**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549




**FORM
      10-KSB**




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


For
      the
      fiscal year ended December 31, 2007




Commission
      File Number 000-52272




**ZULU
      ENERGY CORP.**


(Exact
      name of registrant as specified in its charter)




**Colorado**
            **20-3281304**State
                or other jurisdiction of
            (I.R.S.
                Employerincorporation
                or organization
            Identification
                No.)





122
      N.
      Main Street, Sheridan, Wyoming 82801


(Address
      of principal executive offices) (Zip Code)




307-751-5517


(Issuer’s
      telephone number)




1066
      West Hastings Street, Vancouver, BC V6E 3X2


(Former
      Address)




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




Securities
      registered pursuant to Section 12(g) of the Act: Common Stock, par value $0.0001
      per share




Check
      whether the issuer is not required to file reports pursuant to Section 13 or
      15(d) of the Exchange Act. o




Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that 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
      no disclosure of delinquent filers in response to Item 405 of Regulation S-B
      is
      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




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




Issuer’s
      revenues for the year ended December 31, 2007 was $0.00.




State
      the
      aggregate market value of the voting and non-voting common equity stock held
      by
      non-affiliates computed by reference to the price at which the common equity
      was
      sold, or the average bid and asked price of such common equity, as of a
      specified date within the past 60 days: $73,840,000 on March 7, 2008. Without
      asserting that any director or executive officer of the issuer, or the
      beneficial owner of more than five percent of the issuer’s common stock, is an
      affiliate, the shares of which they are the beneficial owners have been deemed
      to be owned by affiliates solely for this calculation.




The
      number of shares outstanding of each of the issuer’s classes of common equity,
      as of the latest practicable date: 82,000,000 as of April 14, 2008 .




**DOCUMENTS
      INCORPORATED BY REFERENCE**




Portions
      of the Registrant’s Proxy Statement for the 2008 Annual Meeting of Stockholders
      are incorporated by reference into Part III of this Annual Report.




Transitional
      Small usiness disclosure format (check
      one): Yes oNo x









**TABLE
      OF CONTENTS**





**FORM
      10-KSB ANNUAL REPORT**





**ZULU
      ENERGY CORP.**





**PART
                I**
            
            
            2**ITEM
                1.**
            DESCRIPTION
                OF BUSINESS
            
            2**ITEM
                2.**
            DESCRIPTION
                OF PROPERTY
            
            10**ITEM
                3.**
            LEGAL
                PROCEEDINGS
            
            10**ITEM
                4.**
            SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY HOLDERS
            
            10**PART
                II**
            
            
            10**ITEM
                5.**
            MARKET
                FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
            
            10**ITEM
                6.**
            MANAGEMENT
                DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
            
            11**ITEM
                7.**
            FINANCIAL
                STATEMENTS
            
            18**ITEM
                8.**
            CHANGES
                IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                DISCLOSURE
            
            34**ITEM
                8A**
            CONTROLS
                AND PROCEDURES
            
            34**ITEM
                8B**
            OTHER
                INFORMATION
            
            35**PART
                III**
            
            
            35**ITEM
                9.**
            DIRECTORS,
                EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE
                GOVERNANCE
            
            35**ITEM
                10.**
            EXECUTIVE
                COMPENSATION
            
            36**ITEM
                11.**
            SECURITY
                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
                STOCKHOLDER MATTERS
            
            36**ITEM
                12.**
            CERTAIN
                RELATIONSHIPS AND RELATED TRANSACTIONS
            
            36**ITEM
                13.**
            EXHIBITS
            
            36**ITEM
                14.**
            PRINCIPAL
                ACCOUNTANT FEES AND SERVICES
            
            37**SIGNATURES**
            
            
            38




i




**FORWARD-LOOKING
      STATEMENTS**




Some
      of
      the statements contained in this Annual Report on Form 10-KSB that are not
      historical facts are “forward-looking statements” which can be identified by the
      use of terminology such as “estimates,” “projects,” “plans,” “believes,”
“expects,” “anticipates,” “intends,” or the negative or other variations, or by
      discussions of strategy that involve risks and uncertainties. We urge you to
      be
      cautious of the forward-looking statements, that such statements, which are
      contained in this Annual Report on Form 10-KSB, reflect our current beliefs
      with
      respect to future events and involve known and unknown risks, uncertainties
      and
      other factors affecting our operations, market growth, services, products and
      licenses. No assurances can be given regarding the achievement of future
      results, as actual results may differ materially as a result of the risks we
      face, and actual events may differ from the assumptions underlying the
      statements that have been made regarding anticipated events. Factors that may
      cause actual results, our performance or achievements, or industry results,
      to
      differ materially from those contemplated by such forward-looking statements
      include without limitation:




·
            Our
                ability to raise capital when needed and on acceptable terms and
                conditions;




·
            Our
                ability to attract and retain management, and to integrate and maintain
                technical information and management information systems;




·
            The
                uncertainty of establishing proven reserves on our properties;




·
            Delays
                in the exploration and development of our operations in Botswana
                due to
                unavailability of equipment, labor or supplies, limited capacity
                among
                engineering, procurement and drilling firms, climatic conditions
                or
                otherwise;




·
            Insufficient
                transportation and transmission capacity, geological and mechanical
                conditions;




·
            Delays
                or failures in obtaining and maintaining regulatory permits and/or
                licenses concerning mining, power generation, gas distribution and
                related
                requirements;




·
            Political
                risks of operating in Africa;




·
            Lack
                of infrastructure to distribute commercial quantities of coalbed
                methane;




·
            Lack
                of markets for coalbed methane;




·
            The
                intensity of competition; and




·
            General
                economic conditions.




All
      written and oral forward-looking statements made in connection with this Annual
      Report on Form 10-KSB that are attributable to us or persons acting on our
      behalf are expressly qualified in their entirety by these cautionary statements.
      All forward-looking statements speak only as of the date of this Annual Report
      on Form 10-KSB. We do not intend to publicly update or revise any
      forward-looking statements as a result of new information, future events or
      otherwise. These cautionary statements qualify all forward-looking statements
      attributable to us or persons acting on our behalf.




1




**PART
      I**




**ITEM
                1.**
            **DESCRIPTION
                OF BUSINESS**




**The
      Company**




Zulu
      Energy Corp. (“Zulu Energy,” “we” or “us”) is an exploration stage company
      focused on plans to drill for and extract methane gas from coalbeds, known
      as
      coalbed methane (CBM), in the Republic of Botswana. If we are successful in
      locating and developing coalbed methane in commercial quantities and raising
      the
      capital needed for such operations, we are considering one or more strategies
      to
      distribute or utilize for various purposes (including gas-to-diesel) the coalbed
      methane in Botswana and its neighboring countries.




We
      hold
      nine Prospecting Licenses, through Nyati Botswana, that were issued by the
      government of Botswana and which grant us the exclusive right for the
      exploration of coalbed methane on land to which the government of Botswana
      holds
      mineral rights. Our licenses expire in September 2008, but we plan to renew
      these licenses. Pursuant to Botswana law, however, we will only be able to
      renew
      50% of the gross acreage under these licenses.




We
      believe that coalbed methane will become a significant source of competition
      to
      conventional natural gas. The potential resources of coalbed methane contained
      in the world’s coal deposits greatly exceed known conventional natural gas
      resources. In many areas, coalbeds contain three times more gas than found
      in
      the equivalent thicknesses of limestone or sandstone.




Currently,
      Botswana depends on neighboring countries to meet its energy needs. With the
      exception of coal, there are no oil, natural gas, or hydro resources in
      Botswana. During the past five years Botswana has been successful in expanding
      its electrical grid and electrification of certain rural areas. Botswana has
      created the goal of developing a greater choice of energy sources during the
      next five years. The focus is on diversifying its energy supplies and reducing
      its exposure to energy imports including the development of renewable and
      environmentally clean energy sources such as coal bed methane.




