**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      DC 20549**





**FORM
      10-KSB/A**


Amendment
      No. 1





x ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
      1934




For
      the
      fiscal year ended December 31, 2005


COMMISSION
      FILE NO. **000-50830**


**OR**


o TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
      OF
      1934




For
      the
      transition period from ______to______




**Calibre
      Energy, Inc.**


(Name
      of
      small business issuer on its charter)








**Nevada**
              (State
                or Other Jurisdiction of
              Incorporation
                or Organization)
            1311
              (Primary
                Standard Industrial
              Classification
                Code Number)
            88-0343804
              (I.R.S.
                Employer
              Identification
                Number)





**1667
      K Street, NW, Suite 1230**


**Washington,
      D.C. 20006**


**(202)
      223-4401**


(Address
      and telephone number


of
      principal executive offices and principal place of business)


___________________




**Oliver
      Pennington**


**1667
      K Street, NW, Suite 1230**


**Washington,
      D.C. 20006**


**(202)
      223-4401**


(Name,
      address and telephone number


of
      agent
      for service)


**___________________**




**Copy
      to:**


**Michael
      C. Blaney**


**Vinson
      & Elkins L.L.P.**


**1001
      Fannin, Suite 2300**


**Houston,
      TX 77002**


**(713)
      758-2222**





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





Check
      if
      disclosure of delinquent filers pursuant to Item 405, of Regulation S-B is
      not
      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. o




Registrant's
      revenue for its most recent fiscal  year:
      $20,778.





On
      March
      31, 2006 the aggregate market value of the voting stock of Calibre Energy,
      Inc.
      held by non-affiliates of the registrant was $92,558,176. There is currently
      a
      limited public market for the registrant’s common stock.




As
      of
      March 31, 2006 there were 53,980,806  outstanding
      shares of common stock, par value $0.001.




Transitional
      Small Business Format: Yes o No x




Documents
      incorporated by reference: None.




1




**Cautionary
        Notice Regarding Forward Looking Statements**
  “Calibre
        Energy, Inc.,” the “company,” “we,” “us” or “our” refer to Calibre Energy, Inc.,
        a Nevada corporation, and its subsidiaries, except where otherwise indicated
        or
        required by context. This
        report contains a number of forward-looking statements that reflect management’s
        current views and expectations with respect to our business, strategies,
        future
        results and events and financial performance. All statements made in this
        Annual
        Report other than statements of historical fact, including statements that
        address operating performance, events or developments that management expects
        or
        anticipates will or may occur in the future, including statements related
        to
        revenues, cash flow, profitability, adequacy of funds from operations,
        statements expressing general optimism about future operating results and
        non-historical information, are forward looking statements. In particular,
        the
        words “believe,” “expect,” “intend,” “ anticipate,” “estimate,” “may,”
variations of such words, and similar expressions identify forward-looking
        statements, but are not the exclusive means of identifying such statements
        and
        their absence does not mean that the statement is not forward-looking. These
        forward-looking statements are subject to certain risks and uncertainties,
        including those discussed below. Our actual results, performance or achievements
        could differ materially from historical results as well as those expressed
        in,
        anticipated or implied by these forward-looking statements. We do not undertake
        any obligation to revise these forward-looking statements to reflect any
        future
        events or circumstances.
  Readers
        should not place undue reliance on these forward-looking statements, which
        are
        based on management’s current expectations and projections about future events,
        are not guarantees of future performance, are subject to risks, uncertainties
        and assumptions (including those described below) and apply only as of the
        date
        of this report. Our actual results, performance or achievements could differ
        materially from the results expressed in, or implied by, these forward-looking
        statements. Factors that could cause or contribute to such differences include,
        but are not limited to, those discussed below in “Risk Factors” as well as those
        discussed elsewhere in this report, and the risks discussed in our press
        releases and other communications to shareholders issued by us from time
        to time
        which attempt to advise interested parties of the risks and factors that
        may
        affect our business. We undertake no obligation to publicly update or revise
        any
        forward-looking statements, whether as a result of new information, future
        events or otherwise.
  2




**ITEM
        1. DESCRIPTION OF BUSINESS**
  We
        are an
        independent natural gas and oil exploration and production company concentrating
        on growing reserves and production through the exploration, development,
        exploitation and acquisition of natural gas and oil reserves in North America.
        We have initially concentrated on the acquisition, exploitation and development
        of producing and non-producing shale gas and oil properties in the Barnett
        Shale
        in Texas. Our oil and gas business was commenced in August 2005. We specialize
        in acquiring oil and gas interests involved in extracting hydrocarbons from
        known gas-shale source rocks. We intend to focus on: a) shales that are
        laterally extensive; b) basins where the target zones have been previously
        penetrated; and c) shales that have been successfully fraced and commercially
        produced.
  **Our
        Executive Offices**
  Our
        principal executive and administrative office facility is located at 1667
        K
        Street, N.W., Suite 1230, Washington, D.C. 20006 and our telephone number
        is
        (202) 223-4401 and we have an operations office at Ashford VI, 1155 Dairy
        Ashford South, Fourth Floor, Houston, TX 77079.
  **Business
        Strategy**
  Our
        goal
        is to expand and develop our exploration and production business and our
        reserves by initially emphasizing the identification and development of shale
        gas opportunities in the Barnett Shale and the Fayetteville Shale. We believe
        that both the Mississippian developments of the Barnett Shale in the Ft.
        Worth
        Basin and the Fayetteville Shale development in the Arkoma Basin provides
        the
        greatest near term economic value to us.
  Because
        the experience of our current management team and project partners, we have
        the
        potential to execute quickly in identifying opportunities and capturing a
        land
        position. Some exploration and production companies take up to one year to
        obtain rights to the land and an additional year to evaluate the land for
        the
        first well. We believe we can shorten the total time for obtaining rights
        and
        evaluation to one year and then commence development in the second
        year.
  **Our
        Projects**
  Currently
        our growth depends heavily on the performance of our operating partners,
        to
        execute drilling and completion programs in an environment where shortages
        of
        equipment and talent are resulting in the escalation of costs. We have no
        current capability to act as an operator at this time as additional legal,
        land,
        drilling, and completion personnel will also be required for us to expand
        our
        operations and to act as an operator. Our senior management team will have
        to
        hire additional expertise in operations and finance to make a successful
        transition into a full operating company. However, in the future we will
        seek to
        operate wells in which we own an interest as we believe that by controlling
        operations, we will be able to more effectively manage the cost and timing
        of
        exploration and development of our properties, including the drilling and
        fracture stimulation methods used.
  *Projects
        with Kerogen Resources*
  We
        are
        currently participating in three projects with Kerogen Resources, Inc., a
        small,
        privately held, recently formed exploration and production company, located
        in
        Houston, Texas. These are as follows:
  3
  *Reichmann
        Petroleum Corporation Project*
  The
          first
          project is a joint venture with Kerogen Resources, Crosby Minerals and
          Reichmann
          Petroleum Corporation to explore, acquire and develop properties located
          in the
          Barnett Shale in the Ft. Worth Basin of North Texas. In October 2005 we
          acquired, through Kerogen Resources, a 12.5% working interest in 6,190
          net acres
          of leasehold interests in Parker, Tarrant, Denton, and Johnson Counties,
          Texas. Subsequent
          to the initial acquisition, we purchased a 25% working interest in 443
          net acres
          of leasehold interests from Reichmann Petroleum in Johnson County, Texas.
          Kerogen Resources provides the technical guidance for the project and in
          exchange will receive 12.5% of our working interest in each well drilled.
          As of June
          15,
          2006, we have paid Kerogen a total $6,708,758, of which $3,529,098 was for the 12.5% working interest in the initial 6,190
          acres, prepayment of drilling costs on 12 wells and
          for the 25% working interest in the leasehold interest in Johnson County
          and
          $1,655,401 was for operating costs (ie, drilling and completion costs)
          of the JV
          since the original payment. Kerogen
          then paid such amounts to Reichmann Petroleum Corporation as reimbursement
          of
          leasehold costs, drilling and operating expenses .
          Currently, our net acreage position subject to the Reichmann agreement
          is 773.94
          net acres. As of June 15, 2006, we owed $1,910,667 as our chare of the
          development and operation costs for the wells in this joint
          venture.
  As
          of June
          15, 2006, Calibre has participated in 22 gross wells. Four wells are currently
          producing, nine wells have been drilled, completed and fraced and are waiting
          to
          be hooked up to a pipeline, four wells have been drilled, completed and
          are
          cleaning up after being frac prior to being hooked up to a gas gathering
          line,
          three wells have been drilled to total depth, completed and are waiting
          to be
          fraced, and two wells are currently drilling. “Frac” or Fracture stimulation is
          a method of stimulating production by opening new flow channels in the
          rock
          surrounding a production well by pumping proppant, a granular substance
          that is
          carried into the formation by the fracturing fluid and helps keep the cracks
          open after a fracture treatment, and fluid into the well at high pressure
          and
          volume.
  *South
          Ft. Worth Basin Project*
  In
          October
          2005, we entered into a Participation Agreement for the exploration and
          development of wells in a portion of the South Ft. Worth Basin with Kerogen
          Resources, Wynn Crosby Energy, Inc. (“Crosby”), and Triangle USA (“Triangle”).
          The agreement covers a five county area of approximately 1.5 million acres
          and
          consists of all lands in these counties outside areas of mutual interest
          covered
          by the Reichmann project. Kerogen Resources is expected to generate shale
          gas
          prospects in the area subject to the agreement. Calibre is obligated to
          pay
          Kerogen Resources $597,600 for its generation of shale gas prospects within
          the
          five county area. As of June 15, 2006 Calibre has paid $500,000 of this
          amount
          and the balance is due upon the delivery of Kerogen Resources’ technical report.
  The
          Participation Agreement is for a two year term. Kerogen Resources, as the
          technical partner in charge of generating the prospect areas, pays 10%
          of the
          costs in exchange for a 16% working interest. Each of Triangle and us will
          pay
          30% of costs for a 27% working interest and Crosby, as operator, will pay
          30% of
          costs for a 30% working interest. Crosby intends to have three drilling
          rigs
          dedicated to this project. The agreement would bind all parties to the
          same area
          of mutual interest. Each party is permitted to obtain oil and gas leases
          in the
          territory, but must offer to assign to the other parties the percentage
          interest
          in the leases described above. Prospects are defined by agreement of the
          parties. The operator of a lease may require the other parties to advance
          payments for their respective percentages of the costs for leases or drilling
          of
          the lease.
  Crosby
          has
          engaged 12 independent land brokers to identify leases for purchase. As
          of June
          15, 2006, Crosby has leased approximately 11,710.87 net leasehold acres.
          Our net
          leasehold position pursuant to this agreement is 3,161.93 acres. We have
          advanced $1,184,154 to Kerogen for participation in these leases in the
          Ft,
          Worth Basin of Texas. We anticipate Calibre will acquire an additional
          5,000 to
          7,500 net leasehold acres under the Participation Agreement in the next
          six
          months. Additionally, Kerogen has acquired a 12 square mile 3D seismic
          program
          over part of our joint leasehold position and we have elected to participate
          for
          our share of the costs of the seismic program. We anticipate that we will
          acquire additional 3D seismic over our other leasehold interests in
          2006.
  4




*Williston
        Basin Project*
  On
        September 20, 2005 we entered into a Participation Agreement with Kerogen
        Resources covering all of the Williston Basin. Under this agreement, we are
        obligated to pay Kerogen Resources the sum of $638,600 for generation of
        shale
        gas prospects in the Williston Basin. As of June 15, 2006 Calibre has paid
        $550,000 to Kerogen Resources and the balance is due upon the delivery of
        Kerogen Resources’ technical report. As of June 15, 2006 no acreage has been
        leased pursuant to this agreement. Kerogen Resources, as the technical partner
        in charge of generating the prospect areas, will pay 70% of the costs for
        a 73%
        working interest in the leasehold interests acquired subject to the agreement,
        and we pay 30% of the costs for a 27% working interest. Each party will control
        their own leases with obligations to offer any leases acquired to the rest
        of
        the group pro-rata. Prospects are defined based on land and range from 25,000
        to
        45,000 acres each. The operator on a lease may required participating parties
        to
        advance funds for leases or drilling.
  *Additional
        Acreage*
  In
        addition to the three joint venture projects with Kerogen Resources, as of
        June
        15, 2006, we have acquired 5,318 gross leasehold acres and 3,417 net acres
        in
        the Barnett Shale outside of the areas covered by the Reichmann Petroleum
        JV,
        the South Ft. Worth Basin project and the Williston Basin project. We anticipate
        that we will commence development activities on these leases in the third
        quarter of 2006. Additionally, as of June 15, 2006, we have acquired 2,636
        gross
        leasehold acres and 1,771 net leasehold acres in the Fayetteville Shale
        development in the Arkoma Basin in Arkansas.
  “Gross
        leasehold acres” means the total number of acres in which we have a working
        interest. “Net leasehold acres” means the sum of the fractional working
        interests we have in the gross leasehold interests.
  **Employees**
  As
        of
        March 31, 2006 we employed five people, none of which are subject to a
        collective bargaining agreement. We consider our relations with our employees
        to
        be good.
  **Oil
        and Gas Properties**
  *Reserves* .
        We have
        4 producing wells in which we have an interest and have recently commenced
        production. Our working interests in each of these wells are
        10.9375%.
  The
        following table presents summary data with respect to our estimated net proved
        oil and natural gas reserves as of the dates indicated. Our reserve estimates
        as
        of December 31, 2005 are based primarily on reserve reports prepared by Ryder
        Scott Company, L.P., our independent reserve engineers In preparing its reports,
        Ryder Scott Company, L.P. evaluated properties representing approximately
        100%
        of our PV-10 as of December 31, 2005. All calculations of estimated net proved
        reserves have been made in accordance with the rules and regulations of the
        Securities and Exchange Commission, or the SEC.
  5




**Gas**
                **(Mcf)**
              
              **Oil**
                **(MBbls)**Total
                  Proved Reserves:Balance,
                  August 17, 2005
              
              
              —
              
              
              —Extensions,
                  discoveries and improved production
              
              
              69,000Production
              
              
              (3,000
              )
              
              —Balance,
                  December 31, 2005
              
              
              66,000
              
              
              —




*Well
        Status Summary* .
        The well
        status of our drilling operations is as follows:
  **Number
                  of Gross Wells**Producing
              
              
              4Fraced
                  & Waiting on Gas Line Hookup
              
              
              9Drilled,
                  Completed, Fraced and Cleaning Up
              
              
              4Waiting
                  on Fracture Treatment
              
              
              3Drilling
              
              
              2**Total**
              
              
              22
 In
          addition, we have interest in four wells that are currently producing,
          nine
          wells that have been drilled, completed and fraced and are waiting to be
          hooked
          up to a pipeline, four wells that have been drilled, completed and are
          cleaning
          up after being frac prior to being hooked up to a gas gathering line, three
          wells that have been drilled to total depth, completed and are waiting
          to be
          fraced, and two wells that are currently drilling. Our gross and net gas
          well
          ownership position is as follows:
  **Gross
                    Wells**
                
                **Net
                    Wells**Reichmann
                    Petroleum Corporation Project
                
                22
                
                2.54
 
 During
          the
          period ending December 31, 2005, the average sales price per unit of gas
          produced was $6.63 and the average lifting costs was $4.30. Our production
          has
          only recently commenced.
  *Developed
          and Undeveloped Leasehold.* We have
          the following developed and undeveloped leasehold interests:
  Developed
          Acreage
  **Gross
                    Leasehold**
                
                **Net
                    Leasehold**Reichmann
                    Petroleum Corporation Project
                
                303
                
                33Total
                
                303
                
                33
 
 Undeveloped
          Acreage
  **Gross
                      Leasehold**
                  
                  **Net
                      Leasehold**Reichmann
                      Petroleum Corporation Project
                  
                  6,330
                  
                  741So.
                      Ft. Worth Basin Project
                  
                  11,711
                  
                  3,162Other
                      Ft. Worth Basin
                  
                  5,316
                  
                  3,417Williston
                      Basin Project
                  
                  0
                  
                  0Arkoma
                      Basin
                  
                  2,636
                  
                  1,771Total
                  
                  25,993
                  
                  9,091




6




Our
        oil
        and gas properties consist primarily of working interests in oil and gas
        wells
        and our ownership of interests in leasehold acreage, both developed and
        undeveloped. The table above summarizes our gross and net developed and
        undeveloped oil and natural gas acreage under lease or option as of June
        1,
        2006. A developed acre is considered to be an acre spaced or assignable to
        productive wells. A gross acre is an acre in which a working interest is
        owned.
        A net acre is the result that is obtained when our fractional ownership working
        interest is multiplied by gross acres. The number of net acres is the sum
        of the
        factional working interests owned in gross acres expressed as whole numbers
        and
        fractions thereof. Undeveloped acreage is considered to be those lease acres
        on
        which wells have not been drilled or completed to a point that would permit
        the
        production of commercial quantities of oil or natural gas, regardless of
        whether
        that acreage contains proved reserves, but does not include undrilled acreage
        held by production under the terms of a lease. As is customary in the oil
        and
        gas industry, we can generally retain our interest in undeveloped acreage
        by
        drilling activity that establishes commercial production sufficient to maintain
        the leases or by paying delay rentals during the remaining primary term of
        leases. The oil and natural gas leases in which we have an interest are for
        varying primary terms, and if production under a lease continues from our
        developed lease acreage beyond the primary term, we are entitled to hold
        the
        lease for as long as oil or natural gas is produced.
  **Government
        Regulation**
  *Regulation
        of transportation of oil*
  Sales
        of
        crude oil, condensate and natural gas liquids are not currently regulated
        and
        are made at negotiated prices. Nevertheless, Congress could reenact price
        controls in the future.
  Our
        sales
        of crude oil are affected by the availability, terms and cost of transportation.
        The transportation of oil in common carrier pipelines is also subject to
        rate
        regulation. The Federal Energy Regulatory Commission, or the FERC, regulates
        interstate oil pipeline transportation rates under the Interstate Commerce
        Act.
        In general, interstate oil pipeline rates must be cost-based, although
        settlement rates agreed to by all shippers are permitted and market-based
        rates
        may be permitted in certain circumstances. Effective January 1, 1995, the
        FERC
        implemented regulations establishing an indexing system (based on inflation)
        for
        transportation rates for oil that allowed for an increase or decrease in
        the
        cost of transporting oil to the purchaser. A review of these regulations
        by the
        FERC in 2000 was successfully challenged on appeal by an association of oil
        pipelines. On remand, the FERC in February 2003 increased the index slightly,
        effective July 2001. Intrastate oil pipeline transportation rates are subject
        to
        regulation by state regulatory commissions. The basis for intrastate oil
        pipeline regulation, and the degree of regulatory oversight and scrutiny
        given
        to intrastate oil pipeline rates, varies from state to state. Insofar as
        effective interstate and intrastate rates are equally applicable to all
        comparable shippers, we believe that the regulation of oil transportation
        rates
        will not affect our operations in any way that is of material difference
        from
        those of our competitors.
  7




