Ruby Creek Resources 10K 2010 Annual report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended on August 31, 2010 or

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

For the transition period from _________to _________

RUBY CREEK RESOURCES, INC.

(Exact name of registrant as specified in Charter

NEVADA 000-52354

26-4329046

(State or other jurisdiction of (Commission File No.) (IRS Employee Identification No.) incorporation or organization)

750 3rd Avenue, 11th Floor, New York, NY 10017

(Address of Principal Executive Offices)

(212) 679-5711

(Registrant’s telephone number, including area code)

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

Common Stock, $0.001 Par Value

(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. Yes ¨ No x

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

Indicate by check mark whether the registrant (1) 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 (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 ¨

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

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

Large Accelerated Filer ¨ Accelerated Filer ¨

Non-Accelerated Filer ¨ Smaller Reporting Company x

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

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant computed by reference to the price at which the registrant's common equity, as of the last business day of the registrant's most recently completed second fiscal quarter was approximately $4,043,567

The registrant had 28,883,642 shares of common stock outstanding as of December 3, 2010.

FORWARD LOOKING STATEMENTS

This annual report contains forward-looking statements that involve risks and uncertainties. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expect", "plan", "intend", "anticipate", "believe", "estimate", "predict", "potential" or "continue", the negative of such terms or other comparable terminology. In evaluating these statements, you should consider various factors, including the assumptions, risks and uncertainties outlined in this annual report under "Risk Factors". These factors or any of them may cause our actual results to differ materially from any forward-looking statement made in this annual report. Forward-looking statements in this annual report include, among others, statements regarding our capital needs; business plans; and expectations.

While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding future events, our actual results will likely vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Some of the risks and assumptions include: our need for additional financing, our limited operating history, our history of operating losses, our exploration activities may not result in commercially exploitable quantities of ore on our mineral property, the risks inherent in the exploration for minerals such as geologic formation, weather, accidents, equipment failures and governmental restrictions, the competitive environment in which we operate, changes in governmental regulation and administrative practices, our dependence on key personnel, conflicts of interest of our directors and officers, our ability to fully implement our business plan, our ability to effectively manage our growth, and other regulatory, legislative and judicial developments.

We advise the reader that these cautionary remarks expressly qualify in their entirety all forward-looking statements attributable to us or persons acting on our behalf. Important factors that you should also consider, include, but are not limited to, the factors discussed under "Risk Factors" in this annual report.

The forward-looking statements in this annual report are made as of the date of this annual report and we do not intend or undertake to update any of the forward-looking statements to conform these statements to actual results, except as required by applicable law, including the securities laws of the United States.

AVAILABLE INFORMATION

Ruby Creek Resources Inc. files annual, quarterly and current reports, proxy statements, and other information with the Securities and Exchange Commission (the "SEC"). You may read and copy documents referred to in this Annual Report on Form 10-K that have been filed with the SEC at the SEC's Public Reference Room, 450 Fifth Street, N.W., Washington, D.C. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. You can also obtain copies of our SEC filings by going to the SEC's website at http://www.sec.gov.

REFERENCES

As used in this annual report: (i) the terms "we", "us", "our", "Ruby Creek" and the "Company" mean Ruby Creek Resources Inc.; (ii) "SEC" refers to the Securities and Exchange Commission; (iii) "Securities Act" refers to the United States Securities Act of 1933, as amended; (iv) "Exchange Act" refers to the United States Securities Exchange Act of 1934, as amended; and (v) all dollar amounts refer to United States dollars unless otherwise indicated.

TABLE OF CONTENTS

ITEM 1.	BUSINESS	5
ITEM 1A.	RISK FACTORS	17
ITEM 1B.	UNRESOLVED STAFF COMMENTS	23
ITEM 2.	PROPERTIES	23
ITEM 3.	LEGAL PROCEEDINGS	23
ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	23
ITEM 5.	MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	24
ITEM 6.	SELECTED FINANCIAL DATA	26
ITEM 7.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	26
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	32
ITEM 8.	FINANCIAL STATEMENTS	33
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	53
ITEM 9A.	CONTROLS AND PROCEDURES	53
ITEM 9B.	OTHER INFORMATION	55
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	55
ITEM 11.	EXECUTIVE COMPENSATION	59
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	61
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE	63
ITEM 14.	PRINCIPAL ACCOUNTING FEES AND SERVICES	64
ITEM 15.	EXHIBITS	65
	SIGNATURES	67

PART I

ITEM 1. BUSINESS

Name and Incorporation

The Company was originally incorporated in the Province of British Columbia, Canada on May 3, 2006. On January 29, 2009, we changed our corporate jurisdiction to the State of Nevada and established our authorized capital at 500,000,000 common shares with a par value or $0.001. We are currently considered an exploration or exploratory stage company as we are involved in the examination and investigation of land that we believe may contain valuable minerals, for the purpose of discovering the presence of commercially viable reserves of ore.

Our office is located at 750 3rd Avenue 11th Floor, New York, NY USA 10017; our telephone number is (212) 679-5711

Our Corporate History

Prior to our recent mining activities described below, we had acquired an option to purchase a group of eight mining exploration claims, known as the More Creek property, located in northwestern British Columbia, Canada. As part of its redirection to Tanzania, Ruby Creek fully relinquished its option on the interest More Creek Properties Canada .

We are considered an exploration or exploratory stage company as we are involved in the examination and investigation of land that we believe may contain valuable minerals, for the purpose of discovering the presence of ore, if any, and its extent. There is no assurance that a commercially viable mineral deposit exists on any of our mining properties, and a great deal of further exploration will be required before a final evaluation as to the economic and legal feasibility for our future exploration is determined. We have no known reserves of any type of mineral.

Our Business

The Mkuvia Gold Project

The Mkuvia Gold Project is located in the Liwale and Nachingwea Districts, Lindi Region of the United Republic of Tanzania. The project is the subject of a report titled the “Technical & Resource Report on the Mkuvia Gold Project”, prepared for our joint venture partner, Douglas Lake Minerals, by Mr. Laurence Stephenson, P.Eng. of British Columbia, Canada and Ross McMaster, MAusIMM of Queensland, Australia. Mr. Stephenson and Mr. McMaster are independent and Qualified Persons in accordance with JORC and NI 43-101. Douglas Lake has spent more than $2,100,000 in exploration and developing an understanding of the mineralization on a portion of the property while focusing on a relatively small area for mechanized production (about 10 sq km).

Our joint venture partner, Douglas Lake, has completed its technical report, reserve estimate, feasibility study and mining plan. The obligation to complete the environmental impact assessment report and mining license application has been assumed by the Ruby Creek Tz, formed on May 24, 2010 as more fully described below. Timing of the application for additional Mining Licenses will be dependent upon the results from the initial Mining License and our ability to obtain adequate financial and human resources to sustain our operations.

On November 7, 2009, the Company entered into a Purchase Agreement (the “Agreement”) with Douglas Lake Minerals for the right to acquire and develop a portion of Douglas Lake’s Mkuvia Gold Project. Pursuant to the terms of the Agreement, the Company acquired a seventy percent (70%) interest in 125 square kilometers of the 380 square kilometers Mkuvia Gold Project for total gross consideration of $3,000,000, payable over three years. In accordance with the terms of the Agreement, the Company paid $250,000 in cash initially, and upon issuance by the Company of its Notice of Satisfactory Due Diligence to Douglas Lake Minerals dated March 15, 2010 paid an additional $100,000. Additionally, the Agreement provided that within 12 months of closing, the Company has the option to increase its interest to 75 percent of the 125 square kilometers by making an additional $1,000,000 payment to Douglas Lake.

On March 7, 2010, the Company entered into an agreement for the creation of a Tanzanian Joint Venture company called Ruby Creek Resources (Tanzania) Limited, formed initially for the ownership and management of the 125 square kilometer Mkuvia Gold Project. The Joint Venture company is owned 70% by the Company, 25% by Douglas Lake and 5% by Mr. Maita Mkuvia (subject to conditions as described below), the owner of the original Prospecting Licenses. The joint venture company was officially formed in Tanzania on May 24, 2010. Ruby Creek Tz is the operating company of and holds mining rights to the 125 square kilometers of land relating to Mkuvia Gold Project acquired by the Company on November 7, 2009 as well the mining rights for the additional 255 sq km of the Mkuvia Gold Project acquired effective on June 16, 2010, as more fully described below. An additional Joint Venture Agreement was entered into by the parties with respect to the additional 255 sq km of the Mkuvia Gold Project effective on May 24, 2010 for the development rights (collectively the “JVA”). Ruby Creek Tz assumed control of the permitting and licensing processes. The JVA provides that Maita Mkuvia’s 5% interest shall vest when Ruby Creek Tz obtains a mining license over a portion of the area covered by the Prospecting Licenses relating to the entire project and a retention license over the balance for the area not covered by the initial mining license.

As a result of the foregoing, the Company controls the exclusive mineral and mining rights to the entire 380 square kilometers of the Mkuvia Gold Project.

Among other conditions, with respect to the entire 380 sq km of the Project, we also have the right to increase our interest from 70% to 75% for an aggregate of $2,000,000 ($1 million with respect to the initial 125 sq km acquisition and $1 million with respect to the remaining 255 sq km).

In all cases, the original owner of the prospecting licenses, Mr. Maita Mkuvia retains a 3 percent Net Smelter Royalty as per the original agreement between Mr. Maita and Douglas Lake.

Location and Access

The Mkuvia Gold Project, consists of 380 square kilometers located in the Nachingwea District, Lindi Region of the United Republic of Tanzania, and is approximately 140 kilometers west of Nachingwea town. The Lindi Region is one of the three regions forming Southern Zone of United Republic of Tanzania, the other regions being Mtwara and Ruvuma. The Mtwara and Ruvuma regions border northern Mozambique and eastern Malawi.

Nature of the Prospecting Licenses

According to the Technical & Resource Report on the Mkuvia Alluvial Gold Project prepared for our joint venture partner, by Laurence Stephenson, P.Eng. and Ross McMaster, MAusIMM, to date, the known gold mineralization in Mkuvia Property occurs as alluvial placer deposits comprising of a significant, but unquantified accumulation of gold in alluvium hosted by: 1) reworked palaeo-placer by the Mbwemkuru River and its tributaries, and 2) an over 10 meter thick zone of palaeo-placer sand and pebble beds non-conformably overlying biotite schist, gneiss, quartzite, garnet-amphibolite and granitoids. The latter comprises a poorly sorted palaeo-beach placer plateau extending over 29 km along a NW-SE direction and ~5 km wide along a NE-SW direction (Figures 5 & 6). In addition there are extensive troughs with similar continental alluvium further west in the Karroo Basin. It is however notable that at the highest point on the property, pebble conglomerates were noted on the surface that have been worked sporadically by the artisanal miners suggesting that gold is present. This is consistent with the proposition that the mineralization is associated with a wide spread beach placer environment. Gold-bearing alluvium along the Mbwemkuru River occurs within a 0.35 to 2.0 m thick zone between the bedrock and sandy-gravelly material related to present drainage active channels and terraces. This zone contains an estimated 1.0 grams per cubic meter that the small-scale miners are currently reportedly recovering.

The gold is very fine-grained in general, suggesting a distal source, although some coarser-grained flakes are present. The gold is associated with the black sands that comprise fine-grained ilmenite and pink garnet and minor magnetite. These may be represented by distinct ferruginous layers in the conglomerate sequence. The minerals in the black sand are consistent with the beach placer model.

Ownership Interest in the Prospecting Licenses

Ruby Creek will pay a 3% net smelter royalty return to Mr. Mkuvia Miata, the original property prospecting license owner.

Pursuant to our November 7, 2009 Purchase Agreement for the acquisition of 125 sq km of the Mkuvia Gold Project, we have the following remaining obligations to Douglas Lake

1.	$400,000 upon Closing and when Ruby Creek receives the first Mkuvia Mining License.

2.	$750,000 payable within 12 months of Closing.

3.	$750,000 payable within 24 months of Closing.

4.	$750,000 payable within 36 months of Closing. Ruby Creek at its sole discretion may elect to make this final payment in common shares of Ruby Creek. The Ruby Creek shares would be valued at the 10 day average trading price immediately prior to the 36 month due date.

For financial reporting purposes, the series of payments due after one year in the gross amount of $2,250,000 were recorded at their fair value of $1,694,042 determined utilizing a discount rate of 12% per annum. Additionally, the Agreement provides that within 12 months of receipt of the initial mining license, the Company has the option to increase its interest to 75% of the 125 square kilometers by making an additional $1,000,000 payment to Douglas Lake. In all cases, the original owner of the four prospecting licenses, Mr. Maita Mkuvia, retains a 3 percent Net Smelter Royalty as per the original agreement between Mr. Maita and Douglas Lake.

Effective on June 16, 2010 pursuant to a second Puchase Agreement, the Company acquired the exclusive mineral and mining rights to 255 square kilometers of the Mkuvia Gold Project in Tanzania from Douglas Lake for a total consideration of $6,000,000. This is payable over a three-year period in a combination of cash and common shares of the Company. Upon execution, the Company paid $200,000; in July 2010 paid an additional $150,000 and issued 4,000,000 common shares of the Company with an agreed upon value of $3,200,000 at $0.80 per share (fair market value of these shares was $2,120,000 on the transaction date) which was paid within 30 days of receipt of governmental Certificates of Acknowledgement; $450,000 on June 1, 2011; $1,000,000 on June 1, 2012; and $1,000,000 on June 1 2013. The Company has the option to satisfy the final $1,000,000 payment due on June 1, 2013 by issuing shares of its common stock valued at the Volume Weighted Average Price (“VWAP”) for the 20 days immediately preceding the payment date. Scheduled cash payments can be accelerated in the event of future equity financing or obtaining additional mining licenses. The new Purchase Agreement also provides that the Company has the option to increase its interest from the current 70%, to 75% of the Project by making an additional $1,000,000 payment to Douglas Lake. Therefore, in total with respect to the entire 380 sq km of the Project, Ruby Creek has the option to increase its interest from 70% to 75% for $2,000,000. As a result of this agreement, in combination with the initial purchase agreement described above, the Company controls the exclusive mineral and mining rights to the entire 380 square kilometers of the Mkuvia Gold Project.

Prior Exploration of Our Joint Venture Prospecting Licenses

There has been little or no exploration of the Mkuvia Gold project prior to Douglas Lake’s involvement in April of 2008.

Present Condition and Current State of Exploration

The property sections that are the subject of our prospecting licenses are currently being worked by local artisan miners. The property is considered undeveloped and does not contain any open-pit or underground mines other than artisanal operations. Currently there is no plant or equipment located on the property. We are presently negotiating with several equipment contractors for equipment to be delivered to the property by the end of our current fiscal year and to commence test mining activities, although there can be no assurance that this will occur.

Kapinga

On September 9, 2010, Ruby Creek signed an option to acquire the exclusive mineral and mining rights to the 340 sq km Kapinga property for a fixed purchase price of $500,000. Through the Purchase Agreement, Ruby Creek has been granted an exclusive option for access to and exploration of the Kapinga property located immediately adjacent to and south of its Mkuvia Gold Project in Tanzania. Should Ruby Creek exercise its Purchase option in the six month period, the Kapinga Property will be transferred into our joint venture company Ruby Creek Gold (Tanzania) Limited. Ruby Creek will own 85% of the joint venture, Mr. Kapinga 10% and other parties 5%. According to the terms of the agreement, if Ruby Creek exercises its right to purchase the property within six months of signing, a total of $250,000 will be paid at that time, in addition to certain share issuances required by the agreements. The final $250,000 payment will be made when the first mining license is issued. Payments can be made in cash, in common shares of the Company, or a combination of both.

Both the Kapinga Project and the Company’s Mkuvia Gold Project are located in the Liwale and Nachingwea Districts, Lindi Region of the United Republic of Tanzania. The existing Ruby Creek Mkuvia mining camp will be used as base camp for the Kapinga exploration.

Tanzania

Overview

Tanzania is located in Central East Africa with about 1,400km of coastline along the Indian Ocean. Lying just south of the equator, Tanzania is East Africa's largest country. It is well situated geographically bordering Burundi, Kenya, Malawi, Mozambique, Rwanda, Uganda, Zambia and the Democratic Republic of Congo. It is the economic hub of East Africa providing natural access and commercial links to eight countries. Tanzania is the right platform for businesses vying to develop or expand opportunities in the wider region. The legal system is based on English common law.

Natural resources include: natural gas, gold, diamonds, nickel, cobalt, copper and other base metals, gemstones (apatite, niobium, tanzanite, corundum) iron ore, coal, hydropower, tin, phosphates, fisheries and forests. Currently Tanzania is the 3rd largest gold producer in Africa.

History:

Tanzania is the site of a 30 mile stretch of the Olduvai Gorge often referred to as the “Cradle of Mankind”. It was here, that work started by Louis and Mary Leakey in the early 1930’s, uncovered evidence that it was in this part of Africa that the human race may first have emerged.

Arab traders first began to colonize the area in 700AD. Portuguese explorers reached the coastal regions in 1500 and held some control until the 17th century. Tanganyika became the colony of German East Africa in 1885. After World War I, it was administered by Britain under a League of Nations mandate and later as a UN trust territory.

The Portuguese made Zanzibar one of their tributary regions in 1503 and later established a trading post. Zanzibar was declared independent of Oman in 1861 and, in 1890 became a British protectorate. On April 26, 1964, the two nations merged into the United Republic of Tanganyika and Zanzibar. The name was changed to Tanzania six months later. Julius Nyerere became its first Prime Minister on December 9, 1961 and a year later was elected the nation’s first president when the country became a republic.

In Nov. 1985, Nyerere stepped down as president. Ali Hassan Mwinyi, his vice president, succeeded him. Running unopposed, Mwinyi was elected president. Shortly thereafter plans were announced to study the benefits of instituting a multiparty democracy, and in Oct. 1995 the country's first multiparty elections since independence took place. Nyerere died in 1999 and in October of 2009, Nyerere was named "World Hero of Social Justice" by the United Nations General Assembly.

Political

Tanzania is a democracy with a republican style government. The President and National Assembly members are elected concurrently by direct popular vote for 5-year terms. The President appoints a Prime Minister who serves as the government's leader in the National Assembly. The President selects his cabinet from among National Assembly members. The Constitution also empowers him to nominate 10 non-elected members of Parliament, who also are eligible to become cabinet members.

The unicameral National Assembly has up to 325 members: the Attorney General, the Speaker, five members elected from the Zanzibar House of Representatives to participate in the Parliament, 75 special women's seats apportioned among the political parties based on their election results, 233 constituent seats from the mainland, and up to 10 members nominated by the President. In 2006, the President nominated seven members and the Speaker was elected to a constituent seat, bringing the total number of Members of Parliament to 320. The ruling party, CCM, holds about 82% of the seats in the Assembly. Laws passed by the National Assembly are valid for Zanzibar only in specifically designated union matters.

