Grand Peak Capital 20F 2004 Annual report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________

FORM 20-F

_________________________

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) or (g) OF THESECURITIES EXCHANGE ACT OF 1934 or

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

For the fiscal year ended December 31, 2004, or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to ______________

Commission File No.: 0-13966

BLACK MOUNTAIN CAPITAL CORPORATION

(Exact name of Registrant as specified in its charter)

Yukon Territory, Canada

(Jurisdiction of incorporation or organization)

Suite 613, 375 Water Street, Vancouver, British Columbia, Canada V6B 5C6

(Address of principal executive offices)

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

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

____________________________________

Common Shares without par value

(Title of Class)

____________________________________

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:None

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report:

8,183,733 Common Shares without par value

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of theSecurities 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. YesxNoo

Indicate by check mark which financial statement item the Registrant has elected to follow. Item 17o Item 18x

TABLE OF CONTENTS

Part I........................................................................................................................................................................................................................3

Item 1. Identity of Directors, Senior Management and Advisors.......................................................................................................3

Item 2. Offer Statistics and Expected Timetable....................................................................................................................................3

Item 3. Key Information.............................................................................................................................................................................3

Item 4. Information on the Company.......................................................................................................................................................8

Item 5. Operating and Financial Review and Prospects......................................................................................................................11

Item 6. Directors, Senior Management and Employees.......................................................................................................................14

Item 7. Major Shareholders and Related Party Transactions..............................................................................................................18

Item 8. Finanicial Information...................................................................................................................................................................19

Item 9. The Offer and Listing...................................................................................................................................................................20

Item 10. Additional Information.................................................................................................................................................................20

Item 11. Quantitative and Qualitative Disclosures About Market Risk..............................................................................................24

Item 12. Description of Securities Other than Equity Securities...........................................................................................................24

Part II.......................................................................................................................................................................................................................25

Item 13. Defaults, Dividend Arrearages and Delinquencies..................................................................................................................25

Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds................................................................25

Item 15. Controls and Procedures..............................................................................................................................................................25

Item 16. [Reserved]........................................................................................................................................................................................26

Item 16A. Audit Committee Financial Expert.............................................................................................................................................26

Item 16B. Code of Ethics..............................................................................................................................................................................26

Item 16C. Prinicpal Accountant Fees and Services.................................................................................................................................26

Item 16D. Exemptions from the Listing Standards for Audit Committees...........................................................................................26

Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers...........................................................................26

Part III.....................................................................................................................................................................................................................27

Item 17. Financial Statements.....................................................................................................................................................................27

Item 18. Financial Statements.....................................................................................................................................................................27

Item 19. Exhibits............................................................................................................................................................................................45

SIGNATURES

CERTIFICATION

In this annual report references to the "Company" mean Black Mountain Capital Corporation (formerly, Mercury Partners & Company Inc.) and its subsidiaries unless the context of the sentence clearly suggests otherwise.

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

Forward-Looking Statements

Statements in this annual report, to the extent that they are not based on historical events, constitute forward-looking statements within the meaning of theUnited States Private Securities Litigation Reform Act of 1995. These statements appear in a number of different places in this annual report and include statements regarding the intent, belief or current expectations of the Company and its directors or officers, primarily with respect to the future market size and future operating performance of the Company and its subsidiaries. Forward-looking statements include, without limitation, statements regarding the outlook for future operations, forecasts of future costs and expenditures, evaluation of market conditions, the outcome of legal proceedings, the adequacy of reserves, or other business plans. Investors are cautioned that any such forward-looking statements are not guarantees and may involve risks and uncertainties, and that actual results may differ from those in the forward-looking statements as a result of various factors such as general economic and business conditions, including changes in interest rates, prices and other economic conditions; actions by competitors; natural phenomena; actions by government authorities, including changes in government regulation; uncertainties associated with legal proceedings; technological development; future decisions by management in response to changing conditions; the ability to execute prospective business plans; and misjudgments in the course of preparing forward-looking statements. Investors are advised that these cautionary remarks expressly qualify in their entirety all forward-looking statements attributable to the Company or persons acting on its behalf.

Exchange Rates

In this annual report, unless otherwise specified, all monetary amounts are expressed in United States dollars. The information set forth in this annual report is as at December 31, 2004, unless an earlier or later date is indicated.

Selected Financial Data

The following table summarizes selected consolidated financial data for the Company prepared in accordance with Canadian generally accepted accounting principles ("Canadian GAAP"). Additional information is presented to show the difference which would result from the application of United States generally accepted accounting principles ("U.S. GAAP") to the Company's financial information. For a description of the differences between Canadian GAAP and U.S. GAAP, see Note 16 of the Company's consolidated financial statements included elsewhere in this annual report. The information in the table was extracted from the more detailed consolidated financial statements and related notes included herein and should be read in conjunction with such financial statements and with the information appearing under the heading, "Item 5. Operating and Financial Review and Prospects.

Canadian GAAP

	Year Ended December 31,
	2004			2003			2002 (as restated⁽²⁾)			2001 (as restated⁽²⁾)			2000
	(in thousands, other than per share amounts)
Revenues⁽¹⁾	$	61		$	76		$	184		$	121		$	502
Income (loss) before discontinuedoperations		(1,829	)		(518	)		(365	)		(799	)		74
Discontinued operations income (loss)		-			-			-			-			-
Net income (loss) from continuingoperations		(1,829	)		(518	)		(365	)		(799	)		74
Net income (loss) per share fromcontinuing operations
Basic		(0.31	)		(0.09	)		(0.06	)		(0.16	)		0.02
Fully diluted		(0.31	)		(0.09	)		(0.06	)		(0.16	)		0.02
Net income (loss) per share from discontinued operations
Basic		-			-			-			-			-
Fully diluted		-			-			-			-			-
Total assets		797			2,108			2,261			2,638			2,935
Net assets		(49	)		2,039			2,119			2,475			2,802
Debt		847			69			142			163			133
Shareholders' equity		(49	)		2,039			2,119			2,475			2,802
Capital stock		3,456			3,456			3,456			3,456			2,609
Dividends		269			-			-			-			-
Weighted average common stock outstanding, fully diluted (in thousands of shares)		5,934			5,934			5,934			4,851			4,532

_________

⁽¹⁾ Excludes revenues from discontinued operations.

⁽²⁾

During fiscal 2003, the Company changed from the temporal method of accounting for foreign exchange translation to the current rate method as required by Emerging Issues Committee 130 issued by the Canadian Institute of Chartered Accountants (see Note 2 to the Company's consolidated financial statements). The standard requires restatement and therefore financial statements for fiscal 2002 and 2001 have been restated.

U.S. GAAP

	Year Ended December 31,
	2004			2003			2002 (as restated⁽²⁾)			2001 (as restated⁽²⁾)			2000
	(in thousands, other than per share amounts)
Revenues⁽¹⁾	$	61		$	76		$	184		$	121		$	502
Income (loss) before discontinuedoperations		(1,524	)		(237	)		(286	)		(799	)		1,154
Discontinued operations income (loss)		-			-			-			-			-
Net income (loss) from continuingoperations		(1,524	)		(237	)		(286	)		(799	)		1,154
Net income (loss) per share from continuing operations
Basic		(0.26	)		(0.04	)		(0.05	)		(0.16	)		0.25
Fully diluted		(0.26	)		(0.04	)		(0.05	)		(0.16	)		0.25
Net income (loss) per share from discontinued operations
Basic		-			-			-			-			-
Fully diluted		-			-			-			-			-
Total assets		1,101			2,109			1,826			2,806			4,022
Net assets		254			2,040			1,684			2,643			3,883
Debt		847			69			142			163			139
Shareholders' equity		254			2,040			1,684			2,643			3,883
Capital stock		3,456			3,456			3,456			3,456			2,609
Dividends		269			-			-			-			-
Weighted average common stock outstanding, fully diluted (in thousands of shares)		5,934			5,934			5,934			4,851			4,532

⁽¹⁾ Excludes revenues from discontinued operations.

⁽²⁾

Risk Factors

The Company's primary risks are transaction risks. In addition, the Company has been and may continue to be affected by many other factors, including but not limited to: (1) economic and market conditions, including the liquidity of capital markets; (2) the volatility of market prices, rates and indices; (3) the timing and volume of market activity; (4) inflation; (5) the cost of capital, including interest rates; (6) political events, including legislative, regulatory and other developments; (7) competitive forces, including the Company's ability to attract and retain personnel; (8) support systems; and (9) litigation. In determining whether to make an investment in the Company's capital stock, investors should consider carefully all of the information set forth in this annual report and, in particular, the following risk factors.

Transaction Risks

The Company manages transaction risk through allocating and monitoring its capital investments and carefully screening clients and transactions. Nevertheless, transaction risks can arise from, among other things, the Company's merchant banking and private equity activities and relate to the risks of the proposed transaction. These risks include market risks associated with the Company's role in providing advisory services.

The Company often makes investments in highly unstructured situations and in companies undergoing severe financial stress. Such investments also often involve severe time constraints. These investments may expose the Company to significant transaction risks and place the Company's funds in illiquid situations. An unsuccessful investment may result in the total loss of such investment and may have a material adverse effect on the Company's business, results of operations and financial condition.

Additionally, in order to grow its business, the Company may seek to acquire or invest in new companies. The Company's failure to make such acquisitions may limit its growth. In pursuing acquisition opportunities, the Company may be in competition with other companies having similar growth and investment strategies. Competition for these acquisitions or investment targets could result in increased acquisition or investment prices and a diminished pool of businesses, technologies, services or products available for acquisition or investment.

Competition Risks

The Company conducts its business in a highly competitive environment. Many of its competitors have far greater resources, capital and access to information than the Company. Competition includes firms traditionally engaged in financial services, such as banks, broker-dealers and investment dealers. Increased competition may lead the Company to become involved in transactions with more risk.

Market Risks

Market risk relates to fluctuations in the liquidity of securities, as well as volatility in market conditions generally. The markets for securities and other related products are affected by many factors over which the Company has little or no control. These factors include the financial performance and prospects of specific companies and industries, world markets and economic conditions, the availability of credit and capital, political events and perceptions of market participants.

The Company is exposed to the risk of a market downturn.

As a financial services company, the Company's business is materially affected by conditions in the financial markets and economic conditions generally. In the event of a market downturn, the Company's business, results of operations and financial condition could be adversely affected. In addition, there is no assurance that an active public market for the Company's securities will continue.

A market downturn could lead to a decline in the number and size of the transactions that the Company executes for its clients, including transactions in which the Company provides financial advisory and other services, and to a corresponding decline in the revenues the Company receives from fees.

A downturn in a market could further result in losses to the extent that the Company owns assets in such market. Conversely, to the extent that the Company has sold assets the Company does not own (i.e., if the Company has short positions) in any market, an upturn in such market could expose the Company to potentially unlimited losses as it attempts to cover its short positions by acquiring assets in a rising market.

Even in the absence of a market downturn, the Company is exposed to substantial risk of loss due to market volatility.

A rise in inflation may affect the Company's results.

The Company does not believe that inflation has had a material impact on its revenues or income over the past three fiscal years. In addition, since the Company's assets to a large extent are liquid in nature, they are not significantly affected by inflation. However, increases in inflation could result in increases in the Company's expenses, which may not be readily recoverable in the price of services provided to the

Company's clients. To the extent inflation results in rising interest rates and has other adverse effects on capital markets, it could adversely affect the Company's business, results of operations and financial condition.

Market risk may increase the other risks that the Company faces.

In addition to the market risks described above, market risks could exacerbate the other risks that the Company faces. For example, if the Company incurs substantial trading losses, its need for liquidity could rise sharply while its access to liquidity could be impaired. In addition, in conjunction with a market downturn, the Company's clients and counterparties could incur substantial losses of their own, thereby weakening their financial condition and increasing the Company's credit risk.

Legal and Regulatory Risks

The Company is exposed to legal risks in its business and the volume and amount of damages claimed in litigation against financial intermediaries are increasing. These risks include potential liability under securities or other laws for materially false or misleading statements made in connection with securities and other transactions and, potential liability for advice the Company provides to participants in corporate transactions.

These risks often may be difficult to assess or quantify and their existence and magnitude often remain unknown for substantial periods of time. See Note 9 of the Financial Statements for additional information with respect to the Company's legal and regulatory proceedings.

Employment Risks

The Company's future success depends, in significant part, upon the continued service and performance of its senior management. Losing the services of some or all of these individuals could impair the Company's ability to conduct its business.

Enforcement Risks

The enforcement of civil liabilities by investors under applicable U.S. federal and state securities laws may be adversely affected because the Company is organized under the laws of the Yukon Territory, Canada and none of its officers or directors are residents of the United States.

As a result, it may be difficult or impossible for U.S. investors to effect service of process upon the Company's officers or directors within the United States. It may also be difficult to realize against the Company or its officers or directors, in the United States, upon judgments of U.S. courts for civil liabilities under applicable U.S. federal and state securities laws. Courts in Canada or elsewhere may not enforce: (1) judgments of U.S. courts obtained in actions against the Company or its officers or directors predicated upon the civil liability provisions of applicable U.S. federal and state securities laws; and (2) in original actions, liabilities against the Company or officers or directors predicated upon such laws.