Further,
        interstate and intrastate common carrier oil pipelines must provide service
        on a
        non-discriminatory basis. Under this open access standard, common carriers
        must
        offer service to all similarly situated shippers requesting service on the
        same
        terms and under the same rates. When oil pipelines operate at full capacity,
        access is governed by prorationing provisions set forth in the pipelines’
published tariffs. Accordingly, we believe that access to oil pipeline
        transportation services generally will be available to us to the same extent
        as
        to our competitors.
  *Regulation
        of transportation and sale of natural gas*
  Historically,
        the transportation and sale for resale of natural gas in interstate commerce
        have been regulated pursuant to the Natural Gas Act of 1938, the Natural
        Gas
        Policy Act of 1978 and regulations issued under those Acts by the FERC. In
        the
        past, the federal government has regulated the prices at which natural gas
        could
        be sold. While sales by producers of natural gas can currently be made at
        uncontrolled market prices, Congress could reenact price controls in the
        future.
        Deregulation of wellhead natural gas sales began with the enactment of the
        Natural Gas Policy Act. In 1989, Congress enacted the Natural Gas Wellhead
        Decontrol Act. The Decontrol Act removed all Natural Gas Act and Natural
        Gas
        Policy Act price and non-price controls affecting wellhead sales of natural
        gas
        effective January 1, 1993.
  FERC
        regulates interstate natural gas transportation rates and service conditions,
        which affects the marketing of natural gas that we produce, as well as the
        revenues we receive for sales of our natural gas. Since 1985, the FERC has
        endeavored to make natural gas transportation more accessible to natural
        gas
        buyers and sellers on an open and non-discriminatory basis. The FERC has
        stated
        that open access policies are necessary to improve the competitive structure
        of
        the interstate natural gas pipeline industry and to create a regulatory
        framework that will put natural gas sellers into more direct contractual
        relations with natural gas buyers by, among other things, unbundling the
        sale of
        natural gas from the sale of transportation and storage services. Beginning
        in
        1992, the FERC issued Order No. 636 and a series of related orders to implement
        its open access policies. As a result of the Order No. 636 program, the
        marketing and pricing of natural gas have been significantly altered. The
        interstate pipelines’ traditional role as wholesalers of natural gas has been
        eliminated and replaced by a structure under which pipelines provide
        transportation and storage service on an open access basis to others who
        buy and
        sell natural gas. Although the FERC’ s orders do not directly regulate natural
        gas producers, they are intended to foster increased competition within all
        phases of the natural gas industry.
  In
        2000,
        the FERC issued Order No. 637 and subsequent orders, which imposed a number
        of
        additional reforms designed to enhance competition in natural gas markets.
        Among
        other things, Order No. 637 effected changes in FERC regulations relating
        to
        scheduling procedures, capacity segmentation, penalties, rights of first
        refusal
        and information reporting. Most pipelines’ tariff filings to implement the
        requirements of Order No. 637 have been accepted by the FERC and placed into
        effect.
  Gathering
        service, which occurs upstream of jurisdictional transmission services, is
        regulated by the states on shore and in state waters. Although its policy
        is
        still in flux, FERC has reclassified certain jurisdictional transmission
        facilities as non-jurisdictional gathering facilities, which may increase
        our
        costs of getting gas to point of sale locations.
  Intrastate
        natural gas transportation is also subject to regulation by state regulatory
        agencies. The basis for intrastate regulation of natural gas transportation
        and
        the degree of regulatory oversight and scrutiny given to intrastate natural
        gas
        pipeline rates and services varies from state to state. Insofar as such
        regulation within a particular state will generally affect all intrastate
        natural gas shippers within the state on a comparable basis, we believe that
        the
        regulation of similarly situated intrastate natural gas transportation in
        any
        states in which we operate and ship natural gas on an intrastate basis will
        not
        affect our operations in any way that is of material difference from those
        of
        our competitors. Like the regulation of interstate transportation rates,
        the
        regulation of intrastate transportation rates affects the marketing of natural
        gas that we produce, as well as the revenues we receive for sales of our
        natural
        gas.
  8
  *Regulation
          of production*
  The
          production of oil and natural gas is subject to regulation under a wide
          range of
          local, state and federal statutes, rules, orders and regulations. Federal,
          state
          and local statutes and regulations require permits for drilling operations,
          drilling bonds and reports concerning operations. Such regulations govern
          conservation matters, including provisions for the unitization or pooling
          of oil
          and natural gas properties, the establishment of maximum allowable rates
          of
          production from oil and natural gas wells, the regulation of well spacing,
          and
          plugging and abandonment of wells. The effect of these regulations is to
          limit
          the amount of oil and natural gas that we can produce from our wells and
          to
          limit the number of wells or the locations at which we can drill, although
          we
          can apply for exceptions to such regulations or to have reductions in well
          spacing. Moreover, each state generally imposes a production or severance
          tax
          with respect to the production and sale of oil, natural gas and natural
          gas
          liquids within its jurisdiction.
  The
          failure to comply with these rules and regulations can result in substantial
          penalties. Our competitors in the oil and natural gas industry are subject
          to
          the same regulatory requirements and restrictions that affect our operations.
  *Environmental,
          health and safety regulation*
  *General* .
          Our
          operations are subject to stringent and complex federal, state, local and
          provincial laws and regulations governing environmental protection, health
          and
          safety, including the discharge of materials into the environment. These
          laws
          and regulations may, among other things:
  ·
              require
                  the acquisition of various permits before drilling
                  commences;  ·
              restrict
                  the
                  types, quantities and concentration of various substances that
                  can be
                  released into the environment in connection with oil and natural
                  gas
                  drilling, production and transportation
                  activities;  ·
              limit
                  or prohibit drilling activities on certain lands lying within wilderness,
                  wetlands and other protected areas; and  ·
              require
                  remedial measures to mitigate pollution from former and ongoing
                  operations, such as requirements to close pits and plug abandoned
                  wells.  These
          laws
          and regulations may also restrict the rate of oil and natural gas production
          below the rate that would otherwise be possible. The regulatory burden
          on the
          oil and gas industry increases the cost of doing business in the industry
          and
          consequently affects profitability. Additionally, Congress and federal
          and state
          agencies frequently revise environmental, health and safety laws and
          regulations, and any changes that result in more stringent and costly waste
          handling, disposal and cleanup requirements for the oil and gas industry
          could
          have a significant impact on our operating costs.
  The
          following is a summary of some of the existing environmental, health and
          safety
          laws and regulations to which our business operations are subject.
  *Waste
          handling* .
          The
          Resource Conservation and Recovery Act, or RCRA, and comparable state statutes,
          regulate the generation, transportation, treatment, storage, disposal and
          cleanup of hazardous and non-hazardous wastes. Under the auspices of the
          federal
          Environmental Protection Agency, or EPA, the individual states administer
          some
          or all of the provisions of RCRA, sometimes in conjunction with their own,
          more
          stringent requirements. Drilling fluids, produced waters and most of the
          other
          wastes associated with the exploration, development and production of crude
          oil
          or natural gas are currently regulated under RCRA’s non-hazardous waste
          provisions. However, it is possible that certain oil and natural gas exploration
          and production wastes now classified as non-hazardous could be classified
          as
          hazardous wastes in the future. Any such change could result in an increase
          in
          our costs to manage and dispose of wastes, which could have a material
          adverse
          effect on our results of operations and financial position.
  9




*Comprehensive
        Environmental Response, Compensation and Liability Act* .
        The
        Comprehensive Environmental Response, Compensation and Liability Act, or
        CERCLA,
        also known as the Superfund law, imposes joint and several liability, without
        regard to fault or legality of conduct, in connection with the release of
        a
        hazardous substance into the environment. Persons potentially liable under
        CERCLA include the current or former owner or operator of the site where
        the
        release occurred and anyone who disposed or arranged for the disposal of
        a
        hazardous substance to the site where the release occurred. Under CERCLA,
        such
        persons may be subject to joint and several liability for the costs of cleaning
        up the hazardous substances that have been released into the environment,
        damages to natural resources and the costs of certain health studies. In
        addition, it is not uncommon for neighboring landowners and other third parties
        to file claims for personal injury and property damage allegedly caused by
        the
        hazardous substances released into the environment.
  We
        own and
        lease, and may in the future operate, numerous properties that have been
        used
        for oil and natural gas exploitation and production for many years. Hazardous
        substances may have been released on, at or under the properties owned, leased
        or operated by us, or on, at or under other locations, including off-site
        locations, where such substances have been taken for disposal. In addition,
        some
        of our properties have been or are operated by third parties or by previous
        owners or operators whose handling, treatment and disposal of hazardous
        substances were not under our control. These properties and the substances
        disposed or released on, at or under them may be subject to CERCLA, RCRA
        and
        analogous state laws. In certain circumstances, we could be responsible for
        the
        removal of previously disposed substances and wastes, remediate contaminated
        property or perform remedial plugging or pit closure operations to prevent
        future contamination. In addition, federal and state trustees can also seek
        substantial compensation for damages to natural resources resulting from
        spills
        or releases.
  *Water
        discharges* .
        The
        Federal Water Pollution Control Act, or the Clean Water Act, and analogous
        state
        laws, impose restrictions and strict controls with respect to the discharge
        of
        pollutants, including oil and other substances generated by our operations,
        into
        waters of the United States or state waters. Under these laws, the discharge
        of
        pollutants into regulated waters is prohibited except in accordance with
        the
        terms of a permit issued by EPA or an analogous state agency. Federal and
        state
        regulatory agencies can impose administrative, civil and criminal penalties
        for
        non-compliance with discharge permits or other requirements of the Clean
        Water
        Act and analogous state laws and regulations.
  The
        Safe
        Drinking Water Act, or SDWA, and analogous state laws impose requirements
        relating to underground injection activities. Under these laws, the EPA and
        state environmental agencies have adopted regulations relating to permitting,
        testing, monitoring, record keeping and reporting of injection well activities,
        as well as prohibitions against the migration of injected fluids into
        underground sources of drinking water.
  *Air
        emissions* .
        The
        Federal Clean Air Act and comparable state laws regulate emissions of various
        air pollutants through air emissions permitting programs and the imposition
        of
        other requirements. In addition, EPA and certain states have developed and
        continue to develop stringent regulations governing emissions of toxic air
        pollutants at specified sources. Federal and state regulatory agencies can
        impose administrative, civil and criminal penalties for non-compliance with
        air
        permits or other requirements of the Federal Clean Air Act and analogous
        state
        laws and regulations.
  10


The
      Kyoto
      Protocol to the United Nations Framework Convention on Climate Change became
      effective in February 2005. Under the Protocol, participating nations are
      required to implement programs to reduce emissions of certain gases, generally
      referred to as greenhouse gases, that are suspected of contributing to global
      warming. The United States is not currently a participant in the Protocol,
      and
      Congress has not acted upon recent proposed legislation directed at reducing
      greenhouse gas emissions. However, there has been support in various regions
      of
      the country for legislation that requires reductions in greenhouse gas
      emissions, and some states have already adopted legislation addressing
      greenhouse gas emissions from various sources, primarily power plants. The
      oil
      and natural gas industry is a direct source of certain greenhouse gas emissions,
      namely carbon dioxide and methane, and future restrictions on such emissions
      could impact our future operations.




*National
      Environmental Policy Act* .
      Oil and
      natural gas exploration and production activities on federal lands are subject
      to the National Environmental Policy Act, or NEPA. NEPA requires federal
      agencies, including the Department of Interior, to evaluate major agency actions
      that have the potential to significantly impact the environment. In the course
      of such evaluations, an agency will prepare an Environmental Assessment that
      assesses the potential direct, indirect and cumulative impacts of a proposed
      project and, if necessary, will prepare a more detailed Environmental Impact
      Statement that may be made available for public review and comment. All
      exploration and production activities on federal lands require governmental
      permits that are subject to the requirements of NEPA. This process has the
      potential to delay the development of oil and natural gas projects on federal
      lands.




*Health,
      safety and disclosure regulation* .
      We are
      subject to the requirements of the federal Occupational Safety and Health Act
      (OSHA) and comparable state statutes. The OSHA hazard communication standard,
      the Emergency Planning and Community Right to Know Act and similar state
      statutes require that we organize and/or disclose information about hazardous
      materials stored, used or produced in our operations.




We
      expect
      to incur capital and other expenditures related to environmental compliance.
      Although we believe that our compliance with existing requirements will not
      have
      a material adverse impact on our financial condition and results of operations,
      we cannot assure you that the passage of more stringent laws or regulations
      in
      the future will not have an negative impact on our financial position or results
      of operation.




11




**RISK
        FACTORS**
  The
        following factors affect our business and the industry in which it operates.
        The
        risks and uncertainties described below are not the only ones we face.
        Additional risks and uncertainties not presently known or that we currently
        consider immaterial may also have an adverse effect on our business. If any
        of
        the matters discussed in the following risk factors were to occur, our business,
        financial condition, results of operations, cash flows, or prospects could
        be
        materially adversely affected.
  **Risks
        Related to Our Business**
  *We
        have a limited operating history and limited revenues* *.*
  Our
        oil
        and gas business commenced in August of 2005 and, accordingly, is subject
        to
        substantial risks inherent in the commencement of a new business enterprise.
        Consequently we have limited assets and operations. To date, we have generated
        limited revenue from our operations. Additionally, we have no business history
        or operating history to successfully identify, develop and operate oil and
        gas
        leases, generate revenues, or operate profitably that investors can analyze
        to
        aid them in making an informed judgment as to the merits of an investment
        in us.
        Any investment in us should be considered a high risk investment because
        the
        investor will be placing funds at risk in a company with unforeseen costs,
        expenses, competition, and other problems to which new ventures are often
        subject. Investors should not purchase our stock unless they can afford to
        lose
        their entire investment.
  *We
        will need additional capital to execute our business plan, and our ability
        to
        obtain the necessary funding is uncertain.*
  We
        expect
        that we will require additional capital to implement our business plan
        successfully. The timing and degree of any future capital requirements will
        depend on many factors, including:
  ·
            the
                accuracy of the assumptions underlying our estimates for our capital
                needs
                in 2006;  ·
            the
                number of prospects we identify;  ·
            the
                terms on which we can obtain rights to those prospects;  ·
            the
                cost of exploring and developing the prospects;
                and  ·
            our
                success rate in developing economically successful prospects.  We
        have no
        immediate internal sources of funds, and we do not have any committed sources
        of
        capital. Additional financing through partnering, public or private equity
        financings, lease transactions or other financing sources may not be available
        on acceptable terms, or at all. Additional equity financings could result
        in
        significant dilution to our stockholders. If sufficient capital is not
        available, we may be required to delay or reduce the scope of our exploration,
        development and/or production activities which could have a material adverse
        effect on our business and financial results.
  *There
        is a high demand for leases and drilling rigs in the areas of our operation
        and
        we may not be able to obtain leases or access to rigs at rates that permit
        us to
        be profitable or at all.*
  Increases
        in oil and natural gas prices have resulted in a significant increase in
        demand
        for both oil and gas leases and drilling rigs. As a result, the cost of both
        leases and rigs has increased substantially. In particular the demand for
        rigs
        has made it difficult in some instances to obtain such services without
        significant advance schedulings. If we cannot obtain leases to oil and gas
        properties and rigs when needed and at reasonable rates, or at all, we may
        not
        be able to complete exploration and development and commence production in
        a
        timely manner. As a result, our associated costs could be substantially higher,
        we may lose our rights to some leases and our business and financial results
        may
        be adversely affected.
  12




