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UNITED STATES**SECURITIES AND EXCHANGE COMMISSION**
  Washington, D.C. 20549

FORM 10-KSB

[X]  Annual Report under section 13 or 15(d) of the
Securities Exchange Act of 1934

For the fiscal year ended September 30, 2006

[   ]  Transition Report pursuant to section 13
or 15(d) of the Securities Exchange Act of 1934

Commission file number000-30087

AMG OIL LTD.(Name of Small
Business Issuer in its charter)

|Nevada                                                               | Not Applicable                      
|-------------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of incorporation or
      organization) | (I.R.S. Employer Identification No.)
|                                                                     |                                     
|600 17thStreet, Suite
      2800 South, Denver, Colorado             | 80202-5428                          
|(Address of principal executive offices)                             | (Zip Code)                          

Issuers telephone number (303) 226-5889

Securities registered under Section 12(b) of the Exchange Act:
None

Securities registered under Section 12(g) of the Exchange
Act:

Common Stock(Title of class)

Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period that AMG Oil was required to filed such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes   [X]   No  [   ]

Check if there is no disclosure of delinquent filers in response
to Item 405 of Regulation S-B contained in this form, and no disclosure will
be contained, to the best of registrants knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB: [   ]

Indicate by check mark whether AMG Oil is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes   [X]  
No  [   ]

State issuers revenues for its most recent fiscal year.
$Nil

State the aggregate market value of the voting and non-voting
common equity held by non-affiliates computed by reference to the price at
which the common equity was sold, or the average bid and ask price of such
common equity, as of a specified date within the past 60 days.
$11,600,000 as of December 12, 2006.

State the number of shares outstanding of each of the issuers
classes of common equity, as of the latest practicable date. As of and
December 12, 2006 there were 23,200,000 shares of Common Stock, $0.00001 par
value per share, outstanding.

Transitional Small Business Disclosure Format (check one):
Yes   [  ]   No  [X]

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- 2 -

As used in this annual report, the terms we, us, our and
AMG Oil mean AMG Oil Ltd. unless otherwise indicated.

FORWARD LOOKING STATEMENTS

Certain information in this report including statements made in
Managements Discussion and Analysis of Financial Condition and Results of
Operations, Description of Business and elsewhere contain forward-looking
statements. All statements other than statements of historical fact are
forward-looking statements, including any projections of earnings, revenues or
other financial items, any statements of the plans and objectives of management
for future operations, any statements concerning proposed new products or
services, any statements regarding future economic conditions or performance,
and any statements of assumptions underlying any of the foregoing. In some
cases, forward-looking statements can be identified by the use of terminology
such as may, expects, plans, anticipates, estimates, potential, or
continue, or the negative thereof or other comparable terminology. Although we
believe that the expectations reflected in our forward-looking statements are
reasonable, we can give no assurance that such expectations or any of our
forward-looking statements will prove to be correct, and actual results could
differ materially from those projected or assumed in these forward-looking
statements.

Forward-looking statements include but are not limited to:

- Our ability to implement successfully our operating strategy as described
  in our business plan;
- Future financial performance as estimated in Our financial projections;
- Our forecasts of market demand; and
- Highly competitive market conditions.

This list of categories of forward-looking statements should
not be construed as exhaustive. AMG Oil will not update or revise any
forward-looking statements.

Certain factors that could cause our forward-looking statements
not to be correct and cause our actual results to materially vary from
projections made in forward-looking statements as further described in the
Risks Associated with AMG Oil section of this report.

PART I

ITEM
1.               
DESCRIPTION OF BUSINESS.

History

AMG Oil was previously engaged in the acquisition and,
formerly, exploration of resource properties. We were incorporated on February
20, 1997 under the name Trans New Zealand Oil Company by filing our Articles
of Incorporation with the Secretary of State of Nevada. We changed our name to
AMG Oil Ltd. on July 27, 1998. Our fiscal year end is September 30.

AMG Oil has been inactive for approximately the last three
years and may be considered a shell company within the meaning assigned to
that term in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the
Exchange Act), because we have no operations and our assets consist solely of
cash. Our corporate office is located at 600 17th Street, Suite 2800 South,
Denver, Colorado 80202-5428 and our administration is effected through our
corporate office located at 1407 - 1050 Burrard Street, Vancouver, British
Columbia, Canada V6Z 2S3. In previous years, we conducted our oil and gas
exploration activities in New Zealand but withdrew from the permit and assigned
our interest to the other participants in the permit during the 2003 fiscal
year.

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- 3 -

During the 2005 and 2004 fiscal years, AMG Oil did not issue
any securities. During the 2006 fiscal year, AMG Oil completed a private
placement financing of 6,000,000 units (each a Unit) at a price of US$0.25 per
Unit for gross proceeds of $1.5 million and also issued 600,000 additional Units
under a rights agreement. Each Unit consists of one share of common stock and
one share purchase warrant and each warrant entitles the holder thereof to
acquire an additional share of common stock at a price of US$0.50 for a period
of 24 months subject to an accelerated expiry provision whereby the warrants
will expire 30 days after a registration statement has been declared effective
by the Securities and Exchange Commission (the SEC) and our shares have traded
at or above $1.00 for 20 consecutive days. Each Unit also includes a right to
receive an additional 0.10 of one Unit granted when a registration statement was
not declared effective by the SEC on or before August 27, 2006. The rights to
receive an additional 600,000 Units were granted because a registration
statement was not declared effective by the SEC on or before August 27, 2006.
Please refer to Note 5 of Item 7 below for further information.

AMG Oil is a Vancouver, British Columbia, Canada based company
which was from 1999 to 2003 modestly active in seeking suitable oil and gas
properties for exploration and development. AMG Oil has been inactive since
2003.

On February 1, 2006, the British Columbia Securities Commission
granted our application to be designated as a reporting issuer under the
Securities Act (British Columbia). Accordingly, we and our insiders are now
subject to the continuous disclosure requirements under the securities laws of
the Province of British Columbia, Canada.

We do not receive any revenue from our discontinued oil and gas
operations in New Zealand and have no significant assets, tangible or intangible
except for cash on hand. We have no history of earnings and there is no
assurance that our business will be profitable. As at the end of the 2006 fiscal
year, we have an accumulated deficit of $2,861,910 and we expect to continue
incurring operating losses and accumulating deficits in future periods. We have
no significant future obligations.

Change of Control

Pursuant to an agreement made November 16, 2005, Robert
Pollock, a Toronto, Ontario businessman, acquired control of AMG Oil through the
purchase of 8,600,000 shares of our common stock at a price of $0.01 per share.
This transaction was disclosed on our report on Form 8-K, filed on December 1,
2005.

The purchase and sale of these shares for $86,000 was completed
on November 29, 2005. These shares represent 37.07% of the outstanding shares of
AMG Oil. The seller of these shares was the previous majority shareholder,
Trans-Orient Petroleum Ltd. (Trans-Orient), which sold 7,305,500 million of
these shares and one other seller, who sold 1,294,500 shares. Trans-Orient is a
corporation registered under the Exchange Act and is controlled by Mr. Peter C.
Loretto, its President, who is a businessman residing in Vancouver, British
Columbia, Canada.

Trans-Orient sold its controlling shares in AMG Oil because
they represented an investment in a superfluous inactive affiliate. Mr. Pollock
purchased the 8,600,000 shares with personal funds and has advised that he has
acquired control of AMG Oil with a view to endeavoring to reactivating our oil
and gas exploration although there can be no assurance he will be successful at
doing so. At this time, AMG Oil has not committed to any financing or property
acquisition transactions although it is currently seeking appropriate prospects
that if acquired may require additional capital to be raised.

By agreement with Mr. Pollock, the two current directors of AMG
Oil have agreed to resign from the board of AMG Oil on request of Mr. Pollock
but may resign of their own volition at any time.

Plan of Operations

Our plan of operations is to acquire a business either through
purchase, merger, consolidation, application or other means, so that AMG Oil
would cease being a shell company. Initially, our management anticipates
concentrating our efforts on locating and acquiring a business, properties, or
other assets, or combination thereof, in the oil and gas industry, although our
management may cause us to attempt to acquire a business in another area.
However, there can be no assurance that we will be able to find a suitable
business to acquire, successfully negotiate the terms of any acquisition, or
have the assets to complete any transaction. Because we are a shell company with
nominal assets

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and no operations, it may be necessary for us to obtain
additional financing (i) to pay our ongoing operating and administrative
expenses, including our audit and other professional expenses associated with
our reporting obligations under the Exchange Act, (ii) costs associated with
locating and acquiring another business, and (iii) funding the operations of any
business in which we may be successful in acquiring an interest. There can be no
assurance we will be able to raise any funds for any purposes, including the
prospective acquisition of a new business. In the event we are unable to raise
sufficient funds, we will be unable to acquire any businesses and may be forced
to halt all operations.

Insurance

Currently, we do not have any insurance coverage.

Government Regulation

There is no governmental regulation which we are aware of or
that would affect AMG Oil.

Employees and Consultants

AMG Oil has no employees and has not retained the services of
any consultants, except for a consultant engaged to review data on a property
for which we were billed a nominal amount for time spent.

AMG Oil is in the start-up stage and none of our executive
officers have employment agreements with AMG Oil.

Administration Contract

AMG Oil receives corporate services from DLJ Management Corp.
(DLJ), a subsidiary of Trans-Orient, based on an oral agreement. The services
consist of shareholder relations and communications, administrative and
accounting support. DLJ bills monthly for its services on a cost recovery basis,
billing AMG Oil and other associated companies for costs already incurred with
no mark-up or other such charges, for items such as labor and rent, office
costs, and employee benefits. As a result of the lack of capital of AMG Oil,
these services were provided by DLJ at no cost from February 1, 2005 to March
31, 2006. During the year ended September 30, 2006, AMG Oil incurred $12,255 of
mainly general and administrative costs through DLJ. This amount represents
costs incurred by DLJ on behalf of AMG Oil.

Risks Associated with AMG Oil

AMG Oil may be unable to continue as a going
concern.

Our auditors have expressed considerable doubt as to our
ability to continue as a going concern. We will be unable to continue as a going
concern if we are unable to earn sufficient revenues from our operations or to
raise additional capital through debt or equity financings to meet our working
capital and joint venture capital contribution obligations. At September 30,
2006, we had $1,332,922 in working capital, which is sufficient for us to
maintain our operations at this time. Our management has determined that we will
likely need to raise additional capital to complete an acquisition of an oil and
gas interest and maintain our monthly overhead that allows us to continue
operating. If we do not raise additional capital concurrently with the
acquisition of an oil and gas interest, we may be unable to continue as a going
concern and you may lose your entire investment.

AMG Oil has no material assets or liabilities with a
history of losses and no revenues to date. Our future is dependent upon our
ability to obtain financing and upon acquiring resource assets for exploration.
We currently do not have any arrangements for financing and we can provide no
assurance to investors that we will be able to obtain financing when
required.