Additionally, the Company is organized under the laws of the Yukon Territory, Canada and its principal operating assets are located outside of the United States. Under bankruptcy laws in the United States, courts typically have jurisdiction over a debtor's property, wherever it is located, including property situated in other countries. Courts outside of the United States may not recognize the U.S. bankruptcy court's jurisdiction. Accordingly, investors may have trouble administering a U.S. bankruptcy case involving a Canadian debtor with property located outside of the United States. Any orders or judgments of a bankruptcy court in the United States may not be enforceable.

Miscellaneous Risks

Certain provisions of the Company's charter documents and the applicable corporate legislation may discourage, delay or prevent a change of control or changes in its management that shareholders consider favourable. Such provisions include authorizing the issuance by its board of directors of preferred stock in series, providing for a classified board of directors with staggered, three-year terms and limiting the persons who may call special meetings of shareholders.

In addition, theInvestment Canada Act (the "ICA") may impose limitations on the rights of non-Canadians to acquire the Company's common shares.

ITEM 4. INFORMATION ON THE COMPANY

History and Development of the Company

The Company was originally incorporated in 1952 under theCanada Corporations Act and was continued under theCanada Business Corporations Act in 1980 and amalgamated with Metanetix Corporation and Canadian Capital Financial Markets (C.C.F.M.) Inc. on January 1, 1995. The Company changed its name on January 22, 1999 from "Hariston Corporation" to"Midland Holland Inc." On January 24, 2000, the Company was continued under theBusiness Corporations Act (Yukon) under the name "Mercury Partners & Company Inc." On December 28, 2001, the Company completed an amalgamation with Pacific Mercantile Company Limited ("PMCL"). The Company changed its name on April 29, 2005 from "Mercury Partners & Company Inc." to "Black Mountain Capital Corporation." The Company's principal place of business is Suite 613, 375 Water Street, Vancouver, British Columbia, Canada V6B 5C6 and its telephone number is (604) 689-7565.

At a special meeting of shareholders held on August 25, 1998, the slate of nominee directors proposed by a dissident shareholder was elected. Following the change in directorship, the Company initiated a comprehensive restructuring plan, which included, among other things, monetizing all non-cash assets, reducing corporate overhead expenses, consolidating the Company's share capital and settling all outstanding litigation. In addition, the Company changed the focus of its business from investing in a wide variety of start-up or early stage businesses to engaging primarily in private equity and merchant banking activities.

On September 26, 2001, shareholders of PMCL and the Company approved the amalgamation between the companies (the "Amalgamation"). Prior to the Amalgamation, PMCL was the largest shareholder of the Company, owning 2,250,219 common shares or approximately 49.5% of the Company.

Under the terms of the Amalgamation Agreement between the Company, PMCL and 940296 Alberta Ltd., a wholly owned subsidiary of the Company, each common share of PMCL was exchanged for five common shares of the Company following the amalgamation of PMCL and 940296 Alberta Ltd., resulting in 3,681,310 shares of the Company being issued to the shareholders of PMCL. The 2,250,219 common shares of the Company owned by PMCL, which had a carrying value of $322,191, are held in treasury for cancellation.

The Company announced a special dividend (the "Dividend") consisting of 0.42 common shares of North Group Limited (TSX Venture Exchange: NOR) ("North Group") for each common share of Mercury. The Company distributed approximately 2,492,075 common shares of North Group to shareholders as of the record date of August 31, 2004. For registered shareholders with addresses in the United States, the shares of North Group which they would otherwise be entitled to was sold on their behalf and the proceeds of the sale have been distributed.

Business Overview

The Company is a publicly traded financial services company engaging primarily in private equity and merchant banking activities in Canada and the United States. The Company's shares are quoted on the NASD OTC Bulletin Board ("OTC") in the United States under the symbol "BMMUF" and on the TSX Venture Exchange, in U.S. dollars, under the symbol "BMM.U". The Company's investment objective is to acquire influential ownership in companies and, through direct involvement, bring about the changes required to realize their potential value. The Company concentrates on return on investment and cash flow to build long-term shareholder value. Accordingly, the Company continually evaluates its existing investments and operations and investigates the possible acquisition of new businesses.

The Company assists companies in developing their business through active involvement in capital financing, acquisitions, business strategy development and execution. The Company develops innovative solutions for projects that are practical, responsible and pragmatic in their implementation. However, the Company takes a cautious approach to new initiatives, selectively allocating capital and concentrating on areas where its financial and management expertise can be best applied.

The Company's principal sources of funds are its available cash resources, bank financing, public financing and the revenues generated from the Company's merchant banking activities and realized investment gains from the Company's private equity operations. The Company has no recurring cash requirements other than repayment of interest and principal on its debt, tax payments and corporate overhead.

Private Equity

The Company's private equity operations include reviewing investment opportunities in undervalued companies or assets, management or leveraged buy-outs and turn around or workout situations. In furtherance of this strategy, the Company often advises and invests in the restructuring of businesses that are having financial distress or have defaulted on their debt obligations. The Company earns advisory fees by providing strategic and financial advice for clients. The following is a brief description of the Company's private equity operations.

Undervalued Companies or Assets

The Company seeks influential ownership in companies or assets whose intrinsic values are not fully reflected in their price. Specifically, the Company invests in businesses that demonstrate consistently high earnings and free cash flow and companies priced at a significant discount in terms of net asset value, earnings multiples or other valuation criteria. The Company works to bring about the changes required to realize the strategic value of those companies.

Management and Leveraged Buy-Outs

The Company invests and assists in arranging financing for a management or succession-leveraged buy-out of a business. The Company invests in equity and mezzanine securities arising from leveraged acquisitions and recapitalizations and other similar types of transactions, which involve significant financial leverage. The Company structures transactions that allow owners to sell part of their equity in advance of their departure while maintaining management continuity.

Turn-Arounds or Workouts

The Company invests in the securities of distressed or troubled companies or assets where the business value is evident but the company suffers from financial or non-financial difficulties. The Company also invests in companies with underperforming management, where the underlying business value is still evident. The Company works to bring about the change required to realize the strategic value of these businesses.

Merchant Banking

The Company's merchant banking operations include financial and management services for corporate finance transactions, including mergers and acquisitions and corporate restructurings. Through merchant banking partnerships, the Company provides companies and their management with investment capital and financial direction. The Company receives fees for services provided including options and other conversion privileges to participate as an equity investor in businesses to which merchant banking services have been provided. The following is a brief description of the Company's merchant banking operations.

Mergers & Acquisitions

The Company is active in public company mergers and acquisitions transactions, including unsolicited takeover bids. The Company assists companies in identifying and financing acquisitions and provides recommendations regarding financial restructuring.

Corporate Restructuring

The Company provides creative and responsible solutions to restructure businesses and their balance sheets so as to improve profitability. In certain circumstances, a company's financial flexibility is enhanced by the company acquiring loans owing to the company's traditional lenders, which are then restructured on financial terms consistent with the company's immediate requirements.

Investment Review

Through its representatives on the board of directors and board committees, the Company plays an active role in setting a company's long-term strategic plans and assessing performance against approved business plans in companies in which it invests. The Company monitors the performance of its investments by requiring the chief executives of each company to present to their respective boards business plans and financial forecasts and targets against which actual performance can be measured.

Competition

The Company currently competes against brokerage firms, investment bankers, merchant banks and other investment managers for appropriate investments. Such businesses are highly competitive and are subject to fluctuations based upon many factors over which the Company has no control, such as the condition of public markets, interest rates and the state of capital markets. Many of the Company's competitors are national or international companies with far greater resources, capital and access to information than the Company. As a result, the Company may become involved in transactions with more risk than if it had greater resources.

Organizational Structure

The following is a list of the Company's significant, but inactive, operating subsidiaries as of December 31, 2004:

Subsidiary	Jurisdiction of Incorporation	Proportion of Ownership Interest
Digital Labs Inc.	Alberta, Canada	100%
Pearson Finance Group Ltd.	Alberta, Canada	100%
Midland Holland Ltd.	Alberta, Canada	100%

Property, Plants and Equipment

The Company's principal executive office is located in Vancouver, British Columbia, Canada, and is leased.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion and analysis of the financial condition and results of operations of the Company for the three years ended December 31, 2004, 2003 and 2002 should be read in conjunction with the consolidated financial statements and related notes included in this annual report. The Company's financial statements included herein were prepared in accordance with Canadian GAAP and are expressed in U.S. dollars. Additional information is presented to show the difference, which would result from the application of U.S. GAAP to the Company's financial information. For a reconciliation of the Company's financial statements included herein to U.S. GAAP, see Note 16 to the financial statements. Certain reclassifications may have been made to the prior periods' financial statements to conform to the current period's presentation.

Restatement of Fiscal 2002 and 2001 Financial Statements

In accordance with Emerging Issues Committee (EIC) 130 of The Canadian Institute of Chartered Accounts (CICA) Handbook, the Company has changed from the temporal method of accounting for foreign exchange translation to the current rate method as of December 31, 2003. Accordingly, the Company has retroactively restated its financial statements for the year ending December 31, 2002 and 2001. Please see Note 3 to the Company's audited financial statements for more information.

Operating Results

The Company operates in both the United States and Canada and, as such, the Company's consolidated financial results are subject to foreign currency exchange rate fluctuations. The Company reports its results of operations in U.S. dollars and translates assets and liabilities into U.S. dollars at the rate of exchange on the balance sheet date. Unrealized gains and losses from these translations are recorded on the consolidated balance sheet as "Cumulative translation adjustment".

Realized investment gains or losses are a recurring element in the Company's revenues and net earnings. Realized investment gains or losses may fluctuate significantly from period to period, with a meaningful effect upon the Company's consolidated net earnings. However, the amount of realized investment gain or loss for any given period has no predictive value, and variations in amount from period to period have no practical analytical value.

The Company's financial results for the past three years are summarized below.

	Year Ended December 31,
	2004			2003			2002 (as restated⁽¹⁾)
Revenue	$	61,170		$	75,704		$	184,341
Operating Expenses		305,135			176,804			153,450
Net loss		(1,828,500	)		(517,555	)		(364,789	)
Net loss per share		(0.31	)		(0.09	)		(0.06	)

⁽¹⁾ During fiscal 2002, the Company changed from the temporal method of accounting for foreign exchange translation to the current rate method as required by Emerging Issues Committee 130 issued by the Canadian Institute of Chartered Accountants (see Note 2 to the Company's consolidated financial statements). The standard requires restatement and therefore financial statements presented for fiscal 2002 have been restated.

Revenues during fiscal 2004, 2003 and 2002 were generated from the Company's merchant banking operations, investment income from the Company's private equity investments and oil and gas royalties. In fiscal 2004, the Company's revenues decreased to $61,170 compared to revenues of $75,704 and $184,341, respectively for the periods ending December 31, 2003 and 2002.

Expenses increased to $305,135 in fiscal 2004 compared to $176,804 in fiscal 2003 and $153,450 in fiscal 2002. General and administrative expenses consisted of professional fees of $123,913, consulting fees, salaries and benefits of $40,008 and non-recoverable GST of $27,732. The Company paid management fees of $65,338 and director fees to independent directors of $11,022 during fiscal 2004. The Company did not pay management fees in fiscal 2003 or 2002.

During March 2005, the Company settled its litigation with Cybersurf by contributing $601,760 (CAD$725,000), which is recorded as a loss on settlement in Other Income (Expense) for the year ending December 31, 2004, in exchange for a full release of claims and withdrawal of the complaint by Cybersurf. Also included in loss of settlement in Other Income (Expense) are legal expenses associated with the Cybersurf litigation. The Company entered into the settlement with Cybersurf due largely to the fact that Cybersurf’s ability to pay costs to the defendants, if unsuccessful, was highly questionable. The Company did not admit to any liability or wrongdoing. Please see Note 9 of the financial statements for more information.

During the year ended December 31, 2004 the Company recorded a loss on sale of long-term investments of $195,854 partially related to when the Company disposed of its investment in North Group Limited in the form of a dividend-in-kind to the Company’s shareholders.

The Company reported a net loss of $1.8 million in fiscal 2004 compared to a net loss of $517,555 in fiscal 2003 and a net loss of $364,789 in fiscal 2002. Basic and diluted loss per common share was $0.31 in 2004 compared to losses of $0.09 and $0.06 in fiscal 2003 and 2002, respectively.

The Company and certain of its subsidiaries have tax loss carry-forwards and other tax attributes, the amount and availability of which are subject to certain qualifications, limitations and uncertainties.

Inflation

The Company does not believe that inflation has had a material impact on revenues or income over the past three fiscal years.

