of additional securities or the incurring of additional debt.

Due to the  Company's  continuing  losses  from  its  business  operations,  the
independent  auditor's report includes a "going concern" explanation relating to
the fact that the Company's  continuation is dependent upon obtaining additional
working  capital either  through  significantly  increasing  revenues or through
outside financing.

Due to the Company's limited cash flow,  operating losses and limited assets, it
is unlikely  that the Company  could  obtain  financing  through  commercial  or
banking  sources.  Consequently,  the Company is  dependent on  continuous  cash
infusions from its major  stockholders or other outside sources in order to fund
its current  operations.  If these investors were unwilling or unable to provide
necessary working capital to the Company, the Company would probably not be able
to  commence  or  sustain  its  operations.  There is no  written  agreement  or
contractual  obligation  which would  require the  Company's  investors  to fund
Company  operations  up to a certain  amount or indeed  continue  to finance the
Company's operations at all.

Management of the Company believes that it will need to raise additional capital
to  continue  to  develop,  promote  and  conduct  its mining  operations.  Such
additional  capital may be raised through public or private financing as well as
borrowing  from  other  sources.  To  date,  the  Company's  President  has paid
substantially  all of the Company's  expenses  since  restarting its business in
February 2003.  Although the Company believes that these creditors and investors
will continue to fund the Company's  expenses based upon their  significant debt
or equity  interest in Newgold,  there is no assurance  that such investors will
continue to pay the  Company's  expenses.  If adequate  funds are not  otherwise
available, the Company would not be able to sustain mining operations.

CRITICAL ACCOUNTING POLICIES

Newgold's  discussion  and analysis of its financial  conditions  and results of
operations are based upon its consolidated financial statements, which have been
prepared in accordance  with  generally  accepted  accounting  principles in the
United States. The preparation of financial  statements require managers to make
estimates  and  disclosures  on the  date  of the  financial  statements.  On an
on-going basis, Newgold evaluates its estimates,  including, but not limited to,
those   related  to  revenue   recognition.   The  Company  uses   authoritative
pronouncements,  historical  experience  and other  assumptions as the basis for
making  judgments.  Actual  results could differ from those  estimates.  Newgold
believes  that  the  following  critical  accounting  policies  affect  its more
significant  judgments  and  estimates in the  preparation  of its  consolidated
financial statements.








                                       21

Valuation of Long-lived Assets
------------------------------

Long-lived assets,  consisting primarily of property and equipment,  patents and
trademarks, and goodwill,  comprise a significant portion of the Company's total
assets. Long-lived assets are reviewed for impairment whenever events or changes
in  circumstances  indicate that their carrying  values may not be  recoverable.
Recoverability of assets is measured by a comparison of the carrying value of an
asset to the future net cash flows expected to be generated by those assets. The
cash flow projections are based on historical  experience,  management's view of
growth  rates  within  the  industry,   and  the  anticipated   future  economic
environment.

Factors Newgold  considers  important that could trigger a review for impairment
include the following:

     (a) significant   underperformance   relative  to  expected  historical  or
         projected future operating results,

     (b) significant  changes in the manner of its use of the acquired assets or
         the strategy of its overall business, and

     (c) significant negative industry or economic trends.

When the Company  determines  that the carrying  value of long-lived  assets and
related goodwill and enterprise-level goodwill may not be recoverable based upon
the existence of one or more of the above indicators of impairment,  it measures
any impairment based on a projected discounted cash flow method using a discount
rate determined by its management to be  commensurate  with the risk inherent in
its current business model.

Deferred Reclamation Costs
--------------------------

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

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









                                       22

and monitoring  costs.  Changes in estimates at inactive mines were reflected in
earnings in the period an estimate was revised.

Exploration Costs
-----------------

Exploration  costs are  expensed  as  incurred.  All costs  related to  property
acquisitions are capitalized.

Mine Development Costs
----------------------

Mine development  costs consist of all costs associated with bringing mines into
production, to develop new ore bodies and to develop mine areas substantially in
advance  of  current  production.  The  decision  to  develop a mine is based on
assessment of the commercial  viability of the property and the  availability of
financing.  Once the decision to proceed to development is made, development and
other expenditures  relating to the project will be deferred and carried at cost
with the intention that these will be depleted by charges against  earnings from
future mining  operations.  No depreciation will be charged against the property
until  commercial  production  commences.  After a mine  has been  brought  into
commercial production,  any additional work on that property will be expensed as
incurred,  except for large  development  programs,  which will be deferred  and
depleted.

Reclamation Costs
-----------------

Reclamation  costs  and  related  accrued  liabilities,  which  are based on the
Company's  interpretation of current environmental and regulatory  requirements,
are accrued and expensed, upon determination.

Based on current environmental  regulations and known reclamation  requirements,
management  has  included  its  best  estimates  of  these  obligations  in  its
reclamation accruals. However, it is reasonably possible that the Company's best
estimates of its ultimate  reclamation  liabilities  could change as a result of
changes in regulations or cost estimates.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In April 2003,  the FASB issued SFAS No. 149,  "Amendment  of  Statement  133 on
Derivative Instruments and Hedging Activities" SFAS No. 149 amends and clarifies
financial accounting and reporting for derivative instruments, including certain
derivative  instruments  embedded in other contracts and for hedging  activities
under SFAS Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities."  The  clarification  provisions  of  this  statement  require  that
contracts  with  comparable  characteristics  be accounted for  similarly.  This
statement is effective for any new derivative  instruments the Company may enter
into after June 30, 2003. Implementation of this statement is not anticipated to
have a significant impact on our financial position or results of operations.

In May 2003,  the FASB issued SFAS No. 150,  "Accounting  for Certain  Financial
Instruments  with  Characteristics  of both Liabilities and Equity" SFAS No. 150
establishes  standards  for  how  an  issuer  classifies  and  measures  certain
financial  instruments with  characteristics  of both 




                                       23

liabilities  and  equity.  It  requires  that an  issuer  classify  a  financial
instrument that is within its scope,  which possesses  certain  characteristics,
and was  previously  classified  as equity,  as a liability (or an asset in some
circumstances).  The provisions of this statement are effective at the beginning
of the first interim period beginning after June 15, 2003. The implementation of
the  provisions of SFAS No. 150 did not have a material  impact on the Company's
financial position or results of operations.




















































                                       24

ITEM 7.  FINANCIAL STATEMENTS

                                  NEWGOLD, INC.
                              FINANCIAL STATEMENTS
                               FOR THE YEARS ENDED
                            JANUARY 31, 2004 AND 2003

INDEX TO FINANCIAL STATEMENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                      F-1

         Balance Sheet                                                       F-2

         Statements of Operations                                            F-4

         Statements of Comprehensive Loss                                    F-5

         Statements of Shareholders' Deficit                                 F-6

         Statements of Cash Flows                                            F-7

         Notes to Financial Statements                                F-8 - F-20





































                                       

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders
Newgold, Inc.

We have audited the  accompanying  balance sheet of Newgold,  Inc. as of January
31,  2004,  and  the  related  statements  of  operations,  comprehensive  loss,
shareholders'  deficit,  and cash  flows for each of the two years in the period
ended January 31, 2004. These financial statements are the responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  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  provided  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Newgold, Inc. as of January 31,
2004,  and the results of its  operations and its cash flows for each of the two
years in the  period  ended  January  31,  2004 in  conformity  with  accounting
principles generally accepted in the United States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 2 to the
financial  statements,  during  the year  ended  January  31,2004,  the  Company
incurred a net loss of $470,821 and had negative  cash flows from  operations of
$176,583. In addition,  the Company had an accumulated  shareholders' deficit of
$4,425,944 at January 31,2004. These factors, among others, as discussed in Note
2 to the  financial  statements,  raise  substantial  doubt about the  Company's
ability to continue as a going  concern.  Management's  plans in regard to these
matters are also  described in Note 2. The  financial  statements do not include
any adjustments that might result from the outcome of this uncertainty.

DRAFT - 11/18/04

/s/ SINGER LEWAK GREENBAUM & GOLDSTEIN LLP

Los Angeles, California
November 7, 2004














                                       F-1

                                                                   NEWGOLD, INC.
                                                                   BALANCE SHEET
                                                                 January 31,2004
--------------------------------------------------------------------------------

                                     ASSETS



                                                                                           
CURRENT ASSETS
     Cash                                                                               $   5,967
     Marketable securities available for sale, net of $204,820 of unrealized loss         110,368
                                                                                        ---------
              Total current assets                                                        116,335

OTHER ASSETS
     Deferred reclamation costs                                                           513,946
     Deposits                                                                              45,000
                                                                                        ---------

              Total other assets                                                          558,946
                                                                                        ---------
                  TOTAL ASSETS                                                          $ 675,281
                                                                                        =========


































                                       F-2

                                                                   NEWGOLD, INC.
                                                                   BALANCE SHEET
                                                                 January 31,2004
--------------------------------------------------------------------------------

                      LIABILITIES AND SHAREHOLDERS' DEFICIT



                                                                                          
CURRENT LIABILITIES
     Accounts payable                                                           $        540,194
     Accrued expenses                                                                  1,665,364
     Accrued reclamation costs                                                           513,946
     Notes payable due to individuals and officer                                      1,581,721
                                                                                -----------------

         Total current liabilities                                                     4,301,225
                                                                                -----------------

DEFERRED REVENUE                                                                         800,000
                                                                                -----------------

         Total liabilities                                                             5,101,225

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' DEFICIT
     Common stock, $0.001 par value
         50,000,000 shares authorized
         47,606,174 shares issued and outstanding                                         47,606
     Additional paid in capital                                                       10,838,432
     Other comprehensive loss                                                           (204,820)
     Accumulated deficit                                                             (15,107,162)
                                                                                -----------------

              Total shareholders' deficit                                             (4,425,944)
                                                                                -----------------

                  TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT                   $        675,281
                                                                                =================


