We have historically incurred losses and these losses are
expected to continue in the future. We have never been profitable. At September
30, 2006, we had an accumulated deficit of $2,861,910. In order to become
profitable, we will need to generate significant revenues through an acquisition
of an oil and gas interest that leads to a commercial

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discovery of hydrocarbons to offset our cost of revenues and
general and administrative expenses. We may not achieve or sustain our revenue
or profit objectives and our losses may increase in the future.

Our operating results are difficult to predict and may
fluctuate significantly from quarter to quarter due to a number of factors, many
of which are outside our control.

These factors include, but are not limited to:

|(a) | we currently do not own any interest in any oil or gas
      properties;                                                                                                                                                                                                                                                                      
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                               
|(b) | our plan of operations is to attempt to acquire an
      interest in an oil and gas property;                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                               
|(c) | we will compete with other companies engaged in the oil
      and gas industries for properties of merit, such competitors will have
      greater financial resources than us;                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                               
|(d) | we anticipate that our ability to acquire an interest in
      an oil and gas property will be contingent upon raising sufficient
      financing to enable us to acquire such interest and if we are successful
      in acquiring such interest, we will likely need additional financing to
      carry out the necessary exploration work;
|    |                                                                                                                                                                                                                                                                                                                                               
|(e) | our inability to find a suitable oil and gas
    property;                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                               
|(f) | our inability to raise the working capital to maintain
      our operations;                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                               
|(g) | our inability to raise the working capital necessary to
      acquire a suitable oil and gas interest and to maintain the work
      requirements after acquisition;                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                               
|(h) | our inability to discover hydrocarbons that are
      commercially viable; and                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                               
|(i) | general economic and political
  conditions.                                                                                                                                                                                                                                                                                                  

An evaluation of our business is difficult because we are
in the start-up phase of our current business after discontinuing our oil and
gas operations in New Zealand and we face a number of risks encountered by
companies in our sector, including;

|(a) | our need to find a suitable oil and gas
  interest;                                                                                                
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                    
|(b) | our need to raise working capital to maintain our
      operations and to have sufficient capital to acquire a suitable oil and
      gas interest;
|    |                                                                                                                                                    
|(c) | our need to discover hydrocarbons that are commercially
      viable; and                                                                          
|    |                                                                                                                                                    
|(d) | our need to manage operations.                                                                                                                     

If we do not attain revenue from the sale of
hydrocarbons, our business will not be successful.

Our success depends on our ability to attain revenue from the
sale of hydrocarbons and we currently do not have an oil and gas interest.

One stockholder owns or controls, directly or indirectly,
a significant proportion of our stock and may act, or prevent certain types of
corporate actions.

This may be or may seem to be adverse to other minority
stockholders.

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- 6 -

The market for our common stock is limited.

There is currently only a limited trading market for our common
stock. Our common stock trades on the OTC Bulletin Board under the symbol AMGO
which is a limited market in comparison to the NASDAQ Global Market, the
American Stock Exchange and other national securities exchanges.

Penny stock rules limit the liquidity of our common
stock.

Our common stock may now and in the future be subject to the
penny stock rules under the Exchange Act. These rules regulate broker-dealer
practices for transactions in penny stocks. Penny stocks generally are equity
securities with a price of less than $5.00. The penny stock rules require
broker-dealers to deliver a standardized risk disclosure document that provides
information about penny stocks and the nature and level of risks in the penny
stock market. The broker-dealer must also provide the customer with current bid
and offer quotations for the penny stock, the compensation of the broker-dealer
and its salesperson and monthly account statements showing the market value of
each penny stock held in the customers account. The bid and offer quotations
and the broker-dealer and salesperson compensation information must be given to
the customer orally or in writing prior to completing the transaction and must
be given to the customer in writing before or with the customers confirmation.
In addition, the penny stock rules require that prior to a transaction, the
broker and/or dealer must make a special written determination that the penny
stock is a suitable investment for the purchaser and receive the purchasers
written agreement to the transaction. These additional penny stock disclosure
requirements are burdensome and may reduce the trading activity in the market
for our common stock. As long as the common stock is subject to the penny stock
rules, holders of our common stock may find it more difficult to sell their
securities.

We have never paid cash dividends on our common
stock.

We have never paid dividends on our common stock and do not
presently intend to pay cash dividends on our common stock. Any future decisions
as to the payment of dividends will be at the discretion of our board of
directors, subject to applicable law.

Limited Financial Resources.

We have limited financial resources and may not be able to
raise sufficient funds to either sustain, continue or expand our business. We
currently have no operating revenues and rely principally on the issuance of
common shares to raise funds to finance our business. There is no assurance that
market conditions will continue to permit us to raise funds on acceptable terms
or at all.

An investment in AMG Oil will likely be
diluted.

We will likely issue a substantial number of shares of our
common stock without investor approval and we may consolidate the current common
stock outstanding. Any such issuance or consolidation of our securities in the
future could reduce an investors ownership percentage and voting rights in our
company and further dilute the value of your investment.

ITEM
2.              
DESCRIPTION OF PROPERTY.

Our administrative offices are located at 1407 - 1050 Burrard
Street, Vancouver, British Columbia, Canada, V6Z 2S3 and our telephone number is
(604) 682-6496. AMG Oil utilizes the office space, for CDN$500 per month,
pursuant to a verbal agreement with DLJ.

ITEM
3.              
LEGAL PROCEEDINGS.

There are no material legal proceedings to which AMG Oil is
subject to or which are anticipated or threatened.

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

There were no matters submitted to a vote of our shareholders
in the fourth quarter of our fiscal year.

PART II

ITEM
5.              
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

Our shares are traded on the OTC Bulletin Board operated by the
National Association of Securities Dealers, Inc. under the trading symbol
AMGO.OB.

Summary trading by quarter, as found at www.yahoo.com, for the
2006 and 2005 fiscal years are as follows:

Fiscal Quarter
      High Bid(1)
      Low Bid(1)2006 ****First
      Quarter ****Second
      Quarter ****Third
      Quarter ****Fourth Quarter
    0.50 1.41 1.33 1.00
    0.125 0.31 0.40 0.402005 ****First
      Quarter ****Second
      Quarter ****Third
      Quarter ****Fourth Quarter
    0.06 0.12 0.08 0.27
    0.025 0.03 0.022 0.03


|(1) | These quotations reflect inter-dealer prices, without
      retail mark-up, mark-down or commission and may not represent actual
      transactions.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------

At December 12, 2006 there were 23,200,000 shares of Common
Stock of AMG Oil issued and outstanding.

As of December 12, 2006 there were 97 holders of record and the
closing share price on that date was $0.50.

Dividend Policy

No cash dividends have been declared by AMG Oil nor are any
intended to be declared. AMG Oil is not subject to any legal restrictions
respecting the payment of dividends, except that they may not be paid to render
AMG Oil insolvent. Dividend policy will be based on our cash resources and needs
and it is anticipated that all available cash will be needed for property
acquisition, exploration and development for the foreseeable future. In
addition, dividend policy under Nevada law is limited in that dividends cannot
be paid if, after giving effect to the dividend (i) we would not be able to pay
our debts as they become due in the usual course of business, or (ii) our total
assets would be less than the sum of our total liabilities.

Securities authorized for issuance under equity
compensation plans

AMG Oil, during the 2000 fiscal year, established a
non-qualified stock option plan (the Plan) for directors, officers, employees
and consultants who provide services to AMG Oil. Under the terms of the Plan,
3,000,000 shares will be reserved for issuance under the Plan. Any options
issued under the plan will expire on the earlier of 10 years from the
establishment of the Plan or the expiry date assigned to the individual option
grant. As of September 30, 2006, 396,000 options have been granted under the
Plan but had not been exercised during the 2006 fiscal year. All options that
have been granted by AMG Oil are exercisable.

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Plan category
      Number of securities to be issued
      upon exercise of outstanding options, warrants and
      rights
      Weighted-average exercise price
      of outstanding options, warrants and rights
      Number of securities remaining
      available for future issuance under equity
      compensation plansEquity compensation plans approved by security holders
    0
    0
    2,604,000Equity compensation plans not approved by security
      holders (1)
    396,000
    $0.25
    2,604,000Total
    396,000
    $0.25
    2,604,000


|(1) | Options for 396,000 common shares were issued to Jones,
      Gable & Company Limited as a commission for arranging
  financing.
|--- | --------------------------------------------------------------------------------------------------------------------------------

Section 15(g) of the Exchange Act

Our shares are covered by Section 15(g) of the Exchange Act
that imposes additional sales practice requirements on broker/dealers who sell
such securities to persons other than established customers and accredited
investors (generally institutions with assets in excess of $5,000,000 or
individuals with net worth in excess of $1,000,000 or annual income exceeding
$200,000 or $300,000 jointly with their spouses). For transactions covered by
the Rule, the broker/dealer must make a special suitability determination for
the purchase and have received the purchasers written agreement to the
transaction prior to the sale. Consequently, the Rule may affect the ability of
broker/dealers to sell our securities and also may affect your ability to sell
your shares in the secondary market.

Section 15(g) of the Exchange Act also imposes additional sales
practice requirements on broker/dealers who sell penny securities. These rules
require a one-page summary of certain essential items. The items include the
risk of investing in penny stocks in both public offerings and secondary
marketing; terms important to in understanding of the function of the penny
stock market, such as bid and offer quotes, a dealers spread and
broker/dealer compensation; the broker/dealer compensation, the broker/dealers
duties to its customers, including the disclosures required by any other penny
stock disclosure rules; the customers rights and remedies in causes of fraud in
penny stock transactions; and, the NASDs toll free telephone number and the
central number of the North American Administrators Association, for information
on the disciplinary history of broker/dealers and their associated persons.

ITEM
6.              
MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.

Plan of Operation

We no longer have any oil or gas properties as we withdrew from
our sole oil and gas property on May 2, 2003. Our plan of operations is to
acquire a business either through purchase, merger, consolidation, application
or other means, so that we will cease being a shell company. Initially, our
management anticipates concentrating our efforts on locating and acquiring a
business, properties, or other assets, or combination thereof, in the oil and
gas industry, although our management may cause AMG Oil to attempt to acquire a
business in another area. However, there can be no assurance that we will be
able to find a suitable business to acquire, successfully negotiate the terms of
any acquisition, or have the assets to complete any transaction. Because we are
a shell company with nominal assets and no operations, it may be necessary for
us to obtain additional financing (i) to pay our ongoing operating and
administrative expenses, including our audit and other professional expenses
associated with our reporting obligations under the Exchange Act, (ii) costs
associated with locating and acquiring another business, and (iii) funding the
operations of any business in which may be successful in acquiring an interest.
There can be no assurance AMG Oil will be able to raise any funds for any
purposes, including the prospective acquisition of a new business. In the event
AMG Oil is unable to raise sufficient funds, AMG Oil will be unable to acquire
any businesses and may be forced to halt all operations.

