UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549




_______________________




FORM
10-K / A


Amendment
Number 2


________________________




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




For the
fiscal year ended December 31, 2008.




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




For the
transition period from ____ to ____.




Commission
File Number: 000-52419




HOLLOMAN
      ENERGY CORPORATION(Exact name of registrant as
      specified in its charter)




Nevada
            
            77-0643398(State
      or other jurisdiction of

                incorporation
      or organization)
            
            (I.R.S.
      Employer
              Identification
      No.)




333
      North Sam Houston Parkway East, Suite 600, Houston, Texas,
      77060(Address of Issuer's Principal
      Executive Offices, Zip Code)





Issuer’s
telephone number, including area code:   (281) 260-0193




Securities
registered under section 12(g) of the Exchange Act: Common Stock, ($0.001 Par
Value)





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes  ̈  No þ




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




Indicate
by check mark whether the registrant (1) filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.  Yes þ  No  ̈





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (229.405 of this chapter) is not contained herein, and will
not be contained, to the best of the registrant’s knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.  ̈





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.





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


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




The
aggregate market value of the voting and non-voting common equity held by
non-affiliates as of June 30, 2008 was approximately
$20,124,072




As of
March 15, 2009 the Company had 95,159,065 outstanding shares of common
stock.












Holloman
Energy Corporation is filing this report on Form 10-K/A to its 10-K report for
the year ended December 31, 2008 (the “Original 10-K”) to; (i) amend our
presentation of outstanding shares on our December 31, 2007 consolidated
balance sheet and December 31, 2008 statement of stockholders equity, (ii)
display operating results and  earnings per share from income and loss
from continuing operations separately on our consolidated statements of
operations, (iii) modify the presentation of our consolidated statements of cash
flows to identify net income (loss) and the cash flows associated with
discontinued operations separately within the operating, investing and financing
sections of those statements, (iv) reclassify the deferred income tax recovery
we recognized for the year ended December 31, 2008 to foreign exchange gain, (v)
to expand upon our disclosures concerning oil and gas properties, and
(vi) to modify our assessment of disclosure controls to state that such
controls were not effective at December 31, 2008.  For the
convenience of the reader, this 10-K/A amends in its entirety the Original
10-K.




This
Amendment continues to speak as of the date of the Original 10-K, and we have
not updated the disclosures contained herein to reflect any events that occurred
at a later date other than those set forth above . All information contained in
this Amendment is subject to updating and supplementing as provided in our
periodic reports filed with the SEC subsequent to the date of the filing of the
Original 10-K.








PART
I


ITEM
1.    BUSINESS.




Cautionary
Statement Concerning Forward-Looking Statements




This
report contains "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements are subject to risks
and uncertainties and are based on the beliefs and assumptions of management and
information currently available to management. The use of words such as
"believes," "expects," "anticipates," "intends," "plans," "estimates," "should,"
"likely" or similar expressions, indicates a forward-looking
statement.




Forward-looking
statements are not guarantees of performance. They involve risks, uncertainties
and assumptions. Future results may differ materially from those expressed in
the forward-looking statements. Many of the factors that will determine these
results are beyond our ability to control or predict. Do not place undue
reliance on any forward-looking statements, which speak only to the date made.
For those statements, we claim the protection of the safe harbor for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995.




Factors
that could cause actual results to differ materially from those expressed or
implied by such forward-looking statements include, but are not limited
to:




·
            The
      impact of the current economic recession and changes in consumer and
      business consumption habits;




·
            our
      ability to finance our business
plan;




·
            our
      ability to deal effectively with competition and manage our
      growth;




·
            the
      success or commercial viability of our exploration and drilling
      plans;




·
            our
      ability to effectively judge acquisition opportunities and integrate
      acquired assets.




We
operate in a very competitive and rapidly changing environment. New risks emerge
from time to time and it is not possible for our management to predict all
risks, nor can we assess the impact of all risks on our business or the extent
to which any risk, or combination of risks, may cause actual results to differ
from those contained in any forward-looking statements. All forward-looking
statements included in this filing are based on information available to us on
the date of the filing. Except to the extent required by applicable laws or
rules, we undertake no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information, future events
or otherwise. All subsequent written and oral forward-looking statements
attributable to us or persons acting on our behalf are expressly qualified in
their entirety by the cautionary statements contained throughout this
filing.




1





Business




We were
incorporated on May 14, 2004 in Nevada. Between May 2004 and
May 2007 we were relatively inactive. During July 2007, we changed our
name from Dujour Products, Inc. to Endeavor Energy Corporation. On
September 25, 2007 we changed our name to Holloman Energy
Corporation.




We are
currently controlled by Holloman Corporation, a Texas corporation involved in
the engineering and construction of pipelines and mid-stream gas processing
facilities.




We
originally intended to be a brand licensing and promotional merchandiser.
However, we were unable to identify a sufficient number of suitable products for
redistribution. Accordingly, we determined to focus on the acquisition,
exploration, and development of oil and gas properties. All of our exploration
and development efforts are currently concentrated in Australia. Our management
believes that Australia provides a stable regulatory, tax and business
environment.




In
May 2007 we acquired a 62.5% working interest in an Australian oil and gas
exploration permit area known as Victoria Permit 60 (“Vic P60”). We paid a
purchase price for the interest of $639,487 plus a 4.00% overriding royalty
interest. In addition, we granted a contingent back-in working interest of 6.20%
effective in the event certain performance criteria are achieved. The closing of
this transaction is subject to the approval of the title transfer on the permit
by the Commonwealth of Australia. In connection with our acquisition of Holloman
Petroleum Pty, Ltd. (see below), we also acquired the remaining 37.5% working
interest in Vic P60. We currently have a net revenue interest of a 96% in the
Vic P60 permit, which comprises 1,375 square kilometers (339,769 acres) in the
Bass Strait of the Gippsland Basin in Victoria, Australia. As the holder of the
permit we committed to complete the work program required for Vic P60. During
February 2008, a shareholder paid $660,000 to an unrelated third party to
reserve the Company’s right to participate in seismic work on the Vic P60
permit. This $660,000 is classified as “Due to Related Parties” on our balance
sheet. That contract was not completed. We project that seismic work and
interpretation of data will require an investment of $4 to $7 million. The
Permit also requires us to drill at least one well before November 2010. We
estimate the cost to drill and complete that well will approximate $20 to
$30 million. Our plan is to joint venture this prospect with third parties
which will pay a substantial portion of the costs required to explore for oil
and gas in the area covered by the permit.




We have a
letter of intent with BOS APS Pte. Ltd. for the performance of a VIC P60 marine
seismic study using the survey vessel BOS Angler.




Registration
of Australian title transfers requires the submission of original “relevant
dealings” and “title transfer applications” in the form prescribed under Section
473 of Australia’s Offshore Petroleum and Greenhouse Gas Storage Act
2006.  The process is multi-tiered, time consuming and involves
several comment rounds.  We have received verbal approval as to the
form and substance of the title transfer application.  We expect to
complete title registration in conjunction with the execution of a final
agreement with seismic service providers in early 2010.





On
August 3, 2007 we acquired Endeavor Canada Corporation (“Endeavor Canada”),
an Alberta corporation involved in the exploration and development of oil and
gas, for 9,000 shares of our Series A Preferred stock and 9,000,000 shares
of the Class A preferred stock of our wholly owned subsidiary, First
Endeavor Holdings. Each Series A Preferred share is convertible into one
share of our common stock and is entitled to 1,000 votes on any matter submitted
to our shareholders for approval. The Class A preferred shares of First
Endeavor Holdings were, at the option of the holder of the shares, convertible
into 9,000,000 shares of our common stock. Cameron King, one of our former
officers and directors, owned a controlling interest in Endeavor Canada at the
time of this transction and received 6,500 Series A Preferred shares and
6,500,000 First Endeavor Holdings Class A preferred shares in exchange for
his shares in Endeavor Canada.





On
November 21, 2007 we acquired Holloman Petroleum Pty. Ltd. for 18,600,000
shares of our common stock. Holloman Petroleum’s assets consisted of working
interests, varying between 37.5% and 100%, in seven oil and gas permits awarded
by the Australian government, including the remaining 37.5% working interest in
the Vic P60 permit. These permits, which have remaining terms expiring between
October 2010 and June 2013, cover 4,554 square kilometers (1,125,317
acres) of land in the Cooper basin and 2,589 square kilometers (639,755 acres)
offshore in the Gippsland basin and the Barrow sub-basin.





2





We are
obligated to pay 4.77% in royalties on revenues generated by our operations in
the Cooper basin. In the Barrow sub-basin we are obligated to pay 4.43% in
royalties on revenues generated by our operations on the WA-372P and Wa-373P
permits, and 1.43% in royalties on revenues generated by our operations on the
WA-375P permit. As holder of these permits, we are required to drill wells and
complete other work on the lands covered by the permits. If we elect to drill
all the wells and perform all other work required by all of our Australian
permits, very early estimates suggest that the cost may be over $45,000,000
during the twelve months ending March 31, 2010 and nearly $260,000,000 over
the terms of the permits.


On
February 15, 2008 we disposed of our interest in Endeavor Canada. As part
of this process, we transferred all outstanding shares of Endeavor Canada to
Cameron King. In consideration for the transfer of these shares, the 6,500
shares of our Series A Preferred stock and the 6,500,000 Class A
Preferred shares of First Endeavor Holdings previously issued to Mr. King
were returned to us and cancelled. At the option of the remaining preferred
stockholders, the residual 2,500 shares of the Company’s Series A Preferred
stock and 2,500,000 preferred shares of FEH were converted into an equivalent
number of shares of the Company’s common stock during June 2008.




As of
February 15, 2008 Endeavor Canada had a 100% working interest in one well,
a 50% working interest in four wells, a 40% working interest in seven wells and
working interests of 25% or less in two wells. Six of these wells were producing
a total of approximately 2,540 mcf of gas per month (1,140 mcf of gas net to
Endeavor Canada’s working interest in these wells) and the remaining eight wells
were shut in due to required maintenance or the price of natural
gas.




On
March 7, 2008 we entered into an agreement with Holloman Oil & Gas
Limited (“Holloman Oil & Gas”) which granted Holloman Oil & Gas the
right to earn a two-thirds working interest in the PEL 112 permit, which covers
approximately 2,196 square kilometers (542,643 acres) in the Cooper basin of
Australia. To earn this working interest, Holloman Oil & Gas agreed
to:




1.
            
            Fund
      the costs required to drill, and if warranted, complete three wells on the
      PEL 112 within the timeframes required by the permit work program;
      and




2.
            
            Pay
      us a 1.33% overriding royalty on gross revenues generated from the sale of
      any oil or gas produced from wells drilled on the PEL
  112.




We have
the right to earn up to a one-third working interest in the PEL 112 concession
by paying, prior to the time any well has reached 50% of the expected total
depth, our proportionate share of the cost of drilling any of the wells involved
in the three-well drilling program. We also have the right to earn up to a
one-third working interest in any future wells drilled on the PEL 112 (over and
above the initial three-well drilling program) by paying our proportionate share
of the cost of drilling the wells.




In
March 2008 Holloman Oil & Gas drilled its first exploratory well on PEL
112. The well was drilled to approximately 6,000 feet and was a dry hole. The
terms of the PEL 112 permit and the related permit covering lands in the Cooper
basin require us to drill two additional wells prior to June 10,
2013.




On
June 11, 2008 the Australian government consolidated two of our oil and gas
permits (PEL 108 and PEL 109) into one permit (PEL 444). In connection with that
consolidation, the government also extended the lease term and associated work
programs for that permit and PEL 112 by five years. Under Australian Law, at the
end of each five year term, one third of the area covered by a petroleum
exploration license must be relinquished. During June 2008, we identified
and relinquished one - third of the acreage covered by PEL 112 and PEL 444 to
the Australian government.




On
January 22, 2009, the Australian government extended the time frames within
which we must complete the Vic P60 seismic work and interpretation. The revised
work program required completion of the seismic work by January 28, 2009.
Due to current economic conditions, we have been unable to complete the seismic
work and we are seeking an additional extension of time to complete these
obligations. Our management has no reason to believe that an additional
extension will not be granted.




To better
coordinate exploration, we are also seeking to consolidate three of our other
oil and gas permits (WA-372P, WA-373P and WA-395P).  On March 24,
2009, the Australian government extended the time frames within which we must
complete our work obligations  on the WA-372P and WA-373P permits by
one year. The work program extension requests we submit evidence of a firm
contract to secure a seismic vessel by June 22, 2009.  If a firm
commitment is secured in time, a further extension could be
considered.




We did
not participate in drilling any wells during the year ended December 31,
2008.




As of
March 15, 2009 we did not have any proven oil or gas reserves and we did
not have any revenue.




During
the remainder of 2009 we plan to enter into joint venture agreements with third
parties to explore for oil and gas in the Cooper, Gippsland and Barrow basins of
Australia.




3





Competition




The
petroleum and natural gas industry is highly competitive. Numerous independent
oil and gas companies, oil and gas syndicates and major oil and gas companies
actively seek out and bid for oil and gas properties as well as for the services
of third party providers, such as drilling companies, upon which we rely. A
substantial number of our competitors have longer operating histories and
substantially greater financial and personnel resources than we do. Many of
these companies not only explore for, produce and market petroleum and natural
gas, but also carry out refining operations and market the resultant products on
a worldwide basis which may provide them with additional sources of capital.
Larger and better capitalized competitors may be in a position to outbid us for
particular prospect rights. These competitors may also be better able to
withstand sustained periods of unsuccessful drilling. Larger competitors may be
able to absorb the burden of any changes in laws and regulations more easily
than we can, which would adversely affect our competitive position. In addition,
most of our competitors have been operating for a much longer time and have
demonstrated the ability to operate through industry cycles.




Petroleum
and natural gas producers also compete with other suppliers of energy and fuel
to industrial, commercial and individual customers. Competitive conditions may
be substantially affected by various forms of energy legislation and/or
regulation considered from time to time by the governments and/or agencies
thereof and other factors out of our control including, international political
conditions, terrorism, overall levels of supply and demand for oil and gas, and
the markets for synthetic fuels and alternative energy sources.




Regulation




The
exploration, production and sale of oil and gas are extensively regulated by
governmental bodies. Applicable legislation is under constant review for
amendment or expansion. These efforts frequently result in an increase in the
regulatory burden on companies in our industry and consequently an increase in
the cost of doing business and decrease in profitability. Numerous governmental
departments and agencies are authorized to, and have, issued rules and
regulations imposing additional burdens on the oil and gas industry that often
are costly to comply with and carry substantial penalties for failure to comply.
Production operations are affected by changing tax and other laws relating to
the petroleum industry, by constantly changing administrative regulations and
possible interruptions or termination by government authorities.