Zanzibar's House of Representatives has jurisdiction over all non-union matters. There are currently 81 members in the House of Representatives in Zanzibar: 50 elected by the people, 10 appointed by the President of Zanzibar, 5 ex officio members, an Attorney General appointed by the President, and 15 special seats allocated to women. Zanzibar's House of Representatives can make laws for Zanzibar without the approval of the union government as long as it does not involve union-designated matters. The terms of office for Zanzibar's President and House of Representatives also are 5 years. The semiautonomous relationship between Zanzibar and the union is a relatively unique system of government.

Tanzania has a five-level judiciary combining the jurisdictions of tribal, Islamic, and British common law. Appeal is from the primary courts through the district courts, resident magistrate courts, to the high courts, and the high courts to the Court of Appeals. District and resident court magistrates are appointed by the Chief Justice, except for judges of the High Court and Court of Appeals, who are appointed by the president. The Zanzibari court system parallels the legal system of the union, and all cases tried in Zanzibari courts, except for those involving constitutional issues and Islamic law, can be appealed to the Court of Appeals of the union. A commercial court was established on the mainland in September 1999 as a division of the High Court.

For administrative purposes, Tanzania is divided into 26 regions - 21 on the mainland, 3 on Zanzibar, and 2 on Pemba. Ninety-nine district councils have been created to further increase local authority. These districts are also now referred to as local government authorities. Currently there are 114 councils operating in 99 districts, 22 are urban and 92 are rural. The 22 urban units are classified further as city (Dar es Salaam and Mwanza), municipal (Arusha, Dodoma, Iringa, Kilimanjaro, Mbeya, Morogoro, Shinyanga, Tabora, and Tanga), and town councils (the remaining 11 communities).

Principal Government Officials

President Vice President Prime Minister President of Zanzibar Minister of Foreign Affairs Ambassador to the United States

From independence in 1961 until the mid-1980s, Tanzania was a one-party state, with a socialist model of economic development. Beginning in the mid-1980s, under the administration of President Ali Hassan Mwinyi, Tanzania undertook a number of political and economic reforms. In January and February 1992, the government decided to adopt multiparty democracy. Legal and constitutional changes led to the registration of 11 political parties. Two parliamentary by-elections in early 1994 were the first-ever multiparty elections in Tanzanian history.

In October 2000, Tanzania held its second multi-party general elections. The ruling CCM party's candidate, Benjamin W. Mkapa, defeated his three main rivals, winning the presidential election with 71% of the vote. In the parliamentary elections, CCM won 202 of the 232 elected seats. In the Zanzibar presidential election, Abeid Amani Karume, the son of former President Abeid Karume, defeated CUF candidate Seif Sharif Hamad. The election was marred by irregularities, especially on Zanzibar.

In October 2001, the CCM and the CUF parties called for electoral reforms on Zanzibar that led to the presidential appointment of an additional CUF official to become a member of the Union Parliament. Changes to the Zanzibar Constitution in April 2002 allowed both the CCM and CUF parties to nominate members to the Zanzibar Electoral Commission. In May 2003, the Zanzibar Electoral Commission conducted by-elections to fill vacant seats in the parliament. Observers considered these by-elections, the first to be free, fair, and peaceful.

In February 2008, President Kikwete nominated and the National Assembly approved a new cabinet. Mizengo Kayanza Peter Pinda was selected as the new Prime Minister. President Kikwete, Vice President Ali Mohamed Shein, Prime Minister Mizengo Kayanza Peter Pinda, and National Assembly members will serve until the next general elections.

Government steps to improve the business climate include redrawing tax codes, floating the exchange rate, licensing foreign banks, and creating an investment promotion center to cut red tape have greatly improved the business regime. In terms of mineral resources and the largely untapped tourism sector, Tanzania is becoming a viable and attractive market.

The Government of Zanzibar legalized foreign exchange bureaus on the islands before mainland Tanzania moved to do so. The effect was to increase the availability of consumer commodities. The government has also established a free port area, which provides the following benefits: contribution to economic diversification by providing a window for free trade as well as stimulating the establishment of support services; administration of a regime that imports, exports, and warehouses general merchandise; adequate storage facilities and other infrastructure to cater for effective operation of trade; and creation of an efficient management system for effective re-exportation of goods.

Foreign Relations

During the Cold War era, Tanzania played an important role in regional and international organizations. Tanzania's first president, Julius Nyerere, was one of the founding members of the Non-Aligned Movement. Additionally, Tanzania played an active role in the front-line states, the G-77, and the Organization of African Unity (OAU). One of Africa's best-known elder statesmen, Nyerere was personally active in many of these organizations, and served as chairman of the OAU (1984-85) and chairman of six front-line states concerned with eliminating apartheid in Southern Africa. Nyerere's death, in October 1999, is still commemorated annually.

Tanzania enjoys good relations with its neighbors in the region and in recent years has been an active participant in efforts to promote the peaceful resolution of disputes. Tanzania helped to broker peace talks to end the conflict in Burundi; a comprehensive cease-fire was signed in Dar es Salaam on September 7, 2006. Tanzania also supports the Lusaka agreement concerning the conflict in the Democratic Republic of the Congo. In March 1996, Tanzania, Uganda, and Kenya revived discussion of economic and regional cooperation. These talks culminated with the signing of an East African Cooperation Treaty in September 1999; a treaty establishing a customs union was signed in March 2004. The customs union went into effect January 1, 2005 and, in time, should lead to complete economic integration. On July 1, 2007 Rwanda and Burundi joined the East African Community (EAC) and the customs union as full members. Tanzania is the only country in East Africa which also is a member of the Southern Africa Development Community (SADC). In January 2005, Tanzania became a non-permanent member of the UN Security Council, serving a two-year term that ended on December 31, 2006. President Kikwete was selected to chair the African Union for a one-year term from February 2008-2009.

U.S.-Tanzanian Relations

The U.S. has historically enjoyed very good relations with Tanzania. The relationship became closer after terrorists bombed the U.S. Embassy in Dar es Salaam on August 7, 1998. With the election of President Kikwete, the relationship has blossomed into warmer relations than at any time since Tanzania achieved independence. In February 2008, President Bush made an official four-day visit to Tanzania. President Kikwete, who has visited the U.S. repeatedly, made a reciprocal official visit to Washington in August 2008. In May 2009, President Kikwete became the first African president to meet President Barack Obama during a visit to Washington.

The U.S. Government provides assistance to Tanzania to support programs in the areas of peace and security, democracy, health, education, economic growth, and natural resource management. Tanzania is a major recipient of funding for the President's Emergency Plan for AIDS Relief (PEPFAR) and the President's Malaria Initiative (PMI). In September 2008, Tanzania's $698 million Millennium Challenge Compact entered into force. The Peace Corps program, revitalized in 1979, provides assistance in education through the provision of teachers. Peace Corps also is assisting in health and environment sectors. Currently, about 147 volunteers are serving in Tanzania.

Tanzania maintains an embassy in the United States.

Geology Of Tanzania

Definitions

Craton: The term craton is used to distinguish the stable portion of the continental crust from regions that are more geologically active and unstable. Cratons can be described as shields, in which the basement rock crops out at the surface, and platforms, in which the basement is overlain by sediments and sedimentary rock.

Proterozoic: The Proterozoic is a geological eon extending from 2,500 million years ago to 542 million years ago. It represents a period before the first abundant complex life on Earth.

Volcaniclastics: Clastic rocks are composed primarily of volcanic materials. Where the volcanic material has been transported and reworked through mechanical action, such as by wind or water, these rocks are termed volcaniclastic.

Graben: A graben is a depressed block of land bordered by parallel faults producing a valley with a distinct cliff or escarpment on each side.

Archean: The Archean is a geologic eon before the Proterozoic.

Ubendian System: The Ubendian orogeny was a phase of mountain building whose precise dates are uncertain but which probably occurred about 1800–1700 million years ago, producing what is now a NW—SE belt in southern Tanzania, northern Zambia, and the eastern Congo.

Usagaran System: Similar to the Ubendian, but of a different time period. The Usagaran occasionally hosts deposits of semi-precious and precious stones. The most famed of these is tanzanite.

Karoo System: The Karoo System is a geologic system of rock formations in Africa covering 1,500,000 square km and extending from the Equator south to the Cape of Good Hope. The Karoo System spans a period of about 100 million years, starting from the Permian or Carboniferous Period 300 million years ago) to the Late Triassic Epoch 228-200 million years ago). The geology of the Great Karoo consists largely of horizontally-bedded shales and sandstones

Geology

Tanzania is dominated by a large mineralized Precambrian craton comprised of formations greater than two billion years old and rimmed by Proterozoic crystalline rocks. Younger sediments and volcaniclastics of recent times occupy the rifted grabens, coastal plains and inland basins. The pre-Tertiary geology of Tanzania is comprised of three main units: an Archaean shield, Proterozoic metamorphic and sedimentary rocks and Karoo sediments.

The Archaean Shield or Tanzania Craton occupies the central-western part of the country. It is comprised of high-grade metamorphic rocks and granite-greenstone belts in its northern portion. The greenstone belts are host to the major gold deposits, which are currently the subject of intense exploration activity and mine development. The Tanzania Craton is surrounded by two lower Proterozoic belts of crystalline high-grade metamorphic rocks, the Ubendian system to the west and the Usagaran System to the east. The initiation of the East African Rift system led to the development of graben structures within the Usagaran-Ubendian rocks in southeast Tanzania. The Karoo rocks are a sedimentary system that developed within intermontain basins formed by grabens. They comprise continental sandstones, siltstones and shales of Permian to Lower Jurassic ages. Total thickness of sediments is believed to be up to 6,000 meters. The Luwegu Basin is the largest of the Karoo basins. Other basins include those at Ruhuhu and the small basin at Mbamba Bay.

The Karoo system is prevalent all over southern Africa, reaching its northernmost outcrop in Tanzania. The Karoo system exhibits a number of features that are favorable for the development of sandstone-hosted uranium deposits similar to other uranium bearing regions of the world. The Karoo rocks of South Africa were explored for sandstone-hosted uranium deposits in the late 1970’s and 1980’s, leading to the discovery of a number of significant deposits within the Beaufort Basin.

Tanzania, with a sequence of rocks spanning in age from Archaean to Recent, is rich in a wide range of minerals. Gold and diamonds has always been the mainstay of the country’s mineral production. Other minerals of economic interest include ferrous metals, base metals and platinum group metals (“PGMs”), tungsten, gemstones, phosphates, salt, coal, kaolin, building materials and tin. Geologically, both the Archaean and Proterozoic rocks are prospective for base metals and PGMs.

Tanzania is home to some of the largest mines in production today, including Barrick’s Bulyanhulu underground gold mine, currently with 12 million ounces of proven and probable gold reserves. In 2008, the mine produced 200,000 ounces of gold at total cash costs of $620 per ounce. Tanzania also holds AngloGold Ashanti’s Geita open pit gold mine, currently with 12.4 million ounces of proven and probable gold reserves. In 2007, the mine produced 327,000 ounces of production at total cash costs of $601 per ounce. Mining contributes 2.3 percent of Tanzania’s GDP presently, a figure projected to grow to 10 percent by 2025. Tanzania has become the investment destination of choice for some of the world's major mining companies. The cornerstone of the rebirth of the central African state has been a reworking of Tanzania's mining legislation. The new regulatory framework around the country's resource sector has been customized to entice global mining companies to sink dollars into fixed investment in the country. As with many other southern and central African states, Tanzania is well endowed with a wealth of minerals; gold, copper, zinc, diamonds and of course, tanzanite and the government is eager to capitalize on the country's natural riches.

Tanzania has become the investment destination of choice for some of the world's major mining companies. The cornerstone of the rebirth of the central African state has been a reworking of Tanzania's mining legislation. The new regulatory framework around the country's resource sector has been customized to entice global mining companies to sink dollars into fixed investment in the country. As with many other southern and central African states, Tanzania is well endowed with a wealth of minerals; gold, copper, zinc, diamonds and of course, tanzanite and the government is eager to capitalize on the country's natural riches.

Tanzanian Operations

Ruby Creek, through its 70% owned Tanzanian subsidiary, Ruby Creek Resources (Tanzania) Limited (“Ruby Creek Tanzania”), has acquired and is developing the Mkuvia Gold Project, a 380 sq km property hosting extensive artisanal gold production. The Mkuvia was acquired in two transactions, in November 2009 and June 2010. A base camp of operations has been established, gold mining equipment has been delivered and testing of mining equipment and recovery systems has commenced.

Having achieved its initial goals for 2010 early, Ruby Creek began its next phase of expansion. Effective on September 9, 2010, Ruby Creek, through its 85% owned Tanzanian subsidiary, Ruby Creek Gold (Tanzania) Limited (“Ruby Creek Gold”), acquired the mineral rights to a 340 sq km property immediately south and adjacent to the Mkuvia, subject to our satisfactory due diligence. It is our intention that the Ruby Creek Mkuvia Camp will service both properties.

The Purchase and Joint Venture Agreements evidencing Ruby Creek’s interest in both properties have been executed and registered with the Ministry of Energy and Mines.

Ruby Creek is examining additional potential property acquisitions in this region, which the Company has named the “Plateau of Gold”.

Through December 2010, Ruby Creek Tanzania has established a fully staffed base camp for 50 personnel including its own camp security, road improvements, satellite dish for voice and internet communications, independent fresh water wells, generating power, and administrative and accounting processes at the Ruby Creek Mkuvia Camp. Equipment in support of test mining has been delivered and equipment testing commenced in September 2010. Expansion is currently underway including plans for solar power, a camp capacity increase to 75 personnel and a an airstrip.

General Geological Map of Tanzania

Competition

We are a junior mineral resource exploration company. We compete with other mineral resource exploration companies for financing and for the acquisition of new mineral properties. Many of the mineral resource exploration companies with whom we compete have greater financial and technical resources than those available to us. Accordingly, these competitors may be able to spend greater amounts on acquisitions of mineral properties of merit, on exploration of their mineral properties and on development of their mineral properties. In addition, they may be able to afford more geological expertise in the targeting and exploration of mineral properties. This competition could result in competitors having mineral properties of greater quality and interest to prospective investors who may finance additional exploration and development. This competition could have an adverse impact on our ability to achieve the financing necessary for us to conduct further exploration of our joint venture mineral property.

We will also compete with other junior mineral exploration companies for financing from a limited number of investors that are prepared to make investments in junior mineral exploration companies. The presence of competing junior mineral exploration companies may have an adverse impact on our ability to raise additional capital in order to fund our exploration programs if investors are of the view that investments in competitors are more attractive based on the merit of the mineral properties under investigation and the price of the investment offered to investors.

We also compete with other junior and senior mineral companies for available resources, including, but not limited to, professional geologists, camp staff, helicopter or float planes, mineral exploration supplies and drill rigs.

Employees

In our corporate office in New York we employ the services of five individuals on a part or full time basis, including the CEO, CFO, Corporate Communications Director and two part time administrative and accounting personnel. We plan to retain independent geologists and consultants on a contract basis to conduct the work programs on our mineral property in order to develop our plan of operations. We employ in our Ruby Creek Tanzania operations 1 full time administrator and approximately 50 additional personnel at our operations at our permanent camp on the Mkuvia Gold Property. These personal are engaged in exploration, security, facilities and equipment services, facilities and food provisioning.

Research and Development Expenditures

We have not incurred any research or development expenditures since our incorporation.

Subsidiaries

As a result of the acquisition of the Mkuvia Gold Property, we have formed an operating company in Tanzania in which we own a 70% controlling interest, Ruby Creek Resources (Tanzania) Ltd. We have included 100% of its assets, liabilities and results of operations results since its inception in our results of operations for our year ended August 31, 2010 since we are responsible for providing operating capital and management, and have the right to recover these costs from future operations. We have also formed Ruby Creek Gold (Tanzania) Limited to operate the Kapinga Property described above, in which we would own an 85% controlling interest should that transaction close.

Patents and Trademarks

We do not own, either legally or beneficially, any patent or trademark.

ITEM 1A. RISK FACTORS

RISK FACTORS

An investment in our common stock involves a number of very significant risks. You should carefully consider the following risks and uncertainties in addition to other information in the Company’s SEC filings in evaluating our Company and its business before purchasing shares of our common stock. Our business, operating results and financial condition could be seriously harmed due to any of the following risks. The risks described below may not be all of the risks facing our Company. Additional risks not presently known to us or that we currently consider immaterial may also impair our business operations. You could lose all or part of your investment due to any of these risks.

Risks associated with our Company

If we do not obtain additional financing, our business plan may fail.

At August 31, 2010 we had cash of $325,756 and a working capital deficit of $772,620. Accordingly, we have insufficient funds to enable us to complete the required phases of our acquisition or exploration program and satisfy our on-going general and administrative expenses over the next twelve months. During the next twelve-month period, we anticipate that we will begin to generate revenues through operations, but which may not be at levels sufficient to support operations. As such, we will be required to obtain additional financing in order to complete our planned acquisitions and operations over the next twelve months or any additional exploration of our joint venture projects to determine whether any mineral deposit exists on these claims. We currently do not have any arrangements for financing and we may not be able to obtain financing when required. Obtaining additional financing would be subject to a number of factors. These factors may make the timing, amount, terms or conditions of additional financing unavailable to us. If we are unable to obtain additional financing when needed, our business plan may fail.

Because we have only recently commenced business operations, we face a high risk of business failure and this could result in a total loss of your investment.

We were incorporated on May 3, 2006, and to date have been involved primarily in organizational activities, evaluating resource projects, establishing operating capabilities in Tanzania, recording the principal purchase agreements and joint venture agreements with the Tanzanian authorities and more recently, establishing a camp, supporting infrastructure and setting up test mining equipment. We have not earned any revenues and have not achieved profitability. Potential investors should be aware of the difficulties normally encountered by new mineral exploration companies and the high rate of failure of such enterprises. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the exploration of the projects that we are undertaking. These potential problems include, but are not limited to, unanticipated problems relating to exploration and additional costs and expenses that may exceed current estimates. We have no history upon which to base any assumption as to the likelihood that our business will prove successful, and we can provide no assurance to investors that we will generate any operating revenues or ever achieve profitable operations. If we are unsuccessful in addressing these risks, our business may fail and you may lose your entire investment in our shares.

Because we do not have any revenues, we expect to incur operating losses for the foreseeable future.

We have never earned revenues and we have never been profitable. Prior to completing exploration on the properties underlying our joint venture projects, we anticipate that we may incur increased operating expenses without realizing any revenues. We may incur significant losses into the foreseeable future. If we are unable to generate financing to continue the exploration of our joint venture projects, we may fail and you may lose your entire investment in our shares.