                                       F-3

                                                                   NEWGOLD, INC.
                                                        STATEMENTS OF OPERATIONS
                                                 For the Years Ended January 31,
--------------------------------------------------------------------------------



                                                                     2004            2003
                                                                --------------  --------------

                                                                                    
NET SALES                                                       $           -   $           -

COST OF GOODS SOLD                                                     37,916          11,135
                                                                --------------  --------------

GROSS PROFIT (LOSS)                                                   (37,916)        (11,135)

OPERATING EXPENSES                                                   (306,477)        (79,644)
                                                                --------------  --------------

LOSS FROM OPERATIONS                                                 (344,393)        (90,779)
                                                                --------------  --------------

OTHER INCOME (EXPENSE)
     Dividend income                                                   10,063          20,125
     Interest expense                                                (136,493)       (144,879)
                                                                --------------  --------------

         Total other income (expense)                                (126,430)       (124,754)
                                                                --------------  --------------

NET LOSS                                                        $    (470,823)  $    (215,533)
                                                                ==============  ==============

BASIC AND DILUTED LOSS PER SHARE                                $       (0.01)  $       (0.01)
                                                                ==============  ==============

BASIC AND DILUTED WEIGHTED-AVERAGE SHARES OUTSTANDING              47,595,763      46,863,708
                                                                ==============  ==============




















                                       F-4

                                                                   NEWGOLD, INC.
                                                STATEMENTS OF COMPREHENSIVE LOSS
                                                 For the Years Ended January 31,
--------------------------------------------------------------------------------


                                                     2004               2003
                                               --------------     --------------

NET LOSS                                       $    (470,823)     $    (215,533)

OTHER COMPREHENSIVE LOSS
     Unrealized loss from
         marketable securities                      (204,820)                 -
                                               --------------     --------------

COMPREHENSIVE LOSS                             $    (675,643)     $    (215,533)
                                               ==============     ==============









































                                       F-5

                                                                   NEWGOLD, INC.
                                             STATEMENTS OF SHAREHOLDERS' DEFICIT
                                                 For the Years Ended January 31,
--------------------------------------------------------------------------------


                                        Common Stock            Additional     Other Com-
                               ------------------------------    Paid in       prehensive    Accumulated
                                   Shares          Amount        Capital         (Loss)        Deficit         Total
                               --------------  -------------- -------------- -------------- -------------- -------------- 
                                                                                                    
BALANCE, JANUARY
   31, 2002                       46,856,174   $      46,856  $  10,688,157  $          -   $ (14,420,806) $  (3,685,793)
COMMON STOCK
   ISSUED
     upon exercise of
       warrants                      550,000             550         54,450                                       55,000
OFFERING COSTS                                                       (1,467)                                      (1,467)
WARRANTS ISSUED
   WITH  DEBT                             -               -          13,574                                       13,574
NET LOSS                                                                                         (215,533)      (215,533)
                               --------------  -------------- -------------- -------------- -------------- -------------- 

BALANCE, JANUARY
   31, 2003                       47,406,174          47,406     10,754,714              -    (14,636,339)    (3,834,219)
COMMON STOCK
   ISSUED
     upon exercise of
       warrants                      200,000             200         19,800                                       20,000
WARRANTS ISSUED
   WITH DEBT                              -               -          63,918                                       63,918
OTHER COMPREHENSIVE
     LOSS                                                                         (204,820)                     (204,820)
NET LOSS                                                                                         (470,823)      (470,823)
                               --------------  -------------- -------------- -------------- -------------- -------------- 

BALANCE, JANUARY
   31, 2004                       47,606,174   $      47,606  $  10,838,432  $    (204,820) $ (15,107,162) $  (4,425,944)
                               ==============  ============== ============== ============== ============== ============== 


















                                       F-6

    The accompanying notes are an integral part of these financial statements

                                                                   NEWGOLD, INC.
                                                        STATEMENTS OF CASH FLOWS
                                                 For the Years Ended January 31,
--------------------------------------------------------------------------------



                                                                    2004             2003
                                                                ------------     ------------
CASH FLOWS FROM OPERATING ACTIVITIES
                                                                                    
     Net loss                                                   $  (470,823)     $  (215,533)
     Adjustments to reconcile net loss to net cash
         used in operating activities
              Accretion of warrants issued as a debt discount        22,753           30,180
              (Increase) decrease in
                  Deposits                                          (38,500)              -
                  Deferred reclamation costs                       (463,446)              -
              Increase (decrease) in
                  Accounts payable                                   (2,000)              -
                  Accrued salaries and benefits                     113,000               -
                  Accrued expenses                                  662,433          160,520
                                                                ------------     ------------

                      Net cash used by operating activities        (176,583)         (24,833)
                                                                ------------     ------------

CASH FLOWS FROM INVESTING ACTIVITIES
     Marketable securities                                          (10,063)         (20,125)
                                                                ------------     ------------

                      Net cash used by financing activities         (10,063)         (20,125)
                                                                ------------     ------------


CASH FLOWS FROM FINANCING ACTIVITIES
     Proceeds from the issuance of common stock                      20,000           53,533
     Proceeds from note payable                                     338,943               -
     Repayments of note payable                                    (171,952)          (1,838)
                                                                ------------     ------------

                  Net cash provided by financing activities         186,991           51,695
                                                                ------------     ------------

                      Net increase in cash                              345            6,737

CASH, BEGINNING OF YEAR                                               5,622           (1,115)
                                                                ------------     ------------

CASH, END OF YEAR                                               $     5,967      $     5,622
                                                                ============     ============








                                       F-7

                                                                   NEWGOLD, INC.
                                                   NOTES TO FINANCIAL STATEMENTS
                                                                January 31, 2004

NOTE 1 - ORGANIZATION AND LINE OF BUSINESS

         NEWGOLD,  Inc.  ("the  Company") has been in the business of acquiring,
         exploring,  developing,  and producing gold properties. The Company had
         rights to mine properties in Nevada and Montana.  Its primary focus was
         on the Relief Canyon Mine located near Lovelock,  Nevada,  where it has
         performed  development and exploratory  drilling and was in the process
         of obtaining  permits to allow  operation of the Relief Canyon Mine. In
         December  1997,  the Company  placed the Relief Canyon Mine on care and
         maintenance  status.  The Company  also  conducted  exploration  at its
         Washington Gulch Mine property in Montana.

         In  February  2000 the  Company  began to  implement  an  entirely  new
         business  model  of  investing  in  Internet  companies.   Due  to  the
         deterioration  of the  investment  market for these types of  companies
         later in 2000, the Company  abandoned this  investment  strategy.  From
         mid-2001 until the beginning of 2003 Newgold was essentially  inactive,
         only continuing with some of the care and maintenance at Relief Canyon,
         as provided for by a  non-affiliate  company  owned by the Chairman and
         CEO of Newgold.

         Merger
         ------
         In November 1996, Newgold, Inc. of Nevada (Old Newgold) was merged into
         Warehouse  Auto  Centers,  Inc.  (WAC),  a public  company,  which  had
         previously filed an involuntary petition under Chapter 11 of the United
         States  Bankruptcy Code in the United States  Bankruptcy  Court for the
         Western  District of New York.  Pursuant to the plan of  reorganization
         and merger (the Plan), (i) WAC which was the surviving  corporation for
         legal  purposes,  changed its name to Newgold Inc. (the Company),  (ii)
         the outstanding  shares of Old Newgold were converted into the right to
         receive an aggregate of 12,000,000  shares or approximately  69% of the
         post  merger  outstanding  common  stock  of the  Company,  (iii)  each
         outstanding  share of WAC was converted  into the right to receive 1/65
         share of the common  stock of the  Company,  for an aggregate of 51,034
         shares or less than 1% of the post  merger  outstanding  common  stock,
         (iv) unsecured trade debts and other unsecured pre-petition liabilities
         were paid in full via the issuance of one share of the Company's stock,
         for each $42 of debt, for an aggregate of 63,374 shares or less than 1%
         of the post merger  outstanding  common  stock,  and (v) post  petition
         creditors  received  1 share  of  stock  for  each $1 of  debt,  for an
         aggregate  of 191,301  shares or  approximately  1% of the post  merger
         outstanding  common  stock.  The Plan also required an amendment to the
         Company's capital structure to increase the number of shares authorized
         to 50,000,000 and to reduce the corresponding par value to $.001.

         In  connection  with the Plan,  the Company  raised  $4,707,000 of cash
         through the issuance of convertible debtor certificates.  Shortly after
         confirmation  of the Plan, the debtor  certificates  were exchanged for
         5,135,130  shares of common stock  (including  428,130 shares issued in
         lieu of paying cash for underwriter's fees) representing  approximately
         29% of the post merger outstanding common stock. An additional bonus of
         513,514 shares was issued to investors and underwriters during the year
         ended January 31, 1998 for delay in the effective date of the Company's
         stock trading.
                                       F-8

                                                                   NEWGOLD, INC.
                                                   NOTES TO FINANCIAL STATEMENTS
                                                                January 31, 2004

         For accounting  purposes,  Old Newgold has been treated as the acquirer
         (reverse acquisition). Accordingly, the historical financial statements
         prior to  November  21,  1996 are those of Old  Newgold.  There were no
         assets or  liabilities  acquired  in this  transaction  and there is no
         impact on the statement of operations.

NOTE 2 - GOING CONCERN

         These financial statements have been prepared on a going concern basis.
         However, during the year ended January 31, 2004, the Company incurred a
         net loss of $470,823 and had  negative  cash flows from  operations  of
         $176,583.  In addition,  the Company had an  accumulated  shareholders'
         deficit of  $4,425,944 at January 31, 2004.  The  Company's  ability to
         continue as a going  concern is dependent  upon its ability to generate
         profitable  operations  in the future  and/or to obtain  the  necessary
         financing to meet its  obligations  and repay its  liabilities  arising
         from  normal  business  operations  when they come due.  The outcome of
         these  matters  cannot be  predicted  with any  certainty at this time.
         Since inception, the Company has satisfied its capital needs by issuing
         equity securities.

