DOUBLE CROWN RESOURCES INC. - FORM 10-Q

Attached files

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EXCEL - IDEA: XBRL DOCUMENT - DOUBLE CROWN RESOURCES INC.	Financial_Report.xls
EX-32.1 - CERTIFICATE - DOUBLE CROWN RESOURCES INC.	dnrr_ex321.htm
EX-31.1 - CERTIFICATE - DOUBLE CROWN RESOURCES INC.	dnrr_ex311.htm

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

Mark One

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

For the quarterly period ended June 30, 2011

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

For the transition period from ______ to _______

Commission File No. 000-53389

Denarii Resources Inc.

(Name of small business issuer in its charter)

Nevada		98-0491567
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

711 S. Carson Street, Suite 4, Carson City, Nevada 89701

(Address of principal executive offices)

(949) 335-5159

(Issuer’s telephone number)

Securities registered pursuant to Section 12(b) of the Act:		Name of each exchange on which registered:
None

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001
(Title of Class)

Indicate by checkmark whether the issuer: (1) has 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 x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files. Yes o No o

Indicate by check mark whether the registrant is a large accelerated filed, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	x

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

Applicable Only to Issuer Involved in Bankruptcy Proceedings During the Preceding Five Years.

N/A

Indicate by checkmark whether the issuer has filed all documents and reports required to be filed by Section 12, 13 and 15(d) of the Securities Exchange Act of 1934 after the distribution of securities under a plan confirmed by a court. Yes o No o

Applicable Only to Corporate Registrants

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the most practicable date:

Class		Outstanding as of August 30, 2011
Common Stock, $0.001		76,399,999

DENARII RESOURCES INC.

Form 10-Q

Part 1. FINANCIAL INFORMATION		Page

Item 1.	Financial Statements	4
	Balance Sheets (Unaudited)	4
	Statements of Operations (Unaudited)	5
	Statement of Changes in Stockholders’ Equity (Unaudited)
	Statements of Cash Flows (Unaudited)	6
	Notes to Financial Statements (Unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22
Item 4.	Controls and Procedures	23

Part II. OTHER INFORMATION

Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3.	Defaults Upon Senior Securities	27
Item 4	Removed and Reserved	27
Item 5.	Other Information	27
Item 6	Exhibits	28

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

DENARII RESOURCES INC.

(An Exploration Stage Company)

BALANCE SHEETS

(unaudited)

	June 30,			December 31,
	2011			2010

ASSETS

Current assets
Cash	$	179		$	-
Prepaid stock compensation		12,666			-
Total current assets	$	12,845		$	-

LIABILITIES

Current Liabilities
Accounts payable	$	84,750		$	83,802
Accounts payable - related parties		376,476			248,080
Accrued Interest - Related Party		3,971			-
Convertible promissory notes - related party (Note 6)		132,382			132,382
Convertible debt - related parties (Note 9)		89,596			6,000
Convertible debt		20,000			-
Total current liabilities		707,175			470,264

Mineral prospect obligation (Note 6)		127,926			-
Convertible debt - long term portion		30,000

Total liabilities		865,101			470,264

STOCKHOLDERS' DEFICIT

Common stock; 500,000,000 shares authorized at $0.001 par value 75,899,999 and 61,900,000 issued and outstanding at June 30, 2011 and December 31, 2010 respectively		75,900			61,900
Common stock payable		2,517			8,034
Additional paid-in capital		689,115			543,915
Deficit accumulated during exploration		(1,619,788	)		(1,084,113	)
Total stockholders' deficit		(852,256	)		(470,264	)

Total liabilities and stockholders' deficit	$	12,845		$	-

The accompanying notes are an integral part of these financial statements.

DENARII RESOURCES INC.

(An Exploration Stage Company)

STATEMENTS OF OPERATIONS

(unaudited)

													From inception (March 23, 2006) through
	Three months ended						Six months ended						From inception (March 23, 2006) through
	June 30, 2011			June 30, 2010			June 30, 2011			June 30, 2010			June 30, 2011

REVENUE	$	-		$	-		$	-		$	-		$	-

OPERATING EXPENSES
Impairment of mineral property acquisition costs		-			-			60,250			-			70,250
Impairment of prepaid royalties		-			-			124,200			-			124,795
Professional fees		78,954			116,064			206,123			185,119			940,571
Office - general expenses		273			6,756			4,335			9,315			29,221
General expenses - related party		104,466			52,467			133,070			98,125			407,539
Total Operating Expenses		183,693			175,287			527,978			292,559			1,572,376

NET LOSS FROM OPERATIONS		(183,693	)		(175,287	)		(527,978	)		(292,559	)		(1,572,376	)
OTHER EXPENSE
Interest Expense		7,697			-			7,697			-			(7,697	)
Financing cost - related party		-			-			-			-			(39,715	)
TOTAL OTHER EXPENSE		7,697			-			7,697			-			(47,412	)

NET LOSS BEFORE INCOME TAXES		(191,390	)		(175,287	)		(535,675	)		(292,559	)		(1,619,788	)

PROVISION FOR INCOME TAX		-			-			-			-			-

NET LOSS FOR THE PERIOD	$	(191,390	)	$	(175,287	)	$	(535,675	)	$	(292,559	)	$	(1,619,788	)

BASIC AND DILUTED (LOSS)
PER COMMON SHARE	$	(0.00	)	$	(0.00	)	$	(0.01	)	$	(0.00	)

WEIGHTED AVERAGE NUMBER
OF COMMON SHARES		75,771,428			61,900,000			70,438,673			61,684,530

The accompanying notes are an integral part of these financial statements.

DENARII RESOURCES INC.

(An Exploration Stage Company)

STATEMENTS OF CASH FLOWS

(unaudited)

							From inception (March 23, 2006) through
	Six months ended						From inception (March 23, 2006) through
	June 30, 2011			June 30, 2010			June 30, 2011
OPERATING ACTIVITIES
Net loss	$	(535,675	)	$	(292,559	)	$	(1,619,788	)
Adjustments to reconcile net loss from operations:
Shares issued for services		121,433			140,000			565,767
Impairment of mineral property acquisition costs		60,250			-			70,250
Impairment of prepaid royalties		124,200			-			124,200
Beneficial Conversion Feature		-			-			39,715
Convertible debt issued for services		83,596			-			83,596
Expenses paid by related parties on behalf of the Company		128,396			169,395			579,858
Change in operating assets and liabilities:
(Increase) decrease in prepaid expenses		(12,666	)		(23,335	)		(12,666	)
Increase in accrued interest		3,726			-			3,726
Increase in accrued interest to a related party		3,971			-			3,971
Increase (decrease) in accounts payable and accrued expense		(4,052	)		6,499			79,750
Net cash used in operating activities		(26,821	)		-			(81,621	)

INVESTING ACTIVITIES
Purchase of mineral claim		-			-			(10,000	)
Net cash used in investing activities		-			-			(10,000	)


FINANCING ACTIVITIES
Payments on convertible debt - related parties		-			-			-
Proceeds from subscriptions payable		27,000			-			27,000
Proceeds from issuance of stock		-			-			64,800
Net cash provided by financing activities		27,000			-			91,800

NET INCREASE IN CASH AND CASH EQUIVALENTS		179			-			179

CASH AND CASH EQUIVALENTS
-BEGINNING OF PERIOD		-			-			-

CASH AND CASH EQUIVALENTS
-END OF PERIOD	$	179		$	-		$	179

SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Royalty obligation incurred on impaired option	$	124,200		$	-		$	124,200
Convertible debt issued for mineral property	$	50,000		$	-		$	50,000
Accounts payable for mineral property	$	5,000		$	-		$	5,000
Shares payable for mineral property	$	5,250		$	-		$	5,250
Shares issued for services	$	121,433		$	140,000		$	565,767

The accompanying notes are an integral part of these financial statements.

