Edgar Filing: Madison Explorations Inc.

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

FORM 10-KSB

(Mark One)

[X] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2005.
OR

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934

FOR THE TRANSITION FROM _______ TO ________.

COMMISSION FILE NUMBER 000-51302

MADISON EXPLORATIONS, INC.
_________________________________________________________________
(Exact Name of Small Business Issuer as Specified in its Charter)

NEVADA
_______________________________ ___________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

525 Seymour Street, Suite 807
Vancouver, BC, Canada V6B 3H7
________________________________________ __________
(Address of principal executive offices) (Zip code)

Issuer's telephone number: (604) 974-0568

Issuer's fax number: (604) 974-0569

Securities registered under Section 12(b) of the Exchange Act: NONE

Securities registered under Section 12(g) of the Exchange Act: COMMON STOCK

NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
_____________________________ _____________________
Common Stock, par value $.001 None

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 /X/ No / /

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. / /

Indicate by check mark whether the registrant is a shell company (as defined in
12b-2 of the Exchange Act). Yes /X/ No / /

Issuer's revenues for its most recent fiscal year were: $0.

The aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
sold as of April 12, 2006 is $12,862,500.

The number of shares outstanding of the Company's common stock, as of April 12,
2006, is 115,520,000.

Transitional Small Business Disclosure Format (check one): Yes / / No /X/

PART I

This Annual Report on Form 10-KSB and the information incorporated by reference
includes "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities and
Exchange Act of 1934, as amended. Various statements, estimates, predictions,
and projections stated under "Risk Factors," "Management's Discussion and
Analysis or Plan of Operations" and "Business," and elsewhere in this Annual
Report are "forward-looking statements" within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act. These statements appear in a
number of places in this Annual Report and include statements regarding the
intent, belief or current expectations of Madison Explorations, Inc. or our
officers with respect to, among other things, the ability to successfully
implement our exploration strategies, including trends affecting our business,
financial condition and results of operations. While these forward-looking
statements and the related assumptions are made in good faith and reflect our
current judgment regarding the direction of the related business, actual results
will almost always vary, sometimes materially, from any estimates, predictions,
projections, assumptions, or other future performance suggested herein. These
statements are based upon a number of assumptions and estimates, which are
inherently subject to significant uncertainties and contingencies, many of which
are beyond our control and reflect future business decisions which are subject
to change. Some of these assumptions inevitably will not materialize, and
unanticipated events will occur which will affect our results. Some important
factors (but not necessarily all factors) that could affect our revenues, growth
strategies, future profitability and operating results, or that otherwise could
cause actual results to differ materially from those expressed in or implied by
any forward-looking statement, include the following:

o our ability to successfully implement our exploration strategies;
o the success or failure of our exploration activities and other opportunities
that we may pursue;
o changes in the availability of debt or equity capital and increases in
borrowing costs or interest rates;
o changes in regional and national business and economic conditions, including
the rate of inflation;
o changes in the laws and government regulations applicable to us; and
o increased competition.

Stockholders and other users of this Annual Report on Form 10-KSB are urged to
carefully consider these factors in connection with the forward-looking
statements. We do not intend to publicly release any revisions to any
forward-looking statements contained herein to reflect events or circumstances
occurring after the date hereof or to reflect the occurrence of unanticipated
events.

ITEM 1. DESCRIPTION OF BUSINESS.

Madison Explorations, Inc. was incorporated on July 15, 1998 under the laws of
the State of Nevada to engage in any lawful corporate activity. We have
incorporated one wholly owned subsidiary named Scout Resources, Inc. to conduct
our Canadian exploration activities and for us to be in compliance with local
law that requires a domestic Canadian corporation to conduct local exploration
activities. Both Madison Explorations, Inc. and Scout Resources, Inc. will be
sometimes referred to collectively as the "Company."

Our principal executive offices are at 525 Seymour Street, Suite 807, Vancouver,
BC, Canada. Our telephone number is 1 604 974 0568, and our fax number is 1 604
974 0569. We maintain a website at HTTP://WWW.MADISONEXPLORATION.COM. Our
website and its linked contents are not part of this form.

We are currently engaged in the business of diamond exploration in the Southern
area of the Province of Saskatchewan, Canada. The Southern area of Saskatchewan
has been explored for diamonds since at least 1963 by other exploration
companies with limited success. Other than conducting some exploration work on
our "Scout Lake" property in 2004 and 2005 and granting an option to Echo
Resources Inc. whereby it may earn a 20% interest in our "Bulls Eye" property
(also known and referred to as the Herbert Anomaly) and a 15% interest in our
"Bronco" target, we have conducted no operations to date and we do not expect to
receive any revenues for at least two years. During these two years, we plan to
concentrate our efforts on exploration and data gathering. Because the Company
is an exploration stage company, there is no assurance that a commercially
viable mineral deposit exists on any of our properties. Further exploration will
be required before the economic and legal feasibility of developing the
properties can be determined.

At the present time, we do not hold any interest in a mineral property that is
in production. The Company's viability and potential success lie in our ability
to develop, exploit and generate revenue from our interests. There can be no
assurance that such revenues will be obtained. The exploration of mineral
deposits involves significant financial risks over a long period of time which
even a combination of careful evaluations, experience and knowledge may not
eliminate. It is impossible to ensure that our current or proposed exploration
programs on the exploration claims will be profitable or successful. The
inability of the Company to locate a viable diamond deposit on the properties
will have a material adverse effect on its operations and could result in a
total loss of its business.

We have signed an Acquisition Agreement on June 16, 2004 and an Amendment to the
Acquisition Agreement on September 1, 2005 (the "Acquisition Agreement") with
Dr. Joseph Montgomery, PhD (Geology) and Frankie Fu to acquire certain mineral
exploration claims in Southern Saskatchewan, Canada. The Company has also
acquired several additional mineral claims directly from the government of
Saskatchewan.

The option of our Bulls Eye property occurred on September 19, 2004. Pursuant to
our agreement, we granted an option to Echo Resources Inc. whereby it may earn a
20% interest in the mineral claim by paying $44,000 and funding 50% of the costs
of the exploration and data gathering program on the Bulls Eye property. The
Company shall be responsible for funding the remaining 50% of proposed
exploration. Echo Resources has paid the $44,000 due to us. If Echo funds half
of the proposed exploration, then it will earn a 20% interest in the property.
However, it is under no obligation to do so. However, unless Echo Resources Inc.
complies with all requirements to exercise the option, it will not earn any
interest in the Bulls Eye property.

Echo Resources, Inc., formerly known as TVE Corporation ("Echo") is a Delaware
corporation with its principle office located at 500 Australian Avenue, West
Palm Beach, FL. It is publically traded on the Over the Counter Bulletin Board
under the symbol "ECHR." Echo is engaged as a pre-exploration stage company with
its business strategy focusing on the development and exploration of diamond and
gold mines in Canada. Echo became aware of Madison through Madison's website and
follow-up discussions resulting there from.

The Company will report to Echo Resources, Inc. the results of our efforts and
to keep in good standing our claims on the property. In the event we determine
not to proceed with our exploration and data gathering program or in the event
we abandon the project, we have agreed to give Echo Resources, Inc. the right of
first refusal to continue to develop and exploit the property. On August 16th,
2005, the Company provided Echo Resources Inc. with an extension to this
agreement to permit the exploration activities to be funded up to February 28,
2006.

The sale-option of our Bronco property occurred on September 14, 2005. Pursuant
to our agreement, we granted a 15% interest in the mineral claim to Echo
Resources, Inc. in exchange for the payment of $50,000 that we treated as a
deposit. The deposit is reflected as a liability on the balance sheet in order
to better match the expenses to their related revenue source. As funds are spent
on this property, the company will bring the corresponding revenue amount into
income. If the Company decides to abandon the property then any remaining
deposit will be brought into income in that year. Echo Resources, Inc. has
agreed to fund 50% of the costs of the exploration and data gathering program on
the Bronco property. We will report to Echo Resources, Inc. the results of our
efforts and to keep in good standing our claims on the property. In the event we
determine not to proceed with our exploration and data gathering program or in
the event we abandon the project, we have agreed to give Echo Resources, Inc.
the right of first refusal to continue to develop and exploit the property.

ACQUISITION AGREEMENT

Our Acquisition Agreement with Dr. Joseph Montgomery and Frankie Fu to acquire
an 80% interest in various properties in Southern Saskatchewan. Dr. Montgomery
and Frankie Fu have a pre-existing personal and business relationship with each
other. With Mr. Fu as the financial partner, they acquired the Scout Lake
Property on April 30, 2002 and title to the interest in the property was vested
in the name of Joseph Montgomery. In addition, Dr. Montgomery provides certain
data gathering and exploration services under the name Montgomery Consultants
Ltd. Dr. Montgomery is the President of Montgomery Consultants Ltd. Mr. Fu and
Dr. Montgomery purchased the Scout Lake Property for CAD $7,800 or approximately
USD $6,610. The Acquisition Agreement does require Madison to loan the mine
development costs to be borne by Dr. Montgomery and Mr. Fu.

We intend to develop the properties from their present early stage exploration
through completion of the exploration phase. Prior to any further exploration
decisions, a mineral deposit must be appropriately assessed by us. Gathering
this data usually takes several years. Once the appropriate data has been
gathered, we will determine whether and how to proceed. We will use the services
of Montgomery Consultants Ltd. (related party) as well as other third party
contractors to conduct surveys and exploration at the properties to begin to
enable us to determine whether we can extract and produce diamonds. Under the
terms of the Acquisition Agreement, we must spend CAD $150,000 (approximately US
$120,000) on exploration work by May 31, 2006, and an additional CAD $200,000
(approximately US $170,000) by May 31, 2007. Dr. Montgomery and Frankie Fu will
not be required to fund any exploration work on the property until a positive
feasibility study is obtained, after which they will be required to fund their
20% of mine development costs. We may be required to provide the funding of Dr.
Montgomery and Mr. Fu to develop the property.

Under the terms of the Acquisition Agreement, we will issue shares to Dr.
Montgomery and Frankie Fu to provide them 10% of the Company's outstanding
shares calculated as of July 1, 2004. These shares are issuable upon the
completion of the initial required exploration work ("work program") and our
determination to continue developing any of the properties listed in the
Acquisition Agreement. If it is determined after the work program that no
further development will be undertaken, no shares will be issued. The shares to
be issued by us upon the completion of the work program and our decision to
continue exploration are not to exceed 12,813,334 shares of common stock. In
determining the terms and conditions of the Acquisition Agreement, we considered
other arms length agreements entered into between similarly situated parties,
both public and private. We may take into account the dilution in value of our
then outstanding shares of common stock as compared to our then valuation of the
work program in determining if we will continue exploration. In addition, we
will consider the amount of diamond bearing rock, if any, the discovery of any
other materials with a potential market value and the potential to resell the
property to unrelated exploration companies predicated upon the perceived value
of the property when developed. As of today, we have made no determination as to
the feasibility of our work program.