Oil and
gas mineral rights may be held by individuals, corporations or governments
having jurisdiction over the area in which such mineral rights are located. As a
general rule, parties holding such mineral rights grant licenses or leases to
third parties to facilitate the exploration and development of these mineral
rights. The terms of the leases and licenses are generally established to
require timely development. Notwithstanding the ownership of mineral rights, the
government of the jurisdiction in which mineral rights are located generally
retains authority over the manner of development of those rights.




Environmental
Considerations




Our
operations are also subject to a variety of constantly changing laws and
regulations governing the discharge of materials into the environment or
otherwise relating to environmental protection. Failure to comply with these
laws and regulations can result in the imposition of substantial fines and
penalties as well as potential orders suspending or terminating our rights to
operate. Some environmental laws to which we are subject provide for strict
liability for pollution damage, rendering a person liable for environmental
damage without regard to negligence or fault on the part of such person. In
addition, we may be subject to claims alleging personal injury or property
damage as a result of alleged exposure to hazardous substances, such as oil and
gas related products or for other reasons.




Some
environmental protection laws and regulations may expose us to liability arising
out of the conduct of operations or conditions caused by others, or for acts
which were in compliance with all applicable laws at the time the acts were
performed. Changes in the environmental laws and regulations, or claims for
damages to persons, property, natural resources or the environment, could result
in substantial costs and liabilities to us. These laws and regulations may
substantially increase the cost of exploring, developing, producing or
processing oil and gas and may prevent or delay the commencement or continuation
of a given project and thus generally could have a material adverse effect upon
our capital expenditures, earnings, or competitive position. We believe that we
are in substantial compliance with current applicable environmental laws and
regulations. Nevertheless, changes in existing environmental laws and
regulations or in the interpretations thereof could have a significant impact on
us and the oil and gas industry in general.




4





Risks




The current recession could
have a material adverse impact.The oil
and gas industry is cyclical in nature and tends to reflect general economic
conditions. The US and other world economies are in a recession which could last
into 2010 and beyond. The recession may lead to significant fluctuations in
demand and pricing for crude oil and natural gas, such as the decline in oil and
gas prices which occurred during 2008 and into 2009. Our access to capital, as
well as that of our partners and contractors, could be limited due to tightening
credit markets that could inhibit development of our property
interests.




Our
failure of to obtain capital may significantly restrict our proposed
operations. We
need additional capital to fund our operating losses and to explore for oil and
gas.We do not know what the terms of any future capital raising may be
but any future sale of our equity securities would dilute the ownership of
existing stockholders and could be at prices substantially below the market
price of our common stock. We may not be able to obtain the capital which we
need.




We have never earned a
profit.We
expect to incur losses during the foreseeable future and we may never be
profitable. To enable us to continue in business we will eventually need to earn
a profit or obtain additional financing until we are able to earn a
profit.




Oil and gas exploration is
not an exact science, and involves a high degree of risk.  Our
primary exploration risk lies in the drilling of dry holes or drilling and
completing wells which, though productive, do not produce gas and/or oil in
sufficient amounts to return the amounts expended and produce a profit. Hazards,
such as unusual or unexpected formation pressures, downhole fires, blowouts,
loss of circulation of drilling fluids and other conditions are involved in
drilling and completing oil and gas wells and, if such hazards are encountered,
completion of any well may be substantially delayed or prevented. In addition,
adverse weather conditions can hinder or delay operations, as can shortages of
equipment and materials or unavailability of drilling, completion, and/or
work-over rigs. Even though a well is completed and is found to be productive,
water and/or other substances may be encountered in the well, which may impair
or prevent production or marketing of oil or gas from the
well.  Exploratory drilling involves substantially greater economic
risks than development drilling because the percentage of wells completed
as producing wells is usually less than in development drilling. Exploratory
drilling itself can be of varying degrees of risk and can generally be divided
into higher risk attempts to discover a reservoir in a completely unproven area
or relatively lower risk efforts in areas not too distant from existing
reservoirs. While exploration adjacent to or near existing reservoirs may be
more likely to result in the discovery of oil and gas than in completely
unproven areas, exploratory efforts are nevertheless high risk
activities.




Although
the completion of oil and gas wells is, to a certain extent, less risky than
drilling for oil and gas, the process of completing an oil or gas well is
nevertheless associated with considerable risk. In addition, even if a well is
completed as a producer, the well for a variety of reasons may not produce
sufficient oil or gas in order to repay our investment in the well.




The acquisition, exploration
and development of oil and gas properties and the production and sale of oil and
gas are subject to many factors which are outside our control. These
factors include, among others, general economic conditions, proximity to
pipelines, oil import quotas, supply, demand, and price of other fuels and the
regulation of production, refining, transportation, pricing, marketing and
taxation by federal, state, and local governmental authorities.




The drilling of oil and gas
wells involves hazards such as blowouts, unusual or unexpected formations,
pressures or other conditions which could result in substantial losses or
liabilities to third parties. Although we believe the coverage and types
of insurance we maintain are currently adequate, we may not be insured against
all losses because insurance may not be available, premium costs may be deemed
unduly high, or for other reasons. Accordingly, uninsured liabilities could
result in significant losses and have a material adverse effect on our
operations.




Other




We
currently have no full-time employees.




In
September 2008, we entered into an Administrative Services Agreement with
our largest shareholder, Holloman Corporation. Beginning September 1, 2008,
administrative services fees of $50,000 per month are payable to Holloman
Corporation. These fees, totaling $200,000 for the year ended December 31,
2008, are paid quarterly in shares of our restricted common stock at the average
closing price of the stock for the last ten trading-days of the applicable
monthly billing period. In exchange for its fees, Holloman Corporation has
agreed to provide, among other things; executive consultation, management
advice, engineering and geological services, office space, office support,
communications, IT support, secretarial services, and the costs of North
American travel expenses incurred in connection with the performance its
services. The agreement under which these fees are incurred can be terminated by
either party with 30-days notice. As of December 31, 2008, Holloman
Corporation had received 2,005,833 shares of our restricted common stock in
connection with this agreement.




As part
of our cost cutting efforts, we amended our Administrative Services Agreement
with Holloman Corporation effective January 1, 2009. This amendment
suspended and cancelled the fees payable to Holloman Corporation under the
agreement during the eight month period beginning January 1, 2009 and
ending August 31, 2009.




In
addition to Holloman Corporation, we use independent consultants who provide us,
among other things, with technical support and accounting services.




Other
than the planning of geochemical and geophysical programs undertaken in
connection with our oil and gas concessions, we have devoted no substantial
efforts to research & development within the last two fiscal
years.




Our
offices are located at 333 North Sam Houston Parkway East, Suite 600, Houston,
Texas. Our offices are provided under the terms of an administrative services
agreement, on a month by month basis, by Holloman Corporation, our principal
shareholder.




5


ITEM
2.    PROPERTIES.






See Item
1 of this report.


ITEM
3.    LEGAL
PROCEEDINGS.






None


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






None




6





PART
II


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






On
February 16, 2007 our common stock began trading on the OTC Bulletin Board
under the symbol "DJRP." On April 25, 2007 our trading symbol was changed
to “ENEC” and on October 10, 2007 our trading symbol changed to “HENC.” The
following chart shows the high and low bid prices as quoted by the OTC Bulletin
Board Market for each quarter for the fiscal years ended December 31, 2008
and 2007. Such prices represent quotations between dealers, without dealer
markup, markdown or commissions, and may not represent actual
transactions.




Quarter
            
            High
            
            
            Low4th
      Quarter 2008
            
            $
            0.25
            
            
            $
            0.043rd
      Quarter 2008
            
            $
            0.43
            
            
            $
            0.172nd
      Quarter 2008
            
            $
            0.49
            
            
            $
            0.041st
      Quarter 2008
            
            $
            0.40
            
            
            $
            0.054th
      Quarter 2007
            
            $
            1.20
            
            
            $
            0.313rd
      Quarter 2007
            
            $
            2.00
            
            
            $
            0.312nd
      Quarter 2007
            
            $
            1.96
            
            
            $
            1.601st
      Quarter 2007
            
            $
            1.80
            
            
            $
            1.25





There is
currently only a limited market for our common stock. A limited market is
characterized by a relatively limited number of shares in the public float,
relatively low trading volume and the small number of brokerage firms acting as
market makers. The market for low priced securities is generally less liquid and
more volatile than securities traded on national stock markets. Fluctuations in
market prices are not uncommon. No assurance can be given that the market for
our common stock will continue or that the stock price will be
maintained.




The
Securities and Exchange Commission has adopted regulations which generally
define a "penny stock" to be any equity security that has a market price (as
defined) of less than $5.00 per share or an exercise price of less than $5.00
per share, subject to certain exceptions. As a result, our shares of common
stock are subject to rules that impose additional sales practice requirements on
broker-dealers who sell such securities to persons other than established
clients and "accredited investors". For transactions covered by these rules, the
broker-dealer must make a special suitability determination for the purchase of
such securities and have received the purchaser's written consent to the
transaction prior to the purchase. Additionally, for any transaction involving a
penny stock, unless exempt, the rules require the delivery, prior to the
transaction, of a risk disclosure document mandated by the SEC relating to the
penny stock market. The broker-dealer must also disclose the commission payable
to both the broker-dealer and the registered representative, current quotations
for the securities and, if the broker-dealer is the sole market maker, the
broker-dealer must disclose this fact and the broker-dealer's presumed control
over the market. Finally, monthly statements must be sent disclosing recent
price information for the penny stock held in the account and information on the
limited market in penny stocks. Consequently, the "penny stock" rules may
restrict the ability of broker-dealers to sell our shares of common stock and
may affect the ability of investors to sell such shares of common stock in the
secondary market and the price at which investors can sell any of such
shares.




As of
March 15, 2009 we had 31 record holders of our common stock.




We have
not declared any dividends and we do not plan to declare any dividends in the
foreseeable future. We plan to retain any earnings to finance the expansion of
our operations.




On
December 31, 2008, we issued 1,812,783 shares of our restricted common
stock, at an average price of $0.083 per share in connection with the conversion
of $150,000 in management fees due our largest shareholder, Holloman
Corporation. We relied upon the exemption provided by Section 4(2) of the
Securities Act of 1933 in connection with the sale of these securities. We
believe Holloman Corporation had knowledge and experience in financial and
business matters which allowed it to evaluate the merits and risks of an
investment in our securities. We did not pay any underwriting discounts or sales
commissions in connection with the issuance of these shares.




During
the year ended December 31, 2008 we did not purchase any shares of our
common stock from third parties in a private transaction or as a result of any
purchases in the open market. During the year ended December 31, 2008 none of
our officers or directors, or any of our principal shareholders purchased any
shares of our common stock on our behalf from third parties in a private
transaction or as a result of purchases in the open market.




7


ITEM
6.    SELECTED
FINANCIAL DATA.






Not
Applicable


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






General




From our
inception in May 2004 through May 2007 we were relatively
inactive.




On
August 3, 2007 we acquired Endeavor Canada, an Alberta corporation involved
in the exploration and development of oil and gas. For accounting purposes, our
acquisition of Endeavor Canada constituted a recapitalization and the
acquisition was accounted for as a reverse merger whereby Endeavor Canada was
deemed to have acquired us. As a result, our financial statements reflect the
historical operations of Endeavor Canada prior to the merger, and our joint
operations for the period from August 3, 2007, the merger date, through
February 15, 2008, the date on which we divested of Endeavor Canada (see
below).




Following
the acquisition of Endeavor Canada, we paid $1,640,000 in principal and accrued
interest to Endeavor Canada’s note holders with 1,093,155 shares of our
restricted common stock.




For the
year ended December 31, 2007 our only revenues were from the sale of gas
from wells in Alberta, Canada owned by Endeavor Canada. During that year,
Endeavor Canada generated $58,957 in net revenues and sustained an operating
loss of $634,610.Of the $2,566,246 we
reported as current liabilities at December 31, 2007, $1,504,147 related to
the operations of Endeavor Canada.




On
February 15, 2008 we sold our interest in Endeavor Canada to Cameron King,
one of our former officers and directors, in return for the shares previously
issued to Mr. King during its acquisition. The assets of Endeavor Canada
included all of our Canadian oil and gas properties.




In
May 2007 we acquired a 62.5% working interest in an Australian oil and gas
exploration permit area known as Victoria Permit 60 (“Vic P60”).In November 2007,
we also acquired working interests, varying between 37.5% and 100%, in seven oil
and gas permits awarded by the Australian government, including the remaining
37.5% working interest in the Vic P60 permit. These permits cover onshore
acreage in the Cooper basin and offshore acreage in the Gippsland basin and
Barrow sub-basin.




During
fiscal 2008, we pursued work program obligations, sought consolidation/extension
of certain of our permits, and actively sought joint venture partners for our
oil and gas concessions.During the remainder of
2009 we plan to pursue joint venture agreements with third parties to explore
for oil and gas in the Cooper, Gippsland and Barrow basins of Australia. We are
currently engaged in discussions with three potential joint venture candidates
regarding our Cooper and Barrow leases.




Results
of Operations




We
acquired Endeavor Canada in August 2007. Between May 2006 (the date of
its incorporation) and February 2008, Endeavor Canada acquired its oil and
gas properties in Alberta, Canada but was otherwise relatively inactive. We
divested Endeavor Canada during February 2008. As a result, a comparison of
our operations for the year ended December 31, 2008 with our operations for
the year ended December 31, 2007 is not meaningful.




During
the year ended December 31, 2008, our general and administrative expenses
increased. This growth in expense relates primarily to an increase in
consulting, management and professional fees incurred in connection with capital
formation and the expansion of our operations in Australia. Our foreign exchange
gain of $1,091,047 for the year ended December 31, 2008 results almost entirely
from the impact of the strengthening US dollar on deferred taxes payable in
Australian dollars.




We have
recognized inception to date net losses from the discontinued operations of
Endeavor Canada totaling $2,454,637. During February 2008, we recognized a
gain upon the divestiture of Endeavor Canada of $783,868.