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- 9 -

We anticipate that our expenditures for the next twelve months
will be approximately $36,000. These anticipated expenditures relate to
accounting, legal and administrative expenses and to the costs of targeting a
new business opportunity. These anticipated expenditures do not include any
amount that may be required to acquire an interest in a new business opportunity
or to fund a new business opportunity once acquired.

We have sufficient amount of working capital required to fund
our plan of operations for the next twelve months based on our current expected
expenditures. We currently have sufficient capital to maintain our required
overhead, but we have no revenues and we anticipate that we will continue to
rely principally on the issuance of common stock to raise the necessary funds to
finance any additional expenditures that may be incurred during the next twelve
months if we acquire a suitable business opportunity to participate in. We have
relied principally on the issuance of common stock in private placements to
individuals known to our officers and directors, to raise funds to support our
business. There can be no assurance that we will be successful in raising
additional funds through the issuance of additional equity nor that the parties
that provided funds in the past will continue to do so.

We do not expect any significant purchases of plant and
equipment or employees, unless acquired in connection with the acquisition of a
business opportunity that may be identified.

Going Concern

Our financial statements have been prepared in accordance with
generally accepted accounting principles in the United States on a going concern
basis, which contemplates the realization of assets and the liquidation of
liabilities in the ordinary course of business. They do not include any
adjustments to the recoverability and classification of recorded assets amounts
and liabilities that might be necessary should we be unable to continue as a
going concern. AMG Oil has incurred recurring operating losses and have an
accumulated deficit of $2,861,910 and Stockholders Equity of $1,332,922 at
September 30, 2006. These factors, among others, raise substantial doubt about
our ability to be able to continue as a going concern. Our future and the
realization of our asset values will depend upon our ability to obtain adequate
financing and continuing support from shareholders and creditors to attain
profitable operations.

Accounting Policies and Estimates

The results of operations discussion is based upon our
consolidated financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States of America. The
preparation of these financial statements requires that we make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses and related disclosure of contingent assets and liabilities. At each
balance sheet date, management evaluates its estimates, including, but not
limited to, those related to accounts receivable, inventories, and deferred
revenue. We base our estimates on historical experience and on various other
assumptions that are believed to be reasonable under the circumstances. Actual
results may differ from these estimates under different assumptions or
conditions.

Results of Operations

We did not generate any revenues from operations during the
year ended September 30, 2006, or during the year ended September 30, 2005. Our
sole income during the year was $31,873 in interest income earned on surplus
cash balances, compared to $360 for the year ended September 30, 2005.

After we withdrew from our only oil and gas interest during the
2003 fiscal year and upon liquidating our subsidiaries during the same period,
we reallocated all relevant costs associated with our oil and gas interest
totaling $1,787,410 to Loss from Discontinued Operations.

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- 10 -

Our operating results are summarized as follows:

|                            | Year Ended         | Year Ended        
|--------------------------- | ------------------ | ------------------
|                            | September 30, 2006 | September 30, 2005
|Expenses                    |                    |                   
|General and administrative  | $ 68,046           | $ 17,448          
|Loss on sale of investments | -                  | 1,685             
|                            | (68,046)           | (19,133)          
|Other Income                |                    |                   
|Interest income             | 31,873             | 360               
|Net loss                    | $ (36,173)         | $ (18,773)        

Our total general and administrative expenses for the twelve
months ended September 30, 2006 were $68,046 compared to $17,448 for the
comparable period last year. Salaries were $6,864 compared to $2,988 for the
twelve months ended September 30, 2005, professional fees were $26,847, versus
$6,752 last year and travel and consulting was $9,514 versus $Nil last year. The
balance of our general and administrative costs for the twelve months ended
September 30, 2006 consisted of office expenses of $4,331, filing fees of
$12,207 and other miscellaneous expenses such as telephone, rent, database
management, and amortization of capital assets totaling $8,283.

As a result of these transactions noted above, AMG Oil incurred
a net loss of $36,173 or $Nil per share for the twelve months ended September
30, 2006, compared to a loss of $18,773 or $Nil per share for the same period
last year.

Liquidity and Capital Resources

During the 2006 fiscal year, our financing activities consisted
of AMG Oil completing an unregistered private placement financing of 6,000,000
Units at a price of US$0.25 per Unit for gross proceeds of $1.5 million on
February 28, 2006 and issuing an additional 600,000 Units of AMG Oil as required
under a rights agreement because a registration statement was not declared
effective on or before August 27, 2006. Each Unit consists of one share of
common stock and one two-year share purchase warrant exercisable at a price of
US$0.50 per share, subject to accelerated expiry provisions should our shares
trade at or above $1.00 for 20 consecutive days and certain other conditions are
met. Please refer to Note 5 of Item 7 for further information. Net proceeds of
this financing will be used for working capital and to enhance our ability to
acquire a suitable interest in a resource based asset. During the twelve months
ended September 30, 2005 there were no financing activities undertaken by AMG
Oil.

AMG Oil did not have any investing activities during the twelve
months ended September 30, 2006 and the investing activities for the 2005 fiscal
year consisted of the sales of 2,205 shares of Trans-Orient and 100,000 shares
of Gondwana Energy, Inc. for proceeds of $3,308 and $6,000, respectively.

At September 30, 2006 our current assets totaled $1,348,282
compared to $14,526 at the beginning of the fiscal year. Our current assets for
both periods consisted entirely of cash. Our current liabilities at September
30, 2006 were $15,360 (2005: $5,622). Cash on hand is currently our only source
of liquidity. We do not have any lending arrangements in place with banking or
financial institutions and we do not anticipate that we will be able to secure
these funding arrangements in the near future.

We propose to raise additional financing through the sale of
equity securities during the next fiscal year, although there can be no
assurance that such funding will be available. In the event that future equity
financing cannot be raised or negotiations for joint venture funding are not
successful, our activities may be curtailed and this may adversely affect our
ability to carry out any acquisitions of suitable oil and gas operations or any
other business opportunity.

We believe our existing cash balances are sufficient to carry
out our normal operations for the next twelve months and additional cash will
likely be required for the acquisition of suitable oil and gas interests or any
other business opportunity during this period. To the extent that we require
additional funds to support our operations or the expansion of our business, we
may sell additional equity or issue debt. Any sale of additional equity
securities will

---

- 11 -

result in dilution to our stockholders. There can be no
assurance that additional financing, if required, will be available to AMG Oil
or on acceptable terms.

Off-Balance Sheet Arrangements

The company does not have any off-balance sheet arrangements
that have or are reasonably likely to have a current or future effect on the
companys financial condition, changes in financial condition, revenues or
expenses, results of operations, liquidity, capital expenditures or capital
resources that are material to investors.

ITEM
7.              
FINANCIAL STATEMENTS.

The following financial statements of AMG Oil and the related
notes to the financial statements are filed as part of this annual report
beginning on page F-1 below, and are incorporated by reference in this Item
7.

PageIndependent Auditors
      Report
    F-1Balance Sheets
    F-2Statements of Operations
    F-3Statements of Changes in
      Stockholders Equity
    F-4Statements of Cash Flows
    F-5


ITEM
8.              
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND FINANCIAL DISCLOSURE.

There have been no changes or disagreements with accountants
during the last two years.

ITEM
8A.            CONTROLS
AND PROCEDURES.

We maintain disclosure controls and procedures that are
designed to ensure that information required to be disclosed in our Exchange Act
reports are recorded, processed, summarized and reported within the time periods
specified in the rules and forms of the SEC, and that such information is
accumulated and communicated to our management, including our Chief Executive
Officer and Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure. Our management carried out an evaluation, with an
effective date of September 30, 2006, under the supervision and with the
participation of our management, including our Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and operation of our
disclosure controls and procedures pursuant to Exchange Act Rule 13a-15. Based
upon the foregoing, our Chief Executive Officer and Chief Financial Officer
concluded that our disclosure controls and procedures are effective to ensure
that the information required to be disclosed by us in the reports that we file
or submit under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the SECs rules and forms.

There were no changes in our internal controls over financial
reporting that have occurred in the last fiscal quarter of our fiscal year ended
September 30, 2006 which materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.

ITEM
8B.             
OTHER INFORMATION.

Not applicable.

---

- 12 -

PART III

|ITEM 9. | DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL
      PERSONS AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(a) OF
      THE EXCHANGE ACT.
|------- | --------------------------------------------------------------------------------------------------------------------------------------------------

The names, municipality of residence, age and position held of
our directors and executive officers are as follows:

Name and Residence
      Age
      Position HeldMichael Hart Roberts Creek, British Columbia Canada
      V0N 2W2
    55
    Director, CEO, President, Secretary and
      TreasurerJohn Campbell West Vancouver, British Columbia
      Canada V7V 1B5
    74
    DirectorDan Brown Langley, British Columbia Canada V2Z 2S1
    34
    DirectorGarth Johnson Surrey, British Columbia Canada V4A
      3L9
    34
    CFO


All directors have a term of office expiring at our next annual
general meeting, unless re-elected or earlier vacated in accordance with our
bylaws. All officers have a term of office lasting until their removal or
replacement by the board of directors.

Mr. Michael Hart has been a Director of AMG Oil since December
13, 1999. From April 1999 until present Mr. Hart has held the position of
President of Hart-Byrne Enterprises Ltd. Hart-Byrne Enterprises Ltd. is a
private company formed by Mr. Hart and other investors, which is developing
specialized products for the music industry. Mr. Hart is also President of On
The Wing Productions Inc., a private company, which is also developing products
for the music industry. Mr. Hart currently is also a Director of Trans-Orient,
our former controlling shareholder until November 29, 2005. Mr. Hart is also the
Corporate Secretary and a director of Entourage Mining Ltd.

Mr. John Campbell became a Director of AMG Oil on March 21,
2006 when he replaced Mr. Doug Lynes, who resigned on March 21, 2006. Mr.
Campbell is a retired member of the Law Society of British Columbia and for the
past 18 years has served as President of mining explorer, Trans America
Industries Ltd.

Mr. Dan Brown became a Director of AMG Oil on April 14, 2005
when he replaced Mr. Arthur Evans, who passed away on March 31, 2005. Mr. Brown
has worked for DLJ for six years, providing administrative and accounting
support services to public and private corporations.

Mr. Garth Johnson became the Chief Financial Officer of AMG Oil
on February 1, 2006 when he replaced Mr. Michael Hart, who resigned as Chief
Financial Officer of AMG Oil on February 1, 2006. Mr. Johnson is a Certified
General Accountant with ten years experience in finance, accounting and
regulatory reporting for public companies. Mr. Johnson is also the Chief
Financial Officer, Secretary and a Director of TAG Oil Ltd.

Mr. Brown and Mr. Hart have committed in writing to Mr. Robert
Pollock, the control person of AMG Oil, that they will resign from their
positions with AMG Oil upon the request of Mr. Pollock. It is expected that Mr.
Pollock will seek to replace the board members with his own nominees.