We have yet to attain profitable operations and because we will need additional financing to fund our expanded exploration activities, our accountants believe there is substantial doubt about our ability to continue as a going concern.

We have incurred an accumulated deficit of $2,996,671 for the period from May 3, 2006 (inception) to August 31, 2010, and have no revenues to date. Our future viability is dependent upon our ability to obtain financing and upon future profitable operations from the development of our joint venture projects. These factors raise substantial doubt that we will be able to continue as a going concern. Our financial statements included with the annual report of August 31, 2010 have been prepared assuming that we will continue as a going concern. Our auditors have made reference to the substantial doubt as to our ability to continue as a going concern in their audit report on our audited financial statements for our fiscal year ended August 31, 2010. If we are not able to achieve profitability or obtain additional financing, then we may not be able to continue as a going concern and our financial condition and business prospects may be adversely affected.

If our costs of the next stage of exploration that we are currently conducting are greater than anticipated, then we may not be able to complete the exploration program for our joint venture projects without additional financing, of which there is no assurance that we would be able to obtain.

We are proceeding with the next stage of exploration on our joint venture projects. However, there is no assurance that our actual costs will not exceed the budgeted costs. Factors that could cause actual costs to exceed budgeted costs include increased prices due to competition for personnel and supplies, unanticipated problems in completing the exploration program and delays experienced in completing the exploration program. Increases in exploration costs could result in us not being able to carry out our exploration program without additional financing. There is no assurance that we would be able to obtain additional financing in this event.

Because of the speculative nature of exploration of mining properties, there is substantial risk that no commercially exploitable minerals will be found and our business will fail.

We are in the equipment testing stage of exploration of one of our joint venture prospecting projects and in the initial stages of due diligence in another, and thus have no way to evaluate the likelihood that we will be successful in establishing commercially exploitable reserves of minerals on our projects. Potential investors should be aware of the difficulties normally encountered by new mineral exploration companies and the high rate of failure of such enterprises. The search for valuable minerals as a business is extremely risky. We may not find commercially exploitable reserves of minerals on our joint venture projects. Exploration for minerals is a speculative venture necessarily involving substantial risk. The expenditures being made by us on our exploration programs may not result in the discovery of commercial quantities of ore. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the exploration of the joint venture projects that we are undertaking. Problems involved in mineral exploration often result in unsuccessful exploration efforts. In such a case, we may be unable to complete our business plan.

We cannot accurately predict whether commercial quantities of ores will be established.

Whether an ore body will be commercially viable depends on a number of factors beyond our control, including the particular attributes of the deposit such as size, grade and proximity to infrastructure, as well as mineral prices and government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. We cannot predict the exact effect of these factors, but the combination of these factors may result in a mineral deposit being unprofitable which would have a material adverse effect on our business. We have no mineral producing properties at this time. We have not defined or delineated any proven or probable reserves or resources on any of our properties.

We may not be able to establish the presence of minerals on a commercially viable basis.

We are incurring substantial expenditures in an attempt to establish the economic feasibility of mining operations by establishing ore reserves through drilling and other techniques, developing metallurgical processes to extract metals from ore, designing facilities and planning mining operations. The economic feasibility of a project depends on numerous factors beyond our control, including the cost of mining and production facilities required to extract the desired minerals, the total mineral deposits that can be mined using a given facility, the proximity of the mineral deposits to a user of the minerals, and the market price of the minerals at the time of sale. Our existing or future exploration programs or acquisitions may not result in the identification of deposits that can be mined profitably and you could lose your entire investment.

Because of the inherent dangers involved in mineral exploration, there is a risk that we may incur liability or damages as we conduct our business.

The search for valuable minerals involves numerous hazards. In the course of carrying out exploration of our joint venture projects, we may become subject to liability for such hazards, including pollution, cave-ins and other hazards against which we cannot insure or against which we may elect not to insure. We currently have no such insurance nor do we expect to get such insurance for the foreseeable future. If a hazard were to occur, the costs of rectifying the hazard may exceed our asset value and cause us to liquidate all of our assets, resulting in the loss of your entire investment in our shares.

If we discover commercial reserves of precious metals on the property underlying our joint venture projects, we can provide no assurance that we will be able to successfully advance the projects into commercial production.

One property underlying our joint venture project does contain any known bodies of ore, and one does not. If our exploration programs are successful in establishing ore of commercial tonnage and grade, we will require additional funds in order to advance the joint venture projects into commercial production. In such an event, we may be unable to obtain any such funds, or to obtain such funds on terms that we consider economically feasible, and you may lose your entire investment in our shares.

Our exploration activities are subject to various local laws and regulations.

We are subject to local laws and regulation governing the exploration, development, mining, production, importing and exporting of minerals; taxes; labor standards; occupational health; waste disposal; protection of the environment; mine safety; toxic substances; and other matters. We require licenses and permits to conduct exploration and mining operations. Amendments to current laws and regulations governing operations and activities of mining companies or more stringent implementation thereof could have a material adverse impact on our Company. Applicable laws and regulations will require us to make certain capital and operating expenditures to initiate new operations. Under certain circumstances, we may be required to close an operation once it is started until a particular problem is remedied or to undertake other remedial actions. This could have a material adverse effect on our results and financial condition.

If we do not obtain clear title to our joint venture projects or properties, our business may fail.

While we have received proof of current title ownership in the name of the mineral claim optionor and we have received a favorable opinion as to the validity of the various agreements by which we have acquired our current mineral and mining rights, this should not be construed as a guarantee of title. The properties underlying our joint venture projects may be subject to prior unregistered agreements or transfers or land claims, and title may be affected by undetected defects. Acquisition of title to mineral properties is a very detailed and time-consuming process, and title to our properties may be affected by prior unregistered agreements or transfer, or undetected defects. Some of our joint venture projects are currently subject to renewal by the Ministry of Energy and Minerals of Tanzania. There is a risk that we may not have clear title to all our mineral property interests, or they may be subject to challenge or impugned in the future, which would have a material adverse effect on our business.

Our mineral property interests may be subject to other mining licenses.

Local residents in Tanzania may have registered the right to mine in small areas located within a prospecting license; such rights are evidenced by a primary mining license. There can be no guarantee that we will be successful in negotiating with primary mining license owners to acquire their rights if we determine that we need their permission to drill or mine on the land covered by such mining licenses.

Our joint venture partners may have business interests, which could be adverse to our interests.

Our joint venture partners in our Tanzanian subsidiary, Ruby Creek Resources (Tanzania) Limited may have interests in projects in which we do not have an interest. These projects may be on parcels adjacent to or near the Mkuvia gold project. In addition there were prior negotiations conducted by the original property owner (and our current partner), which could have been and may result in conflicts with the current interests the Company. We are unable to ascertain these at this time and conflicts of interest may remain.

We are subject to risks inherent in the mining industry and at present we do not have any insurance against such risks. Any losses we may incur that are associated with such risks may cause us to incur substantial costs, which will have a material adverse effect upon our results of operations.

The business of mining for metals is generally subject to a number of risks and hazards including environmental hazards, industrial accidents, labor disputes, unusual or unexpected geological conditions, pressures, cave-ins, changes in the regulatory environment and natural phenomena such as inclement weather conditions, floods, and earthquakes. At present we do not intend to obtain insurance coverage and even if we were to do so, no assurance can be given that such insurance will continue to be available or that it will be available at economically feasible premiums. Insurance coverage may not continue to be available or may not be adequate to cover any resulting liability. Moreover, insurance against risks such as environmental pollution or other hazards as a result of exploration and production is not generally available to companies in the mining industry on acceptable terms. We might also become subject to liability for pollution or other hazards which may not be insured against or which we may elect not to insure against because of premium costs or other reasons. Losses from these events may cause us to incur significant costs that could have a material adverse effect upon our financial performance and results of operations.

We rely on key members of management, the loss of whose services would have a material adverse effect on our success and development.

Our success depends to a certain degree upon certain key members of management and consultants. These individual are a significant factor in our growth and success. The loss of the service of these members could have a material adverse effect on our success and development.

We rely on consultants, geologists and engineers to perform our exploration activities.

Substantial expenditures are required to develop the exploration infrastructure at any site chosen for exploration, to establish ore reserves, to carry out environmental and social impact assessments, and to develop metallurgical processes to extract the metal from the ore. We may not be able to discover minerals in sufficient quantities to justify commercial operation, and we may not be able to obtain funds required for exploration on a timely basis. Accordingly, you could lose your entire investment.

If we must find another property and because of the fiercely competitive nature of the mining industry, we may be unable to maintain or acquire attractive mining properties on acceptable terms, which will materially affect our financial and other condition.

We operate in a highly competitive industry, competing with other mining and exploration companies, and institutional and individual investors, which are actively seeking minerals exploration properties throughout the world together with the equipment, labor and materials required to exploit such properties. Many of our competitors have financial resources, staff and facilities substantially greater than ours. The principal area of competition is encountered in the financial ability to cost effectively acquire prime minerals exploration prospects and then exploit such prospects. Competition for the acquisition of minerals exploration properties is intense, with many properties available in a competitive bidding process in which we may lack technological information or expertise available to other bidders. Therefore, we may not be successful in acquiring, exploring and developing profitable properties in the face of this competition. No assurance can be given that a sufficient number of suitable minerals exploration properties will be available for acquisition, exploration and development.

We have uninsurable risks.

We may be subject to unforeseen hazards such as unusual or unexpected geological formations and other conditions. We may become subject to liability for pollution, cave-ins or hazards against which we cannot insure or against which we may elect not to insure. The payment of such liabilities may have a material adverse effect on our financial position.

We are subject to the volatility of metal and mineral prices.

The economics of developing metal and mineral properties are affected by many factors beyond our control including, without limitation, the cost of operations, variations in the grade ore or resource mined, and the price of such resources. The market prices of the metals for which we are exploring are highly speculative and volatile. Depending on the price of gold or other resources, we may determine that it is impractical to commence or continue commercial production. The price of gold has fluctuated widely in recent years. The price of gold and other metals and minerals may not remain stable, and such prices may not be at levels that will make it feasible to continue our exploration activities, or commence or continue commercial production.

Our business activities are conducted in Tanzania.

Our mineral exploration activities in Tanzania may be affected in varying degrees by political stability and government regulations relating to the mining industry and foreign investment in that country. The government of Tanzania may institute regulatory policies that adversely affect the exploration and development (if any) of our properties. Any changes in regulations or shifts in political conditions in this country are beyond our control and may materially adversely affect our business. Our operations may be affected in varying degrees by government regulations with respect to restrictions on production, price controls, export controls, foreign exchange controls, income taxes, expropriation of property, environmental legislation and mine safety.

Risks related to our common stock

There is no significant trading market for our common stock as yet and if a market for our common stock does not develop, our investors may be unable to sell their shares.

We currently have our common stock quoted on the OTC Bulletin Board under the trading symbol RBYC. The trading market for our common stock has not yet developed to any significant level. We cannot provide our investors with any assurance that a significant public market will materialize for our common stock. Further, the OTC Bulletin Board is not a listing service or exchange, but is instead a dealer quotation service for subscribing members. The market price of our common stock may be significantly affected by factors such as actual or anticipated fluctuations in our operation results, general market conditions and other factors. In addition, the stock market has from time to time experienced significant price and volume fluctuations that have particularly affected the market prices for the shares of developmental stage companies, which may materially adversely affect the market price of our common stock.

Our directors and officers are indemnified for any monies they pay in settlement of actions performed while a director or officer.

Sections 78.7502 and 78.751 of the Nevada Revised Statutes provide for indemnification of our officers and directors in certain situations where they might otherwise personally incur liability, judgments, penalties, fines and expenses in connection with a proceeding or lawsuit to which they might become parties because of their position with the Company. We have authorized the indemnification of our officers and directors to the full extent available under the Nevada Revised Statutes.

Our stock is a penny stock. Trading of our stock may be restricted by the SEC's penny stock regulations and FINRA's sales practice requirements, which may limit a stockholder's ability to buy and sell our stock.

Our common stock is subject to the "Penny Stock" Rules of the SEC, which can make transactions in our common stock cumbersome and may reduce the value of an investment in our common stock. Our stock is quoted on the OTC Bulletin Board of FINRA, which is generally considered to be a less efficient market than markets such as NASDAQ or the national exchanges, and which may cause difficulty in conducting trades and difficulty in obtaining future financing. Further, our securities are subject to the "penny stock rules" adopted pursuant to Section 15(g) of the Exchange Act. The penny stock rules apply generally to companies whose common stock trades at less than $5.00 per share, subject to certain limited exemptions. Such rules require, among other things, that brokers who trade "penny stock" to persons other than "established customers" complete certain documentation, make suitability inquiries of investors and provide investors with certain information concerning trading in the security, including a risk disclosure document and quote information under certain circumstances. Many brokers have decided not to trade "penny stock" because of the requirements of the "penny stock rules" and, as a result, the number of broker-dealers willing to act as market makers in such securities is limited. In the event that we remain subject to the "penny stock rules" for any significant period, there may develop an adverse impact on the market, if any, for our securities. Because our securities are subject to the "penny stock rules", investors will find it more difficult to dispose of our securities. Further, it is more difficult: (i) to obtain accurate quotations, (ii) to obtain coverage for significant news events because major wire services, such as the Dow Jones News Service, generally do not publish press releases about such companies, and (iii) to obtain needed capital.

In addition to the "penny stock" rules promulgated by the SEC, FINRA has adopted rules that require a broker-dealer to have reasonable grounds for believing that an investment is suitable for a customer when recommending the investment to 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, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA 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. (See “Principal Shareholders.)

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

Our joint venture properties are described above under "Our Business".

Our executive offices are located at 750 3rd Avenue 11th Floor, New York, NY USA 10017. We have a one year lease arrangement, which commenced on June 1, 2010, for this space with an entity that is affiliated with a director and principal shareholder. Consideration for this space was paid in common shares of the Company, and at a total value which the Company believes was determined on an arms length basis.

ITEM 3. LEGAL PROCEEDINGS We are not a party to any material legal proceedings nor are we aware of any legal proceedings pending or threatened against us or our properties other than as follows. .

On March 8, 2010, the Company was served with a Writ of Summons from its former general counsel, Lang Michner LLP of Vancouver, Canada, for the collection of its alleged uncollected fees in the amount of approximately US$115,000 including claimed interest. On November 23, 2010, the Company entered into an agreement with Lang Michner pursuant to which the Company paid $75,000 in full settlement of this dispute and mutual releases were exchanged. This amount was adequately provided for in the Company’s financial statements for the year ended August 31, 2010.

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

On January 13, 2009, the shareholders of Ruby Creek Resources Inc. voted in favor of proposal to change the jurisdiction of incorporation the Company from British Columbia (Canada) to Nevada. The shareholders also voted in favor of a proposal to change the Company's authorized share capital from unlimited common shares without par value to 500,000,000 common shares with a par value of $0.001 per share.

The change in jurisdiction and the change in Authorized Share Capital were accomplished through the adoption by Ruby Creek Resources Inc. shareholders of certain resolutions and a plan of continuation under Section 308 of the Business Corporations Act of British Columbia which authorized Ruby Creek Resources Inc. to complete the jurisdiction change. Upon completion of the jurisdiction change, Ruby Creek Resources Inc. commenced its incorporation in the State of Nevada and was thereafter governed under the Nevada Revised Statutes. The Company ceased to be incorporated in British Columbia.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock has been traded on the OTC Bulletin Board under the symbol "RBYC" since January 2007. The following table sets forth the high and low bid price per share of our common stock for the periods indicated. These over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions:

Quarter Ended	High		Low

November 30, 2010	$	0.78	$	0.51

August 31, 2010	$	0.60	$	0.36

May 31, 2010	$	0.50	$	0.27

February 28, 2010	$	0.31	$	0.11

November 30, 2009	$	0.17	$	0.05

August 31, 2009	$	0.14	$	0.09

May 31, 2009	$	0.10	$	0.03

February 28, 2009	$	0.07	$	0.04

November 30, 2008	$	0.30	$	0.25

We had 118 registered shareholders of record as of December 3, 2010

Penny Stock Rule

Our shares will have to comply with the Penny Stock Reform Act of 1990 which may potentially decrease your ability to easily transfer our shares. Broker-dealer practices in connection with transactions in "penny stocks" are regulated. Penny stocks generally are equity securities with a price of less than $5.00. 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 that provides information about penny stocks and the 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. In addition, the penny stock rules generally require that prior to a transaction in a penny stock, the broker-dealer 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 a stock that has to comply with the penny stock rules. As our shares will likely have to comply with such penny stock rules, our shareholders will in all likelihood find it more difficult to sell their securities.

Recent Sales of Unregistered Securities

On July 23, 2009, the Company issued 400,000 of common stock at a price of $0.05 per share for net proceeds of $15,000, net of share issuance costs of $5,000. As part of this private placement, the Company issued 200,000 share purchase warrants to purchase one share of common stock for each warrant exercisable at $0.05 for a period of five years. The fair value of these share purchase warrants, determined using the Black-Scholes option pricing model with a risk-free interest rate of 2.57%, a dividend rate of 0% and a volatility of 99%, was 17,492 or $0.09 per warrant. The shares were issued equally to David Bukzin and Double Trouble Productions, LLC.

On November 27, 2009, the Company entered into two convertible note agreements to issue two 1 year, $50,000, 11% convertible notes for total proceeds of $100,000. Each note is convertible, in part or in full, into the Company’s common stock at an exercise price of $0.05 per common share, and interest is to be paid quarterly. In addition, each holder of the note received warrants to purchase 1,000,000 shares of the Company’s common stock at an exercise price of $0.05 for a term of three years. The proceeds of these notes were received December 3, 2009 and used to make the first $100,000 installment in the Mkuvia Gold Project Joint Venture Agreement described above.

On March 10, 2010, the Company filed a final Form D with the Securities and Exchange Commission disclosing the sale of 1,600,000 units to 20 investors at a price of $0.125 per unit resulting in gross proceeds of $200,000. Each unit consisted of one share of common stock and one warrant. The warrants are exercisable at a price of $0.25 for a period of two years. Two warrants are required to purchase one share. The shares issued pursuant to the units were issued to 19 accredited investors and one non-accredited investor. The shares issued to the above investors were not registered under the Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any state, and were offered and sold in reliance on the exemption from registration afforded by Regulation D, Rule 506. In addition to the shares issued in reliance on the exemption from registration afforded by Regulation D, Rule 506, shares issued to two investors were not registered under the Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any state, and were offered and sold in reliance on the exemption from registration afforded by Regulation S. Both investors are residents of Quebec, Canada.