8


Financial
Condition, Liquidity and Capital Resources




The oil
and gas industry is cyclical in nature and tends to reflect general economic
conditions. The US and other world economies are in a recession which continues
to inhibit investment liquidity. Fluctuating oil & gas prices provide
additional uncertainty in capital markets. We expect current economic conditions
to result in greater drilling rig availability and somewhat decreased
exploration costs. Our access to capital however, as well as that of our
partners and contractors, could be limited due to tightening credit markets and
may inhibit the formation of exploration ventures and consortiums. As a result,
the development of our property interests may be delayed due to financial
constraints.




The
current carrying value of our oil and gas properties substantially exceeds our
market capitalization. Our management believes the recent decrease in our market
capitalization results from a lack of liquidity in the capital markets
associated with the global economic recession. Further, our oil and gas leases
are highly sensitive to the market price of oil and the availability of capital
required to fulfill our lease obligations in a timely manner. In the event the
market price of oil declines permanently, or capital remains unavailable for an
extended period, the value of our oil and gas leases may be
impaired.




In
response to the economic recession, we have undertaken a variety of cost-cutting
measures targeted at reducing our administrative expenses. Those measures
include reductions in executive compensation as well as the consulting,
management and professional fees we incur to support our
operations.




We
project that seismic acquisition, interpretation of data and related work on our
Vic P60 and Barrow sub-basin permits will require an investment of up to $7 to
$12 million prior to March 31, 2010. Further, our permits require us
to drill two wells in the Barrow sub-basin before February 26, 2010, four
wells in the Barrow sub-basin before July 22, 2010, and one well on the Vic
P60 permit before November 2010. We are in the process of requesting
extensions from the Australian government with respect to those drilling
obligations. Our management has no reason to believe that an extension of time
to complete those obligations will not be granted.




If we
elect to drill all the wells and perform all other work required by all of our
permits, very early estimates suggest that the total costs may be over
$45,000,000 during the twelve months ending March 31, 2010 and up to
$260,000,000 over the terms of the permits. We intend to joint venture our work
program obligations with third parties which will pay all, or a significant
portion, of the costs required to explore for oil and gas in the area covered by
our permits. We are currently engaged in discussions with three potential joint
venture candidates regarding the initial drilling obligations on our Cooper and
Barrow leases.




At
December 31, 2008, we had advances payable to:




·
            An
      unrelated party in the amount of
$259,343;




·
            Members
      of our Board of Directors in the amount of
  $243,554;




·
            An
      entity affiliated with Mr. Petersen, our President and Chief
      Executive Officer in the amount of $74,728;
and




·
            Holloman
      Corporation in the amount of
$1,254,521




These
advances were used to support our operations in Australia, maintain fund raising
efforts, and pay general and administrative expenses. All advances are
unsecured, non-interest bearing, and are due on demand.




Our
material future contractual obligations as of December 31, 2008, other than
the obligations associated with our oil and gas concessions in Australia, are
shown below.




Payments
      due by periodContractual
      Obligations
            
            Total
            
            
            Less
      than
              1
      Year
            
            
            1-3
      Years
            
            
            3-5
      Years
            
            
            More
      than
              5
      YearsLoans
      and Advances
            
            $
            1,832,146
            
            
            $
            1,832,146
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––




9





Our
operations have been financed from the sale of our securities, loans from
unrelated third parties and advances from Holloman Corporation, our largest
shareholder, our current and former officers, directors and their affiliates.
See Item 12 of this report for more information




On
September 30, 2008, the Company sold 6,764,706 shares of common stock in a
private placement of investment units to our largest shareholder, Holloman
Corporation, and to Mark Stevenson and Douglas Brown, both directors of the
Company and to an affiliated party.




Subsequent
to December 31, 2008, we have repaid $840,000 in advances payable to
related parties.




We
believe our plan of operations may require up to $45,000,000 in exploration
work over the twelve-month period ending March 31, 2010. We are attempting
to enter into joint ventures with third parties who will pay all, or a
significant portion of the costs required to explore for oil and gas and
otherwise fulfill the obligations required by our Australian
permits.




If we are
unable to raise the financing we need, our business plan may fail and our
stockholders could lose their investment. If we are unable to perform in
accordance with the work programs set forth in our leases, the Australian
government could cancel our exploration rights. There can be no assurance that
we will be successful in raising the capital we require, or that if the capital
is offered, it will be subject to terms we consider acceptable. Investors should
be aware that even in the event we are able to raise the funds we require, there
can be no assurance that we will succeed in our drilling or production plans and
we may never be profitable.




As of
March 15, 2009 we did not have any off balance sheet
arrangements.




As of
March 15, 2009 we did not have any proven oil or gas reserves and we did
not have any revenues.




Critical
Accounting Policies and Estimates




Measurement
Uncertainty




The
process of preparing financial statements requires that we make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Such estimates primarily relate to unsettled transactions and
events as of the date of the financial statements; accordingly, actual results
may differ from estimated amounts. The most significant estimates with regard to
the financial statements included with this report relate to carrying values of
oil and gas properties, determination of fair values of stock based
transactions, and deferred income tax rates and timing of the reversal of income
tax differences.




These
estimates and assumptions are reviewed periodically and, as adjustments become
necessary they are reported in earnings in the periods in which they become
known.




Petroleum and Natural Gas
Properties




We
utilize the full cost method to account for our investment in oil and gas
properties. Accordingly, all costs associated with acquisition, exploration and
development of oil and gas reserves, including such costs as leasehold
acquisition costs, capitalized interest costs relating to unproved properties,
geological expenditures, tangible and intangible development costs including
direct internal costs are capitalized to the full cost pool. When we commence
production from established proven oil and gas reserves, capitalized costs,
including estimated future costs to develop the reserves and estimated
abandonment costs, net of salvage, will be depleted on the units-of-production
method using estimates of proved reserves. Investments in unproved properties
and major development projects including capitalized interest, if any, are not
depleted until proved reserves associated with the projects can be determined.
If the future exploration of unproved properties are determined uneconomical the
amount of such properties are added to the capitalized cost to be
depleted.




The
capitalized costs included in the full cost pool are subject to a "ceiling
test", which limits such costs to the aggregate of the estimated present value,
using a ten percent discount rate, of the future net revenues from proved
reserves, based on current economic and operating conditions plus the lower of
cost and estimated net realizable value of unproven properties. At
December 31, 2008, our interests in Australia are all classified as
unproven.




Sales of
proved and unproved properties are accounted for as adjustments of capitalized
costs with no gain or loss recognized, unless such adjustments would
significantly alter the relationship between capitalized costs and proved
reserves of oil and gas, in which case the gain or loss is recognized in the
statement of operations.




10


Asset Retirement
Obligations




We record
the fair value of an asset retirement obligation as a liability in the period in
which we incur an obligation associated with the retirement of tangible
long-lived assets that result from the acquisition, construction, development
and/or normal use of our assets. The estimated fair value of the asset
retirement obligation is based on the current cost escalated at an inflation
rate and discounted at a credit adjusted risk-free rate. This liability is
capitalized as part of the cost of the related asset and amortized over its
useful life. The liability accretes until we settle the obligation.




Environmental




Environmental
expenditures are expensed or capitalized depending on their future economic
benefit. Expenditures that relate to an existing condition caused by past
operations and that have no future economic benefits are expensed. Liabilities
for expenditures of a non-capital nature are recorded when an environmental
assessment and/or remediation is probable, and the costs can be reasonably
estimated.




Revenue
Recognition




Oil and
natural gas revenues are recorded using the sales method whereby we recognize
oil and natural gas revenue based on the amount of oil and gas sold to
purchasers when title passes, the amount is determinable and collection is
reasonably assured. Actual sales of oil and gas are based on sales, net of the
associated volume charges for processing fees and for costs associated with
delivery, transportation, marketing, and royalties in accordance with industry
standards. Operating costs and taxes are recognized in the same period of which
revenue is earned.




Joint Venture
Activities




Substantially
all of our petroleum and natural gas exploration and production activities are
conducted jointly with others, and, accordingly, our financial statements
reflect only our proportionate interest in such activities.




Foreign Currency
Translation




Our
functional and reporting currency, and that of our Australian subsidiary, is the
United States dollar. The financial statements of our former Canadian subsidiary
are translated to United States dollars using period-end rates of exchange for
assets and liabilities, and average rates of exchange for the period for
revenues and expenses. Translation gains (losses) are recorded in accumulated
other comprehensive income as a component of stockholders’ equity. Gains and
losses arising on settlement of foreign currency denominated transactions or
balances are included in the determination of income. Foreign currency
transactions are primarily undertaken in Canadian and Australian dollars. We
have not, to the date of these financial statements, entered into derivative
instruments to offset the impact of foreign currency fluctuations.




Deferred Income
Taxes




We follow
the asset and liability method of accounting for future income taxes. Under this
method, future income tax assets and liabilities are recorded based on temporary
differences between the carrying amount of balance sheet items and their
corresponding tax bases. In addition, the future benefits of income tax assets,
including unused tax losses, are recognized, subject to a valuation allowance,
to the extent that it is more likely than not that such future benefits will
ultimately be realized. Future income tax assets and liabilities are measured
using enacted tax rates and laws expected to apply when the tax liabilities or
assets are to be either settled or realized.




Earnings per
share




We
present both basic and diluted earnings (loss) per share (EPS) on the face of
the consolidated statements of operations. Basic EPS is computed by dividing net
earnings (loss) available to common shareholders by the weighted average number
of shares outstanding during the period. Diluted EPS gives effect to all
dilutive potential common shares outstanding during the period including
convertible debt, stock options, and warrants, using the treasury stock method.
Diluted EPS excludes all dilutive potential shares if their effect is
anti-dilutive. Diluted EPS figures are equal to those of basic EPS for each
period since we have no dilutive stock options and warrants.




See Note
2 to the financial statements included as part of this report for a discussion
of recent accounting pronouncements.




11


ITEM
8.    FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA.






Attached.


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






None


ITEM
9A.    CONTROLS
AND PROCEDURES.






An
evaluation was carried out under the supervision and with the participation of
our management, including our Principal Financial Officer and Principal
Executive Officer, of the effectiveness of our disclosure controls and
procedures as of the end of the period covered by this report on Form 10-K.
Disclosure controls and procedures are procedures designed with the objective of
ensuring that information required to be disclosed in our reports filed under
the Securities Exchange Act of 1934, such as this Form 10-K, is recorded,
processed, summarized and reported, within the time period specified in the
Securities and Exchange Commission’s rules and forms, and that such information
is accumulated and is communicated to our management, including our Principal
Executive Officer and Principal Financial Officer, or persons performing similar
functions, as appropriate, to allow timely decisions regarding required
disclosure. Based on that evaluation, our management concluded that, as of
December 31, 2008, our disclosure controls and procedures were not  effective to satisfy the objectives for which
they are intended.




Management’s Report on
Internal Control Over Financial Reporting




Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting as required by Sarbanes-Oxley (SOX)
Section 404.A. Our internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements in accordance with
generally accepted accounting principles in the United States. Because of its
inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Therefore, even those systems determined to be effective can
provide only reasonable assurance of achieving their control objectives. In
evaluating the effectiveness of our internal control over financial reporting,
our management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in Internal Control - Integrated
Framework. Based on that evaluation, management concluded that during the period
covered by this report our internal controls and procedures were not effective
to detect the incorrect application of GAAP as more fully described below. This
was due to deficiencies that existed in the design or operation of our internal
control over financial reporting that may be considered to be material
weaknesses.




The
matters involving internal controls and procedures that our management
considered to be material weaknesses were: (1) the lack of a fully functional
independent audit committee, (2) the lack of a majority of outside directors,
resulting in ineffective oversight in the establishment and monitoring of
required internal controls and procedures; (3) inadequate segregation of duties
consistent with control objectives; and (4) insufficient written policies and
procedures for accounting and financial reporting with respect to GAAP and SEC
disclosure requirements. These material weaknesses were identified by our Chief
Executive and Financial Officer in connection with the audit of our financial
statements as of December 31, 2008.




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




There
were no changes in our internal control over financial reporting identified in
connection with the evaluation performed that occurred during our last fiscal
quarter that has materially affected or is reasonably likely to materially
affect, our internal control over financial reporting. Management believes that
the material weaknesses described above did not have an affect on our financial
results.




12


We are
committed to improving our organization. We intend to: (i) increase our
accounting personnel when funds are available which will also permit better
segregation of duties, (ii) appoint one or more additional outside directors who
will also be appointed to our audit committee; and (iii) prepare and implement
sufficient written policies and procedures pertaining to accounting and
financial reporting in accordance with GAAP and SEC disclosure
requirements.




We will
continue to monitor and evaluate the effectiveness of our internal controls and
procedures over financial reporting on an ongoing basis and are committed to
taking further action and implementing additional improvements as necessary and
as funds allow.


ITEM
9B.    OTHER
INFORMATION






None




13


PART
III


ITEM
10.    DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.






Name
            
            Age
            
            PositionGrant
      Petersen
            
            53
            
            President,
      Chief Executive Officer, Principal Financial Officer, and
      TreasurerMark
      Stevenson
            
            54
            
            Chairman
      of the Board of Directors and SecretaryJ.
      Douglas Brown
            
            56
            
            DirectorEric
      Prim
            
            51
            
            Director




Our
Directors are elected for a one-year term and hold office until the next annual
meeting of our shareholders or until their resignation or removal by a vote of
our shareholders. Officers are appointed by the Board of Directors and serve at
the discretion of the Board. There is no family relationship between or among
any of our Directors or Officers.




Grant
Petersen, President, Chief Executive Officer, Principal Financial Officer and
Treasurer




Grant
Petersen was elected as our President and Chief Executive Officer on
January 4, 2008. During 2007, Mr. Petersen was an independent
financial consultant. Mr. Petersen served as a Director of House of
Brussels Chocolates. Inc. from October 2002 to January 2007.
Mr. Petersen was also employed by House of Brussels Chocolates as Chief
Executive Officer (May 2003 to January 2007), President
(January 2004 to January 2007), and General Sales Manager
(June 2001 to October 2002). Mr. Petersen was the Chief Executive
Officer of SUMmedia.com from August 1999 to
December 2001.




Mark
Stevenson, Chairman of the Board of Directors and Secretary




Mark
Stevenson has been a Director since September 2007. Mr. Stevenson has
served as President and Chief Executive Officer of Holloman Corporation since
July 1998. Prior to his appointment as President of Holloman Corporation,
Mr. Stevenson was employed by Holloman Corporation as Executive Vice
President (1997 to 1998), Vice President - Pipeline Division (1979 to 1997),
chief estimator (1977 to 1979) and field construction engineer (1976 to
1977).