DENARII RESOURCES INC.

(An Exploration Stage Company)

Notes to Financial Statements

June 30, 2011

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

Denarii Resources, Inc. ("Denarii Resources" or the "Company") was organized under the laws of the State of Nevada on March 23, 2006 to explore mining claims and property in North America.

The preparation of the financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. These are condensed notes and should be read in conjunction with the audited financial statements from the year ending December 31, 2010.

On March 16, 2010 Stuart Carnie resigned as an officer and director. On March 19, 2010 Dennis Lorrig was appointed as an officer and director.

On June 16, 2010 the Company entered into an agreement to acquire an 80% interest in Touchstone Precious Metals Inc. On October 29, 2010 the company filed an 8K disclosing that the Company has rescinded the Acquisition Agreement with Touchstone Precious Metals Inc. and Touchstone Venture Ltd.

On July 29, 2010 Dennis Lorrig and Robert Malasek resigned as officers and directors.

On July 29, 2011 Mr. David Figueiredo was appointed as an officer and director.

On August 9, 2011 Dr. Stewart Jackson resigned from his position as officer and director.

NOTE 2 - GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. However, the Company has accumulated a loss and is new. This raises substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from this uncertainty.

As shown in the accompanying interim financial statements, the Company has incurred a net loss of $1,619,788 for the period from March 23, 2006 (inception) to June 30, 2011 and has not generated any revenues. The future of the Company is dependent upon its ability to obtain financing and upon future profitable operations from the development of acquisitions. Management has plans to seek additional capital through a private placement and public offering of its common stock. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

DENARII RESOURCES INC.

(An Exploration Stage Company)

Notes to Financial Statements

June 30, 2011

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and cash equivalents

The Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents.

Per Share Data

Net loss per common share is computed by dividing net loss by the weighted average common shares outstanding during the period as defined by Financial Accounting Standards, ASC Topic 260, "Earnings per Share". Basic earnings per common share (“EPS”) calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding. During periods when common stock equivalents, if any, are anti-dilutive they are not considered in the computation.

Fair value of financial instruments

The carrying value of cash equivalents and accrued expenses approximates fair value due to the short period of time to maturity.

Stock-based compensation

The Company records stock based compensation in accordance with the guidance in ASC Topic 718 which requires the Company to recognize expenses related to the fair value of its employee stock option awards. This eliminates accounting for share-based compensation transactions using the intrinsic value and requires instead that such transactions be accounted for using a fair-value-based method. The Company recognizes the cost of all share-based awards on a graded vesting basis over the vesting period of the award.

ASC 505, "Compensation-Stock Compensation", establishes standards for the accounting for transactions in which an entity exchanges its equity instruments to non employees for goods or services. Under this transition method, stock compensation expense includes compensation expense for all stock-based compensation awards granted on or after January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of ASC 505. The Company implemented this standard during the three months ended September 30, 2010.

DENARII RESOURCES INC.

(An Exploration Stage Company)

Notes to Financial Statements

June 30, 2011

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

Recent Accounting Pronouncements

The Company has evaluated all of the recent accounting pronouncements through the filing date of these financial statements and feels that none of them will have a material effect on the Company’s interim financial statements.

NOTE 4 - RECLASSIFICATIONS

The Company reclassified $21,000 and $42,000 from Management and administration fees - related party, $7,500 and $15,000 from Rent - related party, and $14,698 and $27,645 from Travel - related party to General expenses - related party for the three and six months ended June 30, 2010, respectively to conform to the current presentation. The reclassifications had no effect on the Company’s financial condition, results of operation, or cash flows.

NOTE 5 – RESTATEMENT

Upon review of the joint venture contract dated December 9, 2010 between the Company and Guyanex Minerals Corp, management has decided that the contract was recorded incorrectly during the period March 31, 2011 by prior management. The contract has expired as the execution date of May 30, 2011 has come and gone with no action. Furthermore, at no time before May 30, 2011 was the future sacrifice of $5,000,000 associated with this contract probable. Therefore, it is current management’s intent to remove this liability and associated adjustments and file restated financials as of March 31, 2011 and for the three month period ended March 31, 2011 and the period from inception (March 31, 2006) through March 31, 2011. Accordingly, the financial statements issued for the first quarter ended March 31, 2011 can no longer be relied upon.

In accordance with the agreement described above, the Company recorded a $5,000,000 asset which was fully impaired and expensed as part of "Impairment of mineral property acquisition costs". As part of this same transaction, the Company also recorded and presented an "Agreement payable" of $5,000,000 on the balance sheet as of March 31, 2011. The net result of this transaction as presented for the three months ended March 31, 2011 was a liability of $5,000,000 and impairment expense in the same amount.

The financial statements presented as of June 30, 2011 and for the six and three months ended June 30, 2011 and the period from inception (March 31, 2006) through June 30, 2011 properly been adjusted to exclude this transaction.

DENARII RESOURCES INC.

(An Exploration Stage Company)

Notes to Financial Statements

June 30, 2011

NOTE 6 – CONVERTIBLE DEBT

Mineral Prospect Obligation

Effective on February 9, 2011 the company entered into an agreement between the Company and Richard and Gloria Kwiatowski . The Option provides for the development of 136 claim units covering a series of nickel-colbalt-gold-platinum group element prospects, which prospects are located 35 kilometers northwest of Thunder Bay, Ontario (the “Prospects”). The Prospects are owned 100% by Kwiatowski as tenants in common. The Company intends to work on the Prospects, including drilling, for three types of geological conceptual targets: (i) shebandowan type high grade nickel-cobalt-gold-platinum sulphide deposits; (ii) disseminated nickel sulphides of Mount Keith type with bulk tonnage potential; and (iii) gold mineralization within an extensive conglomerate unit of potential open-pit bult tonnage configuration.

In accordance with the terms and provisions of the Option: (i) upon execution of certain documentation and transfer of title, the Company will pay $5,000 and issue 250,000 shares of common stock to the Kwiatowski; (ii) at the end of year one, the Company will pay to Kwiatowski a further $20,000 either in half cash and half shares or all shares at the option of the Kwiatowski; (iii) at the end of year two, the Company will pay to Kwiatowski a further $30,000 either in half cash and half shares or all shares at the option of the Kwiatowskiwill; (iv) each anniversary thereafter, the Company shall pay to Kwiatowski $25,000 as advance royalty payment until the sum of $200,000 has been paid; (v) the Company shall further make payment to Kwiatowski of 3% NSR royalty on all production from the Prospects, which royalty may be purchased by the Company as to 1.5% of the 3% for the sum of $1,500,000 in increments of

$500,000 per 0.5% NSR; and (vi) the Company shall commit to expenditures of $200,000 on the Prospects.

