Gilla 10K 2007 Annual report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K


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

For the Fiscal Year Ended December 31, 2007


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

COMMISSION FILE NO. 000-28107

GILLA INC..

(Exact name of registrant as specified in its charter)


Nevada (State or Other Jurisdiction of Incorporation or Organization)		88-0335710 (I.R.S. Employer Identification Number)

112 North Currey Street, Carson City, NV (Address of Principal Executive Offices)		89703 (Zip Code)

Registrant’s telephone number, including area code(416) 884-8807

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

Common Shares, Preferred Shares

(Title of Class)

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

o Yes þ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

þ Yes o No

Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes o No þ

Check if there is no disclosure of delinquent filers pursuant to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of the 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. o

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


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

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

The aggregate market value of the voting common stock held by non-affiliates of the Registrant on June 30, 2007, was approximately $3,471,301.10, based on the average bid and asked prices on such date of $1.10. The registrant does not have any non-voting equities.

The Registrant had 27,783,286 shares of common stock, .0002 par value per share, outstanding on February 27, 2008.(Should this not be as of December 31, 2007)

TABLE OF CONTENTS
FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 31, 2007


Part I

ITEM 1		Business
ITEM 2.		Properties
ITEM 3.		Legal Proceedings
ITEM 4.		Submission of Matters to a Vote of Security Holders

Part II

ITEM 5.		Market for Registrants Common Equity and Related Stockholders Matters
ITEM 6.		Selected Financial Data
ITEM 7.		Management’s Discussion and Analysis of Financial Condition and Results of Operation
ITEM 8 .		Financial Statements and Supplementary Data
ITEM 9.		Changes In and Disagreements with Accountants on Accounting and Financial Disclosure
ITEM 9A.		Controls and Procedures

Part III

ITEM 10.		Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act
ITEM 11.		Executive Compensation
ITEM 12.		Security Ownership of Certain Beneficial Owners and Management
ITEM 13.		Certain Relationships and Related Transactions
ITEM 14.		Principal Accountants Fee and Services

Part IV

ITEM 15.		Exhibits and Reports on Form 8K

Signatures
Exhibits

Forward-Looking Statements

This Report contains, in addition to historical information, forward-looking statements regarding Gilla Inc., which represent the Company’s expectations or beliefs including, but not limited to, statements concerning the Company’s operations, performance, financial condition, business strategies, and other information and that involve substantial risks and uncertainties. The Company’s actual results of operations, some of which are beyond the Company’s control, could differ materially. For this purpose, any statements contained in this Report that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate,” “continue” or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. Factors that could cause or contribute to such difference include, but are not limited to, history of operating losses and accumulated deficit; need for additional financing; competition; dependence on management;; and other factors discussed herein and in the Company’s other filings with the Securities and Exchange Commission.

PART I

ITEM 1. BUSINESS

Business Development

Gilla Inc. (the “Company”), 112 N. Curry Street, Carson City, Nevada, 87803 was incorporated under the laws of the state of Nevada on March 28, 1995 under the name of Truco, Inc. The shareholders approved a name change on March 22, 1996, March 18, 1997, September 13, 1999, October 3, 2000, April 23, 2003 and February 27, 2007 to Web Tech, Inc., Cynergy, Inc., Mercantile Factoring Credit Online Corp., Incitations, Inc., Osprey Gold Corp. and to its present name, respectively.

We have specialized in acquiring and consolidating large, exploration-stage properties with near-term production potential and future growth through exploration discoveries. Our acquisition and development emphasis is focused on properties containing gold and other strategic minerals located in Canada.

Business of Issuer

The Company is a mineral-property development company specializing in acquiring and consolidating mineral properties with production potential and future growth through exploration discoveries. Acquisition and development emphasis has been focused on properties containing gold and other strategic minerals that are located in Canada.

The Company maintains a Camp located in Gogama, Township of Invergarry, Ontario, Canada.

The Company has 2 full time employees.

MANAGEMENT RISKS

Management of the Company consists of Georges Benarroch/President and Chief Financial Officer, and Linda Kent, who serves as Secretary/Treasurer as well as manager of the day-to-day operations of the company. There is one full-time employee of the Company and, therefore, the only person who is able to devote all of her time to the affairs of the Company. Consequently, management of the Company has historically relied upon, and will continue to rely upon for the foreseeable future, the employment of outside consultants and independent contractors such as attorneys, accountants, geologists, petroleum engineers, financial advisors, and others to assist management in conducting the business affairs of the Company. The President and directors of the Company have other business interests in which they devote their primary attention or a substantial portion of their time and they are expected to continue to do so for the foreseeable future. As a result, there are at least potential conflicts of interest which may arise because of such other commitments.

Any such conflicts, however, have been and are expected to be resolved through the exercise of sound business judgment by such individuals consistent with their fiduciary duties to the Company.

SECURITIES MARKET AND STOCK OWNERSHIP RISKS

There is no predictable method by which investors in the securities of the Company shall be able to realize any gain or return on their investment in the Company, or shall be able to recover all or any substantial portion of the value of their investment.. There is, currently no public market for the securities of the Company, and no assurance can be given that a market will develop or that an investor will be able to liquidate his investment without considerable delay, if at all. Consequently, should the investor suffer a change in circumstances arising from an event not contemplated at the time of his investment, and should the investor therefore wish to transfer the common stock owned by him, he may find he has only a limited or no ability to transfer or market the common stock. Accordingly, purchasers of the common stock need to be prepared to bear the economic risk of their investment for an indefinite period of time. If a market should develop, the price may be highly volatile. Factors such as those discussed in this “Risk Factors” section may have a significant impact upon the market price of the securities of the Company. Owing to what may be expected to be the low price of the securities, many brokerage firms may not be willing to effect transactions in the securities. Even if an investor finds a broker willing to effect a transaction in these securities, the combination of brokerage commissions and any other selling costs may exceed the selling price. Further, many lending institutions will not permit the use of such securities as collateral for any loans. The Company has no agreement with any securities broker or dealer that is a member of the National Association of Securities Dealers, Inc., to act as a market maker for the Company’s securities. Should the Company fail to obtain one or more market makers for the Company’s securities, the trading level and price of the Company’s securities will be materially and adversely affected. Should the Company happen to obtain only one market maker for the Company’s securities, the market maker would in effect dominate and control the market for such securities. The Company’s registered securities are covered by a Securities and Exchange Commission rule that imposes additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors. For purposes of the rule, the phrase “accredited investors” means, in general terms, institutions with assets in excess of $5,000,000, or individuals having a net worth in excess of $1,000,000 or having an annual income that exceeds $200,000 (or that, when combined with a spouse’s income, exceeds $300,000). For transactions covered by the rule, the broker-dealer must make a special suitability determination for the purchaser and receive the purchaser’s written, agreement to the transaction prior to the sale. Consequently, the rule may affect the ability of broker-dealers to sell the Company’s securities and also may affect the ability of investors in securities of the Company to sell their securities in any market that might develop therefore.

Of the currently issued and outstanding shares of common stock of the Company, approximately 4,344,488 shares (approximately 37% of the total number of shares outstanding) are owned by, or are under the direct or indirect control of, only two individuals. That number of shares is enough to dominate and control the price and trading volume in the Company’s securities. Because those shares are controlled by such a limited number of persons, selling decisions by either or both of those persons can be expected to have a substantial impact upon (or “overhang” over) the market, if any, for the common stock. Should either or both of such persons chose to sell a large number of shares over a short period of time, the market price for the shares could be significantly depressed.

The majority of the Company’s authorized but unissued common stock remains unissued. The board of directors of the Company has authority to issue such unissued shares without the consent or vote of the stockholders of the Company. The issuance of these shares may dilute the interests of investors in the securities of the Company and will reduce their proportionate ownership and voting power in the Company.

GEOLOGIC UNCERTAINTY AND INHERENT VARIABILITY

Although the estimated reserves and additional mineralized material have been delineated with appropriately spaced drilling to provide a high degree of assurance in the continuity of the mineralization, there is inherent

variability between duplicate samples taken adjacent to each other and between sampling points that cannot be reasonably eliminated. There may also be unknown geologic details that have not been identified or correctly appreciated at the current level of delineation. This results in uncertainties that cannot be reasonably eliminated from the estimation process. Some of the resulting variances can have a positive effect and others can have a negative effect on mining operations. Acceptance of these uncertainties is part of any mining operation.