J.
Douglas Brown, Director




J.
Douglas Brown joined our Board of Directors on March 19, 2007.
Mr. Brown holds a law degree from Edinburgh University and possesses over
35 years investment banking experience. He began his banking career as a
financial analyst with J P Morgan in London and New York. During the
period from 1982 to 1997, Mr. Brown served with Citigroup and Banque
Indosuez focusing on transactions related to the Middle East. Since 1997, he has
actively participated in the creation and management of hedge fund and corporate
finance opportunities. Mr. Brown currently sits on the boards of directors
of: Lund Gold Ltd; LIM Asia Multi Strategy Fund; and Eastern Capital
Fund.




Eric
Prim, Director




Eric Prim
joined or Board of Directors in September 2007. Mr. Prim has been the
Vice President of Engineering and Construction of Holloman Corporation since
1997. Prior to his association with Holloman, Mr. Prim held engineering
positions with Huntsman Corporation and Rexene Corporation. Mr. Prim
received his Bachelor of Science degree in chemical engineering from the
University of Texas in 1982 and a Master of Business Administration degree from
Amber University in 1987.




On
November 21, 2007 we acquired Holloman Petroleum Pty. Ltd. for 18,600,000
shares of our common stock. As a condition of this acquisition, Mark Stevenson,
President and CEO of Holloman Corporation, and Eric Prim, Vice President of
Holloman Corporation, were appointed to our Board of Directors.




J.
Douglas Brown is an independent director, as that term is defined in
Section 803 of the listing standards of the NYSE Alternext US.




14


During
2008, our Audit Committee was comprised J. Douglas Brown and David Lewis who
were independent directors (as that term is defined by section 803 of the
Listing Standards of the NYSE Alternext US). Mr. Lewis, who resigned from
our Board of Directors on January 29, 2009, was our Audit Committee
financial expert as that term is defined in Item 407 of Regulation S-B of
the Securities and Exchange Commission. Mr. Brown currently serves as the
financial expert for the Audit Committee.




We have
no separately designated nominating or compensation committees.




On
March 26, 2007, our Board of Directors adopted a code of ethics that
applies to our principal executive and financial officers. A copy of our Code of
Ethics was included as Exhibit 14.1 to our Form 10-KSB for our year
ended December 31, 2006.




Compensation
Committee Interlocks and Insider Participation




Our
directors act as our compensation committee. During the year ended
December 31, 2008, all of our directors participated in deliberations
concerning executive officer compensation.




During
the year ended December 31, 2008, none of our officers was also a member of
the compensation committee or a director of another entity, which other entity
had one of its executive officers serving as one of our directors or as a member
of our compensation committee.




Changes in
Management




The
following table shows the changes in our officers and directors since
January 1, 2007.




Date
            
            Name
            
            Appointed
      (A)to orResigned (R)from
      Positions
            
            Positions
      Appointed toPositions Resigned From1/22/07
            
            Douglas
      Blackman
            
            A
            
            Director2/22/07
            
            Douglas
      Blackman
            
            R
            
            Director5/25/07
            
            Adrian
      Crimeni
            
            R
            
            President,
      Principal Financial Officer, Secretary and Director5/25/07
            
            James
      Giachetti
            
            R
            
            Vice
      President3/9/07
            
            J.
      Douglas Brown
            
            A
            
            Director5/25/07
            
            Kelly
      Fielder
            
            A
            
            Principal
      Executive and Financial Officer, President, Secretary and
      Treasurer8/3/07
            
            Kelly
      Fielder
            
            R
            
            Principal
      Executive and Financial Officer, President, Secretary and
      Treasurer8/3/07
            
            Cameron
      King
            
            A
            
            Principal
      Executive and Financial Officer, Director9/20/07
            
            Mark
      Stevenson
            
            A
            
            Director
      and Secretary9/20/07
            
            Eric
      Prim
            
            A
            
            Director9/21/07
            
            David
      Lewis
            
            A
            
            Director12/10/07
            
            Cameron
      King
            
            R
            
            Principal
      Executive and Financial Officer, Director1/4/08
            
            Grant
      Petersen
            
            A
            
            President,
      Chief Executive Officer and Treasurer1/29/09
            
            David
      Lewis
            
            R
            
            Director




Compliance with
Section 16A of the Exchange Act




Section 16(a)
of the Securities Exchange Act of 1934, as amended, requires that our directors
and executive officers and persons who beneficially own more than 10% of our
common stock (referred to herein as the “reporting persons”) file with the
Securities and Exchange Commission various reports as to their ownership of and
activities relating to our common stock. Such reporting persons are required by
the SEC regulations to furnish us with copies of all Section 16(a) reports
they file. Based solely upon a review of copies of Section 16(a) reports
and representations received by us from reporting persons, and without
conducting any independent investigation of our own, we believe all Forms 3, 4
and 5 were timely filed with the Securities and Exchange Commission by such
reporting persons, with the exception of; Douglas Brown our current director,
who filed two Form 4’s reporting two transactions after their due date;
Mark Stevenson, our current director who filed two Form 4’s reporting two
transactions after their due date; Holloman Corporation, our controlling
shareholder which filed four Form 4’s reporting four transactions after
their due date, David Lewis our former director who filed one Form 4 after
its due date, and Grant Petersen, our current officer who filed one Form 4
reporting one transaction after its due date.


15


ITEM
11.    EXECUTIVE
COMPENSATION.




The
following table shows the compensation paid to our Chief Executive Officer and
those executive officers that earned more than $100,000 in 2008 and
2007:




Summary
Compensation Table




Stock
            
            
            Option
            
            
            All
      OtherSalary
            
            
            Bonus
            
            
            Awards
            
            
            Awards
            
            
            Compensation
            
            
            TotalName
      and PrincipalPosition
            
            Year
            
            ($)
            
            
            ($)
            
            
            ($)
            
            
            ($)
            
            
            ($)
            
            
            ($)Adrian
      Crimeni(1),Chief
      Executive
            
            2007
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––and
      FinancialOfficerKelly
      Fielder(1),Chief
      Executive
            
            2007
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––and
      FinancialOfficerCameron
      King(1),Chief
      Executive
            
            2007
            
            $
            86,667
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            $
            86,667and
      FinancialOfficerGrant
      Petersen(2),
            
            2008
            
            $
            175,000
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            $
            175,000Chief
      Executiveand
      FinancialOfficer


———————




(1)
            Mr. Crimeni,
      Mr. Fielder and Mr. King all resigned their positions with us
      prior to December 31, 2007.




(2)
            Mr. Petersen
      became our Chief Executive and Financial Officer on January 4, 2008.
      Mr. Petersen’s was compensated in the form of management fees for
      services rendered in the normal course of operations. The amount of the
      fees was established and approved by our Board of
    Directors.




During
2007 we paid management fees of $65,623 to King Capital Corporation, a company
owned by Cameron King, our former Chief Executive Officer and
President.




Director
Compensation




Our
Directors are reimbursed for reasonable out-of-pocket expenses in connection
with attendance at Board of Director and committee meetings. Directors have not
been compensated for their service as directors.




Stock-Based
Compensation/Retirement Benefits




We do not
have any securities authorized for issuance under any stock option, stock bonus
or other equity compensation plans.




We have
not granted stock-based compensation or stock options to our executive officers.
We have never offered any annuity, pension or retirement benefits for our
officers, directors or employees.




16


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




The
following table shows as of March 15, 2009, the beneficial ownership of
shares of common stock by (i) each person known to us who owns beneficially more
than 5% of the outstanding shares of common stock, (ii) each of our Officers and
Directors and (iv) all of our Executive Officers and Directors as a group.
Unless otherwise indicated, each stockholder has sole voting and investment
power with respect to the shares shown. We have no securities authorized for
issuance under equity compensation plans.




Name
      and address of  beneficial owner
            
            Number
      of
              Shares
      (1)
            
            
            Percentage
      of
              Common
      StockGrant
      Petersen
            
            
            5,206,471
            (2)
            
            
            5.43
            %Chief
      Executive Officer,President
      and Treasurer482
      – 1027 Davie StreetVancouver,
      BC, CanadaMark
      Stevenson
            
            
            1,013,016
            (3)
            
            
            1.06
            %Chairman
      – Board of Directors8225
      San Diego StreetOdessa,
      Texas 79765J.
      Douglas Brown
            
            
            5,695,293
            
            
            
            5.85
            %Director16E
      Les Roseyres, Gron1882Vaud,
      SwitzerlandEric
      Prim
            
            
            436,076
            
            
            
            0.46
            %Director4901
      Polo ParkwayMidland,
      Texas 79705Holloman
      Oil & Gas Limited
            
            
            17,237,500
            
            
            
            18.11
            %Unit
      8-988
      Forrest StreetCottesloe,
      WA, 6001AustraliaHolloman
      Corporation
            
            
            32,299,953
            
            
            
            30.66
            %333
      North Sam Houston Parkway EastSuite
      600Houston,
      Texas 77060All
      Officers and Directors as a group (four persons)
            
            
            61,888,309
            (4)
            
            
            56.94
            %


———————


(1)
            Includes
      shares which may be acquired on the exercise of the warrants listed below,
      all of which were exercisable as of December 31,
  2008.




Shares
      Issuable UponName
            
            Exercise  of
      Warrants
            
            Exercise
      Price
            
            Expiration
      DateGrant
      Petersen*
            
            392,157
            
            $0.70
            
            9/30/2011Grant
      Petersen*
            
            392,157
            
            $2.00
            
            9/30/2011Mark
      Stevenson
            
            196,078
            
            $0.70
            
            9/30/2011Mark
      Stevenson
            
            196,078
            
            $2.00
            
            9/30/2011J.
      Douglas Brown
            
            1,078,431
            
            $0.70
            
            9/30/2011J.
      Douglas Brown
            
            1,078,431
            
            $2.00
            
            9/30/2011Holloman
      Corporation
            
            5,098,040
            
            $0.70
            
            9/30/2011Holloman
      Corporation
            
            5,098,040
            
            $2.00
            
            9/30/2011


———————


*
            Warrants
      are held of record by Mr. Petersen’s
wife.




(2)
            Includes
      shares held by an entity controlled by Mr. Petersen, shares held by
      Mr. Peterson’s wife, and shares issuable upon the exercise of
      warrants.


(3)
            Includes
      388,050 shares held directly, 232,810 shares held indirectly by entities
      controlled by Mr. Stevenson, and shares issuable upon the exercise of
      warrants.


(4)
            Mark
      Stevenson is the President and chief executive officer of Holloman
      Corporation. Eric Prim is the Vice President of Holloman Corporation.
      Holloman Corporation owns all of the outstanding shares of Holloman Oil
      & Gas. Mr. Stevenson is the president of Holloman Oil & Gas
      and Mr. Prim is one of its directors.Accordingly, this
      number includes shares owned of record by Holloman Oil & Gas Limited
      and Holloman Corporation as well as shares issuable upon the exercise of
      warrants held by Holloman
Corporation.




17


ITEM
13.    CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.






As
detailed in Items 1 and 7 of this report, we have non-interest bearing advances
from certain of our Directors, shareholders and affiliates; and a series of
transactions with Holloman Corporation and Holloman Oil & Gas.




During
2007 we paid $65,623 for management services to King Capital Corporation, a
company owned by Cameron King, our former Chief Executive Officer and President.
During 2008 management fees totaling $175,000 were paid to our current Chief
Executive Officer. The fees were incurred as compensation for services rendered
in the normal course of operations and were paid at the amount established and
agreed to by our Board of Directors.




In
November 2007 we acquired Holloman Petroleum Pty. Ltd. for 18,600,000
shares of our common stock. Prior to the acquisition, Holloman Petroleum was a
majority owned subsidiary of Holloman Oil & Gas.




The
following describes the manner by which our officers, directors and principal
shareholders acquired their shares of our common stock.




Grant
Peterson:




Date
            
            Number
      ofShares Acquired
            
            Description  of
      Transaction03-07-08
            
            4,000,000*
            
            (1)09-17-08
            
            30,000
            
            Open
      market purchase10-06-08
            
            392,157*
            
            (2)


———————


*
            Held
      of record by Mr. Petersen’s wife and an entity affiliated with
      Mr. Petersen




Mark
Stevenson:




Date
            
            Number
      ofShares Acquired
            
            Description  of
      Transaction09-24-07
            
            55,000
            
            Open
      market purchase10-01-07
            
            27,000
            
            Open
      market purchase11-21-07
            
            282,782
            
            Acquisition
      of Holloman Petroleum Pty. Ltd. Mr. Stevenson, as well as a limited
      liability company and two trusts controlled by Mr. Stevenson, were
      shareholders of Holloman Petroleum Pty. Ltd.09-17-08
            
            60,000
            
            Open
      market purchase10-06-08
            
            196,078
            
            (2)




J. Douglas
Brown:




Date
            
            Number
      ofShares Acquired
            
            Description  of
      Transaction03-07-08
            
            2,460,000
            
            (1)10-06-08
            
            1,078,431
            
            (2)




Eric
Prim:




Date
            
            Number
      ofShares Acquired
            
            Description  of
      Transaction9-24-07
            
            59,000
            
            Open
      market purchases11-21-07
            
            377,076
            
            Acquisition
      of Holloman Petroleum Pty. Ltd. Mr. Prim was a shareholder of
      Holloman Petroleum Pty. Ltd.


18


Holloman
Oil & Gas Ltd.:




Date
            
            Number
      ofShares Acquired
            
            Description  of
      Transaction11-21-07
            
            17,237,500
            
            Acquisition
      of Holloman Petroleum Pty. Ltd. Holloman Oil & Gas Ltd. was the
      principal shareholder of Holloman Petroleum Pty.
  Ltd.





Holloman
Corporation:




Date
            
            Number
      ofShares Acquired
            
            Description  of
      Transaction03-07-08
            
            15,000,000
            
            (1)09-30-08
            
            193,050
            
            Conversion
      of $50,000 in administrative service fees at $0.26 per
    share10-06-08
            
            5,098,040
            
            (2)12-31-08
            
            1,812,783
            
            Conversion
      of $150,000 in administrative service fees at $0.083 per
    share


———————


(1)
            Shares
      were purchased in a private transaction from Adrian Crimeni, our former
      President and largest shareholder.




(2)
            Shares
      were purchased from us in a private offering. The shares were sold as part
      of a unit and at a price of $0.255 per unit. Each unit consisted of one
      share of our restricted common stock, one Series A warrant and one
      Series B warrant. Each Series A warrant entitles the holder to
      purchase one share of our restricted common stock at a price of $0.70 per
      share. Each Series B warrant entitled the holder to purchase one
      share of our restricted common stock at a price of $2.00 per share. The
      Series A and B warrants expire on September 30,
      2011.