On September 7, 2010 the Company filed a final Form D filed with Securities and Exchange Commission for the sale of units consisting of one share and one warrant, between April 3, 2010 and August 26, 2010, the Company sold a total of 5,356,000 units to 56 individuals and received proceeds of $1,339,000. Each unit consisted of one share of common stock at a price of $0.25 per share and one warrant. Two warrants are required to purchase one share of stock for $.50 per share, and each warrant is exercisable for a period of two years. The shares issued to these investors were not registered under the Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any state, and were offered and sold in reliance on the exemption from registration afforded by Regulation D, Rule 506.

Pursuant to a Form D filed with Securities and Exchange Commission for the sale of units consisting of one share and one warrant, between October 20, 2010 and December 3, 2010, the Company sold a total of 1,780,000 units to 41 individuals and received proceeds of $890,000. Each unit consists of one share of common stock at a price of $0.50 per share and one warrant to purchase one share of stock for $1.00 per share, and each warrant has a two year life. The shares issued to these investors were not registered under the Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any state, and were offered and sold in reliance on the exemption from registration afforded by Regulation D, Rule 506.

Dividends

There are no restrictions in our Articles that prevent us from declaring dividends. The business act governing corporations in the State of Nevada (Nevada Revised Statutes, Chapter 78), provides that a corporation may declare or pay a dividend unless there are reasonable grounds to believe that the corporation is insolvent or the payment of the dividend would render the corporation insolvent.

We have not declared any dividends and we do not plan to declare any dividends in the foreseeable future.

Securities Authorized For Issuance Under Compensation Plans

The Company does not have a formal Compensation Plan. From time to time, the Company grants warrants or options to specific directors, officers, employees or consultants as deemed necessary.

ITEM 6. SELECTED FINANCIAL DATA

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition, changes in financial condition, plan of operations and results of operations should be read in conjunction with (i) our audited financial statements as of August 31, 2010 and 2009 and for the period from inception (May 3, 2006) to August 31, 2010 and (ii) the section “Business”, included in this annual report. This discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including, but not limited to, some of which are outside our control.

Plan of Operations

Based on the nature of our business, we anticipate incurring operating losses in the foreseeable future. We base this expectation, in part, on the fact that very few prospecting licenses in the exploration stage ultimately develop into producing, profitable mines. As noted above, our future financial results are also uncertain due to a number of factors, some of which are outside our control.

Due to our lack of operating history and lack of operating revenues, uncertainty on the availability of adequate financial resources to support operations and to fund future payment obligations associated with the acquisitions of the Mkuvia Gold Project, there exists substantial doubt about our ability to continue as a going concern. Even if we complete our current exploration and test mining program and we are successful in identifying mineral deposits, we will have to spend substantial funds on further drilling and engineering studies, mining equipment and/or contractors before we will know if we have a commercially viable mineral deposit or reserve.

Our plan of operations for the next twelve months is to obtain the funding necessary for the continued exploration and development of the Mkuvia Gold Project and other potential exploration properties.

Liquidity and Financial Condition

At August 31, 2010, we had cash of $325,756 and a working capital deficit of $ 772,620, including an aggregate of $911,453 due to Douglas Lake Minerals at discounted value. In addition to working capital requirements, our need for liquidity includes payment obligations remaining under our Mkuvia Gold Property purchases. With respect to the 125 Sq Km Mkuvia Property rights acquisition, the Company will be required to make (i) a payment of $400,000 to Douglas Lake Minerals upon the issuance of the initial mining license which is anticipated to occur in the first half of fiscal 2011; and (ii) three additional payments of $750,000 within 12, 24 months and 36 months of that date. The Company has the option to satisfy the final $750,000 payment (which would be due on September, 2013, should the mining license be issued in September 2010) by issuing shares of its common stock based upon the Volume Weighted Average Price (“VWAP”) for the 10 days immediately preceding the payment date. In connection with the acquisition of the rights to the 225 sq km of the Mkuvia Gold Project on June 16, 2010 we have remaining obligations to pay $450,000 on June 1, 2011; $1,000,000 on June 1, 2012; and $1,000,000 on June 1 2013. The Company has the option to satisfy the final $1,000,000 payment due on June 1, 2013, by issuing shares of its common stock based upon the Volume Weighted Average Price (“VWAP”) for the 20 days immediately preceding the payment date. Complete details of these agreements are included elsewhere in this document.

The Purchase Agreements also provide us with the option to increase our interest from the current 70% to 75% of the Project by making an aggregate payment of an additional $2,000,000 to Douglas Lake. Therefore, in total with respect to the entire 380 sq km of the Project, we have the option to increase our interest from 70% to 75% for $2,000,000.

We will require an additional $475,000 if we determine to complete the Kapinga acquisition.

In fiscal 2010 and through December 3, 2010, we received additional financing as follows:

From December 29, 2009 to February 19, 2010 we raised $200,000 and filed a Form D pursuant to Rule 506 of the SEC, Notice of Exempt Offering of Securities. Under this offering we issued 1,600,000 shares of our common stock at $0.125 per share and warrants to purchase an additional 800,000 common shares for 2 years at $0.25 per share.

For the period from April 3, 2010 to August 26, 2010, we conducted an offering of our securities under Regulations D and S offering pursuant to Rule 506 of the SEC for $350,000. We ultimately sold 5,356,000 Units at a price of $0.25 per Unit and received total proceeds of $1,339,000 on this offering. Each Unit consisted of one common share and one warrant. Two warrants are required to buy one common share at a price of $0.50 per share for a period of up to two years.

On October 18, 2010, we commenced another offering of our equity securities pursuant to Rule 506 of Regulation D and Regulation S for up to $3,000,000 consisting of 6,000,000 million units. Through December 3, 2010, the Company received $890,000 in proceeds for the sale of 1,780,000 Units at a price of $0.50 per Unit. Each Unit consists of one common share and one common stock purchase warrant. One warrant is required to buy one common share, at a price of $1.00 per share exercisable for a period of up to two years. This offering is continuing and we anticipate, but cannot guarantee, receiving additional funds.

On November 27, 2010, the holders of our 11% convertible debentures and accrued interest in the aggregate amount of $111,000 elected to convert these securities into 2,220,000 common shares, extinguishing this obligation.

Subsequent to August 31, 2010, three holders of an aggregate of 450,000 warrants issued in the private placement described in Note 8b to the Notes to the Consolidated Financial Statements exercised their right to purchase 225,000 shares of common stock for which we received $56,250.

On December 1, 2010, the holder of a 1,500,000 common share default warrant issued in connection with a $75,000 bridge loan (which itself was converted in March 2010) exercised this warrant, for which we received proceeds of $75,000.

We anticipate that any future additional funding will be in the form of equity financing from the sale of our common stock or other securities convertible into our common stock. In addition to equity and equity related financing sources, we believe that debt financing may be a viable alternative for funding additional phases of exploration. However, while management believes that it will be successful, there can be no assurance that any potential subsequent financings will be, or that any funds raised will be sufficient for us to conduct and sustain our operations, fund our obligations under property acquisition agreements and pay our expenses for the next twelve months. In the absence of such financing, we will not be able to continue exploration of our joint venture prospecting licenses for the Mkuvia Gold Mining Project and the Kapinga and our business plan could fail. Even if we are successful in obtaining debt or equity financing to fund our acquisition and exploration program, there is no assurance that we will obtain the funding necessary to pursue any advanced exploration of any prospecting licenses we presently have or that we may acquire or that the any project will yield commercially viable levels of minerals. If we do not continue to obtain additional financing, we will be forced to abandon our plan of operations.

Results of Operations for the year ended August 31, 2010.

Mining exploration and preoperating costs

In the year ended August 31, 2010, we incurred approximately $126,000 of these costs as compared to no such costs in the immediately preceding year. These costs include the establishment of base camp operations on the Mkuvia, housing facilities, salaries of full time and part time personnel, security and rental of test mining equipment in preparation to obtain a mining license and commencement of commercial operations and rental of office space in Dar es Salaam.

Consulting Services

In the year ended August 31, 2010, we incurred approximately $661,000 in consulting costs as compared to $26,000 in the immediately preceding year. This substantial increase is support of our accelerating operating activities. We have engaged board advisors and members to assist us in operations in Tanzania and in support of board of directors and financing activities and strategies, investor relations and other legal and administrative support. Of the total amount incurred, approximately $84,000 was in payments requiring cash, and $576,000 was in stock based compensation.

Interest and Financing Fees

In the year ended August 31, 2010, we incurred approximately $1,085,000 in such costs as compared to no such costs in the immediately preceding year. Approximately $11,000 was actual interest expense incurred and substantially all was non-cash financing costs related to the fair value of derivative instruments issued in connection with the bridge loan and the 11% convertible debentures ($934,000) and the amortization of debt discount related to the amounts due Douglas Lake minerals ($147,000).

Management Services

In the year ended August 31, 2010, we incurred approximately $246,000 of these costs as compared to $15,000 in the immediately preceding year. The increase reflects the full time services and a full year of services of the our CEO in the current year as compared to the preceding year, and the retention of a CFO in February 1, 2009 to deal with greater complexity in financial reporting, SEC compliance and business transactions. Of the 2010 amount $97,000 represents non cash- stock based compensation comprised of the fair value of compensation warrants and common share issuances earned in 2010.

Office and General, Professional Fees, and Shareholder and Investor Relations

In the year ended August 31, 2010, we incurred approximately $414,000 of these costs as compared to $157,000 in the immediately preceding year. These expenses increased in a manner consistent with the increased complexity and scope or operations of the company, including the retention of investor relations firms to enhance our profile in the public markets, travel and related costs arising from attendance at various industry and investor conferences, directors and officers insurance and additional support staff and facilities costs.

Net Loss

We had a net loss of $2,500,000 for the year ended August 31, 2010 as compared to a net loss of $208,000 in the immediately preceding year. Our net loss from inception on May 3, 2006 until August 31, 2010 was 2,997,000. The preceding discussions explain the increase in our net loss. Of our 2010 net loss, $657,000 was stock based compensation and shares issued for services and $1,077,000 was for non-cash financing costs for an aggregate of $1,734,000 in non-cash costs.

Going Concern

We are in the exploration stage and have not generated revenues since inception. We have incurred significant losses to date and further losses are anticipated raising substantial doubt about the ability of our Company to continue operating as a going concern. The continuation of our Company as a going concern is dependent upon our ability to obtain necessary equity financing to continue operations, meet the Douglas Lake and other obligations and to determine the existence, discovery and successful exploitation of economically recoverable reserves on our resource properties and ultimately on the attainment of future profitable operations. Since inception to August 31, 2010, we had accumulated losses of $2,997,000. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.

Off-Balance Sheet Arrangements

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

Critical Accounting Policies

Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. 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, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.

Use of Estimates and Assumptions

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

Mineral Property Costs

The Company classifies its mineral rights as tangible assets and accordingly acquisition costs are capitalized as mineral property costs. Generally accepted accounting principles require that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In performing the review for recoverability, the Company is to estimate the future cash flows expected to result from the use of the asset and its eventual disposition. If the sum of the undiscounted expected future cash flows is less than the carrying amount of the asset, an impairment loss is recognized. Mineral exploration costs are expensed as incurred until commercially mineable deposits are determined to exist within a particular property. To date the Company has not established any proven or probable reserves.

The Company accounts for asset retirement obligations by recording the initial measurement and subsequent accounting for obligations associated with the sale, abandonment, or other disposal of long-term tangible assets arising from the acquisition, construction or development and for normal operations of such assets. As of August 31, 2010, any potential costs related to the retirement of the Company's mineral property interests have not yet been determined.

Foreign Currency Translation

The Company’s functional and reporting currency is the United States dollar. The functional currency of the Company’s Tanzanian subsidiary is the Tanzanian Shilling. The financial statements of the subsidiary are translated to United States dollars in accordance with ASC 830, Foreign Currency Translation Matters. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Non-monetary assets and liabilities denominated in foreign currencies are translated at rates of exchange in effect at the date of the transaction. Average monthly rates are used to translate revenues and expenses. Related translation adjustments are reported as a separate component of stockholders' equity, whereas gains or losses resulting from foreign currency transactions are included in results of operations.

Recent Accounting Pronouncements

Effective September 1, 2009, the Company adopted ASC 855, Subsequent Events. ASC 855 requires companies to recognize in the financial statements the effects of subsequent events that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements. An entity shall disclose the date through which subsequent events have been evaluated, as well as whether that date is the date the financial statements were issued. Companies are not permitted to recognize subsequent events that provide evidence about conditions that did not exist at the date of the balance sheet but arose after the balance sheet date and before financial statements are issued. Some non recognized subsequent events must be disclosed to keep the financial statements from being misleading. For such events a company must disclose the nature of the event, an estimate of its financial effect, or a statement that such an estimate cannot be made. This Statement applies prospectively for interim or annual financial periods ending after June 15, 2009. The adoption of ASC 855 did not have an impact on the Company’s results of operations and financial position.

In January 2010, the FASB issued ASC No. 2010-06, “Fair Value Measurement and Disclosures (Topic 820): Improving Disclosure and Fair Value Measurements”, which requires that purchases, sales, issuances, and settlements for Level 3 measurements be disclosed. ASC No. 2010-06 is effective for its fiscal quarter beginning after December 15, 2010. The adoption of ASC No. 2010-06 is not expected to have a material impact on the Company’s consolidated financial statements.

In February 2010, the FASB issued ASU No. 2010-11, “Derivatives and Hedging (Topic 815): Scope Exception Related to Embedded Credit Derivatives”. ASU No. 2010-11 clarifies the type of embedded credit derivative that is exempt from embedded derivative bifurcation requirements. Specifically, only one form of embedded credit derivative qualifies for the exemption – one that is related only to the subordination of one financial instrument to another. As a result, entities that have contracts containing an embedded credit derivative feature in a form other than such subordination may need to separately account for the embedded credit derivative feature. The amendments in ASU No. 2010-11 are effective for each reporting entity at the beginning of its first fiscal quarter beginning after June 15, 2010. Early adoption is permitted at the beginning of each entity’s first fiscal quarter beginning after March 5, 2010. The adoption of ASC No. 2010-11 is not expected to have a material impact on the Company’s consolidated financial statements.

Other recent pronouncements issued are not expected to have a material effect on the Company’s condensed consolidated financial statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS

RUBY CREEK RESOURCES, INC.
(An Exploration Stage Company)
August 31, 2010

	INDEX

Report of Independent Registered Public Accounting Firm	F - 1

Consolidated Balance Sheets	F - 2

Consolidated Statements of Operations	F - 3

Consolidated Statement of Stockholders’ Equity (Deficit)	F - 4

Consolidated Statements of Cash Flows	F - 5

Notes to Consolidated Financial Statements	F - 6-19

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of Ruby Creek Resources Inc.

We have audited the accompanying balance sheets of Ruby Creek Resources Inc (an exploration stage company) as of August 31, 2010 and 2009 and the related statements of operations, stockholders’ equity (deficit) and cash flows for the years ended August 31, 2010 and 2009 and the period from May 3, 2006 (inception) through August 31, 2010. 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 an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also 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 provide a reasonable basis for our opinion.

In our opinion, these financial statements present fairly, in all material respects, the financial position of Ruby Creek Resources Inc. as of August 31, 2010 and 2009 and the results of its operations and its cash flows for the years ended August 31, 2010 and 2009 and the period from May 3, 2006 (inception) through August 31, 2010 in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, to date the Company has reported losses since inception from operations and requires additional funds to meet its obligations and fund the costs of its operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in this regard are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

“DMCL”

DALE MATHESON CARR-HILTON LABONTE LLP

CHARTERED ACCOUNTANTS

Vancouver, Canada

December 10, 2010

F-1

RUBY CREEK RESOURCES, INC.

(An Exploration Stage Company)

CONSOLIDATED BALANCE SHEETS

	August 31,
	2010			2009

ASSETS

CURRENT ASSETS
Cash	$	325,756		$	5,838
GST receivable		-			371
Due from related party		7,668			-
Prepaid expenses and other current assets		42,824			285
Total current assets		376,248			6,494

PROPERTY AND EQUIPMENT, net of accumulated depreciation of $4,614 and $649, respectively		35,808			810

MINERAL PROPERTIES		6,796,170			-

TOTAL ASSETS	$	7,208,226		$	7,304

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES
Accounts payable	$	142,342		$	107,308
Accrued interest		8,349			-
Loan payable		10,833			-
Convertible notes - related parties, net of discount		75,890			-
Due to Douglas Lake Minerals Inc.		911,453			-
Due to related parties		-			29,293
Total current liabilities		1,148,868			136,601

LONG-TERM LIABILITIES
Due to Douglas Lake Minerals Inc., net of discount		3,311,988			-

		4,460,856			136,601

COMMITMENTS AND CONTINGENCIES (Note 7)

STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, 500,000,000 shares authorized, par value $0.001 22,727,912 and 8,737,000 shares issued and outstanding, respectively		22,728			8,737
Additional paid-in capital		5,720,423			314,010
Comprehensive income (loss) from foreign exchange translation		890			-
Deficit accumulated during the exploration stage		(2,996,671	)		(452,044	)

Total Stockholders' Equity (Deficit)		2,747,370			(129,297	)

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$	7,208,226		$	7,304

See accompanying notes to consolidated financial statements.

F-2

RUBY CREEK RESOURCES, INC.

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS

							Cumulative
							for the Period
							from
							May 3, 2006
							(Inception) to
	Year Ended August 31,						August 31,
	2010			2009			2010

EXPENSES

Mining exploration and preoperating costs	$	125,797		$	-		$	125,797
Consulting services		660,812			25,595			686,407
Depreciation		3,965			272			4,615
Interest and financing fees		1,085,150			-			1,085,150
Management services		245,655			15,335			314,289
Office and general		210,588			36,590			260,347
Professional fees		141,737			117,969			403,897
Property impairment and costs on disposed mineral property		9,431			9,772			49,617
Shareholder and investor relations		61,492			2,344			66,552

Total expenses		2,544,627			207,877			2,996,671

NET LOSS	$	(2,544,627	)	$	(207,877	)	$	(2,996,671	)

NET LOSS PER COMMON SHARE, BASIC AND DILUTED	$	(0.20	)	$	(0.02	)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC AND DILUTED		12,450,771			8,383,027

See accompanying notes to consolidated financial statements.

F-3

RUBY CREEK RESOURCES, INC.