The prepaid royalty of $124,200 has been analyzed for impairment and has been fully impaired.

Interest on the discounted royalty claim has been accreted at 12%. Accreted interest was $3,726 and $0 as of June 30, 2011 and December 31, 2010 respectively.

Convertible Promissory Notes – Related Party

Effective on October 21, 2010 the company entered into a series of convertible promissory notes in various principal amounts with Falco Investments Inc. (the “Creditor”). The aggregate amount represented in principal loaned to the Corporation from the Creditor is $132,382.

In accordance with the terms and provisions of the Convertible Promissory Notes, the Convertible Promissory Notes are unsecured, shall bear interest at the rate of 12% compounded annually on the principal amount commencing on the date of the respective quarterly period. Each Convertible Promissory Note is convertible at the election of the Creditor into shares of the

DENARII RESOURCES INC.

(An Exploration Stage Company)

Notes to Financial Statements

June 30, 2011

NOTE 6 – CONVERTIBLE DEBT – (CONTINUED)

Corporation’s common stock at the rate of $0.01 per share (which conversion price is a 20% discount from the trading price of the Company’s common stock on the OTC Bulletin Board on October 21, 2010).

The Company has recognized $39,715 in beneficial conversion feature costs in connection with this convertible note. If the total $132,382 is converted the share capital issued will increase by 13,238,200 common shares.

Falco Investments Inc. has agreed to waive all interest and accrued interest up to March 31, 2011. Interest on the convertible debt has been accrued at 12% for the quarter ended June 30, 2011. Accrued interest was $3,971 and $0 as of June 30, 2011 and December 31, 2010 respectively. Please refer to footnote 8 & 10 for further debts and obligations to Falco.

NOTE 7 – STOCKHOLDERS' DEFICIT

Authorized

On April 25, 2011, the Company increased its authorized capital structure from one hundred million shares (100,000,000) of common stock to five hundred million shares (500,000,000) of common stock.

On February 23, 2011, the Company issued 1,700,000 shares for the conversion of accounts payable valued at $25,000. The cost per share was $0.0147. These shares were previously recorded as Common stock payables.

On February 23, 2011, the Company issued 2,000,000 shares for the conversion of advances from a related party valued at $40,000. The cost per share was $0.02. These shares were previously recorded as Common stock payables.

On March 16, 2011, the company issued 4,333,333 shares for services valued at $94,334. The cost per share was $0.021772. These shares were previously recorded as Common stock payables.

On March 16, 2011, the company issued 1,888,889 shares for services valued at $113,333. The cost per share was $0.02.

On March 31, 2011, the company has authorized 250,000 shares issuable in accordance with the terms of the option agreement relating to the Bateman Proposal valued at $5,250. The cost per share is $0.021. Physical certificates have not been issued.

DENARII RESOURCES INC.

(An Exploration Stage Company)

Notes to Financial Statements

June 30, 2011

NOTE 7 – STOCKHOLDERS' DEFICIT- (CONTINUED)

On May 05, 2011, the company has authorized 1,000,000 shares issuable in a private placement to Rita McPeck for cash in the amount of $15,000. The cost per share is $0.015. Physical certificates have not been issued.

On May 09, 2011, the company issued 300,000 shares for services valued at $4,500. The cost per share was $0.015.

On June 23, 2011, the company has authorized 466,666 shares issuable in a private placement to Alison Barrett and Benjamin Woita for cash in the amount of $7,000. The cost per share is $0.015. Physical certificates have not been issued.

On June 27, 2011, the company has authorized 300,000 shares issuable pursuant to a consulting agreement with Glen Soler, a related party for consulting services. The cost per share is $0.012.

On June 30, 2011, the company has authorized 500,000 shares issuable in a private placement to Foxton Holdings for cash in the amount of $5,000. The cost per share is $0.010.

Stock Warrants

The following is a summary of warrants balance as of December 31, 2010 and activity during the six months period ended June 30, 2011:

	Number of Shares		Weighted Average Exercise Price
Balance, December 31, 2010		-		-

Warrants granted and assumed		1,966,666		0.04
Warrants expired		-		-
Warrants canceled		-		-
Warrants exercised		-		-

Balance, June 30, 2011		1,966,666		0.04

All warrants outstanding as of June 30, 2011 are exercisable. The warrants issued during 2011 were issued as part of a series of common stock subscriptions for cash.

All warrants have been issued as a cost of issue as part of a unit that included a warrant and a share. These value of these warrants issued have no effect on the financial statements.

DENARII RESOURCES INC.

(An Exploration Stage Company)

Notes to Financial Statements

June 30, 2011

NOTE 7 – STOCKHOLDERS' DEFICIT- (CONTINUED)

500,000,000 common shares with a par value of $0.001. As of June 30, 2010 there was a total of 75,899,999 shares issued and outstanding and 2,516,666 shares authorized for issuance but not yet issued and outstanding (common stock payable).

NOTE 8 – PAYABLE TO RELATED PARTY

During the six months ended June 30, 2011, the officers of the Company advanced an additional $79,396 to pay for operating expenses. As of June 30, 2011, the total amount of Accounts payable to a related party ("related party advances") totaled $322,476. The advances are unsecured, non-interest bearing and due on demand. Accordingly, they have been classified as current liabilities as of June 30, 2011 and no interest has been imputed.

Falco believes that the Company is obligated to reissue $271,331 of this amount as notes convertible at about 80% of the fair value of the stock, but the Company has not yet done so. If fully converted, approximately 27,133,109 new shares would be issued. Please refer to footnote 10 for further debts and obligations to Falco.

NOTE 9 – CONSULTING AGREEMENT – RELATED PARTY

In the year ended December 31, 2010 the company entered into a five-year consulting agreement dated October 1, 2010 with Dr. Stewart Jackson (“Jackson”), pursuant to which Jackson, as the chief executive officer and a member of the Board of Directors, will provide certain consulting services to the Company including, but not limited to, contact with precious metal assets for acquisition in North America. Jackson shall be entitled to monthly compensation of $2,000 representing aggregate compensation of $120,000. The compensation may be paid by cash or issuance of shares of common stock priced at the ten-day average each month. As of June 30, 2011 the future obligation based on the contract to Mr. Jackson has been recognized and accrued at its present value using a 12% discount rate over fifty-one months. This resulted in a $79,596 increase in consulting fees for the three and nine months ended June 30, 2011 and a convertible debt in the same amount as of June 30, 2011.

In addition to the $79,596 above, another $10,000 is accrued for past services at June 30, 2011, for a total convertible debt of $89,596. If converted, approximately 7,466,334 new shares would be issued.