         Management  plans to continue to provide for its capital  needs  during
         the year  ended  January  31,  2005 by  issuing  equity  securities  or
         incurring  additional debt  financing,  with the proceeds to be used to
         re-establish  mining operations at Relief Canyon as well as improve its
         working capital position. These financial statements do not include any
         adjustments to the amounts and classification of assets and liabilities
         that may be  necessary  should the  Company be unable to  continue as a
         going concern.

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Cash and Cash Equivalents
         -------------------------
         For the purpose of the statements of cash flows, the Company  considers
         all highly liquid  investments  purchased  with original  maturities of
         three months or less to be cash equivalents.

         Marketable Securities Available for Sale
         ----------------------------------------
         Investments in equity securities are classified as  available-for-sale.
         Securities  classified  as  available  for sale are marked to market at
         each period end.  Changes in value on such securities are recorded as a
         component of Other  comprehensive  income (loss).  If declines in value
         are deemed  other than  temporary,  losses are  reflected in Net income
         (loss).

         Property and Equipment
         ----------------------
         Depreciation,  depletion and  amortization of mining  properties,  mine
         development   costs  and  major  plant   facilities  will  be  computed
         principally by the units-of-production method based on estimated proven
         and probable  ore  reserves.  Proven and probable ore reserves  reflect
         estimated quantities of ore which can be economically  recovered in the
         future from known mineral deposits. Such estimates are based on current
         and projected costs and prices.  Other  equipment is depreciated  using
         the straight-line  method principally over the estimated useful life of
         seven years.
                                       F-9

                                                                   NEWGOLD, INC.
                                                   NOTES TO FINANCIAL STATEMENTS
                                                                January 31, 2004

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

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

         Exploration Costs
         -----------------
         Exploration  costs are  expensed  as  incurred.  All costs  related  to
         property acquisitions are capitalized.

         Mine Development Costs
         ----------------------
         Mine  development  costs consist of all costs  associated with bringing
         mines into  production,  to develop new ore bodies and to develop  mine
         areas substantially in advance of current  production.  The decision to
         develop a mine is based on  assessment of the  commercial  viability of
         the property and the  availability  of financing.  Once the decision to
         proceed to  development  is made,  development  and other  expenditures
         relating to the project  will be deferred  and carried at cost with the
         intention that these will be depleted by charges against  earnings from
         future mining  operations.  No depreciation will be charged against the
         property until commercial production  commences.  After a mine has been
         brought  into  commercial  production,  any  additional  work  on  that
         property  will be expensed as  incurred,  except for large  development
         programs, which will be deferred and depleted.

         Financing Costs
         ---------------
         Financing costs,  including  interest,  are capitalized when they arise
         from  indebtedness  incurred to finance  development  and  construction
         activities on properties  that are not yet subject to  depreciation  or
         depletion.  Financing costs are charged against  earnings from the time
         that  mining  operations  commence.  Capitalization  is based  upon the
         actual  interest  on  debt  specifically  incurred  or on  the  average
         borrowing  rate for all other debt  except  where  shares are issued to
         fund the cost of the project.

         Depreciation, Depletion and Amortization
         ----------------------------------------
         Assets other than mining  properties and mineral rights are depreciated
         using the  straight-line  method  over their  estimated  useful  lives.
         Capitalized  development costs are amortized on the units of production
         method  considering  proven and  probable  reserves.  Depreciation  and
         depletion  rates are  subject to  periodic  review to ensure that asset
         costs are amortized over their useful lives.

                                      F-10

                                                                   NEWGOLD, INC.
                                                   NOTES TO FINANCIAL STATEMENTS
                                                                January 31, 2004

         Impairment
         ----------
         Mining  projects and properties  are reviewed for  impairment  whenever
         events or changes in circumstances indicate that the carrying amount of
         these assets may not be  recoverable.  If  estimated  future cash flows
         expected to result from the use of the mining  project or property  and
         its eventual disposition are less than the carrying amount,  impairment
         is recognized  based on the  estimated  fair market value of the mining
         project or property. Fair value generally is based on the present value
         of estimated future net cash flows for each mining project or property,
         calculated  using  estimates of proven and probable  minable  reserves,
         geological   resources,   future  prices,   operating  costs,   capital
         requirements  and  reclamation  costs.  A provision  for  impairment in
         valuation  of  development  costs and  property,  plant  and  equipment
         amounted  to  $800,000  for the year  ended  January  31,  2002 and was
         charged to operating  expense.  After these adjustments all development
         costs and property, plant and equipment have been fully written off.

         Management's  estimates  of future  cash flows are subject to risks and
         uncertainties.  Therefore, it is reasonably possible that changes could
         occur which may affect the  recoverability of the Company's  investment
         in mineral properties.

         Risks Associated with Gold Mining
         ---------------------------------
         The  business  of gold  mining is subject  to  certain  types of risks,
         including environmental hazards, industrial accidents, and theft. Prior
         to suspending operations, the Company carried insurance against certain
         property   damage   loss   (including   business    interruption)   and
         comprehensive general liability insurance. While the Company maintained
         insurance  consistent  with  industry  practice,  it is not possible to
         insure  against  all risks  associated  with the  mining  business,  or
         prudent to assume that  insurance  will  continue to be  available at a
         reasonable cost. The Company has not obtained  environmental  liability
         insurance  because such coverage is not  considered by management to be
         cost effective.  The Company  currently  carries no insurance on any of
         its  properties due to the current status of the mine and the Company's
         current financial condition.

         Reclamation Costs
         -----------------
         Reclamation costs and related accrued  liabilities,  which are based on
         the Company's  interpretation  of current  environmental and regulatory
         requirements, are accrued and expensed, upon determination.

         Based  on  current  environmental  regulations  and  known  reclamation
         requirements,  management  has  included  its best  estimates  of these
         obligations  in its  reclamation  accruals.  However,  it is reasonably
         possible that the Company's best estimates of its ultimate  reclamation
         liabilities  could change as a result of changes in regulations or cost
         estimates.

         Revenue Recognition
         -------------------
         Revenues will be recognized when deliveries of gold are made, title and
         risk of loss  passes  to the  buyer and  collectibility  is  reasonably
         assured.  Deferred revenue represents  non-refundable  cash received in
         exchange  for  royalties  on net smelter  returns on the Relief  Canyon
         Mine. Deferred revenue will be amortized to earnings based on estimated
         production in accordance with the royalty agreement.

         Fair Value of Financial Instruments
         -----------------------------------
         The Company's  financial  instruments include cash and cash equivalents
         and accounts  payable - 

                                      F-11

                                                                   NEWGOLD, INC.
                                                   NOTES TO FINANCIAL STATEMENTS
                                                                January 31, 2004

         trade. The carrying amounts for these financial instruments approximate
         fair value due to their short maturities.

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

         Stock-Based Compensation
         ------------------------
         SFAS No. 123, "Accounting for Stock-Based  Compensation," as amended by
         SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and
         Disclosure,"  defines  a fair  value  based  method of  accounting  for
         stock-based  compensation.  However,  SFAS No.  123 allows an entity to
         continue  to  measure  compensation  cost  related  to stock  and stock
         options  issued to employees  using the intrinsic  method of accounting
         prescribed  by  Accounting  Principles  Board  ("APB")  Opinion No. 25,
         "Accounting for Stock Issued to Employees." Entities electing to remain
         with  the  accounting  method  of  APB  No.  25  must  make  pro  forma
         disclosures  of net income and  earnings per share as if the fair value
         method of  accounting  defined  in SFAS No. 123 had been  applied.  The
         Company  has  elected to account for its  stock-based  compensation  to
         employees using the intrinsic value method under APB No. 25. There were
         no stock options granted or outstanding for the years ended January 31,
         2004 and 2003.

         Income Taxes
         ------------
         The Company accounts for income taxes under the liability method, which
         requires the recognition of deferred tax assets and liabilities for the
         expected  future tax  consequences of events that have been included in
         the financial  statements or tax returns.  Under this method,  deferred
         income taxes are recognized for the tax consequences in future years of
         differences  between the tax bases of assets and  liabilities and their
         financial  reporting  amounts at each  period end based on enacted  tax
         laws and  statutory  tax rates  applicable  to the periods in which the
         differences are expected to affect taxable income. Valuation allowances
         are established,  when necessary,  to reduce deferred tax assets to the
         amount expected to be realized.

         As of  January  31,  2004,  the  deferred  tax  assets  related  to the
         Company's net operating loss carry-forwards are fully reserved.  Due to
         the  provisions  of Internal  Revenue Code Section 338, the Company may
         not have any net  operating  loss  carry-forwards  available  to offset
         financial statement or tax return taxable income in future periods as a
         result of a change in control involving 50 percentage points or more of
         the issued and outstanding securities of the Company.

         Estimates
         ---------
         The  preparation of financial  statements  requires  management to make
         estimates and  assumptions  that affect the reported  amounts of assets
         and liabilities and disclosure of contingent  assets and 

                                      F-12

                                                                   NEWGOLD, INC.
                                                   NOTES TO FINANCIAL STATEMENTS
                                                                January 31, 2004

         liabilities  at the date of the financial  statements  and the reported
         amounts of revenue and expenses  during the  reporting  period.  Actual
         results could differ from those estimates.

         Loss Per Share
         --------------
         The Company utilizes SFAS No. 128, "Earnings per Share." Basic loss per
         share is computed by dividing loss available to common  shareholders by
         the weighted-average number of common shares outstanding.  Diluted loss
         per share is computed  similar to basic loss per share  except that the
         denominator  is  increased to include the number of  additional  common
         shares that would have been  outstanding if the potential common shares
         had been issued and if the  additional  common  shares  were  dilutive.
         Common  equivalent  shares are excluded from the  computation  if their
         effect is anti-dilutive.