(An Exploration Stage Company)

Consolidated Statement of Stockholders' Equity (Deficit)

From May 3, 2006 (Date of Inception) to August 31, 2010

													Comprehensive
										Deficit			income (loss) from		Total
	Common Stock				Additional					Accumulated During			foreign exchange		Stockholders'
	Shares		Amount		Paid-in capital		Subscriptions			Exploration Stage			translation		Equity (Deficit)

Balance - May 3, 2006 (Date of Inception)		-	$	-	$	-	$	-		$	-		$	-	$	-
August 31, 2006 - issuance of common shares for cash at $0.01 per share		4,500,000		4,500		40,500		-			-			-		45,000
August 31, 2006 - issuance of common shares for cash at $0.05 per share		2,970,000		2,970		145,530		-			-			-		148,500
August 31, 2006 - issuance of common shares for cash at $0.10 per share		867,000		867		85,833		(5,000	)		-			-		81,700
August 31, 2006 - donated rent and management services		-		-		3,000		-			-			-		3,000
Net loss		-		-		-		-			(19,696	)		-		(19,696	)
Balance - August 31, 2006		8,337,000		8,337		274,863		(5,000	)		(19,696	)		-		258,504
September 5, 2006 - cash received for stock subscription		-		-		-		5,000			-			-		5,000
Net loss		-		-		-					(127,497	)		-		(127,497	)
Balance - August 31, 2007		8,337,000		8,337		274,863		-			(147,193	)		-		136,007
Net loss											(96,974	)		-		(96,974	)
Balance - August 31, 2008		8,337,000		8,337		274,863		-			(244,167	)		-		39,033
July 23. 2009 - issuance of common shares for cash at $0.05 per share		400,000		400		14,600		-			-			-		15,000
Stock based compensation		-		-		24,547		-			-			-		24,547
Net loss		-		-		-		-			(207,877	)		-		(207,877	)
Balance - August 31, 2009		8,737,000		8,737		314,010		-			(452,044	)		-		(129,297	)
November 6, 2009 - issuance of common shares for related party debt at $0.05 per share		1,000,000		1,000		49,000		-			-			-		50,000
December 24, 2009 to February 19, 2010 - issuance of common shares for cash at $0.125 per share		1,600,000		1,600		198,400		-			-			-		200,000
February 1, 2010 - issuance of common shares for services at $0.20 per share		110,000		110		21,890		-			-			-		22,000
December 22, 2009 to January 22, 2010 - issuance of common shares and warrants for finance fee		180,000		180		61,120		-			-			-		61,300
Fair value - beneficial conversion feature, warrants and discount in connection with issuance of 11% convertible notes		-		-		100,000		-			-			-		100,000
March 3, 2010 - issuance of common shares for finance fee at $0.25 per share		10,000		10		2,490		-			-			-		2,500
March 23, 2010 - issuance of common shares for bridge loan default conversion at $0.05 per share		1,544,877		1,545		75,699		-			-			-		77,244
March 23, 2010 - fair value of warrants on default of bridge loan		-		-		787,369		-			-			-		787,369
June 4, 2010 - issuance of common stock for services at $0.35 per share		50,000		50		19,450		-			-			-		19,500
June 30, 2010 - Issuance of common stock for services at $0.25 per share		8,608		9		2,143		-			-			-		2,152
July 26, 2010 - Issuance of common stock for services at $0.25 per share		30,000		30		7,470		-			-			-		7,500
April 3, 2010 to August 26, 2010 - issuance of common shares for cash at $0.25 per share		5,356,000		5,356		1,333,644		-			-			-		1,339,000
August 16, 2010 - Issuance of common stock on exercise of options		101,427		101		3,445		-			-			-		3,546
August 27, 2010 - Issuance of common stock for mineral property		4,000,000		4,000		2,116,000		-			-			-		2,120,000
Stock based compensation		-		-		628,293		-			-			-		628,293
Comprehensive income - foreign exchange translation		-		-		-		-			-			890		890
Net loss		-		-		-		-			(2,544,627	)		-		(2,544,627	)
Balance - August 31, 2010		22,727,912	$	22,728	$	5,720,423	$	-		$	(2,996,671	)	$	890	$	2,747,370

See accompanying notes to consolidated financial statments.

F-4

RUBY CREEK RESOURCES, INC.

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

							Cumulative
							for the Period
							from
	Year						May 3, 2006
	Ended						(Inception) to
	August 31,						August 31,
	2010			2009			2010

Cash Flows From Operating Activities
Net loss	$	(2,544,627	)	$	(207,877	)	$	(2,996,671	)
Adjustments to reconcile net loss to net cash (used in) operating activities:
Depreciation and amortization		3,963			272			4,613
Donated rent		-			-			1,500
Donated services		-			-			1,500
Interest and financing fees, including discount accretion - non cash		1,076,575			-			1,076,575
Common stock issued for services		29,152						29,152
Property impairment		-			9,771			9,771
Stock based compensation		628,293			24,547			652,840
Net changes in noncash working capital items:
(Increase) decrease - GST receivable		371			4,442			-
(Increase) decrease - Prepaid expenses		(20,539	)		(285	)		(20,824	)
Increase (decrease)- Accounts payable		47,820			60,718			155,128
Increase (decrease) - Dues to related parties		13,039			29,180			42,332
Net cash flows (used in) operating activities		(765,953	)		(79,232	)		(1,044,084	)

Cash flows from investing activities
Purchase of equipment		(38,962	)		(528	)		(40,422	)
Acquisition of mineral properties		(600,000	)		(5,594	)		(609,771	)
Net cash flows (used in) investing activities		(638,962	)		(6,122	)		(650,193	)

Cash flows from financing activities
Gross proceeds on issuance of common shares for cash - private placements		1,539,000			15,000			1,834,200
Gross proceeds of loan		19,500			-			19,500
Repayment of loan		(8,667	)		-			(8,667	)
Gross proceeds on bridge loan- related party		75,000			-			75,000
Gross proceeds on convertible notes - related parties		100,000			-			100,000
Net cash flows provided by financing activities		1,724,833			15,000			2,020,033

Net increase (decrease) in cash		319,918			(70,354	)		325,756

Cash - beginning of year		5,838			76,192			-

Cash - end of year	$	325,756		$	5,838		$	325,756

Supplemental disclosures
Interest paid	$	228		$	57		$	228
Taxes paid		-			-			-
Conversion of related party debt to shares of common stock and warrants		127,244			-			127,244
Mineral property costs acquired for short term debt		1,100,000			-			1,100,000
Mineral property costs acquired for long term debt, net of discount		3,576,170			-			3,576,170
Mineral property costs acquired - Fair value of common shares issued		2,120,000			-			2,120,000

See accompanying notes to consolidated financial statments.

F-5

Ruby Creek Resources, Inc.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

August 31, 2010

NOTE 1 – ORGANIZATION, BUSINESS AND BASIS OF PRESENTATION

Organization

Ruby Creek Resources, Inc. (the “Company”) was incorporated in the Province of British Columbia on May 3, 2006. The Company is an Exploration Stage Company. The Company’s principal business is the acquisition, exploration and mining of mineral properties.

Effective January 29, 2009, the Company changed its jurisdiction from the Province of British Columbia to the State of Nevada. Effective the same date, the Company's authorized capital was changed from an unlimited number of common shares without par value to 500,000,000 common shares with a par value of $0.001 per share. Ruby Creek Resources (Tanzania) Limited (“RCRTz) was incorporated on May 21, 2010 in Tanzania, a company which is 70% owned by the Company.

Going Concern

These financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company is in the exploration stage and has not generated revenues since inception. The Company has incurred significant losses from inception through August 31, 2010 approximating $2,997,000 and has a working capital deficit of approximately $773,000 at August 31, 2010, raising substantial doubt about the ability of the Company to continue as a going concern. The continuation of the Company as a going concern is dependent upon its ability to obtain necessary financing to settle outstanding debts, fund ongoing operating losses and to determine the existence, discovery and successful exploitation of economically recoverable mineral reserves on its resource properties and ultimately on the attainment of future profitable operations. During the year ended August 31, 2010, the Company raised approximately $1.6 million in two private placements of its common shares and warrants to purchase common shares, and has raised approximately $890,000 subsequent to August 31, 2010. However substantial additional working capital and capital funds will be required to finance the Company’s operations and meet the funding obligations of the agreement with Douglas Lake Minerals, Inc. (“Douglas Lake”) until commercial operations commence and positive cash flow could be achieved. While management believes that additional financing will be available on terms acceptable to the Company, there can be no assurance of this, nor that profitable commercial operations will be achieved. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Basis of Presentation

These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in U.S. dollars. These consolidated financial statements include the accounts of the Company and its 70% owned subsidiary, RCRTz. The Company's fiscal year-end is August 31. Under the terms of its joint venture agreement, the Company has voting, operating and financial control of RCRTz and is required to fund all of the development and operational costs until commercial production commences. Therefore 100% of the operating results of RCRTz are included in the consolidated results of operations for the year ended August 31, 2010.

F-6

Ruby Creek Resources, Inc.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

August 31, 2010

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a)	Property and equipment

Property and equipment is stated at cost less accumulated depreciation. Depreciation is provided principally using the straight-line and declining balance methods over the estimated useful lives of the assets, which range from 3 to 10 years. The cost of repairs and maintenance is charged to operations as incurred. Expenditures for property betterments and renewals are capitalized. Upon sale or other disposition of a depreciable asset, cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the statement of operations.

The Company periodically evaluates whether events and circumstances have occurred that may warrant revision of the estimated useful life of property and equipment or whether the remaining balance of property and equipment should be evaluated for possible impairment. If events and circumstances warrant evaluation, the Company uses an estimate of the related undiscounted cash flows over the remaining life of the property and equipment in measuring their recoverability.

b)	Impairment of long-lived assets

The Company reviews and evaluates long-lived assets for impairment when events or changes in circumstances indicate the related carrying amounts may not be recoverable. The assets are subject to impairment consideration under ASC 360-10-35-17, Measurement of an Impairment Loss, if events or circumstances indicate that their carrying amount might not be recoverable. As of August 31, 2010, exploration and evaluation activities continue consistent with the Company’s plans and no events or circumstances have happened to indicate the related carrying values of the properties may not be recoverable. When the Company determines that an impairment analysis should be done, the analysis will be performed using the rules of ASC 930-360-35, Asset Impairment, and 360-10-15-3 through 15-5, Impairment or Disposal of Long-Lived Assets.

Various factors could impact the Company’s ability to achieve forecasted production schedules. Additionally, commodity prices, capital expenditure requirements and reclamation costs could differ from the assumptions the Company may use in cash flow models used to assess impairment. The ability to achieve the estimated quantities of recoverable minerals from exploration stage mineral interests involves further risks in addition to those factors applicable to mineral interests where proven and probable reserves have been identified, due to the lower level of confidence that the identified mineralized material can ultimately be mined economically.

Material changes to any of these factors or assumptions discussed above could result in future impairment charges to operations.

c) Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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.

d) Basic and Diluted Net Loss Per Share

The Company computes loss per share in accordance with generally accepted accounting principles which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive.

e) Other Comprehensive Income (Loss)

ASC 220, Comprehensive Income establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. For the years ended August 31, 2010 and 2009, the only components of comprehensive loss were foreign currency translation adjustments.

F-7

Ruby Creek Resources, Inc.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

August 31, 2010

NOTE 2 – SUMMAR OF SIGNIFICANT ACCOUNTING POLICIES, continued

f) Mineral Property Costs

The Company has been in the exploration stage since its formation on May 3, 2006 and has not realized any revenues from its planned operations. It is primarily engaged in the acquisition and exploration of mineral properties. The Company classifies its mineral rights as tangible assets and accordingly acquisition costs are initially capitalized as mineral property costs. Generally accepted accounting principles require that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In performing the review for recoverability, the Company is to estimate the future cash flows expected to result from the use of the asset and its eventual disposition. If the sum of the undiscounted expected future cash flows is less than the carrying amount of the asset, an impairment loss is recognized. Mineral exploration costs are expensed as incurred until commercially mineable deposits are determined to exist within a particular property. To date the Company has not established any proven or probable reserves.

The Company accounts for the initial measurement and subsequent accounting for obligations associated with the sale, abandonment, or other disposal of long-term tangible assets arising from the acquisition, construction or development and for normal operations of such assets. As of August 31, 2010, the Company has not incurred any potential costs related to the retirement of mineral property interests since operation have not commenced.

g) Reclamation and Remediation Costs (Asset Retirement Obligation)

Upon commencement of commercial operations, the Company will accrue costs associated with environmental remediation obligations in accordance with ASC 410-20, Asset Retirement Obligations. In accordance with ASC 410-20-25, Asset Retirement Obligations - -Recognition, the Company will record a liability for the present value of the estimated environmental remediation costs in the period in which the liability is incurred and becomes determinable, with an offsetting increase in the carrying amount of the associated asset. The liability will be accreted and the asset will be depreciated over the life of the related assets. Adjustments for changes resulting from the passage of time and changes to either the timing or amount of the original present value estimate underlying the obligation will be made. As reclamation work is performed or liabilities are otherwise settled, the recorded amount of the liability will be reduced.

The Company will accrue costs associated with any environmental remediation obligation when it is probable that such costs will be incurred and they are reasonably estimable. Estimates for reclamation and other closure costs are prepared in accordance with ASC 450, Contingencies, or ASC 410-30-25, Asset Retirement and Environmental Obligations - Recognition. Costs of future expenditures for environmental remediation will not be discounted to their present value unless subject to a contractually obligated fixed payment schedule. Such costs will be based on management’s then current best estimate of amounts to be incurred when the remediation work is performed, within current laws and regulations.

Future reclamation and environmental-related expenditures are difficult to estimate, in many circumstances, due to the early stage nature of the exploration project, and uncertainties associated with defining the nature and extent of environmental disturbance and the application of laws and regulations by regulatory authorities and changes in reclamation or remediation technology. The Company will be required to periodically review accrued liabilities for such reclamation and remediation costs as evidence becomes available indicating that the liabilities have potentially changed. Changes in estimates will be reflected in the statement of operations in the period an estimate is revised.

F-8

Ruby Creek Resources, Inc.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

August 31, 2010

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

h) Foreign Currency Translation

i) Fair Value of Financial Instruments

Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk including the entity’s own credit risk.

A fair value hierarchy for valuation inputs is established. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels and which is determined by the lowest level input that is significant to the fair value measurement in its entirety.

These levels are:

Level 1 – inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.

Level 2 – inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.

The Company’s financial instruments consist of cash, accounts payable, accrued interest, loan payable, convertible notes and amounts due to Douglas Lake. The carrying value of these financial instruments approximates their fair value based on their liquidity, their short-term nature or application of appropriate risk based discount rates to determine fair value. These financial assets and liabilities are valued using level 3 inputs, except for cash which is at level 1. The Company is not exposed to significant interest, exchange or credit risk arising from these financial instruments.

j) Stock-Based Compensation

The Company records stock-based compensation by using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued. Certain warrants and options include cashless exercise provisions.

F-9

Ruby Creek Resources, Inc.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

August 31, 2010

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

k) Income Taxes

The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, Income Taxes. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

l) Recent Accounting Pronouncements

Accounting Standards Codification

The Accounting Standards Codification (ASC) has become the source of authoritative U.S. generally accepted accounting principles (“GAAP”). The ASC only changes the referencing of financial accounting standards and does not change or alter existing GAAP.

Other recent pronouncements issued are not expected to have a material effect on the Company’s consolidated financial statements.

F-10

Ruby Creek Resources, Inc.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

August 31, 2010

NOTE 3 – MINERAL PROPERTIES

(a) Pursuant to an agreement dated July 15, 2006, as amended on July 9, 2008, the Company acquired an option to earn a 100% interest in the Moore Creek Property (the “Property”) located in the Iskut River region, British Columbia, Canada in exchange for cash payments totaling CDN$100,000 over four years. In November 2009, the option agreement was terminated by the Company. As a result, the Company expensed approximately $10,000 in the year ended August 31, 2009 which was previously paid and capitalized. No material obligations remain with respect to this transaction.

(b) On November 7, 2009, the Company entered into a Purchase Agreement (the “Agreement”) with Douglas Lake, for the right to acquire and develop a portion of Douglas Lake’s Mkuvia Gold Project. Pursuant to the terms of the Agreement, the Company acquired a seventy percent (70%) interest in 125 square kilometers of the 380 square kilometers Mkuvia Gold Project for total gross consideration of $3,000,000, payable over three years. In accordance with the terms of the Agreement, the Company initially paid $250,000, and upon satisfactory due diligence paid an additional $100,000. For financial reporting purposes, the transaction contemplated by the Agreement has an effective date of March 15, 2010.

Upon issuance and receipt of the first mining license, the Company will be required to make (i) an additional payment of $400,000 to Douglas Lake (this amount has been classified as a current liability in the accompanying balance sheet); and (ii) three additional payments of $750,000 within 12, 24 months and 36 months of that date, respectively. The Company has the option to satisfy the final $750,000 payment by issuing shares of its common stock valued based upon the Volume Weighted Average Price (“VWAP”) for the 10 days immediately preceding the payment date. For financial reporting purposes, the series of future payments in the gross amount of $2,250,000 were recorded at their estimated fair value of $1,694,042 determined utilizing a discount rate of 12% per annum resulting in a discount of $555,958. Interest expense for the year ended August 31, 2010 includes amortization of $86,413 of this debt discount, resulting in a remaining net balance of these future payments as of August 31, 2010 of $1,780,455.

Additionally, the Agreement provides that within 12 months of receipt of the initial mining license, the Company has the option to increase its interest to 75 percent of the 125 square kilometers by making an additional $1,000,000 payment to Douglas Lake. In all cases, the original owner of the four prospecting licenses, Mr. Maita Mkuvia, retains a 3 percent Net Smelter Royalty as per the original agreement between Mr. Mkuvia and Douglas Lake.

The Mkuvia Gold Project is located in the Liwale and Nachingwea Districts, Lindi Region of the United Republic of Tanzania.

(c) On March 7, 2010, the Company entered into an agreement for the creation of a Tanzanian joint venture company (“RCRTz”) formed for the ownership and management of the 125 square kilometer Mkuvia Gold Project. The joint venture company is owned 70% by the Company, 25% by Douglas Lake and 5% by Mr. Maita Mkuvia (subject to conditions as described below), the original Prospecting License owner. The joint venture company was officially formed in Tanzania on May 21, 2010. RCRTz will be the operating company holding the mineral rights to the 125 square kilometers of land relating to Mkuvia Gold Project as well as the additional 255 sq km of the Mkuvia Gold Project acquired on June 16, 2010 as described below. A second Joint Venture Agreement (the “JVA”) was entered into by the parties with respect to the additional 255 sq km of the Mkuvia Gold Project whereby RCRTz assumed control of the permitting and licensing processes. The JVA provides that Mr. Mkuvia’s 5% interest shall vest when RCRTz obtains a mining license over a portion of the area covered by the Prospecting Licenses relating to the 380 sq km of the Project and a retention license over the balance for the area.