*We
        will face intense competition in our industry, and we may not have the capacity
        to compete with larger oil and gas companies also investing in oil and gas
        prospects.*
  Identifying
        and realizing attractive investments in the energy sector are highly
        competitive, involve a high degree of uncertainty and often require significant
        capital. There are many companies with more resources in the oil and gas
        industry, competing to identify and acquire the most desirable oil and gas
        prospects. If we cannot acquire oil and gas prospects, at a cost which allows
        us
        to earn a profit, due to such competition, our business and financial results
        will be adversely affected.
  *The
        selection of prospects, ownership and operation of oil and gas wells, and
        the
        ownership of non-operating oil and gas properties are highly speculative
        investments.*
  Prospects
        may not produce oil or natural gas, or drilling or development on a prospect
        may
        not take place at all. Operations on the interests we acquire may be
        unprofitable, not only because a well may be non-productive “dry hole,” but also
        because the producing life and productivity of wells are unpredictable. Wells
        may not produce oil and/or gas in sufficient quantities or quality to recoup
        the
        investment, let alone return a profit. Further, weather-related and other
        delays
        may affect the ability to drill for hydrocarbons, produce hydrocarbons, or
        to
        transport hydrocarbons. Development and transportation may be made impracticable
        or impossible by weather, ground conditions, inability to obtain appropriate
        easements, ground water, or other conditions or delays. If any of our prospects
        or wells fails to produce at anticipated levels or if their completion or
        operation is delayed or limited, our business and financial results may be
        adversely affected.
  *The
        experts on whom we rely to analyze potential acquisitions may not make accurate
        conclusions about prospects.*
  We
        will
        rely on our management and personnel, experts, our partners and other third
        parties to analyze potential prospects in which we invest. If the analysis
        is
        inaccurate, the prospects may not result in productive wells and our business
        and financial results will be adversely affected.
  *Third
        parties may operate some of the prospects in which we invest* *and
        thus we may be unable to control their operations in a manner as we believe
        will
        yield the best results.*
  Third
        parties may act as the operator of some of our prospects, and in most cases,
        we
        will acquire less than a 100% ownership position in our oil and gas properties.
        Accordingly, third parties may manage and control the drilling, completion
        and
        production operations on the properties. As a result, a prospect may not
        be
        drilled or operated in the manner we desire. Additionally, we could be held
        liable for the joint activities of other working interest owners of our
        investment properties, including nonpayment of costs and liabilities arising
        from the other working interest owners’ actions. Moreover, if other working
        interest owners do not, or cannot, pay their share of drilling and completion
        costs for a prospect, that prospect might not be fully developed.
  *Leasehold
        interests in which we invest may revert before the interest is profitable.*
  Many
        leases and mineral interests contain provisions that allow ownership to revert
        back to the original owners after a certain period of time and under certain
        circumstances. Because we may not have control of the majority of the interest
        in a particular lease block or because of a lack of funds or availability
        of
        equipment, we will have little or no control over the development or drilling
        that takes place, and leases may therefore expire before any commercialization
        of the lease takes place.
  13




*Drilling
        wells is speculative, unpredictable, and* *we
        will lose our entire investment in wells that do not produce in commercial
        quantities.*
  We
        will be
        required to pay our pro rata share of drilling expenses on a prospect where
        we
        own a working interest. Drilling involves high risk, and the probability
        is high
        that no oil and gas will be discovered in commercial quantities. In most
        instances for any given prospect, a dry hole will result in a total loss
        of any
        amounts invested in the drilling of the prospect, including the amount invested
        in the mineral lease.
  *Production
        and marketing conditions may cause production delays.*
  Some
        of
        the prospects we acquire may be remote from transportation facilities. Drilling
        wells in areas remote from transportation facilities may delay production
        from
        those wells until sufficient reserves are established to justify construction
        of
        necessary pipelines and production facilities. The inability to complete
        wells
        in a timely fashion on a prospect may also result in production delays. In
        addition, marketing demands (which have historically been seasonal) may reduce
        or delay production from wells. The wells on the prospects in which we invest
        may have access to only one potential market. Local conditions, including
        closing businesses, conservation, shifting population, pipeline maximum
        operating pressure constraints, local supply levels and delivery problems
        could
        halt or reduce sales from the wells in which we invest. The occurrence of
        any of
        these adverse conditions may adversely affect our ability to produce and/or
        market oil and gas from the affected wells.
  *Oil
        and gas markets have historically been unstable* *and
        their fluctuation may adversely affect the value and marketability of our
        investments.*
  Global
        economic conditions, political conditions and other factors create an unstable
        market for the price of oil and natural gas. Oil and gas prices may fluctuate
        significantly in response to supply, demand, political, economic, weather
        and
        other factors. Such price fluctuation may affect the value of cash flow from
        producing properties and the value and marketability of our investments.
  *We
        may
        not be able to be both cost-efficient and geographically diversified.*
  While
        we
        will diversify our investments among different properties, prospects, and,
        possibly, geographic regions, the cost to acquire interests in and develop
        oil
        and gas prospects varies greatly in different geographic locations.
        Consequently, if we make investments in a limited geographic area, it may
        lower
        our cost per investment but would limit the diversity of our portfolio.
        Conversely, if we make investments in a number of different areas, our diversity
        would increase but at a greater cost to us.
  *The
        profitability of any investment will be subject to the risk of loss due to
        damage to people or property arising from the hazards of drilling and operating
        prospects and wells.*
  We
        intend
        to invest in leaseholds, titles, mineral interests, working interests, royalty
        interests and other energy exploration related assets. Numerous potential
        hazards accompany the development of these interests, including unexpected
        or
        unusual ground formations, pressures, blowouts, and pollution. Any of these
        hazards could injure or kill people or damage property, including causing
        surface damages, equipment damage, reservoir damage and reserve loss. If
        any of
        these potential hazards occur, the associated damages could exceed the value
        of
        our assets and any insurance coverage.
  14




*Our
        activities will be subject to substantial environmental laws and regulations
        and
        the cost of complying with those laws and regulations* *may
        be significant.*
  We
        will be
        subject to federal, state and local environmental laws, regulations and
        ordinances that may impose liability for the costs of cleaning up, and damages
        resulting from, past spills, disposals and other releases of hazardous
        substances. In particular, under applicable environmental laws, we may be
        responsible for certain costs associated with investigating and remediating
        environmental conditions and may be subject to associated liability, including
        lawsuits brought by private litigants, relating to prospects in which we
        own
        working interests. These obligations could arise regardless of whether the
        environmental conditions were created by us, a partner or by a prior owner
        or
        tenant. If we incur any such costs, our business and financial results may
        be
        adversely affected.
  **Risks
        Related to Our Stock**
  *There
        is currently a limited market for our common stock, and any trading market
        that
        develops in the common stock may be highly illiquid and may not reflect the
        underlying value* *of
        our
        net assets or business prospects.*
  There
        is
        currently a limited market for our common stock. Accordingly, purchasers
        of the
        shares offered hereby will be required to bear the economic consequences
        of
        holding such securities for an indefinite period of time. An active trading
        market for our common stock may not ever develop. Any trading market that
        does
        develop may be volatile, and significant competition to sell our common stock
        in
        any such trading market may exist, which could negatively affect the price
        of
        our common stock. As a result, the value of our common stock may decrease.
        Additionally, if a trading market does develop, such market may be highly
        illiquid, and our common stock may trade at a price that does not accurately
        reflect the underlying value of our net assets or business prospects. Investors
        are cautioned not to rely on the possibility that an active trading market
        may
        develop or on the prices at which our stock may trade in any market that
        does
        develop in making an investment decision.
  *If
        our
        share price is volatile, we may be the target of securities litigation, which
        is
        costly and time-consuming to defend.*
  In
        the
        past, following periods of market volatility in the price of a company’s
        securities, security holders have often instituted class action litigation.
        If
        the market value of our common stock experiences adverse fluctuations and
        we
        become involved in this type of litigation, regardless of the outcome, we
        could
        incur substantial legal costs and our management’s attention could be diverted
        from the operation of our business, causing our business to suffer.
  *Our* *“blank
        check” preferred stock could be issued to prevent a business combination not
        desired by management or our current majority shareholders.*
  Our
        articles of incorporation authorize the issuance of “blank check” preferred
        stock with such designations, rights and preferences as may be determined
        by our
        board of directors without shareholder approval. Our preferred stock could
        be
        utilized as a method of discouraging, delaying, or preventing a change in
        our
        control and as a method of preventing shareholders from receiving a premium
        for
        their shares in connection with a change of control.
  15


*Future
      sales of our common stock in the public market could lower our stock
      price.*




We
      may
      sell additional shares of common stock in subsequent public or private
      offerings. We may also issue additional shares of common stock to finance future
      acquisitions. Such sales or issuances may be at prices less than the public
      trading price. We cannot predict the size of future issuances of our common
      stock or the effect, if any, that future issuances and sales of shares of our
      common stock will have on the market price of our common stock. Sales of
      substantial amounts of our common stock (including shares issued in connection
      with an acquisition), or the perception that such sales could occur, may
      adversely affect prevailing market prices for our common stock.




*We
      presently do not intend to pay cash dividends on our common
      stock.*




We
      currently anticipate that no cash dividends will be paid on the common stock
      in
      the foreseeable future. While our dividend policy will be based on the operating
      results and capital needs of the business, it is anticipated that all earnings,
      if any, will be retained to finance the future expansion of the our business.
      Therefore, prospective investors who anticipate the need for immediate income
      by
      way of cash dividends from their investment should not purchase our shares
      of
      common stock.






**ITEM
      2. DESCRIPTION OF PROPERTY.**




Calibre
      Energy, Inc. leases 2,360 square feet of office space in Washington, D.C. that
      serves as its corporate office. The lease is at market rates and expires in
      October 2008. We also have an
      operations office of 4000sq feet at Ashford VI, 1155 Dairy Ashford South, Fourth
      Floor, Houston, TX 77079.




**ITEM
      3** **:
      LEGAL PROCEEDINGS.**




We
      are not
      currently a party to any legal proceedings.




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




No
      meetings were held in 2005. In December of 2005, a majority of our stockholders
      executed a written consent approving the Agreement and Plan of Reorganization
      pursuant to which we acquired Calibre Energy, Inc., a Delaware corporation
      and
      approving a stock option plan and the change of our name to Calibre Energy,
      Inc.




16




**PART
        II**
  **ITEM
        5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS
        ISSUER PURCHASES OF EQUITY SECURITIES.**
  Shares
        of
        our common stock are traded on the National Association of Securities Dealers
        Inc. Over the Counter Bulletin Board under the symbol “CBRE.OB.” Our common
        stock trades on a limited, sporadic and volatile basis. As of March 31, 2006,
        the last reported sales price of our common stock on the OTC Bulletin Board
        was
        $2.77. As of March 31, 2006, there were 53,980,806 shares of our common stock
        outstanding that were held of record by 182 persons.
  The
        following table sets forth, for the periods indicated, the range of high
        and low
        bid information for our common stock. These quotations reflect inter-dealer
        prices, without retail mark-up, mark-down or commission, and may not represent
        actual transactions.
  **Price
                  Ranges****High**
              
              **Low****Fiscal
                  Year Ended December 31, 2003**First
                  Quarter
              
              
              0
              
              
              0Second
                  Quarter
              
              
              0
              
              
              0Third
                  Quarter
              
              
              0
              
              
              0Fourth
                  Quarter
              
              
              0
              
              
              0**Fiscal
                  Year Ended December 31, 2004**First
                  Quarter
              
              
              0
              
              
              0Second
                  Quarter
              
              
              0
              
              
              0Third
                  Quarter
              
              
              0
              
              
              0Fourth
                  Quarter
              
              
              0
              
              
              0**Fiscal
                  Year Ended December 31, 2005**First
                  Quarter
              
              
              0
              
              
              0Second
                  Quarter
              
              
              0
              
              
              0Third
                  Quarter
              
              
              0
              
              
              0Fourth
                  Quarter
              
              
              2.00
              
              
              1.42**Fiscal
                  Year Ended December 31, 2006**First
                  Quarter
              
              
              3.00
              
              
              1.55




17




**ITEM
        6. MANAGEMENT’S DISCUSSION AND ANALYSIS AND PLAN OF
        OPERATIONS**
  **Overview**
  We
        are
        engaged in oil and natural gas exploration and exploitation activities in
        the
        Barnett Shale development in Ft. Worth Basin located northern Texas, the
        Bakkan
        Shale development in the Williston Basin located in Montana and North Dakota,
        and the Fayetteville Shale development in the Arkoma Basin located in Arkansas.
        We have a limited operating history as our predecessor company for financial
        reporting purposes was formed on August 17, 2005. We are engaged in the
        acquisition, exploitation and development of producing and non-producing
        oil and
        gas-shale (source rock) properties in selected producing basins in North
        America. Our oil and gas business was commenced in August 2005. Our current
        activities are focused on the exploration and production of natural gas in
        the
        Barnett Shale development in Northern Texas and the Fayetteville Shale
        development in Arkansas.
  Our
        goal
        is to expand and develop our exploration and production business and our
        reserves by initially emphasizing the identification and development of shale
        gas opportunities in the Barnett Shale and the Fayetteville Shale. We believe
        both the Mississippian development of the Barnett Shale in the Ft. Worth
        Basin
        and the Fayetteville Shale development in the Arkoma Basin provides the greatest
        near term economic value to us.
  *Acquisition,
        exploration and development.*
  We
        follow
        the full cost method of accounting for oil and gas properties. Accordingly,
        all
        costs associated with acquisition, exploration, and development of oil and
        gas
        reserves, including directly related overhead costs and related asset retirement
        costs, are capitalized.
  *General
        and administrative.*
  General
        and administrative expenses consist primarily of salaries and benefits, office
        expense, professional services fees, and other corporate overhead costs.
        We
        anticipate increases in general and administrative expenses as we continue
        to
        increase our staff to expand our operations.
  **Results
        of Operations**
  We
        commenced our oil and gas operations in August 2005. Prior to that time we
        did
        not have any significant activities or assets. Consequently, we are not able
        to
        compare results of operations for the period ended December 31, 2005 to any
        earlier period.
  *Oil
        and Gas Revenues.*
  For
        the
        period from inception (August 17, 2005) to December 31, 2005 our oil and
        gas net
        sales were $20,778, Oil and gas revenues are derived from our proportionate
        share of working interests in oil and gas properties.
  18




*General
        and Administrative Expenses.*
  For the
        period
        from inception (August 17, 2005) to December 31, 2005 general and administrative
        expenses were $1,893,602. A total of $273,585 was for actual costs associated
        with our general and administrative expense ,
        $115,517
        was for salary and wages for employees, and
        $1,504,500 since inception was a non-cash compensation expense associated
        with
        stock and options granted to our founders and management who we believe are
        key
        to the development of our business.
  *Net
        loss.*
  For
        the
        period from inception (August 17, 2005) to December 31, 2005, we had a net
        loss
        for the year ended December 31, 2005, of $1,901,651 or ($0.05) per share
        (basic
        and diluted).
  **Liquidity
        and Capital Resources**
  Since
        our
        inception, our primary sources of liquidity have been generated by the sale
        of
        equity securities (including the issuance of securities in exchange for goods
        and services to third parties and to pay costs of employees).
  On
        October
        31, 2005, we raised an aggregate of $8,000,000 ($7,243,056 net of offering
        costs) through the sale of 20,000,000 shares of common stock and warrants
        to
        purchase 10,000,000 shares of common stock at an exercise price of $0.75.
        The
        terms of the warrants are described in this report under “Description of
        Securities.” As of March 31, 2006, 400,000 warrants to purchase our common stock
        have been exercised. As of December 31, 2005, we had cash of $2,105,749.
        In
        March and April 2006, we raised an aggregate of $11,560,000 ($10,708,000
        net of
        offering costs) through the sale of 5,780,000 shares of common stock and
        warrants to purchase 5,780,000 shares of common stock at an exercise price
        of
        $2.75. The terms of the Warrants are described in this report under “Description
        of Securities.”
  For
        the
        period from August 17, 2005 to December 31, 2005, cash provided by operating
        activities was 566,352 which consists of our net loss of $1,901,651, the
        adjustment to for the non-cash expense of stock options granted for services
        and
        an increase in accounts payable of $1,045,482.
  **CASH
        FLOW FROM INVESTING ACTIVITIES**
  For
        the
        period from August 17, 2005 to December 31, 2005, net cash used in investing
        activities was ($5,730,659), driven primarily by our investment in oil and
        gas
        properties in the Ft. Worth Basin.
  **CASH
        FLOW FROM FINANCING ACTIVITIES**
  For
        the
        period from August 17, 2005 to December 31, 2005, net cash provided by financing
        activities was $7,270,056, which was attributed to our sale of common stock
        and
        purchase warrants. On October 31, 2005, we raised an aggregate of $8,000,000
        ($7,243,056 net of offering costs) through the sale of 20,000,000 shares
        of
        common stock and warrants to purchase 10,000,000 shares of common stock at
        an
        exercise price of $0.75.
  *Future
        capital expenditures and commitments*
  **Future
        capital expenditures and commitments**
  Expenditures
        for exploration and development of oil and natural gas properties and lands
        costs related to the acquisition of non-producing leasehold are the primary
        use
        of our capital resources. Our budgeted capital and exploration and development
        expenditures are expected to be approximately $19.5 million in 2006 as follows
        (in millions):
  19




**Amount**General
                  & Administrative and Capital Costs
              
              $
              3.0Exploration
                  & development drilling
              
              
              9.5Land
                  costs
              
              
              6.5Seismic
              
              
              .5**Total**
              
              $
              19.5




As
        of June
        15, 2006, we believe that our remaining cash balance and revenues from existing
        projects will be sufficient to cover our current liabilities, obligations
        and
        contractual commitments for 2006 but will not be sufficient to fund all budgeted
        development and drilling of our existing projects, or to fund the acquisition
        of
        all budgeted land costs, as discussed above in our 2006 capital budget. We
        will
        need to raise additional capital through the sale of equity and/or debt
        securities to fully meet our 2006 capital budget. Failure to raise necessary
        capital or generate sufficient cash flow from operations in 2006 will cause
        us
        to curtail or eliminate certain development and drilling of existing and
        planned
        projects as well as a curtail the acquisition of land costs as highlighted
        in
        our 2006 capital budget.
 