Foreign Currency

The Company's operations are conducted in international markets and its consolidated financial results are subject to foreign currency exchange rate fluctuations. During fiscal 2003 the Company

changed from the temporal method of accounting for foreign exchange translation to the current rate method as required by EIC 130 issued by the CICA (see Note 2 to the Company's consolidated financial statements).

Application of Critical Accounting Policies

The preparation of financial statements in conformity with generally accepted accounting principles requires the Company's 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 periods.

Management routinely makes judgments and estimates about the effects of matters that are inherently uncertain. As the number of variables and assumptions affecting the probable future resolution of the uncertainties increase, these judgments become even more subjective and complex. The Company has identified certain accounting policies, described below, that are the most important to the portrayal of its current financial condition and results of operations. The significant accounting policies are disclosed in Note 2 to the consolidated financial statements included in this annual report.

Marketable securities

Marketable securities are recorded at the lower of cost or quoted market value on a specific identification basis.

Long-terminvestments

Investments in companies over which the Company has significant influence are accounted for by the equity method, whereby the original cost of the shares is adjusted for the Company's share of earnings or losses less dividends since significant influence was acquired. Investments in which the Company has no significant influence and that it intends to hold longer than one year are accounted for on the cost basis and reported as long-term investments. Cost of investments includes acquisition costs of shares as well as legal and consulting costs related to maintaining the Company's interest. Investments are written-down to their estimated net realizable value when there is evidence of a decline in value below their carrying amount that is other than temporary.

A decline in market value may be only temporary in nature or may reflect conditions that are more persistent. Declines may be attributable to general market conditions, either globally or regionally, that reflect prospects of the economy as a whole or prospects of a particular industry or a particular company. Such declines may or may not indicate the likelihood of ultimate recovery of the carrying amount of a

security. Management regularly reviews the Company's portfolio position to determine whether other than temporary decline exists.

In determining whether the decline in value is other than temporary, quoted market price is not the only deciding factor, particularly for thinly-traded securities, large block holdings and restricted shares.

Liquidity and Capital Resources

The Company's principal assets consist of securities, loan and receivables, long term investments and stock of its direct subsidiaries. The Company continuously evaluates its existing operations and investigates possible acquisitions of new businesses and dispositions of businesses in order to maximize its ultimate economic value to shareholders. Accordingly, while the Company does not have any material arrangement, commitment or understanding with respect thereto (except as disclosed in this annual report), further acquisitions, divestitures, investments and changes in capital structure are possible.

The Company's principal sources of funds are its available cash resources, bank financing, public financing and the financial services fees generated from the Company's merchant banking activities and investment gains from the Company's private equity operations. The Company has no recurring cash requirements other than repayment of interest and principal on its debt, tax payments and corporate overhead. In the opinion of management, the working capital is sufficient for the Company's present requirements.

At December 31, 2004, the Company's readily available cash and cash equivalents increased to $657,988 compared to $241,105 at December 31, 2003. Additional sources of liquidity at December 31, 2004 included $112,818 in marketable securities and $22,561 in loan and receivables, compared to $110,000 in marketable securities and $51,651 in loan and receivables at December 31, 2003. The market value of marketable securities as of December 31, 2004 was $417,000. Total current assets at December 31, 2004 increased to $793,367 from $402,756 in 2003.

In fiscal 2004 operations used cash of $807,397 compared with operations using cash of $273,921 during fiscal 2003 and generating cash of $982,714 during fiscal 2002.

Investing activities generated cash of $1,103,875, predominantly from the sale of the Company’s investment in Cybersurf during fiscal 2004 compared to using cash of $244,152 in fiscal 2003 and $619,267 in 2002. Financing activities provided no cash in fiscal 2004, 2003 and 2002.

Financial Position

Total assets of the Company at December 31, 2004 declined to $797,472, compared to $2.1 million at December 31, 2003 due to the dividend-in-kind paid to shareholders during the year. As previously discussed, the Company distributed its investment in North Group Limited to shareholders of the Company during the year.

The Company's liabilities increased to $846,924 in fiscal 2004 from $69,260 in fiscal 2003 due largely to the inclusion of the Cybersurf litigation settlement, which occurred during March 2005, but was recorded as of December 31, 2004.

Shareholders' Equity

Shareholders' equity as of December 31, 2004 was ($49,452) compared to $2 million as of December 31, 2003 due largely to the dividend-in-kind paid to shareholders and the net loss incurred during the year. The Company had 8,183,733 shares issued and outstanding as of December 31, 2004 of which 2,250,219 were held in treasury for cancellation.

Research and Development, Patents and Licenses

Not applicable.

Trend Information

For the current financial year, the Company is not aware of any trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on the Company's net sales or revenues, income from continuing operations, profitability, liquidity or capital resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial condition.

Off-balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Contractual Obligations

	Payments due by period
	Total		Less than1 year		1-3 years		3-5 years		More than 5 years
Operating Lease Obligations	$	1,818	$	1,818	$	-		-		-
Total	$	1,818	$	1,818	$	-		-		-

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

Directors and Senior Management

The Company's Articles provide for three classes of directors with staggered terms. Each director holds office until the expiry of his term or until his successor is elected or appointed, unless his office is earlier vacated in accordance with the Bylaws of the Company or with the provisions of theBusiness Corporations Act (Yukon). At each annual meeting of the Company, a class of directors is elected to hold office for a three year term. Successors to the class of directors whose term expires are identified as being of the same class as the directors they succeed and are elected to hold office for a term expiring at the third succeeding annual meeting of shareholders of the Company. A director appointed or elected to fill a vacancy on the board of directors holds office for the unexpired term of his predecessor. Officers of the Company serve at the discretion of the board of directors of the Company.

The following table sets out certain information concerning the directors and executive officers of the Company:

Name and Present Position with the Company	Principal Occupation	Director Since	Expiration of Current Term of Office
Tom S. Kusumoto⁽¹⁾ President, Secretary and Director	President, Secretary and Director of Black Mountain Capital Corporation, North Group Limited; Director and President of Pacific Northwest Partners Limited.	August 25, 1998	2008⁽²⁾
Greg MacRae⁽¹⁾ Director	President of CSI Capital Solutions Inc.; Director of North Group Limited, Black Mountain Capital Corporation; Director and Secretary of Pacific Northwest Partners Limited; Director of LML Payment Systems Inc.	August 7, 2003	2007⁽²⁾
Alex W. Blodgett⁽¹⁾ Director	President of Call Genie Inc.; Director of Black Mountain Capital Corporation, North Group Limited, Pacific Northwest Partners Limited; formerly: Vice-President, Oxford Bancorp Inc.; Partner, Gordon Capital Corporation; Vice-President of Corporate Finance, Bankers Trust Company	August 25, 1998	2006⁽²⁾

⁽¹⁾ Members of the Audit Committee.

⁽²⁾ Directors' terms expire at the Company's annual meeting of shareholders for the applicable fiscal year. The annual meeting is typically held

following the completion of the fiscal year. The annual meeting for the fiscal year ended December 31, 2004 was held on June 8, 2005, at which Mr. Kusumoto’s term expired. Mr. Kusumoto was elected for election as a Class III director to serve for a term of three years until the annual meeting of shareholders for fiscal 2007, to be held in 2008.

There are no arrangements or understandings with major shareholders, customers or others pursuant to which any person referred to above was selected as a director or executive officer.

The Company does not have a Remuneration Committee of the board of directors. The Company's board of directors is primarily responsible for determining the compensation to be paid to the Company's executive officers and evaluating their performance. The compensation of executives is based upon, among other things, the responsibility, skills and experience required to carry out the functions of each position held by each executive officer and varies with the amount of time spent by each executive officer in carrying out his or her functions on behalf of the Company. The President's compensation is additionally based upon the responsibility, skills and experience required to conduct his functions and upon the time spent by him in relation to the affairs of the Company. In setting compensation rates for executive officers and the President, the board of directors compares the amounts paid to them with the amounts paid to executives in comparable positions at other comparable corporations.

Employment Agreements and Termination of Employment on Change of Control

There are no employment contracts between the Company and its directors or executive officers, nor are there any arrangements with the Company's directors or executive officers for compensation in the event of resignation, retirement or any other termination with the Company or change in the directors' or executive officers' responsibilities following a change of control.

Compensation

During the fiscal year ended December 31, 2004, the Company paid $11,022 in compensation to its independent directors. The Company has not issued or granted any incentive stock options to either the Company's directors or officers or any other non-cash compensation, as more particularly described below. No other funds were set aside or accrued by the Company during the fiscal year ended December 31, 2004 to provide pension, retirement or similar benefits for directors or officers of the Company pursuant to any existing plan provided or contributed to by the Company.

The Company is required, under applicable securities legislation in Canada, to disclose to its shareholders details of compensation paid to certain of its directors and executive officers. The following fairly reflects material information regarding compensation paid thereto.

Executive Compensation

The following table sets forth certain summary information concerning compensation paid or accrued for services rendered to the Company in all capacities during each of the last three financial years of the Company to its Chief Executive Officer and to the other executive officers of the Company who received a combined salary and bonus in excess of Cdn. $150,000 during the financial year ended December 31, 2004 (the "Named Executive Officer"):

SUMMARY COMPENSATION TABLE

Name And Principal Position	Year Ended December, 31	Annual Compensation			Long Term Compensation			All Other Compensation ($)
		Salary ($)	Bonus ($)	Other Annual Compensation ($)	Awards		Payouts
					Securities Under Options/ SARs⁽¹⁾ Granted (#)	Restricted Shares or Share Units ($)	LTIP⁽²⁾ Payouts ($)
Tom S. Kusumoto President and Secretary⁽³⁾	2004 2003 2002	Nil Nil Nil	Nil Nil Nil	$90,000⁽⁴⁾ Nil Nil	Nil Nil Nil	Nil Nil Nil	Nil Nil Nil	Nil Nil Nil

________________________________

(1) Stock appreciation rights.

(2) Long-term incentive plan.

(3) Tom S. Kusumoto acts as the Chief Executive Officer and Chief Financial Officer of the Corporation.

(4) Fees paid to Geko Bank Corp., a company wholly owned by Tom S. Kusumoto.

Options to Purchase Securities

During the year ended December 31, 2004, the Company’s shareholders approved the adoption of a stock option plan whereby the Company is authorized to grant options to officers and directors, employees and consultants enabling them to acquire up to 10% of the issued and outstanding common stock of the Company. The plan is subject to the rules of the TSX Venture Exchange (“TSX-V”). Under the plan, the exercise price of each option cannot be less than the price permitted by the TSX-V. The options can be granted for a maximum term of five years or as allowed by the TSX-V.

The Company also has outstanding incentive stock options entitling former directors of the Company to acquire an aggregate of 120,000 common shares at an exercise price of $1.25 per share, which expired on February 2, 2005.

Option Grants During the Most Recently Completed Fiscal Year

The Company did not grant any options to the Named Executive Officer during the fiscal year ended December 31, 2004.

Aggregated Option Exercises During the Most Recently Completed Fiscal Year and Fiscal Year End Option Values

The Named Executive Officer does not hold any options or freestanding SARs to acquire securities of the Company and did not acquire any securities of the Company on the exercise of options or freestanding SARs during the financial year ended December 31, 2004.

Board Practices (Audit Committee)

Mandate

The primary function of the audit committee (the "Committee") is to assist the board of directors in fulfilling its financial oversight responsibilities by reviewing the financial reports and other financial information provided by the Corporation to regulatory authorities and shareholders, the Corporation's systems of internal controls regarding finance and accounting and the Corporation's auditing, accounting and financial reporting processes. Consistent with this function, the Committee will encourage continuous improvement of, and should foster adherence to, the Corporation's policies, procedures and practices at all levels. The Committee's primary duties and responsibilities are to: (i) serve as an independent and objective party to monitor the Corporation's financial reporting and internal control system and review the Corporation's financial statements; (ii) review and appraise the performance of the Corporation's external auditors; and (iii) provide an open avenue of communication among the Corporation's auditors, financial and senior management and the board of directors.

Composition

The members of the Committee are currently Tom S. Kusumoto, Greg MacRae, and Alex Blodgett, the majority of whom are free from any relationship that, in the opinion of the board of directors, would interfere with the exercise of his or her independent judgment as a member of the Committee.

Currently, the Committee has at least one member with accounting or related financial management expertise. All members of the Committee that are not financially literate will work towards becoming financially literate to obtain a working familiarity with basic finance and accounting practices. For the purposes of the Corporation's Charter, the definition of "financially literate" is the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can presumably be expected to be raised by the Corporation's financial statements.

Meetings

The Committee meets annually or more frequently as circumstances dictate. As part of its job to foster open communication, the Committee meets with the external auditors.

Responsibilities and Duties

To fulfill its responsibilities and duties, the Committee:

Documents/Reports Review

(a) Reviews and updates its Charter annually.

(b) Reviews the Corporation's financial statements, MD&A, any annual and interim earnings and press releases before the Corporation publicly discloses this information and any reports or other financial information (including quarterly financial statements), which are submitted to any governmental body, or to the public, including any certification, report, opinion or review rendered by the external auditors.