None of our current officers are employed directly by AMG Oil,
and all officers devote less than 10% of their time to our business. All of our
officers and directors devote a significant amount of their time to other
interests or competing businesses, which may conflict with the operations and
business of AMG Oil.

---

- 13 -

None of the individuals listed above are subject to any
anticipated or threatened legal proceedings of a material nature nor have they
been subject to such proceedings within the last five years.

Compliance with Section 16(a) of the Exchange
Act

Section 16(a) of the Exchange Act requires officers, directors
and persons who own more than ten percent of a registered class of a companys
equity securities to file initial reports of beneficial ownership and to report
changes in ownership of those securities with the SEC. They are also required to
furnish AMG Oil with copies of all Section 16(a) forms they file. To our
knowledge, based solely on review of the copies of Forms 3, 4 and 5 furnished to
us, we believe that during the fiscal year ended September 30, 2006 and during
the current fiscal year, all filing requirements applicable to our officers,
directors, greater-than-ten-percent beneficial owners and other persons subject
to Section 16(a) of the Exchange Act were met.

Audit Committee and Charter

We have an audit committee and audit committee charter. Our
audit committee is comprised of all of our directors. A copy of our audit
committee charter was filed as an exhibit to our Form 10-KSB filed for our 2003
fiscal year and is incorporated into this document by reference. Our audit
committee is responsible for: (1) selection and oversight of our independent
accountant; (2) establishing procedures for the receipt, retention and treatment
of complaints regarding accounting, internal controls and auditing matters; (3)
establishing procedures for the confidential, anonymous submission by our
employees of concerns regarding accounting and auditing matters; (4) engaging
outside advisors; and, (5) funding for the outside auditory and any outside
advisors engagement by the audit committee.

Audit Committee Financial Expert

Our board of directors has determined that Mr. John Campbell
meets the SECs definition of an audit committee financial expert, as defined
in Item 401(e)(2) of Regulation S-B. The board of directors has also determined
that Mr. Campbell meets the definition of an independent director, as defined
in Rule 121A of the American Stock Exchange Company Guide.

Code of Ethics

We have adopted a corporate code of ethics that applies to our
Chief Executive Officer and our Chief Financial Officer. A copy of the code of
ethics was filed as an exhibit to our Form 10-KSB filed for our 2003 fiscal year
and is incorporated into this document by reference. We believe our code of
ethics is reasonably designed to deter wrongdoing and promote honest and ethical
conduct; provide full, fair, accurate, timely and understandable disclosure in
public reports; comply with applicable laws; ensure prompt internal reporting of
code violations; and provide accountability for adherence to the code.

Disclosure Committee and Charter

We have a disclosure committee and disclosure committee
charter. Our disclosure committee is comprised of all of our officers and
directors. The purpose of the committee is to provide assistance to the Chief
Executive Officer and the Chief Financial Officer in fulfilling their
responsibilities regarding the identification and disclosure of material
information about us, and the accuracy, completeness and timeliness of our
financial reports. A copy of our disclosure committee charter was filed as an
exhibit to our Form 10-KSB filed for our 2003 fiscal year end is incorporated
into this document by reference.

ITEM
10.              
EXECUTIVE COMPENSATION.

Our directors and officers have received the following
compensation for the fiscal years ending September 30, 2006, 2005 and 2004.

---

- 14 -

Name and
      Principal Position
      Year
      Salary ($)
      Bonus ($)
      Stock Awards
      ($)
      Non-Equity Incentive
      Plan Compensation ($)
      Nonqualified Deferred
      **Compensation**Earnings ($)
      All Other
      Compensation ($)
      Total ($)Michael Hart (1) Director, CEO,
      President, Secretary and Treasurer
    2006 2005 2004
    - - -
    - - -
    - - -
    - - -
    - - -
    - - -
    - - -Douglas Lynes (2) Director
    2006 2005 2004
    - - -
    - - -
    - - -
    - - -
    - - -
    - - -
    - - -John Campbell (2) Director
    2006 2005 2006
    - - -
    - - -
    - - -
    - - -
    - - -
    - - -
    - - -Dan Brown (3) Director
    2006 2005 2004
    - - -
    - - -
    - - -
    - - -
    - - -
    5,553 - -
    - - -Garth Johnson (1) CFO
    2006 2005 2004
    - - -
    - - -
    - - -
    - - -
    - - -
    - - -
    - - -


|(1) | Mr. Michael Hart resigned as our CFO on February 1,
        2006, and was replaced by Mr. Garth Johnson on February 1, 2006.                  
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Mr. Douglas Lynes resigned as a Director of AMG Oil
        on March 21, 2006, and was replaced by Mr. John Campbell on March 21,
        2006
|(3) | Mr. Brown was paid indirectly by us through DLJ for
        time spent directly on AMG Oil. DLJ invoices us on a cost recovery basis.         

*Option/SAR**Grants*

There were no option/SAR Grants during the 2006, 2005 or 2004
fiscal years except for options for 396,000 shares of common stock that was
granted to Jones, Gable & Company Limited in February 2006 as a commission
for arranging our financing.

During the 2000 fiscal year, we established the Plan for
directors, officers, employees and consultants who provide services to us.
3,000,000 shares of common stock are reserved for issuance under the Plan. Any
options issued under the Plan will expire on the earlier of 10 years from the
establishment of the Plan or the expiry date assigned to the individual option
grant. As of September 30, 2006, 396,000 options have been granted under the
Plan but had not been exercised during the 2006 fiscal year. All options that
have been granted by us are exercisable.

Aggregate Option Exercises in the Last Fiscal Year and
Fiscal Year-End Option Values

No stock options were exercised by any named executive officer
during the 2006, 2005 or 2004 fiscal years.

Compensation of Our Officers

For the fiscal year ending September 30, 2006, we did not pay
Mr. Michael Hart, our President, Chief Executive Officer, Secretary and
Treasurer any compensation, bonus or options and we did not pay Mr. Garth
Johnson, our Chief Financial Officer any compensation, bonus or
options.

---

- 15 -

Long-Term Incentive Plan Awards

We do not have any long-term incentive plans that provide
compensation intended to serve as incentive for performance to occur over a
period longer than one fiscal year, whether such performance is measured by
reference to our financial performance, our stock price, or any other measure
other than our 2000 Incentive/or Nonqualified Stock Option Plan.

Compensation of Directors

We do not have any plans to pay our directors any money and we
do not intend to grant our directors any additional options. Mr. Brown was
indirectly paid $5,553 by us through DLJ for time spent directly on AMG Oil.

Indemnification

Pursuant to our articles of incorporation and bylaws, we may
indemnify an officer or director who is made a party to any proceeding,
including a lawsuit, because of his position, if he acted in good faith and in a
manner he reasonably believed to be in our best interest. In certain cases, we
may advance expenses incurred in defending any such proceeding. To the extent
that the officer or director is successful on the merits in any such proceeding
as to which such person is to be indemnified, we must indemnify him against all
expenses incurred, including attorneys fees. With respect to a derivative
action, indemnity may be made only for expenses actually and reasonably incurred
in defending the proceeding, and if the officer or director is judged liable,
only by a court order. The indemnification is intended to be to the fullest
extent permitted by the laws of the state of Nevada.

Regarding indemnification for liabilities arising under the
Securities Act of 1933 which may be permitted to directors or officers pursuant
to the foregoing provisions, we are informed that, in the opinion of the SEC,
such indemnification is against public policy, as expressed in the Act and is,
therefore unenforceable.

|ITEM 11. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
      MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
|-------- | -----------------------------------------------------------------------------------------------------

Our securities are recorded on the books of our transfer agent
in registered form. However, a substantial amount of such shares are registered
in the name of intermediaries, such as, brokerage houses and clearing houses on
behalf of their respective clients and AMG Oil does not have knowledge of the
beneficial owners thereof. AMG Oil, up until November 29, 2005, was controlled
by Trans-Orient, a corporation that owned a controlling interest consisting of
8,200,000 shares (49.4%) of our outstanding shares. However pursuant to an
agreement made November 16, 2005 and completed on November 29, 2005, Robert
Pollock, acquired control of us through the purchase of 8,600,000 of our common
shares at a price of $0.01 per share. Trans-Orient sold 7,305,500 of its
8,200,000 shares of AMG Oil and one other seller sold 1,294,500 shares. This
agreement was filed as an exhibit to the Form 8-K filed by us on November 30,
2005.

As of December 22, 2006, we had an authorized share capital of
100,000,000 shares of Common Stock with a par value of $0.00001 per share, of
which 23,200,000 shares were issued and outstanding.

The following table sets forth, as of December 22, 2006, the
beneficial shareholdings of persons or entities holding five per cent (5%) or
more of our common stock, each director individually, and each named executive
officer and all of our directors and officers as a group. Each person has sole
voting and investment power with respect to the shares of Common Stock shown,
and all ownership is of record and beneficial.

Name and Address of Beneficial
      Owner
      Amount and Nature of Beneficial
      Ownership
      Position
      Percent of ClassRobert Pollock, Toronto, Ontario
    8,600,000 shares
    Shareholder
    37.07%Michael Hart (1) Roberts Creek, British
      Columbia
    22,000 shares
    Director, CEO, President, Secretary and
      Treasurer
    0.09%


---

- 16 -

Name and Address of Beneficial Owner
      Amount and Nature of Beneficial
      Ownership
      Position
      Percent of ClassJohn Campbell West Vancouver, British Columbia
    158,840 shares
    Director
    0.7%Dan Brown Langley, British Columbia
    44,000 shares
    Director
    0.19%Garth Johnson Surrey, British Columbia
    Nil
    CFO
    0%


|(1) | Mr. Harts beneficial ownership of 22,000 shares
        includes 11,000 share purchase warrants that can be exercised within the
        next sixty days at an exercise price of $0.50 per share.     
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Mr. Campbells beneficial ownership of 158,840
        shares includes 55,000 share purchase warrants that can be exercised within
        the next sixty days at an exercise price of $0.50 per share.
|(3) | Mr. Browns beneficial ownership of 44,000 shares
        includes 22,000 share purchase warrants that can be exercised within the
        next sixty days at an exercise price of $0.50 per share.    

Changes in Control of AMG Oil

To the knowledge of management there are no present
arrangements or pledges of our securities that may result in a change of control
of AMG Oil, other than the change of control that completed on November 29,
2005.

As at December 22, 2006, Robert Pollock owns 8,600,000, or
approximately 37.07%, of the issued and outstanding shares of common stock and
thereby effectively controls AMG Oil. Robert Pollock is a Toronto, Ontario
businessman.

ITEM
12.              
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.