         The  following   common  stock   equivalents  were  excluded  from  the
         calculation  of diluted  loss per share since their  effect  would have
         been anti-dilutive:
                                                      2004             2003
                                                 -------------     -------------
                      Warrants                     3,718,229         3,648,463

         Concentrations of Credit Risk
         -----------------------------
         Financial   instruments  which  potentially   subject  the  Company  to
         concentrations of credit risk consist of cash and cash equivalents. The
         Company places its cash and cash equivalents with high credit,  quality
         financial institutions. At times, such cash and cash equivalents may be
         in excess of the Federal Deposit Insurance  Corporation insurance limit
         of  $100,000.  The  Company  has not  experienced  any  losses  in such
         accounts and believes it is not exposed to any significant  credit risk
         on cash and cash equivalents.

         Recent Accounting Pronouncements
         --------------------------------
         In April 2003,  the FASB issued SFAS No. 149,  "Amendment  of Statement
         133 on Derivative  Instruments  and Hedging  Activities."  SFAS No. 149
         amends and clarifies financial  accounting and reporting for derivative
         instruments, including certain derivative instruments embedded in other
         contracts  and for hedging  activities  under SFAS  Statement  No. 133,
         "Accounting  for Derivative  Instruments and Hedging  Activities."  The
         clarification  provisions of this statement require that contracts with
         comparable  characteristics be accounted for similarly.  This statement
         is effective for any new derivative  instruments  the Company may enter
         into after  June 30,  2003.  Implementation  of this  statement  is not
         anticipated to have a significant  impact on our financial  position or
         results of operations.

         In May 2003,  the FASB  issued SFAS No.  150,  "Accounting  for Certain
         Financial  Instruments  with  Characteristics  of both  Liabilities and
         Equity."  SFAS  No.  150  establishes   standards  for  how  an  issuer
         classifies   and   measures   certain   financial    instruments   with
         characteristics  of both  liabilities  and equity.  It requires that an
         issuer classify a financial  instrument that is within its scope, which
         possesses  certain  characteristics,  and was previously  classified as
         equity,  as a  liability  (or an  asset  in  some  circumstances).  The
         provisions of this  statement  are effective for financial  instruments
         entered  into  or  modified  after  May 31,  2003,  and  otherwise  are
         effective at the beginning of the first interim period  beginning after
         June 15, 2003. The implementation of the 

                                      F-13

                                                                   NEWGOLD, INC.
                                                   NOTES TO FINANCIAL STATEMENTS
                                                                January 31, 2004

         provisions  of SFAS  No.  150 did not  have a  material  impact  on the
         Company's financial position or results of operations.

NOTE 4 - MARKETABLE SECURITIES AVAILABLE FOR SALE

         At January 31, 2004 the Company held 71,205  common  shares of NutraCea
         which was accounted  for as an  investment  in  marketable  securities.
         During the year ended January 31, 2004,  unrealized  holding  losses of
         $204,820  were  recorded  in Other  comprehensive  loss to reflect  the
         market value  decrease  during the period.  In October 2004 the Company
         sold all of its investment in marketable securities (see Note 11).

NOTE 5 - PROPERTY AND EQUIPMENT

         Property  and  equipment  at January 31, 2004 was recorded at no value.
         The  Company  had  previously  determined  that the  value of its fixed
         assets at the Relief  Canyon Mine were  permanently  impaired and wrote
         off assets with a basis of  $800,000.  If the  Company can  reestablish
         mining  operations  at Relief  Canyon it is possible that some of these
         assets could be utilized in such operations.

         A summary of property, plant and equipment was as follows:



                                     `              Machinery
                                                        &          Development      Capitalized   
                                     Buildings      Equipment      Costs            Interest          Total
                                   -------------  -------------  ---------------  ---------------  ------------   
                                                                                           
         Relief Canyon Mine          $215,510       $277,307       $261,742        $45,441           $800,000


         All office  furniture and equipment  has been fully  depreciated  as of
         January 31, 2004.

NOTE 6 - NOTES PAYABLE TO RELATED PARTIES AND INDIVIDUALS

         Unsecured  notes payable to individuals  and related parties consist of
         the following at January 31, 2004:

         Loans from  officer.  The notes bear interest at 8%
         per year.  The notes are currently due. The Company
         is in  default  with  respect  to these  loans.  In
         connection  with the loans,  warrants  to  purchase
         3,718,229  shares of common stock have been issued.
         The   warrants   have   been   valued   using   the
         Black-Scholes  option  pricing  model (see Note 7).
         The  warrants  were  issued  at $0.15 per share and
         expire in five years from the date of issuance.            $ 1,402,742

         Loan from individual. The note bears interest at 8%
         per year. The note is currently due. The Company is
         in default with respect to this loan.                          176,500

         Other non-interest bearing advances                             47,038

                            F-14

                                                                   NEWGOLD, INC.
                                                   NOTES TO FINANCIAL STATEMENTS
                                                                January 31, 2004


         Unamortized warrant expense                                    (44,559)
                                                                    ------------
            Total notes payable to individuals and related parties  $ 1,581,721
                                                                    ============
         The  Company  recorded  $136,493  of  interest  expense in the  current
         period.


NOTE 7 - COMMITMENTS AND CONTINGENCIES

         Except for the  advance  royalty and rent  payments  noted  below,  the
         Company is not  obligated  under any capital  leases or  non-cancelable
         operating  lease with initial or remaining lease terms in excess of one
         year as of January 31, 2004.  However,  minimum annual royalty payments
         are required to retain the lease rights to the Company's properties.

         Relief Canyon Mine
         ------------------
         The Company purchased the Relief Canyon Mine from J.D. Welsh Associates
         (Welsh) in January  1995.  The mine  consisted of 39 claims and a lease
         for access to an additional 800 acres contiguous to the claims.  During
         1997,  the  Company  staked an  additional  402 claims.  Subsequent  to
         January  31,  1998,  the  Company   reduced  the  total  claims  to  50
         (approximately  1,000  acres).  The annual  payment to  maintain  these
         claims is $5,000.  As part of the  original  purchase of Relief  Canyon
         Mine,  Welsh assigned the lease from Santa Fe Gold  Corporation  (Santa
         Fe) to the  Company.  The  lease  granted  Santa Fe the  sole  right of
         approval of transfer to any subsequent owner of the Relief Canyon Mine.
         Santa Fe had  accepted  lease and  minimum  royalty  payments  from the
         Company,  but has  declined  to approve  the  transfer.  Due to Welsh's
         inability to transfer the Santa Fe lease,  the original  purchase price
         of  $500,000  for Relief  Canyon Mine was reduced by $50,000 in 1996 to
         $450,000.

         Subsequent to January 31, 1998,  the lease was  terminated by Santa Fe.
         Management  believes  loss of the Santa Fe lease will have no  material
         adverse affect on the remaining operations of the mine operation or the
         financial position of the Company.

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

         Litigation
         ----------
         On  December  3, 1996,  plaintiff  Roy  Christiansen  filed a breach of
         contract  action against the Company in the Second  Judicial  District,
         Reno,  Washoe  County,  Nevada.  Plaintiff  alleged  that  he was  owed
         $250,000   relating  to  recovery  of  his  investment  in  a  property
         subsequently  acquired by the  Company.  It was  discovered  during the
         pendency of this action that a former  Secretary-Treasurer  of Newgold,
         Inc.,  (prior to the  Company  going  public  through  its merger  with
         Warehouse  Auto) signed a contract in 1994 which obligated the Company,
         Newgold,   Inc.   (the  Delaware   Corporation)   to  pay  $250,000  to
         Christiansen,  a former  developer  of the Golden Asset  

                                      F-15

                                                                   NEWGOLD, INC.
                                                   NOTES TO FINANCIAL STATEMENTS
                                                                January 31, 2004

         project which Newgold purchased and is located in Helena Montana.  This
         obligation was unknown to the current principals of the Company. During
         the  course of  litigation,  Plaintiff  moved  the  court  for  summary
         judgment based on this signed agreement;  this motion was granted and a
         judgment for $250,000 was entered against the Company. On May 11, 2000,
         the Company  satisfied  this  judgment  through the issuance of 350,000
         shares of Common Stock to a shareholder who  subsequently  settled this
         judgment.

         On May 7, 1997 a judgment was entered  against the Company on behalf of
         the plaintiff,  Roger Primm,  in the Second  Judicial  District,  Reno,
         Washoe County,  Nevada.  The underlying  lawsuit sought  repayment of a
         loan made by the plaintiff to the Company;  loan proceeds were used for
         development  purposes at the Company's  mining  properties.  On May 11,
         2000,  the Company  satisfied  this  judgment  through the  issuance of
         300,000  shares  of  Common  Stock to a  shareholder  who  subsequently
         settled this judgment.

         On March 11, 1998, one of the Company's  former  consulting  firms, JBR
         Consultants, instituted a suit against the Company for sums due under a
         consultant  engineering  contract. On August 19, 1998 the court for the
         Second  Judicial  District,  Washoe  County,  Reno,  Nevada,  entered a
         default  judgment  against the Company for $28,815.  On  September  25,
         1999, the outstanding balance of the judgment was paid in full.

         On February 4, 2000, a complaint  was filed  against the Company by Sun
         G. Wong in the Superior Court of Sacramento  County,  California  (Case
         No.  00AS00690).  In the  complaint,  Mr.  Wong claims that he was held
         liable as a guarantor of Newgold in a claim brought by Don Christianson
         in a breach of contract action against  Newgold.  Despite the fact that
         Newgold settled the action with Mr.  Christianson  through the issuance
         of 350,000 shares of Newgold common stock, Mr. Wong, nevertheless, paid
         $60,000 to a third party claiming to hold Mr.  Christianson's  judgment
         pursuant to Mr. Wong's guaranty agreement.  Similarly, Mr. Wong alleges
         that he was held liable as a guarantor  for a debt of $200,000  owed by
         Newgold to Roger  Primm with regard to money  borrowed by Newgold.  Mr.
         Primm  filed suit  against the  Company  which was settled  through the
         issuance of 300,000 shares of Newgold common stock.  Nevertheless,  Mr.
         Wong alleges that he remains  liable to a third party  claiming to hold
         Mr.  Primm's  judgment  for up to $200,000  pursuant to his guaranty of
         such debt of Mr. Primm.