External Auditors

(a) Reviews annually the performance of the external auditors who shall be ultimately accountable to the board of directors and the Committee as representatives of the shareholders of the Corporation.

(b) Obtains annually a formal written statement of external auditors setting forth all relationships between the external auditors and the Corporation, consistent with Independence Standards Board Standard 1.

(c) Reviews and discusses with the external auditors any disclosed relationships or services that may impact the objectivity and independence of the external auditors.

(d) Takes or recommends that the full board of directors take appropriate action to oversee the independence of the external auditors.

(e) Advises the board of directors on selection and, where applicable, the replacement of the external auditors nominated annually for shareholder approval.

(f) At each meeting, consults with the external auditors, without the presence of management, about the quality of the Corporation's accounting principles, internal controls and the completeness and accuracy of the Corporation's financial statements.

(g) Reviews and approves the Corporation's hiring policies regarding partners, employees and former partners and employees of the present and former external auditors of the Corporation.

(h) Reviews with management and the external auditors the audit plan for the year-end financial statements and intended template for such statements.

(i) Reviews and pre-approves all audit and audit-related services and the fees and other compensation related thereto, and any non-audit services, provided by the Corporation's external auditors. The pre-approval requirement is waived with respect to the provision of non-audit services if:

(1) The aggregate amount of all such non-audit services provided to the Corporation constitutes not more than five (5%) percent of the total amount of revenues paid by the Corporation to its external auditors during the fiscal year in which the non-audit services are provided;

(2) Such services were not recognized by the Corporation at the time of the engagement to be non-audit services; and

(3) Such services are promptly brought to the attention of the Committee by the Corporation and approved prior to the completion of the audit by the Committee or by one or more members of the Committee who are members of the board of directors to whom authority to grant such approvals has been delegated by the Committee.

Provided the pre-approval of the non-audit services is presented to the Committee's first scheduled meeting following such approval such authority may be delegated by the Committee to one or more independent members of the Committee.

Financial Reporting Processes

(a) In consultation with the external auditors, reviews with management the integrity of the Corporation's financial reporting process, both internal and external.

(b) Considers the external auditor's judgments about the quality and appropriateness of the Corporation's accounting principles as applied in its financial reporting.

(c) Considers and approves, if appropriate, changes to the Corporation's auditing and accounting principles and practices as suggested by the external auditors and management.

(d) Reviews significant judgments made by management in the preparation of the financial statements and the view of the external auditors as to appropriateness of such judgments.

(e) Following completion of the annual audit, reviews separately with management and the external auditors any significant difficulties encountered during the course of the audit, including any restrictions on the scope of work or access to required information.

(f) Reviews any significant disagreement among management and the external auditors in connection with the preparation of the financial statements.

(g) Reviews with the external auditors and management the extent to which changes and improvements in financial or accounting practices have been implemented.

(h) Reviews any complaints or concerns about any questionable accounting, internal accounting controls or auditing matters.

(i) Reviews the certification process.

(j) Establishes a procedure for the confidential, anonymous submission by employees of the Corporation of concerns regarding questionable accounting or auditing matters.

Other

Reviews any related party transactions.

Composition of the Audit Committee

The following are the members of the Audit Committee:

Tom S. Kusumoto Not independent* Financially literate*

Greg MacRae Independent* Financially literate*

Alex Bodgett Independent* Financially literate*

* As defined by Multilateral Instrument 52-110,Audit Committees("MI 52-110").

Audit Committee Oversight

At no time since the commencement of the Corporation's most recently completed financial year was a recommendation of the Committee to nominate or compensate an external auditor not adopted by the board of directors of the Corporation.

Employees

As at December 31, 2004, the Company employed one person.

Share Ownership

As at June 28, 2005, the Named Executive Officer beneficially owned, directly or indirectly 1,352,770 shares, or approximately 16.5%, of the Company's outstanding common shares.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

Major Shareholders

To the knowledge of the Company's directors and senior officers, the following table sets forth certain information as at June 28, 2005 concerning the ownership of the Company's common shares as to each person known by the directors and senior officers, based solely upon public records and filings, to be the direct and/or indirect owner of more than five (5%) percent of the Company's common shares:

Title of Class	Identity of Person or Group	Amount Owned	Percentage of Class

Common Shares	Tom S. Kusumoto⁽¹⁾	1,352,770	16.5%

________________

⁽¹⁾ 552,490 shares are held by Harrop Country Fair Limited and 654,780 shares are held by Mercury Finance Group Ltd. Both companies are wholly-owned by Tom S. Kusumoto. On May 30, 2005 Mr. Tom S. Kusumoto indirectly acquired, through Mercury Finance Group Inc., a total of 654,780 common shares of the Corporation, which represents approximately eight (8%) percent of the outstanding common shares of the Corporation, through private transactions.

All of the Company's common shares carry the same voting rights. The Company's officers and directors, as a group, own or control, directly or indirectly, an aggregate of 1,352,770 common shares, representing approximately 16.5% of the Company's outstanding common shares.

To the extent known to the company, the company is not directly or indirectly owned or controlled by another corporation, by any foreign government or by any other natural or legal person(s) severally or jointly.

The company is unaware of any arrangements which may at a subsequent date result in a change in control of the company.

Shareholder Distribution

As at June 14, 2005, there were approximately 67 holders of record of the Company's common shares. Approximately 1,985,875, or 24.3%, of the Company's common shares are held of record by 35 U.S. holders.

Related Party Transactions

Other than as disclosed herein, to the best of the Company's knowledge, there have been no material transactions since January 1, 2004 to which the Company was or is a party and in which a director or officer of the Company, or any relative or spouse of any director or officer, or any relative of such spouse who has the same home as such person or who is a director or officer of any subsidiary of the Company, has or will have a direct or indirect material interest, nor were any directors or officers of the Company, or any associates of such directors or officers, indebted to the Company or any of its subsidiaries during this period.

ITEM 8. FINANCIAL INFORMATION

Consolidated Statements and Other Financial Information

See "Item 18. Financial Statements" for financial statements filed as part of this annual report.

Legal Proceedings

The Company is subject to routine litigation incidental to the Company's business and is named from time to time as a defendant in various legal actions arising in connection with the Company's activities. The Company is also involved, from time to time, in investigations and proceedings by governmental and self-regulatory agencies. Some of these legal actions, investigations and proceedings may result in adverse judgments, penalties or fines. Please see Note 9 of the financial statements for further information.

In view of the inherent difficulty of predicting the outcome of such matters, particularly in cases in which substantial damages are sought, the Company cannot state what the eventual outcome of pending matters will be. The Company is contesting the allegations made in each pending matter and believes, based on current knowledge and after consultation with counsel, that the outcome of such matters will not have a material adverse effect on the Company's consolidated financial condition, but may be material to the Company's operating results for any particular period, depending on the level of the Company's income for such period.

The following is a description of material legal proceedings involving the Company.

Oil and Gas Properties

A statement of claim has been filed against the Company to recover certain oil and gas properties, which the claimant alleges were sold to it by the former management of the Company. The Company believes these oil and gas properties were not included as part of the properties sold to the claimant. The Company has offered to transfer certain of the interests in exchange for a waiver of court costs.

Cybersurf Litigation

During the year ended December 31, 2003, Cybersurf Corp. (“Cybersurf”) filed a statement of claim claiming that the Company engaged in improper actions during the Company’s attempt to replace the board of directors of Cybersurf at its annual general meeting held on November 28, 2002. As a result of the statement of claim, Cybersurf postponed its annual general meeting for almost two years. The Company was Cybersurf’s largest shareholder until it sold its investment during the year ended December 31, 2004 for proceeds of $1,125,037. During the year ended December 31, 2004, the Company paid a court judgment of $79,003 for costs related to the Company’s legal challenge.

On March 23, 2005, the Company announced it had entered into an agreement to settle and dismiss its litigation with Cybersurf. The Company did not admit to any liability or wrongdoing. Pursuant to the settlement, the Company contributed $601,760 in exchange for a full release of claims and a withdrawal of the complaints of Cybersurf. This amount and related legal costs of $699,793 have been recorded as a loss on settlement of lawsuit for the year ended December 31, 2004.

Dividend Information

The Company paid a dividend-in-kind, valued at $268,729, to shareholders in the form of shares of North Group Limited.

Any decision to pay dividends on the common shares in the future will be made by the board of directors on the basis of earnings, financial requirements and other conditions existing at the time. Currently, the board does not intend to pay any dividends.

Significant Changes

No significant changes have occurred since the date of the financial statements provided in Item 18 below.

Item 9. The Offer and Listing

Markets and Price History

The Company's common shares are quoted on the OTC Bulletin Board under the symbol "BMMUF" and, on the TSX Venture Exchange, in U.S. dollars, under the symbol "BMM.U". The following table sets forth the high and low sales prices of the Company's common shares on the OTC and TSX Venture Exchange for the periods indicated:

	OTC BB				TSX Venture Exchange
	High		Low		High		Low

Annual Highs and Lows

2000⁽¹⁾	$	1.25	$	0.125	$	0.20	$	0.15
2001		0.28		0.08		0.35		0.12
2002		0.76		0.15		0.65		0.13
2003		0.75		0.23		0.60		0.15
2004		0.25		0.05		0.22		0.09

Quarterly Highs and Lows

2003
First Quarter		0.75		0.40		0.60		0.50
Second Quarter		0.55		0.35		0.55		0.35
Third Quarter		0.35		0.35		0.35		0.24
Fourth Quarter		0.35		0.23		0.24		0.15
2004
First Quarter		0.23		0.23		0.19		0.17
Second Quarter		0.23		0.152		0.22		0.15
Third Quarter		0.25		0.082		0.18		0.12
Fourth Quarter		0.105		0.05		0.12		0.11

Most Recent Six Months: Highs and Lows

2005
January		0.23		0.23		0.185		0.17
February		0.23		0.23		0.19		0.17
March		0.23		0.23		0.19		0.19
April		0.23		0.15		0.22		0.15
May		0.20		0.20		0.22		0.15
June⁽²⁾		0.10		0.10		0.135		0.12

⁽¹⁾ The Company's common shares were listed on the TSX Venture Exchange as of November 27, 2000. ⁽²⁾ As of June 27, 2005.

ITEM 10. ADDITIONAL INFORMATION

Articles and Bylaws

The Company is organized under the laws of the Yukon Territory, Canada and has been assigned corporate access number 31180.

The Company's Articles and Bylaws do not contain a description of the Company's objects and purposes, except insofar as to restrict the Company from carrying on the business of a railway, steamship, air transport, canal, telegraph, telephone or irrigation company (see section 5 of the Articles). The Company may perform any and all corporate activities permissible under the laws of the Yukon Territory.

The Company's Articles and Bylaws do not restrict a director's power to vote on a proposal, arrangement or contract in which the director is materially interested, vote compensation to themselves or any other members of their body in the absence of an independent quorum or exercise borrowing powers. There is no mandatory retirement age for the Company's directors and the Company's directors are not required to own securities of the Company in order to serve as directors.

The Company's authorized capital consists of an unlimited number of common shares without par value and an unlimited number of class A preferred shares. The Company's class A preferred shares may be issued in one or more series and the Company's directors may fix the number of shares which is to comprise each series and the designation, rights, privileges, restrictions and conditions attaching to each series. Currently, the Company has not issued any class A preferred shares.

Holders of the Company's common shares are entitled to receive notice of, attend at and vote at all meetings of shareholders, except meetings at which only holders of a specified class of shares are entitled to vote, receive any dividend declared by the Company and, subject to the rights, privileges, restrictions and conditions attaching to any other class of shares of the Company, receive the remaining property of the Company upon dissolution, liquidation or winding-up.

The Company's class A preferred shares of each series rank on a parity with the Company's class A preferred shares of any other series and are entitled to a preference over the Company's common shares with respect to the payment of dividends and the distribution of assets or return of capital in the event of liquidation, dissolution or winding-up of the Company.

The provisions in the Company's Articles attaching to the Company's common shares and class A preferred shares may be altered, amended, repealed, suspended or changed by the affirmative vote of the holders of not less than two-thirds of the common shares and two-thirds of the class A preferred shares, respectively.

The Company's Articles provide for three classes of directors with staggered terms. Each director holds office until the expiry of his term or until his successor is elected or appointed, unless his office is earlier vacated in accordance with the Company's Bylaws or with the provisions of theBusiness Corporations Act (Yukon). At each annual meeting of the Company, a class of directors is elected to hold office for a three year term. Successors to the class of directors whose term expires are identified as being of the same class as the directors they succeed and are elected to hold office for a term expiring at the third succeeding annual meeting of shareholders. A director appointed or elected to fill a vacancy on the board of directors holds office for the unexpired term of his predecessor.