F-11

Ruby Creek Resources, Inc.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

August 31, 2010

NOTE 3 – MINERAL PROPERTIES, continued

(d) Effective on June 16, 2010, the Company acquired the exclusive mineral and mining rights to the remaining 255 square kilometers of the Mkuvia Gold Project in Tanzania from Douglas Lake. As consideration, the Company is required to pay Douglas Lake $6,000,000 over a three-year period in a combination of cash and common shares. The Company has paid $250,000 and issued 4,000,000 common shares of the Company with a fair market value of $2,120,000 at $0.53 per share (fair market value on date of issuance), which was due within 30 days of receipt of governmental Certificates of Acknowledgement. For contractual purposes these four million shares had a value of $4 million, based upon a stated value of $0.80 per share. In addition $450,000 is due on June 1, 2011; $1,000,000 is due on June 1, 2012; and $1,000,000 is due on June 1 2013. An additional $100,000 due to Douglas Lake is being retained to satisfy Douglas Lake’s financial obligation to deliver an environmental study and an initial mining license. The Company has the option to satisfy the final $1,000,000 payment due on June 1, 2013 by issuing shares of its common stock based upon the Volume Weighted Average Price (“VWAP”) for the 20 days immediately preceding the payment date. Scheduled cash payments can be accelerated in the event of future equity financing or obtaining additional mining licenses. The new Purchase Agreement also provides that the Company has the option to increase its interest from the current 70% to 75% of the Project by making an additional $1,000,000 payment to Douglas Lake. For financial reporting purposes, the series of future payments in the gross amount of $2,450,000 were recorded at their fair value of $1,882,127 (of which $398,565 was current as of the transaction date) determined utilizing a discount rate of 12% per annum resulting in a discount of $567,872. Interest expense for the year ended August 31, 2010 includes amortization of $60,859 of this debt discount, resulting in a remaining net balance of these future payments as of August 31, 2010 of $1,942,986.

As a result of the transactions above the Company owns 70% of the mineral and mining rights to the entire 380 sq km of the Mkuvia Gold Project, and has the option to increase its interest from 70% to 75% for $2,000,000.

NOTE 4 – BRIDGE LOAN

On December 22, 2009, the Company received $75,000 in proceeds of a bridge loan transaction (the “loan”) from a significant shareholder and special advisor who became a director in September 2010 (“holder”). The loan bears interest at the rate of 12% per annum. The loan agreement grants the holder the right to convert any portion of the balance plus accrued interest into common shares of the Company at a price of $0.125 per share. The original due date of the loan of January 22, 2010 was extended several times by mutual consent, ultimately to March 23, 2010. In consideration of the loan and these extensions, the Company agreed to additional consideration in the form of units of securities and additional warrants. This additional consideration resulted in the issuance of an aggregate of 180,000 common shares and two year warrants to purchase an additional 390,000 common shares at $0.25 per share. The fair value of this consideration of $61,300 was included in interest expense for the year ended August 31, 2010. This amount consisted of $31,500 which was the fair value of the common shares, and $29,800 which was the fair value of the warrants based upon the Black-Scholes option pricing model. On March 23, 2010, the Company defaulted on the payment of interest and principal on the loan. Pursuant to terms of the loan, upon the occurrence of the default, the holder gave notice to the Company of his intention to convert the outstanding balance of the note ($75,000) and accrued interest ($2,244) into shares of common stock of the Company at the default conversion price of $0.05 per share. This resulted in the issuance of 1,544,877 common shares. In addition, under contractual default provisions, the Company was obligated to issue the holder a two year warrant to purchase 1,500,000 common shares at an exercise price of $0.05 per share. This resulted in a non-cash financing charge of $787,369, included in interest and financing fees for the year ended August 31, 2010, comprised of the $386,219 fair value of common shares issued in excess of the book value of liabilities and $401,150 fair value of the 1,500,000 common share warrants issued on that date. The Company estimated the fair value of the warrant using the Black-Scholes option pricing model with the following assumptions: an expected life of two years, a risk-free interest rate of 1.02%, a dividend rate and forfeiture rate of 0% and an expected volatility of 136%. Refer to Note 10f.

F-12

Ruby Creek Resources, Inc.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

August 31, 2010

NOTE 5 - CONVERTIBLE NOTES – RELATED PARTIES

On November 27, 2009, the Company issued two $50,000, 11% convertible notes for total proceeds of $100,000 to a significant shareholder and consultant to the Company (a director in September 2010) and to another significant shareholder. These notes are due and payable on November 27, 2010. Upon maturity, each note, at the sole discretion of the note holder, is convertible, in part or in full, into shares of the Company’s common stock at a conversion price of $0.05 per common share. Interest is to be paid quarterly in arrears and, at each note holders’ sole option, each may elect to receive payment in shares of Company common stock valued at $0.05 per share. In addition, each holder of the note received warrants to purchase 1,000,000 shares of the Company’s common stock at an exercise price of $0.05 for a term of three years. The funds were used to make the first payment on the Mkuvia Alluvial Gold Project. The Company calculated an associated beneficial conversion feature and discount of $100,000 which amount was reflected as additional paid-in capital. The amount was determined using the relative fair value method and is limited to the loan proceeds. This discount is being amortized to interest expense over the term of the notes. As of August 31, 2010, $75,890 has been amortized and is included in interest expense for the year ended August 31, 2010. The Company estimated the fair value of the warrant using the Black-Scholes option pricing model with the following assumptions: an expected life of three years, a risk-free interest rate of 2.57%, and a dividend rate and expected forfeiture rate of 0%, and an expected volatility of 116%.

NOTE 6 - OTHER RELATED PARTY TRANSACTIONS

At August 31, 2010, the Chief Executive Officer (“CEO”) was indebted to the Company in the amount of $39,668. This represents net amounts advanced for travel and mining related expenses to be incurred while in Tanzania. At August 31, 2009, the Company was indebted to a former director in the amount of $29,293. These funds are unsecured, do not bear interest and have no fixed terms of repayment. During the year ended August 31, 2010, the CEO purchased 1,000,000 shares of common stock of the Company at $0.05 per share by applying $50,000 of his balance due from the Company on that date. On September 1, 2009, the Company granted 1,100,000 compensation warrants to the CEO at an exercise price of $0.05 per share for a term of 5 years. These warrants vest 25% every three months over a period of one year. The Company estimated the fair value of these warrants to be $72,500 at the date of grant, using the Black-Scholes option pricing model with the following assumptions: expected life of three years, a risk-free interest rate of 2.57%, a dividend yield of 0%, an expected volatility and forfeiture rate of 100%. Stock-based compensation of $72,500 was recorded during the year ended August 31, 2010 as management services (2009 - Nil).

At August 31, 2010 $32,000 was owing to a significant shareholder and special advisor who became a director of the Company in September 2010 for services.

NOTE 7 – COMMITMENTS AND CONTINGENCIES

On March 8, 2010, the Company was served with a Writ of Summons by its former general counsel, Lang Michener LLP of Vancouver, Canada, for the collection of its alleged uncollected fees in the amount of approximately US$115,000, including claimed interest. The Company has retained counsel for this matter and intends to vigorously dispute these charges. Management believes that it has adequately provided for any potential liability in the matter in its financial statements (accounts payable). Subsequent to August 31, 2010 the matter was settled. Refer to Note 10.

Commencing June 1, 2010, the Company entered into an arrangement with a company affiliated with a significant shareholder for the use of its office space and facilities in New York City for a one year period in the gross amount of $36,000. This amount will be satisfied by the issuance of 144,000 common shares of the Company valued at $0.25 per share, the fair value at the date of the arrangement. This amount will be recognized as rent expense in over the term of the arrangement. The shares were issued subsequent to August 31, 2010.

F-13

Ruby Creek Resources, Inc.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

August 31, 2010

	NOTE 7 – COMMITMENTS AND CONTINGENCIES, continued

c.	On April 24, 2010, the Company entered into an Advisory Agreement. The initial term of the agreement is for one year and is renewable for successive one-year periods on mutually acceptable terms. The Advisor may terminate this Agreement at any time by giving the other party ten business days prior written notice of termination. The terms of the agreement provide that the Advisor will be available to provide advice on developing conditions in Tanzania as they pertain to establishing commercially viable mining operation on the Mkuvia Gold Project property or other properties of interest to the Company. Compensation is comprised of $6,000 and warrants to purchase 50,000 shares of the common stock of the Company at $0.35 per share vested upon execution and $6,000 and warrants to purchase 50,000 shares of the common stock of the Company at $0.35 per share payable and vested on October 24, 2010. The warrants have a five year life and contain a cashless exercise provision. The Company estimated the fair value of the warrants granted upon execution to be $13,609 at the date of grant, using the Black-Scholes option pricing model with the following assumptions: an expected life of two years, a risk-free interest rate of 1.68%, a dividend rate and forfeiture rate of 0%, and an expected volatility of 139%. Stock-based compensation of $13,609 was included in consulting services during the year ended August 31, 2010.

d.	On May 15, 2010, the Company entered into a financial advisory and media services agreement for a six month period. The agreement is cancellable on 60 days written notice by either party and may be extended for an additional six months if mutually agreed by the parties. Compensation is comprised of £2,000 per month plus reimbursement of expenses and warrants to purchase 200,000 shares of the Company’s common stock at $0.35 per share, vesting 20% upon execution and 20% for each of the subsequent four quarters. These warrants have a two-year life and include a cashless exercise provision. The Company estimated the fair value of these warrants to be $64,684 at the date of grant (which is subject to re-measurement on each vesting date), using the Black-Scholes option pricing model with the following assumptions: an expected life of two years, a risk-free interest rate of 1.28%, a dividend rate and forfeiture rate of 0%, and an expected volatility of 139%. Stock-based compensation of $20,098 was recorded as consulting services during the year ended August 31, 2010.
e.	Effective June 4, 2010, the Company entered into an Advisory Agreement with Mr. Maita Mkuvia (“Advisor”), the original owner of the prospecting licenses of the Mkuvia Gold Project. The initial term of the agreement is for a three year period. The Advisor or the Company may terminate this Agreement at any time by giving the other party ninety (90) days prior written notice of termination. This Agreement may be renewed for successive one-year periods on mutually acceptable terms. Compensation is comprised of $1,000 for each Director’s meeting the Advisor attends and 300,000 shares of common shares of stock of the Company as follows: 50,000 shares vested upon signing, 75,000 shares issuable on June 4, 2011; 75,000 shares issuable on June 4, 2012 and 100,000 shares on June 4, 2013 The Company recognized $2,000 in fees paid and $19,500 in stock based compensation relating to the 50,000 shares issued.
f.	On December 4, 2010, effective July 28, 2010, the Company entered into an employment agreement with a Director of Corporate Communications, Strategic and Technical Advisor. The term of the agreement is two years, automatically renewable for successive one year terms unless terminated by either party on 60 days advance notice. Annual salary shall be $93,600 plus bonuses at the discretion of the Board of Directors. The employee is entitled to 200,000 common shares of the Company, 100,000 vesting on commencement, and 100,000 vesting six months thereafter. In addition, the employee shall be granted non-qualified stock options to purchase 300,000 shares of common stock, which shall vest at the rate of 37,500 options per quarter. The options granted have a five year life. Notwithstanding the vesting provision, all options shall become fully vested in the event of a change in control, as defined in the agreement. The Company estimated the fair value of the stock options to be $132,522 at the date of grant, using the Black-Scholes option pricing model with the following assumptions: expected life of five years, risk-free interest rate of 0.61%, a dividend and forfeiture rate of 0% and a volatility of 143.7%. The amount will be amortized ratably over the initial expected two years of service.

F-14

Ruby Creek Resources, Inc.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

August 31, 2010

NOTE 8 - COMMON STOCK

Shares of common stock issuable upon conversion or exercise of potentially dilutive securities at August 31, 2010 are as follows:

Shares issuable upon exercise of warrants - July 2009 private placement			200,000
Shares issuable for November 27, 2009 convertible notes and related warrants			4,000,000
Compensatory warrant exercisable for shares to CEO			1,100,000
Compensatory warrants exercisable for shares to significant shareholders			1,500,000
Compensatory warrant/options exercisable for shares – others			1,677,500
Bridge Loan – principal investor – shares issuable upon conversion of related warrants and penalty warrant issued upon default conversion			1,890,000
Shares issuable upon conversion of warrants issued in December 2009 private placement			800,000
Shares issuable upon conversion of warrants issued in March 2010 private placement			2,678,000
Shares reserved for employment agreement			200,000

Total			14,045,500

a) Effective January 29, 2009, the Company re-domiciled from the Province of British Columbia to the State of Nevada. Effective the same date, the Company's authorized capital was changed from an unlimited number of common shares without par value to 500,000,000 common shares with a par value of $0.001 per share.

b) During the period from December 24, 2009 to February 10, 2010, the Company conducted an offering of equity securities pursuant to Rule 506 of Regulation D and Regulation S. The Company sold 1,600,000 Units at a price of $0.125 per Unit for a total of $200,000. Each Unit consisted of one common share and one warrant. Two warrants are required to buy one common share at a price of $0.25 per share for a period of up to two years. The Company estimated the fair value of these warrants to be approximately $89,000 at the date of grant, using the Black-Scholes option pricing model with the following assumptions: expected life of two years, risk-free interest rate ranging from 0.77%-1.00%, a dividend rate and forfeiture rate of 0% and an expected average volatility of approximately 117%, which is reflected as a component of additional paid-in capital.

c) On January 29, 2010, the Company entered into an agreement with a consultant to assist management on a part time basis in the role of interim chief financial officer (“Consultant”) for a six-month period which commenced on February 1, 2010. Compensation for these services is at the rate of $6,500 per month, 60,000 shares of common stock, plus a signing bonus of 50,000 shares of common stock, with a combined fair value of $22,000 at the date of grant. The fair value of these has been expensed in the year ended August 31, 2010. Approximately $47,000 is included in management services for the year ended August 31, 2010 associated with this arrangement. The agreement can be extended on terms and for a period agreeable to both parties.

d) During the period from April 3, 2010 through August 26, 2010, the Company conducted an offering of equity securities pursuant to Rule 506 of Regulation D and Regulation S. The Company sold 5,356,000 Units at a price of $0.25 per Unit for a total of $1,339,000. Each Unit consists of one common share and one warrant. Two warrants are required to buy one common share at a price of $0.50 per share for a period of up to two years. The Company estimated the fair value of these warrants to be approximately $1,126,000 at the date of grant, using the Black-Scholes option pricing model with the following assumptions: expected life of two years, risk-free interest rate ranging from 0.50%-1.18%, a dividend rate and forfeiture rate of 0% and an expected range of volatility from 139.7% to 144.6%. This amount is reflected as a component of additional paid-in capital.

F-15

Ruby Creek Resources, Inc.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

August 31, 2010

NOTE 8 - COMMON STOCK, continued

Stock Options and Warrants

On July 15, 2009, the Company granted 50,000 compensation warrants to a former director at an exercise price of $0.05 per share for a term of 5 years. These options vested on November 1, 2009. The Company estimated the fair value of these warrants using the Black-Scholes option pricing model with the following assumptions: an expected life of three years, a risk-free interest rate of 2.57%, a dividend and forfeiture rate of 0% and an expected volatility of 99%. Stock-based compensation of $2,202 and $2,905 was recorded as management fees during the years ended August 31, 2009 and August 31, 2010, respectively.

On July 15, 2009, the Company granted 1,750,000 stock options to consultants at an exercise price of $0.05 per share for a term of 5 years. These options vest 25% per quarter from the date of grant until fully vested. These options vest 25% every three months over a period of one year. The Company estimated the fair value of the options using the Black-Scholes option pricing model with the following assumptions: an initial expected life of three years, a risk-free interest rate of 0.95% to 2.57%, and a dividend and forfeiture rate of 0% and an expected volatility of between 99% and 117%. Stock-based compensation of $22,345 and $354,816 was recorded as consulting fees during the years ended August 31, 2009 and 2010, respectively. All of these options vested by August 31, 2010.

On September 1, 2009, the Company granted 1,100,000 compensation warrants to the President at an exercise price of $0.05 per share for a term of 5 years. These options vested 275,000 on December 1, 2009 and 275,000 each successive quarter until fully vested. The Company estimated the fair value of these warrants to using the Black-Scholes option pricing model with the following assumptions: an expected life of three years, a risk-free interest rate of 2.57%, a dividend rate and forfeiture rate of 0% and an expected volatility of 100%. Stock-based compensation of $72,500 was recorded at as management fees during the year ended August 31, 2010.

On October 1, 2009, the Company granted 350,000 stock options to a consultant at an exercise price of $0.05 per share for a term of 5 years. These options vested 80,000 on grant and 90,000 for each of the successive quarters. The Company estimated the fair value of these options using the Black-Scholes option pricing model with the following assumptions: an initial expected life of three years, a risk-free interest rate of 0.95% to 2.57%, a dividend rate and forfeiture rate of 0% and an expected volatility of 99% to 117%. Stock-based compensation of $70,110 was recorded as consulting fees during the year ended August 31, 2010.

On October 15, 2009, the Company granted 150,000 stock options to a consultant at an exercise price of $0.05 per share for a term of 5 years. These options vest 25% per quarter from the date of grant until fully vested. The Company estimated the fair value of these options using the Black-Scholes option pricing model with the following assumptions: an initial expected life of three years, a risk-free interest rate of 0.95% to 2.57%, a dividend rate and forfeiture rate of 0% and an expected volatility of 104% to 117%. Stock-based compensation of $24,628 was recorded as consulting fees during the year ended August 31, 2010.

On November 1, 2009, the Company granted 250,000 stock options to a consultant at an exercise price of $0.05 per share for a term of 5 years. These options vest 25% per quarter from the date of grant until fully vested. The Company estimated the fair value of these options using the Black-Scholes option pricing model with the following assumptions: an expected life of three years, a risk-free interest rate of 2.57%, a dividend rate and forfeiture rate of 0% and an expected volatility of 108%. Stock-based compensation of $33,803 was recorded as consulting fees during the year ended August 31, 2010.

On November 1, 2009, the Company granted 150,000 stock options to a consultant at an exercise price of $0.05 per share for a term of 5 years. These options vest 25% per quarter from the date of grant until fully vested. The Company estimated the fair value of these options using the Black-Scholes option pricing model with the following assumptions: an expected initial life of three years, a risk-free interest rate of .095% to 2.57%, a dividend rate and forfeiture rate of 0% and an expected volatility of 103% to 117%. Stock-based compensation of $28,592 was recorded as consulting fees during the year ended August 31, 2010.

On January 20, 2010, the Company granted 40,000 stock options to a consultant at an exercise price of $0.05 per share for a term of 5 years. These options vest 25% per quarter from the date of grant until fully vested. The Company estimated the fair value of these options using the Black-Scholes option pricing model with the following assumptions: an expected initial life of three years, a risk-free interest rate of .095% to 2.57%, a dividend rate and forfeiture rate of 0% and an expected volatility of 117%. Stock-based compensation of $7,230 was recorded as consulting fees during the year ended August 31, 2010.