The Saskatchewan Mineral Disposition Regulations stipulates that a claim holder
must spend CAD $12 Canadian per hectare (approximately US$10) per year in claim
year 2 to 10 in order to keep its mineral claims in good standing. After 10
years a claim holder must spend CAD $25 (approximately US $21) per hectare per
year in order to keep its mineral claims in good standing. The claims acquired
under the Acquisition Agreement were initially claimed by Dr. Montgomery in
April of 2002. All of the claims initially acquired are a part of the "Scout
Lake Property. The claims recorded under numbers S-135705, S-135706, and
S-135707 are the original land claims comprising the Scout Lake Property on
which drilling activity occurred. After assessing the drill results on the
property claimed in April of 2002 these claims have been allowed to lapse and
are no longer of interest to the Company. The claim numbers relating to the
Scout Lake property are S-137962 and S-137963, were claimed by Scout Resources
in July 2004. These claims are now in year two.

We intend to explore the properties from early stage exploration through
completion of the exploration phase. Prior to any decision to develop the
properties, a diamond deposit must be assessed to determine the total tonnage of
diamond bearing material, the average grade of the rock, the estimated size
distribution of the diamonds in the deposit and the average value per carat of
the diamonds. Gathering this data usually takes several years. At that time, the
Company will evaluate whether, and if so, how to proceed.

EXPLORATION PROGRAM

We have no independent exploration capabilities.

The Company intends to use third party service providers as well as Montgomery
Consultants Ltd. to perform its exploration activities. The Company pays an
hourly rate for the field services of Dr. Montgomery and his staff as well as
reimbursement for expenses, including equipment, transportation, lodging and
meals. In determining the terms and conditions of the consideration paid or to
be paid, we considered other arms length agreements entered into between
similarly situated parties, both public and private, and have determined that
the payments to Dr. Montgomery and Montgomery Consultants Ltd are on terms equal
to or more favorable than those that would have been paid to other third
parties. Pursuant to oral agreements, Dr. Montgomery is paid not to exceed the
sum of CAD$400 per day (approximately US $332), plus expenses for field days, a
value comparable to that of similar professionals with the education and
experience of Dr. Montgomery. Dr. Montgomery receives no remuneration for
services performed as an officer and director.

Over the next two years, during its exploration phase, the Company intends to
continue to retain Montgomery Consultants Ltd. to co-ordinate crews of workers
who will gather samples of rock from the properties and transport the samples to
a facility where they can be tested for properties which tend to indicate the
presence of diamonds. At the end of the two years of exploration, we will seek
either a joint venture partner or a senior partner that will undertake the
exploration of the properties. However, there is a substantial risk that no
commercially viable diamond deposit will be found. If so, we will have
difficulty finding any partners to undertake further exploration.

The Company has begun its early stage exploration activities and has gathered
samples from the Scout Lake Properties for analysis. A total of 96 soil samples
were taken by us over the Scout Lake magnetic anomaly. These were analyzed by
SGS Laboratories (SGS) of Toronto, Canada. At the Company's request, SGS used
the MMI D Kimberlite package developed for the detection of kimberlites and
related rocks. Mobile Metal Ions (MMI) soil geochemistry is a technology
developed in Australia for the detection of metal ions through considerable
depths of overburden. This analytical method was used to analyze for palladium,
niobium, yttrium, rubidium, nickel, cobalt, chromium, titanium and magnesium
(Pd, Nb, Y, Rb, Ni, Co, Cr, Ti, and Mg). These minerals are deemed to be diamond
indicating minerals. The location of these minerals tends to indicate a higher
possibility or probability of locating diamonds in the proximity of the mineral
predicated upon the concentration of the mineral. Statistical analyses were
performed for each element and a "background" value determined as the mean of
the lowest quartile. The ratios of actual values to background were calculated
and stacked bar graphs were used to illustrate the results.

A total of 96 MMI samples were collected at 50 meter intervals along two
profiles. Anomalous values were obtained for the elements magnesium, chromium,
rubidium, nickel, and palladium. These elements are typically associated with
kimberlites and ultramafic rocks. The highest response ratios for each element
from the survey were: magnesium-7, chromium-6, yttrium-8, cobalt-24, and
palladium-32.

The Company has also conducted a ground magnetic survey over the Scout Lake
property. The survey was done by Discovery International Geophysics Inc. A total
of 41 line-km. was completed. The raw data was processed to remove culture,
spikes and a regional gradient. The resulting data imaged the magnetic response
from the interpreted dyke successfully showing more detail than the aeromagnetic
survey and some additional structures which may also be dykes.

After a study of the ground magnetic survey and integration with the MMI
geochemical data, four sites were selected for test drilling.

A drilling program on Scout Lake was completed in 2005. The drill hole
encountered sedimentary rocks of the Ravenscrag formation. These Tertiary
sediments consisted of poorly consolidated sandstone, clay, gravel and coal
seems. The formation, in this area, is of unknown thickness. The unexpected
intersection of Tertiary sediments of unknown thickness has resulted in a change
in the direction of Madison's exploration program. After discussions with Dr.
Joseph Montgomery, the Company's claims in the Willow Bunch district will not be
renewed. The main thrust of our exploration program will be in southwest
Saskatchewan. The Company has 18 mineral claims in this area which covers the
richest indicator mineral concentration so far encountered.

Two areas in Saskatchewan have been designated as having diamond discovery
potential. They are the Fort a la Corne District and the Wood Mountain District.

The Fort a la Corne District is the area surrounding Prince Albert in
North-Central Saskatchewan Canada. The Fort a la Corne area of Saskatchewan
hosts one of the most extensive kimberlite fields in the world. Over 70
kimberlites exist in the Fort a la Corne area and over 70 percent of these have
been shown to contain diamonds. Shore Gold Inc. has discovered a diamond bearing
kimberlite within the Fort a la Corne area, and is currently conducting a
Pre-Feasibility Study to determine the commercial viability of their find.

The Wood Mountain area is an area in which high occurrences of diamond indicator
minerals have been found, similar to those at Fort a la Corne. The Company's
focus will be on properties that are in or near the Wood Mountain area, near the
towns of Val Marie and Wideview. It is noted that both of these towns lie in
defined Wood Mountain area.

COMPETITION

The mineral exploration business is competitive in all of its phases. The
Company expects to compete with numerous other exploration companies and
individuals, including competitors with greater financial, technical and other
resources than the Company, for resources required for exploration. Their
greater resources will likely position these competitors to conduct exploration
within a shorter time frame than the Company.

GOVERNMENT REGULATION AND LICENSING

The operations of the Company require licenses and permits from various
governmental authorities. The Company believes that it presently holds all
necessary licenses and permits required to carry on with its intended activities
under applicable laws and regulations and the Company believes it is presently
complying in all material respects with the terms of such licenses and permits.
However, such licenses and permits are subject to change in regulations and in
various operating circumstances. The Company may not be able to obtain all
necessary licenses and permits required to carry out exploration.

The Company is currently subject to environmental regulation under The
Environmental Management and Protection Act (Saskatchewan), the Crown Minerals
Act (Saskatchewan) and the Forest Resources Management Act (Saskatchewan). We
believe that we are in compliance with all of these acts. Moreover, the Company
believes that an environmental impact of its exploration activities will be
minimal. To the extent that the Company removes large amounts of rock or soil
from the properties, we will likely have to replace such rock or soil and
remediate any environmental disruption caused by its activities. It is
impossible for us to assess with any certainty the cost of such replacement or
remediation or the potential liability the Company would face if we were found
to have violated one or more of these acts.

EMPLOYEES

We currently have three part time employees, our officers and directors, who
work for the Company on a part time basis. None of these employees devote more
than 10% of their time to the Company. Except for the compensation to Dr.
Montgomery unrelated to his activities as an officer and director, no officer or
director is paid for services rendered.

SEASONALITY

Due to the potential for extremely cold weather in Saskatchewan during the
period from November to March, there may be years when exploration is not
possible during these months.

CURRENCY FLUCTUATION

The Company's currency fluctuation exposure is primarily to the Canadian dollar
as all of the Company's properties are in Saskatchewan. Such fluctuations may
materially affect the Company's financial position and results of operations.

SUBSIDIARIES

We have incorporated one wholly owned subsidiary named Scout Resources, Inc. to
conduct our Canadian exploration activities and for us to be in compliance with
local law that requires a domestic Canadian corporation to conduct local
exploration activities. Both Madison Explorations, Inc. and Scout Resources,
Inc. will be sometimes referred to collectively as the "Company."

REPORTS TO SECURITY HOLDERS

The Company does not intend to deliver an annual report to its security holders.
The public may read and copy any materials filed with the SEC, such as this Form
10-KSB and Form 10-QSB reports. The Company is an electronic filer under the
SEC's EDGAR filing program. Accordingly, the Company's filings are maintained by
the SEC in a database at www.sec.gov and are available to all security holders.

RISK FACTORS

An investment in an exploration stage mining company with no history of
operations such as ours involves an unusually high amount of risk, both unknown
and known, and present and potential, including, but not limited to the risks
enumerated below.

RISKS ASSOCIATED WITH MINING

ALL OF OUR PROPERTIES ARE IN THE EXPLORATION STAGE. THERE IS NO ASSURANCE THAT
WE CAN ESTABLISH THE EXISTENCE OF ANY MINERAL RESOURCE ON ANY OF OUR PROPERTIES
IN COMMERCIALLY EXPLOITABLE QUANTITIES. UNTIL WE CAN DO SO, WE CANNOT EARN ANY
REVENUES AND IF WE DO NOT DO SO WE WILL LOSE ALL OF THE FUNDS THAT WE EXPEND ON
EXPLORATION. IF WE DO NOT DISCOVER ANY MINERAL RESOURCE IN A COMMERCIALLY
EXPLOITABLE QUANTITY, OUR BUSINESS WILL FAIL.

Despite some limited exploration work on our mineral properties, we have not
established that any of them contain any mineral reserve, nor can there be any
assurance that we will be able to do so. If we do not, our business will fail. A
mineral reserve is defined by the Securities and Exchange Commission in its
Industry Guide 7
(http://www.sec.gov/divisions/corpfin/forms/industry.htm#secguide7) as that part
of a mineral deposit, which could be economically and legally extracted or
produced at the time of the reserve determination. The probability of an
individual prospect ever having a "reserve" that meets the requirements of the
Securities and Exchange Commission's Industry Guide 7 is extremely remote; in
all probability our mineral resource property does not contain any 'reserve' and
any funds that we spend on exploration will probably be lost.

Even if we do eventually discover a mineral reserve on one or more of our
properties, there can be no assurance that they can be developed into producing
mines and extract those resources. Both mineral exploration and development
involve a high degree of risk and few properties, which are explored, are
ultimately developed into producing mines.

The commercial viability of an established mineral deposit will depend on a
number of factors including, by way of example, the size, grade and other
attributes of the mineral deposit, the proximity of the resource to
infrastructure, government regulation and market prices. Most of these factors
will be beyond our control, and any of them could increase costs and make
extraction of any identified mineral resource unprofitable.

MINERAL OPERATIONS ARE SUBJECT TO APPLICABLE LAW AND GOVERNMENT REGULATION. EVEN
IF WE DISCOVER A MINERAL RESOURCE IN A COMMERCIALLY EXPLOITABLE QUANTITY, THESE
LAWS AND REGULATIONS COULD RESTRICT OR PROHIBIT THE EXPLOITATION OF THAT MINERAL
RESOURCE. IF WE CANNOT EXPLOIT ANY MINERAL RESOURCE THAT WE MIGHT DISCOVER ON
OUR PROPERTIES, OUR BUSINESS MAY FAIL.