In the year ended December 31, 2010 the company entered into a one-year consulting agreement dated October 1, 2010 with David Figueiredo (“Figueiredo”), and Steve Claus ("Claus") pursuant to which Figueiredo and Claus, as members of the Board of Directors, will provide certain consulting services to the Company including, but not limited to, contact with precious metal assets for acquisition in North America. Figueiredo and Claus shall be entitled to monthly

DENARII RESOURCES INC.

(An Exploration Stage Company)

Notes to Financial Statements

June 30, 2011

NOTE 9 – CONSULTING AGREEMENT – RELATED PARTY – (CONTINUED)

compensation of $4,000 and $2,000, respectively representing aggregate compensation of $72,000. The current debt of $54,000 is unsecured, non-interest bearing and due on demand.

NOTE 10 – COMMITMENTS AND CONTINGENCIES

As of June 15, 2011 the old management signed a resolution approving the issuance of convertible promissory notes in the amount of $271,331 to Falco Investments Inc. New management believes that the old management was not acting in the best interest of the company when they authorized these expenses and subsequently approved the issuance of the convertible debts. The Company has recorded the balance of $407,684 due to Falco Investments Inc. of which $132,382 has been reported as convertible debt, $271,331 as accounts payable related party and $3,971 as accrued interest. The Company has decided to contest the current balance claimed to be due to Falco. It is current management’s opinion that these amounts due are frivolous. No additional liabilities were recorded for the period ending June 30, 2011 as new management does not believe that it is probable that the Company will pay these debts.

NOTE 11 – SUBSEQUENT EVENTS

On July 19, 2011 the Company issued payment of $4,000 and incurred an additional $1,000 payable to purchase a mineral property option on the "Bateman Property" which relates to the agreement entered into on February 8, 2011.

On August 9, 2011, Stewart Jackson resigned from his position as an officer and director of the Company and submitted a report stating that the Company owed him an additional amount of $24,662 in management fees and amounts previously advanced to the Company to cover general operating costs.

On June 30, 2011 the board extended an offer to David Figueiredo and Steve Claus which would allow them to convert any debt accrued in relation to the consulting fees described in Note 9 into shares of common stock priced at the ten-day average each month.

The Company has evaluated subsequent events through the filing of these financial statements and has disclosed any such events that are material to the financial statements.

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

FORWARD LOOKING STATEMENTS.

The information in this discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These forward-looking statements involve risks and uncertainties, including statements regarding Denarii Resources Inc.'s (the "Company") capital needs, business strategy and expectations. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expect", "plan”,” intend", "anticipate", "believe", "estimate", "predict", "potential" or "continue", the negative of such terms or other comparable terminology. Actual events or results may differ materially. In evaluating these statements, you should consider various factors, including the risks outlined below, and, from time to time, in other reports the Company files with the SEC. These factors may cause the Company's actual results to differ materially from any forward-looking statement. The Company disclaims any obligation to publicly update these statements, or disclose any difference between its actual results and those reflected in these statements. The information constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

As used in this Quarterly Report, the terms "we," "us," "our," and "our Company" mean Denarii Resources Inc. unless otherwise indicated. All dollar amounts in this Quarterly Report are in U.S. dollars unless otherwise stated.

OVERVIEW

Denarii Resources Inc. was organized under the laws of the State of Nevada on March 23, 2006, to explore mining claims and property in North America.

We are an exploration stage company and we have not realized any revenues to date. We do not have sufficient capital to enable us to commence and complete our exploration program. We will require financing in order to conduct the exploration programs.

RECENT CORPORATE DEVELOPMENTS

Amendment to Articles of Incorporation

On April 25, 2011, our Board of Directors and shareholders holding a majority of the total issued and outstanding shares of our common stock approved an increase in our authorized capital to five hundred million (500,000,000) shares of common stock, par value $0.001 (the “Increase in Authorized Capital”). Therefore, on May 23, 2011, 2011, we filed an amendment to our articles of incorporation with the Nevada Secretary of State regarding the Increase in Authorized Capital (the “Amendment”).

The Board of Directors considered certain factors regarding the Increase in Authorized Capital including, among others, the following: (i) establishing a proper market value for the Company and its shares and increasing the potential marketability of its common stock; and (ii) increasing the opportunities for the Company to engage in successful financing arrangements with a proper market cap.

The amendment will not affect the number of our issued and outstanding common shares.

CURRENT BUSINESS OPERATIONS

McNab Property

We have a mineral property, known as the McNab Molybdenum Property (the “McNab Property”). The McNab Property is comprised of one mineral claim containing 1 cell claim units totaling 251.11 hectares;

BC Tenure #		Work Due Date		Units		Total Area (Hectares)
831929				12		251.11

The McNab Property is located near the headwaters of McNab Creek, approximately 40 km northwest of Vancouver, BC. Access to the property is presently via water or helicopter. The McNab Property consists of 251.11 hectares of mineral title, valid until August 20, 2010. The property is held in the name of Stan Ford on behalf of the company pending completion of the company’s application for a British Columbia Miners License. The McNab Property can be reached directly from Vancouver 40 km via helicopter. Alternatively, water transportation or float plane can be used to reach the logging camp at tidewater, and then by road 10 km to the McNab Property. Arrangements can be made to rent a truck from the logging company to allow road access to the property.

A proposed work program includes construction of a control grid, geological mapping and rock sampling of surface showings, a soil and silt geochemical sampling program, IP geophysical survey, and rock trenching. Based on a compilation of these results, a diamond drill program will be designed to explore and define the potential resources.

Phase 1: Reconnaissance geological mapping, prospecting and rock sampling, helicopter transportation.

Phase 2: Detailed geological mapping and rock sampling, grid construction, soil and silt geochemical survey, IP survey, establish drill and trenching targets.

Phase 3: 1000 metres of diamond drilling including geological

Our business plan is to proceed with the exploration of our molybdenum property to determine whether there is any potential for molybdenum on the property that comprises our mineral claims. We have decided to proceed with the three phases of a staged exploration program recommended by the geological report. We anticipate that these phases of the recommended geological exploration program will cost approximately $25,000.00, $100,000 and $175,000 respectively. We had $0 in cash reserves as of the period ended December 31, 2010. The lack of cash has kept us from conducting any exploration work on the property. We will commence Phase 1 of the exploration program once we receive funding. Phase 2 and 3 will commence after completion of the Phase 1 program. As such, we anticipate that we will incur the following expenses over the next twelve months:

>> $25,000.00 in connection with the completion of Phase 1 of our recommended geological work program;

>> $100,000.00 in connection with the completion of Phase 2 of our recommended geological work program;

>> $175,000 for Phase 3 of our recommended geological work program; and

>> $10,000 for operating expenses, including professional legal and accounting expenses associated with compliance with the periodic reporting requirements after we become a reporting issuer under the Securities Exchange Act of 1934.

If we determine not to proceed with further exploration of our mineral claims due to a determination that the results of our initial geological program do not warrant further exploration or due to an inability to finance further exploration, we plan to pursue the acquisition of an interest in other mineral claims. We anticipate that any future acquisition would involve the acquisition of an option to earn an interest in a mineral claim as we anticipate that we would not have sufficient cash to purchase a mineral claim of sufficient merit to warrant exploration. This means that we might offer shares of our stock to obtain an option on a property. Once we obtain an option, we would then pursue finding the funds necessary to explore the mineral claim by one or more of the following means: engaging in an offering of our stock; engaging in borrowing; or locating a joint venture partner or partners.