 As
        a
        result, the actual amount and timing of our capital expenditures may differ
        materially from our estimates. Some of the other factors which may keep us
        from
        fulfilling our 2006 capital budget are among other things, actual drilling
        results, cost overruns, the availability of drilling rigs and other services
        and
        equipment, regulatory, technological and competitive developments, and all
        such
        other assumptions referenced in the in this report.
  **Hedging**
  We
        did not
        hedge any of our oil or natural gas production during 2005 and have not entered
        into any such hedges from January 1, 2006 through the date of this
        filing.
  **Contractual
        Commitments**
  **Total**
                
                **Payments
                    Due By Period****Less
                    Than 1 Year**
                
                **1-3
                    Years**
                
                **3-5
                    Years**
                
                **More
                    than 5 Years****Contractual
                    Obligations****Operating
                    Lease****Obligations**
                
                
                634,202
                
                
                143,097
                
                
                79,033
                
                
                -**Drilling
                    Well in Progress**
                
                
                1,910,667
                
                
                1,910.667**Total**
                
                $
                2,544,869
                
                $
                2,053,764
                
                $
                79,033
                
                
                -




All
        of our
        drilling well obligations are associated with the Reichmann Petroleum
        Project.
  As
        of
        December 31, 2005, we had no long-term debt obligations, capital lease
        obligations, purchase obligations or other long-term liabilities reflected
        on
        the balance sheet.
  20




**Off-Balance
        Sheet Arrangements**
  As
        of
        December 31, 2005, we had no off-balance sheet arrangements.
  **Related
        Party Transactions**
  For
        information on these transactions, please read “Certain Relationships and
        Related Party Transactions” in this report.
  **Critical
        Accounting Policies**
  Our
        discussion and analysis of our financial condition and results of operations
        is
        based on our 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 us to make estimates and
        judgments that affect the reported amounts of assets, liabilities and expenses.
        We base our estimates on historical experience and on various other assumptions
        that we believe to be reasonable under the circumstances, the results of
        which
        form the basis for making judgments about the carrying values of assets and
        liabilities that are not readily apparent from other sources. Actual results
        may
        differ from these estimates under different assumptions or conditions. We
        believe the following critical accounting policies affect our most significant
        judgments and estimates used in preparation of our consolidated financial
        statements.
  *Reverse
        Acquisition* .
        We
        treated the merger of Calibre Energy, Inc.,a Delaware corporation, into a
        subsidiary of Hardwood Doors and Milling Specialties, Inc. as a reverse
        acquisition. Pursuant to the guidance in Appendix B of SEC Accounting Disclosure
        Rules and Practices Official Text, the “merger of a private operating company
        into a non-operating public shell corporation with nominal net assets typically
        results in the owners and management of the private company having actual
        or
        effective operating control of the combined company after the transaction,
        with
        the shareholders of the former public shell continuing only as passive
        investors. These transactions are considered by the staff to be capital
        transactions in substance, rather than business combinations. That is, the
        transaction is equivalent to the issuance of stock by the private company
        for
        the net monetary assets of the shell corporation, accompanied by a
        recapitalization.” Accordingly, the reverse acquisition has been accounted for
        as a recapitalization. For accounting purposes, the original Calibre Energy,
        Inc. is considered the acquirer in the reverse acquisition. The historical
        financial statements are those of the original Calibre Energy, Inc. Earnings
        per
        share for periods prior to the merger are restated to reflect the number
        of
        equivalent shares received by the acquiring company.
  *Revenue
        recognition* .
        We
        derive substantially all of our revenues from the sale of oil and natural
        gas.
        Oil and gas revenues are recorded in the month the product is delivered to
        the
        purchaser and title transfers. We generally receive payment from one to three
        months after the sale has occurred. Each month we estimate the volumes sold
        and
        the price at which they were sold to record revenue. Variances between estimated
        revenue and actual amounts are recorded in the month payment is
        received.
  *Oil
        and Gas Properties* .
        We
        follow the full cost method of accounting for oil and gas properties.
        Accordingly, all costs associated with acquisition, exploration, and development
        of oil and gas reserves, including directly related overhead costs and related
        asset retirement costs, are capitalized.
  All
        capitalized costs of oil and gas properties, including the estimated future
        costs to develop proved reserves, are amortized on the unit-of-production
        method
        using estimates of proved reserves. Investments in unproved properties and
        major
        development projects are not amortized until proved reserves associated with
        the
        projects can be determined or until impairment occurs. If the results of
        an
        assessment indicate that the properties are impaired, the amount of the
        impairment is added to the capitalized costs to be amortized.
  21




In
        addition, the capitalized costs are subject to a “ceiling test,” which basically
        limits such costs to the aggregate of the “estimated present value,” discounted
        at a 10-percent interest rate of future net revenues from proved reserves,
        based
        on current economic and operating conditions, plus the lower of cost or fair
        market value of unproved properties.
  Sales
        of
        proved and unproved properties are accounted for as adjustments of capitalized
        costs with no gain or loss recognized, unless such adjustments would
        significantly alter the relationship between capitalized costs and proved
        reserves of oil and gas, in which case the gain or loss is recognized in
        income.
  Abandonments
        of properties are accounted for as adjustments of capitalized costs with
        no loss
        recognized.
  *Oil
        and Gas Properties Not Subject to Amortization* .
        We are
        currently participating in oil and gas exploration and development activities.
        As of December 31, 2005, substantially all of our activities are in a
        preliminary exploration and drilling stage. Upon completion of development
        of
        each property, we make an estimate of proved producing reserves associated
        with
        such property. Until such time, property, development and exploratory costs
        are
        excluded in computing amortization.
  Calibre
        is
        currently participating in oil and gas exploration and development activities.
        At December 31, 2005, a determination could not be made about the extent
        of oil
        reserves that should be classified as proved reserves. Consequently, all
        the
        property, development and exploratory costs have been excluded in computing
        amortization. Calibre will begin to amortize these costs when these projects
        are
        evaluated, which is currently estimated to be at the end of 2006
  Depreciation,
        depletion and amortization, or DD&A, of capitalized drilling and development
        costs of oil and natural gas properties are generally computed using the
        unit of
        production method on an individual property or unit basis based on total
        estimated proved developed oil and natural gas reserves. Amortization of
        producing leasehold is based on the unit-of-production method using total
        estimated proved reserves. In arriving at rates under the unit-of-production
        method, the quantities of recoverable oil and natural gas are established
        based
        on estimates made by our geologists and engineers and independent engineers.
        Service properties, equipment and other assets are depreciated using the
        straight-line method over estimated useful lives of 5 to 40 years. Upon sale
        or
        retirement of depreciable or depletable property, the cost and related
        accumulated DD&A are eliminated from the accounts and the resulting gain or
        loss is recognized.
  Non-producing
        properties consist of undeveloped leasehold costs and costs associated with
        the
        purchase of certain proved undeveloped reserves. Undeveloped leasehold cost
        is
        expensed over the life of the lease or transferred to the associated producing
        properties. Individually significant non-producing properties are periodically
        assessed for impairment of value and a loss is recognized.
  *Oil
        and natural gas reserves and standardized measure of future cash
        flows* .
        Our
        independent engineers and technical staff prepare the estimates of our oil
        and
        natural gas reserves and associated future net cash flows. Current accounting
        guidance allows only proved oil and natural gas reserves to be included in
        our
        financial statement disclosures. The SEC has defined proved reserves as the
        estimated quantities of crude oil and natural gas which geological and
        engineering data demonstrate with reasonable certainty to be recoverable
        in
        future years from known reservoirs under existing economic and operating
        conditions. Even though our independent engineers and technical staff are
        knowledgeable and follow authoritative guidelines for estimating reserves,
        they
        must make a number of subjective assumptions based on professional judgments
        in
        developing the reserve estimates. Reserve estimates are updated at least
        annually and consider recent production levels and other technical information
        about each field.
  22




Periodic
        revisions to the estimated reserves and future cash flows may be necessary
        as a
        result of a number of factors, including reservoir performance, new drilling,
        oil and natural gas prices and cost changes, technological advances, new
        geological or geophysical data, or other economic factors. We cannot predict
        the
        amounts or timing of future reserve revisions. If such revisions are
        significant, they could significantly alter future DD&A and result in
        impairment of assets that may be material.
  *Impairment
        of Long-Lived Assets* .
        We
        review long-lived assets and certain identifiable assets for impairment whenever
        events or changes in circumstances indicate that the carrying amount of an
        asset
        may not be recoverable. If the sum of the expected future undiscounted cash
        flows is less than the carrying amount of the asset, further impairment analysis
        is performed. An impairment loss is measured as the amount by which the carrying
        amount exceeds the fair value of assets.
  *Employee
        Stock Plan* .
        In
        December 2004, the FASB issued SFAS No.123R, “Accounting for Stock-Based
        Compensation” (“SFAS No. 123R”). SFAS No.123R establishes standards for the
        accounting for transactions in which an entity exchanges its equity instruments
        for goods or services. This Statement focuses primarily on accounting for
        transactions in which an entity obtains employee services in share-based
        payment
        transactions. SFAS No.123R requires that the fair value of such equity
        instruments be recognized as expense in the historical financial statements
        as
        services are performed. Prior to SFAS No.123R, only certain pro forma
        disclosures of fair value were required. SFAS No.123R shall be effective
        for
        small business issuers as of the beginning of the first interim or annual
        reporting period that begins after December 15, 2005. Calibre will adopt
        SFAS
        No. 123R as of January 1, 2006.
  We
        have a
        stock-based compensation plan, which is described more fully in Note 6. As
        permitted under generally accepted accounting principles, we account for
        the
        plan under the recognition and measurement principles of APB Opinion No.
        25,
        Accounting for Stock Issued to Employees, and related interpretations.
        Accordingly, stock-based employee compensation cost has been recognized,
        as all
        options granted under the plan had an exercise price less than the market
        value
        of the underlying common stock on the date of grant, see note 5 for more
        information. There would be minimal effect on the net loss had compensation
        cost
        for the stock-based compensation plan been determined based on the grant
        date
        fair values of awards (the method described in FASB Statement No. 123,
        Accounting for Stock-Based Compensation).
  *Consolidation
        of Variable Interest Entities* .
        In
        January 2003, the FASB issued Interpretation No. 46(R) (“FIN 46”), Consolidation
        of Variable Interest Entities. FIN 46 addresses consolidation by business
        enterprises of variable interest entities (formerly special purpose entities).
        In general, a variable interest entity is a corporation, partnership, trust
        or
        any other legal structure used for business purposes that either (a) does
        not
        have equity investors with voting rights nor (b) has equity investors that
        do
        not provide sufficient financial resources for the entity to support its
        activities. The objective of FIN 46 is not to restrict the use of variable
        interest entities, but to improve financial reporting by companies involved
        with
        variable interest entities. FIN 46 requires a variable interest entity to
        be
        consolidated by a company if that company is subject to a majority of the
        risk
        of loss from the variable interest entity’s activities or entitled to receive a
        majority of the entity’s residual returns or both. The consolidation
        requirements are effective for the first period that ends after March 15,
        2004;
        we elected to adopt the requirements effective for the reporting period ending
        December 31, 2005. The adoption of FIN 46 had no effect on our consolidated
        financial statements.
  23




**ITEM
        7. FINANCIAL STATEMENTS**
  **REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
  To
        the
        Board of Directors
 Calibre
        Energy, Inc.
 Washington,
        DC 20006
  We
        have
        audited the accompanying consolidated balance sheet of Calibre Energy, Inc.
        as
        of December 31, 2005 and the related consolidated statements of operations,
        stockholders’ equity, and cash flows for the period August 17, 2005 (inception)
        to December 31, 2005. These consolidated financial statements are the
        responsibility of the Company’s management. Our responsibility is to express an
        opinion on these consolidated financial statements based on our
        audit.
  We
        conducted our audit in accordance with the standards of the Public Company
        Accounting Oversight Board (United States). Those standards require that
        we plan
        and perform an audit to obtain reasonable assurance about whether the financial
        statements are free of material misstatement. An audit also includes examining,
        on a test basis, evidence supporting the amounts and disclosures in the
        financial statements, assessing the accounting principles used and significant
        estimates made by management, as well as evaluating the overall financial
        statement presentation. We believe that our audit provides 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 Calibre Energy, Inc. as of December
        31, 2005 and the results of operations and cash flows for the period from
        August
        17, 2005 (inception) to December 31, 2005, in conformity with accounting
        principles generally accepted in the United States of America.
  The
        accompanying financial statements have been prepared assuming that Calibre
        Energy, Inc. will continue as a going concern. As discussed in Note 3 to
        the
        financial statements, Calibre Energy, Inc. was formed on August 17, 2005
        and has
        generated operating losses since inception, which raise substantial doubt
        about
        its ability to continue as a going concern. Management’s plans in regard to
        these matters are described in Note 3. The financial statements do not include
        any adjustments that might result from the outcome of this uncertainty.
  Malone
        & Bailey, P.C.
  Houston,
        Texas
  May
        2,
        2006
  24




**Calibre
                  Energy, Inc.****Balance
                  Sheet****December
                  31, 2005**
  **Assets****Current
                    Assets**Cash
                
                $
                2,105,749Accounts
                    receivable
                
                
                33,960Note
                    receivable - related party
                
                
                300,000Other
                    current assets
                
                
                104,100Total
                    current assets
                
                
                2,543,809**Noncurrent
                    Assets**Oil
                    and gas properties, using full cost method
                
                
                5,308,881Properties
                    subject to amortization
                
                
                830,646Properties
                    not subject to amortization
                
                
                4,478,235Furniture
                    and office equipment
                
                
                121,778Less:
                    Accumulated depreciation, depletion, amortization and
                    impairment
                
                
                (35,599
                )Net
                    property, furniture and office equipment
                
                
                5,395,060**Total
                    assets**
                
                **$**
                **7,938,869****Liabilities
                    and Shareholders’ Equity****Current
                    Liabilities**Accounts
                    payable - trade
                
                
                946,852Accounts
                    payable - employees
                
                
                98,630Accrued
                    expenses
                
                
                20,482Total
                    liabilities
                
                
                1,065,964**Shareholders’
                    Equity**Preferred
                    stock; $.001 par value; 10,000,000 authorized; none issued
                
                
                -Common
                    stock; $.001 par value; 70,000,000 authorized; 47,000,000 issued
                    and
                    outstanding
                
                
                47,000Additional
                    paid-in capital
                
                
                8,727,556Accumulated
                    deficit
                
                
                (1,901,651
                )Total
                    shareholders’ equity
                
                
                6,872,905**Total
                    liabilities and shareholders’ equity**
                
                **$**
                **7,938,869**See
                    accompanying notes to financial statements.




25




**Calibre
                  Energy, Inc.****Statement
                  of Operations****For
                  the Period from Inception (August 17, 2005) to December 31,
                  2005**
  Oil
                  and Gas Revenue
              
              $
              20,778Operating
                  expensesLease
                  operating expense
              
              
              14,684Depletion
                  expense
              
              
              35,599Compensation
                  expense(including salaries, benefits and a non-cash option
                  expense)
              
              
              1,620,017General
                  and administrative (excluding compensation expense)
              
              
              273,585Total
                  operating expense
              
              
              1,943,885Loss
                  from operations
              
              
              1,923,107Interest
                  income
              
              
              21,502Interest
                  expense
              
              
              (46
              )21,456Net
                  loss
              
              $
              1,901,651Earnings
                  per share:Basic
                  and diluted
              
              $
              (0.05
              )See
                  accompanying notes to financial statements.




26




**Calibre
                  Energy, Inc.****Statement
                  of Shareholders’ Equity****For
                  the Period from Inception (August 17, 2005) to December 31,
                  2005**




**Common
                  Stock**
              
              **Additional**
                **Paid-in**
              
              **Accumulated****Shares**
              
              **Amount**
              
              **Capital**
              
              **Deficit**
              
              **Total**Balance,
                  August 17, 2005 (inception)
              
              
              —
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              —Initial
                  capital from founding shareholdersInit
              
              
              27,000,000
              
              
              27,000
              
              
              
              
              
              
              
              
              27,000Issuance
                  of common stock and warrants
              
              
              20,000,000
              
              
              20,000
              
              
              7,223,056
              
              
              
              
              
              7,243,056Stock
                  options granted to employees for services
              
              
              
              
              
              
              
              
              1,504,500
              
              
              
              
              
              1,504,500Net
                  loss
              
              
              
              
              
              
              
              
              
              
              
              (1,901,651
              )
              
              (1,901,651
              )Balance,
                  December 31, 2005
              
              
              47,000,000
              
              $
              47,000
              
              $
              8,727,556
              
              $
              (1,901,651
              )
              $
              6,872,905See
                  accompanying notes to financial statements.




27




**Calibre
                  Energy, Inc.****Statement
                  of Cash Flows****For
                  the Period from Inception (August 17, 2005) to December 31,
                  2005**




Cash
                  Flows from Operating Activities:Net
                  loss
              
              $
              (1,901,651
              )Adjustments
                  to reconcile net loss to net cash provided by operating
                  activities:Stock
                  options granted for services
              
              
              1,504,500Depletion
                  expense
              
              
              35,599Changes
                  in working capital components:(Increase)
                  in accounts receivable
              
              
              (33,960
              )(Increase)
                  in other current assets
              
              
              (104,100
              )Increase
                  in accounts payable
              
              
              1,045,482Increase
                  in accrued expense
              
              
              20,482Net
                  cash provided by operating activities
              
              
              566,352Cash
                  Flows from Investing Activities:Additions
                  to oil and gas properties
              
              
              (5,308,881
              )Additions
                  to furniture, office equipment and leasehold improvements
              
              
              (121,778
              )Disbursements
                  on note receivable
              
              
              (300,000
              )Net
                  cash (used in) investing activities
              
              
              (5,730,659
              )Cash
                  Flows from Financing Activities:Proceeds
                  from sale of common stock
              
              
              7,270,056Net
                  cash provided by financing activities
              
              
              7,270,056Net
                  increase in cash
              
              $
              2,105,749Cash:Beginning
                  of period
              
              
              —End
                  of period
              
              $
              2,105,749Supplemental
                  information:Income
                  taxes paid
              
              
              —Interest
                  paid
              
              
              46See
                  accompanying notes to financial statements.