GOLD EXPLORATION IS HIGHLY SPECULATIVE, INVOLVES SUBSTANTIAL EXPENDITURES, AND IS FREQUENTLY NON-PRODUCTIVE

Gold exploration involves a high degree of risk and exploration projects are frequently unsuccessful. Few prospects that are explored end up being ultimately developed into producing mines. To the extent that we continue to be involved in gold explorations, the long-term success of our operations will be related to the cost and success of our exploration programs. We cannot assure you that our gold exploration efforts will be successful. The risks associated with gold exploration include:

Identification of potential gold and probable uncertainties, we cannot assure you that current and future exploration programs will mineralization based on superficial analysis; quality of our management and our geological and reserves and to develop and construct mining and processing facilities. As a result of these technical expertise; and capital available for exploration and development.

Substantial expenditures are required to determine if a project has economically mineable mineralization. It may take several years to establish proven result in the discovery of reserves, the expansion of our existing reserves and the development of mines.

THE PRICE OF GOLD AND OTHER MINERALS ARE HIGHLY VOLATILE AND A DECREASE IN THE PRICE OF GOLD AND OTHER MINERALS CAN HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS

The profitability of gold and mineral mining operations is directly related to market prices. The market prices of gold and other minerals fluctuate significantly and are affected by a number of factors beyond our control, including, but not limited to, the rate of inflation, the exchange rate of the dollar to other currencies, interest rates, development of a mine is undertaken and the time production can commence can significantly affect the profitability of a mine. Accordingly, we may begin to develop one or more of our mines at a time when the price of gold or other minerals makes such exploration economically feasible and, subsequently, incur losses because the price of gold or other minerals decreases. We cannot predict the market price or fluctuations of the gold or copper price.

FUEL PRICE VARIABILITY

The cost of fuel can be a major variable in the cost of mining, one which is not necessarily included in the contract mining prices obtained from mining contractors but is passed on to the overall cost of operation. Although high fuel prices by historical standards have been used in making the reserve estimates included herein, future fuel prices and their impact on operating profitability cannot be predicted.

VARIATIONS IN MINING AND PROCESSING PARAMETERS

The parameters used in estimating mining and processing efficiency are based on testing and experience with previous operations at the properties or on operations at similar properties. While the parameters used have a reasonable basis, various unforeseen conditions can occur that may materially affect the estimates. In particular, past operations indicate that care must be taken to ensure that proper ore grade control is employed and that proper steps are taken to ensure that the leaching operations are executed as planned. The mining contracts for the mines include clauses addressing these issues to help ensure planned requirements are met. Nevertheless, unforeseen difficulties may occur in planned operations.

CHANGES IN ENVIRONMENTAL AND MINING LAWS AND REGULATIONS

Registrant believes that it currently complies with existing environmental and mining laws and regulations affecting its operations. The reserve estimates contain cost estimates based on requirements compliance with current laws and regulations. While there are no currently known proposed changes in these laws or regulations, significant changes have affected past operations and no assurance can be given that such changes will not occur in the future.

Through December 31, 2007, the Company has generated no revenues from operations.

REPORTS TO SECURITIES HOLDERS

There were no shareholders meetings during the period covered by this report.

The Bylaws of the Gilla Inc. are silent regarding an annual report to shareholders. Gilla Inc. is a reporting company and files reports with the U.S. Securities and Exchange Commission (SEC). The Company is required to file quarterly reports (Form 10-Q) and an annual report (Form 10-K) with the SEC. The annual report includes an audited financial statement.

Any materials that the Company filed with the Securities and Exchange Commission may be read and copied at the SEC’s Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. Further, you may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. The Company is an electronic filer and the SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Commission. That site is http://www.sec.gov.

ITEM 2. PROPERTIES

The Company acquired the Watershed-Gogama Gold Camp, in the Township of Invergarry, Ontario, Canada, a facility to house and administers the Company’s mining operations from a related party. The acquisition was valued at $1,500,000 and was paid for by the issuance of 2,000,000 common shares and the execution of a demand note payable for $500,000.

The shareholder was a related party who had not transferred the Watershed-Gogama Gold Camp. Management as of May 24, 2006, acquired the Land Use Permit in the name of the Company. The demand note payable for $500,000 has been cancelled.

The Company occupies office space on a month-to-month basis and therefore has no leasehold interest. The Company pays a fee to a related party, at the rate of $4,000 (US) monthly, which includes rent of $2,500 and certain administrative services, such as bookkeeping, copying and printing, courier services, and telephone.

The Company owns no investments.

ITEM 3. LEGAL PROCEEDINGS

There have been no changes since the filing of our Form 10-KSB for December 31, 2006 except the following:

Mark B. Aronson — On April 17, 2007 Aronson, a disbarred lawyer, filed an Application for Examination of Judgment Debtor, in the Eighth Judicial District Court in and for the County of Clark, in the state of Nevada. The application was granted on May 1, 2007. On June 28, 2007 Gilla, filed a Motion with the same court to Dismiss Plaintiff Mark B. Aronson’s Foreign Judgment and to Vacate Order for Examination

of Judgment Debtor. This motion was not defended and therefore on July 30, 2007 the Court granted dismissal of Plaintiff Mark B. Aronson’s Foreign Judgment and Vacating Order for Examination of Judgment Debtor. In August, Aronson filed a Civil Action against Gilla in the Court of Common Pleas of Allegheny County, Pennsylvania. On August 22, 2007 a settlement was reached between Gilla and Aronson and the case was dismissed. The settlement entailed the Company to pay $600 and the Plaintiff is required to release the Company from any further obligations.

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

On February 27, 2007 a majority of the shareholders of the registrant, pursuant to a recommendation by the Board of Directors, voted for a reverse split of the Company’s common shares. All Shares held as of February 28, 2007 were subject to the reversal. As a result of the amendment to the Company’s Articles of Incorporation, each fifty (50) shares held by a shareholder on February 28, 2007 have been exchanged for one (1) share of the Company’s common stock. In all other respects, the registrant’s capitalization has remained unchanged.

The Bylaws of the Gilla Inc. are silent regarding an annual report to shareholders. Gilla Inc. is a reporting company and files reports with the U.S. Securities and Exchange Commission (SEC). The Company is required to file quarterly reports (Form 10-QSB) and an annual report (Form 10-KSB) with the SEC. The annual report includes an audited financial statement.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our common stock has been publicly traded since August 19, 2003. The securities were traded on the over-the-counter market until NASD removed the Company from the over-the-counter market as it failed to file audited financial statements, which such action caused on June 6, 2005, the United States District Court, District of Nevada to return complete control of the Company to the Benarroch Group. The Company is listed on the Pink Sheets under the symbol “GLLA.” The following table sets forth for the periods indicated the range of high and low closing bid quotations per share as reported by the over-the-counter market for the past two years. These quotations represent inter-dealer prices, without retail markups, markdowns or commissions and may not necessarily represent actual transactions. The market for the common stock has been sporadic and there have been long periods during which there were few, if any, transactions in the common stock and no reported quotations. Accordingly, reliance should not be placed on the quotes listed below, as the trades and depth of the market may be limited, and therefore, such quotes may not be a true indication of the current market value of the Company’s common stock.


YEAR 2007	HIGH		LOW
First Quarter	$	2.75	$	1.00
Second Quarter	$	2.25	$	1.00
Third Quarter	$	2.00	$	1.10
Fourth Quarter	$	1.35	$	0.58

On December 31, 2007, the closing price of our common stock as reported on the OTCBB was $0.75 per share. On December 31, 2007, we had in excess of 616 beneficial stockholders of our common stock and 5,679,069 shares of our common stock were issued and outstanding.

DIVIDENDS

We did not paid any dividends on our common stock in 2007, However, on January 17, 2008 the Board of Directors of Gilla Inc. declared a cash dividend to its common stock Shareholders of Record on February 4, 2008 in the amount of $0.035 per share of common stock, which was distributed on February 15, 2008.

RECENT SALES OF UNREGISTERED SECURITIES

In December 2007, the Company issued the following shares:

30,000 Common Shares for Directors at par value

ITEM 6. Selected Financial Data.

Earnings per share for each of the fiscal years shown below are based on the weighted average number of shares outstanding.


	Years ended December 31,
	2007			2006			2005

Revenues		—			—			—

Net Loss	$	(562,475	)	$	(415,270	)	$	(213,799	)

Earning Loss Per Share	$	(0.10	)	$	(0.07	)	$	(0.04	)

Total assets	$	724,112		$	1,447,206		$	173,097

Total liabilities	$	10,889		$	194,008		$	859,804

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND REULTS OF OPERATION

The Company is a mineral-property development company specializing in acquiring and consolidating mineral properties with production potential and future growth through exploration discoveries.