On July 28, 2010, the Company granted 300,000 stock options to an employee. The terms of these options are more fully described in Note 7f.

F-16

Ruby Creek Resources, Inc.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

August 31, 2010

NOTE 8 - COMMON STOCK, continued

On April 24, 2010, the Company granted 50,000 stock options to a consultant at an exercise price of $0.35 per share for a term of two years. These options vested on grant. The Company estimated the fair value of the options to be $13,609 using the Black-Scholes option pricing model with the following assumptions: an expected life of two years, a risk-free interest rate of 1.68%, a dividend rate and forfeiture rate of 0% and an expected volatility of 139%. Stock-based compensation of $13,609 was recorded as consulting fees during the year ended August 31, 2010.

On May 15, 2010, the Company granted 200,000 stock options to a consultant at an exercise price of $0.35 per share for a term of two years. These options vest 20% on grant and 20% every three months over a period of one year. The Company estimated the fair value of the options that vested to be $12,937 using the Black-Scholes option pricing model with the following assumptions: an expected life of two years, a risk-free interest rate of 1.28%, a dividend rate and forfeiture rate of 0% and an expected volatility of 139%, Stock-based compensation of $21,460 was recorded as consulting fees during the year ended August 31, 2010 and the remainder will be recorded over the term of vesting.

In August 2010, the holder of 112,500 vested options, issued at $0.05 per share, exercised a cashless exercise provision included in the agreement and received 101,427 common shares. The total intrinsic value of these options exercised at August 31, 2010 was $54,000.

The following is a summary of stock options and warrants outstanding for the periods shown:

Share Purchase Options

	Options			Weighted Average Exercise Price
Balance, August 31, 2008		-
Granted		1,800,000		$	0.05
Exercised		-
Cancelled/Expired		-
Balance, August 31, 2009		1,800,000		$	0.05
Granted		2,590,000		$	0.14
Exercised		(112,500	)	$	0.05
Cancelled/Expired		-			-
Balance, end of year		4,277,500		$	0.10
Exercisable, at end of year		3,762,500		$	0.06

	Options		Weighted Average grant-date fair value
Nonvested balance, August 31, 2009		1,800,000	$	0.10
Granted		2,590,000	$	0.13
Vested during the year		3,875,000	$	0.04
Nonvested, August 31, 2010		515,000	$	0.34

F-17

Ruby Creek Resources, Inc.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

August 31, 2010

NOTE 8 - COMMON STOCK, continued

As of August 31, 2010, 3,875,500 stock options have vested and 515,000 stock options remain unvested. The weighted average remaining life of the vested and unvested stock options is 3.9 years and 1.17 years, respectively. As of August 31, 2010, the intrinsic value of the vested options was $1,767,000. Future Compensation expense based upon the fair value of unvested stock options at August 31, 2010 approximates $215,000.

Share Purchase Warrants

	Shares		Weighted Average Exercise Price
Balance, August 31, 2008		-
Issued		200,000	$	0.05
Exercised		-
Cancelled/Expired		-
Balance, August 31, 2009		200,000	$	0.05
Issued		7,368,000	$	0.24
Exercised		-		-
Cancelled/Expired		-		-
Balance, end of period, August 31, 2010		7,568,000	$	0.24
Exercisable, end of period		7,568,000	$	0.24

The weighted average remaining life of all outstanding share purchase warrants is 1.74 years. As of August 31, the intrinsic value of these warrants was $2,238,290.

NOTE 9 - INCOME TAXES

The provision for income taxes differs from the result which would be obtained by applying the statutory income tax rate to income before income taxes. The difference results from the following items:

	August 31, 2010
	2010			2009
Net loss before income taxes	$	(2,544,627	)	$	(207,877	)
Statutory tax rate		34	%		35	%

Expected tax expense (recovery)		(865,173	)		(72,757	)
NYS franchise tax, net of Federal benefit		(44,777	)		-
Stock based compensation not deductible for tax purposes		213,620			8,591
Mineral property expenditure not deducted for tax purposes		37,739			-
Other unrecognized items for tax purposes		(592	)		28,589
Effect of tax rate difference in Tanzania		4,110			-
Increase in valuation allowance		655,073			35,577

Income tax provision	$	-		$	-

Effective January 29, 2009, the Company changed its jurisdiction from the Province of British Columbia to the State of Nevada. As a result, the Company relinquished approximately $293,000 in non-capital losses and $33,000 in capital pool losses. As of August 31, 2010 and 2009, the Company has US net operating loss carry-forwards of approximately $1,795,000 and $102,000, respectively, and Tanzanian net operating loss carry-forwards of $103,000 at August 31, 2010, which may be available to reduce future year’s taxable income. These carry-forwards will expire, if not utilized, commencing in 2029. Management believes that the realization of the benefits from this deferred tax assets appears uncertain due to the Company’s limited operating history and continuing losses. Accordingly a full, deferred tax asset valuation allowance has been provided and no deferred tax asset benefit has been recorded.

F-18

Ruby Creek Resources, Inc.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

August 31, 2010

NOTE 9 - INCOME TAXES, continued

The Company’s tax-effected deferred income tax assets are estimated as follows:

	August 31, 2010
	2010			2009
Potential future income tax assets:
Net operating losses available	$	641,000		$	36,000
Other		(9,400	)		-
Mining exploration costs expensed		38,000			-
Less: valuation allowance		(669,600	)		(36,000	)

Net deferred income tax asset	$	-		$	-

The Company has uncertain tax positions for which the possible liability for penalties and interest is not currently reliably estimable by management. Management has considered the likelihood and significance of possible penalties associated with its current and intended filing positions and has determined, based on their assessment, that such penalties, if any, would not be expected to be material.

As the Company has incurred losses since inception there would be no known or anticipated exposure to penalties for income tax liability.

Inherent uncertainties arise over tax positions taken, or expected to be taken, with respect to transfer pricing, financing charges, fees, related party transactions, tax credits, tax based incentives and stock based transactions. Management has not recognized any tax benefits related to these uncertainties.

Disclosure concerning certain carry-forward tax pools, temporary and permanent timing differences in tax basis versus reported amounts may be impacted by assessing practices and tax code regulations when income tax returns are filed up to date. As a 100% valuation allowance has been provided against deferred tax assets reported in these financial statements, there would be no significant net impact to the current and deferred income tax disclosures or reconciliations reported.

NOTE 10 - SUBSEQUENT EVENTS

(a) On September 9, 2010, the Company signed an option to acquire the exclusive mineral and mining rights to the 340 sq km Kapinga property for a fixed purchase price of $500,000. Should the Company exercise its purchase option in the six month period ended March 9, 2011, the Kapinga Property will be transferred into a joint venture company, Ruby Creek Gold (Tanzania) Limited. The Company will own 85% of the joint venture, Mr. Kapinga 10% and other parties 5%. According to the terms of the agreement, if the Company exercises its right to purchase the property within six months of signing, a total of $250,000 will be paid at that time. The final $250,000 payment will be made when the first mining license is issued. Payments can be made in cash, in the Company equity, or a combination of both.

Both the Kapinga Project and the Company’s Mkuvia Gold Project are located in the Liwale and Nachingwea Districts, Lindi Region of the United Republic of Tanzania.

F-19

Ruby Creek Resources, Inc.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

August 31, 2010

NOTE 10 - SUBSEQUENT EVENTS, continued

(b) Commencing on October 18, 2010, the Company commenced an offering of its equity securities pursuant to Rule 506 of Regulation D and Regulation S. Through December 3, 2010, the Company received $890,000 in proceeds for the sale of 1,780,000 Units at a price of $0.50 per Unit. Each Unit consists of one common share and one common stock purchase warrant. One warrant is required to buy one common share, or an aggregate of 1,780,000 common shares, at a price of $1.00 per share exercisable for a period of up to two years.

(c) Subsequent to August 31, 2010, three holders of an aggregate of 450,000 warrants issued in the private placement described in Note 8b above exercised their rights to purchase 225,000 shares of common stock for which the Company received $56,250.

(d) On November 23, 2010, the Company entered into an arrangement for the satisfaction of the litigation discussed in Note 7a above, pursuant to which the Company paid C$75,000 in full settlement of this dispute. Mutual releases were exchanged.

(e) On November 27, 2010, the holders of the convertible notes described in Note 5 elected to convert these notes in the amount of $100,000, plus an aggregate of $11,000 in interest earned, into 2,220,000 shares of common shares of the Company.

(f) On December 1, 2010, 1,500,000 warrants were exercised for 1,500,000 shares of common stock at a price of $0.05 per share for which the Company received $75,000 in proceeds.

The Company evaluated subsequent events through the financial statement filing date.

F-20

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

We have had no disagreements with our principal independent accountants.

ITEM 9A(T). CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our principal executive officer and our principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective as of the end of the period covered by this report, based on their evaluation of these controls and procedures required by paragraph (b) of Rules 13a-15 and 15d-15, due to certain material weaknesses in our internal control over financial reporting as discussed below.

Internal Control Over Financial Reporting

Management of Ruby Creek Resources Inc. is responsible for establishing and maintaining adequate internal control over financial reporting. Ruby Creek Resources Inc.'s internal control over financial reporting is a process, under the supervision of the Chief Executive Officer and the Chief Financial Officer, designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company's financial statements for external purposes in accordance with United States generally accepted accounting principles (GAAP). Internal control over financial reporting includes those policies and procedures that:

·	Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the Company's assets;

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the Board of Directors; and

·	Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

Ruby Creek Resources Inc.'s management conducted an assessment of the effectiveness of the Company's internal control over financial reporting as of August 31, 2010 based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). As a result of this assessment, management believes that steps have been taken to overcome previously identified material weaknesses in internal control over financial reporting.

A material weakness is a control deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis.

The previous material weaknesses and their remediation, which was effective as of August 31, 2010, are identified are disclosed below.

However, we have commenced operations in Tanzania during the year ended August 31, 2010. We are currently in the process of establishing adequate systems of internal control over safeguarding company assets deployed in Tanzania.

Appropriate Independent Oversight. The Company believes that it has established an appropriate level of oversight of the Company's financial reporting and procedures for internal control over financial reporting, including appropriate authorization of transactions for its current operations. There are, at present, two directors of the Company, but no independent Directors who could provide an appropriate level of oversight, including challenging management's accounting for and reporting of the transactions. On February 1, 2010, the Company retained a Chief Financial officer who is CPA and has extensive experience in SEC reporting and in establishing systems of internal control.

Segregation of Duties. During the current year, the Company has retained a qualified Chief Financial Officer, and added member of its Board of Directors who is an SEC accounting and reporting expert, a CPA and a partner in a major CPA firm. In prior periods, the Company has historically had limited accounting resources as a result of its lack of revenues and limited working capital and therefore relied on outside consultants for all accounting and financial reporting resources. While the Company still has limited resources, the Company has a CFO and other accounting personnel who prepare the general ledger (including the preparation of routine and non-routine journal entries) and the preparation of accounting reconciliations; and has a member of its Board of Directors, who together with the CFO have adequate expertise in the selection of accounting principles, and in the preparation of interim and annual financial statements (including footnote disclosures) in accordance with generally accepted accounting principles. The Company believes that has adequate oversight and monitoring of its financial accounting and reporting systems.

As a result of these remedial activities to strengthen its systems of internal control over financial reporting described above, Ruby Creek’s management has concluded that, as of August 31, 2010, the Company's internal control over financial reporting was effective based on the criteria in Internal Control - Integrated Framework issued by the COSO.

This annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this annual report.

Changes in Internal Control over Financial Reporting

We added a member to our Board of Directors described above, which has significantly strengthened our internal control over financial reporting during our fourth fiscal quarter of our fiscal year ended August 31, 2010.

ITEM 9B. OTHER INFORMATION

Not applicable.

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Officers and Directors

The Company's present officers and directors are as follows.

Name	Age	Positions

Rob Slavik	58	President, Chief Executive Officer, Principal Executive Officer and Director
David Bukzin	45	Director
Myron Landin	62	Chief Financial Officer

The following sets forth certain information concerning our officers and directors:

Robert Slavik, President, Chief Executive Officer, Director

In addition to his executive and board positions with the Company, Mr. Slavik has served as the President, Chief Executive Officer and as a member of the board of directors of Tanzanian Goldfields Company, a mining company, since 2008, President of Vitalstate since 2008, President of Ariel Resources since 2004, and as President and a member of the board of directors of Pacific Gems Trading Company, a gem and resources company, since 1999. Mr. Slavik served as the President of T-Rex Vehicles Corporation, a specialty vehicles company, from 2007 through 2008 and as a consultant for Notre Dame Capital, a Canadian venture capital company, from 2006 through 2007. He served as a consultant to Groupe InterCapital, another Canadian venture capital company, from 2006 through 2007. Mr. Slavik was the Operations Manager of Savoy Resources Corp, a China-based mining company, from 2004 through 2005 and served as that company’s president in 2004 and 2005. Mr. Slavik graduated in engineering and business administration from the British Columbia Institute of Technology.

David Bukzin, Director

Mr. Bukzin Is the Partner-in-Charge of Marcum LLP's SEC Practice Group. Marcum is one of the nation’s largest independent public accounting and advisory services firms. In addition to working as a Certified Public Accountant, Mr. Bukzin is a specialist in the area of business valuation, especially as it applies to mergers and acquisitions, and corporate finance transactions. He also provides services in the areas of turnaround and workout consulting, reorganizations and recapitalizations. He received his B.B.A. from Baruch College in 1988. Mr. Bukzin maintains memberships with the American Institute of Certified Public Accountants and the New York State Society of Certified Public Accountants.

Myron Landin, Chief Financial Officer

CPA Myron W. Landin was appointed acting Chief Financial Officer pursuant to a six month consulting agreement with the Company on February 1, 2010. Mr. Landin brings more than 35 years of financial experience to Ruby Creek Resources. For the period 2003-2010 Mr. Landin principal activity has been providing consulting services to a number of publicly traded companies through his consulting firm, JTL Enterprises, Inc. His services have included accounting support services, financial statement preparation, and business, SEC advisory and Sarbanes-Oxley consulting. Mr. Landin has participated in numerous forward and reverse-mergers, acquisitions, reorganizations and restructurings, private placements, and SEC and Sarbanes- Oxley compliance projects. Major assignments included the CFO responsibilities in a $115 million public SPAC funding for the successful acquisition of an oil and gas exploration company, including all pre and post acquisition activities, over a three year period (2006-2008). Mr. Landin held senior executive and Board level positions with an entrepreneurial public company in the telecommunications industry (1984-1991) and the subsequent spinoff of a subsidiary where he served as Chairman of the BOD and CFO (1992-1999). This entity was eventually merged into a NYSE listed company in 1999. Mr. Landin served as senior assurance manager with a Big Four accounting firm, (now Deloitte) (1972-1981) and as an audit partner (1981-1984) of a regional and internationally affiliated PCAOB registered accounting firm. Mr. Landin holds a B.A. in economics from Stony Brook University and attended Pace University Graduate School of Business. He is a Certified Public Accountant licensed in the state of New York. Mr. Landin maintains memberships with the American Institute of Certified Public Accountants and the New York State Society of Certified Public Accountants.

ADVISORS

Professor Dr. Abdul Mruma, BSc MSc PhD – Advisor, Tanzanian Geology

Dr. Mruma is a Professor of Geology and was the head of the Department of Geology, University of Dar es Salaam from 1994 to 2004. Since 2004 he has been the Vice Chairman of the Association of Geological Surveys of Africa and is the Chief Executive Officer of the Geological Survey of Tanzania, Ministry of Energy and Minerals reporting directly to the Minister of Energy and Mines. Other positions he has held include: National Coordinator, International Geological Correlation Programs; External Examiner, Department of Geology of the University of Nairobi in Kenya and the University of Makerere in Uganda. He has also had extensive involvement as a board and steering committee member of numerous geological and environmental research projects and groups. Dr. Mruma has published over thirty international publications, mainly in the fields of Structural Geology, Precambrian Geology, Stratigraphy and Mineral Deposits. He has also consulted on and authored more than twenty technical reports in the fields of Resource Assessments and Engineering Geology. He is currently a member of the Geological Society of Africa and the Tanzania Geological Society.

Charles Rwechungura, Advisor – Tanzanian Mining and Financial Law

Mr. Rwechungura Is the founder and Partner-in-Charge of CRB Attorneys. He played a key role working with the World Bank in the re-drafting of the Tanzanian Mining Laws of the late 90’s and was lead attorney for the American Barrick takeover of Jim Sinclair’s Sutton Resources. He is a seasoned consultant in the fields of mining, corporate, banking and financial law. He is an advisor to mining companies on such issues as joint venture agreements, transfers or assignments of mineral rights, mining license applications and has conducted multiple large-scale due diligence exercises for foreign investors in the Tanzanian mining sector. Mr. Rwechungura acts for many of the national and foreign banks operating in Tanzania, advising them on the range of financial and banking law issues. In recognition of his industry knowledge and legal expertise, he is often appointed as an arbitrator on complex commercial disputes. He received his LLB (Hons) from the University of Dar es Salaam in 1977. He was President of the Tanganyika Law Society from 2005 to 2006, 2nd Deputy Treasurer for the East African Law Society from 2005 to 2007, Vice President of the East Africa Law Society from 2008 to 2010 and has been a board member of the International Commercial Bank Limited since 2006. He is a member of the Council of the Tanganyika Law Society, and a member of the Governing Council and the Executive Committee of the SADCC Lawyers Association.

Term of Office

Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until they resign or are removed from the board in accordance with our Articles of Incorporation. Our officers are appointed by our Board of Directors and hold office until they resign or are removed from office by the Board of Directors.

Significant Employees

Toby Hansen, Process Engineering and Corporate Communications

Mr. Hansen has been an engineer for over 20 years. He began his career designing rare earth magnetostrictive transducers for medical, oil/gas and industrial applications where he obtained a wealth of knowledge of diverse materials and processes. Subsequent to transducer design he has spent the last six years leading research and development efforts to enhance electromagnetic devices. Over his career he has been granted four US patents (#6,012,521, #6,227,853, #6,624,539 and #6,909,666) and has four additional patents pending. Mr. Hansen has earned a bachelor in Mechanical Engineering at the University of Utah and a Masters Degree in Engineering Mechanics at Iowa State University. Mr. Hansen is also the editor of the Heavy Metal Investor featuring a quarterly market newsletter. This endeavor has resulted in a vast accumulation of knowledge in the gold and mining industry. The newsletter began in 2003 with a dozen readers and has grown in popularity with readership presently approaching 1700 people worldwide. Through his newsletter, he identified the potential of the Mkuvia Gold Project. Mr. Hansen has just committed to a two year contract with Ruby Creek. Mr. Hansen’s responsibilities will be two-fold, Corporate Communications and Operations. Onsite his focus will be the reviewing of processes and analysis of systems and materials as well as developing strategies for maximizing returns on gold and other mineral concentrates.