ITEM
14.    PRINCIPAL
ACCOUNTANT FEES AND SERVICES.






The
following table sets forth the aggregate fees paid or accrued for professional
services rendered by Dale Matheson Carr-Hilton LaBonte LLP Chartered Accountants
for the audit of our annual financial statements for 2008 and 2007, and the
aggregate fees paid or accrued for audit-related services and all other services
rendered by Dale Matheson Carr-Hilton LaBonte LLP for those years.




2008
            
            
            2007Audit-related
      fees
            
            $
            77,000
            
            
            $
            92,000Tax
      fees
            
            
            5,000
            
            
            
            5,000Total
            
            $
            82,000
            
            
            $
            97,000




The
category of “Audit fees” includes fees for our annual audit, quarterly reviews
and services rendered in connection with regulatory filings with the SEC. “Tax
fees” include fees incurred in the review and preparation of our annual income
tax filings.




The Audit
Committee of our Board of Directors pre-approves the scope and estimated costs
of all services rendered by our Principal Accountants. We concluded that the
service provided by Dale Matheson Carr-Hilton LaBonte LLP was compatible with
the maintenance of that firm’s independence in the conduct of its auditing
functions.




19





PART
IV


ITEM
15.    EXHIBITS,
FINANCIAL STATEMENT SCHEDULES.






FINANCIAL
STATEMENTS


Consolidated
Balance Sheets


Consolidated
Statements of Operations


Consolidated
Statements of Stockholders Equity (Deficiency)


Consolidated
Statements of Cash Flows


Notes to
Consolidated Financial Statements






EXHIBITS




ExhibitNumber
            
            Description
      of Exhibit3.1
            
            Articles
      of Incorporation(1)3.2
            
            Corporate
      Bylaws(1)10.1
            
            Administrative
      Services Agreement between Holloman Energy Corporation and Holloman
      Corporation including Amendment 1 to that Agreement10.2
            
            Share
      Exchange Agreement between Endeavor Energy Corporation, First Endeavor
      Holdings Inc .and Endeavor Canada Corporation(2)10.3
            
            Agreement
      between Endeavor Energy Corporation and Holloman Petroleum Pty. Ltd. for
      the purchase of assets and exchange of shares(3)10.4
            
            Option
      Agreement dated February 1, 2008 between Holloman Energy Corporation
      and Cameron King for an exchange of shares of Endeavor Canada
      Corporation(4)10.5
            
            Notice
      of Option Exercise dated February 15, 2008 relating to the Option
      Agreement between Holloman Energy Corporation and Cameron King for an
      exchange of shares of Endeavor Canada Corporation(4)10.6
            
            Farm
      Out Commitment Agreement between Holloman Energy Corporation and Holloman
      Oil & Gas, Ltd.(4)10.7
            
            Sales
      and Purchase Agreement effective May 16, 2007 for the acquisition of a
      37.5% working interest in Vic P6014.1
            
            Code
      of Ethics for Principal Executive and Senior Financial Officers(5)21.1
            
            As
      of March 15, 2009 our subsidiaries were:First
      Endeavor Holdings Inc. (100% Owned)Holloman
      Petroleum Pty. Ltd. (100% Owned)Endeavor
      Exploration Pty. Ltd. (100% Owned)31.1
            
            Rule 13a-14(a)
      Certifications31.2
            
            Rule 13a-14(a)
      Certifications32
            
            Section 1350
      Certifications


———————


(1)
            Previously
      filed with our Form SB-2 on January 23, 2006 and incorporated by
      reference.


(2)
            Previously
      filed with our Form 8-K on August 9, 2007 and incorporated by
      reference.


(3)
            Previously
      filed with our Form 8-K on November 29, 2007 and incorporated by
      reference.


(4)
            Previously
      filed with our Form 10-KSB on April 15, 2008 and incorporated by
      reference.


(5)
            Previously
      filed with our Form 10-KSB/A on April 26, 2007 and incorporated
      by reference.  20
 SIGNATURES









In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.




HOLLOMAN
      ENERGY CORPORATIONDate:
            March
      30, 2010By:
            /s/ Mark
      StevensonMark
      Stevenson, President and Principal Executive OfficerBy:
            /s/ Robert
      WesolekRobert
      Wesolek, Principal Financial and Accounting
  Officer





In
accordance with the Securities Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.




Signature
            
            Date/s/ Mark
      Stevenson
            
            March
      30, 2010Mark
      Stevenson, Director/s/ J.
      Douglas Brown
            
            March
      30, 2010J.
      Douglas Brown, Director/s/ Eric
      Prim
            
            March
      30, 2010Eric
      Prim, Director/s/ Keith
      Macdonald
            
            March
      30, 2010Keith
      Macdonald, Director





21








REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM








To the
Stockholders and Board of Directors of Holloman Energy Corporation:





We have
audited the accompanying consolidated balance sheets of Holloman Energy
Corporation (an exploration stage company) as of  December 31, 2008
and 2007 and the related consolidated statements of operations, stockholders’
equity and cash flows for the years then ended and the period from May 5, 2006
(inception) through December 31, 2008.  These financial statements are
the responsibility of the Company's management.  Our responsibility is
to express an opinion on these financial statements based on our
audits.





We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform an audit to obtain reasonable assurance whether the
financial statements are free of material misstatement.  The Company
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company’s internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable basis
for our opinion.





In our
opinion, these consolidated financial statements present fairly, in all material
respects, the financial position of Holloman Energy Corporation as at December
31, 2008 and 2007 and the results of its operations and its cash flows for the
years then ended and the period from May 5, 2006 (inception) through September
30, 2008 in conformity with accounting principles generally accepted in the
United States of America.





As
discussed in Note 12, to the consolidated financial statements, the 2008
financial statements are restated to correct
misstatements.





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











“DMCL”








DALE
MATHESON CARR-HILTON LABONTE LLP


CHARTERED
ACCOUNTANTS


Vancouver,
Canada


September 14,
2009 (except
for Note 12 which is of March 29, 2010)










F-1


HOLLOMAN
ENERGY CORPORATION


(An
Exploration Stage Company)


CONSOLIDATED
BALANCE SHEETS




December
      31,
                2008
              
              
              December
      31,
                2007ASSETS
              
              (Restated - see Note 12)CURRENT
      ASSETSCash
              
              $
              1,763,998
              
              
              $
              ––Accounts
      receivable
              
              
              ––
              
              
              
              14,339Other
      receivable
              
              
              2,838
              
              
              
              63,386Prepaid
      expenses and deposits
              
              
              5,375
              
              
              
              115,1471,772,211
              
              
              
              192,872Equipment,
      net
              
              
              ––
              
              
              
              14,019Oil
      and gas properties, full cost method, unproven
              
              
              23,081,129
              
              
              
              22,945,468Deposit
      on acquisition
              
              
              639,487
              
              
              
              639,487Other
      Assets
              
              
              ––
              
              
              
              5,044Total
      Assets
              
              $
              25,492,827
              
              
              $
              23,796,890LIABILITIES
      AND STOCKHOLDERS' EQUITYCURRENT
      LIABILITIESAccounts
      payable and accrued liabilities
              
              $
              175,351
              
              
              $
              821,903Loans
      payable
              
              
              259,343
              
              
              
              585,928Due
      to related parties
              
              
              1,572,803
              
              
              
              1,158,4152,007,497
              
              
              
              2,566,246Deferred
      tax liability
              
              
              5,086,156
              
              
              
              6,177,000Asset
      retirement obligations
              
              
              ––
              
              
              
              60,692Total
      Liabilities
              
              
              7,093,653
              
              
              
              8,803,938STOCKHOLDERS'
      EQUITYAuthorized:10,000,000
      preferred shares, par value $0.001 per share150,000,000
      common shares, par value $0.001 per shareIssued
      and outstanding:NIL
      (December 31, 2007 - 9,009,000) preferred shares
              
              
              ––
              
              
              
              995,159,065  (December
      31, 2007 - 81,219,358) common shares
              
              
              95,159
              
              
              
              81,219Minority  interest
              
              
              ––
              
              
              
              9,000Additional
      paid in capital
              
              
              20,464,301
              
              
              
              17,903,746Accumulated
      other comprehensive income (loss)
              
              
              1,614
              
              
              
              (30,870
              )Deficit
      accumulated during the exploration stage
              
              
              (2,161,900
              )
              
              
              (2,970,152
              )Total
      Stockholders' Equity
              
              
              18,399,174
              
              
              
              14,992,952Total
      Liabilities and Stockholders' Equity
              
              $
              25,492,827
              
              
              $
              23,796,890


F-2





HOLLOMAN
ENERGY CORPORATION


(An
Exploration Stage Company)


CONSOLIDATED
STATEMENTS OF OPERATIONS


(Restated
– Note 12)




Cumulative
              results
              from
      May 5,
              2006
      to
              December
      31,
              2008Year
      EndedDecember
      31,
              2008
            
            
            December 31,
              2007GENERAL
      AND ADMINISTRATIVE
              EXPENSES
            
            (Restated
      -see Note 12)
            
            
            (Restated -see Note 12)Consulting
            
            $
            435,777
            
            
            $
            304,907
            
            
            
            130,870Foreign
      exchange (gain)/loss
            
            
            (1,083,748
            )
            
            
            (1,091,047
            )
            
            
            7,299Gain
      on settlement of debt
            
            
            (38,063
            )
            
            
            (38,063
            )
            
            
            ––Management
      fees
            
            
            375,000
            
            
            
            375,000
            
            
            
            ––Office,
      travel and general
            
            
            388, 768
            
            
            
            201,820
            
            
            
            186,878Professional
      fees
            
            
            326,731
            
            
            
            167,026
            
            
            
            159,705Salaries,
      wages, and benefits
            
            
            86,666
            
            
            
            ––
            
            
            
            86,666LOSS
      FROM CONTINUING
              OPERATIONS
            
            
            (491, 131
            )
            
            
            80,357
            
            
            
            (571,418
            )DISCONTINUED
      OPERATIONSNet loss from discontinued
operations
            
            
            (2,454,637
            )
            
            
            (55,902
            )
            
            
            (936,327
            )Gain on disposal of Endeavor
            
            
            783,868
            
            
            
            783,868
            
            
            
            ––GAIN (LOSS) FROM DISCONTINUED
    OPERATIONS
            
            
            (1,670,769
            )
            
            
            727,966
            
            
            
            (936,327
            )INCOME
      ( LOSS)
            
            $
            (2,161 ,900
            )
            
            $
            808,323
            
            
            $
            (1,507,745
            )BASIC
      AND DILUTED NET LOSS FROM
              CONTINUING
      OPERATIONS PER
              COMMON
      SHARE
            
            
            
            
            
            $
            (0.00
            )
            
            $
            (0.01
            )BASIC
      AND DILUTED NET LOSS
              FROM
      DISCONTINUED
              OPERATIONS
      PER COMMON
              SHARE
            
            
            
            
            
            $
            (0.00
            )
            
            $
            (0.01
            )BASIC
      AND DILUTED NET (LOSS)
              INCOME
      PER COMMON SHARE
            
            
            
            
            
            $
            0.01
            
            
            $
            (0.02
            )WEIGHTED
      AVERAGE NUMBER OF
              BASIC
      AND DILUTED COMMON
              SHARES
      OUTSTANDING
            
            
            
            
            
            $
            85,860,458
            
            
            $
            63,743,997







F-3


HOLLOMAN
ENERGY CORPORATION


(An
Exploration Stage Company)


CONSOLIDATED
STATEMENT OF STOCKHOLDERS' EQUITY


From May
5, 2006 (Inception) to December 31, 2008


(Restated
–  see Note  12)




Common
      Shares
            
            
            Preferred
      Shares
            
            
            
            
            
            Additional
            
            
            
            
            
            Deficit
              Accumulated
              During
            
            
            TotalNumber
            
            
            
            
            
            Number
            
            
            
            
            
            Minority
            
            
            Paid
      In
            
            
            Comprehensive
            
            
            Exploration
            
            
            Stockholders'of
      Shares
            
            
            Amount
            
            
            of
      Shares
            
            
            Amount
            
            
            Interest
            
            
            Capital
            
            
            Income/(Loss)
            
            
            Stage
            
            
            EquityIssuance
      of common shares to  to founder, May 2006
            
            
            100
            
            
            $
            1
            
            
            
            ––
            
            
            $
            ––
            
            
            $
            ––
            
            
            $
            ––
            
            
            $
            ––
            
            
            $
            ––
            
            
            $
            1Foreign
      currency translation
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            13,987
            
            
            
            ––
            
            
            
            13,987Net
      loss for the 8 month period ended December 31, 2006
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            (1,462,407)
            
            
            
            (1,462,407)Balance,
      December 31, 2006
            
            
            100
            
            
            
            1
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            13,987
            
            
            
            (1,462,407)
            
            
            
            (1,448,419)Issued
      in connection  with the acquisition of ECC in August
      2007
            
            
            ––
            
            
            
            ––
            
            
            
            9,000
            
            
            
            9
            
            
            
            9,000
            
            
            
            (9,000)
            
            
            
            ––
            
            
            
            ––
            
            
            
            9Adjustment
      to give effect to acquisition of ECC in August, 2007
            
            
            61,466,203
            
            
            
            61,466
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            329,766
            
            
            
            ––
            
            
            
            ––
            
            
            
            391,232Shares
      of ECC acquired by legal parent
            
            
            (100)
            
            
            
            (1)
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            (1)Issued
      at $1.50 per share in August 2007  on conversion of ECC
      debentures
            
            
            1,093,155
            
            
            
            1,093
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            1,638,640
            
            
            
            ––
            
            
            
            ––
            
            
            
            1,639,733Issued
      for cash at $1.00 per share
            
            
            60,000
            
            
            
            60
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            59,940
            
            
            
            ––
            
            
            
            ––
            
            
            
            60,000Issued
      for property at $0.86 per share
            
            
            18,600,000
            
            
            
            18,600
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            15,884,400
            
            
            
            ––
            
            
            
            ––
            
            
            
            15,903,000Foreign
      currency translation
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (44,857)
            
            
            
            
            
            
            
            (44,857)Net
      loss for the year ended December 31, 2007
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            (1,507,745)
            
            
            
            (1,507,745)Balance,
      December 31, 2007
            
            
            81,219,358
            
            
            
            81,219
            
            
            
            9 ,000
            
            
            