Except as described below, none of the following persons has
any direct or indirect material interest in any transaction to which we were or
are a party during the past two years, or in any proposed transaction to which
AMG Oil proposes to be a party:

|(a) | any person who beneficially owns, directly or indirectly,
      shares carrying more than 5% of the voting rights attached to our common
      stock; or                                              
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                       
|(b) | any relative or spouse of any of the foregoing persons,
      or any relative of such spouse, who has the same house as such person or
      who is a director or officer of any parent or
subsidiary.

Mr. Michael Hart, Mr. John Campbell and Mr. Dan Brown, who are
the three directors of AMG Oil, participated in the private placement financing
completed on February 28, 2006, acquiring a total of 120,000 Units at a price of
$0.25 per Unit. Each Unit consists of one share of common stock and one share
purchase warrant and each warrant entitles the holder thereof to acquire an
additional share of common stock at a price of US$0.50 for a period of 24 months
subject to an accelerated expiry provision whereby the warrants will expire 30
days after a registration statement has been declared effective by the SEC and
our shares have traded at or above $1.00 for 20 consecutive days. Each unit also
includes a right to receive an additional 0.10 of one unit, which was granted
because a registration statement was not declared effective by the SEC on or
before August 27, 2006.

DLJ Management

During the 2006 fiscal year we incurred $12,255 (2005 fiscal
year: $5,652) of mainly general and administrative costs through DLJ, a wholly
owned subsidiary of Trans-Orient, our former principal shareholder. This amount
represents costs incurred by DLJ on our behalf for administrative and accounting
services. Payments made to DLJ were on a cost basis with no mark-up, based on
time spent by the employees of DLJ providing accounting and administrative
services for us. We believe that we would have had to pay more for these
services if we had sought

---

- 17 -

such services from unaffiliated third-parties. At September 30,
2006 we owe DLJ $2,838 (September 30, 2005: $Nil).

|ITEM 13.    | EXHIBITS.                                                                                                                                                                                               
|----------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|            |                                                                                                                                                                                                         
|Exhibit No. | Description of Exhibit                                                                                                                                                                                  
|            |                                                                                                                                                                                                         
|3.1         | Articles of
        Incorporation, as filed February 20, 1997 (1)                                                                                                                                       
|            |                                                                                                                                                                                                         
|3.2         | Bylaws (1)                                                                                                                                                                                              
|            |                                                                                                                                                                                                         
|3.3         | Articles of
        Amendment to the Articles of Incorporation, as filed on July 27, 1998
        (1)                                                                                                   
|            |                                                                                                                                                                                                         
|10.1        | Form
        of Subscription Agreement for the private placement completed on Feb 28,
        2006. (3)                                                                                                 
|            |                                                                                                                                                                                                         
|10.2        | Form
        of Rights Agreement (3)                                                                                                                                                                    
|            |                                                                                                                                                                                                         
|10.3        | Form
        of Agency Agreement (3)                                                                                                                                                                    
|            |                                                                                                                                                                                                         
|14.1        | Code of Ethics
        (2)                                                                                                                                                                              
|            |                                                                                                                                                                                                         
|21.1        | Subsidiaries
        of AMG Oil: None                                                                                                                                                                   
|            |                                                                                                                                                                                                         
|31.1        | Certification
        of Principal Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a),
        promulgated under the Securities and Exchange Act of 1934, as amended.
        (3)             
|            |                                                                                                                                                                                                         
|31.2        | Certification of Principal Financial
      Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the
      Securities and Exchange Act of 1934, as amended. (3)                         
|            |                                                                                                                                                                                                         
|32.1        | Certification
        pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
        of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer and Chief Financial
        Officer) (3)
|            |                                                                                                                                                                                                         
|99.1        | Audit Committee
        Charter (2)                                                                                                                                                                     
|            |                                                                                                                                                                                                         
|99.2        | Disclosure Committee
        Charter (2)                                                                                                                                                                

|(1) | Incorporated herein by reference from our Form 10-SB
        registration statement and all amendments thereto filed with the Securities
        and Exchange Commission, and amendments thereto, SEC file No. 000-30087.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Incorporated by reference from our Form 10-KSB filed
        with the Securities and Exchange Commission on December 29, 2003.                                                                                           
|(3) | Filed as an exhibit to this Annual Report on Form 10-KSB.                                                                                                                                                                

ITEM
14.              
PRINCIPAL ACCOUNTANT FEES AND SERVICES.

(1)              
Audit Fees

The aggregate fees billed for each of the last two fiscal years
for professional services rendered by the principal accountant for our audit of
annual financial statements and review of financial statements included in our
Form 10-QSBs or services that are normally provided by the accountant in
connection with statutory and regulatory filings or engagements for those fiscal
years was:

2006- $10,000 2005- $6,000

---

- 18 -

(2)              
Audit-Related Fees

The aggregate fees billed in each of the last two fiscal years
for assurance and related services by the principal accountants that are
reasonably related to the performance of the audit or review of our financial
statements and are not reported in the preceding paragraph was:

2006- $ Nil 2005- $Nil

(3)              
Tax Fees

The aggregate fees billed in each of the last two fiscal years
for professional services rendered by the principal accountant for tax
compliance, tax advice, and tax planning was:

2006- $ Nil 2005- $Nil

(4)              
All Other Fees

The aggregate fees billed in each of the last two fiscal yeas
for the products and services provided by the principal accountant, other than
the services reported in paragraphs (1), (2), and (3) was:

2006- $ Nil 2005- $Nil

(5)Our audit committees pre-approval policies and procedures described in
paragraph (c)(7)(i) of Rule 2-01 of Regulation S-X require that the audit
committee pre-approve all accounting related activities prior to the performance
of any services by any accountant or auditor.

(6)The percentage of hours expended on the principal accountants engagement to
audit our financial statements for the most recent fiscal year that were
attributed to work performed by persons other than the principal accountants
full time, permanent employees was 0%.

---

- 19 -

SIGNATURES

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

| | **AMG Oil Ltd.**
| | ----------------
| | (Registrant)    
| |                 
| | By:             
| |                 
| |                 
| |                 
| |                 
| | Date:           

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

| | By:   | /s/ Michael Hart                             
| | ----- | ---------------------------------------------
| |       | Michael Hart                                 
| |       | Director, President, CEO,
      Secretary and
| |       | Treasurer                                    
| |       |                                              
| | Date: | December 22, 2006                            
| |       |                                              
| |       |                                              
| |       |                                              
| |       |                                              
| | By:   | /s/ Garth Johnson                            
| |       | Garth Johnson                                
| |       | Director and CFO                             
| |       |                                              
| | Date: | December 22, 2006                            
| |       |                                              
| |       |                                              
| |       |                                              
| |       |                                              
| | By:   | /s/ Dan Brown                                
| |       | Dan Brown                                    
| |       | Director                                     
| |       |                                              
| | Date: | December 22, 2006                            

---



AMG OIL LTD.(An Exploration Stage Enterprise)

Financial Statements (Expressed in United States
Dollars)

For the Years Ended September 30, 2006 and 2005





---

TELFORD SADOVNICK,
P.L.L.CCERTIFIED PUBLIC ACCOUNTANTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM

To the Board of Directors and Stockholders of AMG Oil Ltd.
(A Development Stage Enterprise)

We have audited the accompanying balance sheets of AMG Oil Ltd.
(an exploration stage enterprise) (the Company) as at September 30, 2006 and
2005 and the related statements of operations, statement of stockholders equity
and cash flows for each of the three years in the period ended September 30,
2006 and the statements of operations and cash flows for the period from
inception on February 20, 1997 to September 30, 2006. These financial statements
are the responsibility of the Companys management. Our responsibility is to
express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of AMG Oil Ltd.
(an exploration stage enterprise) as at September 30, 2006 and 2005 and the
results of its operations and its cash flows for each of the three years in the
period ended September 30, 2006 and for the period from inception on February
20, 1997 to September 30, 2006 in conformity with accounting principles
generally accepted in the United States of America.

The accompanying financial statements have been prepared
assuming the Company will continue as a going concern. As discussed in Note 1 to
the financial statements, the Company is an exploration stage enterprise and has
yet to establish any revenues from business operations. As a result, there is
substantial doubt about the Companys ability to continue as a going concern.
Managements plans in regard to these matters are also described in Note 1. The
financial statements do not include any adjustments relating to the
recoverability and classification of assets and liabilities that might result
from the outcome of this uncertainty.



/s/ Telford Sadovnick, P.L.L.C. 
  CERTIFIED PUBLIC
ACCOUNTANTS Bellingham, Washington November 17, 2006

F1

---

|AMG OIL LTD.                        
|------------------------------------
|(An Exploration Stage Enterprise)   
|Balance Sheets                      
|(Expressed in United States Dollars)

|As at September
      30,                        |   | 2006       |   |   | 2005       |  
|------------------------------------------------ | - | ---------- | - | - | ---------- | -
|                                                 |   |            |   |   |            |  
|Assets                                           |   |            |   |   |            |  
|Current                                          |   |            |   |   |            |  
|                                                 |   |            |   |   |            |  
|Cash                                             | $ | 1,348,282  |   | $ | 14,526     |  
|                                                 |   | 1,348,282  |   |   | 14,526     |  
|                                                 |   |            |   |   |            |  
|Property and
      equipment                     |   | -          |   |   | 1,234      |  
|                                                 |   |            |   |   |            |  
|Total
      Assets                               | $ | 1,348,282  |   | $ | 15,760     |  
|                                                 |   |            |   |   |            |  
|Current Liabilities                              |   |            |   |   |            |  
|                                                 |   |            |   |   |            |  
|Accounts payable and accrued liabilities         | $ | 12,522     |   | $ | 5,622      |  
|Due to related parties                           |   | 2,838      |   |   | -          |  
|                                                 |   |            |   |   |            |  
|Total Liabilities                                |   | 15,360     |   |   | 5,622      |  
|                                                 |   |            |   |   |            |  
|Commitments and Contingencies (Note
      4)     |   | -          |   |   | -          |  
|                                                 |   |            |   |   |            |  
|Stockholders Equity                             |   |            |   |   |            |  
|                                                 |   |            |   |   |            |  
|Common voting stock, $0.00001 par value          |   |            |   |   |            |  
|100,000,000 shares authorized                    |   |            |   |   |            |  
|Issued and outstanding at September
      30,    |   |            |   |   |            |  
|2006: 23,200,000 shares                          |   |            |   |   |            |  
|2005: 16,600,000 shares                          |   | 232        |   |   | 166        |  
|Additional paid-in capital                       |   | 4,194,600  |   |   | 2,835,709  |  
|Deficit accumulated during the exploration stage |   | (2,861,910 | ) |   | (2,825,737 | )
|                                                 |   |            |   |   |            |  
|Total Stockholders Equity                       |   | 1,332,922  |   |   | 10,138     |  
|                                                 |   |            |   |   |            |  
|Total Liabilities and Stockholders Equity       | $ | 1,348,282  |   | $ | 15,760     |  