Both mineral exploration and extraction require permits from various federal,
provincial and local governmental authorities and are governed by laws and
regulations, including those with respect to prospecting, mine development,
mineral production, transport, export, taxation, labor standards, occupational
health, waste disposal, toxic substances, land use, environmental protection,
mine safety and other matters. There can be no assurance that we will be able to
obtain or maintain any of the permits required for the continued exploration of
our mineral properties or for the construction and operation of a mine on our
properties at economically viable costs. If we cannot accomplish these
objectives, our business could fail.

We believe that we are in compliance with all material laws and regulations that
currently apply to our activities but there can be no assurance that we can
continue to do so. Current laws and regulations could be amended and we might
not be able to comply with them, as amended. Further, there can be no assurance
that we will be able to obtain or maintain all permits necessary for our future
operations, or that we will be able to obtain them on reasonable terms. To the
extent such approvals are required and are not obtained, we may be delayed or
prohibited from proceeding with planned exploration or development of our
mineral properties.

IF WE ESTABLISH THE EXISTENCE OF A MINERAL RESOURCE ON ANY OF OUR PROPERTIES IN
A COMMERCIALLY EXPLOITABLE QUANTITY, WE WILL REQUIRE ADDITIONAL CAPITAL IN ORDER
TO DEVELOP THE PROPERTY INTO A PRODUCING MINE. IF WE CANNOT RAISE THIS
ADDITIONAL CAPITAL, WE WILL NOT BE ABLE TO EXPLOIT THE RESOURCE, AND OUR
BUSINESS COULD FAIL.

If we do discover mineral resources in commercially exploitable quantities on
any of our properties, we will be required to expend substantial sums of money
to establish the extent of the resource, develop processes to extract it and
develop extraction and processing facilities and infrastructure. Although we may
derive substantial benefits from the discovery of a major deposit, there can be
no assurance that such a resource will be large enough to justify commercial
operations, nor can there be any assurance that we will be able to raise the
funds required for development on a timely basis. If we cannot raise the
necessary capital or complete the necessary facilities and infrastructure, our
business may fail.

MINERAL EXPLORATION AND DEVELOPMENT IS SUBJECT TO EXTRAORDINARY OPERATING RISKS.
WE DO NOT CURRENTLY INSURE AGAINST THESE RISKS. IN THE EVENT OF A CAVE-IN OR
SIMILAR OCCURRENCE, OUR LIABILITY MAY EXCEED OUR RESOURCES, WHICH WOULD HAVE AN
ADVERSE IMPACT ON OUR COMPANY.

Mineral exploration, development and production involve many risks, which even a
combination of experience, knowledge and careful evaluation may not be able to
overcome. Our operations will be subject to all the hazards and risks inherent
in the exploration, development and production of resources, including liability
for pollution, cave-ins or similar hazards against which we cannot insure or
against which we may elect not to insure. Any such event could result in work
stoppages and damage to property, including damage to the environment. We do not
currently maintain any insurance coverage against these operating hazards. The
payment of any liabilities that arise from any such occurrence would have a
material, adverse impact on our Company.

MINERAL PRICES ARE SUBJECT TO DRAMATIC AND UNPREDICTABLE FLUCTUATIONS.

We expect to derive revenues, if any, from the eventual extraction and sale of
diamonds as well as precious and base metals such as gold, silver and copper.
The price of those commodities has fluctuated widely in recent years, and is
affected by numerous factors beyond our control including international,
economic and political trends, expectations of inflation, currency exchange
fluctuations, interest rates, global or regional consumptive patterns,
speculative activities and increased production due to new extraction
developments and improved extraction and production methods. The effect of these
factors on the price of base and precious metals, and, therefore, the economic
viability of any of our exploration projects, cannot accurately be predicted.

THE MINING INDUSTRY IS HIGHLY COMPETITIVE AND THERE IS NO ASSURANCE THAT WE WILL
CONTINUE TO BE SUCCESSFUL IN ACQUIRING MINERAL CLAIMS. IF WE CANNOT CONTINUE TO
ACQUIRE PROPERTIES TO EXPLORE FOR MINERAL RESOURCES, WE MAY BE REQUIRED TO
REDUCE OR CEASE OPERATIONS.

There are hundreds of public and private companies that are actively engaged in
mineral exploration. The exact number is virtually impossible to quantify.
Furthermore, since the mineral exploration sphere is so diverse, it is quite
difficult to identify specific primary competitors and make comparisons to our
Company.

Many of our competitors have greater financial resources and technical
facilities. Accordingly, we will attempt to compete primarily through the
knowledge and experience of our management. This competition could adversely
affect our ability to acquire suitable prospects for exploration in the future.
Accordingly, there can be no assurance that we will acquire any interest in
additional mineral resource properties that might yield reserves or result in
commercial mining operations.

THIRD PARTIES MAY CHALLENGE OUR RIGHTS TO OUR RESOURCE PROPERTIES OR THE
AGREEMENTS THAT PERMIT US TO EXPLORE OUR PROPERTIES MAY EXPIRE IF WE FAIL TO
TIMELY RENEW THEM AND PAY THE REQUIRED FEES.

In connection with the acquisition of our mineral properties, we sometimes
conduct only limited reviews of title and related matters, and obtain certain
representations regarding ownership. These limited reviews do not necessarily
preclude third parties from challenging our title and, furthermore, our title
may be defective. Consequently, there can be no assurance that we hold good and
marketable title to all of our mining concessions and mining claims. If any of
our concessions or claims were challenged, we could incur significant costs and
lose valuable time in defending such a challenge. These costs or an adverse
ruling with regards to any challenge of our titles could have a material adverse
affect on our financial position or results of operations. There can be no
assurance that any such disputes or challenges will be resolved in out favor.

We are not aware of challenges to the location or area of any of the mining
concessions and mining claims. There is, however, no guarantee that title to the
claims and concessions will not be challenged or impugned in the future.

RISKS ASSOCIATED WITH OUR COMMON STOCK

BECAUSE OUR COMMON STOCK IS TRADED ONLY ON THE PINK SHEETS, YOUR ABILITY TO SELL
YOUR SHARES IN THE SECONDARY TRADING MARKET MAY BE LIMITED.

Currently, our common stock is traded only on the Pink Sheets. Consequently, the
liquidity of our common stock is impaired, not only in the number of shares that
are bought and sold, but also through delays in the timing of transactions, and
coverage by security analysts and the news media, if any, of our Company. As a
result, prices for shares of our common stock may be different than might
otherwise prevail if our common stock was quoted or traded on a national
securities exchange such as the New York Stock Exchange, NASDAQ, or the American
Stock Exchange. Although we have applied to have our common stock quoted on the
National Association of Securities Dealer's OTC Bulletin Board, we cannot
provide any assurance that our common stock will be traded on the OTC Bulletin
Board or, if traded, that a public market will develop.

OUR STOCK PRICE HAS BEEN VOLATILE AND YOUR INVESTMENT IN OUR COMMON STOCK COULD
SUFFER A DECLINE IN VALUE.

Our common stock is traded only on the Pink Sheets. The market price of our
common stock may fluctuate significantly in response to a number of factors,
some of which are beyond our control. These factors include price fluctuations
of precious metals, government regulations, disputes regarding mining claims,
broad stock market fluctuations and economic conditions in the United States.

BECAUSE WE DO NOT INTEND TO PAY ANY DIVIDENDS ON OUR COMMON SHARES, INVESTORS
SEEKING DIVIDEND INCOME OR LIQUIDITY SHOULD NOT PURCHASE OUR SHARES.

We do not currently anticipate declaring and paying dividends to our
shareholders in the near future. It is our current intention to apply net
earnings, if any, in the foreseeable future to increasing our working capital.
Prospective investors seeking or needing dividend income or liquidity should,
therefore, not purchase our common stock. We currently have no revenues and a
history of losses, so there can be no assurance that we will ever have
sufficient earnings to declare and pay dividends to the holders of our shares,
and in any event, a decision to declare and pay dividends is at the sole
discretion of our board of directors, who currently do not intend to pay any
dividends on our common shares for the foreseeable future.

OUR STOCK IS A PENNY STOCK. TRADING OF OUR STOCK MAY BE RESTRICTED BY THE SEC'S
PENNY STOCK REGULATIONS, WHICH MAY LIMIT A STOCKHOLDER'S ABILITY TO BUY AND SELL
OUR STOCK.

Our stock is a penny stock. The Securities and Exchange Commission has adopted
Rule 15g-9 which generally defines "penny stock" to be any equity security that
has a market price (as defined) less than $5.00 per share or an exercise price
of less than $5.00 per share, subject to certain exceptions. Our securities are
covered by the penny stock rules, which impose additional sales practice
requirements on broker-dealers who sell to persons other than established
customers and "accredited investors". The term "accredited investor" refers
generally to institutions with assets in excess of $5,000,000 or individuals
with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or
$300,000 jointly with their spouse. The penny stock rules require a
broker-dealer, prior to a transaction in a penny stock not otherwise exempt from
the rules, to deliver a standardized risk disclosure document in a form prepared
by the SEC, which provides information about penny stocks and the nature and
level of risks in the penny stock market. The broker-dealer also must provide
the customer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction and
monthly account statements showing the market value of each penny stock held in
the customer's account. The bid and offer quotations, and the broker-dealer and
salesperson compensation information, must be given to the customer orally or in
writing prior to effecting the transaction and must be given to the customer in
writing before or with the customer's confirmation. In addition, the penny stock

rules require that prior to a transaction in a penny stock not otherwise exempt
from these rules, the broker-dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor interest
in and limit the marketability of our common stock.

NASD SALES PRACTICE REQUIREMENTS MAY ALSO LIMIT A STOCKHOLDER'S ABILITY TO BUY
AND SELL OUR STOCK.

In addition to the "penny stock" rules promulgated by the Securities and
Exchange Commission (see above for discussions of penny stock rules), the NASD
has adopted rules that require that in recommending an investment to a customer,
a broker-dealer must have reasonable grounds for believing that the investment
is suitable for that customer. Prior to recommending speculative low priced
securities to their non-institutional customers, broker-dealers must make
reasonable efforts to obtain information about the customer's financial status,
tax status, investment objectives and other information. Under interpretations
of these rules, the NASD believes that there is a high probability that
speculative low priced securities will not be suitable for at least some
customers. The NASD requirements make it more difficult for broker-dealers to
recommend that their customers buy our common stock, which may limit your
ability to buy and sell our stock and have an adverse effect on the market for
our shares.

PLEASE READ THIS FORM 10KSB CAREFULLY. YOU SHOULD RELY ONLY ON THE INFORMATION
CONTAINED HEREIN AND ON THE OTHER REPORTS AND OUR FORM 10SB, AS AMENDED, THAT WE
HAVE FILIED WITH THE SECURITIES AND EXCHANGE COMMISSION. WE HAVE NOT AUTHORIZED
ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION.

ITEM 2. DESCRIPTION OF PROPERTY.

The Company does not own real property nor do we hold any lease or other real
property interest except for the exploration claims we have acquired pursuant to
the Acquisition Agreement as described under "Description of Business" and from
staking claims directly with the government of Saskatchewan.