Our subsidiary in Tanzania now employs personnel to conduct our mining operations and control accounting and administrative functions.

Family Relationships

There are no family relationships among our directors or executive officers.

Committees of the Board of Directors

We presently have an Audit Committee comprised the president, Rob Slavik. We presently do not have a compensation committee, a nominating committee, an executive committee of our Board of Directors, stock plan committee or any other committees. However, our Board of Directors is considering establishing various committees during the current fiscal year.

Our Board of Directors has determined that at present there is no audit committee financial expert serving on the Audit Committee. The Company is in the exploration stage and has limited financial resources and plans to add an audit committee financial expert to the Audit Committee as the Company's operations ramp up and financial resources permit.

Code of Ethics

Our Board of Directors has adopted a code of ethics applicable to its principal executive officer, its principal financial officer, its principal accounting officer or controller, or persons performing similar functions. We have not done so due to our limited operating history to date.

Our Board of Directors intends to consider and adopt a code of ethics in the near future.

��

Involvement in Certain Legal Proceedings

None of our directors, executive officers and control persons have been involved in any of the following events during the past five years other than as disclosed:

any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

Rob Slavik, president of Ruby Creek Resources, Inc., is a director of T-Rex Vehicles Corporation, a Nevada corporation and served as president the company’s Quebec subsidiary, T-Rex Vehicles, Inc., in the winding down and eventual bankruptcy proceedings of the subsidiary from October 2007 to March 2008.

•	any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offences);

•	being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or

•	being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment or decision has not been reversed, suspended, or vacated.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who beneficially own more than 10% of our equity securities, to file reports of ownership and changes in ownership with the SEC. Officers, directors and greater than 10% shareholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file. Based on our review of the copies of such forms we received, we believe that during the fiscal year ended August 31, 20 all such filing requirements applicable to our officers and directors were complied with.

Limitation of Liability of Directors

Pursuant to our Sections 78.7502 and 78.751 of the Nevada Revised Statutes and our bylaws, we may indemnify an officer or director who is made a party to any proceeding, because of his position as such, to the fullest extent authorized by the Nevada Revised Statutes, as the same exists or may hereafter be amended. In certain cases, we may advance expenses incurred in defending any such proceeding.

To the extent that indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling our Company pursuant to the foregoing provisions, we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. If a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by a director, officer or controlling person of our Company in the successful defense of any action, suit or proceeding) is asserted by any of our directors, officers or controlling persons in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of that issue.

ITEM 11. EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

The following table sets forth the compensation paid to our executive officers during the following fiscal years:

Summary Compensation Table

Name and

Principal

Position

Year

Ended

August 31,

Salary

($)

Bonus

($)

Stock

Awards

Option

Awards

Non-Equity

Incentive Plan

Compensation

Non Qualified

Deferred

Compensation

Earnings ($)

All Other

Compensation

($)

Total

($)

Rob Slavik

President,

2010

100,000

Nil

1,100.000 warrants at $0.05

Nil

100,000

CEO, Director

(5)

2009

Nil

David Bukzin

Director (6)

2010

32,000

Nil

32,000

Myron Landin

CFO (7)

2010

47,000

Nil

110,000

Nil

47,000

Brian Roberts

(former)

President (1)

2009

11,286

Nil

50,000

warrants at

$0.05

Nil

11,286

Ian Foreman,

(former)

CFO (2)

2009

2,697

Nil

2,697

Wayne

Waters

(former)

Director (4)

2009

Nil

1) Mr. Roberts was appointed President and CEO of our Company in May 2006. He tendered his resignation as President on June 18, 2009 and as a Director on November 7, 2009.

(2) Mr. Foreman was appointed CFO of our Company in September 2006. Mr. Foreman tendered his resignation as of June 18, 2009. The Company paid $2,697 during the year ended August 2008 and $1,505 during the year ended August 31, 2008 to Foremost Geological Consulting, of which Ian Foreman is the principal, as payment for certain geological consulting work rendered by that entity. Mr. Foreman did not receive any compensation for serving as an executive officer of our company.

(4) Mr. Waters was appointed to the Board in the position of Director in May 2006. Mr. Waters tendered his resignation as of June 18, 2009.

(5) Mr. Slavik was appointed President and CEO in June 2009. Effective January 1, 2010, Mr. Slavik has been receiving compensation at the rate of $10,000 per month. On September 1, 2009 Mr. Slavik was awarded 1,100,000 compensation warrants to purchase an equal number of shares at an exercise price of $.05 per share. The warrants vested over the year ended August 31, 2010.

(6) Mr. Bukzin has been a special advisor to the Board of Directors and has been receiving compensation of $4,000 per month since January 1, 2010. At August 31, 2010 the Company was indebted to Mr. Bukzin for the amount of $32,000.

(7) Pursuant to a February 2, 2010 six month consulting agreement, Mr. Landin became interim Chief Financial Officer of the Company. Terms provided for $6,500 per month for a portion of his time, a signing bonus of 50,000 common shares and 60,000 common shares as compensation earned over the six month term. Additional compensation is due for time in excess of that stipulated in the agreement.

Outstanding Equity Awards

On July 15, 2009, the Company granted 50,000 compensation warrants to Brian Roberts a director at the time of issuance, at an exercise price of $0.05 per share for a term of 5 years. These compensation warrants vested on November 1, 2009.

On July 15, 2009, the Company granted a total of 1,750,000 stock options to consultants at an exercise price of $0.05 per share for a term of 5 years. These options vest 25% quarterly over a period of one year. The stock options were issued as follows: 600,000 to a consulting firm, 900,000 to David Bukzin, 100,000 to Ian Foreman and 75,000 each to 2 to consultants. These options fully vested as of July 15, 2010.

On September 1, 2009, the Company granted 1,100,000 options to Rob Slavik, an officer and director of the Company. The options have no vesting provisions.

On October 1, 2009, the Company granted 350,000 options to a consultant to the Company. The options fully vested on July 1, 2010.

On October 15, 2009, the Company granted 150,000 options to a New York-based law firm for services. The options fully vested on October 15, 2010

On November 1, 2009, the Company granted 150,000 options to a California-based law firm for services. The options fully vested on November 1, 2010.

On November 1, 2009, the Company granted 250,000 options to Ron Shenton. The options fully vested on August 1, 2010.

Dr. Mruma Consulting Agreement – Board of Advisors granted 50,000 options on April 24, 2010 at $0.35

Maita Mkuvia – granted shares 50,000 shares on June 2, 2010 in connection with consulting agreement.

Myron Landin was awarded 110,000 shares in connection with his 6 month consulting agreement on February 1, 2010, which vested over the period through July 31, 2010.

Toby Hansen was awarded 200,000 shares and 300,000 non-qualified common stock purchase options in connection with his employment agreement effective July 28, 2010 and executed on December 4, 2010. Common shares vest The options are exercisable at $0.60 per share and vest quarterly over the two year term of the agreement.

Compensation of Directors

Some of our directors may cash or non-cash compensation for their services. They are, also, reimbursed for any out-of-pocket expenses they may incur in connection with our business.

In the year ended August 31, 2010 we had one Director, Robert Slavik, also our President and Chief Executive Officer. He earned $100,000 in salary and received a compensation warrant to purchase 1.1 million common shares of the Company at $.05 per share, expiring in 5 years. Commencing on January 1, 2010 he was entitled to receive a fee of $10,000 per month as approved by the Board of Directors.

Mr. Bukzin became a director in September 2010. Mr. Bukzin has been a special advisor to the Company since July 2009. He was awarded non-qualified stock options to purchase 900,000 shares at $0.05 per share on July 15, 2009. Commencing on January 1, 2010 he was entitled to receive a fee of $4,000 per month as approved by the Board of Directors. This total fee of $32,000 was accrued and unpaid as of August 31, 2010.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth information regarding the beneficial ownership of our shares of common stock as of December 3, 2010 by (i) each person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock, (ii) each of our directors, (iii) each of our executive officers, and (iv) by all of our directors and executive officers as a group. Each person named in the table, has sole voting and investment power with respect to all shares shown as beneficially owned by such person and can be contacted at our executive office address.

Name and address of beneficial owner	Amount and nature of Beneficial Owner(1)		Percentage of Class(2)
Directors and Officers:

Rob Slavik, President CEO, Director 750 3rd Avenue 11th Floor, New York, NY		5,945,000		19.8	%

David Bukzin, Director 750 3rd Avenue 11th Floor, New York, NY		8,234,877		26.1	%

Myron Landin, Chief Financial Officer 750 3rd Avenue 11th Floor, New York, NY		155,000		0.5	%

All officers and directors as a group (three individuals)		10,529,877		43.8	%

5% Shareholders:

Douglas Lake Minerals, Inc.		4,000,000		13.8	%

Double Trouble Productions, LLC.		3,260,000		10.6	%

(1) Under Rule 13d-3 of the Exchange Act a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights.

(2) Based on 28,883,642 shares of our common stock issued and outstanding as of December 3, 2010.

Changes in Control

On June 17, 2009, Rob Slavik acquired an aggregate of 4,520,000 shares of common stock (the “Shares”) of Ruby Creek Resources, Inc. (the “Company”) from Brian Roberts, Ron Shenton, Shannon May, and Shayne May. In addition, on June 18, 2009, Rob Slavik was elected as the Company’s President and Director. These transactions constituted a change of control of the Company.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

Except as described below or in Item 11 above, none of the following parties has, in the last two fiscal years, had any material interest, direct or indirect, in any transaction with us or in any presently proposed transaction that has or will materially affect us:

• any of our directors or officers;

• any person proposed as a nominee for election as a director;

• any person who beneficially owns, directly or indirectly, shares carrying more than 10% of the voting rights attached to our outstanding shares of common stock; or

• any member of the immediate family (including spouse, parents, children, siblings and in-laws) of any of the above persons.

Brian Roberts

On August 22, 2006, Brian Roberts, our President, Chief Executive Officer, Principal Executive Officer and a director, acquired 1,500,001 shares of our common stock at a price of $0.01 per share, for a total purchase price of $15,000. On June 17, 2009, Mr. Slavik, our current President and a Director purchased all 1,500,000 from Mr. Roberts in a private transaction. Mr. Roberts resigned as president on June 18, 2009.

On July 15, 2009, the Company granted 50,000 warrants to Brian Roberts a director at the time of issuance, at an exercise price of $0.05 per share for a term of 5 years, these options fully vested on November 1, 2009. Mr. Roberts resigned as a director on November 7, 2009.

As at August 31, 2009, the Company was indebted to Mr. Roberts for $113 (2008 - $113.). The amount due is non-interest bearing, unsecured and due on demand. Mr. Roberts was also paid fees of $11,286 during the year ended August 31, 2009.

Ron Shenton

On August 31, 2006, Ron Shenton acquired 1,500,000 shares of our common stock at a price of $0.01 per share. Mr. Shenton paid a total purchase price of $15,000 for these shares. On June 17, 2009, Mr. Slavik, our current President and a Director purchased all 1,500,000 from Mr. Shenton in a private transaction.

Shannon May

On August 31, 2006, Shannon May acquired 1,500,000 shares of our common stock at a price of $0.01 per share. Ms. May paid a total purchase price of $15,000 for these shares. On June 17, 2009, Mr. Slavik, our current President and a Director purchased all 1,500,000 from Shannon May in a private transaction.

Rob Slavik

As at August 31, 2009, the Company was indebted to Mr. Slavik for $29,000. The amount due is non-interest bearing, unsecured and due on demand. On August 31, 2010 Mr. Slavik was indebted to the Company in the amount of $7,668.

On September 1, 2009, the Company granted 1,100,000 warrants to Rob Slavik, an officer and director of the Company, subject to his acceptance. Also, on November 7, 2009, the Board unanimously approved the right of Rob Slavik to effect a debt conversion of up to $50,000 based on the price of the Company’s stock at the time of the closing of the OTC Bulletin Board, immediately following the announcement of the Mkuvia Joint Venture Agreement with Douglas Lake Minerals Inc. and the next level financing. As Mr. Slavik was an officer and director of the Company at the time of these transactions, they were not at arm’s-length. On November 16, 2009 Mr. Slavik effected this debt conversion and received $1,000,000 shares of common stock of the Company.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Dale Matheson Carr-Hilton LaBonte LLP served as our independent registered public accounting firm and audited our financial statements for the fiscal years ended August 31, 2010 and 2009. Aggregate fees for professional services rendered to us by our auditor are set forth below:

	Year Ended August 31, 2010		Year Ended August 31, 2009

Audit Fees	$	17,272	$	11,644

Audit-Related Fees		25,720		10,100

Tax Fees			–

All Other Fees			–

Total	$	43,022	$	21,744

Audit Fees

Audit fees are the aggregate fees billed for professional services in the period rendered by our independent auditors for the audit of our annual financial statements and services provided in connection with statutory and regulatory filings or engagements.

Audit Related Fees

Audit related fees are the aggregate fees billed by our independent auditors in the period for assurance and related services that are reasonably related to the review of the financial statements included in each of our quarterly reports and are not described in the preceding category.

Tax Fees

Tax fees will be billed by our independent auditors for tax compliance services provided.

All Other Fees All

Other fees include fees billed by our independent auditors for products or services other than as described in the immediately preceding three categories.

Policy on Pre-Approval of Services Performed by Independent Auditors

It is our audit committee's policy to pre-approve all audit and permissible non-audit services performed by the independent auditors. We approved all services that our independent accountants provided to us in the past two fiscal years.

ITEM 15. EXHIBITS

The following exhibits are filed with this Annual Report on Form 10-K unless filed previously as noted below.

Number		Description of Exhibit

3.1		Articles of Incorporation (1)

3.2		Bylaws (5)

10.1		Founder's Seed Capital Share Private Placement Subscription Agreement (1)

10.2		Subscriber's $0.05 Seed Capital Share Private Placement Subscription Agreement.(1)

10.3		Subscriber's $0.05 Seed Capital Share Private Placement Subscription Agreement.(1)

10.4		Mineral Claims Option Agreement between Ruby Creek Resources, Inc. and Carl von Einsiedel, dated July 15, 2006, as amended August 15, 2006 (1)

10.5		More Creek Claims - Payment Schedule Agreement dated July 9, 2008. (2)

10.6		Amendments to Mineral Claims Option Agreement between Ruby Creek Resources Inc. and Carl von Einsiedel dated July 9, 2008 (3)

10.7		Consulting Agreement between Ruby Creek Resources, Inc. and Brian Roberts dated June 18, 2008 and of July 15, 2009 respectively (5)

10.8		Amendment to the Consulting Agreement between Ruby Creek Resources, Inc. and Brian Roberts, dated November 1, 2009 (5)

10.9		Form of Ruby Creek Resources, Inc. Consulting Warrant (5)

10.10		Advisory Agreement between Ruby Creek Resources, Inc. and Foremost Geological Consulting dated July 15, 2009. (4)

10.11		Consulting Agreement between Ruby Creek Resources, Inc. and David Bukzin dated July 17, 2009. (4)

10.12		Consulting Agreement between Ruby Creek Resources, Inc. and Double Trouble Productions LLC dated July 17, 2009. (4)

10.13		Purchase Agreement for shares between Ruby Creek Resources, Inc. and Double Trouble Productions LLC/Booha Family Partners dated July 20, 2009 (5)

10.14		Consulting Agreement for shares between Ruby Creek Resources, Inc. and M. Littman dated July 20, 2009 (5)

10.15		Consulting Agreement for shares between Ruby Creek Resources, Inc. and B. Krooks dated July 20, 2009(5)

10.16		Consulting Agreement between Ruby Creek Resources, Inc. Kouzelne Mesto Ltd. dated October 1, 2009 (5)

10.17		Advisory Agreement between Ruby Creek Resources, Inc. and R. Shenton dated November 1, 2009 (5)

10.18		Joint Venture Agreement between Ruby Creek Resources, Inc., and Douglas Lake Minerals, Inc. Dated November 7, 2009 (5)

10.19		Letter Agreement (payment extension) between Ruby Creek Resources, Inc., and Douglas Lake Minerals, Inc. dated December 18, 2009 (6)

10.20		Bridge Note dated December 22, 2009 (6)

10.21		Consulting Agreement between the Company and Myron W. Landin (7)

10.22		Joint Venture Development Agreement among between Ruby Creek Resources, Inc., and Douglas Lake Minerals, Inc. and Maita Mkuvia dated March 7, 2010 (8)

10.23		Purchase Agreement by and between Ruby Creek Resources, Inc. and Douglas Lake Minerals, Inc., effective as of June 16, 2010 (9)

10.24		Purchase Agreement by and between Ruby Creek Resources, Inc. and Carlos John Kolos Kapinga, effective as of September 9, 2010 (10)

10.25		Employment Agreement between Ruby Creek Resources, Inc. and T. Toby Hansen dated December 4, 2010 (Filed herewith)

31.1		Certification of Chief Executive (Filed herewith)

31.2		Certification of Chief Financial Officer (Filed herewith)

32.1		Certification of Chief Executive Officer (Filed herewith)

32.2		Certification of Chief Financial Officer (Filed herewith)

(1.)	Incorporated by reference. Filed as an exhibit to the Company's Registration Statement on Form SB-2, as filed with the SEC on November 7, 2006, and incorporated herein by this reference.

(2.)	Incorporated by reference. Filed as an exhibit to the Company's Form 10-K for the year ended August 31, 2008.

(3.)	Incorporated by reference. Filed as an exhibit to the Company's Form 10-Q for the period ended February 28, 2009.

(4.)	Incorporated by reference. Filed as an exhibit to the Company's Form 10-Q for the period ended May 31, 2009.

(5.)	Incorporated by reference. Filed as an exhibit to the Company's annual report on Form 10-K, filed with the SEC on December 10, 2009.

(6.)	Incorporated by reference. Filed as an exhibit to the Company's Form 10-Q for the period ended November 30, 2009.

(7.)	Incorporated by reference. Filed as an exhibit to the Company's Form 8-K dated February 11, 2010.

(8.)	Incorporated by reference. Filed as an exhibit to the Company's Form 8-K dated March 17, 2010.

(9.)	Incorporated by reference. Filed as an exhibit to the Company's Form 8-K dated June 16, 2010.

(10.)

Incorporated by reference. Filed as an exhibit to the Company's Form 8-K dated September 15, 2010.

SIGNATURES

Pursuant to the requirements of Section 13 and 15 (d) 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.

RUBY CREEK RESOURCES, INC.

/s/ ROB SLAVIK
Rob Slavik, President, Chief Executive Officer, Director
Date: December 13, 2010

/s/ MYRON LANDIN
Myron Landin, Chief Financial Officer
Date: December 13, 2010

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Ruby Creek Resources (RBYC) Inactive 10-K2010 FY Annual report

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