On January 31^st, 2008, The Company acquired FREE MINING COMPANY S.A. which owns the rights to 2 Titanium concessions in Cameroon. Those rights are for exploration and renewable in 3 years. Preliminary reserve estimates have been done by the BRGM in France in the late ‘90s. The Government of Cameroon requires that about $300,000 of work be done on each property over 3 years. Once done, a development permit will be issued as per the Mining Law.

The Company is currently preparing a 43-101compliant report for each property. Although a vast amount of technical work has been done and is available, GILLA, in accordance with the permits issued in Cameroon, will do further testing and will ensure that a 43-101 be presented to the Ministry in the next couple of months.

The Company has a history of operating losses and we expect to continue to incur operating losses in the near future.

On February 5, 2007 the board of directors approved the creation of two subsidiaries of the Company, Polar Bear Mining Corp. (US) and Geolyndar Inc. (Formerly 640959 Canada Inc.)(Canada). The Company will focus entirely on the Cameroon operation and has relinquished both of its subsidiaries.

The report of our independent accountants on our December 31, 2007 financial statements includes an explanatory paragraph indicating that there is substantial doubt about our ability to continue as a going concern due to substantial recurring losses from operations and significant accumulated deficit and working capital deficit. Our ability to continue as a going concern will be determined by our ability to obtain additional funding and commence and maintain successful operations. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.

CERTAIN BUSINESS RISK FACTORS

You should carefully consider the risks described below before purchasing our common stock. If any of the following risks actually occur, our business, financial condition, or results or operations could be materially adversely affected, the trading of our common stock could decline, and you may lose all or part of your investment. You should acquire shares of our common stock only if you can afford to lose your entire investment.

WE HAVE A LIMITED OPERATING HISTORY WITH SIGNIFICANT LOSSES AND EXPECT LOSSES TO CONTINUE FOR THE FORESEEABLE FUTURE

We have yet to establish any history of profitable operations.We expect that our revenues will not be sufficient to sustain our operations for the foreseeable future. Our profitability will require the successful commercialization of our gold mines. No assurances can be given that we will be able to successfully commercialize our gold mines or that we will ever be profitable.

Our independent auditors have added an explanatory paragraph to their audit opinion issued in connection with the financial statements for the year ended December 31, 2007. The Company’s auditors have expressed doubt about the Company’s ability to continue as a going concern. The Company has current assets in the form of cash of $670,142, other receivable of $3,970 and current liabilities of $10,889. The Company’s net losses to date are $10,525,197.

THERE IS SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN DUE TO SIGNIFICANT RECURRING LOSSES FROM OPERATIONS, ACCUMULATED DEFICIT AND WORKING CAPITAL DEFICIT ALL OF WHICH MEANS THAT WE MAY NOT BE ABLE TO CONTINUE OPERATIONS UNLESS WE OBTAIN ADDITIONAL FUNDING.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Gilla Inc
(Osprey Gold Corp.
(An Exploration Stage Company)

Financial Statements

December 31, 2007

Table of Contents


Report of Independent Registered Public Accounting Firm		F-2

Balance Sheets		F-3

Statements of Operations		F-4

Statements of Changes in Shareholders’ Deficit		F-5

Statements of Cash Flows		F-6

Notes to the Financial Statements		F-7 — F-20

Report of Independent Registered Public Accounting Firm

To the board of directors and shareholders of
Gilla, Inc.

We have audited the accompanying consolidated balance sheet of Gilla, Inc. (An Exploration Stage Company) and the related statements of operations, changes in shareholders’ deficit and cash flows for the years ended December 31, 2007 and 2006 and for the period from March 28, 1999 (inception) through December 31, 2007. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provided a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Gilla, Inc. (An Exploration Stage Company) as of December 31, 2007 and the results of its operations and its cash flows for the years then ended December 31, 2007 and 2006, and from March 28, 1999 (inception) through December 31, 2007 in conformity with accounting principles generally accepted in the United States.

The accompanying financial statements referred to above have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 1, the Company’s need to seek new sources or methods of financing or revenue to pursue its business strategy, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans as to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/Jewett, Schwartz, Wolfe & Associates

Hollywood, Florida
March 31, 2008

F-2

GILLA, INC.
(formerly OSPREY GOLD CORP.)
(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED BALANCE SHEET


		December 31,			December 31,
		2007			2006
ASSETS

CURRENT ASSETS	��
Cash		$	670,142		$	335,594
Other receivable			3,970			2,999


TOTAL CURRENT ASSETS			674,112			338,593

NON CURRENT ASSETS
Restricted cash			—			1,058,613
Mining camp			50,000			50,000


TOTAL ASSETS		$	724,112		$	1,447,206


LIABILITIES AND SHAREHOLDERS’ DEFICIT

CURRENT LIABILITIES
Accounts payable		$	6,731		$	138,311
Accrued expenses			4,158			55,697


TOTAL LIABILITIES			10,889			194,008


Commitments and Contingencies

SHAREHOLDERS’ DEFICIT
Common stock, .0002 par value, 300,000,000 shares authorized; 5,676,069 and 5,646,069 shares issued and outstanding, respectively			1,135			1,129
Additional paid in capital			11,237,285			11,214,791
Accumulated deficit			(10,525,197	)		(9,962,722	)


TOTAL SHAREHOLDERS’ DEFICIT			713,223			1,253,198


TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT		$	724,112		$	1,447,206

The accompanying notes are an integral part of these financial statements

F-3

GILLA, INC.
(formerly OSPREY GOLD CORP.)
(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED STATEMENTS OF OPERATIONS


							March 28, 1995
	For the Year Ended						For the Period From
	December 31,						(Inception) to
	2007			2006			December 31, 2007

REVENUES	$	—		$	—		$	—


TOTAL REVENUES		—			—			—

EXPENSES:
Exploration cost		31,481			34,359			1,615,472
General and administrative		718,816			3,131,738			13,023,044


TOTAL OPERATING EXPENSES		750,297			3,166,097			14,638,516


NET LOSS FROM OPERATIONS		(750,297	)		(3,166,097	)		(14,638,516	)


OTHER INCOME (EXPENSES)
Interest income		31,904			8,613			40,517
Interest expense		(3,277	)		—			(3,277	)
Gain on sale of mining properties		—			2,100,000			2,100,000
Gain (loss) on foreign exchange rate transactions		(8,358	)		4,763			151,088
Gain of forgiveness of debt		167,553			637,451			1,824,991

TOTAL OTHER EXPENSES		187,822			2,750,827			4,113,319


NET LOSS	$	(562,475	)	$	(415,270	)	$	(10,525,197	)


WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANIDING - BASIC AND DILUTED		5,646,316			5,548,691			3,658,349


EARNINGS (LOSS) PER COMMON SHARES — BASIC AND DILUTED	$	(0.10	)	$	(0.07	)	$	(2.88	)

The accompanying notes are an integral part of these financial statements

F-4

GILLA, INC.
(formerly OSPREY GOLD CORP.)
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
For the year ended December 31, 2007, 2006, 2005, 2004, and 2003


	Common Stock						Additional		Accumulated
	Shares			Amount			Paid In Capital		Deficit			Total

Balance — December 31, 2002		10,882		$	2		$	306,403	$	(700,132	)	$	(393,727	)
Issuance of common stock for mining claims — related party		620,000			124			6,076		—			6,200
Issuance of common stock for consulting services		120,000			24			399,976		—			400,000
Issuance of common stock for directors fees		10,000			2			309,998		—			310,000
Fair market value of options granted		—			—			465,000		—			465,000
Purchase of camp		40,000			8			49,992		—			50,000
Net loss		—			—			—		(915,574	)		(915,574	)

Balance December 31, 2003		800,882		$	160		$	1,537,445	$	(1,615,706	)	$	(78,101	)

Issuance of common stock for mining claims — related party		2,016,800			404			19,764		—			20,168
Issuance of common stock for mining claims		11,000			2			176,998		—			177,000
Issuance of common stock for directors fees		6,000			1			41,999		—			42,000
Issuance of common stock for consulting fees		463,813			93			4,430,167		—			4,430,260
Issuance of common stock for management fees		80,000			16			527,984		—			528,000
Issuance of common stock for financing fees		4,000			1			23,999		—			24,000
Issuance of common stock for cancellation of letter of intent and services		310,000			62			324,938		—			325,000
Sale of common stock		215,600			43			1,208,261		—			1,208,304
Capital contribution		—			—			68,408		—			68,408
Net loss		—			—			—		(7,717,947	)		(7,717,947	)