28




Notes
      to
      Financial Statements


**CALIBRE
        ENERGY, INC.**
  **Notes
        to Financial Statements**
  **Note
        1.** **Organization
        and Business Operations**
  Calibre
        Energy, Inc. (the “Company” or “Calibre”) is an exploration and production
        company focused on the acquisition, exploitation and development of high
        quality, long-lived producing and non-producing fractured gas and oil shale
        properties in selected producing basins in North America. Headquartered in
        Washington, DC and Houston, Texas, Calibre is a Delaware corporation that
        was
        formed on August 17, 2005.
  Calibre
        completed a reverse merger into a public company, Hardwood Doors and Milling
        Specialties, Inc. (“Hardwood”), on January 27, 2006, in which Calibre obtained a
        controlling interest. See Note 11 for details.
  Calibre’s
        goal is to expand and develop our exploration and production business and
        its
        reserves by initially emphasizing the identification and development of shale
        gas opportunities in the Barnett Shale and the Fayetteville Shale. Calibre
        has
        identified that both the Mississippian developments of the Barnett Shale
        in the
        Ft. Worth Basin and the Fayetteville Shale development in the Arkoma Basin
        provide the greatest near term economic value to it. Calibre is currently
        participating in three projects with Kerogen Resources, Inc., a small, privately
        held, exploration and production company, located in Houston, Texas, the
        Reichmann Petroleum project, South Ft. Worth Basin project and Williston
        Basin
        project. As of June 15, 2006, Calibre held 774 net acres in the Reichmann
        Petroleum project and 3,161.93 net acres in the South Ft. Worth JV and has
        participated in 22 gross wells. Four wells are currently producing, nine
        wells
        have been drilled, completed and fraced and are waiting to be hooked up to
        a
        pipeline, four wells have been drilled, completed and are cleaning up after
        being frac prior to being hooked up to a gas gathering line, three wells
        have
        been drilled to total depth, completed and are waiting to be fraced, and
        two
        wells are currently drilling. Calibre has acquired 5,318 gross leasehold
        acres
        and 3,417 net acres in the Barnett Shale outside of the areas covered by
        the
        Reichmann Petroleum project, South Ft. Worth Basin project and Williston
        Basin
        project. Calibre anticipates that it will commence development activities
        on
        these leases in the third quarter of 2006. Additionally, as of June 15, 2006,
        we
        have acquired 2,636 gross leasehold acres and 1,771 net leasehold acres in
        the
        Fayetteville Shale development in the Arkoma Basin in Arkansas.
 
  Calibre
        anticipates applying a business model to achieve substantial annual growth
        in
        production and reserves with a relatively low risk approach. These plans
        include
        deploying known techniques for use in identifying, predicting, and optimizing
        future production volumes and rates. Using multi-discipline teams with core
        competencies of petrophysics, reservoir and production engineering, geology
        and
        geophysics, the Calibre’s emphasis will be on the practical integrated
        application of these technologies to identify previously “hidden” potential.
        This model mitigates conventional exploration risk because Calibre will focus
        on: a) shales that are laterally extensive (pervasive); b) basins where the
        target zones have been previously penetrated and found to be productive;
        c)
        shales that have been successfully fraced (contained); d) cuttings utilized
        to
        validate source rock potential, porosity, and permeability; and e) projects
        that
        will be financially leveraged.
  29




Notes
      to
      Financial Statements


**Note
        2.** **Summary
        of Significant Accounting Policies**
  **Use
        of Estimates**
  The
        preparation of financial statements in conformity with accounting principles
        generally accepted in the United States of America requires management to
        make
        estimates and assumptions that affect the reported amounts of assets and
        liabilities and disclosure of contingent assets and liabilities at the date
        of
        the financial statements and the reported amounts of revenues and expenses
        during the reporting period. Actual results could differ from those
        estimates.
  Calibre’s
        financials are based on a number of significant estimates, including oil
        and gas
        reserve quantities which are the bases for the calculation of depreciation,
        depletion and impairment of oil and gas properties, and timing and costs
        associated with its retirement obligations.
  **Cash
        and Cash Equivalents**
  Cash
        and
        cash equivalents include cash in banks and certificates of deposit which
        mature
        within three months of the date of purchase.
  **Concentration
        of Credit Risk**
  Financial
        instruments that potentially subject Calibre to concentration of credit risk
        consist of cash. At December 31, 2005, Calibre had $1,905,749 in cash in
        excess
        of federally insured limits. Calibre maintains cash accounts only at large
        high
        quality financial institutions and Calibre believes the credit risk associated
        with cash is remote.
  **Oil
        and Gas Properties**
  Calibre
        follows the full cost method of accounting for oil and gas properties.
        Accordingly, all costs associated with acquisition, exploration, and development
        of oil and gas reserves, including directly related overhead costs and related
        asset retirement costs, are capitalized.
  All
        capitalized costs of oil and gas properties, including the estimated future
        costs to develop proved reserves, are amortized on the unit-of-production
        method
        using estimates of proved reserves. Investments in unproved properties and
        major
        development projects are not amortized until proved reserves associated with
        the
        projects can be determined or until impairment occurs. If the results of
        an
        assessment indicate that the properties are impaired, such impairment is
        expensed in the period incurred..
  Capitalized
        costs are subject to a “ceiling test,” which limits such costs to the aggregate
        of the “estimated present value,” discounted at a 10-percent interest rate of
        future net revenues from proved reserves, based on current economic and
        operating conditions, plus the cost of properties not being amortized, plus
        the
        lower of cost or fair market value of unproved properties included in costs
        being amortized, less the income tax effects related to book and tax basis
        differences of the properties.
  Sales
        of
        proved and unproved properties are accounted for as adjustments of capitalized
        costs with no gain or loss recognized, unless such adjustments would
        significantly alter the relationship between capitalized costs and proved
        reserves of oil and gas, in which case the gain or loss is recognized in
        income.
  30




Notes
      to
      Financial Statements




Abandonments
        of properties are accounted for as adjustments of capitalized costs with
        no loss
        recognized.
  **Oil
        and Gas Properties Not Subject to Amortization**
  Calibre
        is
        currently participating in oil and gas exploration and development activities.
        At December 31, 2005, a determination cannot be made about the extent of
        oil
        reserves that should be classified as proved reserves. Consequently, all
        the
        property, development and exploratory costs have been excluded in computing
        amortization. Calibre will begin to amortize these costs when these projects
        are
        evaluated, which is currently estimated to be 2006.
  **Furniture
        and Office Equipment**
  Furniture
        and office equipment is stated at cost. Depreciation is computed on a
        straight-line basis over the estimated useful lives of 5 years. During the
        period ended December 31, 2005, there was no depreciation expense as the
        assets
        were not in place and utilized until after the period end.
  **Employee
        Stock Plan**
  In
        December 2004, the FASB issued SFAS No.123R, “Accounting for Stock-Based
        Compensation” (“SFAS No. 123R”). SFAS No.123R establishes standards for the
        accounting for transactions in which an entity exchanges its equity instruments
        for goods or services. This Statement focuses primarily on accounting for
        transactions in which an entity obtains employee services in share-based
        payment
        transactions. SFAS No.123R requires that the fair value of such equity
        instruments be recognized as expense in the historical financial statements
        as
        services are performed. Prior to SFAS No.123R, only certain pro forma
        disclosures of fair value were required. SFAS No.123R shall be effective
        for
        small business issuers as of the beginning of the first interim or annual
        reporting period that begins after December 15, 2005. Calibre will adopt
        SFAS
        No. 123R as of January 1, 2006.
  Calibre
        has a stock-based compensation plan, which is described more fully in Note
        6. As
        permitted under generally accepted accounting principles, Calibre accounts
        for
        the plan under the recognition and measurement principles of APB Opinion
        No. 25,
        Accounting for Stock Issued to Employees, and related interpretations.
        Accordingly, stock-based employee compensation cost has been recognized,
        as all
        options granted under the plan had an exercise price less than the market
        value
        of the underlying common stock on the date of grant, see note 6 for more
        information. There would be minimal effect on the net loss had compensation
        cost
        for the stock-based compensation plan been determined based on the grant
        date
        fair values of awards (the method described in FASB Statement No. 123,
        Accounting for Stock-Based Compensation).
  **Income
        Taxes**
  Provisions
        for income taxes are based on taxes payable or refundable for the current
        year
        and deferred taxes on temporary differences between the amount of taxable
        income
        and pretax financial income and between the tax bases of assets and liabilities
        and their reported amounts in the financial statements. Deferred tax assets
        and
        liabilities are included in the financial statements at currently enacted
        income
        tax rates applicable to the period in which the deferred tax assets and
        liabilities are expected to be realized or settled as prescribed in SFAS
        Statement No. 109, Accounting for Income Taxes. As changes in tax laws or
        rates
        are enacted, deferred tax assets and liabilities are adjusted through the
        provision for income taxes. A valuation allowance is established when necessary
        to reduce the deferred tax asset to the amount expected to be
        realized.
  31




Notes
      to
      Financial Statements




**Revenue
      and Cost Recognition**




Calibre
      uses the sales method of accounting for natural gas and oil revenues. Under
      this
      method, revenues are recognized based on the actual volumes of gas and oil
      sold
      to purchasers. The volume sold may differ from the volumes to which Calibre
      is
      entitled based on our interest in the properties. Costs associated with
      production are expensed in the period incurred.




**Note
      3.** **Going
      Concern**




As
      shown
      in the accompanying financial statements, Calibre has incurred operating losses
      since inception and expects to continue to incur losses through 2006. As of
      December 31, 2005, Calibre has limited financial resources until such time
      that
      Calibre is able to generate positive cash flow from operations. These factors
      raise substantial doubt about our ability to continue as a going concern.
      Calibre’s ability to achieve and maintain profitability and positive cash flow
      is dependent upon Calibre’s ability to locate profitable properties, generate
      revenue from their planned business operations, and control exploration cost.
      Management plans to fund its future operation by obtaining additional financing
      and commencing commercial production. However, there is no assurance that we
      will be able to obtain additional financing from investors or private lenders
      and, if available, such financing may not be on commercial terms acceptable
      to
      Calibre or its shareholders.




**Note
      4.** **Income
      Taxes**




Net
      deferred tax assets consist of the following components as of December 31,
      2005:




Net
                  operating loss
              
              
              665,578Less
                  valuation allowance
              
              
              (665,578
              )Total
              
              $
              –




The
      components giving rise to the net deferred tax assets described above have
      been
      included in the accompanying balance sheet as noncurrent assets. The deferred
      tax assets are net of a full valuation allowance of $665,578 based on the amount
      that management believes will ultimately be realized. Realization of deferred
      tax asset is dependent upon sufficient future taxable income during the period
      that deductible temporary differences and carryforwards are expected to be
      available to reduce taxable income. Loss carryforwards for tax purposes will
      begin to expire in 2025.




The
      income
      tax provision differs from the amount of income determined by applying the
      U.S.
      Federal income tax rate to pretax income for the year ended December 31, 2005
      primarily due to the valuation allowance.




**Note
      5.** **Oil
      and Gas Properties Not Subject to Amortization**




Calibre
      is
      currently participating in oil and gas exploration and development activities
      on
      onshore properties in the Fort Worth Basin, Williston Basin and Arkhoma Basin.
      At December 31, 2005, these activities are in the early stages of development
      and a determination cannot be made about the extent of oil and gas reserves
      that
      should be classified as proved reserves. Accordingly, the capital costs have
      been excluded from the computation of amortization of the full cost pool.
      Calibre will begin to amortize these costs as the projects are completed and
      reserve estimates are available. We estimate that many of the projects we are
      currently participating in will be evaluated and subject to amortization by
      the
      2006 year end.




32







capital
      costs have been excluded from the computation of amortization of the full cost
      pool. Calibre will begin to amortize these costs as the projects are completed
      and reserve estimates are available. We estimate that many of the projects
      we
      are currently participating in will be evaluated and subject to amortization
      by
      the 2006 year end.





Costs
      excluded from amortization consist of the following at December 31,
      2005:





Year
                Incurred
            
            Acquisition
                Costs
            
            Exploration
                Costs
            
            Development
                Costs
            
            Capitalized
                Interest
            
            Total2005
            
            $
            1,042,418
            
            $
            1,083,130
            
            $
            2,352,687
            
            
            -
            
            
            4,478,235







**Note
      6** **.**  **Shareholders’
      Equity**




**Preferred
      Stock**




Calibre
      is
      authorized to issue up to 10 million shares of $.001 par value preferred stock,
      the rights and preferences of which are to be determined by the Board of
      Directors at or prior to the time of issuance. As of December 31, 2005 none
      of
      the preferred stock is outstanding.




**Common
      Stock**




As
      of
      December 31, 2005, Calibre is authorized to issue 70,000,000 shares of common
      stock, par value of $.001 per share. The founding shareholders were granted
      and
      issued 27,000,000 shares of common stock at inception. In October 2005, Calibre
      completed a private offering of 20,000,000 shares of common stock at a price
      of
      $.40 per share realizing net proceeds after offering costs of $7.2 million.
      In
      conjunction with the common shares issued, Calibre issued warrants to purchase
      10,000,000 shares of common stock at an exercise price of $.75 per share. The
      warrants expire in October 2007. These warrants are valued at $0.15 per share
      or
      $1,500,000. Calibre paid fees and expenses related to this offering of $756,944.
      Calibre also granted 2,000,000 warrants with an exercise price of $0.40 per
      share. The Warrants expire in October 2007. These warrants were also valued
      at
      $0.15 or $300,000.




**Note
      7. Stock Option Plan**




**2005
      Stock Incentive Plan** .
      Calibre
      adopted the 2005 Stock Incentive Plan (the “Plan”) in October 2005. Under the
      Plan options may be granted to key employees and other persons who contribute
      to
      the success of Calibre. Calibre has reserved 9,000,000 shares of common stock
      for the plan. During the period ended December 31, 2005, we granted options
      pursuant to the plan, to purchase 5,150,000 shares of common stock at an
      exercise price of $.05 per share, 50,000 options to purchase shares of common
      stock at an exercise price of $.12 per share, and 1,250,000 options to purchase
      shares of common stock at an exercise price of $.24 per share. 5,800,000 options
      are fully vested and 650,000 options vest equally over a four year period.
      All
      of our outstanding options expire 10 years after the date of grant. The plan
      is
      designed to qualify under the Internal Revenue Code as an incentive stock option
      plan. Compensation expense recorded through December 31, 2005 for the options
      granted is $1,504,500.




33




**December
                31, 2005**Net
                loss, as reported
            
            
            ($1,901,651
            )Add:
                Stock based intrinsic value included in report loss
            
            
            ($1,504,500
            )Less:
                Total stock-based employee compensation expense determined under
                the fair
                value based method for all awards
            
            
            ($1,877,465
            )Pro-forma
                net loss
            
            
            ($2,274,616
            )Basic
                and diluted loss per share:As
                reported
            
            
            ($0.05
            )Pro
                forma
            
            
            ($0.06
            )







The
      fair
      value of each option granted is estimated on the date of grant using the
      Black-Scholes option-pricing model with the following weighted average
      assumptions: dividend yield $0, expected volatility of 57.99%, risk-free
      interest rate of 5.0%, and expected lives of 10 years.




**Note
      8. Related Party Transactions.**




Prentis
      B.
      Tomlinson, Jr., served as a Director and Chairman of the Board of Directors
      from
      its formation in July 2005 until April 21, 2006. He owns a 17.9% interest in
      Kerogen Resources, Inc. (“KRI”.) Calibre has entered into four agreements with
      Kerogen Resources, Inc.




First,
      Calibre is a party to a letter agreement with Kerogen Resources pursuant to
      which Calibre is participating in the Reichmann Petroleum project. The
      project is a joint venture with Kerogen Resources, Crosby Minerals and Reichmann
      Petroleum Corporation to explore, acquire and develop properties located in
      the
      Barnett Shale in the Ft. Worth Basin of north Texas. Reichmann is the operator
      of the properties. In October 2005 Calibre acquired, through Kerogen Resources,
      a 12.5% working interest in 6,190 net acres of leasehold interests in Parker,
      Tarrant, Denton, and Johnson Counties, Texas. Subsequent to the initial
      acquisition, Calibre purchased a 25% working interest in 443 net acres of
      leasehold interests from Reichmann Petroleum in Johnson County, Texas. Kerogen
      Resources provides the technical guidance for the project and in exchange will
      receive 12.5% of our working interest in each well drilled. As of March
      31,
      2005, Calibre has paid Kerogen a total $4,835,061, of which $3,179,660 was for the 12.5% working interest in the initial 6,190
      acres, prepayment of drilling costs on 12 wells and
      for
      the purchase of the 25% working interest in the leasehold interest in Johnson
      County and $1,655,401 was for operating costs (ie, drilling and completion
      costs) of the joint venture since the original payment. Kerogen
      then paid such amounts to Reichmann Petroleum Corporation as reimbursement
      of
      leasehold costs, drilling and operating expenses .
      Currently, our net acreage position subject to the Reichmann agreement is 773.94
      net acres. As
      of
      April 30, 2006, Calibre has participated in 20 gross wells. Four wells are
      currently producing, nine wells have been drilled, completed and fraced and
      are
      waiting to be hooked up to a pipeline, four wells have been drilled, completed
      and are cleaning up after being frac prior to being hooked up to a gas gathering
      line, three wells have been drilled to total depth, completed and are waiting
      to
      be fraced, and two wells are currently drilling.