See accompanying notes to the financial statements

F2

---

|AMG OIL LTD.                              
|------------------------------------------
|(An Exploration Stage Enterprise)         
|Statements of Operations                  
|(Expressed in
      United States Dollars)

|                                          |   |               |   |   |               |   |   |               |   |   | Cumulative      |  
|----------------------------------------- | - | ------------- | - | - | ------------- | - | - | ------------- | - | - | --------------- | -
|                                          |   |               |   |   |               |   |   |               |   |   | from Inception  |  
|                                          |   |               |   |   |               |   |   |               |   |   | on February 20, |  
|                                          |   | Year Ended    |   |   | Year Ended    |   |   | Year Ended    |   |   | 1997 to         |  
|                                          |   | September 30, |   |   | September 30, |   |   | September 30, |   |   | September 30,   |  
|                                          |   | 2006          |   |   | 2005          |   |   | 2004          |   |   | 2006            |  
|                                          |   |               |   |   |               |   |   |               |   |   |                 |  
|Expenses                                  |   |               |   |   |               |   |   |               |   |   |                 |  
|General and administrative                | $ | 68,046        |   | $ | 17,448        |   | $ | 34,468        |   | $ | 883,641         |  
|Loss on sale of investments               |   | -             |   |   | 1,685         |   |   | -             |   |   | 17,820          |  
|Write-down of investments                 |   | -             |   |   | -             |   |   | -             |   |   | 234,780         |  
|Write-off of loan receivable              |   | -             |   |   | -             |   |   | 30,000        |   |   | 30,000          |  
|                                          |   |               |   |   |               |   |   |               |   |   |                 |  
|                                          |   | (68,046       | ) |   | (19,133       | ) |   | (64,468       | ) |   | (1,166,241      | )
|                                          |   |               |   |   |               |   |   |               |   |   |                 |  
|Other Income                              |   |               |   |   |               |   |   |               |   |   |                 |  
|Interest income                           |   | 31,873        |   |   | 360           |   |   | 379           |   |   | 91,741          |  
|                                          |   |               |   |   |               |   |   |               |   |   |                 |  
|Net loss from continuing
      operations |   | (36,173       | ) |   | (18,773       | ) |   | (64,089       | ) |   | (1,074,500      | )
|                                          |   |               |   |   |               |   |   |               |   |   |                 |  
|Net loss from discontinued operations     |   | -             |   |   | -             |   |   | -             |   |   | (1,787,410      | )
|                                          |   |               |   |   |               |   |   |               |   |   |                 |  
|Net loss                                  | $ | (36,173       | ) | $ | (18,773       | ) | $ | (64,089       | ) | $ | (2,861,910      | )
|                                          |   |               |   |   |               |   |   |               |   |   |                 |  
|Basic loss per share:                     |   |               |   |   |               |   |   |               |   |   |                 |  
|From
      continuing operations          | $ | (0.00         | ) | $ | (0.00         | ) | $ | (0.00         | ) | $ | (0.05           | )
|From discontinued operations              |   | (0.00         | ) |   | (0.00         | ) |   | (0.00         | ) |   | (0.08           | )
|                                          | $ | (0.00         | ) | $ | (0.00         | ) | $ | (0.00         | ) | $ | (0.13           | )
|                                          |   |               |   |   |               |   |   |               |   |   |                 |  
|Weighted average number of                |   |               |   |   |               |   |   |               |   |   |                 |  
|common shares outstanding                 |   | 20,172,055    |   |   | 16,600,000    |   |   | 16,600,000    |   |   |                 |  

See accompanying notes to the financial statements

F3

---

|AMG OIL LTD.                                                   
|---------------------------------------------------------------
|(An Exploration Stage Enterprise)                              
|Statements of Changes in Stockholders Equity                  
|(Expressed in
      United States Dollars)                     
|                                                               
|From Inception on
      February 20, 1997 to September 30, 2006

DeficitAccumulatedAdditional
    
    
    during the
    
    
    TotalCommon Stock
    
    
    Paid-in
    
    
    Development
    
    
    StockholdersShares
    
    
    Amount
    
    
    Capital
    
    
    Stage
    
    
    EquityBalance at February 20, 1997
    
    -
    
    $
    -
    
    $
    -
    
    $
    -
    
    $
    -April 2, 1997
    
    2,000,000
    
    
    20
    
    
    100,980
    
    
    -
    
    
    101,000August 11, 1997
    
    3,000,000
    
    
    30
    
    
    29,970
    
    
    -
    
    
    30,000September 29, 1997
    
    4,000,000
    
    
    40
    
    
    199,960
    
    
    -
    
    
    200,000Net loss for the period
    
    -
    
    
    -
    
    
    -
    
    
    (21,888
    )
    
    (21,888
    )Balance at September 30, 1997
    
    9,000,000
    
    
    90
    
    
    330,910
    
    
    (21,888
    )
    
    309,112December 31, 1997
    
    2,000,000
    
    
    20
    
    
    99,980
    
    
    -
    
    
    100,000July 2, 1998
    
    1,500,000
    
    
    15
    
    
    374,985
    
    
    -
    
    
    375,000August 14, 1998
    
    500,000
    
    
    5
    
    
    124,995
    
    
    -
    
    
    125,000Net loss for the year
    
    -
    
    
    -
    
    
    -
    
    
    (144,368
    )
    
    (144,368
    )Balance at September 30, 1998
    
    13,000,000
    
    
    130
    
    
    930,870
    
    
    (166,256
    )
    
    764,744March 17, 1999
    
    1,200,000
    
    
    12
    
    
    599,988
    
    
    -
    
    
    600,000Net loss for the year
    
    -
    
    
    -
    
    
    -
    
    
    (97,165
    )
    
    (97,165
    )Balance at September 30, 1999
    
    14,200,000
    
    
    142
    
    
    1,530,858
    
    
    (263,421
    )
    
    1,267,579April 10, 2000
    
    5,000,000
    
    
    50
    
    
    249,950
    
    
    -
    
    
    250,000August 25, 2000
    
    400,000
    
    
    4
    
    
    899,996
    
    
    -
    
    
    900,000Net compensation
      expensefrom stock options
    
    -
    
    
    -
    
    
    42,255
    
    
    -
    
    
    42,255Net loss for the year
    
    -
    
    
    -
    
    
    -
    
    
    (1,106,470
    )
    
    (1,106,470
    )Balance at September 30, 2000
    
    19,600,000
    
    
    196
    
    
    2,723,059
    
    
    (1,369,891
    )
    
    1,353,364Net compensation
      expensefrom stock options
    
    -
    
    
    -
    
    
    94,315
    
    
    -
    
    
    94,315Net loss for the year
    
    -
    
    
    -
    
    
    -
    
    
    (893,774
    )
    
    (893,774
    )Balance at September 30, 2001
    
    19,600,000
    
    
    196
    
    
    2,817,374
    
    
    (2,263,665
    )
    
    553,905Net compensation
      expensefrom stock options
    
    -
    
    
    -
    
    
    38,697
    
    
    -
    
    
    38,697Net loss for the year
    
    -
    
    
    -
    
    
    -
    
    
    (137,397
    )
    
    (137,397
    )Balance at September 30, 2002
    
    19,600,000
    
    
    196
    
    
    2,856,071
    
    
    (2,401,062
    )
    
    455,205Re-purchase of shares
      for cash
    
    (3,000,000
    )
    
    (30
    )
    
    (29,970
    )
    
    -
    
    
    (30,000
    )Net compensation expensefrom stock options
    
    -
    
    
    -
    
    
    9,608
    
    
    -
    
    
    9,608Net loss for the year
    
    -
    
    
    -
    
    
    -
    
    
    (341,813
    )
    
    (341,813
    )Balance at September 30, 2003
    
    16,600,000
    
    
    166
    
    
    2,835,709
    
    
    (2,742,875
    )
    
    93,000Net loss for the year
    
    -
    
    
    -
    
    
    -
    
    
    (64,089
    )
    
    (64,089
    )Balance at September 30, 2004
    
    16,600,000
    
    
    166
    
    
    2,835,709
    
    
    (2,806,964
    )
    
    28,911Net loss for the year
    
    -
    
    
    -
    
    
    -
    
    
    (1,106,470
    )(18,773)
    
    (18,773
    )Balance at September 30, 2005
    
    16,600,000
    
    
    166
    
    
    2,835,709
    
    
    (2,825,737
    )
    
    10,138February 27, 2006
    
    6,000,000
    
    
    60
    
    
    1,358,897
    
    
    (1,106,470
    )-
    
    1,358,957August 30, 2006
    
    600,000
    
    
    6
    
    
    (6
    )
    
    -
    
    
    -Net loss for the year
    
    -
    
    
    -
    
    
    -
    
    
    (36,173
    )
    
    (36,173
    )Balance at September 30, 2006
    
    23,200,000
    
    $
    232
    
    $
    4,194,600
    
    $
    (2,861,910
    )
    $
    1,332,922


See accompanying notes to the financial statements

F4

---

|AMG OIL LTD.                              
|------------------------------------------
|(An Exploration Stage Enterprise)         
|Statements of Cash Flows                  
|(Expressed in
      United States Dollars)