Incorporation
      and Organization




Zulu
      Energy was incorporated on May 6, 2005 as Global Sunrise, Inc. in the State
      of
      Colorado. In January 2007, we changed our name to Zulu Energy Corp. Prior to
      our
      acquisition of Nyati Botswana, our efforts had been limited to organizational
      activities and capital formation and initial due diligence on a mineral claim
      in
      Ontario, Canada. After careful consideration and review of the Botswana Coalbed
      Methane project, our board of directors determined that it would be in the
      best
      interest of our Company and our stockholders to abandon the mineral exploration
      project in Ontario, Canada and concentrate our efforts on the Botswana Coalbed
      Methane project. Since early 2007, we have employed a new Chief Executive
      Officer and new Chief Financial Officer and appointed new members to the board
      of directors in conjunction with the resignation of the previous members of
      the
      board of directors.




As
      more
      fully described below, following our acquisition of Nyati Botswana we changed
      our fiscal year to that of our wholly owned subsidiary, Nyati Mauritius and,
      as
      a result, the information reflected in our financial statements included at
      Item
      7 of this Annual Report reflect the information of Nyati Mauritius and its
      subsidiaries.




Our
      shares are quoted on the Over-the-Counter (OTC) Bulletin Board quotation
      system under the symbol ZLUE.




2




**Acquisition
      of Nyati Botswana**




On
      December 20, 2007, we entered into a Share Exchange Agreement and Plan of
      Reorganization (the “Exchange Agreement”), dated as of December 19, 2007, with
      Nyati Mauritius Limited (“Nyati Mauritius”) and LMA Hughes LLLP (“LMA Hughes”).
      Nyati Mauritius is the parent entity of Nyati Resources Limited, which holds
      50%
      of the issued and outstanding capital stock of Nyati Resources Botswana
      (Proprietary) Limited (“Nyati Botswana”), which holds certain Prospecting
      Licenses issued by the government of the Republic of Botswana. On December
      20,
      2007, we also entered into a Stock Purchase Agreement (the “Stock Purchase
      Agreement”), dated as of December 19, 2007, with Swansi Holdings Corp.
      (“Swansi”) to acquire the remaining 50% of the issued and outstanding capital of
      Nyati Botswana. The transactions contemplated by the Exchange Agreement and
      the
      Stock Purchase agreement were consummated and all closing conditions were met
      on
      December 20, 2007. As a result of the transactions contemplated by the Exchange
      Agreement and Stock Purchase Agreement, Nyati Mauritius became our wholly-owned
      subsidiary, and we became the ultimate parent of Nyati Botswana.




Pursuant
      to the terms of the Exchange Agreement, we issued 30,000,000 shares of our
      common stock to LMA Hughes, which was the sole shareholder of Nyati Mauritius
      prior to the closing, in exchange for all of the issued and outstanding shares
      of capital stock of Nyati Mauritius. As a result of the foregoing issuance,
      LMA
      Hughes became our largest shareholder. We also granted LMA Hughes a 10%
      over-riding royalty interest in any properties that we acquire from LMA Hughes
      in the future and we agreed to reimburse LMA Hughes for certain expenses it
      incurred as part of this transaction. LMA Hughes is controlled by Brian Hughes,
      who recently joined our Board of Directors, and his children.




Pursuant
      to the terms of the Stock Purchase Agreement, we are obligated to pay Swansi
      $3
      million in the aggregate and issue to Swansi a warrant to purchase 15,000,000
      shares of our common stock exercisable at $1.50 per share. The warrant will
      have
      a five year term and have substantially the same terms as the warrants issued
      in
      the First Private Placement as described below. We were obligated to conclude
      a
      $5 million private placement by January 19, 2008 and to pay $1.5 million dollars
      of the proceeds to Swansi as part of the purchase price. Pursuant to the
      terms of the Stock Purchase Agreement, Swansi had a rescission right
      concerning the shares in Nyati Mauritius that it sold to us, however,
      Swansi subsequently waived this right. We refer to this private placement
      as the “First Private Placement.” By September 20, 2008, we are obligated to
      conclude a second private placement of at least $5 million of which $1.5 million
      is to be paid to Swansi as part of the purchase price.




No
      members of the board of directors of Zulu Energy or the officers of Zulu Energy
      resigned their positions as a result of the foregoing transactions.




The
      issuances of the common stock to LMA Hughes was made pursuant to Rule 506 of
      Regulation D and Section 4(2) of the Securities Act of 1933, as amended, as,
      among other things, each transaction did not involve a public offering, the
      investor was an accredited investor, the investor had access to information
      about the company and their investment, the investor took the securities for
      investment and not resale, and we took appropriate measures to restrict the
      transfer of the common stock.