Second,
      Calibre has entered into a Participation Agreement with Kerogen Resources for
      the exploration and development of prospects in the South Fort Worth Basin.
      Pursuant to this agreement Calibre is obligated to pay Kerogen Resources
      $597,000 for its identification of prospects; Calibre has paid Kerogen Resources
      $500,000 of such amount. As of April 30, 2006 Calibre
      has leased approximately 2,399 net leasehold acres under 8,885 gross leasehold
      acres pursuant to this agreement.  Calibre
      has paid $666,637 to Kerogen for participation in these leases in the Ft. Worth
      Basin of Texas. All the leasehold acreage is currently undeveloped. Management
      believes the price paid for leases represented market prices for similar acreage
      in the area.




34


Third,
      Calibre has entered into a Participation Agreement with Kerogen Resources for
      the exploration and development of prospects in the Williston Basin. Pursuant
      to
      this agreement Calibre is obligated to pay Kerogen Resources $638,600 for its
      identification of prospects; Calibre has paid Kerogen Resources $550,000 of
      such
      amount. As of March 31, 2006, Calibre has not leased or developed any properties
      pursuant to this agreement.




Fourth,
      Calibre held a promissory note issued by Kerogen Resources. The principal owed
      pursuant to the note was $300,000 bearing interest at the rate of 6.25% per
      annum. The principal of this note and accrued interest thereon was due and
      payable in a single installment on the maturity date. The maturity date was
      the
      earlier of September 30, 2006 or the date on which Kerogen Resources received
      gross proceeds of at least $6,000,000 from a sale of equity, in one or more
      transactions. Calibre acquired the note from Mr. Tomlinson in October 2005
      in
      exchange for a payment of $300,000. This note was entered into by Mr. Tomlinson,
      a founder of Calibre Energy, in anticipation of the formation of Calibre Energy.
      After the incorporation of Calibre Energy, the company entered into agreements
      with Kerogen for the purpose of identification, exploration
      and development of prospects in the Fort Worth Basin and
      Williston Basin. The Reichmann Petroleum Project and South Fort Worth Basin
      project are projects identified by these agreements. On March 24, 2006, Kerogen
      Resources repaid $314,623.29, the full amount of the promissory note and all
      interest due.




On
      March
      24, 2006, we loaned $350,000 to Standard Drilling, Inc.  pursuant to a loan
      bearing interest at 4% per annum.  On April 7, 2006 Standard Drilling, Inc.
      repaid us $350,544.54, the full amount of the loan with all interest due. 
Mr. Tomlinson, our President, controls a limited liability company that, at
      the
      time of the loan, owned 53% of Standard Drilling, Inc. Further, Standard
      Drilling’s principal officers also serve as officers of Calibre.





**Note
      9.**  **Commitments
      and Contingencies**




Calibre
      has entered into a three year operating lease agreement for office space in
      Washington, DC. The lease commenced on November 1, 2005 and will expire on
      October 31, 2008.




At
      December 31, 2005, future minimum lease payments under the operating lease
      are
      as follows:




2006
            
            $
            100,9272007
            
            
            103,4502008
            
            
            79,0332009
            
            
            -2010
            
            
            -Thereafter
            
            
            -Total
            
            $
            283,410







35


Total
      rent
      expense was $32,557 for the period ended December 31, 2005. There were $17,700
      of leasehold incentives which will be amortized over the life of the lease.
      As
      of December 31, 2005, we have drilling commitments of $3,183,898 in 2006 for
      drilling and completion of wells in progress.




**NOTE
      10-Asset Retirement Obligations**




In
      accordance with SFAS 143, “Accounting for Asset Retirement Obligations” Calibre
      records the fair value of a liability for asset retirement obligations (“ARO”)
      in the period in which it is incurred and a corresponding increase in the
      carrying amount of the related long-lived asset. The present value of the
      estimated asset retirement cost is capitalized as part of the carrying amount
      of
      the long-lived asset and is depreciated over the useful life of the asset.
      Calibre accrues an abandonment liability associated with its oil and gas wells
      when those assets are placed in service. The ARO is recorded at its estimated
      fair value and accretion is recognized over time as the discounted liability
      is
      accreted to its expected settlement value. Fair value is determined by using
      the
      expected future cash outflows discounted at Calibre’s risk-free interest rate.
      No market risk premium has been included in Calibre’s calculation of the ARO
      balance. Calibre’s net ARO liability at December 31, 2005 is expected to
      approximate the salvage value of the properties..




**NOTE
      11-** **Subsequent
      Events**




*Reverse
      Merger*




On
      January
      27, 2006, pursuant to an Amended and Restated Agreement and Plan of
      Reorganization dated as of January 17, 2006 by and among Hardwood Doors and
      Milling Specialties, Inc., a Nevada corporation (the “Company”), Calibre
      Acquisition Co., a Delaware corporation (“Merger Sub”), and Calibre Energy,
      Inc., a Delaware corporation (“Calibre Energy Delaware”), ( the “Merger
      Agreement”), Merger Sub was merged with and into Calibre Energy Delaware, and
      Calibre Energy Delaware became a wholly-owned subsidiary of Calibre (the
“Merger”). As a result of the Merger, Calibre, which previously had no material
      operations, acquired the business of Calibre Energy Delaware. For accounting
      purposes, this reorganization will be treated as a reverse merger, with Calibre
      being the accounting acquirer and the go-forward financial statements will
      show
      Calibre’s history from its inception on August 17, 2005.




Each
      outstanding share of common stock of Calibre Energy Delaware was converted
      into
      one share of common stock of Calibre. All outstanding options and warrants
      to
      purchase common stock of Calibre Energy Delaware were assumed by Calibre and
      converted into options and warrants to purchase an equal number of shares of
      common stock of Calibre. The Merger resulted in a change of control of Calibre,
      with the former security holders of Calibre Energy Delaware owning approximately
      93.0% of Calibre’s outstanding common stock, or approximately 93.7% assuming the
      exercise of all outstanding options and warrants, following the closing of
      the
      Merger.




In
      connection with the Merger, Calibre issued 47,000,000 shares of its common
      stock
      to holders of common stock of Calibre Energy Delaware and reserved for issuance
      (1) 12,000,000 shares of common stock pursuant to outstanding warrants to
      purchase common stock of Calibre Energy Delaware that were assumed by Calibre,
      and (2) 6,425,000 shares of common stock pursuant to outstanding options to
      purchase common stock of Calibre Energy Delaware pursuant to the Calibre Energy,
      Inc. 2005 Stock Incentive Plan that were assumed by Calibre. In addition,
      19,575,000 issued and outstanding shares of common stock of Calibre were
      cancelled. The shares were cancelled as part of the merger transaction and
      our
      consummation of the merger, as well as our distribution of $100,000, constituted
      consideration for the cancellation of the shares.




36


As
      a
      result of the merger, Calibre has 50,525,000 shares of common stock issued
      and
      outstanding and an additional 18,425,000 shares of common stock reserved for
      issuance as described above.




In
      connection with the consummation of the merger, we changed our name to Calibre
      Energy, Inc.




*Private
      Placement*




On
      April
      18, 2006 Calibre completed a private placement to institutional and other
      accredited investors in which it sold 5 ,780,000
      units. Each unit, composed of one share of common stock and a warrant to
      purchase a share of common stock, was sold at a price of $2.00. Aggregate
      gross proceeds to Calibre were $11,560,000.
      Offering costs were $ 892,000 and will be reflected as a reduction in the
      proceeds.




Each
      warrant issued entitles the holder to acquire one additional share of Calibre
      common stock at an exercise price of U.S. $2.75 per share at any time on or
      before two years following the date of issuance. Provided that if the closing
      price of our common stock on any exchange on which the common stock is traded
      or
      quoted equals or exceeds U.S.$4.00 for 20 consecutive trading days and if
      either: (i) a registration statement registering the re-sale of the shares
      issuable upon exercise of the warrants has been declared effective, or (ii)
      Calibre has completed a “Canadian Going Public Transaction” as referred to in
      the Warrant under the caption “Canadian Reporting Issuer Status,” then the
      warrant term shall be automatically reduced to 30 days from the date of initial
      issuance of a news release by Calibre announcing the change to the warrant
      term.




In
      connection with sales outside the United States, Calibre Energy paid finders
      fees totaling $ 892,000 and issued to the finders warrants to acquire a total
      of
      577,500 shares on the same terms as those warrants issued to the investors
      except that the exercise price for the finders warrants is $2.00 per
      share.






37








SUPPLEMENTAL
      INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES




(UNAUDITED)




The
      standardized measure of discounted future net cash flows is computed by applying
      year-end prices of oil and gas to the estimated future production of proved
      oil
      and gas reserves, less estimated future expenditures (based on year-end costs)
      to be incurred in developing and producing the proved reserves, less estimated
      future income tax expenses (based on year-end statutory tax rates) to be
      incurred on pre-tax net cash flows less tax basis of the properties and
      available credits, and assuming continuation of existing economic conditions.
      The estimated future net cash flows are then discounted using a rate of 10
      percent per year to reflect the estimated timing of the future cash
      flows.




Proved
      Developed and Undeveloped Oil and Gas Reserves, at year end (net):




From
                Inception(August 17, 2005)to December 31, 2005(MMcf)Balance,
                August 17, 2005
            
            
            -Extensions,
                discoveries and improved production
            
            
            69.000Production
            
            
            (3.000
            )Balance,
                December 31, 2005
            
            
            66.000





Proved
                developed reservesAt
                August 17, 2005
            
            -At
                December 31, 2005
            
            66.000





Standardized
      Measure of Discounted Future Net Cash Flows:




December
                31, 2005Future
                cash inflows
            
            $
            462,794Future
                production costs
            
            
            ($154,904
            )Future
                development costs and abandonment
            
            
            (10,938
            )Future
                net cash flows before income taxes
            
            
            296,952Future
                income taxes
            
            
            (103,933
            )Future
                net cash flows
            
            
            193,01910%
                annual discount for estimated
              timing
                of cash flows
            
            
            (60,500
            )Standardized
                Measure of Discounted Future Net Cash Flows
            
            $
            132,519





38








Changes
      in
      Standardized Measure of Discounted Future Net Cash Flows:


From
                Inception (August 7, 2005) to December 31, 2005Beginning
                of the year
            
            
            -Extensions,
                discoveries and improved production
            
            $
            138,613Sales
                of oil and gas produced, net of production costs
            
            
            (6,094
            )End
                of the Year
            
            $
            132,519







39







**ITEM
      8** **.
      C** **HANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE.**







**Change
      of Accountants**




Effective
      April 7, 2006, our Board of Directors, determined to change our independent
      accountants and dismissed Jones Simkins, PC as our independent registered public
      accounting firm. The Audit Committee of the Board of Directors and the Board
      of
      Directors approved the decision to change independent auditors. Jones Simkins,
      PC had served as our Independent Registered Public Accountant since June 1,
      2001
      and audited our financial statements for the period June 1, 2001 through
      December 31, 2005.




During
      our
      two most recent fiscal years, ending December 31, 2004 and 2005, (i) there
      were
      no disagreements between us and Jones Simkins on any matter of accounting
      principles or practices, financial statement disclosure or auditing scope or
      procedure which, if not resolved to the satisfaction of Jones Simkins would
      have
      caused Jones Simkins to make reference to the matter in its reports on our
      financial statements, and (ii) Jones Simkins’ report on our financial statements
      did not contain any adverse opinion or disclaimer of opinion, and was not
      qualified or modified as to uncertainty, audit scope, or accounting principles
      with the exception of the following “going concern” qualification:




“As
      of
      December 31, 2005, the Company’s revenue generating activities are not in place,
      and the Company has incurred losses since inception. These factors raise
      substantial doubt about the Company’s ability to continue as a going concern.
      Management intends to seek additional funding through business ventures. There
      can be no assurance that such funds will be available to the Company or
      available on terms acceptable to the Company. The financial statements do not
      include any adjustments that might result from the outcome of these
      uncertainties.”




On
      April
      4, 2006, our Audit Committee recommended the engagement of Malone & Bailey,
      CP as our independent registered public accounting firm. Our Board of Directors
      appointed Malone & Bailey as our Independent Registered Public Accountant
      effective April 7, 2006.




**ITEM
      8A.****Controls
      and Procedures.**









Our
      management, with the participation of our chief executive officer and chief
      financial officer, has evaluated the effectiveness of our disclosure controls
      and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
      Exchange Act of 1934 (the “Exchange Act”)) as of March 31, 2006. Based on this
      evaluation, our chief executive officer and chief financial officer have
      concluded that, as of March  31, 2006, our disclosure controls and
      procedures were not effective, in that they do not ensure that information
      required to be disclosed by us in the reports that we file or submit under
      the
      Exchange Act are (1) recorded, processed, summarized and reported within the
      time periods specified in the Commission’s rules and forms, and (2) 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 conclusion was based on (1) our lack of
      systematic accounting and disclosure procedures, (2) the initial stages of
      the
      development of our IT systems, (3) the hiring and development of new personnel
      and (4) the number of adjustments identified by our independent auditors during
      the course of their review. We attribute all of the identified weaknesses to
      the
      formative stage of our organizational development. We currently lack the
      personnel resources to ensure that our disclosure controls and procedures are
      adequate. We
      are
      addressing the procedural and control issues by adding more formalized
      accounting procedures and IT systems and by developing and adding to our
      personnel in the reporting and control area.




Calibre
      has substantially increased its business activities since the merger on January
      27, 2006. Accordingly, Calibre has been required to improve its system of
      internal control over financial reporting during the fiscal quarter covered
      by
      this report by (1) initiating a plan to formalize accounting and disclosure
      procedures; (2) further development of our internal IT systems; (3) hiring
      additional financial personnel (4) engaging a third party provider of
      accounting, bookkeeping and IT services that specializes in oil and gas
      accounting; (5) performing additional reviews of our internal accounting
      information prior to review by our independent auditors to ensure that no items
      that would have a material affect or are reasonably likely to have a material
      affect on internal control over financial reporting will be identified prior
      to
      issuance of our reports.






40




**PART
      III**




**ITEM
      9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
      WITH
      SECTION 16(A) OF THE EXCHANGE ACT.**







The
      following table sets forth certain information regarding our current directors
      and executive officers.




Our
      executive officers are elected by the board of directors and serve at the
      discretion of the board. All of the current directors serve until the next
      annual stockholders’ meeting or until their successors have been duly elected
      and qualified.




**Name**
            **Age**
            **Position**Prentis
                B. Tomlinson, Jr.
            63
            President,
                CEO and Chairman of the BoardEdward
                L. Moses, Jr.
            67
            Vice
                Chairman, DirectorO.
                Oliver Pennington
            35
            Vice
                President and Chief Financial OfficerPeter
                F. Frey
            62
            ControllerW.
                Richard Anderson
            50
            Director




The
      following biographies describe the business experience of our executive officers
      and directors. Each of our officers and directors were appointed to their
      positions on January 27, 2006 in connection with the merger of our subsidiary,
      Calibre Acquisition Co., with the predecessor of our business. Each of our
      officers devotes such
      of his business
      time, attention and energies to the business of the Company as are reasonably
      necessary to perform his duties under their
      respective employment Agreements.




**Prentis
      B. Tomlinson, Jr** .,
      President, Chairman and CEO. Mr. Tomlinson has over 30 years of experience
      in
      the energy industry, and is a second-generation oil and gas man who traces
      his
      roots back to Tomlinson Geophysical Service, founded in 1937 by P. B. Tomlinson,
      Sr. Mr. Tomlinson has founded a number of companies in the energy sector,
      including exploration and production companies, a crude trading company and
      an
      oilfield service company, TGS Geophysical, Inc., which merged with Nopec in
      1997
      to form TGS Nopec (OSE: TGS). Since 2001 Mr. Tomlinson has been a private
      investor. In 2004 Mr. Tomlinson helped to found, and remains a significant
      shareholder in, a drilling technology company based in Houston, Texas, Particle
      Drilling Technologies, Inc. (www.particledrilling.com) (Nasdaq: PDRT). Since
      February 2006, Mr. Tomlinson has also served as Chairman and CEO of Standard
      Drilling, Inc., a privately held land drilling company based in Houston, Texas.
      See “ITEM 12” Certain Relationships and Related Party Transactions.




**Edward
      L. Moses, Jr** .,
      Vice
      President of Operations and Director. Mr. Moses has over 40 years experience
      in
      the oil and gas industry beginning as a roustabout and roughneck for drilling
      contractors while studying for his B.S. in Petroleum Engineering at Texas
      A&M University. He is currently a Director of Horizon Offshore (Nasdaq:
      HOFF). After receiving his engineering degree in 1958, Mr. Moses joined The
      Superior Oil Company where he was Manager of Domestic and International Drilling
      Operations. He left Superior Oil in 1976 to work as an independent consultant
      where he and his partners provided consulting and turnkey drilling services
      throughout the Gulf Coast, South Texas, and North Sea areas as well as India
      and
      Central America. Mr. Moses joined Deep Tech companies in 1989 as Vice President,
      Engineering. Before leaving Deep Tech in 1998, he served as Senior Vice
      President of North Atlantic Pipeline Partners, L.P.; Senior Vice President
      of
      Tatham Offshore Canada, Limited; Managing Director of Deepwater Production
      Systems, Inc.; and Executive Vice President of RIGCO North American, L.L.C.
      From
      1998 until 2000, Mr. Moses was the Chairman and Chief Executive Officer of
      Prime
      Natural Resources, Inc. a Houston based exploration and production company.
      Since 2000 Mr. Moses has been a private investor. He is a Professional Engineer
      in Texas and Louisiana, member of Society of Petroleum Engineers, Texas Society
      of Professional Engineers, and a Director of Spindletop. Since February 2006,
      Mr. Moses has also served as Vice Chairman of Standard Drilling,
      Inc.