An annual meeting of shareholders must be held at such time in each year not later than 15 months after the last preceding annual meeting and at such place as the Company's board of directors, or failing it, the Company's Chairman, Managing Director or President, may from time to time determine. The holders of not less than five (5%) percent of the Company's issued shares that carry the right to vote at a meeting may requisition the Company's directors to call a meeting of shareholders for the purposes stated in the requisition. The quorum for the transaction of business at any meeting of shareholders is two persons present in person or by proxy who together hold or represent by proxy in aggregate not less than one-third of the Company's outstanding shares entitled to vote at the meeting. Only persons entitled to vote, the Company's directors and auditor and others who, although not entitled to vote, are otherwise entitled or required to be present, are entitled to be present at a meeting of shareholders.

As set forth above, the Company's Articles and Bylaws contain certain provisions that would have an effect of delaying, deferring or preventing a change in control of the Company, including authorizing the issuance by the Company's board of directors of preferred stock in series, providing for a classified board of directors with staggered, three-year terms and limiting the persons who may call special meetings of shareholders. The Company's Articles and Bylaws do not contain any provisions that would operate only with respect to a merger, acquisition or corporate restructuring of the Company.

The Company's Bylaws do not contain any provisions governing the ownership threshold above which shareholder ownership must be disclosed.

Material Contracts

On June 14, 2005 the Company announced that it had entered into a settlement agreement with the Alberta Securities Commission (“ASC”) regarding the breach of Alberta securities laws respecting control persons, insiders, and takeover bids. The Company entered into the agreement to, among other things, mitigate the ongoing expense of litigation. The Company has agreed to pay the ASCCdn. $40,000 and an additionalCdn.$10,000 in partial satisfaction of the investigation costs to resolve this matter.

On March 23, 2005, the Company announced that it had entered into an agreement to settle and dismiss its litigation with Cybersurf. The Company did not admit to any liability or wrongdoing. Pursuant to the settlement, the Company contributed $601,760 in exchange for a full release of claims and a withdrawal of the complaints of Cybersurf. This amount and related legal costs of $699,793 have been recorded as a loss on settlement of lawsuit for the year ended December 31, 2004.

There have been no other material contracts entered into by the Company during the preceding two years.

Exchange Controls

There are presently no governmental laws, decrees or regulations in Canada which restrict the export or import of capital, or which impose foreign exchange controls or affect the remittance of interest, dividends or other payments to non-resident holders of the Company's common shares. However, any remittances of dividends to United States residents are subject to a 15% withholding tax (five percent if the beneficial owner of the dividends is a corporation owning at least 10% of the Company's voting shares) pursuant to the Canada-U.S. Tax Convention (1980), as amended (the "Treaty"). See "Item 10. Additional Information - Taxation".

Except as provided in the ICA, there are no limitations specific to the rights of non-Canadians to hold or vote the Company's common shares under the laws of Canada or the Yukon Territory, or in the Company's charter documents. The following summarizes the principal features of the ICA for non-Canadian residents proposing to acquire the Company's common shares. This summary is of a general nature only and is not intended to be, and should not be construed to be, legal advice to any holder or prospective holder of the Company's common shares, and no opinion or representation to any holder or prospective holder of the Company's common shares is hereby made. Accordingly, holders and prospective holders of the Company's common shares should consult with their own legal advisors with respect to the consequences of purchasing and owning the Company's common shares.

The ICA governs the acquisition of Canadian businesses by non-Canadians. Under the ICA, non-Canadian persons or entities acquiring "control" (as defined in the ICA) of a corporation carrying on business in Canada are required to either notify, or file an application for review with, Industry Canada. Industry Canada may review any transaction which results in the direct or indirect acquisition of control of a Canadian business, where the gross value of corporate assets exceeds certain threshold levels (which are higher for investors from members of the World Trade Organization ("WTO"), including Americans, or WTO member-controlled companies) or where the activity of the business is related to Canada's cultural heritage or national identity. No change of voting control will be deemed to have occurred, for purposes of the ICA, if less than one-third of the voting control of a Canadian corporation is acquired by an investor.

If an investment is reviewable under the ICA, an application for review in the form prescribed is normally required to be filed with Industry Canada prior to the investment taking place, and the investment may not be implemented until the review has been completed and the Minister responsible for the ICA is satisfied that the investment is likely to be of net benefit to Canada. If the Minister is not satisfied that the investment is likely to be of net benefit to Canada, the non-Canadian applicant must not implement the investment, or if the investment has been implemented, may be required to divest itself of control of the Canadian business that is the subject of the investment.

Certain transactions relating to the Company's common shares would be exempt from the ICA, including:

(a)	the acquisition of the Company's common shares by a person in the ordinary course of that person's business as a trader or dealer in securities;

(b)	the acquisition of control of the Company in connection with the realization of security granted for a loan or other financial assistance and not for a purpose related to the provisions of the ICA; and

(c)	the acquisition of control of the Company by reason of an amalgamation, merger, consolidation or corporate reorganization following which the ultimate direct or indirect control in fact of the Company, through ownership of the Company's common shares, remains unchanged.

Taxation

Certain Canadian Federal Income Tax Consequences

The Company considers that the following general summary fairly describes the principal Canadian federal income tax consequences applicable to a holder of the Company's common shares who is a resident of the United States, who is not, will not be and will not be deemed to be a resident of Canada for purposes of theIncome Tax Act (Canada) (the "ITA") and any applicable tax treaty and who does not use or hold, and is not deemed to use or hold, his common shares of the Company in connection with carrying on a business in Canada (a "non-resident holder").

This summary is based upon the current provisions of the ITA, the regulations thereunder (the "Regulations"), the current publicly announced administrative and assessing policies of the Canada Customs and Revenue Agency and the Treaty. This summary also takes into account the amendments to the ITA and Regulations publicly announced by the Minister of Finance (Canada) prior to the date hereof (the "Tax Proposals") and assumes that all such Tax Proposals will be enacted in their present form. However, no assurances can be given that the Tax Proposals will be enacted in the form proposed, or at all. This summary is not exhaustive of all possible Canadian federal income tax consequences applicable to a holder of common shares of the Company and, except for the foregoing, this summary does not take into account or anticipate any changes in law, whether by legislative, administrative or judicial decision or action, nor does it take into account provincial, territorial or foreign income tax legislation or considerations, which may differ from the Canadian federal income tax consequences described herein.

This summary is of a general nature only and is not intended to be, and should not be construed to be, legal, business or tax advice to any particular holder or prospective holder of the Company's common shares, and no opinion or representation with respect to the tax consequences to any holder or prospective holder of the Company's common shares is made. Accordingly, holders and prospective holders of the Company's common shares should consult their own tax advisors with respect to the income tax consequences of purchasing, owning and disposing of the Company's common shares in their particular circumstances.

Dividends

Dividends paid on the Company's common shares to a non-resident holder will be subject under the ITA to withholding tax at a rate of 25% subject to a reduction under the provisions of an applicable tax treaty, which tax is deducted at source by the Company. The Treaty provides that the ITA's standard 25% withholding tax rate is reduced to 15% on dividends paid on shares of a corporation resident in Canada (such as the Company) to residents of the United States, and also provides for a further reduction of this rate to five (5%) percent where the beneficial owner of the dividends is a corporation resident in the United States that owns at least 10% of the voting shares of the corporation paying the dividend.

Capital Gains

A non-resident holder is not subject to tax under the ITA in respect of a capital gain realized upon the disposition of a common share of the Company unless such share represents "taxable Canadian property" (as defined in the ITA) to the holder thereof. The Company's common shares generally will be considered taxable Canadian property to a non-resident holder if:

(a)	the non-resident holder;

(b)	persons with whom the non-resident holder did not deal at arm's length; or

(c)	the non-resident holder and persons with whom such non-resident holder did not deal at arm's length,

owned or had an interest in an option in respect of not less than 25% of the issued shares of any class of the Company's capital stock at any time during the 60 month period immediately preceding the disposition of such shares. In the case of a non-resident holder to whom shares of the Company represent taxable Canadian property and who is resident in the United States, no Canadian taxes will generally be payable on a capital gain realized on such shares by reason of the Treaty unless the value of such shares is derived principally from real property situated in Canada.

Certain United States Federal Income Tax Consequences

The following is a general discussion of certain possible United States Federal foreign income tax matters under current law, generally applicable to a U.S. Holder (as defined below) of the Company's common shares who holds such shares as capital assets. This discussion does not address all aspects of United States Federal income tax matters and does not address consequences peculiar to persons subject to special provisions of Federal income tax law, such as those described below as excluded from the definition of a U.S. Holder. In addition, this discussion does not cover any state, local or foreign tax consequences. See "Certain Canadian Federal Income Tax Consequences" above.

The following discussion is based upon theInternal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations, published Internal Revenue Service ("IRS") rulings, published administrative positions of the IRS and court decisions that are currently applicable, any or all of which could be materially and adversely changed, possibly on a retroactive basis, at any time. In addition, this discussion does not consider the potential effects, both adverse and beneficial, of any recently proposed legislation which, if enacted, could be applied, possibly on a retroactive basis, at any time. No assurance can be given that the IRS will agree with such statements and conclusions, or will not take, or a court will not adopt, a position contrary to any position taken herein.

The following discussion is for general information only and is not intended to be, nor should it be construed to be, legal, business or tax advice to any holder or prospective holder of the Company's common shares, and no opinion or representation with respect to the United States Federal income tax consequences to any such holder or prospective holder is made. Accordingly, holders and prospective holders of common shares should consult their own tax advisors with respect to Federal, state, local, and foreign tax consequences of purchasing, owning and disposing of the Company's common shares.

U.S. Holders

As used herein, a "U.S. Holder" includes a holder of the Company's common shares who is a citizen or resident of the United States, a corporation created or organized in or under the laws of the United States or of any political subdivision thereof, any entity which is taxable as a corporation for U.S. tax purposes and any other person or entity whose ownership of the Company's common shares is effectively connected with the conduct of a trade or business in the United States. A U.S. Holder does not include persons subject to special provisions of Federal income tax law, such as tax-exempt organizations, qualified retirement plans, financial institutions, insurance companies, real estate investment trusts, regulated investment companies, broker-dealers, non-resident alien individuals or foreign corporations whose ownership of the Company's common shares is not effectively connected with the conduct of a trade or business in the United States and shareholders who acquired their shares through the exercise of employee stock options or otherwise as compensation.

Foreign Tax Credit

A U.S. Holder who pays (or has had withheld from distributions) Canadian income tax with respect to the ownership of the Company's common shares may be entitled, at the option of the U.S. Holder, to either a deduction or a tax credit for such foreign tax paid or withheld. Generally, it will be more advantageous to claim a credit because a credit reduces United States Federal income taxes on a dollar-for-dollar basis, while a deduction merely reduces the taxpayer's income subject to tax. This election is made on a year-by-year basis and generally applies to all foreign income taxes paid by (or withheld from) the U.S. Holder during that year. There are significant and complex limitations which apply to the tax credit, among which is an ownership period requirement and the general limitation that the credit cannot exceed the proportionate share of the U.S. Holder's United States income tax liability that the U.S. Holder's foreign source income bears to his or its worldwide taxable income. In determining the application of this limitation, the various items of income and deduction must be classified into foreign and domestic sources. Complex rules govern this classification process. There are further limitations on the foreign tax credit for certain types of income such as "passive income", "high withholding tax interest", "financial services income", "shipping income", and certain other classifications of income.The availability of the foreign tax credit and the application of these complex limitations on the tax credit are fact specific and holders and prospective holders of the Company's common shares should consult their own tax advisors regarding their individual circumstances.

Passive Foreign Investment Corporation

The Company does not believe that it is a passive foreign investment corporation (a "PFIC"). If a U.S. Holder disposes of shares in a PFIC, any resultant gain will be subject to a tax that is determined by apportioning the gain pro rata over the entire holding period of the shares. The amount of gain that is apportioned to the current year, and to any pre-1987 holding period, is included in the U.S. Holder's current income.

The tax on the amount apportioned to any prior years beginning with 1987 is calculated using the highest tax rate in each applicable year. In addition, interest compounded daily is charged on the tax due for each prior year from the due date of the return for the respective year to the due date for the current year. The interest rate is set quarterly. The U.S. Holder's current year tax is increased by the special tax and interest on amounts apportioned to prior years.

A U.S. Holder can avoid this special tax and interest charge by making a permanent election to treat a PFIC as a "qualified electing fund" and to report in each year thereafter such shareholder's pro rata share of the ordinary earnings and net capital gains of a PFIC. If the election is not made in the first year that the U.S. Holder owns the shares, a special election would have to be made to cleanse the effect of the prior year's holding periods.

These rules apply similarly to distributions from a PFIC that would be considered excess distributions. Complex rules govern the determination of applicable gains and excess distributions, the calculation of the amounts allocated pro rata to prior years, the resultant tax and applicable interest, and the qualified electing fund elections whether as pedigreed or non-pedigreed.Holders and prospective holders of common shares of a PFIC should consult their own tax advisors regarding their individual circumstances.