         On December 29, 2000,  the superior  court  entered a default  judgment
         against   Newgold  in  the  amount  of  $400,553  with  regard  to  the
         Christianson judgment and an additional $212,500 in regard to the Primm
         judgment  against Mr. Wong. The Company  believes that Mr. Wong was not
         obligated to pay any sums pursuant to his guarantees with regard to the
         Christianson and Primm judgments against Newgold and, as a result,  Mr.
         Wong   should  not  have  any   recourse   against   the   Company  for
         reimbursement.  Should Mr. Wong seek to assert these judgments  against
         the Company,  the Company cannot predict the outcome of any such action
         or the  amount  of  expenses  that  would  be  ultimately  incurred  in
         defending  any such  claims.  The Company is  currently  negotiating  a
         settlement  with  Mr.  Wong,  however  there  is no  assurance  that an
         acceptable settlement will be consummated.

                                      F-16

                                                                   NEWGOLD, INC.
                                                   NOTES TO FINANCIAL STATEMENTS
                                                                January 31, 2004

         On May 18, 2004 Paul Ngoyi filed a petition for involuntary  bankruptcy
         against  Newgold  (Case No.  BK-N-0451511).  Mr. Ngoyi claims to be the
         holder of both the Christiansen and Primm judgments against Newgold and
         is  claming  that  Newgold  cannot  pay such  judgments  because  it is
         insolvent.  Newgold has filed for Summary  Judgment  alleging  that Mr.
         Ngoyi's  claims  are  invalid  as the  two  judgments  were  previously
         satisfied and that Newgold is not insolvent.  A preliminary  hearing on
         the Summary  Judgment  motion is scheduled  for November 22, 2004.  The
         Company intends to vigorously oppose the bankruptcy petition.

         The  Company is  involved  in various  other  claims and legal  actions
         arising  in  the  ordinary  course  of  business.  In  the  opinion  of
         management,  the ultimate dispositions of these matters will not have a
         material adverse effect on the Company's financial position, results or
         operations or liquidity.

NOTE 8 - SHAREHOLDERS' DEFICIT

         The following common stock transactions occurred during the years ended
         January 31, 2004 and 2003:

         Common Stock
         ------------
         On February  20, 2003  warrants  to purchase  200,000  shares of common
         stock  were  exercised  at a price of $0.10  per  share.  The  original
         exercise   price  was  $1.00  however  the  investor  and  the  Company
         renegotiated the exercise price to $0.10 per share.

         On January 27, 2003 warrants to purchase 550,000 shares of common stock
         were  exercised at a price of $0.10 per share.  The  original  exercise
         price was $1.00 however the investors and the Company  renegotiated the
         exercise price to $0.10 per share.

         Warrants
         --------
         The  Company  has issued  common  stock  warrants  to an officer of the
         Company as part of certain financing transactions (see Note 5).

         The fair market value of these  warrants  issued during the years ended
         January 31, 2004 and 2003 was  determined to be $63,919 and $13,574 and
         was calculated  under the  Black-Scholes  option pricing model with the
         following assumptions used:
                                                      2004             2003
                                                   ---------        ---------
                  Expected life                     5 years          5 years
                  Risk free interest rate             3.16%            3.00%
                  Volatility                           400%             506%
                  Expected dividend yield              None             None

         The fair value of these warrants is being amortized to interest expense
         over one year,  the  original  life of the  loans.  Total  amortization
         expense for the years ended January 31, 2004 and 2003 was approximately
         $22,800 and $30,200 respectively.

         The following table presents warrant activity through January 31, 2004:

                                      F-17

                                                                   NEWGOLD, INC.
                                                   NOTES TO FINANCIAL STATEMENTS
                                                                January 31, 2004


                                                                    Weighted-
                                                                    Average
                                                    Number          Exercise
                                                  of Shares          Price
                                                --------------   -------------
  Outstanding, January 31, 2002                     3,746,000    $       0.53
    Granted                                           452,463    $       0.15
    Exercised                                        (550,000)   $      (0.10)
                                                --------------   -------------
                                                                
  Outstanding, January 31, 2003                     3,648,463    $       0.43
    Granted                                         1,265,766    $       0.15
    Exercised                                        (200,000)   $      (0.10)
    Expired                                          (996,000)   $       1.00
                                                --------------   -------------
                                                                
      OUTSTANDING, JANUARY 31, 2004                 3,718,229    $       0.15
                                                ==============   =============
                                                                   
      EXERCISABLE, JANUARY 31, 2004                 3,718,229    $       0.15
                                                ==============   =============

NOTE 9 - INCOME TAXES

         As  of  January  31,  2004,   the  Company  had  net   operating   loss
         carry-forwards of approximately  $10,161,000 available to reduce future
         Federal taxable income which, if not used, will expire at various dates
         through  January  31,  2024.  Due to  changes in the  ownership  of the
         Company, the utilization of these loss carry-forwards may be subject to
         substantial annual limitations.  Deferred tax assets  (liabilities) are
         comprised of the following at January 31, 2004:

                  Deferred Tax Assets
                      Net Operating Loss Carry-forwards         $    4,129,645
                      Accrued Interest Payable                         164,278
                      Accrued Payroll Tax                              139,586
                      Accrued Payroll                                   48,422
                      Amortization Diff Book/Tax                        21,165
                      Accrued Accounts Payable                          88,250
                      Other                                                272
                  Less valuation allowance                          (4,269,515)
                                                                ---------------
                  Total Deferred Tax Assets                            322,104
                                                                ---------------
                  Deferred Tax Liability
                      State Taxes                                     (322,104)
                                                                ---------------
                  Total Deferred Tax Liabilities                      (322,104)
                                                                ---------------

                      NET  DEFERRED  TAX  ASSETS                $           - 
                                                                ===============

         The net  change in the total  valuation  allowance  for the year  ended
         January 31, 2004 was $174,971.  The valuation  allowance is provided to
         reduce the deferred  tax asset to a level which,  more likely than not,
         will be realized.

         The  expected  Federal  income  tax  benefit,  computed  based  on  the
         Company's  pre-tax losses at January 31, 2004 and the statutory Federal
         income tax rate, is  reconciled to the actual tax benefit  reflected in
         the accompanying financial statements as follows:

                                      F-18

                                                                   NEWGOLD, INC.
                                                   NOTES TO FINANCIAL STATEMENTS
                                                                January 31, 2004



                                                                                          
                  Expected tax benefit at statutory rates                       $        174,971
                  Decrease resulting from valuation allowance for benefits
                      from net operating loss carry-forwards and other                  (174,971)
                                                                                -----------------

                           TOTAL                                                $             -
                                                                                =================


         Previous to June 21, 1996, the stockholder of the Company elected under
         Internal  Revenue Code  Section 1362 to have the Company  taxed as an S
         Corporation.  As such, all Federal and  substantially  all State income
         tax attributes  passed through the Company  directly to the stockholder
         until that date.

NOTE 10 - RELATED PARTY TRANSACTIONS

         Loans from officer
         ------------------
         As of January 31, 2004, the Chief Executive Officer and Chairman of the
         Company,  loaned the Company an  aggregate  of $338,943  and was repaid
         $171,952. During the year ended January 31, 2003, he was repaid $9,248.
         As of  January  31,  2004 the net  principal  balance  owing to him was
         $1,402,742 and accrued  interest  payable was $331,101.  See Note 5 and
         Note 10.

         Accrued Payroll and Expenses Owed to Officers
         ---------------------------------------------
         As of January 31, 2004 the Company owed the Chief Executive Officer and
         Chairman of the Company  $64,000 for back wages. As of January 31, 2004
         the  Company  owed the Chief  Financial  Officer and  Secretary  of the
         Company $192,334 for back wages and $16,717 for accrued  expenses.  See
         Note 11.

NOTE 11 - SUBSEQUENT EVENTS

         As of October 31, 2004 the Chief Executive  Officer and Chairman of the
         Company,  loaned the Company an additional  $21,581 and was repaid $350
         during fiscal 2005. In connection with the loans,  warrants to purchase
         141,500  shares of common  stock have been issued.  The  warrants  were
         issued at $0.15 per share  and  expire in five  years  from the date of
         issuance.

         In October 2004, the Company consolidated the amounts owed to the Chief
         Executive  Officer and the Chief Financial  Officer referred to in Note
         10 (excluding  accrued  interest  payable) into new  convertible  notes
         payable  bearing  interest at 8% and due September 30, 2005.  The notes
         and any interest  accrued on the new notes are convertible  into common
         shares of the  Company at a  conversion  price of $0.15 per  share.  In
         connection with the loans, warrants to purchase 9,351,613 and 1,395,007
         shares of common stock have been issued to the Chief Executive  Officer
         and the Chief Financial Officer, respectively.

         In October 2004,  the Company  liquidated  its investment in marketable
         securities  through  open market  transactions.  Net  proceeds  totaled
         approximately $34,100.

         In October 2004, the Company  re-staked the Relief Canyon mill site and
         lode claims, which now include a total of 78 claims. The annual payment
         to maintain these claims is approximately $15,600.

                                      F-19

                                                                   NEWGOLD, INC.
                                                   NOTES TO FINANCIAL STATEMENTS
                                                                January 31, 2004
























































                                      F-20

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
         ACCOUNTING AND FINANCIAL DISCLOSURE

On December 5, 2003, the Company  dismissed Burnett & Company LLP ("Burnett") as
its independent  accountants.  The Company's Board of Directors  participated in
and approved the decision to change independent accountants. This change was due
to Burnett's  determination  to  discontinue  auditing  services  for  companies
subject to the reporting  obligations  of the  Securities  Exchange Act of 1934.
("Exchange Act")

Burnett did not perform any audit  services for the Company  during the past two
fiscal years.