We have entered into an agreement to acquire an 80% interest in various
properties, located in Southern Saskatchewan.

Scout Lake Property

The Scout Lake Property is located on Canadian NTS Map Sheet 72G.

The property lies approximately 150 kilometers southwest of Regina at
geographical coordinates 49 20'N latitude, 106 57'W longitude. The property is
serviced by local roads, power and water. The legal descriptions of the two
claims that make up the Scout Lake property are noted in the following table.

______________________________________________________________________________________

Claim number Location NTS Area Recorded Area
______________________________________________________________________________________

S-137962 All of Sections 19 and 30 72-H-05 512 Hectares
and 26, Township 4 Range
29, West of the Second
Meridian
______________________________________________________________________________________

S-137963 All of Section 13 72-H-05 512 Hectares
Township 4 Range 30
West of the Second
Meridian
______________________________________________________________________________________

The Bronco Target is located on Canadian NTS Map Sheet 72-G.

The Bronco target lies in Southern Saskatchewan near the town of Val Marie,
approximately 400 km southwest of the Star Kimberlite - Fort al La Corne. This
area is in the area defined by the Saskatchewan Geological Survey as being high
diamond exploration potential.

______________________________________________________________________________________

Claim number Location NTS Area Recorded Area
______________________________________________________________________________________

S-137774 The North half of sections 7, 8 72-G-03 1152 Hectares
and 9 and all of sections 16, 17
and 18, Township 3, Range 9,
West of the Third Meridian.
______________________________________________________________________________________

S-137775 All of section 19, Township 3, 72-G-03 256 Hectares
RANGE 9, West of the Third
Meridian
______________________________________________________________________________________

S-137776 The North half of sections 10, 72-G-03 1152 Hectares
11 and 12 and all of sections
13, 14 and 15, Township 3,
Range 10, West of the Third
Meridian.
______________________________________________________________________________________

S-138592 All of sections, 20 and 21 72-G-03 256 Hectares
Township 3, Range 10
West of the Third Meridian.

______________________________________________________________________________________

The Val Marie Target is located on Canadian Map Sheet 72-G.

There are numerous anomalies within the Val Marie target, and an abundance of
indicator minerals have been found in past ground exploration. The chemistry of
these minerals is consistent with a kimberlitic source. An abundance of chrome
diopsides suggests a local source within a few kilometers.

Altered Bearpaw Formation rocks were identified 1.5 km from the site. The
alteration of these rocks reflects the proximity of intrusive rocks.

Claim number Location NTS Area Recorded Area
______________________________________________________________________________________

S-137460 ALL OF SECTIONS 14, 15, 22, 72-G-03 2048 Hectares
23, 26, 27, 34 AND 35, & 72-G-06
TOWNSHIP 3, RANGE 11, WEST
OF THE THIRD MERIDIAN

______________________________________________________________________________________

S-137461 ALL OF SECTIONS 2 AND 3, 72-G-06 512 Hectares
TOWNSHIP 4, RANGE 11, WEST
OF THE THIRD MERIDIAN
______________________________________________________________________________________

The Bulls Eye Target is located on Canadian NTS Map Sheet 72J.

The Bulls Eye Target was initially claimed by the Company on August 31, 2004.
The property lies approximately 200 kilometers West of Regina at geographical
coordinates 50 30'N latitude, 107 15' longitude. The property is serviced by
local roads, power and water. The legal descriptions of the two claims that make
up the Bulls Eye Target are noted in the following table.

Claim number Location NTS Area Recorded Area
______________________________________________________________________________________

S-137654 All of section 11, 72-J-06 256 Hectares
Township 18, Range 10, & 72-J-11
West of the Third Meridian
______________________________________________________________________________________

S-137655 All of section 12, 72-J-06 256 Hectares
Township 18, Range 10, & 72-J-11
West of the Third Meridian
______________________________________________________________________________________

The Wood Mountain North Target was initially claimed by the Company on November
18, 2004. The Wood Mountain North Target is located on Canadian NTS Map Sheet
72G. The property lies approximately 100 kilometers Southwest of Regina at
geographical coordinates 49 30'N latitude, 106 30' longitude. The property is
serviced by local roads, power and water. The legal descriptions of the claim
that make up the Wood Mountain North Target is noted in the following table.

Claim number Location NTS Area Recorded Area
______________________________________________________________________________________

S-137742 All of Sections 27, 28, 29 72-G-07, 1024 Hectares
and 30, Township 6, Range 72-G-08,
4, West of the Third 72-G-09
Meridian & 72-G-10
______________________________________________________________________________________

The Company has also claimed other unnamed properties in Saskatchewan as at
December 31, 2005. The legal descriptions of the unnamed claims is noted in the
following table.

Claim number Location NTS Area Recorded Area
______________________________________________________________________________________

S-137765 All of section 31, 72-G-04 256 Hectares
Township 1, RANGE 13, West
of the Third Meridian
______________________________________________________________________________________

S-137766 All of section 9, Township 72-G-04 256 Hectares
1, RANGE 14, West of the
Third Meridian
______________________________________________________________________________________

S-137767 All of section 5, Township 72-F-08 256 Hectares
4, RANGE 18, West of the
Third Meridian
______________________________________________________________________________________

S-137768 All of section 29, Township 6, 72-F-08 256 Hectares
RANGE 18, West of the & 72-F-09
Third Meridian
______________________________________________________________________________________

S-137769 All of section 4, Township 2, 72-F-02 256 Hectares
RANGE 22, West of the
Third Meridian
______________________________________________________________________________________

S-137770 All of sections 28 and 33, 72-F-14 512 Hectares
Township 9, RANGE 25, West of
the Third Meridian
______________________________________________________________________________________

S-137771 All of sections 5 and 6, 72-F-05 512 Hectares
Township 5, RANGE 28, West of
the Third Meridian
______________________________________________________________________________________

S-137772 All of section 7, Township 5, 72-F-05 256 Hectares
RANGE 28, West of the Third
Meridian
______________________________________________________________________________________

S-137773 All of section 9, Township 5, 72-F-05 256 Hectares
RANGE 28, West of the
Third Meridian
______________________________________________________________________________________

ITEM 3. LEGAL PROCEDINGS.

The Company is not currently party to any material legal proceedings and to our
knowledge, no such proceedings are threatened or contemplated.

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

During the fourth quarter of calendar year 2005, no matters were submitted to a
vote of the security holders of the Company.

PART II

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

MARKET INFORMATION

There is no established trading market in our Common Stock.

We have been assigned a trading symbol of MDEX in connection with the reporting
of a secondary market transaction or transactions by a broker or dealer in the
Automated Confirmation Transaction Service. The symbol was assigned at the
request of a broker-dealer from the NASD Regulators, Inc.

SHAREHOLDERS

As at March 31, 2006 there are eight hundred & twenty nine (829) holders of the
Company's Common Stock.

SHARES ELIGIBLE FOR RESALE

Except for the shares of stock held by our officers and directors, all of our
issued and outstanding shares of Common Stock held by non-affiliates are
eligible for sale under Rule 144 promulgated under the Securities Act of 1933,
as amended, subject to certain limitations included in said Rule. In general,
under Rule 144, a person (or persons whose shares are aggregated), who has
satisfied a one year holding period, under certain circumstances, may sell
within any three-month period a number of shares which does not exceed the
greater of one percent of the then outstanding Common Stock or the average
weekly trading volume during the four calendar weeks prior to such sale. Rule
144 also permits, under certain circumstances, the sale of shares without any
quantity limitation by a person who has satisfied a two-year holding period and
who is not, and has not been for the preceding three months, an affiliate of the
Company.

In summary, Rule 144 applies to affiliates (that is, control persons) and
nonaffiliates when they resell restricted securities (those purchased from the
Company or an affiliate of the Company in nonpublic transactions). Nonaffiliates
reselling restricted securities, as well as affiliates selling restricted or
nonrestricted securities, are not considered to be engaged in a distribution
and, therefore, are not deemed to be underwriters as defined in Section 2(11),
if six conditions are met:

(1) Current public information must be available about the Company unless sales
are limited to those made by nonaffiliates after two years.

(2) When restricted securities are sold, generally there must be a one-year
holding period.

(3) When either restricted or nonrestricted securities are sold by an affiliate
after one year, there are limitations on the amount of securities that may be
sold; when restricted securities are sold by non-affiliates between the first
and second years, there are identical limitations; after two years, there are no
volume limitations for resales by non-affiliates.

(4) Except for sales of restricted securities made by nonaffiliates after two
years, all sales must be made in brokers' transactions as defined in Section
4(4) of the Securities Act of 1933, as amended, or a transaction directly with a
"market maker" as that term is defined in Section 3(a)(38) of the 1934 Act.

(5) Except for sales of restricted securities made by nonaffiliates after two
years, a notice of proposed sale must be filed for all sales in excess of 500
shares or with an aggregate sales price in excess of $10,000.

(6) There must be a bona fide intention to sell within a reasonable time after
the filing of the notice referred to in (5) above.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

As at the date of this report there are no securities authorized for issuance
under equity compensation plans.

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

The following discussion regarding the Company and our business and operations
contains "forward-looking statements." These statements consist of any statement
other than a recitation of historical fact and can be identified by the use of
forward-looking terminology such as "may," "expect," "anticipate," "estimate" or
"continue" or its negative or other variations or comparable terminology. All
forward-looking statements are necessarily speculative and there are certain
risks and uncertainties that could cause actual events or results to differ
materially from those referred to in such forward-looking statements.

PLAN OF OPERATION

The Company was incorporated in June of 1998 under the name of "Madison-Taylor
General Contractors, Inc." and intended to engage as a general contractor for
constructing temporary buildings at exploratory mining locations. Madison-Taylor
General Contractors, Inc. was unable to implement the business and remained
inactive from 1998 until 2004. The Company commenced operations under its
current name in April of 2004. After implementing the Company's current plan of
operation, the Company has relied on advances and contributions of capital of
approximately $28,925 from our principal stockholders, an additional shareholder
loan of $25,000 and proceeds of approximately $94,000 from the sale of a 20%
interest in one of the Company's claims (Bulls Eye) and the sale of a 15%
interest in another claim (Bronco) to support its limited operations. As of
December 31, 2005, we had approximately $56,288 of cash. The Company will need
additional equity or debt financing of up to $2,000,000 to use for the second
phase of its exploration program.

GEOLOGICAL REPORT: SOUTHERN SASKATCHEWAN

Dr. Joseph Montgomery has prepared a geological report on the Wood Mountain
District. The report summarizes the Company's claims in the area and the
geological formations on the claims that have been identified by aeromagnetic
survey and other mineral exploration activities done in the past.

In his report, Dr. Joseph Montgomery has recommend to us that we proceed with a
three-phase, staged exploration program in the Wood Mountain District based on
his conclusion that prospecting, geophysical surveys and soil and rock sampling
are the exploration techniques that have been the most successful in diamond
bearing kimberlite rock in the region.

The Company has several specific exploration objectives:

(1) To locate one or more Kimberlite/Lamproite pipes, dykes or sills;
(2) To determine whether the Kimberlite/Lamproite contains Diamonds; and
(3) To determine if the diamond-bearing pipe could be the source of an
economically viable mine.