Guyana Prospect

Effective on February 28, 2011, we entered into that certain extension of the letter agreement to form a joint venture dated December 9, 2010 (the “Letter Agreement”) with Guyanex Minerals Corp. (“GMC”). The Letter Agreement provides for the development of the gold mining concessions owned by Guyanex Minerals Incorporation (“GMI”), which is the owner of a 100% interest in those certain gold mining concessions located in the Republic of Guyana, including three concessions along the Guyani River (collectively, known as the “Prospect”). In accordance with the terms and provisions of the Letter Agreement: (i) we will purchase an undivided 50% equity interest in the Prospects by providing a payment of $5,000,000 prior to January 31, 2011 to be held in escrow (the “Option Purchase Price”); (ii) upon payment of the $5,000,000 by us, GMI will issue to us 1,000 common shares representing the 50% equity interest in GMI; (iii) any capital requirements above the Option Purchase Price will be paid on a 50-50 basis by us and GMC (the “Capital Requirements”); (iv) the joint venture shall be governed by four directors with us appointing two directors and GMC appointing two directors; (v) in the event either we or GMC fail to provide their respective portion of the Capital Requirements and either we or GMC is: (a) diluted to less than 35% but more than 21%, the party with the majority interest would appoint three of the four directors, and (b) diluted to less than 20%, the party with the majority interest would appoint all four directors.

In accordance with the extension of the Letter Agreement, we and GMC have agreed to a payment date of May 31, 2011 for the Option Purchase Price. As of the date of this Quarterly Report, we have not made the required payment. Moreover, it has been determined that at no time prior to May 31, 2011 was the future sacrifice of $5,000,000 associated with the Letter Agreement probable and, therefore, it is management’s intent to remove this liability from its financial statements and make corresponding adjustments. Therefore, out Quarterly Report on Form 10-Q for the three month period ended March 31, 2011 will be restated.

Bateman Property Option

Effective on February 9, 2011, we entered into that certain Bateman Property Option (the “Option”) between with Richard and Gloria Kwiatkowski (collectively, the “Kwiatkowski”). The Option provides for the development of 136 claim units covering a series of nickel-colbalt-gold-platinum group element prospects, which prospects are located 35 kilometers northwest of Thunder Bay, Ontario (the “Prospects”). The Prospects are owned 100% by Kwiatkowski as tenants in common. We intend to work on the Prospects, including drilling, for three types of geological conceptual targets: (i) shebandowan type high grade nickel-cobalt-gold-platinum sulphide deposits; (ii) disseminated nickel sulphides of Mount Keith type with bulk tonnage potential; and (iii) gold mineralization within an extensive conglomerate unit of potential open-pit bult tonnage configuration.

In accordance with the terms and provisions of the Option: (i) upon execution of certain documentation and transfer of title, we will pay $5,000 and issue 250,000 shares of common stock to the Kwiatkowski; (ii) at the end of year one, we will pay to Kwiatkowski a further $20,000 either in half cash and half shares or all shares at the option of the Kwiatkowski; (iii) at the end of year two, we will pay to Kwiatkowski a further $30,000 either in half cash and half shares or all shares at the option of the Kwiatkowski will; (iv) each anniversary thereafter, we shall pay to Kwiatkowski $25,000 as advance royalty payment until the sum of $200,000 has been paid; (v) we shall further make payment to Kwiatkowski of 3% NSR royalty on all production from the Prospects, which royalty may be purchased by us as to 1.5% of the 3% for the sum of $1,500,000 in increments of $500,000 per 0.5% NSR; and (vi) we shall commit to expenditures of $200,000 on the Prospects.

On July 19, 2011, we paid $4,000 and incurred an additional $1,000 payable to purchase the Option. The prepaid royalty of $124,200 has been analyzed for impairment and fully impaired on the financials.

RESULTS OF OPERATIONS

Six Month Period Ended June 30, 2011 Compared to Six Month Period Ended June 30, 2010

Our net loss for the six month period ended June 30, 2011 was ($535,675) compared to a net loss of ($292,559) during the six month period ended June 30, 2010, an increase of $243,116. During the six month periods ended June 30, 2011 and 2010, we did not generate any revenue.

During the six month period ended June 30, 2011, we incurred operating expenses of $527,978 compared to $292,559 incurred during the six month period ended June 30, 2010. The increase in operating expenses was primarily attributable to an increase in the following items: (i) impairment of mineral property acquisition $60,250 (2010 $-0-) (ii) professional fees of $206,123 (2010: $185,119); (iii) impairment of prepaid royalties of $124,200 (2010: $-0-); and (iv) general expenses – related party of $133,070 (2010: $98,125).

Operating expenses incurred during the six month period ended June 30, 2011 compared to the six month period ended June 30, 2010 increased primarily due to impairment of mineral property acquisition costs and impairment of prepaid royalties relating to an increase in the scope and scale of our business operations. General and administrative expenses generally include corporate overhead, financial and administrative contracted services, marketing and consulting costs.

Our net loss during the six month period ended June 30, 2011 was ($535,675) or ($0.01) per share compared to a net loss of ($292,559) or $0.00 per share during the six month period ended June 30, 2010. The weighted average number of shares outstanding was 70,438,673 for the six month period ended June 30, 2011 compared to 61,684,530 for the six month period ended June 30, 2010.

Three Month Period Ended June 30, 2011 Compared to Three Month Period Ended June 30, 2010

Our net loss for the three month period ended June 30, 2011 was ($191,390) compared to a net loss of ($175,287) during the three month period ended June 30, 2010, an increase of $16,103. During the three month periods ended June 30, 2011 and 2010, we did not generate any revenue.

During the three month period ended June 30, 2011, we incurred operating expenses of $183,693 compared to $175,287 incurred during the three month period ended June 30, 2010. The decrease in operating expenses was primarily attributable to the following items: (i) professional fees of $78,954 (2010 $116,064) (ii) general expenses – related party of $104,466 (2010: $52,467); and (iii) office – general expenses of $273 (2010: $6,756)

Operating expenses incurred during the three month period ended June 30, 2011 compared to the three month period ended June 30, 2010 decreased primarily due to the decrease in professional fees.

Our net loss during the three month period ended June 30, 2011 was ($191,390) or $0.00 per share compared to a net loss of ($175,287) or $0.00 per share during the three month period ended June 30, 2010. The weighted average number of shares outstanding was 75,771,428 for the three month period ended June 30, 2011 compared to 61,900,000 for the three month period ended June 30, 2010.

We anticipate that we will not earn revenues until such time as we have entered into commercial production, if any, of our mineral properties. We are presently in the exploration stage of our business and we can provide no assurance that we will discover commercially exploitable levels of mineral resources on our properties, or if such resources are discovered, that we will enter into commercial production of our mineral properties.