            9
            
            
            
            9,000
            
            
            
            17,903,746
            
            
            
            (30,870)
            
            
            
            (2,970,152
            )
            
            
            14,992,952Write
      Off Accumulated Comprehensive Income from ECC operations to Extraordinary
      Gain
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            31,265
            
            
            
            (71)
            
            
            
            31,194Cancelled
      on divestiture of ECC February 2008
            
            
            ––
            
            
            
            ––
            
            
            
            (6,500)
            
            
            
            (6)
            
            
            
            (6,500)
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            (6,506
            )Conversion
      of preferred shares to common stock
            
            
            2,502,500
            
            
            
            2,503
            
            
            
            (2,500)
            
            
            
            (3)
            
            
            
            (2,500 )
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––Investment
      Units issued for cash at $0.30 per unit
            
            
            2,766,668
            
            
            
            2,767
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            744,233
            
            
            
            ––
            
            
            
            ––
            
            
            
            747,000Investment
      Units Issued for cash at $0.255 per unit
            
            
            6,664,706
            
            
            
            6,664
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            1,618,335
            
            
            
            ––
            
            
            
            ––
            
            
            
            1,624,999Management
      fees converted to common stock
            
            
            2,005,833
            
            
            
            2,006
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            197,987
            
            
            
            ––
            
            
            
            ––
            
            
            
            199,993Foreign
      currency translation
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            1,219
            
            
            
            
            
            
            
            1,219Net
      income for the year ended December 31, 2008
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            ––
            
            
            
            808,323
            
            
            
            808,323Balance,
      December 31, 2008
            
            
            95,159,065
            
            
            $
            95,159
            
            
            
            ––
            
            
            $
            ––
            
            
            $
            ––
            
            
            $
            20,464,301
            
            
            $
            1,614
            
            
            $
            (2,161,900)
            
            
            $
            18,399,174







F-4


HOLLOMAN
ENERGY CORPORATION


(An
Exploration Stage Company)


CONSOLIDATED
STATEMENTS OF CASH FLOWS


(Restated
– Note 12)




Cumulative
      results
              from
      May 5,
              2006
      to
              December
      31,
              2008Year
      EndedDecember
      31,
              2008
            
            
            December
      31,
              2007OPERATING
      ACTIVITIES
            
            (Restated -see
      Note 12)
            
            
            (Restated -see
      Note 12)Net
      (loss) income
            
            $
            (2,161,900
            )
            
            $
            808,323
            
            
            $
            (1,507,745
            )Adjustments
      to reconcile net (loss) income to net cash used in operating
      activities:Cash
      used by discontinued operations
            
            
            1,729,701
            
            
            
            29,135
            
            
            
            575,326Gain
      on disposal of Endeavor
            
            
            (783,868
            )
            
            
            (783,868
            )
            
            
            ––Gain
      from settlement of indebtedness
            
            
            (63,063
            )
            
            
            (63,063
            )
            
            
            ––Management
      fees paid in common shares
            
            
            200,000
            
            
            
            200,000
            
            
            
            ––Foreign
      exchange (gain)/ loss
            
            
            (1,128,605
            )
            
            
            (1,091,048
            )
            
            
            7,299Interest
      accrued and financing costs
            
            
            ––
            
            
            
            ––
            
            
            
            (37,558
            )Changes
      in non-cash working capital itemsAccounts
      receivable
            
            
            (2,838
            )
            
            
            (2,838
            )
            
            
            ––Prepaid
      expenses and deposits
            
            
            (5,375
            )
            
            
            (5,375
            )
            
            
            ––Accounts
      payable and accrued liabilities
            
            
            350,501
            
            
            
            5,650
            
            
            
            344,852Cash
      used by operations
            
            
            (1,865,447
            )
            
            
            (903,084
            )
            
            
            (617,826
            )FINANCING
      ACTIVITIESFinancing
      activities from discontinued operations
            
            
            2,000,261
            
            
            
            ––
            
            
            
            ––Common
      stock issued for cash
            
            
            2,432,001
            
            
            
            2,372,000
            
            
            
            60,000Loans
      payable
            
            
            50,567
            
            
            
            (35,100
            )
            
            
            93,021Due to related parties
            
            
            2,183,831
            
            
            
            1,025,415
            
            
            
            1,158,415Cash
      provided by financing activities
            
            
            6,666,660
            
            
            
            3,362,315
            
            
            
            1,311,436INVESTING
      ACTIVITIESInvesting
      activities from discontinued operations
            
            
            (1,447,739
            )
            
            
            ––
            
            
            
            133,607Petroleum
      and natural gas expenditures
            
            
            (962,685
            )
            
            
            (695,233
            )
            
            
            (267,452
            )Cash
      acquired on acquisition
            
            
            12,696
            
            
            
            ––
            
            
            
            12,696Deposit
      on acquisition
            
            
            (639,487
            )
            
            
            ––
            
            
            
            (639,487
            )Repayment of advances to shareholder
            
            
            ––
            
            
            
            ––
            
            
            
            (131,735
            )Cash
      used by investing activities
            
            
            (3,037,215
            )
            
            
            (695,233
            )
            
            
            (892,371
            )CHANGE
      IN CASH
            
            
            1,763,998
            
            
            
            1,763,998
            
            
            
            (198,761
            )CASH,
      BEGINNING
            
            
            ––
            
            
            
            ––
            
            
            
            198,761CASH,
      ENDING
            
            $
            1,763,998
            
            
            $
            1,763,998
            
            
            $
            ––SUPPLEMENTAL
      DISCLOSURE:Interest
      paid
            
            $
            9,908
            
            
            $
            ––
            
            
            $
            9,908Income
      taxes paid
            
            $
            ––
            
            
            $
            ––
            
            
            $
            ––NON-CASH
      ACTIVITIES:Shares
      issued on conversion of management fees
            
            $
            200,000
            
            
            $
            200,000
            
            
            $
            ––Shares
      issued on conversion of liabilities
            
            $
            1,639,733
            
            
            $
            ––
            
            
            $
            1,639,733Shares
      issued for property acquired
            
            $
            15,903,000
            
            
            $
            ––
            
            
            $
            15,903,000


F-5


HOLLOMAN
ENERGY CORPORATION


(An
Exploration Stage Company)





NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS





DECEMBER
31, 2008


1.   
NATURE
AND CONTINUANCE OF OPERATIONS






Holloman
Energy Corporation (the “Company” or “Holloman”), formerly Endeavor Energy
Corporation, was incorporated in the State of Nevada on May 14,
2004.




On August
3, 2007, the Company acquired Endeavor Canada Corporation (“Endeavor”), an
entity incorporated in Alberta, Canada and involved in the exploration and
development of oil and gas properties (see Note 3). The Company acquired
Endeavour for 9,000 shares of its Series A Preferred stock and 9,000,000 shares
of the preferred stock of the Company’s wholly owned subsidiary, First Endeavor
Holdings (“FEH”).




For
accounting purposes, the acquisition of Endeavor constituted a re-capitalization
whereby Endeavor was deemed to have acquired Holloman. As a result, the
financial statements reflect the historical operations of Endeavor since its
inception and the operations of Holloman subsequent to August 3, 2007. On
February 15, 2008, the Company divested its interest in Endeavour (Note
3).




On
November 21, 2007 the Company acquired Holloman Petroleum Pty. Ltd. (“Holloman
Petroleum”) for 18,600,000 shares of its common stock.  Holloman
Petroleum’s assets consisted of working interests, varying between 37.5% and
100%, in seven oil and gas permits awarded in Australia.




The
Company’s consolidated financial statements are prepared on a going concern
basis in accordance with generally accepted accounting principles in the United
States which contemplates the realization of assets and discharge of liabilities
and commitments in the normal course of business. The Company is in the
exploration stage and has not generated operating revenues to date, has incurred
substantial losses in developing its business and has accumulated losses of
approximately $2,162,000 since inception. To date the Company has funded
operations through the issuance of capital stock and debt. Management’s plan is
to continue raising additional funds through; third-party equity or debt
financings, joint venturing of its work program obligations with third parties
to pay all, or a significant portion, of the costs required and reliance upon
the continued support of it controlling shareholder. Given the global economic
recession, however, there is no certainty that further funding will be available
as needed. These factors raise substantial doubt about the ability of the
Company to continue operating as a going concern. The ability of the Company to
continue its operations as a going concern and to realize the carrying value of
its assets and discharge its liabilities in the normal course of business is
dependent upon the continued support of its controlling shareholder and on the
Company’s ability to raise sufficient new capital to fund its exploration and
development commitments and to fund ongoing losses and ultimately on generating
profitable operations.




2.   
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES




Basis of
Presentation




These
consolidated financial statements and related notes are presented in accordance
with accounting principles generally accepted in the United States, and are
expressed in United States dollars. The Company has not produced significant
revenues from its principal business and is an exploration stage company as
defined by Statement of Financial Accounting Standard (“SFAS”) No. 7 “Accounting
and Reporting by Development Stage Enterprises.” These financial statements
include the accounts of the Company and its wholly owned subsidiaries, Endeavor,
FEH and Holloman Petroleum. All intercompany transactions and balances have been
eliminated.




F-6


Use of
Estimates




The
preparation of financial statements in conformity with U.S. generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period. The
Company regularly evaluates estimates and assumptions. The Company bases its
estimates and assumptions on current facts, historical experience and various
other factors it believes to be reasonable under the circumstances, the results
of which form the basis for making judgments about the carrying values of assets
and liabilities and the accrual of costs and expenses that are not readily
apparent from other sources. The actual results experienced by the Company may
differ materially and adversely from the Company’s estimates. To the extent
there are material differences between the estimates and the actual results,
future results of operations will be affected. The most significant estimates
with regard to these financial statements relate to carrying values of oil and
gas properties, determination of fair values of stock based transactions, and
deferred income tax rates.




Foreign
Currency Translation




The
Company and its Australian subsidiaries’ functional and reporting currency is
the United States dollar. The functional currency of the Company’s Canadian
subsidiary is the Canadian dollar. The financial statements of the subsidiary
are translated to United States dollars in accordance with SFAS No. 52 “Foreign
Currency Translation” using period-end rates of exchange for assets and
liabilities, and average rates of exchange for the period for revenues and
expenses. Translation gains (losses) are recorded in accumulated other
comprehensive income as a component of stockholders’ equity. Foreign currency
transactions of the Company’s subsidiaries are primarily undertaken in
Australian and Canadian dollars. The Company has not, to the date of these
financial statements, entered into derivative instruments to offset the impact
of foreign currency fluctuations.




Oil and
Gas Properties




The
Company utilizes the full cost method to account for its investment in oil and
gas properties. Accordingly, all costs associated with acquisition, exploration
and development of oil and gas reserves, including such costs as leasehold
acquisition costs, capitalized interest costs relating to unproved properties,
geological expenditures, tangible and intangible development costs including
direct internal costs are capitalized to the full cost pool. When the Company
commences production from established proven oil and gas reserves, capitalized
costs, including estimated future costs to develop the reserves and estimated
abandonment costs, net of salvage, will be depleted on the units-of-production
method using estimates of proved reserves.   Costs
of unproved properties are not amortized until the proved reserves associated
with the projects can be determined or until impairment occurs.  If an
assessment of such properties indicates that properties are impaired, the amount
of impairment is added to the capitalized cost base to be
amortized.




The
capitalized costs included in the full cost pool are subject to a "ceiling
test", which limits such costs to the aggregate of the (i) estimated present value, using a ten percent discount
rate, of the future net revenues from proved reserve, based on current economic
and operating conditions, (ii) the lower of cost
or estimated fair value
of unproven properties included in the costs being
amortized, (iii) the cost of properties not being amortized, less (iv) income
tax effects related to differences between the book and tax basis of the cost of
properties not being amortized and the cost or estimated fair value of unproved
properties included in the costs being amortized.   At December
31, 2008, all of the Compan y’s oil and gas interests were
classified as unproven properties and were not being
amortized.




Sales of
proved and unproved properties are accounted for as adjustments of capitalized
costs with no gain or loss recognized, unless such adjustments would
significantly alter the relationship between capitalized costs and proved
reserves of oil and gas, in which case the gain or loss is recognized in the
statement of operations.




Equipment


Equipment
is recorded at historical cost.  The declining-balance method of
depreciation is used for the assets at the following annual
rates:






Computer
      equipment
            45%Furniture
      and Equipment
            20%




Expenditures
for replacements, renewals, and betterments are
capitalized.  Maintenance and repairs are charged to operations as
incurred.




F-7





Asset
retirement obligations




The
Company accounts for asset retirement obligations in accordance with the
provisions of Statement of Financial Accounting Standard (SFAS) No. 143
“Accounting for Asset Retirement Obligations”. SFAS No. 143 requires the Company
to record the fair value of an asset retirement obligation as a liability in the
period in which it incurs an obligation associated with the retirement of
tangible long-lived assets that result from the acquisition, construction,
development and/or normal use of the assets. The estimated fair value of the
asset retirement obligation is based on the current cost escalated at an
inflation rate and discounted at a credit adjusted risk-free rate. This
liability is capitalized as part of the cost of the related asset and amortized
over its useful life.  The liability accretes until the Company
settles the obligation.




Environmental




Oil and
gas activities are subject to extensive federal and provincial environmental
laws and regulations. These laws, which are constantly changing, regulate the
discharge of materials into the environment and may require the Company to
remove or mitigate the environmental effects of the disposal or release of
petroleum or chemical substances at various sites.




Environmental
expenditures are expensed or capitalized depending on their future economic
benefit.  Expenditures that relate to an existing condition caused by
past operations and that have no future economic benefits are expensed.
Liabilities for expenditures of a non-capital nature are recorded when an
environmental assessment and/or remediation is probable, and the costs can be
reasonably estimated.




Income
taxes




Income
taxes are determined using the liability method in accordance with Statement of
Financial Accounting Standards (“SFAS”) No. 109, Accounting for Income
Taxes.  Deferred 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 basis. Deferred tax assets and liabilities are measured using the
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or
settled.  The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes that
date of enactment.  In addition, a valuation allowance is established
to reduce any deferred tax asset for which it is determined that it is more
likely than not that some portion of the deferred tax asset will not be
realized.




In June
2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in
Income Taxes, an interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48
clarifies the accounting for uncertainty in income taxes by prescribing a
two-step method of first evaluating whether a tax position has met a more likely
than not recognition threshold and, second, measuring that tax position to
determine the amount of benefit to be recognized in the financial statements.
FIN 48 provides guidance on the presentation of such positions within a
classified balance sheet as well as on de-recognition, interest and penalties,
accounting in interim periods, disclosure and transition. FIN 48 was adopted by
the Company on January 1, 2007. The adoption of this statement did not have a
material effect on the Company's financial statements.