In  connection  with its  audits  for  fiscal  years 2000 and 1999 there were no
disagreements with Burnett on any matter of accounting  principles or practices,
financial  statement   disclosure,   or  auditing  scope  or  procedure,   which
disagreements  if not resolved to the  satisfaction of Burnett would have caused
them to make reference  thereto in their report on the financial  statements for
such years.

The Company  engaged Singer Lewak  Greenbaum & Goldstein LLP ("SLGG") as its new
independent  accountants  as of  December  5, 2003.  During the two most  recent
fiscal years and through  December 5, 2003,  the Company has not consulted  with
SLGG  regarding  either  (i)  the  application  of  accounting  principles  to a
specified  transaction,  either  completed  or  proposed;  or the  type of audit
opinion  that might be  rendered  on the  Company's  financial  statements,  and
neither a written report was provided to the Company or oral advice was provided
that the Company  concluded was an important factor considered by it in reaching
a decision as to the accounting,  auditing or financial reporting issue; or (ii)
any  matter  that was  either the  subject  of a  disagreement,  as that term is
defined in Item  304(a)(1)(iv)(A) of Regulation S-B and the related instructions
to Item 304 of Regulation S-B, or a reportable event, as that term is defined in
Item 304(a)(1)(iv)(B) of Regulation S-B.

ITEM 8A. CONTROLS AND PROCEDURES

The  Company  carried  out an  evaluation,  under the  supervision  and with the
participation of the Company's management, including the Company's President and
Chief Executive Officer along with the Company's Chief Financial Officer, of the
effectiveness of the design and operation of the Company's  disclosure  controls
and procedures  pursuant to Exchange Act Rule 13a-14 as of the end of the period
covered by this report. Based upon that evaluation,  the Company's President and
Chief  Executive  Officer  along  with the  Company's  Chief  Financial  Officer
concluded that the Company's disclosure controls and procedures are effective to
ensure the information  required to be disclosed by the Company in reports filed
or submitted under the Exchange Act were timely recorded,  processed and will in
the future be reported  within the time periods  specified in the Securities and
Exchange Commission rules and forms.











                                       25

There have been no significant  changes in the Company's  internal controls over
financing  reporting or in other factors which occurred  during the last quarter
covered by this report,  which could materially  affect or are reasonably likely
to materially affect the Company's internal controls over financing reporting.

ITEM 8B. OTHER INFORMATION

None



















































                                       26

                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
         PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
         ACT

The  following  table sets forth  information  about the directors and executive
officers of the Company  together with the principal  positions and offices with
the Company held by each:



---------------------------- ------- ------------------------------------------------------ ------------------------
Name of Person                 Age   Position and Office Presently Held With NutraStar      Director Since
---------------------------- ------- ------------------------------------------------------ ------------------------
---------------------------- ------- ------------------------------------------------------ ------------------------
                                                                                    
A. Scott Dockter               48    Chairman, CEO and President                            1996
---------------------------- ------- ------------------------------------------------------ ------------------------
James W. Kluber                53    Chief Financial Officer and Director                   2000
---------------------------- ------- ------------------------------------------------------ ------------------------


A.  SCOTT  DOCKTER  has been the Chief  Executive  Officer  and  Chairman  since
December 2000,  assuming such positions upon the  resignation of James Cutburth.
Mr.  Dockter had  previously  served as the  Company's  CEO and  President  from
November  1996 until  February  2000 at which  time Mr.  Cutburth  assumed  such
positions.  Mr. Dockter has been self-employed in the business sector since 1978
and  currently  operates  his business  through ASD CORP.  He has held a Class A
General  Engineering and Contracting  License for more than 20 years,  operating
his businesses in California,  Nevada and Montana, specializing in earth moving,
mining, pipeline projects, structures, dams, industrial parks and sub divisions.
Mr. Dockter has directed his companies in large landfill operations, underground
concrete  structures  projects,  large  excavations,  reclamation  projects  and
others,  which include state and local municipal projects.  Mr. Dockter has also
been a real  estate  developer,  worked on oil & gas  projects  and has spent 15
years in the mining  industry.  He has personally  owned mines,  operated mines,
constructed mine infrastructures (physical, production and process) and produced
precious  metals.  In January 2002,  Mr.  Dockter  pleaded  guilty to one felony
charge of  environmental  pollution  and was  sentenced to 5 months in a Federal
detention  camp and a $5,000  fine.  The charge  related  to the  release in the
summer 1997 of a hazardous material  (asbestos) at a demolition project owned by
Riverfront  Development  Corporation,  a corporation  founded by Mr.  Dockter of
which he was then the CEO.

JAMES W. KLUBER has been the Chief  Financial  Officer of Newgold since February
2000 and a  director  since  April  2000.  Mr.  Kluber  has  served  as a senior
financial  consultant in a variety of service and technology  environments  with
special focus on high growth  companies  and  restructuring  operations.  He has
successfully  raised  capital for  companies in a variety of markets,  utilizing
public  and  private  equity  as  well  as  securitized  and  unsecured  debt to
accomplish  funding  requirements.  From  December 2001 to September  2003,  Mr.
Kluber was the CFO of Nutracea, a public company involved in the development and
distribution of products based on the use of stabilized rice bran. Additionally,
he was the Senior Vice President and CFO from 1996 to 1999 for RealPage,  Inc. a
leading provider of software and services to the



                                       27

real estate industry. From 1993 to 1996 he served as Vice President of Financial
Operations  for two  public  companies  sponsored  by  Security  Capital  Group,
ProLogis Trust and Archstone Communities.

The  current  Directors  will  serve  and hold  office  until  the  next  annual
shareholders'  meeting  or until  their  respective  successors  have  been duly
elected and  qualified.  The Company's  executive  officers are appointed by the
Board of Directors and serve at the discretion of the Board.

FAMILY RELATIONSHIPS

There are no family relationships between any director or executive officer.

BOARD MEETINGS AND COMMITTEES

The Board of Directors  of the Company  held one meeting  during the fiscal year
ended January 31, 2004. The Board does not currently have an Audit, Executive or
Compensation Committee.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities  Exchange Act of 1934, as amended,  requires the
Company's executive officers and directors, and persons who own more than 10% of
the Company's common stock to file reports of ownership on Form 3 and changes in
ownership on Form 4 with the  Securities  and Exchange  Commission  (the "SEC").
Such executive officers, directors and 10% stockholders are also required by SEC
rules to furnish the Company  with copies of all Section  16(a) forms they file.
Based  solely  upon its  review of copies of such  forms  received  by it, or on
written  representations  from certain  reporting  persons that no other filings
were required for such persons,  the Company  believes  that,  during the fiscal
year ended  January 31,  2004,  its  executive  officers and  directors  and 10%
stockholders  complied with all  applicable  Section 16(a) filing  requirements,
except as follows: A Form 4 indicating the acquisition of a convertible note and
warrants was filed delinquently by the Company's President, Mr. Dockter.

ITEM 10.        EXECUTIVE COMPENSATION

The following table sets forth the compensation of the Company's Chief Executive
Officer during the last three complete fiscal years.  No other officer  received
annual compensation in excess of $100,000 during the last completed fiscal year.



















                                       28

                           SUMMARY COMPENSATION TABLE



                                        Annual Compensation                          Long Term Compensation
                             -------------------------------------------   -----------------------------------------
                                                                                     Awards               Payout
                                                                           ---------------------------  ------------
                                                                            Restricted    Securities
                                                          Other Annual        Stock       Underlying       LTIP       All Other  
                    Fiscal     Salary        Bonus ($)  Compensation ($)   Award(s) ($)    Options      Payout ($)   Compensation
                     Year                                                                    (#)                         ($)
                  ---------- ------------- ------------ ----------------   ------------- -------------  ------------ ------------
                                                                                             
Scott Dockter(1)     2004     $ 60,000         -0-           -0-               -0-           -0-            -0-            -0-
(CEO)                2003     $ 12,400         -0-           -0-               -0-           -0-            -0-            -0-
                     2002     $ 30,000         -0-           -0-               -0-           -0-            -0-            -0-

James Kluber(2)      2004     $140,000         -0-           -0-               -0-           -0-            -0-            -0-
(CFO)                2003     $ 20,000         -0-           -0-               -0-           -0-            -0-            -0-
                     2002     $ 70,000         -0-           -0-               -0-           -0-            -0-            -0-



-------------------------
     (1) Of the amounts shown, the following amounts have been deferred:  2004 -
         $24,000; 2002 - $30,000
     (2) Of the amounts shown, the following amounts have been deferred:  2004 -
         $89,000; 2002 - $30,000

STOCK OPTION PLAN

Newgold does not have a formal stock option plan currently in place.  Options to
date have been granted on an  individual  basis  pursuant to  individual  option
agreements. Newgold expects to adopt a formal stock option plan during this next
fiscal year.

Options/SAR Grants in Last Fiscal Year
--------------------------------------

The following  table sets forth certain  information  with respect to options or
SAR grants in Newgold during the fiscal year ended January 31, 2004 to the Named
Executive Officers.



-------------------------- ------------------------- ----------------------- ------------------ ----------------------
Name                       Number of Securities      Percent of Total        Exercise or Base   Expiration Date
                           Underlying Options        Options Granted to      Price
                           Granted                   Employees at January    ($ Per Share)
                                                     31, 2004
-------------------------- ------------------------- ----------------------- ------------------ ----------------------
                                                                                    
None
-------------------------- ------------------------- ----------------------- ------------------ ----------------------




                                       29

Aggregated Option/SAR Exercises Year-End Table.
-----------------------------------------------

During the fiscal  year ended  January  31,  2004,  none of the Named  Executive
Officers had exercised any options/SARs  issued by Newgold.  The following table
sets forth  information  regarding the stock options held as of January 31, 2004
by the Named Executive Officers.