Documents on Display

The Company is subject to the informational requirements of theSecurities Exchange Act of 1934, as amended (the “Exchange Act”). In accordance with these requirements, the Company files reports and other information with the SEC. These materials, including this annual report and the exhibits hereto, may be inspected and copied at the public reference facilities maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the SEC's regional offices at 175 West Jackson Boulevard, Suite 900, Chicago, Illinois 60604, and 233 Broadway, New York, New York 10279. Copies of the materials may be obtained from the principal office of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. The public may obtain information on the operation of the SEC's public reference facilities by calling the SEC in the United States at 1-800-SEC-0330. The SEC also maintains a web site at http://www.sec.gov that contains reports, proxy statements and other information regarding registrants that file electronically with the SEC.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The primary market risks that the Company is exposed to are changes in equity prices which may affect the Company's results of operations and financial condition. Other market risks include interest rate and foreign currency exchange rate fluctuations. The Company manages its exposure to interest rate fluctuations by maintaining its cash balances in deposits at banks and in highly liquid short-term investments, which lowers the Company's exposure to interest rate fluctuations. The Company has not entered into any derivative hedging instruments to reduce the risk of exchange rate fluctuations.

The Company manages other risks through internal risk management policies. If any of the variety of instruments and strategies the Company utilizes to manage its exposure to various types of risk are not effective, the Company may incur losses. Many of the Company's strategies are based on historical trading patterns and correlations. However, these strategies may not be fully effective in mitigating the Company's risk exposure in all market environments or against all types of risk. Unexpected market developments may affect the Company's risk management strategies during this time, and unanticipated developments could impact its risk management strategies in the future.

Changes in trading prices of equity securities may affect the fair value of equity securities or the fair value of other securities convertible into equity securities. An increase in trading prices will increase the fair value and a decrease in trading prices will decrease the fair value of equity securities or instruments convertible into equity securities. The Company's financial instruments which may be sensitive to fluctuations in equity prices are investments and debt obligations.

The Company's reporting currency is the U.S. dollar. The majority of the Company's foreign exchange rate exposure for financial statement reporting purposes relates to the translation of the Company's Canadian dollar investments into U.S. dollars which is impacted by changes in the exchange rate between the U.S. dollar and the Canadian dollar. Significant fluctuations in the U.S. dollar to Canadian dollar exchange rate affect the number of Canadian dollars required to satisfy the Company's debts denominated in U.S. dollars. As of December 31, 2004 the majority of all of the Company's investments were in Canadian dollars.

The Company has prepared a sensitivity analysis to assess the impact of exchange rate fluctuations on its 2004 operating results. Based on this analysis, the Company estimates that a five (5%) percent increase in the exchange rate for the U.S. dollar to the Canadian dollar would have decreased the Company's reported net loss for 2004 by approximately $55,000.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not Applicable.

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None.

ITEM 14.

MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

None.

ITEM 15.

CONTROLS AND PROCEDURES

(a)

We performed an evaluation of the effectiveness of our disclosure controls and procedures that are designed to ensure that the material financial and non-financial information required to be disclosed on Form 20-F and filed with the Securities and Exchange Commission is recorded, processed, summarized and timely reported. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon and as of the date of our evaluation, our Chief Executive Officer and Chief Financial Officer, both positions held by the same person, concluded that the disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed in the reports we file and submit to the Securities and Exchange Commission under the Exchange Act is recorded, processed, summarized and reported as and when required.

(b)

There have been no changes in our internal controls over financial reporting or other factors that could significantly affect these controls during fiscal 2004 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 16.

[RESERVED]

Item 16A.

AUDIT COMMITTEE FINANCIAL EXPERT

Our board of directors has determined that Alex Blodgett is an "audit committee financial expert" as defined in Item 16A of Form 20-F under the Exchange Act, and that Mr. Blodgett is independent under the applicable rules promulgated by the SEC.

Item 16B. CODE OF ETHICS

On May 18, 2004 our board of directors adopted a Code of Ethics, as defined in Item 16B of Form 20-F. Our Code of Ethics applies to our senior financial officers, including our Chief Executive Officer and persons performing similar functions, as well as to our directors and other officers and employees.

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table summarizes the aggregate fees billed to us by Davidson & Company during the fiscal years ended December 31, 2004 and 2003:

	Year Ended December 31,
	2004		2003
	(Canadian dollars)
	$		$
Audit Fees		35,500		36,500
Audit Related Fees		Nil		Nil
Tax Fees		4,500		6,650
All Other Fees		Nil		Nil
Total		40,000		43,150

Audit Committee's Pre-Approval Policies and Procedures

We have adopted pre-approval policies and procedures under which all audit and non-audit services provided by our external auditors must be pre-approved by the audit committee. Any service proposals submitted by external auditors need to be discussed and approved by the audit committee. Once the proposed services are approved, we formalize the engagement of service. The approval of any audit and non-audit services to be provided by our external auditors is specified in the minutes of our audit committee.

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable.

ITEM 16E.

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

None.

PART III

ITEM 17. FINANCIAL STATEMENTS

Not applicable.

ITEM 18. FINANCIAL STATEMENTS

Index to Financial Statements and Schedules

1. Independent Auditors' Report on the consolidated financial statements of the Company as at December 31, 2004 and 2003.

2. Consolidated Balance Sheets at December 31, 2004 and 2003.

3. Consolidated Statements of Operations for the years ended December 31, 2004, 2003 and 2002.

4. Consolidated Statements of Shareholders' Equity for the years ended December 31, 2004, 2003and 2002.

5. Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2003 and 2002.

6. Notes to the Consolidated Financial Statements.

BLACK MOUNTAIN CAPITAL CORPORATION

CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. dollars)

December 31, 2004

INDEPENDENT AUDITORS' REPORT

To the Shareholders of

Mercury Partners & Company Inc.

We have audited the consolidated balance sheets of Mercury Partners & Company Inc. as at December 31, 2004 and 2003 and the consolidated statements of operations, shareholders' equity and cash flows for the years ended December 31, 2004, 2003 and 2002. 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 Canadian generally accepted auditing standards and 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2004 and 2003 and the results of its operations and its cash flows for the years ended December 31, 2004, 2003 and 2002 in accordance with Canadian generally accepted accounting principles.

Vancouver, Canada	“DAVIDSON & COMPANY”
	Chartered Accountants
February 28, 2005, (except as to Note 9(b), which is as of March 4, 2005)

MERCURY PARTNERS & COMPANY INC.

CONSOLIDATED BALANCE SHEETS

(Expressed in U.S. dollars)

	December 31,
	2004			2003
ASSETS
CURRENT
Cash and cash equivalents	$	657,988		$	241,105
Marketable securities (Note 3)		112,818			110,000
Loan and receivables (Note 4)		22,561			51,651
Total current assets		793,367			402,756

Long-term investments, cost (Note 5)		2,364			998,127
Long-term investments, equity (Note 5)		-			696,070
Property and equipment (Note 6)		1,741			11,267
Total assets	$	797,472		$	2,108,220

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
CURRENT
Accounts payable	$	245,164		$	69,260
Accrued liabilities (Note 9(b))		601,760			-
		846,924			69,260
Shareholders' equity (deficiency)
Capital stock
Authorized
Unlimited number of common shares
Unlimited number of Class A preferred shares
Issued and outstanding
8,183,733 common shares at December 31, 2004 and 2003		3,456,139			3,456,139
Less: Treasury stock - 2,250,219 common shares at December 31, 2004 and 2003		(1,294,050	)		(1,294,050	)
Additional paid-in capital		971,859			971,859
Cumulative translation adjustment		399,948			391,131
Deficit		(3,583,348	)		(1,486,119	)
Total shareholders’ equity (deficiency)		(49,452	)		2,038,960
Total liabilities and shareholders’ equity (deficiency)	$	797,472		$	2,108,220

Organization and operations(Note 1)

Contingencies(Note 9)

Commitment(Note 12)

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

MERCURY PARTNERS & COMPANY INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Expressed in U.S. dollars)

	December 31,
	2004			2003			2002
REVENUE	$	61,170		$	75,704		$	184,341

EXPENSES
Amortization		6,301			4,229			6,058
General and administrative (Note 8)		222,340			169,006			145,852
Directors and management fees (Note 7)		76,360			3,529			1,273
Interest		134			40			267
Total expenses		305,135			176,804			153,450
Income (loss) before other income (expense)		(243,965	)		(101,100	)		30,891

OTHER INCOME (EXPENSE)
Equity income (loss) (Note 5)		(4,521	)		2,397			(17,975	)
Write-down of marketable securities		-			(260	)		(16,147	)
Write-down of long-term investments		-			(426,950	)		-
Loss on sale of long-term investments		(195,854	)		-			-
Loss on sale of equipment		(3,604	)		-			-
Recovery (write-down) of loan and receivables (Note 4)		-			108,065			(361,558	)
Loss on settlement of lawsuit (Note 9(b))		(1,380,556	)		-			-
Excise tax re-assessed		-			(99,707	)		-
Total other expense, net		(1,584,535	)		(416,455	)		(395,680	)
Net loss for the year	$	(1,828,500	)	$	(517,555	)	$	(364,789	)
Basic and diluted loss per common share	$	(0.31	)	$	(0.09	)	$	(0.06	)
Weighted average number of common shares outstanding		5,933,514			5,933,514			5,933,514

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

MERCURY PARTNERS & COMPANY INC.

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

(Expressed in U.S. dollars)

	Common Shares						Treasury Shares
	Number of Shares		Amount		Additional Paid-in Capital		Number of Shares			Amount			Cumulative Translation Adjustment			Deficit			Total
Balance at December 31, 2001		8,183,733	$	3,456,139	$	971,859		(2,250,219	)	$	(1,294,050	)	$	(55,198	)	$	(603,775	)	$	2,474,975
Cumulative translationadjustment		-		-		-		-			-			8,904			-			8,904
Net loss for the year		-		-		-		-			-			-			(364,789	)		(364,789	)
Balance at December 31, 2002		8,183,733		3,456,139		971,859		(2,250,219	)		(1,294,050	)		(46,294	)		(968,564	)		2,119,090
Cumulative translationadjustment		-		-		-		-			-			437,425			-			437,425
Net loss for the year		-		-		-		-			-			-			(517,555	)		(517,555	)
Balance at December 31, 2003		8,183,733		3,456,139		971,859		(2,250,219	)		(1,294,050	)		391,131			(1,486,119	)		2,038,960
Cumulative translationadjustment		-		-		-		-			-			8,817			-			8,817
Dividend		-		-		-		-			-			-			(268,729	)		(268,729	)
Net loss for the year		-		-		-		-			-			-			(1,828,500	)		(1,828,500	)
Balance at December 31, 2004		8,183,733	$	3,456,139	$	971,859		(2,250,219	)	$	(1,294,050	)	$	399,948		$	(3,583,348	)	$	(49,452	)

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

MERCURY PARTNERS & COMPANY INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in U.S. dollars)

	December 31,
	2004			2003			2002
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the year	$	(1,828,500	)	$	(517,555	)	$	(364,789	)
Items not affecting cash and cash equivalents:
Amortization		6,301			4,229			6,058
Equity (income) loss		4,521			(2,397	)		17,975
Write-down (recovery) of loan and receivables		-			(108,065	)		361,558
Write-down of marketable securities		-			260			16,147
Write-down of long-term investments		-			426,950			-
Loss on sale of long-term investments		195,854			-			-
Loss on sale of equipment		3,604			-			-

Changes in non-cash working capital items:
Decrease in marketable securities		5,382			10,471			363,570
Decrease in loan and receivables		32,939			15,624			603,423
Decrease in marketable securities sold short		-			-			(70,360	)
Increase (decrease) in accounts payable		170,742			(80,643	)		30,418
Increase in accrued liabilities		601,760			-			-
Increase (decrease) in due to related party		-			(22,795	)		18,714
Net cash provided by (used in) operating activities		(807,397	)		(273,921	)		982,714

CASH FLOWS FROM INVESTING ACTIVITIES
Long-term investment purchases/costs		(21,162	)		(244,152	)		(745,594	)
Proceeds on sale of long-term investments		1,125,037			-			126,327
Net cash provided by (used in) investing activities		1,103,875			(244,152	)		(619,267	)
Effect of foreign exchange on cash and cash equivalents		120,405			102,598			(8,250	)
Change in cash and cash equivalents during the year		416,883			(415,475	)		355,197
Cash and cash equivalents, beginning of year		241,105			656,580			301,383
Cash and cash equivalents, end of year	$	657,988		$	241,105		$	656,580
Cash paid during the year for interest	$	134		$	40		$	267
Cash paid during the year for income taxes	$	-		$	-		$	-

Supplemental disclosure with respect to cash flows (Note 10)

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

MERCURY PARTNERS & COMPANY INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2004

1. Organization and Operations

Mercury Partners & Company Inc. (the "Company") is organized under the Yukon Business Corporations Act. The Company currently operates in the financial services industry in Canada, engaging in private equity, merchant banking, consulting activities and asset-based commercial lending.