Stock
based compensation




The
Company records compensation expense in the financial statements for share based
payments using the fair value method pursuant to the Financial Accounting
Standards Board Statement (“FASB”) No. 123R.  The fair value of
share-based compensation to employees will be determined using the Black-Scholes
option valuation model at the time of grant. Fair value for common shares issued
for goods or services rendered by non-employees are measured based on the fair
value of the goods and services received. Share-based compensation is expensed
with a corresponding increase to share capital.  Upon the exercise of
the stock options, the consideration paid is recorded as an increase in share
capital.




There
were no options granted during the year ended December 31, 2008, or since
inception.




F-8


Long-Lived
assets




In
accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of
Long-Lived Assets", the carrying value of intangible assets and other long-lived
assets is reviewed on a regular basis for the existence of facts or
circumstances that may suggest impairment. The Company recognizes impairment
when the sum of the expected undiscounted future cash flows is less than the
carrying amount of the asset. Impairment losses, if any, are measured as the
excess of the carrying amount of the asset over its estimated fair
value.




Fair
Value of Financial instruments




The
estimated fair values for financial instruments under statement of Financial
Accounting Standards (“SFAS”) No. 107, Disclosures about Fair Value of
Financial Instruments, are determined at discrete points in time based on
relevant market information. These estimates involve uncertainties and cannot be
determined with precision. The estimated fair value of cash, accounts
receivable, other receivables, loans payable, deposit on acquisition, accounts
payable and amounts due to related parties approximates their carrying value due
to their short-term nature.




In
connection with private placements, the Company granted certain investors
exercising all of their Series A or Series B Warrants a prorata portion of a 2%
net revenue interest in wells drilled by the Company, or on its behalf, in the
Company’s concessions covering lands in the Cooper or Barrow basins of
Australia.  It is management’s opinion that no value can be assigned
to these revenue interests, or any associated derivative effect, the fair value
cannot be reasonably determined given the current stage of
exploration.




Other
Comprehensive Income (Loss)




SFAS No.
130, “Reporting Comprehensive Income”, establishes standards for the reporting
and display of comprehensive loss and its components in the financial
statements. For the years ended December 31, 2008 and 2007, the only components
of comprehensive loss were foreign currency translation
adjustments.




Earnings
per share




The
Company computes net earnings (loss) per share in accordance with SFAS No. 128
"Earnings per Share" which requires presentation of both basic and diluted
earnings per share (“EPS”) on the face of the statements of operations. Basic
EPS is computed by dividing net earnings (loss) available to common shareholders
by the weighted average number of shares outstanding during the period. Diluted
EPS gives effect to all dilutive potential common shares outstanding during the
period including convertible debt, stock options, and warrants, using the
treasury stock method. Diluted EPS excludes all dilutive potential shares if
their effect is anti-dilutive. Diluted EPS figures are equal to those of basic
EPS for each period since the Company has no dilutive stock options and
warrants.


Recent
accounting pronouncements






In
February 2007, the FASB issued Statement of Financial Accounting Standards
(“SFAS”) No. 159, “The Fair Value Option for Financial Assets and Financial
Liabilities — Including an amendment of FASB Statement No. 115”
(“SFAS No. 159”). SFAS No. 159 permits entities to choose to
measure many financial instruments and certain other items at fair value.
SFAS No. 159 is effective for fiscal years beginning after
November 15, 2007 and, as such, the Company adopted the provisions of
SFAS 159 as of January 1, 2008. The Company chose not to elect the
fair value option to measure its financial assets and liabilities existing at
January 1, 2008 that had not been previously carried at fair value, or of
financial assets and liabilities it transacted in the year ended
December 31, 2008. Therefore, the adoption of SFAS No. 159 had no
effect on the Company’s financial statements.




In
September 2006, the FASB issued SFAS No. 157, “Fair Value
Measurements” (“SFAS No. 157”). SFAS No. 157 provides a
common definition of fair value to be applied to existing generally accepted
accounting principles (“GAAP”) requiring the use of fair value measures,
establishes a framework for measuring fair value and enhances disclosure about
fair value measures under other accounting pronouncements, but does not change
existing guidance as to whether or not an asset or liability is carried at fair
value. SFAS No. 157 is effective for financial statements issued for
fiscal years beginning after November 15, 2007 for all financial assets and
liabilities, and any other assets and liabilities that are recognized or
disclosed at fair value on a recurring basis. For nonfinancial assets and
liabilities, SFAS No. 157 is effective for financial statements issued
for fiscal years beginning after November 15, 2008. The Company’s adoption
of the provisions of SFAS No. 157 as of January 1, 2008 did not
have a material effect on its results of operations, financial position or cash
flows.




F-9





In
December 2007, the EITF reached a consensus on Issue No. 07-1, “Accounting
for Collaborative Arrangements” (“EITF No. 07-1”). The EITF concluded on
the definition of a collaborative arrangement, and that revenues and costs
incurred with third parties in connection with collaborative arrangements would
be presented gross or net based on the criteria in EITF No. 99-19 and other
accounting literature. Based on the nature of the arrangement, payments to or
from collaborators would be evaluated, and its terms, the nature of the entity’s
business, and whether those payments are within the scope of other accounting
literature would be presented. Companies are also required to disclose the
nature and purpose of collaborative arrangements, along with the accounting
policies, and the classification and amounts of significant financial statement
amounts related to the arrangements. Activities in the arrangement conducted in
a separate legal entity should be accounted for under other accounting
literature; however, required disclosure under EITF No. 07-1 applies to the
entire collaborative agreement. EITF No. 07-1 is effective for fiscal years
beginning after December 15, 2008 and is to be applied retrospectively to
all periods presented for all collaborative arrangements existing as of the
effective date. The Company plans to adopt the provisions of EITF No. 07-1
as of January 1, 2009 and does not expect the adoption to have a material
effect on its results of operations, financial position or cash
flows.




In April
2008, the FASB issued FSP No. SFAS 142-3, “Determination of the Useful
Life of Intangible Assets” (“SFAS 142-3”). In determining the useful life
of intangible assets, SFAS 142-3 removes the requirement to consider
whether an intangible asset can be renewed without substantial cost or material
modifications to the existing terms and conditions and, instead, requires an
entity to consider its own historical experience in renewing similar
arrangements. SFAS 142-3 also requires expanded disclosure related to the
determination of intangible asset useful lives. SFAS 142-3 is effective for
financial statements issued for fiscal years beginning after December 15,
2008. The Company is currently evaluating the effect, if any, the adoption of
SFAS 142-3 will have on its results of operations, financial position or
cash flows.




In May
2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted
Accounting Principles" (“SFAS 162”).  The statement identifies
the sources of accounting principles and establishes a hierarchy for selecting
those principles to prepare financial statements in accordance with U.S.
GAAP.  The statement is effective 60 days following the SEC's approval
of the Public Fund Accounting Oversight Board (PCAOB) amendments to AU Section
411, "The Meaning of Present Fairly in Conformity with Generally Accepted
Accounting Principles."  The Company is currently evaluating the
impact of SFAS 162, but does not expect the adoption of the pronouncement will
have a material impact on its financial position, results of operation, or cash
flows.




In June
2008, the EITF reached a consensus Issue No. 07-5, “Determining Whether an
Instrument (or Embedded Feature) is indexed to an Entity’s Own Stock (“EITF
No. 07-5”). EITF No. 07-5 was issued to clarify how to determine
whether certain instruments or features are indexed to an entity’s own stock
under EITF Issue No. 01-6, “The Meaning of Indexed to a Company’s Own
Stock” (“EITF No. 01-6”). The consensus in EITF No. 07-5 applies to
any freestanding financial instrument or embedded feature that has the
characteristics of a derivative as defined in FSP No. SFAS 133,
“Accounting for Derivative Instruments and Hedging Activities”
(“SFAS 133”). The consensus in EITF No. 07-5 supersedes EITF
No. 01-6 and is effective for financial statements issued for fiscal years
beginning after December 15, 2008, and interim periods within those fiscal
years. The Company is currently evaluating the effect, if any, the adoption of
EITF No. 07-5 will have on its results of operations, financial position or
cash flows.




Other
pronouncements issued by the FASB or other authoritative accounting standards
groups with future effective dates are either not applicable or are not expected
to be significant to the financial statements of the Company.


3.   
DIVESTITURE
OF ENDEAVOR AND DISCONTINUED OPERATIONS






Effective
August 3, 2007, the Company entered into a share exchange agreement to acquire
100% of the issued and outstanding shares of Endeavor.




The
Company’s acquisition of Endeavor was accounted for as a re-capitalization using
accounting principles applicable to reverse acquisitions whereby the financial
statements subsequent to the date of the transaction are presented as a
continuation of Endeavor. Under re-capitalization accounting Endeavor was
treated as the Company’s accounting parent (legal subsidiary) and the Company
was treated as the accounting subsidiary (legal parent).  This means
the consolidated results of operations of the Company include those of Endeavor
from its inception on May 5, 2006 and those of the Company from the closing date
of the re-capitalization on August 3, 2007.  Endeavor, the acquired
entity, is regarded as the predecessor and continuing entity as of August 3,
2007.




F-10


A summary
of the reverse takeover recapitalization adjustments is as follows:




Cash
            
            $
            12,658Deposit
            
            
            639,548Account
      payable and accrued liabilities
            
            
            (41,873
            )Loans
      payable
            
            
            (219,101
            )Recapitalization
      adjustment
            
            $
            391,232




On
February 1, 2008, the Company entered into an agreement with its former CEO
which provided the Company the option of exchanging all of the Company’s
interest in Endeavor for the Company’s Series A Preferred shares and the Class A
Preferred shares of FEH, Inc. held by the former CEO.




On
February 15, 2008 the option was exercised.  As a result, the 6,500
shares of the Company’s Series A Preferred stock and the 6,500,000 Class A
Preferred shares of FEH originally issued to the CEO of Endeavour were returned
to the Company and cancelled. In exchange, all outstanding shares of Endeavor
were transferred to the former CEO. During the year ended December 31, 2007,
Endeavor generated $58,957 in net revenues and sustained an operating loss of
$634,610. Of the $2,566,246 reported as current liabilities at December 31,
2007, $1,504,147 related to Endeavor. The Company recognized a gain on its
divestiture of Endeavor as follows:




Net
      liabilities of Endeavor:Assets
            
            $
            (780,467
            )Liabilities,
      including $351,504 in amounts payable to related parties
            
            
            3,401,781Accumulated
      comprehensive income
            
            
            (31,265
            )Carrying
      value
            
            
            2,590,049Share
      consideration received
            
            
            6,507Intercompany
      receivables written off
            
            
            (1,812,688
            )Gain
      on disposal of discontinued operations
            
            $
            783,868




The
assets of Endeavor included all of the Company’s Canadian-based oil and gas
holdings and operations.




4.           OIL
AND GAS PROPERTIES




All of
the Company’s oil and gas properties are located in Australia and are unproven.
As such, the costs capitalized in connection with those properties are not
currently subject to depletion. The Company intends to acquire additional
seismic data and begin drilling exploratory wells on our properties with 24
months. As a result, the Company anticipates depletion of these properties will
begin during fiscal year 2011. The costs incurred in oil and natural gas
property acquisition and exploration activities are summarized as
follows:




Australian Exploration Properties -
      UnprovenBalance,
      December 31, 2006
            
            $
            ––Acquisition
      costs
            
            
            15,903,000Impact
      of deferred tax liability
            
            
            6,177,000Exploration
      costs
            
            
            290,925Balance,
      December 31, 2007
            
            
            22,370,925Exploration
      Costs
            
            
            710,204Balance,
      December 31, 2008
            
            $
            23,081,129




In May
2007, the Company entered into an agreement to acquire a 62.5% working interest
in an Australian oil and gas exploration permit covering 339,769 acres, more or
less, in an area known as Victoria Permit 60 (“Vic P60”).  In
connection with the agreement, the Company paid $639,487 in the form of a
deposit on the Vic P60 permit awaiting approval of the transfer of the permit by
the Australian government (see Note 5). The Company has also agreed to pay a
4.00% overriding royalty interest on Vic P60 with an additional contingent
back-in working interest of 6.20% effective in the event certain performance
criteria are achieved.


F-11


On
November 21, 2007, the Company purchased seven Australian oil and gas interests.
This purchase was facilitated by the acquisition of Holloman Petroleum Pty.
Ltd., a privately held Australian-based company, for 18,600,000 shares of the
Company's common stock with a fair market value of $15,903,000. The interests
are located in the Cooper basin, in the State of South Australia, in the
Gippsland basin, in the State of Victoria, and in the Barrow sub-basin, in the
State of Western Australia. In connection with the acquisition, the Company also
acquired the remaining 37.5% working interest in the Vic P60 permit. During
February 2008, a shareholder paid $660,000 to an unrelated third party to
reserve the Company’s right to participate in a seismic study for the Vic P60
permit.  This $660,000 is included in the category “Due to Related
Parties” on the Company’s balance sheet.  On January 22, 2009, the
Australian government extended the time frames within which the Company must
complete the Vic P60 seismic work and interpretation. The revised work program
required completion of the seismic work by January 28, 2009. Due to current
economic conditions, the Company was unable to complete the seismic work and is
seeking an additional extension of time to complete these
obligations.




On March
7, 2008, the Company entered into an agreement with Holloman Oil & Gas
Limited (“Holloman O & G”), an Australian corporation, which granted
Holloman O & G a two-thirds working interest in the PEL 112
permit.  To earn its working interest, Holloman Oil & Gas agreed
to:




·
            Fund
      the costs required to drill, and if warranted, complete three wells on the
      PEL 112 within the timeframes required  by the permit work
      programs; and




·
            Pay
      the Company a 1.33% overriding royalty on gross revenues generated from
      the sale of any oil or gas produced from wells drilled on the PEL
      112.




The
Company has the right to earn up to a one-third working interest in the PEL 112
concession by paying, prior to the time any well has reached 50% of the expected
total depth, the Company’s proportionate share of the cost of drilling any of
the wells involved in the three-well drilling program.  The Company
also has the right to earn up to a one-third working interest in any future
wells drilled on the PEL 112 by paying its proportionate share of the cost of
drilling. Two of the Company’s directors are officers and shareholders in
Holloman Corporation, which holds a 100% interest in Holloman
O&G.