Even if the Company locates Kimberlite, the finding of diamonds in Kimberlite is
rare and the finding of a commercial grade of diamonds is rarer.

We believe that exploration is by its very nature is evolutionary. Each
subsequent step is based on the foundation established by previous results. Even
then, diverse factors affect the process. Weather and seasons influence when
work can be commissioned. Previous results determine the direction for future
exploration and the availability of funds dictates what work can be budgeted for
each phase of exploration.

The Company has completed its initial phase of work on the Scout Lake properties
and now intends to continue the initial phase of work on some of its other
properties in the Wood Mountain District. The results at our Scout Lake
properties do not warrant spending further time and money at this location.
Phase one work should consist of a ground magnetometer survey at approximately
500 meter line-spacing. At the same time, surface samples should be taken of
till for heavy mineral evaluation. About 50 samples would cover the grid area
satisfactorily. If results warrant, a few lines of gravimetric surveying could
be done. Two or three RC drill holes (about 500 meter) would then test the
anomaly.

Phase 1 - Initial Wood Mountain Evaluation

- Ground Magnetometer - 1 month Instrument Rental 1,800
- 50 Sample Collections - Processing @ $50 each 2,500
- Gravimetric Survey - Instrument Rental 600
- Chemical Analysis - 50 @ $10 each 500
- Personnel - Geologist 2 weeks @ $300/day 4,200
- Personnel - Assistant 2 weeks @ $200/day 2,800
- Accommodation - $100/day x 2 2,800
- Transportation - Truck Rental, Maintenance 2,000
Engineering & Supervision
- Engineering & Supervision 2,000
- Contingencies approximately 5% 900

Phase 1 Total $20,100

Phase Two - Regional Program

The regional program of exploration is being proposed to locate kimberlite
diatremes. At present, we have regional to detailed heavy mineral anomalies and
regional to detailed magnetic anomalies. Unfortunately, the heavy mineral
dispersion is too widespread and the magnetic anomalies are too numerous to
allow reasonable drill target selection. The following systematic approach may
help us to alleviate this problem:

Regional Structural Study

Kimberlite pipe emplacement is governed by deep-seated structures that penetrate
stable Archean Cratons and allow the rapid rise of lower mantle ultramafic
magmas through diamond-bearing strata. Some of the major structures in southern
Saskatchewan are known, but it appears that a satellite imagery interpretation,
in particular of radar data, would be of value to us.

Regional Heavy Mineral Study

Heavy mineral data is already available to us from the government and other
available for purchase proprietary surveys. However, a large proportion of the
area of our interest remains without data.

It is proposed that a detailed heavy mineral survey be conducted over the area
with one sample being taken per township to start. The usual method of
processing heavy mineral samples, which includes, washing, sizing, gravity
separation by jig, tables or heavy liquids, microscopic hand-picking and
microprobe analysis would be prohibitively expensive. Therefore, the following
processing methodology is suggested:

(a) Sample till or stream sediments (about 20 kg).
(b) Wash and sieve sample in the field or nearby portable equipment to obtain a
clean, sized fraction suitable for hydrosizing.
(c) Use a laboratory-sized elutriator (hydrosizer) to obtain a sized, heavy
mineral fraction. Adjust density to retain all indicator minerals.
(d) Analyze for chromium and nickel and other trace elements by total fusion and
ICP. This will provide an indicator for ultramafic rocks.
(e) Plot results and evaluate for trends.
(f) Some detailed HM testing, - microprobing grain-picking.

Wood Mountain Formation Study

Heavy minerals including standard indicator minerals and micro-diamonds have
been recovered from the unconsolidated sand and gravel deposits of the Wood
Mountain formation. We believe that a heavy mineral study of this formation and
a paleo-current study should be undertaken. The samples should be processed in
the same manner as in the "Regional Heavy Mineral Study."

Compilation of Geophysical Data

(a) Aeromagnetic
(b) Ground magnetic
(c) Gravimetric
(d) Seismic

G.I.S. Compilation of all Data

A G.I.S. (Geographic Information Systems) compilation of the following data
should be undertaken in order to select the best drill targets:

(a) Bedrock Geology
(b) Surficial Geology (i.e. land surface to approximately 5 feet below)
(c) Our HM Surveys
(d) Government surveys
(e) Federal-provincial geochem and HM
(f) Aeromagnetic Data surveys
(g) Gravity Data
(h) Seismic Data
(i) Ground Magnetic Data
(j) Cratonic Age Data
(k) Satellite Radar Imagery Interpretation

Phase 2 - Regional Program

Regional Structural Study
- Satellite Photos - 10 @ $200 each 2,000
- Interpretation - 10 hours @ $500 5,000
- Digitizing 3,000

Regional Heavy Mineral Study
- Sample collection - 600 samples @ $15 each 9,000
- Vehicle - FWD - 3 months @ $2,000/month 6,000
- Detail Sample Collection - 1000 samples @ $15 each 15,000
- Initial Processing 24,000
- Washer/Sieve rental - 3 months @ $2,000/month 6,000
- Sample Bags - 1,600 20Kg bags @ $1 each 1,600
- Sample Bags - 1,600 2Kg bags @ $1 each 1,600
- Elutriation (Hydraulic Separation of HM) - 1600 @ $18.75 each 30,000
- ICP (Induced Coupled Polarization) (total) - 1600 @ $10 each 16,000
- Digitizing 3,000

Regional Surficial Geology Study
- Data Interpretation 4,000
- Digitizing 3,000

Compilation of Geophysical Data
- Data Collection 2,500
- Data Interpretation 5,000
- Digitizing 4,000

G.I.S. Compilation
- Additional Data Collection 5,000
- Data Interpretation 5,000
- Digitizing 5,000

Engineering & Supervision
- Engineering & Supervision 15,000
- Contingencies approximately 5% 7,800

Phase 2 Total $178,500

Phase Three - Drilling and Confirmation

The goal of this phase will be to locate anomalous areas by the use of ground
magnetic surveys, and to prioritize each for test drilling.

Gravimetric Surveys will be completed over the ground magnetic anomalies - 1 or
2 lines per anomaly. Test Drilling will then be conducted to test the best
targets.

Phase 3 - Drilling and Confirmation

Ground Magnetic Surveys
- Instrument Rental - 3 months @ $1,600/month 4,800
- Field computer Rental - 3 month @ $300/month 900
- Operator/Assistant - 70 Days @ $300/day 21,000

Gravimetric Survey
- Instrument Rental - 3 months @ $1,600/month 3,000
- Operator/Assistant - 70 Days @ $300/day 21,000
- Surveying 6,000

Test Drilling
- 5,000 ft. @ $10 50,000
- Cutting Analysis - 50 samples @ $500 each 25,000

Engineering & Supervision
- Engineering & Supervision 13,000
Contingencies approximately 5% 6,700

Phase 3 Total $151,400

24 Month Exploration Budget on new and future claims

The Company intends to option additional property by way of claim staking or
acquiring companies with promising mineral claims in the area of Southern
Saskatchewan and Northern Montana

___________________________________________________________________________

Planned Exploration on future Claims Year 1 Year 2
___________________________________________________________________________

Claim Staking/property acquisition 50,000 50,000
___________________________________________________________________________

Property Exploration Expenditures 500,000 650,000
___________________________________________________________________________

$550,000 $700,000
___________________________________________________________________________

The Company's business plan for the year 2006 will consist of further
exploration on the properties over which we hold mineral exploration claims and
options. As part of Phase Two, the Company also plans to continue staking
strategically important areas as more information becomes available with respect
to the geology of Southern Saskatchewan. The Company intends to continue using
Montgomery Consulting Ltd. and third party contractors to collect soil samples,
process and analyze the results, plot drill targets, drill the identified
targets and other exploration related work. The Company completed its drill
program at Scout Lake in 2005. The results of the drill program do not warrant
spending further time and money at this location. The main thrust of our program
will now be in the Val Marie area of the Wood Mountain district in Southern
Saskatchewan. As at December 31, 2005, the Company has 18 mineral claims in this
area which covers the richest indicator mineral concentration so far
encountered.

The combination of numerous indicator minerals (pyrope garnets and chrome
diopsides) and magnetic anomalies make this area a prime target. The indicator
mineral suite is identical chemically to that of the Fort a la Corne district.
An early drilling program is anticipated for this area. Additional targets in
the Wood Mountain district and other areas will also be investigated. Keating
analysis of existing geophysical data over the Company's claim holdings has
identified 6 potential diamond targets, including the 3 targets that were
previously designated as high priority drill targets. Preliminary investigation
of these targets will be carried out to assess the possibility of diamond
deposits existing on the Company's properties.

The Company estimates that we will require approximately $2,000,000 Canadian to
conduct its full exploration program over a two year period. This amount will be
used to pay for prospecting and geological mapping, airborne surveys, lodging
and food for workers, transportation of workers to and from the work sites,
fuel, pick-up truck rentals, assays, drilling, equipment rental, additional
claim staking, and supervision, including a daily rate payable to Dr. Montgomery
of $400 per day in Canadian funds (approximately US $332), plus out of pocket
expenses, for time spent in the field.

The officers and directors have agreed to pay all costs and expenses of having
us comply with the federal securities laws (and being a public company, should
the Company be unable to do so). We estimate that these costs will be
approximately $20,000 per year. Our officers and directors have also agreed to
pay the other expenses of the Company, excluding those direct costs and expenses
of data gathering and mineral exploration, should the Company be unable to do
so. To implement our business plan, we will need to secure financing for our
business development. We have no source for funding at this time.

If we are unable to raise additional funds to satisfy our reporting obligations,
investors will no longer have access to current financial and other information
about our business affairs.

Additional funding to conduct either our full exploration program or a partial
exploration program will depend upon our ability to secure loans or obtain
either private or public financing. We have had some preliminary negotiations
for funding that have been unsuccessful and we currently have not undertaken any
further negotiations. There is no assurance that we will be able to obtain such
funding on any terms or terms acceptable to us and if adequate funds are not
available, we believe that our business development will be adversely affected.
Accordingly, there is no assurance that we will be able to continue in business.

OFF-BALANCE SHEET ARRANGEMENTS

The Company does not have any 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.

ITEM 7. FINANCIAL STATEMENTS.

MADISON EXPLORATIONS, INC.
(A Development Stage Enterprise)

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2005
DECEMBER 31, 2004

MADISON EXPLORATIONS, INC.
(A Development Stage Enterprise)

CONTENTS

INDEPENDENT AUDITOR'S REPORT ON THE FINANCIAL STATEMENTS F-1

FINANCIAL STATEMENTS

Consolidated Balance Sheets F-2

Consolidated Statements of Operations F-3

Consolidated Statements of Stockholders' Equity (Deficit) F-4

Consolidated Statements of Cash Flows F-5

Notes to Consolidated Financial Statements F-6-13
________________________________________________________________________________

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors
Madison Explorations, Inc.
Vancouver, British Columbia

I have audited the accompanying consolidated balance sheet of Madison
Explorations, Inc. (A Development Stage Enterprise) as of December 31, 2005 and
2004 and the related consolidated statements of operations, stockholders'
deficit, and cash flows for the years then ended and the period June 15, 1998
(inception) through December 31, 2005. These consolidated financial statements
are the responsibility of the Company's management. My responsibility is to
express an opinion on these consolidated financial statements based on my audit.