During the year ended December 31, 2004, the Company’s shareholders approved a name change and the reduction of capital stock and deficit by $1,486,119. These transactions have not been completed and accordingly these financial statements do not reflect these transactions.

All amounts are expressed in United States dollars except for certain amounts denoted in Canadian dollars ("CAD$").

2. Significant Accounting Policies

These consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles. The significant accounting policies adopted by the Company are as follows:

Principles of consolidation

These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant inter-company transactions and balances have been eliminated upon consolidation.

Use of estimates

The preparation of financial statements in accordance with Canadian 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 amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and cash equivalents

Cash and cash equivalents include highly liquid investments with an original maturity of three months or less.

Marketable securities

Marketable securities are recorded at the lower of cost or quoted market value on a specific identification basis.

Loan and receivables

Provisions are made for doubtful accounts and loan losses on an individual basis.

Long-term investments

Investments in companies over which the Company has significant influence are accounted for by the equity method, whereby the original cost of the shares is adjusted for the Company's share of earnings or losses less dividends since significant influence was acquired. Investments in which the Company has no significant influence and that it intends to hold longer than one year are accounted for on the cost basis. Cost of investments includes acquisition costs of shares, as well as legal and consulting costs related to maintaining the Company’s interest. Investments are written-down to their estimated net realizable value when there is evidence of a decline in value below their carrying amount that is other than temporary.

Property and equipment

Property and equipment are recorded at cost less accumulated amortization. Amortization is provided for on a straight-line basis over the estimated useful lives of the assets as follows:

Furniture and equipment	5 years
Computer equipment	3 years
Leasehold improvements	5 years

Foreign currency translation

The functional currency of the Company and itssubsidiaries is the Canadian dollar. The Company follows the current rate method of translation with respect to its presentation of these consolidated financial statements in the reporting currency, being the United States dollar. Accordingly, assets and liabilities are translated into U.S. dollars at the period-end exchange rates, while revenue and expenses are translated at the prevailing exchange rates during the period. Related exchange gains and losses are included in a separate component of shareholder’s equity (deficiency) as cumulative translation adjustment.

Revenue recognition

Revenue consists of gains or losses from trading securities, interest income from a loan and investments of cash and cash equivalents, royalty revenue and management and merchant banking fees. Gains and losses from trading are recorded when securities are disposed of. Interest income is recognized when earned using the effective interest method. Management and merchant banking fees are recorded when services are provided. Oil and gas royalty revenue from the Company’s pro rata interest in oil and gas claims in Alberta are recorded when received.

Net loss per share

The Company uses the treasury stock method to compute the dilutive effect of options, warrants and similar instruments. Under this method, the dilutive effect on net loss per share is recognized on the use of the proceeds that could be obtained upon exercise of options, warrants and similar instruments. It assumes that the proceeds would be used to purchase common shares at the average market price during the year. This calculation proved to be anti-dilutive for the years ended December 31, 2004, 2003 and 2002. The dilutive instrument consists of stock options convertible into 120,000 common shares for the years presented.

Basic net loss per share is calculated using the weighted average number of common shares outstanding during the year.

Stock-based compensation

From January 1, 2002 to December 31, 2002, as permitted by CICA Handbook Section 3870, the Company used the intrinsic value-based method, which recognizes compensation cost for awards to employees only when the market price exceeds the exercise price at date of grant, but requires pro-forma disclosure of loss and loss per share as if the fair value method had been adopted. Any consideration paid by the option holders to purchase shares is credited to capital stock.

Effective January 1, 2003, in accordance with CICA Handbook Section 3870, the Company adopted, on a prospective basis, the fair value based method of accounting for all stock-based compensation. There is no impact for the years presented.

Income taxes

Future income taxes are recorded using the asset and liability method, whereby future income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Future tax assets and liabilities are measured using enacted or substantively enacted tax rates expected to apply when the asset is realized or the liability settled. The effect on future tax assets and liabilities of a change in tax rates is recognized in income in the period that substantive enactment or enactment occurs. To the extent that the Company does not consider it to be more likely than not that a future tax asset will be recovered it provides a valuation allowance against the excess.

Comparative figures

Certain of the comparative figures have been reclassified in order to conform with the current year’s presentation.

3. Marketable Securities

	2004				2003
	Fair Value		Carrying Value		Fair Value		Carrying Value
Variable Income Securities
Publicly Traded Securities
Canadian	$	47,214	$	2,133	$	84,050	$	1,935
American		369,786		110,685		306,530		108,065
Total Marketable Securities	$	417,000	$	112,818	$	390,580	$	110,000

4. Loan and Receivables

	2004		2003
Loan	$	15,910	$	48,563
Receivables		6,651		3,088
	$	22,561	$	51,651

As at December 31 2004, the loan in the amount of $15,910 (2003 - $Nil) was unsecured and bears interest at 8% per annum.

As at December 31, 2003, the loan in the amount of $48,563 was unsecured and bore interest at 18% per annum. The loan was repaid in full during the year ended December 31, 2004.

During the year ended December 31, 2003, a loan in the amount of $108,065, which had been written-down during the 2002 fiscal year, was recovered in the form of common shares of a public U.S. company having a market price of $306,530 at December 31, 2003. The recovery and investment have been recorded at the carrying amount of the original loan.

During the year ended December 31, 2002, a $200,000 debenture, as well as $161,558 in loan and receivables were written-off as management determined the balances to be uncollectible.

5. Long-term Investments

	2004				2003
	Fair Value		Carrying Value		Fair Value		Carrying Value
Investments carried at cost	$	1,212	$	2,364	$	718,651	$	998,127
Investments carried at equity		-		-		492,430		696,070
Total Long-term Investments	$	1,212	$	2,364	$	1,211,081	$	1,694,197

	2004				2003
	Fair Value		Carrying Value		Fair Value		Carrying Value
Variable Income Securities
Canadian (publicly traded securities)	$	1,212	$	2,364	$	1,211,081	$	1,694,197
Total Long-term Investments	$	1,212	$	2,364	$	1,211,081	$	1,694,197

Long-term Investments, equity

As at December 31, 2004, the Company held a .06% (2003 - 19%) interest in the common shares of North Group Limited (“North Group”), a company with common directors. The Company distributed its investment in North Group to the Company’s shareholders during the year ended December 31, 2004 by paying a dividend in kind of 2,492,076 shares of North Group, valued at $268,729.

The Company recorded equity income (loss) totaling $(4,521) (2003 - $2,397; 2002 - $(17,975)) to the date of disposal. As a result of the disposal, the accounting policy was changed from the equity method to the cost method.

6. Property and Equipment

	2004						2003
	Cost		Accumulated Amortization		Net Book Value		Cost		Accumulated Amortization		Net Book Value
Furniture andEquipment	$	33,344	$	31,729	$	1,615	$	34,159	$	27,769	$	6,390
Computer equipment		49,669		49,669		-		52,626		47,875		4,751
LeaseholdImprovements		3,880		3,754		126		3,880		3,754		126
	$	86,893	$	85,152	$	1,741	$	90,665	$	79,398	$	11,267

The Company holds an interest in certain oil and gas properties in Alberta with a carrying value of $Nil (2003 - $Nil). Title to the properties is subject to a dispute (Note 9(a)).

7. Related Party Transactions

As part of the Company's merchant banking activities, the Company often appoints a representative to the client company's board of directors. Accordingly, such transactions are considered to be related party transactions in nature.

The Company entered into the following transactions with related parties:

a) Paid or accrued $65,338 (2003 - $Nil; 2002 - $Nil) in management fees to private companies of the executive management of the Company.

b) Paid or accrued directors fees of $11,022 (2003 - $3,529; 2002 - $1,273) to independent directors of the Company.

c) Paid a dividend in kind, valued at $267,829, to shareholders consisting of 2,492,076 shares of North Group, a company with common directors (Note 5).

These transactions were in the normal course of operations and were measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.

8. General and Administrative Costs

General and administrative costs include the following expenses:

	2004		2003		2002
Consulting fees, salaries and benefits	$	40,008	$	47,861	$	27,135
Non-recoverable GST		27,732		14,062		-
Office and miscellaneous		17,030		3,583		7,085
Professional fees		123,913		89,405		105,677
Regulatory, transfer agent and shareholder communication		13,657		14,095		5,955
	$	222,340	$	169,006	$	145,852

9. Contingencies

Litigation

a) A statement of claim has been filed against the Company to recover certain oil and gas properties (Note 6), which the claimant alleges were sold to it by the former management of the Company. The Company believes these oil and gas properties were not included as part of the properties sold to the claimant.The Company has offered to transfer certain of the interests in exchange for a waiver of court costs.

b) During the year ended December 31, 2003, Cybersurf Corp. (“Cybersurf”) filed a statement of claim claiming that the Company engaged in improper actions during the Company’s attempt to replace the board of directors of Cybersurf at its annual general meeting held on November 28, 2002. As a result of the statement of claim, Cybersurf postponed its annual general meeting for almost two years. The Company was Cybersurf’s largest shareholder until it sold its investment during the year ended December 31, 2004 for proceeds of $1,125,037 (CAD $1,575,000). During the year ended December 31, 2004, the Company paid a courtjudgment of $79,003 for costs related to the Company’s legal challenge to the election of directors of Cybersurf at its November 28, 2002 annual general meeting.

On March 23, 2005, the Company announced it had entered into an agreement to settle and dismiss its litigation with Cybersurf. The Company did not admit to any liability or wrongdoing. Pursuant to the settlement, the Company contributed $601,760 (CAD$725,000) in exchange for a full release of claims and a withdrawal of the complaints of Cybersurf. This amount and related legal costs of $699,793 have been recorded as a loss on settlement of lawsuit for the year ended December 31, 2004.

c) The Company has been notified of certain additional legal claims. In the opinion of management, these claims are without merit and no provision has been made for them in the accounts. The likelihood and amount of any loss is not determinable.

10. Supplemental Disclosure With Respect to Cash Flows

The significant non-cash transaction during the year ended December 31, 2004, consisted of the Company paying a dividend in kind, valued at $268,729, to shareholders in the form of shares of North Group (Note 5).

The significant non-cash transaction for the year ended December 31, 2003 consisted of the Company receiving common shares in a U.S. public company as settlement of a $108,065 loan, which was written off in 2002 (Note 4).

There were no significant non-cash transactions during the year ended December 31, 2002.

11. Stock Options

During the year ended December 31, 2004, the Company’s shareholders approved the adoption of a stock option plan whereby the Company is authorized to grant options to officers and directors, employees and consultants enabling them to acquire up to 10% of the issued and outstanding common stock of the Company. The plan is subject to the rules of the Venture Exchange (“TSX-V”). Under the plan, the exercise price of each option cannot be less than the price permitted by the TXS-V. The options can be granted for a maximum term of 5 years or as allowed by the TSX-V.

During the years ended December 31, 2004, 2003 and 2002, no stock options were granted, exercised, forfeited or cancelled.

The following is a summary of the status of stock options outstanding to former management at December 31, 2004:

	Outstanding Options			Exercisable Options
Exercise Price	Number of Shares	Weighted Average Remaining Contractual Life (Years)	Weighted Average Exercise Price	Number of Shares	Weighted Average Exercise Price
$ 1.25	120,000	.081	$ 1.25	120,000	$ 1.25

12. Commitment

The Company is committed to annual lease payments for premises of $1,818 in 2005.

13. Financial Instruments

The Company's financial instruments consist of cash and cash equivalents, marketable securities, loan and receivables, investments and accounts payable and accrued liabilities. The Company does not believe it is subject to any significant concentration of credit risk. Although cash and cash equivalents balances are held in excess of federally insured limits, they are in place with major financial institutions and major corporations. The fair value of these financial instruments approximates their carrying values unless otherwise noted.

Market risk is the risk that the value of a financial instrument might be adversely affected by a change in commodity prices, interest rates or currency exchange rates. The Company manages the market risk associated with commodity prices, interest rates and currency exchange rates by establishing and monitoring parameters that limit the type and degree of market risk that may be undertaken.

14. Income Taxes

A reconciliation of income tax expense (recovery) at Canadian statutory rates with the reported taxes is as follows:

	2004			2003			2002
Loss before income taxes	$	(1,828,500	)	$	(517,555	)	$	(364,789	)

Expected income tax recovery	$	(651,310	)	$	(194,704	)	$	(144,529	)
Equity (income) loss		(1,890	)		(969	)		7,118
Expenses unrecognized (recognized) for tax purposes		574,470			167,096			(44,398	)
Unrecognized benefit of non-capital losses		78,730			28,577			181,809
Total income taxes	$	-		$	-		$	-

Details of the Company's future income tax assets are as follows:

	2004			2003
Future income tax assets:
Non-capital losses available for future periods	$	779,000		$	934,097
Net capital losses available for future periods		2,264,000			1,749,200
Equipment		82,600			73,442
Other items		11,980			171,073
		3,137,580			2,927,812
Valuation allowance		(3,137,580	)		(2,927,812	)
	$	-		$	-

The Company has non-capital losses of approximately $2,630,000 available to reduce future years’ taxable income, which expire through to 2014. The Company also has net capital losses of approximately $7,651,000, which can be carried forward indefinitely and applied against future years’ taxable capital gains.