**Business
      Strategy**




Our
      Prospecting Licenses allow us to explore for Coalbed Methane on approximately
      2.2 million acres of land in the Pandamatenga area located in the northeast
      region of the Republic of Botswana on the southern part of the African
      continent. This area of Botswana is adjacent to the western area of the Republic
      of Zimbabwe where coal was discovered in the late 1970s and coalbed methane
      was
      subsequently discovered. We believe the strata in Zimbabwe extend west into
      Botswana, and we intend to confirm this belief during our initial exploration
      phases. Our goal is to discover and produce substantial commercial quantities
      of
      coalbed methane on the property. However, no assurance can be given that
      commercial quantities of coalbed methane will be produced.




3




Our
      business strategy is predicated on obtaining the necessary capital to fund
      the
      required operations. In the early stages of our business strategy, we plan
      to
      raise the required funds through primarily equity financings. If we conclude,
      based on our exploration and testing, that commercial quantities of coalbed
      methane can be extracted from the area to which we hold licenses we will need
      substantially more capital for operations and to construct required
      infrastructure to distribute the methane or otherwise bring the methane to
      market. Such financings could lie with development banks that are focused on
      this part of Southern Africa, including the United States Trade &
Development Agency and the World Bank, or large institutional investors;
      however, we have no commitments for financing from any source and the
      availability of financing will depend upon many factors, including our
      exploration results, energy prices, investment needs, governmental regulation
      and government, economic and political conditions.




Our
      business plan is focused on a strategy for maximizing our expertise in
      identifying and developing coalbed methane resources in Botswana. To date,
      execution of our business plan has largely focused on identifying and obtaining
      prospective coalbed methane licenses in Botswana. Successful coalbed methane
      drilling is dependant on the knowledge and experience of the management team.




The
      three
      important concepts in defining economically viable coalbed methane acreage
      are
      coal thickness, the relationship between gas content and saturation, and
      permeability. During our initial exploration phases we intend to validate the
      economic viability of extracting commercial volumes of coalbed methane from
      the
      area to which we hold licenses.




Our
      business plan involves three phases. During the first phase we plan to drill
      approximately nine exploration wells to confirm the coal deposit, identify
      the
      absorption rates and gas content of the coal and identify production pilot
      locations. We anticipate that this initial exploration phase will last
      approximately six months. We plan to begin test drilling and initiate this
      first
      phase as soon as practicable after we have received funding. We expect that
      approximately $7 million of capital will be necessary for the first phase.
      Assuming we are successful in locating coalbed methane and raising the required
      capital, the second phase will likely involve the drilling of approximately
      16
      production test wells with the intent of demonstrating production and commercial
      viability or commercial volumes of coalbed methane. This phase will also likely
      include the dewatering of the coal and gas production and is expected to last
      approximately six months. The third phase will likely involve adding more wells
      to the pilot wells drilled in the second phase, expanding the then existing
      well
      footprint and increasing production. We anticipate that phase three will last
      approximately nine months. Costs for the second and third phase are estimated
      at
      $20 million. The initiation and completion of each of the three contemplated
      phases will require us to raise sufficient capital.




If
      we are
      successful in locating and developing coalbed methane in commercial quantities,
      and we are successful in obtaining the requisite funding, we plan to utilize
      the
      methane for one or more market uses, which could include (i) stand-alone power
      supply systems including small-scale self-contained gas turbines for power
      generation that would provide electricity to the national electricity grid
      network, (ii) gas-to-liquid production to produce high quality diesel fuel
      from
      coalbed methane, (iii) gas-fired power generation plant connecting to the
      national electricity grid and exporting to neighboring countries, or (iv) the
      development of a fertilizer plant using coalbed methane as a feedstock and
      as an
      energy source for ammonia production for internal use and export.