LIQUIDITY AND CAPITAL RESOURCES

Six Month Period Ended June 30, 2011

As of June 30, 2011, our current assets were $12,845 and our current liabilities were $707,175, which resulted in a working capital deficit of $694,330. As of June 30, 2011, current assets were comprised of $179 in cash and $12,666 in prepaid stock compensation. As of June 30, 2011, our current liabilities consisted of: (i) $84,750 in accounts payable; (ii) $376,476 in accounts payable – related parties; (iii) $132,382 in convertible promissory notes – related party; (iv) $89,596 in convertible debt – related parties; (v) convertible debt of $20,000; and (vi) accrued interest – related party of $3,971.

As of June 30, 2011, our total assets were $12,845 comprised of current assets. Our total assets for fiscal year ended December 31, 2010 were $-0-.

As of June 30, 2011, our total liabilities were $865,101 comprised of: (i) current liabilities of $707,175; (ii) mineral prospect obligation of $127,926; and (iii) convertible debt – long term portion of $30,000

Stockholders’ deficit increased from ($470,264) as of December 31, 2010 to ($852,256) as of June 30, 2011 primarily due to the deficit accumulated during exploration. .

Cash Flows from Operating Activities

We have not generated positive cash flows from operating activities. For the six month period ended June 30, 2011, net cash flows used in operating activities was $26,821 compared to $-0- used during the six month period ended June 30, 2010. Net cash flows used in operating activities consisted primarily of a net loss of ($535,675) (2010: $22,559), which was adjusted by: (i) $60,250 (2010: $-0-) in impairment of mineral property acquisition costs; (ii) $121,433 (2010: $140,000) in shares issued for services; and (iii) $124,200 (2010: $-0-) in impairment of prepaid royalties. Net cash flows from operating activities was further changed by an increase in: (i) convertible debt for consulting of $83,596 (2010: $-0-); (ii) prepaid expenses of $12,666 (2010: $23,335); (iii) advances from related parties of $128,396 (2010: $169,395); (iv) accrued interest of $3,726 (2010: $-0-); and (v) accrued interest to related party of $3,971 (2010: $-0-). Net cash flows from operating activities was further changed by a decease in accounts payable and accrued expenses of $4,052 (2010: $6,499).

Cash Flows from Investing Activities

For the six month periods ended June 30, 2011 and June 30, 2010, net cash flows used in investing activities was $-0- .

Cash Flows from Financing Activities

For the six month period ended June 30, 2011, net cash flows provided by financing activities was $27,000 consisting of $27,000 in proceeds from subscriptions payable. For the six month period ended June 30, 2010, net cash flows provided by financing activities was $-0-.

PLAN OF OPERATION AND FUNDING

Based on our current operating plan, we do not expect to generate revenue that is sufficient to cover our expenses for at least the next year. In addition, we do not have sufficient cash and cash equivalents to execute our operations for the next year. We will need to obtain additional financing to operate our business for the next twelve months. We will raise the capital necessary to fund our business through a private placement and public offering of our common stock. Additional financing, whether through public or private equity or debt financing, arrangements with shareholders or other sources to fund operations, may not be available, or if available, may be on terms unacceptable to us. Our ability to maintain sufficient liquidity is dependent on our ability to raise additional capital. If we issue additional equity securities to raise funds, the ownership percentage of our existing shareholders would be reduced. New investors may demand rights, preferences or privileges senior to those of existing holders of our common stock. Debt incurred by us would be senior to equity in the ability of debt holders to make claims on our assets. The terms of any debt issued could impose restrictions on our operations. If adequate funds are not available to satisfy either short or long-term capital requirements, our operations and liquidity could be materially adversely affected and we could be forced to cease operations.

MATERIAL COMMITMENTS

Convertible Promissory Notes

From approximately the first quarter of 2009 through the third quarter of 2010, Falco Petroleum Inc. (“Falco”) agreed to advance to us by way of certain loans the aggregate amount of $324,313.49 (collectively, the “Loan”). The Loan was evidenced by those certain respective convertible promissory notes dated October 21, 2010 in the principal amounts as set forth below:

Date of Quarterly Period	Principal Amount
June 30, 2009	$	64,607.37
September 30, 2009		67,774.88
December 31, 2009		38,635.21
March 31, 2010		60,186.33
June 30, 2010		38,708.53
September 30, 2010		54,401.22.

Subsequently, the Board of Directors determined that there were insufficient shares in its authorized capital to issue in the event that Falco should decide to convert all of the Convertible Notes and, therefore, we agreed with Falco to rescind certain of the Convertible Notes and to re-enter into new convertible notes subsequent to us filing an amendment to our articles of incorporation increasing the authorized capital structure as follows: (i) promissory note dated December 31, 2009 in the principal amount of $38,635.21l (ii) promissory note dated March 31, 2010 in the principal amount of $60,186.33; (iii) promissory note dated June 30, 2010 in the principal amount of $38,708.53; and (iv) promissory note dated September 30, 2010 in the principal amount of $54,401.22 (collectively, the “Rescinded Convertible Notes”).

Therefore, the two remaining convertible notes were: (i) promissory note dated June 30, 2009 in the principal amount of $64,607.37; and (ii) promissory note dated September 30, 2009 in the principal amount of $67,774.88, thus aggregating $132.382.25. We further agreed with Falco that no interest shall bear or accrue on the two remaining convertible notes until January 1, 2011 and that commencing January 1, 2011, the two remaining convertible notes shall bear interest at the rate of 12% per annum.

Subsequently, the Board of Directors authorized the issuance of new convertible notes for the Rescinded Convertible Notes in addition to two further notes: (i) December 31, 2010 in the amount of $33,642.82; and (ii) March 31, 2011 in the amount of $45,756.98. However, new management has determined that the new convertible notes should not be issued. Therefore, as of June 30, 2011, the financial statements reflect an aggregate of $132,382.25 in convertible debt due and owing to Falco, $3,971 in accrued interest on the convertible debt owed to Falco, and $271,331.09 in accounts payable – related party to Falco.

Payable to Related Party

During the six month period ended June 30, 2011, our officers advanced $79,396 to pay for operating expenses. As of June 30, 2011, the total amount of accounts payable to a related party total $376,476. The advances are unsecured, non-interest bearing and due on demand.

Consulting Agreement

Dr. Stewart Jackson. On October 1, 2010, we had entered into a five year consultant agreement with Dr. Stewart Jackson, our prior President/Chief Executive Officer and member of the Board of Directors (the “Jackson Consultant Agreement”). In accordance with the terms and provisions of the Jackson Consultant Agreement, Dr. Jackson agreed to provide certain consulting services to us regarding contact with precious metal assets for acquisition in North America and we agreed to pay Dr. Jackson monthly compensation of $2,000. As of the date of this Quarterly Report, the amount due and owing to Dr. Jackson under the Jackson Consultant Agreement is $120,000, which may be converted into common stock at a per share price based on the ten-day average of each month. Therefore, this resulted in a $79,596 increase in consulting fees for the three and six months ended June 30, 2011 and a convertible debt in the same amount as of June 30, 2011. In addition to the $79,596, a further $10,000 is accrued for past services at June 309, 2011 for a total convertible debt of $89,596. In converted, approximately 7,466,334 shares of common stock would be issued

On August 9, 2011, Dr. Jackson resigned from his position as a member of the Board of Directors and the President/Chief Executive Officer stating that an additional $24,662 in management fees and amounts previously advanced by him to us to cover general operating costs is due and owing.