41


**O.
      Oliver Pennington** ,
      Vice
      President and Chief Financial Officer. Mr. Pennington has over 11 years of
      experience in the financial industry and can trace his roots in the oil and
      gas
      business through his grandfather, Arthur Buzzini, back to the mid-1930s. From
      July 2005 until December of 2005 Mr. Pennington was a private investor. From
      January 2003 until June 2005, Mr. Pennington was employed as a partner and
      senior member of the investment team of Sthenos Capital Limited, a hedge fund
      based in London. From September 2002 until January 2005, Mr. Pennington was
      a
      private investor. From August 1996 until September of 2002 as the Head of
      International Trading, analyst and member of the international investment team
      at Kingdon Capital Management Corp., a hedge fund based in New York. Mr.
      Pennington started his career as a trader for AIM Management, an asset
      management company based in Houston. Since February 2006, Mr. Pennington has
      also served as CFO of Standard Drilling, Inc.




**Peter
      F. Frey** ,
      Controller. Mr. Frey has over 39 years of experience in accounting, banking
      and
      finance. After serving in the U.S. Air Force, Mr. Frey, began his financial
      career at Buffalo Savings Bank, later known as Goldome FSB where he was
      Assistant Vice President for Budgeting and Planning for the $16 billion bank.
      Since retiring from Goldome FSB, Mr. Frey has worked for various financial
      and
      banking institutions including FDIC - Resolution Trust Corporation, which
      assisted with the Savings and Loan Association crisis of the early 90’s. From
      there he joined ESL Federal Credit Union as Controller, which was successfully
      separated from the Eastman Kodak Company and was launched as an independently
      managed financial institution. From March 1997 until December 2001 Mr. Frey
      was
      employed as the Director of Accounting Operations by Superior Bank FSB, managing
      the accounting operations for the bank and a coast-to-coast lending operation.
      From December 2001 to August 2003 Mr. Frey was the Director of Accounting
      Operations at the Nasdaq Stock Market where he developed and implemented the
      accounting operations and payroll functions for the impending separation from
      the parent company, NASD. From August 2003 until January 2004 Mr. Frey worked
      as
      a private consultant. From January 2004 to December 2005 Mr. Frey was employed
      by Rose Financial Services, LLC as project manager. Mr. Frey joined Calibre
      Energy in December 2005. Since February 2006, Mr. Frey has also served as
      Controller of Standard Drilling, Inc.




**W.
      Richard Anderson** ,
      Director
      for Calibre Energy, Inc. Since 2002, Mr. Anderson has served as President and
      Chief Executive Officer of Prime Natural Resources, Inc. and was formerly its
      Chief Financial Officer (1998-2002). Prime Natural Resources www.primenri.com
      is
      a closely held exploration and production company. Prior to his employment
      at
      Prime, he was employed by Hein & Associates, LLP, a certified public
      accounting firm, where he served as a partner from 1989 to January 1995 and
      as a
      managing partner from January 1995 until October 1998. Since 1999, Mr. Anderson
      has served as a Director of Boots & Coots International Well Control
      www.bootsandcoots.com (AMEX: WEL), Chairman the Audit Committee, and member
      of
      the Compensation Committee. Mr. Anderson also formerly served as a Director
      and
      Chairman of the Audit Committees of Grant Geophysical, Inc www.grantgeo.com.,
      and its subsidiary Solid State Geophysical, Inc.(TSE), Professional Geophysics,
      Inc., and Seis Pros, Inc. www.seispros.com.




42




**Committees
      of the Board of Directors**




We
      currently have an audit committee, a compensation committee, and a nominating
      and corporate governance committee.




*Audit
      Committee* .
      The
      audit committee selects, on behalf of our board of directors, an independent
      public accounting firm to be engaged to audit our financial statements, discuss
      with the independent auditors their independence, review and discuss the audited
      financial statements with the independent auditors and management and recommend
      to our board of directors whether the audited financials should be included
      in
      our Annual Reports to be filed with the Securities and Exchange Commission.
      The
      Audit Committee operates pursuant to a written charter, which was adopted
      February 3, 2005. The current member of the audit committee is Mr. Anderson.




All
      of the
      current members of the Audit Committee are non-employee directors who: (1)
      meet
      the criteria for independence set forth in Rule 10A-3(b)(1) under the Securities
      Exchange Act of 1934, as amended (the “Exchange Act”); (2) have not participated
      in the preparation of our financial statements or the financial statements
      Hardwood Doors and Milling Specialties, Inc.; and (3) are able to read and
      understand fundamental financial statements, including a balance sheet, income
      statement and cash flow statement. The board has determined that Mr. Anderson
      qualifies as an “Audit Committee Financial Expert” as defined by item 401(e) of
      Regulation S-B of the Exchange Act.




*Compensation
      Committee* .
      The
      compensation committee reviews and either approves, on behalf of our board
      of
      directors, or recommends to the board of directors for approval (1) the annual
      salaries and other compensation of our executive officers and (2) individual
      stock and stock option grants. The compensation committee also provides
      assistance and recommendations with respect to our compensation policies and
      practices and assists with the administration of our compensation plans. The
      members of our Compensation Committee are independent directors as defined
      in
      the applicable rules and regulations promulgated by the SEC, and are neither
      an
      officer nor employee of us or our subsidiary. The Compensation Committee
      operates pursuant to a written charter, which was adopted August 11, 2004.
      The
      current member of the compensation committee is Mr. Anderson.




*Nominating
      and Corporate Governance Committee* .
      The
      nominating and corporate governance committee assists our board of directors
      in
      fulfilling its responsibilities by: identifying and approving individuals
      qualified to serve as members of our board of directors, selecting director
      nominees for our annual meetings of shareholders, evaluating the performance
      of
      our board of directors, and developing and recommending to our board of
      directors corporate governance guidelines and oversight with respect to
      corporate governance and ethical conduct. Mr. Anderson is the current member
      of
      the Nominating and Corporate Governance Committee, who has been found by the
      Board of Directors to be an “independent director” pursuant to the applicable
      rules and regulations promulgated by the SEC. Mr. Tomlinson is also a member
      of
      the committee. This committee operates pursuant to a written charter adopted
      on
      April 4, 2006.




*Compensation
      Committee Interlocks And Insider Participation* .
      During
      the year ended December 31, 2005, we did not have a Compensation Committee
      because Luke Frazier served as our sole officer and director. Following our
      acquisition of Calibre Energy, Inc. in January 2006 and the appointment of
      our
      current Board of Directors, our Board of Directors formed a Compensation
      Committee comprised of Mr. Anderson. The committee member has never been an
      employee of Calibre Energy, Inc. None of our executive officers serve as a
      member of the board of directors or compensation committee of any entity that
      has any executive officer serving as a member of our Board of Directors or
      Compensation Committee.






43




**Section
      16(a) Beneficial Ownership Reporting Compliance**




Section
      16(a) of the Securities Exchange Act of 1934 requires our directors, executive
      officers and beneficial owners of more than 10% of our Common Stock to file
      with
      the SEC reports of their holdings of, and transactions in, our Common Stock.
      Based solely upon our review of copies of such reports and written
      representations from reporting persons that were provided to us, we believe
      that
      our officers, directors and 10% stockholders complied with these reporting
      requirements with respect to 2005.




**Code
      of Ethics**




We
      have
      adopted a written code of ethics that applies to our principal executive
      officer, principal financial officer, principal accounting officer and any
      persons performing similar functions. The Company will provide a copy of its
      code of ethics to any person without charge upon written request addressed
      to
      Calibre Energy, Inc., 1667 K Street, NW, Suite 1230, Washington, D.C.
      20006.








44




**ITEM
      10. EXECUTIVE COMPENSATION**









The
      following tables set forth certain information regarding our CEO and each of
      our
      most highly-compensated officers whose total annual salary and bonus for the
      period ending December 31, 2005 exceeded $100,000.




**Summary
      Compensation Table**




**Annual
                Compensation**
            
            **Long
                Term Compensation Awards****Name
                and**
              **Principal
                Position (2)**
            
            **Year**
            
            **Salary**
              **($)**
            
            **Bonus**
              **($)**
            
            **Securities
                Underlying**
              **Options**
              **(#)**
            
            **All
                Other**
              **Compensation**
              **($)**Prentis
                B. Tomlinson(1)
            
            
            2005
            
            $
            15,000
            
            
            -
            
            
            4,000,000
            
            
            -Chief
                Executive Officer
            
            
            2004
            
            
            -
            
            
            -
            
            
            
            
            
            -2003
            
            
            -
            
            
            -
            
            
            
            
            
            -O.
                Oliver Pennington, III (1)
            
            
            2005
            
            
            -
            
            
            -
            
            
            1,000,000
            
            
            -Chief
                Financial Officer
            
            
            2004
            
            
            -
            
            
            -
            
            
            
            
            
            -2003
            
            
            -
            
            
            -
            
            
            
            
            
            -Peter
                F. Frey (1)
            
            
            2005
            
            $
            4,166
            
            
            -
            
            
            200,000
            
            
            -Controller
            
            
            2004
            
            
            -
            
            
            -
            
            
            
            
            
            -2003
            
            
            -
            
            
            -
            
            
            -
            
            
            -Edward
                L. Moses (1)
            
            
            2005
            
            $
            8,333
            
            
            -
            
            
            750,000
            
            
            -Vice
                Chairman
            
            
            2004
            
            
            -
            
            
            -
            
            
            
            
            
            -2003
            
            
            -
            
            
            -
            
            
            -
            
            
            -




(1)  Each
      executive served for less than a full year in 2005. See “Executive Employment
      Contracts” for a discussion of their annual Salary and options.


(2)  Luke
      Frazier was the sole officer for Hardwood Doors and Milling Speciality during
      2003, 2004, and 2005, and received no compensation during those years. Mr.
      Frazier resigned as an officer and director on January, 27, 2006.






45







**Equity
      Compensation Plan Information - December 31, 2005**


Plan
                Category
            
            (a)
              Number
                of securities to
              be
                issued upon exercise
              of
                outstanding options,
              warrants
                and rights
            
            (b)
              Weighted-average
              exercise
                price of
              outstanding
                options,
              warrants
                and rights
            
            (c)
              Number
                of securities
              remaining
                available for
              future
                issuance under
              equity
                compensation
              plans
                (excluding
              securities
                reflected in
              column
                (a))Equity
                compensation plans
              approved
                by security holders
            
            8,450,000-
            
            0.163
            
            2,450,000Equity
                compensation plans not approved by security holders
            
            
            
            
            
            -Total
            
            8,450,000
            
            $0.163
            
            2,450,000








(1)
            
            Consists
                of warrants issued to our placement agent to purchase (a) 2,000,000
                shares
                of our Common Stock at $0.40 per share.(2)
            
            Consists
                of 6,450,000 stock options grants to our employees, officers and
                directors.







**Option
      Grants in Fiscal Year Ending December 31, 2005**




(Individual
      Grants)




**Name**
            **Number
                of Securities Options Granted**
            **%
                of Total Options Granted to FiscalYear**
            **Exercise/Base
                Price ($/Share)**
            **Expiration
                Date**Prentis
                B. Tomlinson
            4,000,000
            62%
            $0.05
            August
                2015Edward
                L. Moses
            750,000
            12%
            $0.05
            August
                2015O.
                Oliver Pennington
            1,000,000
            16%
            $0.24
            December
                2015W.
                Richard Anderson
            400,000
            6%
            $0.05
            August
                2015Peter
                F. Frey
            200,000
            3%
            $0.24
            December
                2015







46










**Options
      Exercises and First Quarter 2006 Quarter End Values**




**Number
                of Shares**
            
            **Value
                of Unexercised****Underlying
                Unexercised**
            
            **In-the-Money
                Options****Options
                at March 31 2006**
            
            **at
                March 31 2006 (1)****Name**
            
            **Exercisable**
            
            **Unexercisable**
            
            **Exercisable**
            
            **Unexercisable**Prentis
                B. Tomlinson (1)
            
            4,000,000
            
            
            
            0
            
            
            
            $10,800,000
            
            
            
            $0Edward
                L. Moses (1)
            
            750,000
            
            
            
            0
            
            
            
            $2,025,000
            
            
            
            $0O.
                Oliver Pennington, III (2)
            
            500,000
            
            
            
            500,000
            
            
            
            $1,255,000
            
            
            
            $1,255,000W.
                Richard Anderson (1)
            
            400,000
            
            
            
            0
            
            
            
            $1,080,000
            
            
            
            $0Peter
                F. Frey (2)
            
            100,000
            
            
            
            100,000
            
            
            
            $251,000
            
            
            
            $251,000






(1)  The
      value
      of “in-the-money” stock options represents the difference between the $0.05
      exercise price of such options and the fair market value of $2.75 per share
      of
      common stock as of March 31, 2006, the closing price of the common stock
      reported on the OTC Bulletin Board.


(2)  The
      value
      of “in-the-money” stock options represents the difference between the $0.24
      exercise price of such options and the fair market value of $2.75 per share
      of
      common stock as of March 31, 2006, the closing price of the common stock
      reported on the OTC Bulletin Board.





No
      options
      were exercised during the fiscal year ended December 31, 2005. No stock
      appreciation rights were outstanding at the end of the 2005 fiscal
      year.




**Executive
      Employment Contracts**




*Prentis
      B. Tomlinson, Jr* .
      Mr.
      Tomlinson entered into an employment agreement effective October 1, 2005. The
      agreement has a three year term and provides that Mr. Tomlinson will serve
      as
      President and CEO. Mr. Tomlinson receives an annual base salary of $180,000,
      which may be further increased at our discretion. Not withstanding the above,
      the base salary of Mr. Tomlinson shall be increased to $360,000 on the third
      anniversary date from the effective date of the agreement. Mr. Tomlinson has
      also received the following stock options pursuant to the agreement:
      non-statutory options to purchase 4,000,000 shares of our common stock at a
      price of $.05 per share, which options are fully vested and shall survive Mr.
      Tomlinson termination date. Mr. Tomlinson is entitled to participate in any
      employee benefit plans that are made available to our employees.




*Edward
      L. Moses* .
      Mr.
      Moses entered into an employment agreement effective October 1, 2005. The
      agreement has a three year term and provides that Mr. Moses will serve as Vice
      President of Operations. Mr. Moses receives an annual base salary of $120,000,
      which may be increased at our discretion. Mr. Moses has also received the
      following stock options pursuant to the agreement: non-statutory options to
      purchase 750,000 shares of our common stock at a price of $0.05 per share,
      which
      options are fully vested. Mr. Moses is entitled to participate in our employee
      benefit plans are made available to our employees.




*O.
      Oliver Pennington* .
      Mr.
      Pennington entered into an employment agreement effective December 28, 2005.
      The
      agreement has a three year term and provides that Mr. Pennington will serve
      as
      Vice President and Chief Financial Officer. Mr. Pennington receives an annual
      base salary of $200,000, which may be increased at our discretion. Mr.
      Pennington has also received the following stock options pursuant to the
      agreement: non-statutory options to purchase 500,000 shares of our common stock
      at a price of $.24 per share, which options are fully vested and has received
      incentive stock options to purchase 500,000 shares of our common stock at a
      price of $.24 pursuant to our qualified stock option plan that shall vest over
      a
      four year period. Mr. Pennington is entitled to participate in our employee
      benefit plans are made available to our employees.






47




*Peter
      F. Frey* .
      Mr. Frey
      entered into an employment agreement effective December 21, 2005. The agreement
      has a three-year term and provides that Mr. Frey will serve as Controller.
      Mr.
      Frey receives an annual base salary of $135,000, which may be increased at
      our
      discretion. Mr. Frey also received the following stock option pursuant to the
      agreement: non-qualified options to purchase 100,000 shares of our common stock
      at a price of $.24 per share. Such options are fully vested, and (2) incentive
      stock options to purchase 100,000 shares of our common stock at a price of
      $.24
      pursuant to our qualified stock option plan that shall vest over a four year
      period. Mr. Frey is entitled to participate in other employee benefit plans
      that
      we may adopt.




*Other
      Employment Agreement Terms* .
      Each of
      the foregoing employment agreements also include the following terms:




During
      the
      term of the agreement, we may terminate the employee’s employment at any time by
      giving three months written notice. Additionally, we may terminate the
      employee’s employment for cause upon written notice by the company. The employee
      may terminate his employment for “Good Reason” when there is a decrease in his
      base salary, or a materially adverse diminution of the overall level of his
      responsibilities, or a material breach by us of any term or provision of the
      employment agreement or after a change of control, or any personal reason that
      the Board or the Compensation Committee of the Board in its discretion
      determines shall constitute “Good Reason.”




In
      the
      event of a “Change of Control” (as defined below), if the employee is terminated
      without cause or he terminates his employment for good reason at any time during
      the three year period following the Change of Control, the employee will be
      entitled to the following: all outstanding stock options granted on or prior
      to
      the Change of Control shall become immediately exercisable and shall remain
      exercisable for a period of three years, a lump-sum payment equal to three
      times
      the employee’s then current base salary, a lump-sum payment equal to three times
      the highest annual bonus allowed under the Executive Bonus Plan during the
      three
      year period preceding the date of the Change of Control, and continued medial
      and dental coverage for three years from the termination date at no cost to
      the
      employee.




For
      purposes of the agreement, a “Change of Control” means: a tender offer for more
      than 25% of the outstanding voting securities of the company; the company is
      merged or consolidated with another corporation, and as a result of the
      transaction, less than 75% of the outstanding voting securities of the resulting
      corporations are beneficially owned by stockholders of the company immediately
      prior to the transaction; the company sells all or substantially all of its
      assets to another entity that is not a wholly-owned subsidiary; during any
      15-month period, individuals who at the beginning of such period constituted
      the
      board of directors of the company (including any new member whose election
      was
      approved by at least 2/3 of the members of the board of directors then still
      in
      office who were members at the beginning of such period) cease for any reason
      to
      constitute at least a majority of the board of directors; the Compensation
      Committee of the Board of Directors determines, in its sole discretion, that
      a
      change of control has occurred; or 80% or more of the outstanding voting
      securities of the company are acquired by any person or entity other than the
      company, its subsidiaries or its affiliates.