|                                                    |   |               |   |   |               |   |   |               |   |   | Cumulative         |  
|--------------------------------------------------- | - | ------------- | - | - | ------------- | - | - | ------------- | - | - | ------------------ | -
|                                                    |   |               |   |   |               |   |   |               |   |   | from Inception     |  
|                                                    |   | Year Ended    |   |   | Year Ended    |   |   | Year Ended    |   |   | on February 20,    |  
|                                                    |   | September 30, |   |   | September 30, |   |   | September 30, |   |   | 1997 to            |  
|                                                    |   | 2006          |   |   | 2005          |   |   | 2004          |   |   | September 30, 2006 |  
|Cash provided by (used in):                         |   |               |   |   |               |   |   |               |   |   |                    |  
|Operating Activities                                |   |               |   |   |               |   |   |               |   |   |                    |  
|Net loss from continuing operations                 | $ | (36,173       | ) | $ | (18,773       | ) | $ | (64,089       | ) | $ | (1,074,500         | )
|Adjustments to reconcile net
      loss to          |   |               |   |   |               |   |   |               |   |   |                    |  
|cash used in operating activities:                  |   |               |   |   |               |   |   |               |   |   |                    |  
|Depreciation                                        |   | 1,234         |   |   | 415           |   |   | 565           |   |   | 5,889              |  
|Net compensation expense from stock                 |   |               |   |   |               |   |   |               |   |   |                    |  
|options                                             |   | -             |   |   | -             |   |   | -             |   |   | 184,875            |  
|Loss on sale of investments                         |   | -             |   |   | 1,685         |   |   | -             |   |   | 17,820             |  
|Write-down of
      investments                     |   | -             |   |   | -             |   |   | -             |   |   | 234,780            |  
|Write-off of loan receivable                        |   | -             |   |   | -             |   |   | 30,000        |   |   | 30,000             |  
|Changes in non-cash working
      capital:          |   |               |   |   |               |   |   |               |   |   |                    |  
|Accounts payable and accrued
      liabilities      |   | 6,900         |   |   | 622           |   |   | (1,000        | ) |   | 12,522             |  
|Due to related parties                              |   | 2,838         |   |   | (1,138        | ) |   | 191           |   |   | (19,396            | )
|Net cash (used in) continuing operations            |   | (25,201       | ) |   | (17,189       | ) |   | (34,333       | ) |   | (608,010           | )
|Net cash provided by discontinued operations        |   | -             |   |   | -             |   |   | -             |   |   | 60,405             |  
|Net
      cash (used in) operating activities       |   | (25,201       | ) |   | (17,189       | ) |   | (34,333       | ) |   | (547,605           | )
|Financing Activities                                |   |               |   |   |               |   |   |               |   |   |                    |  
|Common shares issued for cash                       |   | 1,358,957     |   |   | -             |   |   | -             |   |   | 4,039,957          |  
|Common shares re-purchased with cash                |   | -             |   |   | -             |   |   | -             |   |   | (30,000            | )
|Net
      cash provided by financing activities     |   | 1,358,957     |   |   | -             |   |   | -             |   |   | 4,009,957          |  
|Investing Activities                                |   |               |   |   |               |   |   |               |   |   |                    |  
|Loan receivable                                     |   | -             |   |   | -             |   |   | -             |   |   | (30,000            | )
|Purchase of investments                             |   | -             |   |   | -             |   |   | -             |   |   | (324,856           | )
|Proceeds from sale of investments                   |   | -             |   |   | 9,308         |   |   | -             |   |   | 82,256             |  
|Oil and gas exploration
      expenditures          |   | -             |   |   | -             |   |   | -             |   |   | (1,835,581         | )
|Purchase of property and equipment                  |   | -             |   |   | -             |   |   | -             |   |   | (5,889             | )
|Net cash provided by (used in) investing activities |   | -             |   |   | 9,308         |   |   | -             |   |   | (2,114,070         | )
|Net increase (decrease) in cash                     |   |               |   |   |               |   |   |               |   |   |                    |  
|during the
      period                             |   | 1,333,756     |   |   | (7,881        | ) |   | (34,333       | ) |   | 1,348,282          |  
|Cash position - Beginning of period                 |   | 14,526        |   |   | 22,407        |   |   | 56,740        |   |   | -                  |  
|Cash position - End of period                       | $ | 1,348,282     |   | $ | 14,526        |   | $ | 22,407        |   | $ | 1,348,282          |  
|Supplemental disclosure of net cash for             |   |               |   |   |               |   |   |               |   |   |                    |  
|discontinued
      operations:                      |   |               |   |   |               |   |   |               |   |   |                    |  
|Net loss from discontinued operations               | $ | -             |   | $ | -             |   | $ | -             |   | $ | (1,787,410         | )
|Gain on forgiveness of debt                         |   | -             |   |   | -             |   |   | -             |   |   | 22,234             |  
|Write-off of oil and gas interest                   |   | -             |   |   | -             |   |   | -             |   |   | 1,832,520          |  
|Gain on sale of oil and gas interest                |   | -             |   |   | -             |   |   | -             |   |   | (6,939             | )
|Net
      cash provided by discontinued operations  |   | -             |   |   | -             |   |   | -             |   |   | 60,405             |  
|Supplemental disclosure of
      non-cash           |   |               |   |   |               |   |   |               |   |   |                    |  
|investing activities:                               |   |               |   |   |               |   |   |               |   |   |                    |  
|Purchase of investments                             | $ | -             |   | $ | -             |   | $ | -             |   | $ | (10,000            | )

See accompanying notes to the financial statements

F5

---

|AMG OIL LTD.                                               
|-----------------------------------------------------------
|(An Exploration Stage Enterprise)                          
|Notes to the Financial Statements                          
|(Expressed in
      United States Dollars)                 
|                                                           
|For the Years
      Ended September 30, 2006, 2005 and 2004

NOTE 1 - NATURE OF OPERATIONS AND CONTINGENCIES

The Companys business focus is the acquisition of an interest
in a suitable resource based asset. The operations of the Companys subsidiary
for the exploration of New Zealand oil and gas properties was discontinued
during the 2003 fiscal year based on managements decision that the subsidiary
had limited prospects, at that time, for developing profitable operations.

These financial statements have been prepared in accordance
with generally accepted accounting principles in the United States on a going
concern basis, which contemplates the realization of assets and the liquidation
of liabilities in the ordinary course of business. They do not include any
adjustments to the recoverability and classification of recorded assets amounts
and liabilities that might be necessary should the Company be unable to continue
as a going concern. The Company has incurred recurring operating losses and has
an accumulated deficit of $2,861,910 and Stockholders Equity of $1,332,922 at
September 30, 2006. These factors, among others, raise substantial doubt about
the Companys ability to be able to continue as a going concern. The future of
the Company and the realization of its asset values will depend upon the
Companys ability to obtain adequate financing and continuing support from
shareholders and creditors to attain profitable operations.

The Company is an exploration stage enterprise and is required
to identify that these financial statements are those of an exploration stage
enterprise in accordance with paragraph 12 of Statement of Financial Accounting
Standards No. 7 and is focusing on acquiring suitable resource based assets.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

|a) | Accounting Principles and Use of
  Estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The preparation of financial statements is in conformity
      with generally accepted accounting principles used in the United States of
      America which requires management to make estimates and assumptions that
      affect the reported amounts of assets and liabilities and disclosures of
      contingent assets and liabilities at the date of the financial statements
      and the reported amounts of revenues and expenses during the fiscal
      period. Actual results may differ from those estimates. There are no
      material differences between United States and Canadian generally accepted
      accounting principles in these financial statements.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|b) | Financial Instruments and Financial Risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Cash, accounts payable and accrued liabilities and due to
      related parties are carried at cost, which approximates fair value due to
      the short-term nature of these instruments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|c) | Cash                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Cash is comprised of cash deposited in a high-quality
      financial institution, and to date has not experienced losses on any of
      its balances.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

---

|d) | Property and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Property and equipment are recorded at cost and amortized over their useful lives. Currently the Company does not have any property and equipment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|e) | Basic and diluted net loss per common share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Basic net loss per common share is calculated by dividing the net loss by the weighted average number of common shares outstanding during the year. Diluted net loss per common share is calculated by dividing the net loss by the
sum of the weighted average number of common shares outstanding and the dilutive common equivalent shares outstanding during the year. Common equivalent shares consist of the shares issuable upon exercise of stock options and warrants calculated
using the treasury stock method. Common equivalent shares are not included in the calculation of the weighted average number of shares outstanding for diluted net loss per common share when the effect would be anti-dilutive.                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Statement of Financial Accounting Standards No. 128: Earnings per Share (SFAS 128) replaces the presentation of primary earnings per share (EPS) with a presentation of both basic and diluted EPS for all
entities with complex capital structures including a reconciliation of each numerator and denominator. Basic EPS excludes dilutive securities and is computed by dividing income available to common stockholders by the weighted-average number of
common shares outstanding for the year. Diluted EPS reflects the potential dilution that could occur if dilutive securities were converted into common stock and is computed similarly to fully-diluted EPS pursuant to previous accounting
pronouncements. SFAS 128 applies equally to loss per share presentations.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|f) | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The Company accounts for income taxes under an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the
Companys financial statements or tax returns. In estimating future tax consequences, all expected future events other than enactment of changes in the tax laws or rates are considered.                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|g) | Foreign Currency Translation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | All transactions in currencies other than the U.S. Dollar during the year are translated at the exchange rate at the date of the transaction. Monetary assets and liabilities denominated in a foreign currency are translated at the
prevailing year-end rate of exchange. Exchange gains or losses are included in the Statement of Operations in the year in which they occur. The Companys functional currency is the U.S Dollar.                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|h) | Accounting Pronouncements Recently Issued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The following accounting pronouncements have been announced since the filing of the Companys FORM 10- KSB, filed on December 23, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | In September 2006, the U.S. Securities and Exchange Commission issued Staff Accounting Bulletin 108 (SAB 108). The interpretations in this bulletin express the staffs views regarding the process of quantifying
financial statement misstatements and are being issued to address diversity in practice in quantifying financial statement misstatements and the potential under current practice for the build up of improper amounts on the balance sheet. SAB 108 is
not expected to have a material impact on the Companys financial statements.                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS No. 157). This statement defines fair value, establishes a framework for measuring fair
value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. This statement does not require any new fair value measurements, however, for some entities the application of this statement will
change current practice. SFAS No. 157 is effective for financial statements                                                                                                                                                                                                                                       

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issued for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years, although early
adoption is permitted. SFAS 157 is not expected to have a material impact on the
Companys financial statements.

In June 2006, the FASB issued FASB
Interpretation No. 48 (FIN 48) entitled Accounting for Uncertainty in Income
Taxes  an interpretation of SFAS No. 109. The interpretation clarifies the
accounting for uncertainty in income taxes recognized in an enterprises
financial statements in accordance with SFAS No. 109, Accounting for Income
Taxes. The evaluation of a tax position in accordance with this interpretation
is a two-step process. Under the recognition step an enterprise determines
whether it is more likely than not that a tax position will be sustained upon
examination based on the technical merits of the position. Under the measurement
step a tax position that meets the more-likely-than-not recognition threshold is
measured to determine the amount of benefit to recognize in the financial
statements. The tax position is measured at the largest amount of benefit that
is greater than 50 percent likely of being realized upon ultimate settlement.
FIN 48 is effective for fiscal years beginning after December 15, 2006. Earlier
application of the provisions of this interpretation is encouraged if the
enterprise has not yet issued financial statements, including interim financial
statements, in the period this interpretation is adopted. FIN 48 is not expected
to have a material impact on the Companys financial statements.

In February 2006, the FASB issued SFAS
No. 155, Accounting for Certain Hybrid Financial Instrumentsan amendment of
FASB statements No. 133 and 140 (SFAS No. 155). SFAS No. 155 resolves issues
surrounding the application of the bifurcation requirements to beneficial
interests in securitized financial assets. In general, this statement permits
fair value remeasurement for any hybrid financial instrument that contains an
embedded derivative that otherwise would require bifurcation. SFAS No. 155 is
effective for all financial instruments acquired or issued after the beginning
of an entitys first fiscal year that begins after September 15, 2006 and is not
expected to have a material impact on the Companys financial statements.

In January 2006, the FASB issued an
exposure draft entitled The Fair Value Option for Financial Assets and
Financial Liabilities (including an amendment of FASB Statement No. 115). The
proposed statement would create a fair value option under which an entity may
irrevocably elect fair value as the initial and subsequent measurement attribute
for certain financial assets and financial liabilities on a contract-by-contract
basis, with changes in fair value recognized in earnings as those changes occur.
The proposed statement is not expected to have a material impact on the
Companys financial statements.