Balance December 31, 2004		3,908,095		$	782		$	8,359,963	$	(9,333,653	)	$	(972,908	)

Sale of common stock		2,000,000			400			499,600		—			500,000
Net loss										(213,799	)		(213,799	)

Balance December 31, 2005		5,908,095		$	1,182		$	8,859,563	$	(9,547,452	)	$	(686,707	)

Cancellation of common stock		(1,223,000	)		(245	)		245		—			—
Issuance of common stock for consulting fees		700,000			140			1,574,860		—			1,575,000
Issuance of common stock for services rendered		33,802			7			43,500		—			43,507
Issuance of common stock for directors fees		10,000			2			32,498		—			32,500
Issuance of common stock for satisfaction of debt		6,567			1			19,699		—			19,700
Issuance of common stock for salary		210,605			42			684,426		—			684,468
Net loss		—			—			—		(415,270	)		(415,270	)

Balance December 31, 2006		5,646,069		$	1,129		$	11,214,791	$	(9,962,722	)	$	1,253,198

Issuance of common stock for directors fees		30,000			6			22,494		—			22,500
Net loss		—			—			—		(562,475	)		(562,475	)

Balance December 31, 2007		5,676,069		$	1,135		$	11,237,285	$	(10,525,197	)	$	713,223

The accompanying notes are an integral part of these financial statements

F-5

GILLA, INC.
(formerly OSPREY GOLD CORP.)
(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED STATEMENTS OF CHANGES IN CASH FLOWS



							For the Period From
	For the Year Ended						March 28, 1995
	December 31						(Inception) to
	2007			2006			December 31, 2007

CASH FLOW FROM OPERATING ACTIVITIES
Net (loss) from operations	$	(562,475	)	$	(415,270	)	$	(10,525,197	)
Adjustment to reconcile net income (loss) to net cash used in operating activities:
Stock compensation		22,500			2,355,175			9,105,303
(Increase) decrease in assets:
Other receivable		(971	)		(2,999	)		(3,970	)
Increase(decrease) in current liabilities
Accounts payable		(131,580	)		(685,716	)		381,546
Accrued expenses		(51,539	)		19,920			4,156

Net cash provided by (used in) operating activities		(724,065	)		1,271,110			(1,038,162	)

CASH FLOW FROM FINANCING ACTIVITIES
Sale of common stock		—			—			1,708,304

Net cash provided by financing activities		—			—			1,708,304

CASH FLOW FROM INVESTING ACTIVITIES
Restricted cash		1,058,613			(1,058,613	)		—

Net cash used in investing activities		1,058,613			(1,058,613	)		—

Net Increase (decrease) in cash		334,548			212,497			670,142

Cash and cash equivalents at beginning of period		335,594			123,097			—


Cash and cash equivalents at end of period	$	670,142		$	335,594		$	670,142


Supplemental Disclosure of Cash Flow Information:
Cash paid for:
Interest		—			—			—

Taxes		—			—			—

The accompanying notes are an integral part of these financial statements

F-6

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND DESCRIPTION OF BUSINESS

Gilla Inc.. (“Gilla” or the “Company”) was incorporated under the Laws of the State of Nevada on March 28, 1995 under the name of Truco, Inc. The shareholders approved a name change on March 22, 1996, March 18, 1997, September 13, 1999, October 3, 2000, April 23, 2003 and February 27, 2007 to Web Tech, Inc., Cynergy, Inc., Mercantile Factoring Credit Online Corp., Incitations, Inc., Osprey Gold Corp. and to its present name respectively. Prior to the merger in September 1999 (Note 6), the Company’s activities had been in the development of proprietary technology and services using smart and remote memory cards and wireless and landline networks in the fields of commerce, publishing and network based systems. The Company’s activities are currently focused on mineral-property development specializing in acquiring and consolidating mineral properties with production potential and future growth through exploration discoveries.

During the year ended December 31, 2007, the Company formed two wholly owned subsidiaries, Geolyndar, Inc. and Polar Bear Mining Co.

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Principles of Consolidation

The consolidated financial statements of Gilla, Inc. include the accounts of the following companies: Gilla, Inc., Geolyndar, Inc., and Polar Bear Mining Corp. All material intercompany transactions have been eliminated.

Basis of Accounting

The financial statements are prepared using the accrual basis of accounting where revenues and expenses are recognized in the period in which they were incurred. The basis of accounting conforms to accounting principles generally accepted in the United States of America.

Going Concern

As shown in the accompanying financial statements, the Company has incurred net losses of $562,475 and $415,270 during the years ended December 31, 2007 and 2006, respectively. These conditions create an uncertainty as to the Company’s ability to continue as a going concern. Management plans to explore new mining opportunities and possibly form joint ventures with other exploration and mining interests. The financial statements do no include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Cash Equivalents

The company considers cash equivalents to be cash as well as short term investments.

Use of Estimates

F-7

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

Earnings per share

The Company computes basic and diluted loss per share amounts for December 31, 2007 and 2006, pursuant to the Statement of Financial Accounting Standards (SFAS) No. 128, “Earnings per Share.”

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Mining Properties and Deferred Expenditures

Significant payments related to the acquisition of land and mineral rights are capitalized as mining properties at cost. If a mineral ore body is discovered, such costs are amortized to income when production begins, using the unit of production method, based on estimated proven and probable reserves. If no mineral ore body is discovered, such costs are expensed in the period in which it is determined the property has no future economic value.

Expenditures for new facilities and improvements that can extend the useful lives of existing facilities are capitalized as plant and equipment at cost.

Mineral exploration costs are charged to income in the year in which they are incurred. When it is determined that a mining property can be economically developed as a result of established proven and probable reserves, the costs of further exploration and development to further delineate the ore body on such property are capitalized. The establishment of proven and probable reserves is based on results of final feasibility studies, which indicate whether a property is economically feasible. Upon the commencement of the commercial production of a development project, these costs are transferred to the appropriate asset category and are amortized to income using the unit of production method.

The recoverability of the amounts capitalized in respect of non producing mining properties is dependant upon the existence of economically recoverable reserves, the ability of the company to obtain the necessary financing to complete the exploration and development of the properties, and upon future profitable production or proceeds from the disposition of the property.

Foreign Currency Translation

Monetary assets and liabilities denominated in a currency other than US dollars are translated into US dollars using the exchange rate in effect at the year end. Non monetary assets and liabilities are translated at historical exchange rates while revenues and expenses are translated at the average exchange rate during the year. Exchange gains and losses are included in income.

F-8

Concentration of Credit Risk

The Company places its cash and cash equivalents with financial institutions and, at times, cash held in checking accounts may exceed the Federal Deposit Insurance Corporation insured limit.

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Income Taxes

Under FASB Statement No. 109, Accounting for income taxes, deferred income taxes are recognized for the tax consequences in future years for differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable for the period and the change during the period of deferred tax assets and liabilities.

Our policy for interest and penalties on material uncertain income tax positions recognized in our consolidated financial statements is to classify these as interest expense and operating expense, respectively. The Company did not incur material income tax interest or penalties during the year ended December 31, 2007.

Fair Value of Financial Instruments

The carrying amounts of financial instruments, including cash, accounts receivable, accounts payable and accrued expenses approximate fair value at December 31, 2007 because of the relatively short maturity of the instruments.

Stock Based Compensation

The company accounts for its stock option grants based on the recognition and measurement principles of FAS 123. The application of FAS 123 results in compensation expense being recorded in these financial statements. Applying FAS 123 to stock compensation results in the equity instruments being measured and recognized at their fair value and the compensation cost being the excess of that amount over any amount paid.

Loss per common share is computed using the weighted-average number of common shares outstanding during each period.

F-9

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Impairment or Disposal of Long-Lived Assets

In August 2001, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets,” which supersedes both SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of” and the accounting and reporting provisions of Accounting Practice Bulletin (“APB”) Opinion No. 30, “Reporting the Results of Operations — Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions,” for the disposal of a segment of a business (as previously defined in that opinion).This statement establishes the accounting model for long-lived assets to be disposed of by sale and applies to all long-lived assets, including discontinued operations. This statement requires those long-lived assets be measured at the lower of carrying amount or fair value less cost to sell, whether reported in continuing operations or discontinued operations. Therefore, discontinued operations will no longer be measured at net realizable value or include amounts for operating losses that have not yet occurred.

SFAS No. 144 retains the fundamental provisions of SFAS No. 121 for recognizing and measuring impairment losses on long-lived assets held for use and long-lived assets to be disposed of by sale, while also resolving significant implementation issues associated with SFAS No. 121.