------------------------------ ------------------------------------------- -------------------------------------------
Name                           Number of Securities Underlying             Value of Unexercised
                               Unexercised Options at                      In-the-Money Options at
                               January 31, 2004                            January 31, 2004
------------------------------ --------------------- --------------------- -------------------- ----------------------
                                      Exercisable         Unexercisable          Exercisable          Unexercisable
------------------------------ --------------------- --------------------- -------------------- ----------------------
                                                                                    
None
------------------------------ --------------------- --------------------- -------------------- ----------------------


EMPLOYEE PENSION, PROFIT SHARING OR OTHER RETIREMENT PLANS

Newgold does not have a defined  benefit pension plan or profit sharing or other
retirement plan.

COMPENSATION OF DIRECTORS

Newgold's  directors  are also  officers  of the  Company and do not receive any
additional compensation for their services as members of the Board of Directors.

The Company intends to appoint additional directors in the future who may or may
not  be  employees.  For  the  non-employee  directors,  the  Company  may  seek
shareholder  approval  for a  "Director  Option  Plan"  which would serve as the
compensation plan for such directors.  No specific plan had been developed as of
the end of the fiscal year.

LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

         The Company's  bylaws  provide that it will  indemnify its officers and
directors,  employees and agents and former officers,  directors,  employees and
agents  unless their conduct is finally  adjudged as grossly  negligent or to be
willful misconduct. This indemnification includes expenses (including attorneys'
fees), judgments,  fines, and amounts paid in settlement actually and reasonably
incurred  by  these  individuals  in  connection  with  such  action,  suit,  or
proceeding,   including  any  appeal  thereof,  subject  to  the  qualifications
contained in Delaware law as it now exists. Expenses (including attorneys' fees)
incurred in defending a civil or criminal  action,  suit, or proceeding  will be
paid by the Company in advance of the final disposition of such action, suit, or
proceeding  upon  receipt  of an  undertaking  by or on behalf of the  director,
officer,  employee or agent to repay such amount,  unless it shall ultimately be
determined  that he or she is  entitled  to be  indemnified  by the  Company  as
authorized in the bylaws. This  indemnification will continue as to a person who
has ceased to be a director,  officer, employee or agent, and will benefit their
heirs,  executors,  and  administrators.  These  indemnification  rights are not
deemed  exclusive of any other rights to which any such person may  otherwise be
entitled  

                                       30

apart from the bylaws.  Delaware law generally provides that a corporation shall
have the power to  indemnify  persons  if they  acted in good  faith in a manner
reasonably  believed  to be in, or not  opposed  to, the best  interests  of the
Company  and,  with  respect  to  any  criminal  action  or  proceeding,  had no
reasonable  cause to believe  the conduct  was  unlawful.  In the event any such
person is judged liable for negligence or misconduct,  this indemnification will
apply only if approved by the court in which the action was  pending.  Any other
indemnification  shall be made only  after the  determination  by the  Company's
Board of Directors  (excluding any directors who were party to such action),  by
independent  legal  counsel  in a  written  opinion,  or by a  majority  vote of
stockholders  (excluding  any  stockholders  who were parties to such action) to
provide such indemnification.

Insofar as indemnification  for liabilities  arising under the Securities Act of
1993  (the  "Securities  Act")  may be  permitted  to  directors,  officers  and
controlling  persons of the small  business  issuer  pursuant  to the  foregoing
provisions, or otherwise, the small business issuer has been advised that in the
opinion of the  Securities  and  Exchange  Commission  such  indemnification  is
against  public  policy as expressed in the  Securities  Act and is,  therefore,
enforceable.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
         MANAGEMENT AND RELATED STOCKHOLDER MATTERS

         The  following  table sets forth the number of shares of the  Company's
Common  Stock  beneficially  owned as of April 30,  2004 by, (i) each  executive
officer and director of the Company;  (ii) all executive  officers and directors
of the  Company as a group;  and (iii)  owners of more than 5% of the  Company's
Common Stock.



   --------------------------------------- ----------------------- ------------------------ -------------------
   Name and Address of Beneficial Owner           Position            Number of Shares           Percent
                                                                     Beneficially Owned
   --------------------------------------- ----------------------- ------------------------ -------------------
   Officers and Directors
   --------------------------------------- ----------------------- ------------------------ -------------------
                                                                                     
   Scott Dockter                              Chairman and CEO          6,806,809(1)              14.3%
   P.O. Box 1626
   Shingle Sprints, CA  957682
   --------------------------------------- ----------------------- ------------------------ -------------------
   James Kluber                             CFO, Executive Vice            -0-(2)                  n/a
   P.O. Box 1626                               President, and
   Shingle Sprints, CA  957682                   Secretary
   --------------------------------------- ----------------------- ------------------------ -------------------
   All officers and  directors as a group                                 6,806,809               14.3%
   ( 2 individuals)
   --------------------------------------- ----------------------- ------------------------ -------------------
   Shareholders owning 5% or more                   None
   --------------------------------------- ----------------------- ------------------------ -------------------

-----------------------
(1) Amount includes  3,718,229 shares issuable under stock warrants  exercisable
within 60 days of April 30, 2004.  Amount excludes shares issuable pursuant to a
convertible  promissory note in the principal  amount of $1,402,742. 
(2) Amount excludes shares issuable pursuant to a convertible promissory note in
the principal amount of $209,251.

                                       31

Equity Compensation Plan Information



------------------------------- ---------------------------- ---------------------------- ----------------------------
Plan Category                   Number of securities to be   Weighted-average exercise    Number of securities
                                issued upon exercise of      price of outstanding         remaining available for
                                outstanding options,         options, warrants and right  future issuance under
                                warrants and rights                                       equity compensation plans
                                                                                          (excluding securities
                                                                                          reflected in column
                                                                                          (a))

                                (a)                          (b)                          (c)
------------------------------- ---------------------------- ---------------------------- ----------------------------
                                                                                 
Equity compensation plans
approved by security holders                N/A
------------------------------- ---------------------------- ---------------------------- ----------------------------
Equity compensation plans not
approved by security holders                N/A
------------------------------- ---------------------------- ---------------------------- ----------------------------
                                            N/A
Total
------------------------------- ---------------------------- ---------------------------- ----------------------------


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTION

ASD  CORP,  incorporated  in the  State  of  Delaware,  is  owned by Mr. A Scott
Dockter,  Chairman and CEO of Newgold.  ASD CORP operates as an engineering  and
construction  company.  It is expected that ASD CORP will enter into  agreements
with  Newgold to  operate as the prime  engineering  and mining  contractor  for
Newgold's  mining  related  properties.  Fees that would be paid to ASD CORP for
such  services  will be at or below  market  rates  earned  by  similar  service
providers.

During the 2004 fiscal year, the President of the Company,  Scott  Dockter,  had
loaned the Company an  aggregate  of  $338,943  and was repaid  $171,952.  As of
January 31, 2004, Mr.  Dockter had loaned the Company a total of $1,402,742.  In
October,  2004 these loans were consolidated into a convertible  promissory note
which is due on  September  30,  2005 and bears  interest  at 8% per annum.  Mr.
Dockter is the largest  creditor of the Company.  In addition to the convertible
promissory  note,  Mr.  Dockter  will be  issued a  Warrant  to  purchase  up to
9,351,613  shares  of  the  Company's  common  stock  at an  exercise  price  of
$0.15/share.













                                       32

Subsequent to the fiscal year end, the Chief  Financial  Officer,  James Kluber,
was issued a convertible  promissory  note in the  principal  amount of $209,251
reflecting  accrued  but unpaid  compensation  and  unreimbursed  expenses.  The
convertible  promissory note,  issued in October,  2004, is due on September 30,
2005  and  bears  interest  at 8% per  annum.  In  addition  to the  convertible
promissory  note,  Mr.  Kluber was issued a Warrant to purchase up to  1,395,007
shares  of the  Company's  common  stock at an  exercise  price of  $0.15/share.
Subsequent to the year ended January 31, 2004, the Chief  Executive  Officer and
Chairman of the Company loaned the Company an additional  $21,581 and was repaid
$350 during  fiscal 2005.  In  connection  with the loans,  warrants to purchase
141,500  shares of common stock have been issued.  The warrants have been valued
using the Black-Scholes  option pricing model. The warrants were issued at $0.15
per share and expire in five years from the date of issuance.

ITEM 13. EXHIBITS                           

         Exhibit2.1(4)     Plan of Reorganization and Merger Agreement, dated as
                           of July 23, 1999, between the Registrant and Business
                           Web, Inc.
         Exhibit2.2(6)     First Amendment to Plan of Reorganization  and Merger
                           Agreement,  dated as of October 31, 1999, between the
                           Registrant and Business Web, Inc.
         Exhibit2.3(7)     Termination Agreement, dated as of December 27, 1999,
                           between the Registrant and Business Web, Inc.
         Exhibit3.1(2)     Certificate of Incorporation of the Registrant.
         Exhibit3.2(1)     Certificate    of   Amendment   to   Certificate   of
                           Incorporation of the Registrant.
         Exhibit3.3(2)     Bylaws of the Registrant.
         Exhibit10.1(3)    Promissory  Note  between  the  Company  and A. Scott
                           Dockter,  dated  April  2,  1997,  for the  principal
                           amount of $100,000.
         Exhibit10.2(3)    Promissory  Note  between  the  Company  and A. Scott
                           Dockter,  dated  April 17,  1997,  for the  principal
                           amount of $50,000.
         Exhibit10.3(3)    Promissory  Note  between  the  Company  and A. Scott
                           Dockter,  dated  April 30,  1997,  for the  principal
                           amount of $20,000.
         Exhibit10.4(3)    Promissory  Note  between  the  Company  and A. Scott
                           Dockter, dated May 30, 1997, for the principal amount
                           of $35,000
         Exhibit10.5(5)    Promissory  Note  between  the  Company  and A. Scott
                           Dockter,  dated  December 24, 1998, for the principal
                           amount of $24,000.
         Exhibit10.6(7)    Warrant  to  Purchase   shares  of  Common  Stock  of
                           Business Web, Inc.
         Exhibit31.1       Certification  by CEO pursuant to Sections 302 of the
                           Sarbanes-Oxley Act of 2002.
         Exhibit31.2       Certification  by CFO pursuant to Sections 302 of the
                           Sarbanes-Oxley Act of 2002.
         Exhibit32         Certification   pursuant   to  Section   906  of  the
                           Sarbanes-Oxley Act of 2002.