Future tax benefits of these losses have been offset by a valuation allowance and have not been recognized in these consolidated financial statements.

15. Segmented Information

The Company has determined that it has one operating and reportable segment, being the financial services industry in Canada. Services include private equity and merchant banking and asset-based commercial lending as described in Note 1.

16. Differences Between Canadian and United States Generally Accepted Accounting Principles

These consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”). The material variations in the accounting principles, practices and methods used in the preparation of these consolidated financial statements from principles, practices and methods accepted in the United States ("U.S. GAAP") are described and quantified below.

The impact of the differences between Canadian GAAP and U.S. GAAP on the consolidated balance sheets, statements of operations and cash flows would be as follows:

	2004			2003
Balance sheets
Current assets, Canadian GAAP	$	793,367		$	402,756
Unrealized holding gains on trading securities		304,182			280,580
Current assets, U.S. GAAP		1,097,549			683,336
Long-term investments, cost, Canadian GAAP		2,364			998,127
Unrealized holding loss on available-for-sale securities		(1,152	)		(279,476	)
Long-term investments, cost, U.S. GAAP		1,212			718,651
Long-term investments, equity, Canadian GAAP and U.S. GAAP		-			696,070
Property and equipment, Canadian GAAP and U.S. GAAP		1,741			11,267
Total assets, U.S. GAAP	$	1,100,502		$	2,109,324

Total liabilities, Canadian GAAP and U.S. GAAP	$	846,924		$	69,260

Shareholders' equity, Canadian GAAP		(49,452	)		2,038,960
Unrealized holding loss on available-for-sale securities		(1,152	)		(279,476	)
Unrealized holding gain on trading securities		304,182			280,580
Shareholders' equity, U.S. GAAP		253,578			2,040,064
Total liabilities and shareholders' equity, U.S. GAAP	$	1,100,502		$	2,109,324

	2004			2003			2002
Statements of operations
Net loss for the year, Canadian GAAP	$	(1,828,500	)	$	(517,555	)	$	(364,789	)
Unrealized holding gain on trading securities		304,182			280,580			79,279
Net loss for the year, U.S. GAAP	$	(1,524,318	)	$	(236,975	)	$	(285,510	)
Basic and diluted loss per common share, U.S. GAAP	$	(0.26	)	$	(0.04	)	$	(0.05	)

At December 31, 2004, 2003 and 2002, 120,000 potentially dilutive shares were excluded from net loss per share.

There is no impact on cash flows as the adjustments to the carrying values of marketable securities and long-term investments required under U.S. GAAP are comprised of unrealized holding gains and losses only.

Marketable securities

For Canadian GAAP purposes, short-term marketable securities are carried at the lower of cost or quoted market value on a specific identification basis, with any unrealized loss included in the statements of operations. Long-term investments are carried on the cost or equity basis and only written-down when there is evidence of a decline in value that is other than temporary.

Under U.S. GAAP, Statements of Financial Accounting Standards No. 115, “Accounting for Certain Investments in Debt and Equity Securities” (“SFAS 115”) requires that certain investments be classified into available-for-sale or trading securities stated at fair market values. Any unrealized holding gains or losses are to be reported as a separate component of shareholders’ equity until realized for available-for-sale securities and included in earnings for trading securities. Under SFAS 115, the Company’s investment in marketable securities in the amount of $112,818 (2003 - $110,000) would be classified as trading securities and its investment in long-term investment securities carried at cost in the amount of $2,364 (2003 - $998,127) would be classified as available-for-sale securities.

	Carrying Value		Gross Unrealized Gain		Gross Unrealized Loss			Market Value
2004
Trading securities	$	112,818	$	304,182	$	-		$	417,000
Available-for-sale securities		2,364		-		(1,152	)		1,212
	$	115,182	$	304,182	$	(1,152	)	$	418,212

	Carrying Value		Gross Unrealized Gain		Gross Unrealized Loss			Market Value
2003
Trading securities	$	110,000	$	280,580	$	-		$	390,580
Available-for-sale securities		998,127		-		(279,476	)		718,651
	$	1,108,127	$	280,580	$	(279,476	)	$	1,109,231

Stock-based compensation

Under U.S. GAAP, Statements of Financial Accounting Standards No. 123, “Accounting for Stock-based Compensation” (“SFAS 123”) requires companies to establish a fair market value based method of accounting for stock-based compensation plans. In previous years, the Company has chosen to account for stock-based compensation using Accounting Principles Board Opinion No. 25 “Accounting for Stock Issued to Employees” (“APB25”). Accordingly, compensation cost for stock options were measured as the excess, if any, of the quoted market price of the Company’s stock at the date of grant over the option price. Effective for fiscal years ending after

December 15, 2002, the Financial Accounting Standards Board (“FASB”) issued Statements of Financial Accounting Standards No. 148, “Accounting for Stock-Based Compensation - - Transition and Disclosure - an amendment of FASB Statement No. 123” (“SFAS 148”). SFAS 148 amends SFAS 123 to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS 148 amends the disclosure requirements of SFAS 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The Company adopted the fair value based method effective January 1, 2003.

New accounting and disclosure standards were introduced under Canadian GAAP (Note 2) for the fiscal year ending December 31, 2002.

Comprehensive income

Under U.S. GAAP, Statements of Financial Accounting Standards No. 130 “Reporting Comprehensive Income” establishes standards for the reporting and display of comprehensive income and its components (revenue, expenses, gains and losses). The purpose of reporting comprehensive income is to present a measure of all changes in shareholders’ equity that result from recognized transactions and other economic events of the year, other than transactions with owners in their capacity as owners. Under Canadian GAAP, the reporting of comprehensive income is not required.

Comprehensive income (loss) is as follows:

	2004			2003			2002
Net loss for the year, U.S. GAAP	$	(1,524,318	)	$	(236,975	)	$	(285,510	)
Other comprehensive income:
Unrealized gain (loss) on investments		(1,152	)		(279,476	)		(514,597	)
Cumulative translation adjustment		8,817			437,425			8,904
Comprehensive net loss for the year, U.S. GAAP	$	(1,516,653	)	$	(79,026	)	$	(791,203	)

New accounting pronouncements

In January 2003, FASB issued Financial Interpretation No. 46 “Consolidation of Variable Interest Entities” ("FIN 46") (revised in December 17, 2003). The objective of FIN 46 is to improve financial reporting by companies involved with variable interest entities. A variable interest entity is a corporation, partnership, trust, or any other legal structure used for business purposes that either (a) does not have equity investors with voting rights or (b) has equity investors that do not provide sufficient financial resources for the entity to support its activities. FIN 46 requires a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity's activities or entitled to receive a majority of the entity's residual returns or both. FIN 46 also requires disclosures about variable interest entities that a company is not required to consolidate but in which it has a significant variable interest. The consolidation requirements of FIN 46 apply immediately to variable interest entities created after December 15, 2003. The consolidation requirements apply to older entities in the first fiscal year or interim period beginning after March 15, 2004.

In December 2004, FASB issued Statement of Financial Accounting Standards No. 153, “Exchanges of Nonmonetary Assets - an amendment of APB Opinion No. 29” (“SFAS 153”) which amends Accounting Principles Board Opinion No. 29, “Accounting for Nonmonetary Transactions” to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. SFAS 153 is effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005.

In December 2004, FASB issued Statement of Financial Accounting Standards No. 123R, “Share Based Payment” (“SFAS 123R”). SFAS 123R supersedes APB 25 and its related implementation guidance by requiring entities to recognize the cost of employee services received in exchange for awards of equity instruments based on the grant-date fair value of those awards (with limited exceptions) and revises Statement of Financial Accounting Standards No. 123 “Accounting for Stock-Based Compensation” (“SFAS 123”) as follows:

Public entities are required to measure liabilities incurred to employees in share-based payment transactions at fair value and nonpublic entities may elect to measure their liabilities to employees incurred in share-based payment transactions at their intrinsic value whereas under SFAS 123, all share-based payment liabilities were measured at their intrinsic value.

Nonpublic entities are required to calculate fair value using an appropriate industry sector index for the expected volatility of its share price if it is not practicable to estimate the expected volatility of the entity’s share price.

Entities are required to estimate the number of instruments for which the requisite service is expected to be rendered as opposed to accounting for forfeitures as they occur.

Incremental compensation cost for a modification of the terms or conditions of an award is measured by comparing the fair value of the modified award with the fair value of the award immediately before the modification whereas SFAS 123 required that the effects of a modification be measured as the difference between the fair value of the modified award at the date it is granted and the award’s value immediately before the modification determined based on the shorter of (1) its remaining initially estimated expected life or (2) the expected life of the modified award.

SFAS 123R also clarifies and expands guidance in several areas, including measuring fair value, classifying an award as equity or as a liability and attributing compensation cost to reporting periods. SFAS 123R does not change the accounting guidance for share-based payment transactions with parties other than employees provided in SFAS 123 as originally issued and Emerging Issues Task Force No. 96-18 “Accounting for

Equity Instruments that are Issued to Other Than Employees for Acquiring or in Conjunction with Selling, Goods and Services”. SFAS 123R also does not address the accounting for employee share ownership plans which are subject to Statement of Position 93-6, “Employers’ Accounting for Employee Stock Ownership Plans”. Public entities (other than those filing as small business issuers) will be required to apply SFAS 123R as of the first interim or annual reporting period that begins after June 15, 2005.

Public entities that file as small business issuers will be required to apply SFAS 123R in the first interim or annual reporting period that begins after December 15, 2005. For nonpublic entities, SFAS 123R must be applied as of the beginning of the first annual reporting period beginning after December 15, 2005.

The adoption of these new pronouncements is not expected to have a material effect on the Company's consolidated financial position or results of operations

Canadian Standards

In 2002, the CICA issued Handbook Section 3063, “Impairment of Long-Lived Assets”, which is effective for fiscal years commencing September 1, 2003. Under this section, an impairment loss is measured as the difference between the carrying value of an asset and its fair value. The Company does not expect the adoption of this section to have significant impact on its consolidated financial statements.

In June 2003, the CICA revised Accounting Guideline 13, “Hedging Relationships”, which is effective for fiscal years beginning on and after July 1, 2003. The guideline addresses the identification, designation, documentation and effectiveness of hedging relationships, for the purpose of applying hedge accounting. The guideline establishes certain conditions for applying hedge accounting and also deals with the discontinuance of hedge accounting. The Company does not expect the adoption of this guideline to have a significant impact on its consolidated financial statements.

In June 2003, the CICA issued Accounting Guideline 15, “Consolidation of Variable Interest Entities”, which will be effective for annual and interim periods beginning on or after November 1, 2004. This guideline addresses the application of consolidation principles to entities that are subject to control on a basis other than ownership of voting interests. Management is assessing the impact, if any, of the adoption of this guideline on the Company’s consolidated financial statements.

* * *

ITEM 19. EXHIBITS

1.1	Articles of Continuance and Bylaws⁽¹⁾
1.2	Articles of Amalgamation⁽²⁾
4.1	Amalgamation Agreement dated August 24, 2001 between the Company, Pacific Mercantile Company Limited and 940296 Alberta Ltd.⁽³⁾
4.2	Share Purchase Agreement dated December 27, 2001 between Mercury Finance Group Inc., Pacific Mercantile Company Limited and Stephen Rota⁽⁴⁾
8.1	Subsidiaries of the Company
11.1	Code of Ethics⁽⁵⁾
12.1	Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated June 29, 2005
13.1	Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to theSarbanes-Oxley Act of 2002, dated June 29, 2005

⁽¹⁾Incorporated by reference to the Company's Form 20-F for the fiscal year ended December 31, 1999.

⁽²⁾Incorporated by reference to the Company's Form 20-F for the fiscal year ended December 31, 2001.

⁽³⁾Incorporated by reference to the Company's Form 6-K filed on August 31, 2001.

⁽⁴⁾Incorporated by reference to the Company's Form 20-F for the fiscal year ended December 31, 2001.

⁽⁵⁾Incorporated by reference to the Company's Form 20-F for the fiscal year ended December 31, 2003.

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

Dated at Vancouver, British Columbia, Canada this 29 day of June, 2005.

BLACK MOUNTAIN CAPITAL CORPORATION

By: /s/ Tom S. Kusumoto

Tom S. Kusumoto

President

BLACK MOUNTAIN CAPITAL CORPORATION

FORM 20-F

EXHIBIT INDEX

Exhibit No.	Description of Exhibit
8.1	Subsidiaries of the Company
12.1	Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated June 29, 2005
13.1	Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to theSarbanes-Oxley Act of 2002, dated June 29, 2005

Positive
Negative
Uncertain
Constraining
Legalese
Litigious
Readability	8th grade Bad

Grand Peak Capital (GPKUF) Inactive 20-F2004 FY Annual report (foreign)

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