NOTE 2 RECENT ACCOUNTING PRONOUNCEMENTS

In July 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 48,Accounting for Uncertainty in Income Taxes(FIN 48). FIN 48 clarifies when tax benefits should be recorded in financial statements, requires certain disclosures of uncertain tax matters and indicates how any tax reserves should be classified in a balance sheet. We adopted the provisions of FIN 48 effective January 1, 2007. No cumulative adjustment to our accumulated deficit was required upon adoption.

In September 2006, the FASB issued SFAS No. 157,Fair Value Measurement,or SFAS 157. This standard provides guidance on using fair value to measure assets and liabilities. SFAS 157 clarifies the principle that fair value should be based on the assumptions market participants would use when pricing an asset or liability and establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. Under the standard, fair value measurements would be separately disclosed by level within the fair value hierarchy. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and is required to be adopted effective January 1, 2008. In February 2008 the FASB issued FASB Staff Position No. 157-2,Partial Deferral of the Effective Date of Statement 157, that will (1) partially defer the effective date of SFAS No. 157 for one year for certain non-financial assets and non-financial liabilities and (2) remove certain leasing transactions from the scope of SFAS No. 157. The adoption of SFAS 157 is not expected to have a material effect on its financial position, results of operations or cash flows.

F-10

On February 15, 2007, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 159,“The Fair Value Option for Financial Assets and Financial Liabilities — Including an Amendment of FASB Statement No. 115”(“SFAS 159”). This standard permits an entity to measure financial instruments and certain other items at estimated fair value. Most of the provisions of SFAS No. 159 are elective; however, the amendment to FASB No. 115,“Accounting for Certain Investments in Debt and Equity Securities,”applies to all entities that own trading and available-for-sale securities. The fair value option created by SFAS 159 permits an entity to measure eligible items at fair value as of specified election dates. The fair value option (a) may generally be applied instrument by instrument, (b) is irrevocable unless a new election date occurs, and (c) must be applied to the entire instrument and not to only a portion of the instrument. SFAS 159 is effective as of the beginning of the first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of the previous fiscal year provided that the entity (i) makes that choice in the first 120 days of that year, (ii) has not yet issued financial statements for any interim period of such year, and (iii) elects to apply the provisions of FASB 157. Management is currently evaluating the impact of SFAS 159, if any, on the Company’s financial statements. The adoption of SFAS No. 159 is not expected to have a material effect on its financial position, results of operations or cash flows.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an amendment of Accounting Research Bulletin No 51” (SFAS 160). SFAS 160 establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, changes in a parent’s ownership of a noncontrolling interest, calculation and disclosure of the consolidated net income attributable to the parent and the noncontrolling interest, changes in a parent’s ownership interest while the parent retains its controlling financial interest and fair value measurement of any retained noncontrolling equity investment. SFAS 160 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Early adoption is prohibited. The adoption of SFAS No. 160 is not expected to have a material effect on its financial position, results of operations or cash flows.

NOTE 2 RECENT ACCOUNTING PRONOUNCEMENTS (continued)

In December 2007, the FASB issued SFAS 141R,Business Combinations(“SFAS 141R”), which replaces FASB SFAS 141,Business Combinations.This Statement retains the fundamental requirements in SFAS 141 that the acquisition method of accounting be used for all business combinations and for an acquirer to be identified for each business combination. SFAS 141R defines the acquirer as the entity that obtains control of one or more businesses in the business combination and establishes the acquisition date as the date that the acquirer achieves control. SFAS 141R will require an entity to record separately from the business combination the direct costs, where previously these costs were included in the total allocated cost of the acquisition. SFAS 141R will require an entity to recognize the assets acquired, liabilities assumed, and any non-controlling interest in the acquired at the acquisition date, at their fair values as of that date. This compares to the cost allocation method previously required by SFAS No. 141. SFAS 141R will require an entity

F-11

to recognize as an asset or liability at fair value for certain contingencies, either contractual or non-contractual, if certain criteria are met. Finally, SFAS 141R will require an entity to recognize contingent consideration at the date of acquisition, based on the fair value at that date. This Statement will be effective for business combinations completed on or after the first annual reporting period beginning on or after December 15, 2008. Early adoption of this standard is not permitted and the standards are to be applied prospectively only. Upon adoption of this standard, there would be no impact to the Company’s results of operations and financial condition for acquisitions previously completed. The adoption of SFAS No. 141R is not expected to have a material effect on its financial position, results of operations or cash flows.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date and are not expected to have a material impact on the financial statements upon adoption.

NOTE 3 MINING CAMP

On July 14, 2003 The Company acquired a mining camp from a related party. The acquisition was valued at $50,000 and was paid for by the issuance of 2,000,000 common shares. The shares were issued subsequent to year end. (Shares issued March 25^th 2004.) (Please note the camp was purchased from a related party that had a cost basis of $50,000 in the property and therefore must be recorded at their basis). The License of Occupation for the camp was issued to the company in May of 2006.

NOTE 4 RELATED PARTY

The company rents office space and administrative services on a month to month basis from a related party at a rate of $4,000 per month. Administrative services provided include bookkeeping, copying and printing, courier services, and telephone. Total expense for rent and administrative fees paid to this related party for the year ended December 31, 2007 was $48,000

NOTE 5 EQUITY

On April 23, 2003, the Company amended its authorized capital stock to include 20,000,000 shares of preferred stock with a par value of $0.0002 per share.

On May 16, 2003, the Company effected a 50 to 1 reverse stock split per Certificate of Amendment to the Articles of Incorporation. The financial statements reflect the stock splits on a retroactive basis.

2003-Stock issued for mining claims-related party

F-12

On June 6, 2003, the Company issued 360,000 common shares value at $3,600, in connection with the acquisition of 53 unpatented mining claims, from a related party, comprising of 27,280 acres situated in the Porcupine Mining Division of Northern Ontario. (Please note these were purchased from a related party that had no actual basis in the property and therefore must be recorded at the par value of the stock issued) These claims were transferred to the company in March 2004 of which 140,000 shares to an unrelated party for services.

On November 14, 2003 the company issued for the Lingman Lake 4 patented claims, 241,000 shares to a related party and 19,000 shares to an unrelated party. The fair value is approximately $2,600. (Please note these were purchased from a related party that had no actual basis in the property and therefore must be recorded at the par value of the stock) As the Company is not able to begin production, or substantiate any proven reserves, it has fully impaired the value.

2003-Stock issued for consulting services

The Company issued to consultants for their services rendered 100,000 common shares at $0.03 per share on July 14, 2003 and 20,000 common shares at $0.25 per share on September 26, 2003. The issuances were recorded at the fair market value $400,000.

NOTE 5 EQUITY (continued)

2003-Stock issued for directors fees

On September 29, 2003 the Company issued a total of 10,000 shares of common to the Board of Directors for services. The Company recorded an expense of $310,000 which is the fair market value on the date of issuance.

2003-Stock issued for purchase of camp

2004-Stock issued for mining claims-related party

In January, 2004 The Company purchased the Lingman Assets from a related party for 160,000 of common stock value at $1,600. (Shares issued March 25^th 2004) The Company has not received control of these assets. (Please note these were purchased from a related party that had no actual basis in the property and therefore must be recorded at the par value of the stock) As the Company is not able to begin production, or substantiate any proven reserves, it has fully impaired the value.

F-13

In March, 2004 The Company purchased the Jerome Patented Claims which consist of 63 patented claims in the Porcupine Mining Division of Northern Ontario for 956,800 shares of common stock valued at $9,568 from a related party. (Please note these were purchased from a related party that had no actual basis in the property and therefore must be recorded at the par value of the stock) As the Company is not able to begin production, or substantiate any proven reserves, it has fully impaired the value.

In August, 2004 the Company purchased the Lingman Lakes claims which consist of 14 patented mining claims in the Red Lake Division of Northern Ontario for 900,000 shares of common stock valued at $9,000 from a related third party. In May, 2006 the United States District of Nevada, ordered the third party to transfer title of the claims to the Company.

NOTE 5 EQUITY (continued)

2004-Stock issued for mining claims

In July, 2004 the Company issued 2,000 shares of common stock valued at $16,500 to Anaconda Gold for the purchase of 8 unpatented claims in the Red Lake Division of Northern Ontario. The agreement was cancelled in early 2005. The shares are non-returnable.

In August 2004, the Company issued 5,000 shares of common stock valued at $52,500 to an unrelated party as part of the purchase of the 63 patented mining claims from a related party.