David Figueiredo. On October 1, 2010, we entered into a one-year consulting agreement with David Figueiredo, our current President/Chief Executive Officer and member of the Board of Directors (the “Figueiredo Consultant Agreement”). In accordance with the terms and provisions of the Figueiredo Consultant Agreement, Mr. Figueiredo agreed to provide certain consulting services to us including, but not limited to, contact with precious metal assets for acquisition in North America, and we agreed to pay monthly compensation of $4,000. Therefore, as of the date of this Quarterly Report, we owe to Mr. Figueiredo an aggregate $36,000. The amount due and owing to Mr. Figueiredo under the Figueiredo Consultant Agreement may be converted into common stock at a per share price based on the ten-day average of each month.

Steve Claus. On October 1, 2010, we entered into a one-year consulting agreement with Steve Claus (the “Claus Consultant Agreement”). In accordance with the terms and provisions of the Claus Consultant Agreement, Mr. Claus agreed to provide certain consulting services to us including, but not limited to, contact with precious metal assets for acquisition in North America, and we agreed to pay monthly compensation of $2,000. Therefore, as of the date of this Quarterly Report, we owe to Mr. Claus an aggregate $18,000. The amount due and owing to Mr. Claus under the Claus Consultant Agreement may be converted into common stock at a per share price based on the ten-day average of each month.

PURCHASE OF SIGNIFICANT EQUIPMENT

We do not intend to purchase any significant equipment during the next twelve months.

OFF-BALANCE SHEET ARRANGEMENTS

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

GOING CONCERN

The independent auditors' report accompanying our December 31, 2010 and December 31, 2009 financial statements contains an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements have been prepared assuming that we will continue as a going concern, which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business.

ITEM III. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk represents the risk of loss that may impact our financial position, results of operations or cash flows due to adverse change in foreign currency and interest rates.

Exchange Rate

Our reporting currency is United States Dollars (“USD”). In the event we acquire any properties outside of the United States, the fluctuation of exchange rates may have positive or negative impacts on our results of operations. However, since all of our properties are currently located within the United States, any potential revenue and expenses will be denominated in U.S. Dollar, and the net income effect of appreciation and devaluation of the currency against the U.S. Dollar would be limited to our costs of acquisition of property.

Interest Rate

Interest rates in the United States are generally stable. Any potential future loans will relate mainly to acquisition of properties and will be mainly short-term. However our debt may be likely to rise in connection with expansion and if interest rates were to rise at the same time, this could become a significant impact on our operating and financing activities. We have not entered into derivative contracts either to hedge existing risks for speculative purposes.

ITEM IV. CONTROLS AND PROCEDURES

FINANCIAL DISCLOSURE CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934 , as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our president/chief executive officer and our secretary, treasurer/chief financial officer to allow for timely decisions regarding required disclosure.

As of June 30, 2011, we carried out an evaluation, under the supervision and with the participation of our president/chief executive officer and our chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our president/chief executive officer and chief financial officer concluded that our disclosure controls and procedures were not effective in providing reasonable assurance in the reliability of our financial reports as of the end of the period covered by this quarterly report. Effectiveness of disclosure controls was primarily a function of our current scale and scope of operations which are relatively non-complex with a limited volume of transactions and capital resources.

The matters involving internal disclosure controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were:

1.	Lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures;

2.	Inadequate segregation of duties consistent with control objectives; and

3.	Ineffective controls over period end financial disclosure and reporting processes.

The aforementioned material weaknesses were identified by our Chief Executive Officer in connection with the review of our financial statements as of June 30, 2011.

Management believes that the material weaknesses set forth in items (2) and (3) above did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.

Management’s Remediation Initiatives

In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we have initiated, or plan to initiate, the following series of measures:

1.	We plan to form an audit committee, which we expect to be partially, if not fully, implemented by December 31, 2011.

2.	We are seeking to add additional personnel, who may be appointed to our board of directors as outside members and/or serve in a capacity to allow us to better segregate job responsibilities.

3.	We have developed internal control procedures over financial disclosure and reporting. However, these procedures are, and will continue to be, ineffective without additional personnel.

Changes in internal controls over financial reporting

There was no change in our internal controls over financial reporting that occurred during the period covered by this report, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

AUDIT COMMITTEE

Our Board of Directors has established an audit committee. Effective August 12, 2011, Glen Soler and Jerry Drew have been appointed as members of the Audit Committee. Both are independent members of the Audit Committee. The audit committee's primary function is to provide advice with respect to our financial matters and to assist our Board of Directors in fulfilling its oversight responsibilities regarding finance, accounting, and legal compliance. The audit committee's primary duties and responsibilities is: (i) serve as an independent and objective party to monitor our financial reporting process and internal control system; (ii) review and appraise the audit efforts of our independent accountants; (iii) evaluate our quarterly financial performance as well as its compliance with laws and regulations; (iv) oversee management's establishment and enforcement of financial policies and business practices; and (v) provide an open avenue of communication among the independent accountants, management and our Board of Directors.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

On August 11, 2011, we received a notice of civil claim (the “Civil Claim”) filed in the Supreme Court of British Columbia, case no. S-115321, between Falco Investments Inc., as Plaintiff, vs. Denarii Resources Inc., as defendant. The Civil Claim alleges that Falco Investments Inc. (“Falco”) entered into a consultant agreement with us on April 1, 2009 confirmed in writing on October 1, 2010 (the “Agreement”). The Civil Claim further alleges that for services rendered pursuant to the Agreement, we would pay Falco the sum of $7,000 monthly and reimburse all expenses incurred by Falco in carrying out the duties under the Agreement. The Civil Claim further alleges that collateral to the Agreement, we agreed with Falco that amounts owed to Falco under the Agreement would bear interest at the date of 12% per annum and such aggregate amounts due and owing would be convertible into shares of our common stock at the rate of $0.01 per share. As of the date of this Quarterly Report, we have not filed our response to the Civil Claim. We intend to aggressively pursue any and all available defenses.

Other than the Civil Claim, we are not a party to any material legal proceedings and to our knowledge; no such proceedings are threatened or contemplated.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.

SHARES ISSUED FOR SERVICES RENDERED

On March 16, 2011, we issued an aggregate of 4,333,333 shares of our restricted common stock valued at $94,334 at a per share price of $0.02 for services rendered. On March 16, 2011, we issued an aggregate 1,888,889 shares of our restricted common stock valued at $113,333 at a per share price of $0.02 for services rendered. On May 9, 2011, we issued an aggregate 300,000 shares of our restricted common stock valued at $4,500 at a per share price of $0.015 for services rendered.

SHARES ISSUED FOR CONVERSION

On February 23, 2011, we issued an aggregate of 1,700,000 shares of our restricted common stock for conversion of accounts payable valued at $25,000. The conversion price per share was $0.0147. On February 23, 2011, we issued an aggregate of 2,000,000 shares of our restricted common stock for conversion of advances from a related party valued at $40,000. The conversion price per share was $0.02.