In June 2005, the FASB issued Staff
position Paper (FSP) 115-1 - The Meaning of Other-Than-Temporary Impairment
and its Application to Certain Investments, superseding EITF 03-1. FSP 115-1
will replace the accounting guidance on the determination of whether an
investment is other-than-temporarily impaired as set forth in EITF 03-1 with
references to existing other-than-temporary impairment guidance. FSP 115-1 is
effective for reporting periods beginning after December 15, 2005. Adoption of
FSP 115-1 is not expected to have a material impact on the Companys financial
statements.

In May 2005, the FASB issued SFAS No.
154 (SFAS 154) - Accounting Changes and Error Corrections. SFAS No. 154
established new standards on accounting for changes in accounting principles.
SFAS No. 154 requires all such changes to be accounted for by retrospective
application to the financial statements of prior periods unless prescribed
otherwise or it is impracticable to do so. SFAS No. 154 is effective for
accounting changes and error corrections made in fiscal years beginning after
December 15, 2005. Adoption of SFAS No. 154 is not expected to have a material
impact on the Companys financial statements.

In March 2005, FASB issued FASB
Interpretation No. (FIN) 47 - Accounting for Conditional Asset Retirement
Obligations in March 2005. FIN 47 clarifies that an entity must record a
liability for a conditional asset retirement obligation if the fair value of the
obligation can be reasonably estimated. This Interpretation also clarifies the
circumstances under which an entity would have sufficient information to
reasonably estimate the fair value of an asset retirement obligation. This
Interpretation is effective no later than the end of fiscal years ending after
December 15, 2005. The Company does not expect this guidance to have a material
impact on its consolidated financial statements.

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In December 2004, the Financial
Accounting Standards Board (FASB) issued a revision to SFAS No. 123,
Accounting for Stock Based Compensation which supersedes APB No. 25,
Accounting for Stock Issued to Employees. This statement (SFAS No. 123(R))
requires measurement of the cost of employee services received in exchange for
an award of equity instruments based on the fair value of the award on the date
of the grant and recognition of the cost in the results of operations over the
period during which an employee is required to provide service in exchange for
the award. No compensation cost is recognized for equity instruments for which
employees do not render the requisite service. The Company elected to implement
this statement on a modified prospective basis. Under the modified prospective
basis the Company will recognize stock based compensation in its U.S. GAAP
results of operations for the unvested portion of awards outstanding as at
January 1, 2006 and for all awards granted after January 1, 2006.

NOTE 3 - RELATED PARTY TRANSACTIONS

|a) | Three directors and one officer of the Company
      participated in the private placement financing completed on February 28,
      2006, acquiring a total of 120,000 units at a price of $0.25 per
    unit.                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Refer to Note 5.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|b) | During the 2006 fiscal year, the Company incurred $12,255
      (September 30, 2005: $5,652 and September 30, 2004: $15,889) of mainly
      general and administrative costs through DLJ Management Corp., (DLJ), a
      wholly owned subsidiary of Trans-Orient Petroleum Ltd. (Trans-Orient).
      The amount represents costs incurred by DLJ on behalf of the Company. At
      September 30, 2006 the Company owes DLJ $2,838 (September 30, 2005: $Nil).
      Trans-Orient was the controlling shareholder of the Company from March 4,
      2003 to November 29, 2005 and is related to the Company through a common
      director.

NOTE 4 - COMMITMENTS AND CONTINGENCIES

The Company is not aware of any events of noncompliance in its
operations with any environmental laws or regulations nor of any potentially
material contingencies related to environmental issues. However, the Company
cannot predict whether any new or amended environmental laws or regulations
introduced in the future will have a material adverse effect on the future
business of the Company. The Company has no significant commitments or
contractual obligations with any parties respecting executive compensation,
consulting arrangements or other matters, except as disclosed. Rental of
premises is on a month-to-month basis.

NOTE 5 - COMMON STOCK

Authorized and Issued Share Capital

The authorized share capital of the Company is 100,000,000
shares of common stock with a par value of $0.00001 per share.

|                                      |  | Number          |  |   | Stated    | 
|------------------------------------- |  | --------------- |  | - | --------- | 
|Issued and fully paid:                |  | of
      Shares |  |   | Value     | 
|Balance at September 30, 2005         |  | 16,600,000      |  | $ | 2,835,875 | 
|Private placement, net of issue costs |  | 6,000,000       |  |   | 1,358,957 | 
|Rights issuance                       |  | 600,000         |  |   | -         | 
|Balance at September 30, 2006         |  | 23,200,000      |  | $ | 4,194,832 | 

On February 28, 2006 the Company completed a private placement
financing of 6,000,000 units (each a Unit) at a price of US$0.25 per Unit for
gross proceeds of $1.5 million. Each Unit consists of one share of common stock
(a Unit Share) and one share purchase warrant (a Warrant), and each Warrant
entitles the holder thereof to acquire an additional share of common stock (a
Warrant Share) at a price of US$0.50 for a period of 24 months subject to an
accelerated expiry provision whereby the warrants will expire 30 days after a
registration statement has been declared effective by the United States
Securities Exchange Commission (SEC) and the Companys shares have traded at
or

---

above $1.00 for 20 consecutive days. Each Unit also included a
Right to receive an additional 0.10 of one Unit if a Registration Statement is
not declared effective by the SEC on or before August 27, 2006. A Registration
Statement was not declared effective by August 27, 2006 and the Right for an
additional 0.10 of one Unit was issued to all Unit holders. Each full Unit (Ten
Rights) consist of one share and one share purchase warrant. As part of the
private placement the Companys agent earned a commission and was granted a two
year option to purchase 360,000 Units of the Company, exercisable at $0.25 per
share. These options include a Right to increase the number of options granted
by an additional 0.10 of one Unit per option according to the terms described
above.

Share Purchase Warrants

At September 30, 2006, the following share purchase warrants
are outstanding:

Number
    
    Price
    
    ExpiryOf Shares
    
    per
      Share
    
    Date6,600,000
    
    $0.50
    
    February 28, 2008


Stock Options

At September 30, 2006, the following stock options are
outstanding:

Number
    
    Price
    
    ExpiryOf Shares
    
    per
      Share
    
    Date396,000
    
    $0.25
    
    February 28, 2008


Net Loss Per Share

The following is a summary of the Companys net loss and basic
and diluted loss per share as reported and pro forma as if the fair value based
method of accounting defined in SFAS 123 had been applied for the fiscal years
ending September 30, 2006, 2005 and 2004:

2006
      
      2005
      
      2004As
      Pro
      
      As
      Pro
      
      As
      ProReported
      Forma
      
      Reported
      Forma
      
      Reported
      FormaNet loss from continuingoperations
      $ (36,173)
      $ (36,173)
      
      $ (18,773)
      $ (18,773)
      
      $ (64,089)
      $ (64,089)Net loss from discontinuedoperations
      -
      -
      
      -
      -
      
      -
      -Net loss
      $ (36,173)
      $ (36,173)
      
      $ (18,773)
      $ (18,773)
      
      $ (64,089)
      $ (64,089)Basic and diluted lossper share:Continuing operations
      $ (0.00)
      $ (0.00)
      
      $ (0.00)
      $ (0.00)
      
      $ (0.00)
      $ (0.00)Discontinued operations
      (0.00)
      (0.00)
      
      (0.00)
      (0.00)
      
      (0.00)
      (0.00)$ (0.00)
      $ (0.00)
      
      $ (0.00)
      $ (0.00)
      
      $ (0.00)
      $ (0.00)


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NOTE 6 - INCOME TAXES

Statement of Financial Accounting Standards No. 109: Accounting
for Income Taxes (SFAS 109) requires that deferred income taxes reflect the
tax consequences on future years of differences between the tax bases of assets
and liabilities and their financial reporting amounts. The adoption of SFAS 109
had no material effect on the Companys financial statements.

The provision for income taxes differs from the result which
would be obtained by applying the statutory tax rate of 34% (2005 and 2004 
34%) to income before income taxes. The difference results from the following
items:

|                                                  |   | September 30, |   |   | September 30, |   |   | September 30, |  
|------------------------------------------------- | - | ------------- | - | - | ------------- | - | - | ------------- | -
|                                                  |   | 2006          |   |   | 2005          |   |   | 2004          |  
|Computed expected (benefit
      of) income taxes | $ | (12,299       | ) | $ | (6,383        | ) | $ | (21,790       | )
|Increase in valuation allowance                   |   | 12,299        |   |   | 6,383         |   |   | 21,790        |  
|Income tax provision                              | $ | -             |   | $ | -             |   | $ | -             |  

Pursuant to SFAS 109, the potential benefit of net operating
loss carry forwards has not been recognized in the financial statements since
the Company cannot be assured that it is more likely than not that such benefit
will be utilized in future years. The components of the net deferred tax asset,
the statutory tax rate, the effective tax rate and the elected amount of the
valuation allowance are as follows:

|                                       |   | September 30, |   |   | September 30, |   |   | September 30, |  
|-------------------------------------- | - | ------------- | - | - | ------------- | - | - | ------------- | -
|                                       |   | 2006          |   |   | 2005          |   |   | 2004          |  
|Net operating loss
      carryforwards | $ | (931,878      | ) | $ | (895,705      | ) | $ | (876,932      | )
|Statutory tax rate                     |   | 34%           |   |   | 34%           |   |   | 34%           |  
|Deferred tax asset                     |   | 316,839       |   |   | 304,540       |   |   | 298,157       |  
|Valuation allowance                    |   | (316,839      | ) |   | (304,540      | ) |   | (298,157      | )
|Net deferred tax asset                 | $ | -             |   | $ | -             |   | $ | -             |  

A valuation allowance has been established, and accordingly, no
benefit has been recognized for the Companys deferred tax assets. The Company
believes that, based on a number of factors, the available objective evidence
creates sufficient uncertainty regarding the realizability of the deferred tax
assets such that a full valuation allowance has been recorded. These factors
include the Companys current history of net losses and the expected near-term
future losses. The Company will continue to assess the realizability of the
deferred tax assets based on actual and forecasted operating results.

The operating losses amounting to $931,878 will expire between
2017 and 2026 if they are not utilized. The following table lists the fiscal
year in which the loss was incurred and the expiration date of the operating
loss carry forwards:

|Fiscal year | Amount     | Expiration Date
|----------- | ---------- | ---------------
|1997        | $   21,888 | 2017           
|1998        | 178,010    | 2018           
|1999        | 88,971     | 2019           
|2000        | 246,302    | 2020           
|2001        | 124,313    | 2021           
|2002        | 90,766     | 2022           
|2003        | 62,593     | 2023           
|2004        | 64,089     | 2024           
|2005        | 18,773     | 2025           
|2006        | 36,173     | 2026           
|Total       | $ 931,878  |                

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NOTE 7 - COMPARATIVE FIGURES

Certain comparative figures have been re-classified to conform
to the presentation of the current year.

---