I conducted my audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that I 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. I believe that my audit provides a reasonable
basis for my opinion.

In my opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Madison
Explorations, Inc. (A Development Stage Enterprise) as of December 31, 2005 and
2004 and the results of its operations and cash flows for the years then ended
and the period June 15, 1998 (inception) through December 31, 2005, in
conformity with U.S. generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has limited operations and has no established
source of revenue. This raises substantial doubt about its ability to continue
as a going concern. Management's plan in regard to these matters is also
described in Note 1. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.

Kyle L. Tingle, CPA, LLC

March 24, 2006
Las Vegas, Nevada

F-1

MADISON EXPLORATIONS, INC.
(A Development Stage Enterprise)
CONSOLIDATED BALANCE SHEETS

December 31, December 31,
2005 2004
____________ ____________

ASSETS

CURRENT ASSETS
Cash $ 56,288 $ 30,841
________ ________

Total current assets $ 56,288 $ 30,841
________ ________

Total assets $ 56,288 $ 30,841
======== ========

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 2,500 $ 5,927
Note payable 26,797 -
Deferred revenue 94,000 44,000
Officers loans and advances 27,895 26,654
________ ________

Total current liabilities $151,192 $ 76,581
________ ________

STOCKHOLDERS' DEFICIT
Common stock: $.001 par value;
authorized 500,000,000 shares;
issued and outstanding: 115,320,000 shares
at December 31, 2004 and 115,320,000
shares at December 31, 2005 $115,320 $115,320
Additional paid-in capital (109,398) (109,398)
Accumulated other comprehensive income (2,998) (2,554)
Accumulated deficit during development stage (97,828) (49,108)
________ ________

Total stockholders' deficit $(94,904) $(45,740)
________ ________

Total liabilities and
stockholders' deficit $ 56,288 $ 30,841
======== ========

See Accompanying Consolidated Notes to Financial Statements.

F-2

MADISON EXPLORATIONS, INC.
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF OPERATIONS

Year Ended June 15, 1998
_____________________________ (inception) to
December 31, December 31, December 31,
2005 2004 2005
____________ ____________ ______________

Revenues $ - $ - $ -

Cost of revenue - - -
____________ ____________ ________

Gross profit $ - $ - $ -

Operating expenses
Exploration and development $ 21,395 $ 28,815 $ 50,210
General and administrative 23,960 19,380 43,340
____________ ____________ ________
Operating loss $ (45,355) $ (48,195) $(93,550)

Other expense 3,365 913 4,278
____________ ____________ ________

Net loss $ (48,720) $ (49,108) $(97,828)
============ ============ ========
Net loss per share, basic
and diluted $ (0.00) $ (0.00)
============ ============
Average number of shares
of common stock outstanding 115,320,000 90,465,410
============ ============

See Accompanying Consolidated Notes to Financial Statements.

F-3

MADISON EXPLORATIONS, INC.
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

Accumulated
Deficit Accumulated
Common Stock Additional During Other
_______________________ Paid in Development Comprehensive
Shares Amount Capital Stage Income Total
___________ ________ __________ ___________ _____________ ________

June 15, 1998, issue
common stock 56,250,000 $ 56,250 $ (55,800) $ - $ - $ 450
Net loss, December 31, 1999
___________ ________ __________ _________ _______ ________
Balance, December 31, 1999 56,250,000 $ 56,250 $ (55,800) - $ - $ 450

Net loss, December 31, 2000
___________ ________ __________ _________ _______ ________
Balance, December 31, 2000 56,250,000 $ 56,250 $ (55,800) $ - $ - $ 450

Net loss, December 31, 2001
___________ ________ __________ _________ _______ ________
Balance, December 31, 2001 56,250,000 $ 56,250 $ (55,800) $ - $ - $ 450

Net loss, December 31, 2002
___________ ________ __________ _________ _______ ________
Balance, December 31, 2002 56,250,000 $ 56,250 $ (55,800) $ - $ - $ 450

Net loss, December 31, 2003
___________ ________ __________ _________ _______ ________
Balance, December 31, 2003 56,250,000 $ 56,250 $ (55,800) $ - $ - $ 450

Issuance of common stock 59,070,000 59,070 (58,598) 472

June 14, 2004 forward stock split
5000:1
Capital contribution 5,000 5,000
Foreign currency translation
adjustments (2,554) (2,554)
Net loss, December 31, 2004 (49,108) (49,108)
___________ ________ __________ _________ _______ ________
Balance, December 31, 2004 115,320,000 $115,320 $ (109,398) $ (49,108) $(2,554) $(45,740)

Foreign currency translation
adjustments (444) (444)
Net loss, December 31, 2005 (48,720) (48,720)
___________ ________ __________ _________ _______ ________

Balance, December 31, 2005 115,320,000 $115,320 $ (109,398) $ (97,828) $(2,998) $(94,904)
=========== ======== ========== ========= ======= ========

See Accompanying Consolidated Notes to Financial Statements.

F-4

MADISON EXPLORATIONS, INC.
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended June 15, 1998
_____________________________ (inception) to
December 31, December 31, December 31,
2005 2004 2005
____________ ____________ ______________

Cash Flows From
Operating Activities
Net loss $(48,720) $(49,108) $(97,828)
Adjustments to reconcile net loss
to cash used in operating activities:
Changes in assets and liabilities
Increase (decrease) in accounts payable and accruals (3,088) 5,588 2,500
Increase in deferred revenues 50,000 44,000 94,000
________ ________ ________
Net cash used in
operating activities $ (1,808) $ 480 $ (1,328)
________ ________ ________
Cash Flows From
Investing Activities
$ - $ - $ -
________ ________ ________
Net cash from
investing activities $ - $ - $ -
________ ________ ________
Cash Flows From
Financing Activities
Issuance of common stock $ - $ 472 $ 922
Capital contribution - 5,000 5,000
Officer loans and advances 350 23,897 24,247
Proceeds from note payable 26,797 - 26,797
________ ________ ________

Net cash provided by
financing activities $ 27,147 $ 29,369 $ 56,966
________ ________ ________
Effect of exchange rate changes on cash and
cash equivalents $ 108 $ 542 $ 650
________ ________ ________
Net increase (decrease)
in cash $ 25,447 $ 30,391 $ 56,288

Cash, beginning of period 30,841 450 $ -
________ ________ ________

Cash, end of period $ 56,288 $ 30,841 $ 56,288
======== ======== ========

See Accompanying Consolidated Notes to Financial Statements.

F-5

MADISON EXPLORATIONS, INC.
(A Development Stage Enterprise)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS

NOTE 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS:

Madison Explorations Inc. (the "Company"), formerly known as Madison-Taylor
General Contractors, Inc., was incorporated in the State of Nevada on June 15,
1998. The Company is engaged in activities related to the exploration for
mineral resources in Canada. The Company currently has operations in the
exploration of natural resources and, in accordance with Statement of Financial
Accounting Standard (SFAS) No. 7, "ACCOUNTING AND REPORTING BY DEVELOPMENT STAGE
ENTERPRISES," is considered a Development Stage Enterprise.

As further explained in Note 3, the Company has entered into an agreement with
Dr. Joseph Montgomery to acquire an 80% working interest in the Scout Lake
Property, located near the town of Scout Lake, Saskatchewan. The parties have
also agreed to work exclusively with each other in the Provinces of
Saskatchewan, Alberta and the State of Montana. The Company intends to develop
the properties from early stage exploration through completion of the
exploration phase. Prior to any further exploration decisions, a mineral deposit
must be appropriately assessed. Gathering this data usually takes several years.
Once the appropriate data has been gathered, management will determine whether
and how to proceed. The Company will use the services of Montgomery Consultants
Ltd. as well as other 3rd party contractors to conduct surveys and exploration
at the properties to begin to enable it to determine whether it can extract and
produce diamonds (see Note 3).

The Company incorporated Scout Resources, Inc. as a wholly owned subsidiary to
conduct the Canadian exploration activities of the Company.

A SUMMARY OF THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES IS AS FOLLOWS:

PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include the
accounts of the Company and its subsidiary. All significant intercompany
balances and transactions have been eliminated.

ESTIMATES

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

F-6

MADISON EXPLORATIONS, INC.
(A Development Stage Enterprise)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS

NOTE 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

GOING CONCERN

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. These financial statements show that Madison
Explorations, Inc. had a substantial working capital deficiency and that it has
suffered losses since inception. Management believes that, at a minimum, the
Company will still need total additional financing of approximately $2,000,000
to continue to operate as planned during the twelve-month period subsequent to
December 31, 2005. These conditions raise substantial doubt about the Company's
ability to continue as a going concern. These financial statements have been
prepared on the basis of generally accepted accounting principles as applicable
to a going concern, however the future of Madison Explorations, Inc. will depend
upon the company's ability to obtain adequate financing, successfully resolve
any outstanding contingencies and attain profitable operations. Although the
successful resolution of these uncertainties is not assured, management is of
the opinion that current negotiations for financing and ultimate satisfactory
settlement of any contingencies will allow the company to continue its
operations.

Management plans to obtain such financing through private and public offerings
of debt and equity securities. However management cannot assure that the Company
will be able to obtain any or all of the additional financing it will need to
continue to operate through at least December 31, 2006 or that, ultimately, it
will be able to generate any profitable commercial mining operations. If the
Company is unable to obtain the required financing, it may have to curtail or
terminate its operations and liquidate its remaining assets and liabilities.

The accompanying financial statements do not include any adjustments related to
the recoverability and classifications of assets or the amounts and
classification of liabilities that might be necessary should the Company be
unable to continue its operations as a going concern

CASH

For the Statements of Cash Flows, all highly liquid investments with maturity of
three months or less are considered to be cash equivalents. There were no cash
equivalents as of December 31, 2005 and December 31, 2004.

INCOME TAXES

Income taxes are provided for using the liability method of accounting in
accordance with SFAS No. 109 "ACCOUNTING FOR INCOME TAXES." A deferred tax asset
or liability is recorded for all temporary differences between financial and tax
reporting. Temporary differences are the differences between the reported
amounts of assets and liabilities and their tax basis. Deferred tax assets are
reduced by a valuation allowance when, in the opinion of management, it is more
likely than not that some portion or all of the deferred tax assets will not be
realized. Deferred tax assets and liabilities are adjusted for the effect of
changes in tax laws and rates on the date of enactment.

F-7

MADISON EXPLORATIONS, INC.
(A Development Stage Enterprise)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS

NOTE 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

ADVERTISING

Advertising costs are charged to operations as incurred. Advertising costs for
the years ended December 31, 2005 and 2004 were $ 938 and $1,797, respectively.

MINING COSTS

Exploration and evaluation costs are expensed as incurred. Management's decision
to develop or mine a property will be based on an assessment of the viability of
the property and the availability of financing. The Company will capitalize
mining exploration and other related costs attributable to reserves in the event
that a definitive feasibility study establishes proven and probable reserves.
Capitalized mining costs will be expensed using the unit of production method
and will also be subject to an impairment assessment.

CONCENTRATIONS OF CREDIT RISK

The Company maintains its cash in bank deposit accounts, the balances of which,
at times, may exceed Federal insurance limits. Exposure to credit risk is
reduced by placing such deposits with major financial institutions and
monitoring their credit ratings.