BATEMAN PROPERTY

On March 31, 2011, we authorized the issuance of 250,000 shares of restricted common stock in accordance with the terms and provisions of the Bateman Option valued at $5,250 at a per share price of $0.021. As of the date of this Quarterly Report, a physical certificate evidencing the issuance of the 250,000 shares of common stock has not been issued.

PRIVATE PLACEMENT

On May 5, 2011, we authorized the issuance of 1,000,000 shares of our restricted common stock pursuant to a private placement for consideration of $15,000. The per share price was $0.015. As of the date of this Quarterly Report, a physical certificate evidencing the shares of common stock has not been issued.

BENEFICIAL OWNERSHIP CHART

The following table sets forth certain information, as of the date of this Quarterly Report, with respect to the beneficial ownership of the outstanding common stock by: (i) any holder of more than five (5%) percent; (ii) each of our executive officers and directors; and (iii) our directors and executive officers as a group. Except as otherwise indicated, each of the stockholders listed below has sole voting and investment power over the shares beneficially owned. Unless otherwise indicated, each of the stockholders named in the table below has sole voting and investment power with respect to such shares of common stock. Beneficial ownership consists of a direct interest in the shares of common stock, except as otherwise indicated. As of the date of this Quarterly Report, there are 76,399,999 shares of common stock issued and outstanding.

Name and Address of Beneficial Owner(1)	Amount and Nature of Beneficial Ownership (1)		Percentage of Beneficial Ownership
Directors and Officers:
Glen Soler 711 S. Carson Street, Suite 4 Carson City, Nevada 89701		-0-		0	%
David Figueiredo 711 S. Carson Street, Suite 4 Carson City, Nevada 89701		666,666	Nil
Paul Murphy 711 S. Carson Street, Suite 4 Carson City, Nevada 89701		4,000,000		5.2	%
Tricia Oakley 711 S. Carson Street, Suite 4 Carson City, Nevada 89701		-0-		0	%
All executive officers and directors as a group (4 persons)		4,666,666		5.2	%

*	Less than one percent.

(1)

Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding as of the date of this Quarterly Report. As of the date of this Quarterly Report, there are 76,399,999 shares issued and outstanding.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. Removed and Reserved

ITEM 5. OTHER INFORMATION.

DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF PRINCIPAL OFFICERS

Effective on July 9, 2011, our Board of Directors accepted the consent of J. Paul Murphy as a member of our Board of Directors.

Effective July 29, 2011, our Board of Directors accepted the resignation of Dr. Stewart Jackson as our President/Chief Executive Officer and a member of the Board of Directors. Dr. Jackson will remain an integral part of the management team engaged as a consultant to assist in bringing our properties into production.

Effective July 29, 2011, our Board of Directors accepted the consent of David Figueiredo as a member of our Board of Directors and as our President/Chief Executive Officer.

Effective August 2, 2011, our Board of Directors accepted the consent of Tricia Oakley as our Secretary.

Effective on April 14, 2011, our Board of Directors accepted the consent of Jerry Drew as a member of our Board of Directors.

Therefore, as of the date of this Quarterly Report, the Board of Directors consists of Jerry Drew, Glen Soler, Paul Murphy and David Figueiredo.

Biography

J. Paul Murphy. During the past fifty years, Mr. Murphy has been involved in the investment business working for a variety of companies, such as Barkley & Crawford (Toronto, Ontario) and Gardner Watson as a co-manager of the underwriting department. Mr. Murphy was also employed at Brawley Cathers, Watt-Carmichael and Brant Securities as an account executive. In 1992, Mr. Murphy and partners developed Skymore Resources Inc., which eventually evolved into Aurico Gold Incorporation. Mr. Murphy is currently a consultant resourcing and/or developing properties.

David Figueiredo. During the past thirty years, Mr. Figueiredo has been involved with a chain of video stores in Northern California, which he started as a sole proprietor in 1983 and remains in operation today. Mr. Figueiredo also has been involved in the acquisition of distressed properties and the development of small shopping centers. He was part of the original team of investors in one of the first legal casinos in Mexico City, Los Palmas, which was opened in 2006 and remains in successful operations today. Mr. Figueiredo graduated from Humboldt State University with a degree in physical education in 1981and was part of the Humboldt State University’s legendary long distance running program. Subsequently, Mr. Figueiredo coached long distance runners for over twenty-five years at the high school level and in 1999 won the Division II California State Championship.

Jerry Drew. During the past thirty years, Mr. Drew has been involved in business development and marketing. Currently, Mr. Drew owns and operates Jerold S. Drew Painting where he is solely responsible for the purchase of job materials, estimation of projects, supervisions of projects and completion. He also owns and operates Spencer Vineyards in Redwood Valley, California, which grows high quality Petite Syrah and Pinot Noir grapes. Mr. Drew’s marketing experience started in the early 1980s where he was employed with J.D. Barton Company, which distribute lighting fixtures to major electrical wholesalers in the Sacramento Valley and throughout northern California. During the 1980s, Mr. Drew also developed a marketing plan for Mendocino Mineral Water. Subsequently, Mr. Drew started Jerold S. Drew Painting which has remained in profitable business for the past thirty years.

Mr. Drew earned his degree from California State University, Sacramento, in Business Management. For approximately twenty years, Mr. Drew was also the high school head cross country and track coach at Ukiah Unified School District until 2004 where his athletes were league, section, state and national champions.

Tricia Oakley. During the past thirty years, Ms. Oakley has been employed as a legal secretary. Her experience ranges from corporate/environmental issues to estate planning, trusts and probate. Since 1997, Ms. Oakley has operated her own business providing secretarial services to attorneys practicing in a wide variety of law fields. Ms. Oakley currently assists attorneys who are practicing corporate, pro bono non-profit, family law and trusts. Ms. Oakley attended Empire College, School of Business, and obtained her Legal Secretarial Sciences degree in 1979.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

Exhibit Number		Description of Exhibit

3.1		Articles of Incorporation (1)

3.2		Bylaws (1)

31.1		Certification by Chief Executive Officer and Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act, promulgated pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith

32.1		Certification by Chief Executive Officer and Chief Financial Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code, promulgated pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 filed herewith

101.INS **		XBRL Instance Document

101.SCH **		XBRL Taxonomy Extension Schema Document

101.CAL **		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF **		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB **		XBRL Taxonomy Extension Label Linkbase Document

101.PRE **		XBRL Taxonomy Extension Presentation Linkbase Document

_________

(1) Filed with the SEC as an exhibit to our Form SB-1 Registration Statement originally filed on March 23, 2006.

(2) Filed as an exhibit to the Current Report filed on November 7, 2010 with the Securities and Exchange Commission.

** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

SIGNATURES

In accordance with the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: September 2, 2011	By:	/s/ DAVID FIGUEIREDO
		DAVID FIGUEIREDO,
		Chief Executive Officer/President


Date: September 2, 2011	By:	/s/ DAVID FIGUEIREDO
		DAVID FIGUEIREDO,
		Chief Financial Officer

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