PENGRAM CORP

As at August 31, 2011, the aggregate intrinsic value (“AIV”), of all outstanding, vested stock options was $NIL and the AIV of options exercised during the year ended August 31, 2011 was $Nil.

During the nine months ended August 31, 2011, the Company paid or accrued $27,000 (August 31, 2010 - $27,000) for management fees to the board of directors of MAC.

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

Terrace is also obligated to pay all advance royalties, county and BLM claim fees and Nevada state taxes during the currency of the Earn-In Agreement. We are currently in the process of negotiating an extension to the promissory note that was due on September 27, 2011. There is no assurance that we be able to reach an agreement with Terrace to extend the promissory note.

During the nine months ended August 31, 2011, our operating expenses increased to $608,769 from $326,861 during the nine months ended August 31, 2010. The decrease in our operating expenses was primarily a result of increased consulting fees, filing and regulatory, office and administrative and the recording of a stock based compensation expense. This increase was partially offset by decreases in bank charges and interest, finance charges, investor relations, professional fees and the recovery of mineral property costs.