In October, 2004 the Company entered into an agreement to purchase 4 unpatented claims in the Porcupine Division of Northern Ontario from an unrelated third party. The Company issued a total of 4,000 shares valued at $108,000. The shares are non-returnable. (This agreement was cancelled in 2005.)

2004-Stock issued for directors fees

In August, 2004 the Board of Directors issued itself a total of 6,000 shares of common stock valued at $42,000 for director’s fees.

2004-Stock issued for consulting services

In April 2004, the Company issued a total of 80,000 shares of common to two consultants for services. The fair market value of the common stock on the date of issuance was $2,080,000.

In July 2004, the Company issued a total of 380,000 of common stock for investor relations in Europe. The fair market value of the common stock on the date of issuance was $2,280,000.

In August 2004, the Company issued 900 shares of common stock valued at $12,000 for services.

F-14

In October 2004, the Company issued 2,913 shares of common stock valued at $58,260 for services.

2004-Stock issued for management fees

In August, 2004 the Company issued a total of 60,000 shares of common stock to the Company’s former President and 20,000 shares of common stock to the Company’s former Vice-President. The fair market value of the common stock on the date of issuance was $528,000.

NOTE 5 EQUITY (continued)

2004-Stock issued for financing fees

In July 2004, the Company issued 4,000 shares of common stock valued at $24,000 for financing fees.

2004-Stock issued for cancellation of letter of intent and services

In December 2004, the Company sold a total of 310,000 units to a related party for net proceeds of $225,000 and fees of $100,000. Each unit consisted of one share of common stock and one warrant expiring two years from the date of issuance.

2004-Sale of common stock

In August, 2004 the Company sold a total of 90,000 units for net proceeds of $225,000. Each unit consisted of one share of common stock and one $.10 warrant expiring 2 years from the date of issuance.

In August 2004, the Company sold a total of 33,000 units to 5 investors for net proceeds of $115,500. Each unit consisted of one share of common stock and one $.25 warrant expiring two years from the date of issuance.

In August 2004, the Company sold a total of 46,520 units to an unrelated investor for net proceeds of $687,804. Each unit consisted of one share of common stock and one $.25 warrant expiring two years from the date of issuance.

In September 2004, the Company sold a total of 46,080 units to related investors for net proceeds of $180,000. Each unit consists of one share of common stock and one $.25 warrant expiring in September 2006.

2004- Capital contribution

Capital contributions were made in 2004 for the total amount of $68,408.

2005-Sale of common stock

In November, 2005 the Company sold a total of 2,000,000 shares of common stock for net proceeds

F-15

of $500,000.

NOTE 5 EQUITY (continued)

2006-Cancellation of common stock

In August 2006, as a result of the “Settlement Agreement”, July 17^th, 2006, the Company recovered and was able to cancel 1,223,000 shares issued to related parties. The transaction was recorded at par value.

2006 — Stock issued for consulting services

During November 2006, 700,000 common shares were issued for consulting fees. The fair market value at time of issuance was valued at $1,575,000.

2006 — Common stock issued for services rendered

In November 2006, the Company issued 32,740 common shares for legal services and 1,062 for staking claims in the Porcupine Mining Division for a value of $43,507.

2006 — Common stock issued for directors fees

On November 1, 2006, 10,000 common shares for director’s fees were issued at fair market value of $32,500.

2006 — Common stock issued for satisfaction of debt

In November 2006, the company issued 6,567 common shares valued at $19,700 for satisfaction of debt.

2006 — Common stock issued for salary

In November 2006, 210,605 common shares were issued in lieu of salary. The fair market value at time of issuance was $684,468.

NOTE 5 EQUITY (continued)

2007 — Reverse stock split

On February 27, 2007 a majority of the shareholders of the registrant, pursuant to a

F-16

recommendation by the Board of Directors, voted for a reverse split of the Company’s common shares. All Shares held as of February 28, 2007 were subject to the reversal. As a result of the amendment to the Company’s Articles of Incorporation, each fifty (50) shares held by a shareholder of record on February 28, 2007 were exchanged for one (1) share of the Company’s common stock effective March 14, 2007. All per share data in the consolidated financial statements have been adjusted to reflect the reverse stock split on a retrospective basis. In all other respects, the registrant’s capitalization remains unchanged.

2007-Issuance of common stock for directors fees

During December 2007, the Board of Directors approved the issuance of 30,000 common shares at $0.0002 per share to all directors of the Company for their services rendered and a compensation expense of $22,500 has been recorded. These shares were issued during the fourth quarter of 2007.

NOTE 6 EARNINGS PER SHARE

Basic earnings per share are computed by dividing earnings available to common stockholders
by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflect per share amounts that would have resulted if dilutive potential common stock had been converted to common stock. The following reconciles amounts reported in the financial statements:


	Income			Shares		Per-share
	(Numerator)			(Denominator)		Amount

Income from continuing operations	$	(562,475	)

Less preferred stock dividends		—


Income available to common stockholders — Basic earnings per share		(562,475	)		5,646,316	$	(0.10	)

Effect of dilutive securities no dilutive securities		—			—		—


Income available to common stockholders — Diluted earnings per share	$	(562,475	)	$	5,646,316	$	(0.10	)

F-17

NOTE 7 BUSINESS COMBINATION

On September 29, 1999, the Company and Mercantile Factoring & Credit Corp. (“MFCC”) completed their agreement to merge upon the filing of the Articles of Merger with the Secretary of State of the state of Nevada.

Pursuant to a separate transaction, MFCC bought 2,534,615 shares of the Company (61.3%) from the shareholders for cash of $250,000 and, prior to the Merger, contributed those shares to the Company for cancellation. The investment was written off and charged to expenses on the statement of operations for the year ended December 31, 1999.

Under the merger agreement, the Company issued 22,500,000 post-merger shares to the former owner of MFCC in consideration for all of the issued and outstanding common shares of MFCC. As the former shareholder of MFCC obtained control (91.97%) of the Company through the share exchange, this transaction was accounted for in these financial statements as a reverse takeover and the purchase method of accounting had been applied. Under reverse takeover accounting, MFCC was considered to have acquired Osprey with the results of operations included in these financial statements from the date of acquisition. MFCC was then merged into the Company.

NOTE 8 INCOME TAXES

Deferred income taxes arise from timing differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. A deferred tax asset valuation allowance is recorded when it is more likely than not that deferred tax assets will not be realized. There are no deferred taxes as of December 31, 2007.

There was no income tax expense for the year ended December 31, 2007.

The Company’s benefit differs from the “expected” benefit for the year ended December 31, 2007 (computed by applying the Corporate tax rate of 38% to the loss before taxes), as follows:


	December 31,
	2007			2006
Computed “expected tax benefit	$	(213,741	)	$	(157,803	)
Benefit of operating loss carryforwards		—			—
Valuation allowance		213,741			157,803

Net tax benefit	$	—		$	—

F-18

The effects of temporary differences that gave rise to significant portions of deferred tax assets and liabilities at December 31, 2007 are as follows:


	December 31, 2007

Deferred Tax Assets

Current Deferred Tax Assets	$	—
Net operating loss carryforward		3,999,575


Total gross deferred Tax Assets Less valuation allowance	$	(3,999,575	)


Net deferred tax assets	$	—

The Company has a net operating loss carryforward of approximately $10,525,197 available to offset future taxable income through 2027.

NOTE 9 SUBSEQUENT EVENTS

On January 17^th2008 the Board of Directors of Gilla Inc. declared a cash dividend to its common stock Shareholders of Record on February 4^th2008 in the amount (or approximate amount in the event existing conversion rights are exercised during the notice period which may affect the per share cash distribution amount) of $0.035 per share of common stock, with a distribution date of February 15^th2008.

On January 31, 2008, Gilla Inc. entered into an agreement (“Acquisition Agreement”) with Free Mining Company S.A. (“FMC”) and the shareholders of FMC to acquire all issued and outstanding shares of FMC which is the exclusive owner of the rights to two mineral properties in Cameroon, respectively known as “MFOUMOU” and “SELE” in exchange for an aggregate of 21,240,184 common shares, or 76.5% of Gilla to the shareholders of FMC. Through the acquisition of FMC, Gilla will acquire 100% of the rights to exploration, development and production of all mineral rights of Mfoumou and Sele. Please see exhibit “A” attached.

Mr. Georges Fotso received $100,000 as a signing bonus on the completion of the Acquisition Agreement.

In accordance with the Acquisition Agreement, Gilla issued 21,240,184 common shares of the company to the shareholders of FMC. FMC has agreed not to participate in the cash or stock dividend for shareholders of record as of February 4, 2008.