The
      employment agreement with each employee also contains customary nondisclosure
      and proprietary rights provisions. In addition, for the period from October
      1,
      2005 until two years after termination of the agreement, the employee is subject
      to a non-solicitation agreement with respect to, among others, our customers,
      suppliers and employees.






48




**Compensation
      of Directors**




On
      April
      4, 2006, the Compensation Committee (the “Committee”) of our Board of Directors
      recommended that the Board approve new compensation for Board members to be
      effective as of January 1, 2006. The new compensation was approved by the Board
      on April 25, 2006. Under the new compensation package, non-employee directors
      will receive an annual retainer of $20,000 and $1,500 for each formal Board
      meeting attended. In addition, each non-employee director who is also a
      committee member will receive an annual committee retainer fee of $2,500 and
      $750 for each formal committee meeting attended. Each non-employee director
      who
      is also a committee chair will receive an additional annual retainer of $2,500.
      In addition, each non-employee director will be granted 20,000 shares of
      restricted common stock and an option for 25,000 shares of common stock. In
      addition, any new non-employee directors will be granted 20,000 shares of
      restricted common stock an option to purchase 25,000 shares of the common stock
      at the market price at the time of grant as a one time award upon joining the
      Board. All option awards will be non-qualified stock options and, together
      with
      all awards of restricted stock, will be issued pursuant to equity compensation
      plans in effect at the time of the award and will be exercisable for a ten-year
      period from the date of grant of the award. The restricted stock and option
      awards will vest in 50% installments on each December 31.









49







**ITEM
      11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
      MANAGEMENT**




The
      following table sets forth the number of shares of our common stock beneficially
      owned as of June 9, 2006 by:




·
            those
                persons or groups known to beneficially own more than 5% of our common
                stock;




·
            each
                of our executive officers and directors;
                and




·
            all
                of our directors and executive officers as a
                group.




For
      purposes of this table, beneficial ownership is determined in accordance with
      Rule 13d-3 promulgated under the Securities Exchange Act of 1934. Except as
      indicated below, the security holders listed possess sole voting and investment
      power with respect to the shares beneficially owned by that person.




**Name
                and Address**(1)
            **Common
                Stock**
            **Ownership
                (%)**(2)Prentis
                B. Tomlinson(3)
            20,060,000
            35.4%Edward
                L. Moses(4)
            1,500,000
            2.65%W.
                Richard Anderson(4)
            400,000
            *O.
                Oliver Pennington(4)
            500,000
            *Peter
                F. Frey(4)
            100,000
            *International
                Capital Advisory, Inc.(5)
            3,896,025
            6.88%The
                Tobin Family Trust(6)
            2,650,000
            4.68%All
                executive officers and directors as a group(5
                persons):
            22,560,000
            39.84%




*
            Represents
                less than 1% of the issued and outstanding shares of common
                stock.





(1)
            Except
                as otherwise noted, the street address of the named beneficial owner
                is
                1667 K Street, NW, Suite 1230, Washington, DC
                20006.


(2)
            Based
                on a total of (i) 53,980,806 shares of common stock issued and outstanding
                on March 31, 2006, plus (ii) shares that may be issued upon exercise
                of
                options that are exercisable within 60
                days.


(3)
            Includes
                (i) 540,000 shares of stock owned directly, (ii) 15,250,000 shares
                of
                stock held by Calibre Energy Partners, LLC., which Mr. Tomlinson
                controls,
                (iii) 270,000 shares of common stock to be issued upon the exercise
                of
                warrants, and (iv) 4,000,000 shares of common stock that may be issued
                upon the exercise of options exercisable in the next 60
                days.


(4)
            Represents
                shares of common stock that may be acquired upon exercise of options
                in
                the next 60 days.


(5)
            Includes
                296,025 shares that may be acquired upon exercise of warrants in
                the next
                60 days. The address for the beneficial owner is 202 Melrose Avenue,
                Toronto, Ontario, Canada.


(6)
            Includes
                250,000 shares that may be acquired upon exercise of warrants in
                the next
                60 days. The address for the beneficial owner is 40 Bassano Rd.,
                Toronto,
                Ontario, Canada M2N 2K1.







50








**ITEM
      12. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS**




Our
      President and Chairman, Mr. Prentis B. Tomlinson, Jr., owns a 17.9% (on a fully
      diluted basis) stake of Kerogen Resources, Inc., a privately held oil and gas
      exploration company. We have entered into four agreements with Kerogen
      Resources, Inc.




First,
      we
      are parties to a letter agreement with Kerogen Resources pursuant to which
      we
      are participating in the Reichmann Petroleum project. The
      project is a joint venture with Kerogen Resources, Crosby Minerals and Reichmann
      Petroleum Corporation to explore, acquire and develop properties located in
      the
      Barnett Shale in the Ft. Worth Basin of north Texas. Reichmann is the operator
      of the properties. In October 2005 we acquired, through Kerogen Resources,
      a
      12.5% working interest in 6,190 net acres of leasehold interests in Parker,
      Tarrant, Denton, and Johnson Counties, Texas. Subsequent to the initial
      acquisition, we purchased a 25% working interest in 443 net acres of leasehold
      interests from Reichmann Petroleum in Johnson County, Texas. Kerogen Resources
      provides the technical guidance for the project and in exchange will receive
      12.5% of our working interest in each well drilled. As of March
      31,
      2006, we have paid Kerogen a total $4,835,061, of which $3,179,660 was for the 12.5% working interest in the initial 6,190
      acres, prepayment of drilling costs on 12 and for
      the 25% working interest in the leasehold interest in Johnson County, TX and
      $1,655,401 was for operating costs (ie, drilling and completion costs) of the
      JV
      since the original payment. Kerogen
      then paid such amounts to Reichmann Petroleum Corporation as reimbursement
      of
      leasehold costs, drilling and operating expenses .
      Currently, our net acreage position subject to the Reichmann agreement is 773.94
      net acres. As
      of May
      31, 2006, Calibre has participated in 22 gross wells. Four wells are currently
      producing, nine wells have been drilled, completed and fraced and are waiting
      to
      be hooked up to a pipeline, four wells have been drilled, completed and are
      cleaning up after being frac prior to being hooked up to a gas gathering line,
      three wells have been drilled to total depth, completed and are waiting to
      be
      fraced, and two wells are currently drilling.




Second,
      we
      have entered into a Participation Agreement with Kerogen Resources for the
      exploration and development of prospects in the South Fort Worth Basin as
      described above under “Our Business - Our Projects.” Pursuant to this agreement
      we are obligated to pay Kerogen Resources $597,000 for its identification of
      prospects; we have paid Kerogen Resources $500,000 of such amount. As of March
      31, we
      have
      leased approximately 2,399 net leasehold acres under 8,885 gross leasehold
      acres
      pursuant to this agreement.  We
      have
      paid $666,637 to Kerogen for participation in these leases in the Hill County
      area of Texas. All the leasehold acreage is currently undeveloped. The price
      paid for leases represented market prices for similar acreage in the
      area.




Third,
      we
      have entered into a Participation Agreement with Kerogen Resources for the
      exploration and development of prospects in the Williston Basin as described
      above under “Our Business - Our Projects.” Pursuant to this agreement we are
      obligated to pay Kerogen Resources $638,600 for its identification of prospects;
      we have paid Kerogen Resources $550,000 of such amount. As of March 31, 2005,
      we
      have not leased or developed of any properties pursuant to this
      agreement.






51




Fourth,
      Calibre held a promissory note issued by Kerogen Resources. The principal owed
      pursuant to the note was $300,000 and it did bear interest at the rate of 6.25%
      per annum. The principal of this note and accrued interest thereon was due
      and
      payable in a single installment on the maturity date. The maturity date was
      the
      earlier of September 30, 2006 or the date on which Kerogen Resources received
      gross proceeds of at least $6,000,000 from a sale of equity, in one or more
      transactions. Calibre acquired the note from Mr. Tomlinson in October 2005
      in
      exchange for a payment of $300,000. This note was entered into by Mr. Tomlinson,
      a founder of Calibre Energy, in anticipation of the formation of Calibre Energy.
      After the incorporation of Calibre Energy, the company entered into agreements
      with Kerogen for the purpose of identification, exploration
      and development of prospects in the Fort Worth Basin and
      Williston Basin. The Reichmann Petroleum Project and South Fort Worth Basin
      project are projects identified by these agreements. On March 24, 2006, Kerogen
      Resources repaid $314,623.29, the full amount of the promissory note and all
      interest due. The note in the amount of $300,000 was paid on March 24, 2006
      together with interest in the amount of $14,623.29.




On
      March
      24, 2006, we loaned $350,000 to Standard Drilling, Inc. pursuant to a loan
      bearing interest at 4% per annum.  On April 7, 2006 Standard Drilling, Inc.
      repaid us $350,544.54, the full amount of the loan with all interest due. 
Mr. Tomlinson, our President, controls a limited liability company that, at
      the
      time of the loan, owned 53% of Standard Drilling, Inc. Further,
      Standard Drilling’s principal officers also serve as officers of
      Calibre.







We
      believe
      all of the transactions with related parties have been on terms no less
      favorable to us than those terms which may have been obtained from unrelated
      third parties.




In
      addition, Mr. O. Oliver Pennington, our Chief Financial Officer, is our
      President’s son-in-law.








52







**ITEM
      13. EXHIBITS** **.**







**(a)**
            **Exhibits.**The
                following exhibits of Calibre are included
                herein.




ExhibitNo.
            Description2.1
            Amended
                and Restated Agreement and Plan of Reorganization dated January 17,
                2006
                by and among Hardwood Doors and Milling Specialities, Inc., a Nevada
                corporation, Calibre Energy Acquisition Corp., a Delaware corporation,
                and
                Calibre Energy, Inc., a Delaware corporation, (Incorporated by reference
                from Exhibit 3.1 to the Current Report on Form 8-K filed by Calibre
                Energy, Inc. on January 27, 2006)3.1
            Amended
                and Restated Articles of Incorporation of Hardwood Doors and Milling
                Specialties, Inc. (Incorporated by reference to Exhibit 3.1 of Calibre
                Energy, Inc.’s Current Report on Form 8-K filed January 27,
                2006.)3.3
            Bylaws
                of Calibre Energy, Inc. (Incorporated by reference to Exhibit 3.3
                of
                Calibre Energy, Inc.’s Current Report on Form 8-K filed January 27,
                2006.)10.1
            Registration
                Rights Agreement dated October 31, 2005 by and among Calibre Energy,
                Inc.
                and the stockholders named therein. (Incorporated by reference to
                Exhibit
                10.1 of Calibre Energy, Inc.’s Current Report on Form 8-K filed January
                27, 2006.)10.2
            Form
                of Common Stock Warrant dated October 31, 2005 issued by Calibre
                Energy,
                Inc. to the purchasers. (Incorporated by reference to Exhibit 10.2
                of
                Calibre Energy, Inc.’s Current Report on Form 8-K filed January 27,
                2006.)10.3
            Participation
                Agreement (Southern Fort Worth Basin) dated September 20, 2005 among
                Calibre Energy, Inc., Kerogen Resources, Inc. (Incorporated by reference
                to Exhibit 10.3 of Calibre Energy, Inc.’s Current Report on Form 8-K filed
                January 27, 2006.)10.4
            Letter
                Agreement re: Barnett Share Acquisition dated October 12, 2005 between
                Reichmann Petroleum and Calibre Energy, Inc. (Incorporated by reference
                to
                Exhibit 10.4 of Calibre Energy, Inc.’s Current Report on Form 8-K filed
                January 27, 2006.)10.5
            Participation
                Agreement (Williston Basin) dated September 20, 2005 between Calibre
                Energy, Inc. and Kerogen Energy, Inc. (Incorporated by reference
                to
                Exhibit 10.5 of Calibre Energy, Inc.’s Current Report on Form 8-K filed
                January 27, 2006.)10.6
            First
                Amendment to Participation Agreements dated October 31, 2005 among
                Calibre
                Energy, Inc., Kerogen Resources, Inc., Triangle Petroleum USA, Inc.
                and
                Wynn Crosby Partners I, LP. (Incorporated by reference to Exhibit
                10.6 of
                Calibre Energy, Inc.’s Current Report on Form 8-K filed January 27,
                2006.)10.7
            Calibre
                Energy, Inc. 2005 Stock Incentive Plan (Incorporated by reference
                to
                Exhibit 10.7 of Calibre Energy, Inc.’s Current Report on Form 8-K filed
                January 27, 2006.)10.8
            Form
                of Incentive Stock Option Agreement (Incorporated by reference to
                Exhibit
                10.8 of Calibre Energy, Inc.’s Current Report on Form 8-K filed January
                27, 2006.)10.9
            Form
                of Non-Statutory Stock Option Agreement (Incorporated by reference
                to
                Exhibit 10.9 of Calibre Energy, Inc.’s Current Report on Form 8-K filed
                January 27, 2006.)10.10
            Employment
                Agreement dated September 11, 2005 between Calibre Energy, Inc. and
                Prentis B. Tomlinson, Jr. (Incorporated by reference to Exhibit 10.10
                of
                Calibre Energy, Inc.’s Current Report on Form 8-K filed January 27,
                2006.)10.11
            Employment
                Agreement dated September 22, 2005 between Calibre Energy, Inc. and
                Moses.
                (Incorporated by reference to Exhibit 10.11 of Calibre Energy, Inc.’s
                Current Report on Form 8-K filed January 27, 2006.)10.12
            Employment
                Agreement dated December 21, 2005 between Calibre Energy, Inc. and
                Peter
                F. Frey (Incorporated by reference to Exhibit 10.12 of Calibre Energy,
                Inc.’s Current Report on Form 8-K filed January 27,
                2006.)10.13
            Employment
                Agreement dated December 28, 2005 between Calibre Energy, Inc. and
                O.
                Oliver Pennington, III (Incorporated by reference to Exhibit 10.13
                of
                Calibre Energy, Inc.’s Current Report on Form 8-K filed January 27,
                2006.)10.14*
            Form
                of Stock Purchase Warrant dated April 18, 2006.10.15*
            Registration
                Rights Agreement dated April 18, 2006.23.1*
            Consent
                of Malone & Bailey, P.C.23.3*
            Consent
                of Ryder Scott Company, L.P.31.1*
            Chief
                Executive Officer Certification Pursuant to Section 13a-14 of the
                Securities Exchange Act31.2*
            Chief
                Financial Officer Certification Pursuant to Section 13a-14 of the
                Securities Exchange Act32.1*
            Certification
                of the CEO, pursuant to 18 U.S.C. §§ 1350 as adopted pursuant to §§ 906 of
                the Sarbanes-Oxley Act of 200231.2*
            Certification
                of the CFO, pursuant to 18 U.S.C. §§ 1350 as adopted pursuant to §§ 906 of
                the Sarbanes-Oxley Act of 2002


*Filed
      herewith






53





**LEGAL
      MATTERS**




The
      validity of the common stock offered by this report was passed upon for us
      by
      Vinson & Elkins L.L.P., Houston, Texas.




**EXPERTS**




The
      consolidated financial statements for the years ended December 31, 2005 included
      in this reports have been audited by Malone & Bailey, PC, independent
      registered public accounting firm, as stated in their report appearing
      herein.




**RESERVE
      ENGINEERS**




Certain
      estimates of our net oil and natural gas reserves and related information as
      of
      December 31, 2005 included in this report have been derived from engineering
      reports prepared by Ryder Scott Company, L.P. All such information has been
      so
      included on the authority of such firm as experts.







54




**Item
      14. Principal Accountant Fees and Services.**




During fiscal year 2005, the aggregate fees which we paid to Malone &
Bailey, PC, our independent auditors, for professional services were as
      follows:





Fiscal
                Year Ended December 31, 2005Audit
                Fees
            
            $
            51,585Audit-Related
                Fees
            
            
            -Tax
                Fees
            
            
            -All
                Other Fees
            
            
            -




(1)
            
            Fees
                for audit services include fees associated with the annual audit,
                and with
                the preparation of our SB-2.




Audit-Related
      Fees





There
      were
      no fees for other audit related services for fiscal year ended
      2005.





Tax
      Fees





There
      were
      no fees relating to tax compliance, tax advice and tax planning.





All
      Other Fees





There
      were
      no other aggregate fees billed in either of the last two fiscal years for
      products and services provided by the principal accountant, other than the
      services reported above.







**Audit
      Committee Pre-Approval of Audit and Permissible Non-Audit Services of
      Independent Registered Public Accounting Firm.**




As required by the Audit Committee charter, the Audit Committee pre-approves
      the
      engagement of Malone & Bailey, PC for all audit and permissible non-audit
      services. The Audit Committee annually reviews the audit and permissible
      non-audit services performed by Malone & Bailey, PC, and reviews and
      approves the fees charged by Malone & Bailey, PC The Audit Committee has
      considered the role of Malone & Bailey, PC in providing tax and audit
      services and other permissible non-audit services to us and has concluded that
      the provision of such services was compatible with the maintenance of Malone
      & Bailey, PC’s independence in the conduct of its auditing
      functions.







55







SIGNATURES





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




Date:
                July 5, 2006
            CALIBRE
                ENERGY, INC.
              
              By:/s/
                Prentis B. Tomlinson, Jr.
              Prentis
                B. Tomlinson, Jr.
              Chief
                Executive Officer
              
              By
                :/s/
                O. Oliver Pennington III
              O.
                Oliver Pennington III
              Chief
                Financial Officer





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








Date:
                July 5, 2006
            By:/s/
                Prentis B. Tomlinson, Jr.
              Prentis
                B. Tomlinson, Jr.
              DirectorBy:/s/
                Edward L. Moses
              Edward
                L. Moses
              DirectorBy:/s/
                W. Richard Anderson
              W.
                Richard Anderson
              Director







56