IMPAIRMENT OF LONG-LIVED ASSETS

Impairment losses on long-lived assets, such as mining claims, are recognized
when events or changes in circumstances indicate that the undiscounted cash
flows estimated to be generated by such assets are less than their carrying
value and, accordingly, all or a portion of such carrying value may not be
recoverable. Impairment losses are then measured by comparing the fair value of
assets to their carrying amounts.

FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS

The functional currency of the Company's operations is Canadian dollars. The
assets and liabilities arising from these operations are translated at current
exchange rates and related revenues and expenses at the exchange rates in effect
at the time the revenue or expense is incurred. Resulting translation
adjustments, if material, are accumulated as a separate component of accumulated
other comprehensive income in the statement of stockholders' deficiency while
foreign currency transaction gains and losses are included in operations.

The Company recorded a foreign currency (gain) loss of $94 and $243 during the
year ended December 31, 2005 and 2004, respectively.

F-8

MADISON EXPLORATIONS, INC.
(A Development Stage Enterprise)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS

NOTE 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

RECENT ACCOUNTING PRONOUNCEMENTS

In November 2004, the FASB issued SFAS No. 151, "Inventory Costs (an amendment
of Accounting Research Bulletin No. 43, Chapter 4)." SFAS No. 151 seeks to
clarify the accounting for abnormal amounts of idle facility expense, freight,
handling costs, and wasted material (spoilage) in the determination of inventory
carrying costs. The statement requires such costs to be treated as a current
period expense and is effective for fiscal years beginning after July 15, 2005.
The Company does not believe the adoption of SFAS No. 151 will have a
significant impact on its financial position or results of operations.

In December 2004, the FASB issued SFAS No. 123 (revised 2004), "Share-Based
Payment." SFAS No. 123R replaced SFAS No. 123 and superceded APB Opinion No. 25.
SFAS No. 123R will require compensation costs related to share-based payment
transactions to be recognized in the financial statements. The adoption of SFAS
No. 123 (revised 2004) should not have a significant impact on the Company's
financial position or results of operations until such time the Company has
share-based payments. The Company will adopt the provisions of SFAS No. 123R at
that time.

In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary
Assets, an amendment of APB Opinion No. 29" ("SFAS No. 153"). SFAS No. 153 is
based on the principle that exchanges of nonmonetary assets should be measured
based on the fair value of the assets exchanged. APB Opinion No. 29, "Accounting
for Nonmonetary Transactions," provided an exception to its basic measurement
principle (fair value) for exchanges of similar productive assets. Under APB
Opinion No. 29, an exchange of a productive asset for a similar productive asset
was based on the recorded amount of the asset relinquished. SFAS No. 153
eliminates this exception and replaces it with an exception of exchanges of
nonmonetary assets that do not have commercial substance. SFAS No. 153 became
effective for our Company as of July 1, 2005. The Company will apply the
requirements of SFAS No. 153 on any future nonmonetary exchange transactions and
does not believe it will have a material impact on our consolidated financial
statements.

On April 14, 2005, the Securities and Exchange Commission issued an announcement
amending the compliance dates for the FASB's SFAS 123R that addresses accounting
for equity based compensation arrangements. Under SFAS 123R registrants would
have been required to implement the standard as of the beginning of the first
interim or annual period that begins after June 15, 2005. The Commission's new
rule will allow companies to implement SFAS 123R at the beginning of the next
fiscal year after June 15, 2005. The Company anticipates adopting SFAS 123R in
the first quarter 2006

In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
Corrections, a replacement of APB No. 20 and FASB Statement No. 3" ("SFAS No.
154"). SFAS No. 154 requires retrospective application to prior periods'
financial statements of a voluntary change in accounting principle unless it is
impracticable. APB Opinion No. 20 "Accounting Changes," previously required that
most voluntary changes in accounting principle be recognized by including in net
income of the period of the change the cumulative effect of changing to the new
accounting principle. This statement is effective for our Company as of January
1, 2006. The Company does not believe that the adoption of SFAS No. 154 will
have a material impact on our consolidated financial statements.

F-9

MADISON EXPLORATIONS, INC.
(A Development Stage Enterprise)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS

NOTE 2. STOCKHOLDERS' EQUITY

COMMON STOCK

The authorized common stock of the Company consists of 500,000,000 shares of
$0.001 par stock. On June 15, 1998 the Company authorized and issued 56,250,000
shares of its common stock in consideration of $450 in cash.

On June 7, 2004 the Company issued 59,070,000 in consideration of $472 in cash.

On June 14, 2004, the State of Nevada approved the Company's restated Articles
of Incorporation, which increased its capitalization from 25,000 common shares
to 500,000,000 common shares. The no par value was changed to $0.001 per share.

On June 14, 2004, the Company's shareholders approved a forward split of its
common stock at five thousand shares for one share of the existing shares. The
number of common stock shares outstanding increased from 23,064 to 115,320,000.
Prior period information has been restated to reflect the stock split

NET LOSS PER COMMON SHARE

Net loss per share is calculated in accordance with SFAS No. 128, "Earnings Per
Share." The weighted-average number of common shares outstanding during each
period is used to compute basic loss per share. Diluted loss per share is
computed using the weighted averaged number of shares and dilutive potential
common shares outstanding. Dilutive potential common shares are additional
common shares assumed to be exercised.

The Company has no warrants or options outstanding at December 31, 2005 and
December 31, 2004.

NOTE 3. MINERAL CLAIMS

SCOUT LAKE

Pursuant to an agreement consummated on June 16, 2004, the Company acquired an
80% interest in certain mineral dispositions near the Town of Scout Lake,
Saskatchewan from two third parties. One of the parties is a key consultant and
advisor to the Company

Under the terms of the agreement the Company must spend Canadian Adjusted
Dollars ("CAD") $150,000 CAD (approximately $125,000 USD) on exploration work by
October 1, 2005 and an additional $200,000 CAD (approximately $166,000 USD) by
August 1, 2006. The other third parties will not be required to fund any
exploration work on the property until a positive feasibility study is obtained,
after which they will be required to fund their 20% of mine development costs.
On September 1, 2005, the Company amended the agreement to extend the work
program deadlines to May 31, 2006 and May 31, 2007 instead of the October 1,
2005 and August 1, 2006 dates, respectively.

F-10

MADISON EXPLORATIONS, INC.
(A Development Stage Enterprise)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS

NOTE 3. MINERAL CLAIMS (CONTINUED)

Under the terms of the agreement, the Company will issue shares to these third
parties to provide them 10% of the Company's outstanding shares calculated as of
July 1, 2004. These shares are issuable upon the completion of the initial
required exploration work ("work program") and the determination to continue
developing the Scout Lake properties. If it is determined after the work program
that no further development will be undertaken, no shares will be issued.
Issuable shares upon the completion of the work program and a decision of the
Company to continue exploration are 12,813,334.

HERBERT ANOMALY (AKA BULLS-EYE TARGET)

Pursuant to an agreement consummated on September 19, 2004, the Company sold an
option for 20% interest in revenue from the mineral claims the Company has in
the Herbert Anomaly in Saskatchewan to Echo Resources, Inc. ("Echo") in
non-refundable consideration of $44,000. This is treated as a deferred income on
the financial statements to be recognized when the expenses of the exploration
occur to match revenues to the associated expenses.

After February 28, 2006, Echo will be required to fund 50% of any additional
exploration work on the property to maintain its 20% interest. If the Company
decides not to continue work on the property, Echo will have the first right of
refusal to continue development of the site.

BRONCO TARGET

Pursuant to an agreement consummated on September 14, 2005, the Company sold an
option for 15% interest in revenue from the mineral claims the Company has in
the Bronco Target in Saskatchewan to Echo in non-refundable consideration of
$50,000. This is treated as a deferred income on the financial statements to be
recognized when the expenses of the exploration occur to match revenues to the
associated expenses.

After June 14, 2006, Echo will be required to fund 50% of any additional
exploration work on the property to maintain its 15% interest. If the Company
decides not to continue work on the property, Echo will have the first right of
refusal to continue development of the site.

NOTE 4. NOTE PAYABLE

The Company has a note payable in the amount of $25,000 from Pale Face Holdings,
Ltd. The note provides for interest payable at 8% annually. Accrued interest on
the note payable was $1,797 for the year ended December 31, 2005. The note
payable balance including accrued interest was $26,797 at December 31, 2005.

F-11

MADISON EXPLORATIONS, INC.
(A Development Stage Enterprise)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS

NOTE 5. RELATED PARTY TRANSACTIONS

The officers of the Company have advanced funds to the Company to continue
ongoing operations. On June 25, 2004, two officers executed demand notes at 5%
interest for $15,000 in CAD ($12,479 USD) each. Also, funds were advanced to the
Company to form its subsidiary. A total of $147 in US dollars was advanced for
this purpose. Since all funds advanced are due on demand, this amount has been
classified as a liability in the accompanying financial statements. The officers
of the Company also submit expense reports on a regular basis of expenses
incurred on behalf of the Company in the normal performance of their duties.
These payable to the officers for unreimbursed expenses totaled $0 and $1,091 in
CAD ($908 USD) at December 31, 2005 and December 31, 2004, respectively.

The Company paid $4,868 and $12,186 of exploration and development expenses to
Montgomery Consultants, Ltd., a related party controlled by a director of the
Company, during the year ended December 31, 2005 and the year ended December 31,
2004, respectively.

Accrued interest on the officers advances was $1,257 and $643 as of December 31,
2005 and 2004, respectively. The officer advances were $27,748 and $26,654 at
December 31, 2005 and 2004, respectively.

NOTE 6. COMPREHENSIVE INCOME

Accumulated other comprehensive income consists of the following:

Dec. 31, 2005 Dec. 31, 2004
_____________ _____________

Foreign currency
translation adjustment $ (2,998) $ (2,554)
======== ========

The components of other comprehensive income for the year ended December 31,
2005 and June 15, 1998 (date of inception) through December 31, 2005:

Dec. 31, 2005 Since inception
_____________ _______________

Foreign currency
translation adjustment $ (444) $ (2,998)
====== ========

NOTE 7. INCOME TAXES

We did not provide any current or deferred Canadian federal income tax provision
or benefit for any of the periods presented because we have experienced
operating losses since inception. We provided a full valuation allowance on the
net deferred tax asset, consisting of net operating loss carryforwards, because
management has determined that it is more likely than not that we will not earn
income sufficient to realize the deferred tax assets during the carryforward
period.

F-12

MADISON EXPLORATIONS, INC.
(A Development Stage Enterprise)
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS

NOTE 6. INCOME TAXES (CONTINUED)

The components of the Company's deferred tax asset as of December 31, 2005 and
2004 is as follows:
2005 2004
_________ _________

Net operating loss carryforward $ 33,707 $ 17,237
Valuation allowance (33,707) (17,237)
_________ _________
Net deferred tax asset $ - $ -
========= =========

A reconciliation of income taxes computed at the statutory rate to the income
tax amount recorded is as follows:
Since
2005 2004 Inception
_________ ________ _________

Tax at statutory rate (35.1%) $ 16,470 $ 17,237 $ 33,707
Increase in valuation allowance (16,470) (17,237) (33,707)
_________ ________ _________
Net deferred tax asset $ - $ - $ -
========= ======== =========

The net non-capital loss carry forward will expire from 2011 through 2012. This
carry forward may be limited upon the consummation of a business combination
Canadian tax regulations.