F-19

On January 31, 2008, 544,804 common shares of the company were issued to D.R.R. Capital Corporation for consulting fees. DRR has agreed not to participate in the cash or stock dividend for shareholders of record as of February 4, 2008.

On January 31, 2008, Gilla entered into an Option Agreement with D.R.R. Capital Corporation (DRR), in which Gilla issued an option to DRR to purchase up to 544,804 common shares of Gilla at an exercise price of $0.75. The Option Agreement expires on January 31, 2010.

On January 31, 2008, Gilla issued 220,311 of common stock for termination of services

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING FINANCIAL DISCLOSURE

A. New Independent Accountants: November 28, 2005, Jewett, Schwartz, Wolfe and Associates had been engaged as the Principal Accountant to Audit the Registrant=s financial statements.

B. The change of independent accountants was approved by the Company’s Board of Directors on June 17th, 2005.

ITEM 9A. CONTROLS AND PROCEDURES

Under the supervision and with the participation of our management, we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of the end of

the period covered by this report. Based on that evaluation, we have concluded that these disclosure controls and procedures are effective.

REPORT OF MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the company. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting for external purposes in accordance with accounting principles generally accepted in the United States of America. Internal control over financial reporting includes maintaining records that in reasonable detail accurately and fairly reflect our transactions; providing reasonable assurance that transactions are recorded as necessary for preparation of our financial statements; providing reasonable assurance that receipts and expenditures of company assets are made in accordance with management authorization; and providing reasonable assurance that unauthorized acquisition, use or disposition of company assets that could have a material effect on our financial statements would be prevented or detected on a timely basis. Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected.

Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework inInternal Control — Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that the company’s internal control over financial reporting was effective as of December 31, 2008. the company’s internal control over financial reporting is effective based on those criteria.

ITEM 9B OTHER ITEMS

Please refer to the financial statements for additional costs and expenditures and other financial information.

The Company had no production from operations for 2007. For 2007, gross revenues were $-0-. Gilla Inc. entered into a non-binding Letter of Intent on July 11, 2007 with Eastmark Limited (“Eastmark”), a private corporation, for the proposed acquisition by Gilla of a 100% interest in all mineral exploration, development and production rights to Mineral Production Sharing Agreement 190 (“MPSA 190”), located in the municipality of Barobo, in the province of Surigao del Sur, Philippines. Preliminary work has been conducted on the property by Alron Geo-Environmental Specialists, Inc. of Cebu City, Philippines. At the end of October 2007, the company having not been able to conduct satisfactory due diligence on MPSA 190, cancelled its LOI.

The proposed acquisition is subject to certain conditions, including due diligence, the execution of a definitive agreement and approval of the acquisition by the board of directors and consent from a majority of shareholders of the respective companies as well as all regulatory and other approvals. The terms of the acquisition are outlined in a Letter of Intent (“LOI”) dated July 11, 2007.

Terms of the LOI include amongst others:

a) the issuance of 4,000,000 Common Shares of Gilla to Eastmark;

b) the raising of $3,000,000 through the Private Placement of Gilla Common Shares at $1.25 per Common Share. Out of the amount raised, US$1,000,000 will go towards outstanding payments on the property and the balance of the proceeds shall be used for further exploration and development of MPSA 190 and working capital;

c) the appointment to the board of directors of Gilla of a number of individuals with established credentials and expertise in natural resources. The new board of directors will include: Mr. Andrew Mullins, Mr. Larry Youell and Mr. Riaz Sumar.

Gilla has also received approval from a majority of its shareholders to spin off its two wholly owned subsidiaries, Geolyndar Inc. and Polar Bear Mining Corp. and dividend the common shares of those subsidiaries to its shareholders of record as of July 23, 2007, in a manner reflecting the proportionate interest held by each Gilla shareholder. The appropriate filings will follow. The spin off and dividend are not related to the acquisition and is expected to close on or prior to completion of the acquisition. Following the spin off, Polar Bear Mining Corp. will primarily be engaged in acquiring international

resources while Geolyndar Inc. will hold the lease to its mining camp in Ontario and will continue to investigate potential mineral acquisitions in Canada.

On July 30 2007 the Canada Revenue Agency issued the certificate for the Section 116 and the money held from the sale of the mining assets, was released from escrow and deposited into the Company bank account on the same day.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

A) IDENTIFY DIRECTORS AND EXECUTIVE OFFICERS


NAME	AGE		POSITION

Georges Benarroch		61	President/Chief Financial Officer/Director

Linda Kent		52	Corporate Secretary & Treasurer Director

Jean Jacques Treyvaud		69	Director

The business experience of the persons listed above during the past five years are as follows:

Georges Benarroch/Chief Financial Officer/President/Director:

Mr. Benarroch was elected as President effective November 18th, 2004, and a Director of the Company since September 2004. Mr. Benarroch is the President and Chief Financial Officer of Credifinance Capital Corp. and Credifinance Securities Limited and President of and Chief Executive Officer of Kyto Biopharma Inc. a public company.

Linda Kent/Corporate Secretary Treasurer/Director: Ms. Kent has worked in the securities brokerage industry since 1979. Since 2000 she has been the Head of Trading for Credifinance Securities Limited in Toronto, Canada.

Jean Jacques Treyvaud/Director: Mr. Treyvaud is a specialist in financial engineering, corporate finance, and investor relations. From 1989 to present, he has been a Private Consultant to many European and Middle Eastern clients in the financial engineering, corporate finance, investor relations and portfolio management. From 1985-1989, he was the Senior Vice-President, Capital Market Group for the Banque Indosuez, Geneva. In the Capital Market Group, Banque Indosuez he was responsible for international financing, syndication and retailing of new issues. From 1983-1985, he was a Vice President—Capital Group at Chemical Bank (Switzerland) S.A. From 1978 to 1983 he was Vice President—Underwriting Guaranties Group at Banque Paribas Suisse, Geneva. From 1964 to 1977 he worked in various Departments of Government of Canada

In 1958, he received a certificate in Geology from McGill University, Montreal, and attended the University of Montreal in the Department of Social Economy from 1957 to 1960. Mr. Treyvaud did his postgraduate studies at the University of Carleton, from 1967 to 1970. He also completed the registered representative course in 1977, and was a Lecturer in International Finance at the Universite du Quebec in 1972.

On January 31, 2008, Jean-Jacques Treyvaud and Linda Kent resigned as Directors of the Company.

On January 31, 2008, the Board of Directors elected Georges Fotso and David Robinson to join the Board of Directors to fill the vacancies created by the foregoing resignations.

B) IDENTIFY SIGNIFICANT EMPLOYEES

The Company does not expect to receive a significant contribution from employees that are not executive officers.

C) FAMILY RELATIONSHIPS

There are no directors, executive officers or persons nominated or persons chosen by the Company to become a director or executive officer of the Company who are directly related to an individual who holds the position of director or executive officer or is nominated to one of the said positions.

D) INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

There are no material events that have occurred in the last five years that would affect the evaluation of the ability or integrity of any director, person nominated to become a director, executive officer, promoter or control person of the Company.

E) AUDIT COMMITTEE

The Audit Committee has the responsibility of (i) recommending the selection of our independent public accountants, (ii) reviewing and approving the scope of the independent public accountants’ audit activity and extent of non-audit services, (iii) reviewing with management and our independent public accountants the adequacy of our accounting system and the effectiveness of our internal audit plan and activities, (iv) reviewing with management and our independent public accountants the financial statements and exercising general oversight of the financial reporting process and (v) reviewing with us litigation and other legal matters that may affect our financial condition, and monitoring compliance with our business ethics and other policies.

The Audit Committee is composed of Jean Jacques Treyvaud, Linda Kent, Georges Benarroch. The Audit Committee did not meet in 2007. The Audit Committee has not adopted a charter. The functions that would normally be performed by the Audit Committee were performed by the Board.

ITEM 11. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth the compensation for the fiscal year ended December 31, 2007 payable/paid to Georges Benarroch the Company=s President/Director, Linda Kent the Company=s Corporate Secretary Treasurer, and the following Directors.


	Salary		Restricted Stock		All Other Compensation
2007	In CDN Funds		(4&5)		In CDN Funds
Georges Benarroch (1)	$	80,000		10,000		—
Linda Kent	$	65,000		10,000		—
Jeans Jacques Treyvaud		—		10,000		—

OPTIONS/SAR GRANTS TABLE

In December, the Board of Directors approved the issuance of 30,000 common shares at $0.0002 per share to all directors of the Company for their services rendered and a compensation expense of $22,500 has been recorded.