On June
11, 2008 the Australian government consolidated two of the Company’s oil and gas
permits (PEL 108 and PEL 109) into one permit (PEL 444). In connection with that
consolidation, the government also extended the lease term and associated work
programs for that permit and PEL 112 by five years. Under Australian Law, at the
end of each five year term, one third of the area covered by a petroleum
exploration license must be relinquished. Accordingly, during June 2008, the
Company identified and relinquished a third of the acreage covered by PEL 112
and PEL 444 to the government.




To better
coordinate exploration, the Company is also seeking to consolidate three of its
other oil and gas permits (WA-372P, WA-373P and WA-395P). On March 24, 2009, the
Australian government extended the time frames within which the Company must
complete the seismic work and interpretation on the WA-372P and WA-373P permits.
The work program extension requests the Company submit evidence of a firm
contract to secure a seismic vessel by June 22, 2009.  If a firm
commitment is secured in time, a further extension could be
considered.




The
Company’s North American properties were disposed of in the sale of Endeavor
(see Note 3).




5.   
DEPOSIT ON ACQUISITION




The
Company has entered into an Asset Purchase Agreement to acquire a 62.5% working
interest, associated assets and contract rights in an offshore oil concession in
the Bass Straits in the State of Victoria, Australia, known as Vic P60. The
purchase price for the interest is $639,487 which has been paid. The closing of
this transaction is subject to the receipt of the approval by the Commonwealth
of Australia to transfer title of the permit. Registration
of Australian title transfers requires the submission of original “relevant
dealings” and “title transfer applications” in the form prescribed under Section
473 of Australia’s Offshore Petroleum and Greenhouse Gas Storage Act
2006.  The process is multi-tiered, and involves several comment
rounds.




In
connection with the Company’s acquisition of Holloman Petroleum, it also
acquired the remaining 37.5% working interest in Vic P60 (see Note
4).




F-12


6.   
LOANS PAYABLE




Loans
payable consists of the following:





December
      31,
              2008
            
            
            December
      31,
              2007Loan
      for $450,000,  non-secured, bears interest at 10% per
      annum
            
            $
            ––
            
            
            $
            450,000Non-interest
      bearing loan, payable upon demand
            
            
            ––
            
            
            
            79,283Non-interest
      bearing loan, payable upon demand
            
            
            259,343
            
            
            
            ––Non-interest
      bearing loan, payable upon demand
            
            
            ––
            
            
            
            50,440Non-interest
      bearing loan, payable upon demand
            
            
            ––
            
            
            
            6,205$
            259,343
            
            
            $
            585,928





During
June and September 2008, the Company negotiated settlements with a two (2) third
party lenders by which $85,488 of indebtedness was satisfied for $35,100
resulting in a gain of $50,388.




7.           RELATED
PARTY TRANSACTIONS




Non-interest
bearing advances, payable upon demand to (from) shareholders and other related
parties consist of the following:




December
      31,
              2008
            
            
            December
      31,
              2007Advances
      from a company affiliated with the president and chief executive
      officer
            
            $
            74,729
            
            
            $
            183,861Advances
      from shareholders / Directors
            
            
            243,553
            
            
            
            363,876Advances
      from Shareholder
            
            
            1,254,521
            
            
            
            ––Advances
      from former president and chief executive officer
            
            
            ––
            
            
            
            610,678$
            1,572,803
            
            
            $
            1,158,415





Management
fees totaling $175,000 (2007 - $65,623) were paid to the Company’s Chief
Executive Officer. The fees were incurred as compensation for services rendered
in the normal course of operations and were paid at the amount established and
agreed to by the related parties.




Beginning
September 1, 2008, administrative services fees of $50,000 per month are payable
to the Company’s major shareholder, Holloman Corporation. These fees, totaling
$200,000 for the year ended December 31, 2008, are paid on a quarterly basis in
shares of the Company’s restricted common stock at the average closing price of
the stock for the last 10 trading-days of the applicable monthly billing period.
In exchange for its fees, Holloman Corporation has agreed to provide, among
other things;  executive consultation, management advice, engineering
and geological services, office space, office support, communications, IT
support, secretarial services, and the costs of North American travel expenses
incurred in connection with the performance its services. The agreement under
which these fees are incurred can be terminated by either party with 30-days
notice. As of December 31, 2008, Holloman Corporation has received 2,005,833
shares of the Company’s restricted common stock in connection with this
agreement.




As part
of recent cost cutting efforts, the Company amended its Administrative Services
Agreement with Holloman Corporation effective January 1, 2009. This amendment
suspended and cancelled the fees payable to Holloman Corporation under the
agreement during the eight month period beginning January 1, 2009 and ending
August 31, 2009.




On
September 30, 2008, the Company sold 6,664,706 shares of common stock in a
private placement of investment units to its major shareholder, Holloman
Corporation, and to certain directors of the Company and to an affiliated
party.




8.   
PREFERRED SHARES




The
Company and its wholly-owned subsidiary, FEH are each authorized to issue
10,000,000 preferred shares each with a par value of $0.001 per share. At
December 31, 2008, neither the Company nor FEH had any preferred shares
outstanding.


F-13


On August
3, 2007 the Company acquired Endeavor for 9,000 shares of the Company’s Series A
Preferred stock and 9,000,000 preferred shares of FEH. Each Series A Preferred
share was convertible into one share of the Company’s common stock and were
entitled to 1,000 votes on any matter submitted to the Company’s shareholders
for approval. The 9,000,000 preferred shares of FEH were, at the option of the
holder of the shares, convertible into 9,000,000 shares of the Company’s common
stock. At December 31, 2007, the Company had 9,000 and FEH had 9,000,000
preferred shares outstanding.




On
February 1, 2008 the Company entered into an agreement with its former Chief
Executive Officer which provided the Company with the option of exchanging all
of the Company’s interest in Endeavor for the Company’s Series A Preferred
shares and the Class A Preferred shares of FEH previously issued in connection
with the Company’s original acquisition of Endeavor. On February 15, 2008 the
option was exercised.  As a result, the 6,500 shares of the Company’s
Series A Preferred stock and the 6,500,000 Class A Preferred shares of FEH were
returned to the Company and cancelled and all outstanding shares of Endeavor
were transferred to the former CEO.




At the
option of the remaining preferred stockholders, the residual 2,500 shares of the
Company’s Series A Preferred stock and 2,500,000 preferred shares of FEH were
converted into an equivalent number of shares of the Company’s common stock
during June 2008.




9.   
COMMON SHARES




The
Company is authorized to issue 150,000,000 common shares with a par value of
$0.001.




During
September and December 2008, the Company issued 193,050 (average conversion
price $0.259 per share) and 1,812,783 (average conversion price $0.083 per
share) shares of its restricted common stock respectively, in consideration for
administrative and other services fees due and payable to Holloman Corporation
totaling $200,000 (see Note 7).




On
September 30, 2008, the Company sold 6,664,706 shares of common stock in a
private placement of investment units to Holloman Corporation, and to certain
directors of the Company and to an affiliated party. The investment units were
priced at $0.255 each (total proceeds - $1,725,000) and consisted of one share
of the Company’s common stock, one Series A Warrant and one Series B
Warrant.




During
June 2008, the Company sold 2,766,668 shares of common stock in a private
placement of investment units to five accredited investors. Investment units
were priced at $0.30 each (total proceeds - $830,000) and consisted of one share
of the Company’s common stock, one Series A Warrant and one Series B
Warrant.  The Company paid finder’s fees in the amount of $83,000,
133,000 Series A Warrants and 133,333 Series B Warrants in connection with this
private placement.




Each
Series A Warrant entitles the holder to purchase one share of the Company’s
common stock at a price of $0.70 per share.  Each Series B Warrant
entitles the holder to purchase one share of the Company’s common stock at a
price of $2.00 per share. All Series A and Series B Warrants issued on September
30, 2008, expire on September 30, 2011. All Series A and Series B Warrants
issued during June 2008, expire on June 30, 2011. In addition, any investor
exercising all of their Series A or Series B Warrants is eligible receive a
prorata portion of a 2% net revenue interest in wells drilled by the Company, or
on its behalf, in the Company’s concessions covering lands in the Cooper or
Barrow basins of Australia. In management’s opinion no value can be assigned
these revenue interests as such valuation is currently
non-estimable.




During
June 2008, the Company also issued 2,502,500 shares of its common stock in
connection with the conversion of preferred shares (see Note 8).




At
December 31, 2008, 19,614,949 share purchase warrants are issued and
outstanding. No warrants have expired or have been exercised since inception.
The weighted average remaining life and weighted average exercise price of
outstanding stock warrants at December 31, 2008 were 32 months and $1.37,
respectively. As at December 31, 2007, no share purchase warrants were issued or
outstanding.




The fair
value of stock warrants issued to purchasers of investment units is determined
using the Black-Scholes valuation model at the time the stock warrant is
granted.




F-14





10.   
INCOME TAXES




The Company is subject to United States federal income taxes at
an approximate rate of 35%. The reconciliation of the provision for
income taxes at the United States federal statutory rate compared to the
Company’s income tax expense as reported is as follows:




Year
      Ended
              December
      31,
              2008
            
            
            Year
      Ended
              December
      31
              2007Statutory
      tax rates
            
            
            35
            %
            
            
            35
            %Expected
      recovery of income taxes at statutory rates
            
            $
            274,251
            
            
            $
            (543,000
            )Increase
      (reduction) in income taxes resulting from:non- deductible expenditures   and
      other
            
            
            (317,498
            )
            
            
            21,000Foreign
      exchange rate and tax rate differences
            
            
            (78, 676
            )
            
            
            (35,000
            )Valuation
      allowance change
            
            
            121,923
            
            
            
            557,000Provision
      for income taxes
            
            $
            ––
            
            
            $
            ––




The
significant components of deferred income tax assets and liabilities at December
31, 2008 and 2007 are as follows:




Year
      Ended
              December
      31,
              2008
            
            
            Year
      Ended
              December
      31,
              2007Deferred
      income tax assets:Canadian
      non-capital loss carryforwards
            
            $
            ––
            
            
            $
            379,000US
      net operating loss carryforwards
            
            
            534,130
            
            
            
            196,000Australian
      operating loss carryforwards
            
            
            28,885
            
            
            
            18,000US
      loan receivable
            
            
            543,806
            
            
            
            ––Property
      and equipment, Canada
            
            
            ––
            
            
            
            3,000Petroleum
      and natural gas properties , Canada
            
            
            ––
            
            
            
            378,000Total
      deferred income tax assets
            
            
            1,106,821
            
            
            
            974,000Less:
      valuation allowance
            
            
            (1,077, 936
            )
            
            
            (956,000
            )Deferred
      income tax assets, net
            
            $
            28,885
            
            
            $
            18,000Petroleum
      and natural gas properties, Australia
            
            $
            (5,115 ,041
            )
            
            $
            (6,195,000
            )Deferred
      income tax liabilities, net
            
            $
            (5,086, 156
            )
            
            $
            (6,177,000
            )





In the
United States, the Company had regular tax net
operating losses of $1,526,087 (2007 – $560,000)
that expire from 2026 through 2028. A valuation allowance of $ 534,130 (2007 - $196,000) has been applied against these
losses.




In
Australia, the Company had regular tax net operating losses of $96,283 (2007 - $70,000) that may be used in future years
to reduce taxable income.




11.   
SUBSEQUENT EVENTS




Subsequent
to December 31, 2008, the Company repaid $840,000 in advances to its major
shareholder and certain directors.




The
Company amended its Administrative Services Agreement with Holloman Corporation
effective January 1, 2009 (see Note 7).





F-15





12.   
RESTATEMENT




The
Company has restated its financial statements for the year ending December 31,
2008. The effect on the Company’s financial statements
follows:





Consolidated Balance
Sheets







Consolidated Statements of
Operations


The
following adjustment has been made to the Consolidated Statement of Operations
for the year ended December 31, 2008:


For
      the Year Ended December 31, 2008Before
              adjustment
              $
            
            
            Adjustment
              $
            
            
            After
              adjustment
              $Foreign
      exchange gain
            
            
            (204
            )
            
            
            (1,090,844
            )
            
            
            (1,091,048
            )Deferred
      income tax recovery
            
            
            (1,090,844
            )
            
            
            1,090,844
            
            
            
            -










Consolidated Statements of
Cash Flows





The
Consolidated Statement of Cash Flows has been revised to reflect the impact of
the change made to the Consolidated Statement of Operations:





For
      the Year Ended December 31, 2008Before
              adjustment
              $
            
            Adjustment
              $
            
            After
              adjustment
              $Operating
      Activites -Foreign
      exchange gain
            
            
            (203
            )
            
            
            (1,090,844
            )
            
            
            (1,091,047
            )Deferred
      income tax recovery
            
            
            (1,090,844
            )
            
            
            1,090,844
            
            
            
            —




F-16





Further,
the cumulative column has been adjusted to reflect the impact of the change made
to the Consolidated Statement of Operations and display components of financing
and investing activities from discontinued operations as separate line items as
follows:


CumulativeBefore
              adjustment
              $
            
            
            Adjustment
              $
            
            
            After
              adjustment
              $Operating
      Activites -Foreign
      exchange gain
            
            
            (37,761
            )
            
            
            (1,090,844
            )
            
            
            (1,128,605
            )Deferred
      income tax
      recovery
            
            
            (1,090,844
            )
            
            
            1,090,844
            
            
            
            —Financing
      Activities –Financing
      activities from discontinued operations
            
            
            
            
            
            
            2,000,261
            
            
            
            2,000,261Convertible
      debentures issued
            
            
            1,500,000
            
            
            
            (1,500,000
            )
            
            
            —Loans
      payable
            
            
            550,828
            
            
            
            (500,261
            )
            
            
            50,567Investing
      Activities –Investing
      activities from discontinued operations
            
            
            —
            
            
            
            (1,447,739
            )
            
            
            (1,447,739
            )Equipment
      acquired
            
            
            (23,490
            )
            
            
            23,490
            
            
            
            —Petroleum
      and natural gas expenditures
            
            
            (2,335,106
            )
            
            
            1,372,421
            
            
            
            (962,685
            )Deposits
            
            
            (51,828
            )
            
            
            51,828
            
            
            
            —





Consolidated Statement of
Stockholders’ Equity




For the
year ended December 31, 2008, the $9,000 of FEH preferred shares has been
corrected, at both their issuance and cancellation, to minority
interest to comply with the Company’s retrospective application of FAS
160.




F-17