F-13

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

None.

ITEM 8A. CONTROLS AND PROCEDURES.

We carried out an evaluation, under the supervision and with the participation
of our management, including our Chief Executive Officer and Chief Financial
Officer, of the effectiveness of our disclosure controls and procedures, as
defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934
as of the end of the period covered by this report. Based on that evaluation,
our Chief Executive Officer and Chief Financial Officer have concluded that our
disclosure controls and procedures as of December 31, 2005 were effective at a
level that provides reasonable assurance to ensure that information required to
be disclosed by us in reports that we file or submit under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported within the
time periods specified in the Securities and Exchange Commission's rules and
forms.

Management of the Company is responsible for establishing and maintaining
adequate internal control over financial reporting of the Company.

The term "internal control over financial reporting" is defined as a process
designed by, or under the supervision of, our Chief Executive Officer and Chief
Financial Officer, or persons performing similar functions, and effected by our
board of directors, management and other personnel, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally
accepted accounting principles and includes those policies and procedures that:

(a) Pertain to the maintenance of records that in reasonable detail accurately
and fairly reflect the transactions and dispositions of our assets;
(b) Provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of our company are
being made only in accordance with authorizations of our management and
directors; and
(c) Provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of our assets that could have a
material effect on the financial statements.

There have been no changes in our internal controls over financial reporting or
in other factors that could materially affect, or are reasonably likely to
affect, our internal controls over financial reporting during the quarter ended
December 31, 2005.

ITEM 8B. OTHER INFORMATION.

None.

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 the name, address and position of each of our
executive officers and directors as of the date hereof:

Name Age Position
________________________________________________________________

Kevin M. Stunder 37 Director and
807 - 525 Seymour Street President
Vancouver, BC
Canada, V6B 3H7

Joel Haskins 35 Director, Secretary
807 - 525 Seymour Street and Treasurer
Vancouver, BC
Canada, V6B 3H7

Dr. Joseph Montgomery 78 V.P. Director and
807 - 525 Seymour Street VP Exploration
Vancouver, BC
Canada, V6b 3H7

Kevin Stunder, President and Director

Mr. Stunder has over 10 years experience in business strategy and marketing. He
has acted in a Director role of several public companies including VantagePoint
Systems Inc., Intrawest Corporation, and Rhino Resources, Inc. He brings
leadership operational expertise and vision to the management team. Kevin holds
a degree in Business Administration from Simon Fraser University. During his
tenure with Intrawest, Mr. Stunder has spoken at several executive engagements
and Mr. Stunder was awarded "Best Integrated Customer Relationship
Management/Ebusiness Solution" from the Microsoft Industry Solutions Awards in
2000 and Internet World's "Best Canadian Recreational Website" in 1998. Both of
these awards were achieved while Mr. Stunder was employed by Intrawest
Corporation as the Director of Ecommerce.

Dr. Joseph Montgomery, PhD, P. Eng., VP Exploration and Director

Dr. Montgomery received his Ph.D. in Geology from Queen's University (Ontario)
and University of British Columbia in 1967. In 1968, he founded Montgomery
consultants consulting firm engaged in mining exploration, property evaluation,
property development, syndicate management, ore reserve estimates and computer
application in the mining industry. Clients have included many major and junior
mining companies, Canadian federal and provincial governments and United
Nations. In 1994, Dr. Montgomery presented "Diamond Exploration in Canada" - An
Update, for the Canadian Institute of Gemology.

As part of his continuing role with the Company, Dr. Montgomery will act as the
Company's Vice President of Exploration. Dr. Montgomery will oversee all
exploration activities and provide market analysis and geologic and reserve
analysis for The Company. He has prepared more than 300 geological reports on
various mineral deposits including precious metals, base metals, industrial
minerals and gemstones for clients and regulatory agencies. Dr. Montgomery has
undertaken mineral investigations in North America and South America, Africa,
Europe, Asia and Australia.

Joel Haskins, CA, Director, Secretary & Treasurer

Mr. Haskins will provide the financial expertise required to direct The
Company's financial affairs. Mr. Haskins has worked as the Chief Financial
Officer and Executive Director of Vontobel Private Equity Management (Cayman)
Ltd. a Swiss Venture capital firm managing over USD 1 Billion in public and
private investments. He graduated from Simon Fraser University in Canada, with a
degree in Business Administration and then went on to become a Chartered
Accountant in 1997.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Security Exchange Act of 1934 requires directors, executive
officers and 10% or greater shareholders of the Company to file with the
Securities and Exchange Commission initial reports of ownership (Form 3) and
reports of changes in ownership of equity securities of the Company (Form 4 and
Form 5) and to provide copies of all such Forms as filed to the Company. Based
solely on our review of the copies of these forms received by us or
representations from certain reporting persons, we believe that SEC beneficial
ownership reporting requirements for fiscal 2005, were met with the following
exceptions:

Number of Late Number of Transactions Not Failure to File
Name Reports Reported on a Timely Basis Requested Forms
________________________________________________________________________________

Kevin Stunder 1 (Form 3) None 0
Joel Haskins 1 (Form 3) None 0

In 2006, the named officers above filed a late Form 3 - Initial Statement of
Beneficial Ownership of Securities - upon learning that the Forms were a
requirement.

Due to the complexity of the reporting rules, we expect to institute procedures
to assist our officers and directors with these obligations.

CODE OF ETHICS

The Company's board of directors has not adopted a code of ethics (the "Code")
that applies to members of our Board of Directors, its officers including its
Chief Executive Officer (being its principal executive officer), and its chief
financial officer (being its principal financial and accounting officer).
Because the Company currently has only two executive officers (both of whom are
also directors of the Company), it is not considered necessary for the Company
to adopt a Code of Business Conduct and Ethics. Once the Company's operations
expand and it has additional employees, the Company intends to adopt a Code of
Business Conduct and Ethics.

ITEM 10. EXECUTIVE COMPENSATION.

The executive officers, Mssrs. Stunder and Haskins, have not yet received any
annual salary compensation for their services. However, the executive officers
will likely receive an annual salary or other compensation in the future. The
Company has not entered into employment agreements with any of its officers or
directors of the Company.

The officers and directors may be deemed parents and promoters of the Company as
those terms are defined by the Securities Act of 1933, as amended. All directors
hold office until the next annual stockholder's meeting or until their death,
resignation, retirement, removal, disqualification, or until their successors
have been elected and qualified. Officers of the Company serve at the will of
the Board of Directors.

No remuneration has been paid for officers and directors except reimbursement
for out-of-pocket expenditures for activities on the Company's behalf. None of
the officers and directors anticipates devoting more than 10% of his time to
Company activities.

The Company has paid no compensation or consulting fees to its executive
officers as a group. The Company is not a party to any employment agreements.
The Company has no retirement pension, profit sharing or stock option plans or
insurance or medical reimbursement plans covering its officers and directors,
and does not contemplate implementing any such plans at this time.

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

The following table sets forth the name and address of each officer and director
of the Company and each person who owns beneficially more than five percent of
the Common Stock of the Company, and the number of shares owned by each such
person and by all officers and directors as a group:

Name and Address Amount and Nature Percentage
Title of Class of Beneficial Owner of Beneficial Owner of Class
______________________________________________________________________________

Common Kevin M. Stunder 32,035,000 27.78%
807 - 525 Seymour St.
Vancouver, BC
V6B 3H7

Common Joel Haskins 32,035,000 27.78%
807 - 525 Seymour St.
Vancouver, BC
V6B 3H7

Common All Officers and
Directors as a Group 64,070,000 55.56%
(three [3] individual)

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS.

None.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

We have entered into an Acquisition Agreement dated June 16, 2004 and as amended
dated on September 15, 2005 with Dr. Montgomery and Frankie Fu. Under the terms
of the Acquisition Agreement, the Company must spend CAD 150,000 (approximately
US $120,000) by May 31, 2006 and an additional CAD 200,000 (approximately US
$170,000) by May 31, 2007 on exploration work. Dr. Montgomery and Mr. Fu will
not be required to fund any exploration work on the property until a positive
feasibility study is obtained, after which they will be required to fund their
20% of mine development costs.

Dr. Montgomery and Frankie Fu have a pre-existing personal and business
relationship with each other. With Mr. Fu as the financial partner, they
acquired the Scout Lake Property on April 30, 2002 and title to the interest in
the property was vested in the name of Joseph Montgomery. In addition, Dr.
Montgomery provides certain data gathering and exploration services under the
name Montgomery Consultants Ltd.

Dr. Montgomery serves as the company's Vice President of Exploration, and
therefore is responsible for the planning and execution of our exploration
plans. It is assumed that he is involved in all aspects of our work that he is
capable of, all other work is contracted.

Any transactions between the Company and our officers and directors or five (5%)
shareholders and their respective affiliates (to include Frankie Fu, Dr. Joseph
Montgomery's partner) will be on terms no less favorable than those terms which
could be obtained from unaffiliated third parties and said transactions will be
approved by a majority of the disinterested directors.

ITEM 13. EXHIBITS.

There were no reports on Form 8-K filed during the quarter for which this report
is filed. The following exhibits are filed with this report:

Exhibit Number Description of Document

Articles of Incorporation and Bylaws
3.1 Articles of Incorporation, as amended (1)
3.2 Bylaws (adopted prior to name change) (1)

Material Contracts
10.1 Mineral Property Agreement Contract dated June 16, 2004
(1)
10.2 Amendment to Property Agreement [10.1] dated September
1, 2005 (2)
10.3 Option Agreement dated September 14, 2005 with Echo
Resources, Inc. (2)

Consents of Experts and Counsel
23.1 Consent of Kyle Tingle
Rule 13a-14(a)/15d-14a(a) Certifications
31.1 Certification of Chief Executive Officer
31.2 Certification of Chief Financial Officer

Section 1350 Certifications
32.1 Section 906 Certification of Chief Executive Officer
32.2 Section 906 Certification of Chief Financial Officer

Additional Exhibits
99.1 Mineral Resource Map of Saskatchewan (3)

(1) Previously filed on May 4, 2005 as part of the Company's Registration
Statement on Form 10SB12G, File No. 000-51302
(2) Previously filed on November 4, 2005 as part of the Company's Registration
Statement on Form 10SB12G/A, File No. 000-51302
(3) Previously filed on December 22, 2005 as part of the Company's Registration
Statement on Form 10SB12G/A, File No. 000-51302

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

During 2005 and 2004, the Company incurred the following fees for professional
services rendered by the principal accountant:

2005 2004
_____ ____
Audit Fees $ 2,556 $ -
Audit Related Fees 3,000 1,750
_______ _______
Total $ 5,556 $ 1,750

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

DATED: APRIL 13, 2006 MADISON EXPLORATION, INC.

BY: /s/ KEVIN M. STUNDER
________________________________________
Kevin M. Stunder
Chief Executive Officer and Director

BY: /s/ JOEL HASKINS
________________________________________
Joel Haskins
Chief Financial Officer and Director