--------------------
(1)  Incorporated by reference to the Registrant's  Annual Report on Form 10-KSB
     for the fiscal  year ended  January  31,  1996 filed with the  omission  on
     January 22, 1997.
(2)  Incorporated  by reference to the  Registrant's  Registration  Statement on
     Form SB-2 (File No.  33-49920)  filed with the  Commission  on October  14,
     1993.
(3)  Incorporated by reference to Registrant's  Annual Report on Form 10-KSB for
     the fiscal year ended  January 31, 1997 filed with the  Commission  on June
     30, 1997.
(4)  Incorporated by reference to Registrant's  Annual Report on Form 10-KSB for
     the fiscal year ended January 31, 1999 filed with the Commission on October
     1, 1999.

                                       33

(5)  Incorporated by reference to Registrant's  First Amendment to Annual Report
     on Form 10-KSB for the fiscal year ended  January 31, 1999,  filed with the
     Commission on October 20, 1999.
(6)  Incorporated  by  reference  to  Registrant's   Form  8-K  filed  with  the
     Commission  on  November  2,  1999.  
(7)  Incorporated by reference to Registrant's  Annual Report on Form 10-KSB for
     the fiscal year ended January 31, 2000 filed with the Commission on May 17,
     2000.


ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

During the  Company's  fiscal years ended January 31, 2003 and January 31, 2004,
the Company was billed the following  aggregate fees by Singer Lewak Greenbaum &
Goldstein LLP ("SLGG").

Audit Fees.
-----------

The  aggregate  fees  billed by SLGG to the Company  for  professional  services
rendered  for the audit of the  Company's  financial  statements  for the fiscal
year, for reviews of the financial  statements  included in the Company's  Forms
10-QSB for the fiscal year, and for services provided by SLGG in connection with
statutory or regulatory filings for the fiscal year, were $12,600 for the fiscal
year ended 2003 and $12,759 for the fiscal year ended 2004.

All Other Fees.
---------------

No fees were billed by SLGG to the Company for products  and  services  rendered
for fiscal  years 2003 and 2004,  relating to  Audit-Related  Fees,  Tax Fees or
other accounting fees.

All of the  services  performed  by SLGG  during 2004 were  pre-approved  by the
Company's  Board  of  Directors,  which  concluded  that  the  provision  of the
non-audit   services   described  above  is  compatible  with   maintaining  the
accountant's independence.

PRE-APPROVED POLICIES AND PROCEDURES

Prior to retaining  SLGG to provide  services in any fiscal  year,  the Board of
Directors first reviews and approves SLGG's fee proposal and engagement  letter.
In the fee proposal,  each category of services (Audit,  Audit Related,  Tax and
All Other) is broken down into  subcategories  that  describe  the nature of the
services to be rendered, and the fees for such services.  Newgold's pre-approval
policy  provides that the Board of Directors must  specifically  pre-approve any
engagement  of SLGG for  services  outside  the  scope of the fee  proposal  and
engagement letter.











                                       34

                                   SIGNATURES

         In  accordance  with  Section  13 or 15 (d) of the  Exchange  Act,  the
registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly authorized.

                                NEWGOLD, INC.


Date: December 07, 2004         By /s/ A. SCOTT DOCKTER
     ----------------------       ------------------------------------------
                                    A. Scott Dockter
                                    President and Chief Executive Officer

         In accordance  with the Exchange Act, this report has been signed below
by the following  persons on behalf of the  registrant and in the capacities and
on the dates indicated.

Signature                           Title                              Date
---------                           -----                              ----
/s/ A. SCOTT DOCKTER
--------------------------  
A. Scott Dockter           Chairman of the Board and           December 07, 2004
                           President                           

/s/ JAMES W. KLUBER
--------------------------  
James W. Kluber            Secretary                           December 01, 2004
                                                                            
/s/ JAMES W. KLUBER
--------------------------  
James W. Kluber            Director and                        December 01, 2004
                           Chief Financial Officer                          
                          (Principal Financial and Accounting Officer)

























                                       35

                                                                    EXHIBIT 31.1

                 CERTIFICATION FOR ANNUAL REPORTS ON FORM 10-KSB

I, Scott Dockter, certify that:

1.  I have  reviewed  this  annual  report  on  Form  10-KSB  of  Newgold,  Inc.
("Registrant");

2 Based on my  knowledge,  this  annual  report  does  not  contain  any  untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made,  not  misleading  with  respect to the period  covered by this annual
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included  in this annual  report,  fairly  present in all  material
respects the financial  condition,  results of operations  and cash flows of the
Registrant as of, and for, the periods presented in this annual report;

4.  The  Registrant's  other  certifying  officer  and  I  are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:

         a) designed  such  disclosure  controls and  procedures  to ensure that
         material  information   relating  to  the  Registrant,   including  its
         consolidated  subsidiaries,  is made known to us by others within those
         entities, particularly during the period in which this annual report is
         being prepared;

         b) evaluated the effectiveness of the Registrant's  disclosure controls
         and  procedures as of a date within 90 days prior to the filing date of
         this annual report (the "Evaluation Date"); and

         c)  presented  in  this  annual  report  our   conclusions   about  the
         effectiveness  of the disclosure  controls and procedures  based on our
         evaluation as of the Evaluation Date;

5. The Registrant's other certifying officer and I have disclosed,  based on our
most recent evaluation,  to the Registrant's auditors and the audit committee of
Registrant's board of directors (or persons performing the equivalent function):

         a) all significant  deficiencies in the design or operation of internal
         controls  which  could  adversely  affect the  Registrant's  ability to
         record,   process,   summarize  and  report  financial  data  and  have
         identified  for the  Registrant's  auditors any material  weaknesses in
         internal controls; and

         b) any fraud,  whether or not  material,  that  involves  management or
         other  employees  who  have a  significant  role  in  the  Registrant's
         internal controls; and










6. The Registrant's other certifying officer and I have indicated in this annual
report whether or not there were significant  changes in internal controls or in
other factors that could  significantly  affect internal controls  subsequent to
the date of our most recent  evaluation,  including any corrective  actions with
regard to significant deficiencies and material weaknesses.

Date:  December 07, 2004

                                 /s/ A. SCOTT DOCKTER
                                 -----------------------------------------------
                                 A. Scott Dockter, President and Chief Executive
                                 Officer




                                                                    EXHIBIT 31.2
                 CERTIFICATION FOR ANNUAL REPORTS ON FORM 10-KSB

I, James Kluber, certify that:

1.  I have  reviewed  this  annual  report  on  Form  10-KSB  of  Newgold,  Inc.
("Registrant");

2.  Based on my  knowledge,  this  annual  report  does not  contain  any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made,  not  misleading  with  respect to the period  covered by this annual
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included  in this annual  report,  fairly  present in all  material
respects the financial  condition,  results of operations  and cash flows of the
Registrant as of, and for, the periods presented in this annual report;

4.  The  Registrant's  other  certifying  officer  and  I  are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:

         a) designed  such  disclosure  controls and  procedures  to ensure that
         material  information   relating  to  the  Registrant,   including  its
         consolidated  subsidiaries,  is made known to us by others within those
         entities, particularly during the period in which this annual report is
         being prepared;

         b) evaluated the effectiveness of the Registrant's  disclosure controls
         and  procedures as of a date within 90 days prior to the filing date of
         this annual report (the "Evaluation Date"); and

         c)  presented  in  this  annual  report  our   conclusions   about  the
         effectiveness  of the disclosure  controls and procedures  based on our
         evaluation as of the Evaluation Date;

5. The Registrant's other certifying officer and I have disclosed,  based on our
most recent evaluation,  to the Registrant's auditors and the audit committee of
Registrant's board of directors (or persons performing the equivalent function):

         a) all significant  deficiencies in the design or operation of internal
         controls  which  could  adversely  affect the  Registrant's  ability to
         record,   process,   summarize  and  report  financial  data  and  have
         identified  for the  Registrant's  auditors any material  weaknesses in
         internal controls; and

         b) any fraud,  whether or not  material,  that  involves  management or
         other  employees  who  have a  significant  role  in  the  Registrant's
         internal controls; and











6. The Registrant's other certifying officer and I have indicated in this annual
report whether or not there were significant  changes in internal controls or in
other factors that could  significantly  affect internal controls  subsequent to
the date of our most recent  evaluation,  including any corrective  actions with
regard to significant deficiencies and material weaknesses.

Date: December 01, 2004

                                           /s/ JAMES KLUBER
                                           -------------------------------------
                                           James Kluber, Chief Financial Officer




                                                                      EXHIBIT 32
                                  CERTIFICATION

            PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
             (SUBSECTIONS (a) AND (b) OF SECTION 1350, CHAPTER 63 OF
                          TITLE 18, UNITED STATES CODE)


         Pursuant to section 906 of the  Sarbanes-Oxley Act of 2002 (subsections
(a) and (b) of section 1350,  chapter 63 of Title 18, United States Code),  each
of the  undersigned  officers  of Newgold,  Inc.,  a Delaware  corporation  (the
"Company"), does hereby certify with respect to the Annual Report of the Company
on Form 10-KSB for the year ended January 31, 2003 as filed with the  Securities
and Exchange Commission (the "10-KSB Report") that:

         (1) the 10-KSB Report fully complies with the  requirements  of Section
13(a) or 15(d) of the Securities Exchange Act of 1934; and

         (2) the information  contained in the 10-KSB Report fairly presents, in
all material respects,  the financial condition and results of operations of the
Company.

Dated: December 07, 2004                  Newgold, Inc.

                                          /s/ A. SCOTT DOCKTER
                                          -------------------------------------
                                          A. Scott Dockter
                                          President and Chief Executive Officer

                                          /s/ JAMES KLUBER
                                          -------------------------------------
                                          James Kluber
                                          Chief Financial Officer