There were no options granted to employees and no grants to key employees in fiscal year 2007.

COMPENSATION OF DIRECTORS

All directors hold office until the next annual meeting of stockholders and until their successors have been duly elected and qualified. There are no agreements with respect to the election and compensation of directors. The Board of Directors appoints officers annually and each executive officer serves at the discretion of the Board of Directors. The Company does not have any standing committees at this time.

The Company does not currently maintain insurance for the benefit of the directors and officers of Osprey against liabilities incurred by them in their capacity as directors or officers of Osprey. Osprey does not maintain a pension plan for its employees, officers or directors.

Three directors received 10,000 common shares each for services during fiscal years 2007. Four directors received 100,000 common shares each for 2006.

None of the directors or senior officers of Osprey and no associate of any of the directors or senior officers of Osprey was indebted to the Company during the financial period ended December 31, 2007 of Osprey other than for routine indebtedness.

EMPLOYMENT CONTRACTS

None

REPORT ON REPRICING OF OPTIONS/SARS

None

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

A) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following persons (including any group as defined in Regulation S-B, Section 228.403) are known to the Company, as the issuer, to be beneficial owner of more than five percent (5%) of any class of the said issuer=s voting securities.


Title of Class	Name of Beneficial Owner	Common Shares	Percentage of Class
Common	Credifinance Capital Corp. (2)	1,549,752	27%
Common	Finance Research & Development (FRD) Trust (3)	1,185,764	21%


(1)		Credifinance Capital Corp. is a privately held Delaware corporation. Georges Benarroch is the President & Chief Financial Officer of Credifinance Corp.

(2)		Finance Research & Development (FRD) Trust owns all of the outstanding shares of Credifinance Capital Corp.

B) SECURITY OWNERSHIP OF MANAGEMENT


Title of Class	Name of Beneficial Owner	Common Shares	Percentage of Class
Common	Linda Kent/Corporate Secretary Treasurer Director	487,100	8%
Common	Georges Benarroch (1)	2,030,852	36%


(1)		Credifinance Capital Corp. is a privately held Delaware corporation. Georges Benarroch is the President & Chief Financial Officer of Credifinance Corp.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

(A) CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Detail of related party transactions are described in note 4 & 5 of the Financial Statements.

(B) TRANSACTIONS WITH PROMOTERS

Georges Benarroch would be considered as a promoter of the Company. Georges Benarroch, is the President & CEO of Credifinance Capital Corp which owns 1,549,752 common shares representing 27.3% of issued shares.

Officers, directors and employees will refrain from gathering competitor intelligence by illegitimate means and refrain from acting on knowledge, which has been gathered in such a manner. The officers, directors and employees of Osprey Gold Corp. will seek to avoid exaggerating or disparaging comparisons of the services and competence of their competitors.

Officers, directors and employees will obey all Equal Employment Opportunity laws and act with respect and responsibility towards others in all of their dealings. Officers, directors and employees will remain personally balanced so that their personal life will not interfere with their ability to deliver quality products or services to the company and its clients.

Officers, directors and employees agree to disclose unethical, dishonest, fraudulent and illegal behavior, or the violation of company policies and procedures, directly to management.

Violation of this Code of Ethics can result in discipline, including possible termination. The degree of discipline relates in part to whether there was a voluntary disclosure of any ethical violation and whether or not the violator cooperated in any subsequent investigation.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The Board of Directors appointed Jewett, Schwartz, Wolfe and Associates. (“Jewett”) as our independent auditors for the fiscal year ending December 31, 2007.

(1) Audit Fees

Jewett, Schwartz, Wolfe and Associates, Independent Registered Public Accounting firm billed an aggregate of $25,000 for the following professional services: audit of our annual consolidated financial statements for the fiscal year ended December 31, 2007 included in our annual report on Form 10-K and review of our interim financial statements included in our quarterly reports on Form 10-SB.

(2) Audit Related Fees

No other professional services were rendered by Jewett, Schwartz, Wolfe and Associates for audit related services rendered during the fiscal year ended December 31, 2007, in connection with, among other things, the preparation of a Registration Statement on Form 10-SB.

(3) Tax Fees

No professional services were rendered by Jewett, Schwartz, Wolfe and Associates for tax compliance, tax advice, and tax planning the fiscal year ended December 31,2007.

The Company hired Mcarney Greenwood to file there Canadian Tax returns for 2003, 2004, 2005 and 2006.

(4) All Other Fees

Not applicable.

ITEM 15. EXHIBITS AND REPORTS ON FORM 8-K


Date		Item(s)

2006-01-19		5.02
2006-02-08		8.01, 9.01
2006-10-05		2.01, 5.02, 8.01, 9.1
2006-12-29		3.02
2007-02-01		3.01
2007-03-

(A) LISTING OF EXHIBITS


EXHIBIT NUMBER		DESCRIPTION

3(i)(a)		*Articles of Incorporation of Osprey Gold Corp.

3(i)(b)		*Articles of Amendment changing name to Osprey Gold Corp.

3(ii)		*Bylaws of Osprey Gold Corp.

31.1		Section 302 Certification

32.1		Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


*		Incorporated by reference filed as form 10SB

(B) CODE OF ETHICS

Gilla Inc. will conduct its business honestly and ethically wherever we operate in the world. We will constantly improve the quality of our services, products and operations and will create a reputation for honesty, fairness, respect, responsibility, and integrity, trust and sound business judgment. No illegal or unethical conduct on the part of officers, directors, employees or affiliates is in the company’s best interest. Gilla Inc. will not compromise its principles for short-term advantage. The ethical performance of this company is the sum of the ethics of the men and women who work here. Thus, we are all expected to adhere to high standards of personal integrity.

Officers, directors, and employees of the company must never permit their personal interests to conflict, or appear to conflict, with the interests of the company, its clients or affiliates. Officers, directors and employees must be particularly careful to avoid representing Gilla Inc. in any transaction with others with whom there is any outside business affiliation or relationship. Officers, directors, and employees shall avoid using their company contacts to advance their private business or personal interests at the expense of the company, its clients or affiliates.

No bribes, kickbacks or other similar remuneration or consideration shall be given to any person or organization in order to attract or influence business activity. Officers, directors and employees shall avoid gifts, gratuities, fees, bonuses or excessive entertainment, in order to attract or influence business activity.

Officers, directors and employees of Gilla Inc. will often come into contact with, or have possession of, proprietary, confidential or business-sensitive information and must take appropriate steps to assure that such information is strictly safeguarded. This information - whether it is on behalf of our company or any of our clients or affiliates — could include strategic business plans, operating results, marketing strategies, customer lists, personnel records, upcoming acquisitions and divestitures, new investments, and manufacturing costs, processes and methods. Proprietary, confidential and sensitive business information about this company, other companies, individuals and entities should be treated with sensitivity and discretion and only be disseminated on a need-to-know basis.

Misuse of material inside information in connection with trading in the company’s securities can expose an individual to civil liability and penalties. Directors, officers, and employees in possession of material information not available to the public are “insiders”. Spouses, friends, suppliers, brokers, and others outside the company who may have acquired the information directly or indirectly from a director, officer or employee are also “insiders.” The Act prohibits insiders from trading in, or recommending the sale or purchase of, the company’s securities, while such inside information is regarded as “material”, or if it is important enough to influence you or any other person in the purchase or sale of securities of any company with which we do business, which could be affected by the inside information.

The following guidelines should be followed in dealing with inside information:

Until the company has publicly released the material information, an employee must not disclose it to anyone except those within the company whose positions require use of the information.

Employees must not buy or sell the company’s securities when they have knowledge of material information concerning the company until it has been disclosed to the public and the public has had sufficient time to absorb the information.

Employees shall not buy or sell securities of another corporation, the value of which is likely to be affected by an action by the company of which the employee is aware and which has not been publicly disclosed.

Officers, directors and employees will seek to report all information accurately and honestly, and as otherwise required by applicable reporting requirements.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf on March 15 2007 by the undersigned, thereunto authorized.


	GILLA INC. (FORMERLY INCITATIONS)
	By:	/s/ Georges Benarroch
		Georges Benarroch, President & Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities on the date(s) indicated.


Name	Title	Date

/s/ Georges Benarroch	President Chief Financial Officer Director	March 15, 2008

Positive
Negative
Uncertain
Constraining
Legalese
Litigious
Readability	8th grade Avg

Gilla (GLLA) Inactive 10-K2007 FY Annual report

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