4




**The
      Coalbed Methane Industry**




Little
      more than a half-century ago, drillers seeking valuable crude oil bemoaned
      the
      discovery of natural gas, despite it being the most efficient and cleanest
      burning fossil fuel. Given the lack of transportation infrastructure at the
      time, wells had to be capped or the gas flared. As the U.S. economy expanded
      after World War II, the development of a vast interstate transmission system
      facilitated widespread consumption of natural gas in homes and business
      establishments. The demand for natural gas rose sharply in the 1980’s, when
      consumers and businesses began to find more uses for it. After years as a
      low-value commodity, natural gas ascended into the spotlight as demand for
      the
      fuel to fire power plants, heat homes and serve as a chemical feedstock
      outstripped the petroleum industry’s ability to tap new reserves. It is our
      belief that a similar use of natural gas in Africa would have a positive impact
      on the economic health of Botswana and its neighboring countries and would
      be a
      viable business opportunity for us.




We
      believe the success of coalbed methane developments has been largely the result
      of improved drilling and completion techniques (including horizontal/lateral
      completions), better hydraulic fracture designs and significant cost reductions
      as a result of highly dependable gas content and coalbed reservoir performance
      analysis. Also aiding this sector’s growth is the apparent shortage of quality
      conventional exploration and development projects.




We
      also
      believe that a major reason propelling the growth in coalbed methane production
      is its relatively low finding and development costs. Coalbed methane fields
      are
      often found where deeper conventional oil and gas reservoirs have already been
      developed. Therefore, considerable exploration-cost reducing geologic
      information is often readily available. This available geological information,
      combined with comparatively shallow depths of prospective coalbed reservoirs,
      reduces finding and development costs.




**Coalbed
      Methane**




Natural
      gas normally consists of 80% or more methane with the balance comprising such
      hydrocarbons as butane, ethane and propane. In some cases it may contain minute
      quantities of hydrogen sulfide, referred to as sour gas. Coalbed methane is,
      generally, a sweet gas consisting of 95% methane and thus is normally of
      pipeline quality. Coalbed methane is considered an unconventional natural gas
      resource because it does not rely on conventional trapping mechanisms, such
      as a
      fault or anticline, or stratigraphic traps. Instead coalbed methane is absorbed
      or attached to the molecular structure of the coals which is an efficient
      storage mechanism as coalbed methane coals can contain as much as seven times
      the amount of gas typically stored in a conventional natural gas reservoir
      such
      as sandstone or shale.




Coalbed
      methane is kept within coal by pressure. To produce the gas the water in the
      coalbed has to be removed, generally by using pumps. As pressure is reduced,
      the
      gas desorbs from the coal, flows to the well, and flows up the casing. At the
      wellhead, the flow rate is measured, and the gas is collected and compressed
      for
      transmission via pipelines to household, commercial and industrial users
      hundreds to thousands of miles away. As dewatering begins to lower the reservoir
      pressure, gas production occurs rapidly. If the target seam is under-saturated
      at a specific depth, significant water production must occur to reduce the
      reservoir pressure to allow gas production to commence. This process usually
      requires the drilling of adjacent wells and sometimes takes 6 to 36 months
      to
      complete. Coalbed methane production typically has a low rate of production
      decline and an economic life typically of 10 to 20 years.




The
      principal sources of coalbed methane are either biogenic, producing a dry gas
      which is generated from bacteria in organic matter, typically at depths less
      than 1,000 feet, or thermogenic, which is a deeper wet gas formed when organic
      matter is broken down by temperature and pressure.




5




The
      three
      main factors that determine whether gas can be economically recovered from
      coalbeds are: (1) the relationship between the gas saturation and the content
      of
      the coals; (2) the permeability or flow characteristics of the coals; and (3)
      the thickness of the coalbeds. Relatively high permeability, which can affect
      the ability of gas to easily travel to the borehole, is an important factor
      for
      the success of coalbed methane wells, but is not absolutely required.




**Commodity
      Price Volatility**




Oil
      and
      natural gas prices are volatile and subject to a number of external factors.
      Prices are cyclical and fluctuate as a result of shifts in the balance between
      supply and demand for oil and natural gas, world and North American market
      forces, conflicts in Middle Eastern countries, inventory and storage levels,
      OPEC policy, weather patterns and other factors. OPEC supply curtailment,
      tensions in the Middle East, increased demand in China and low North American
      crude stocks have kept crude oil prices high. Natural gas prices are greatly
      influenced by market forces in North America since the primary source of supply
      is contained within the continent. Market forces include the industry’s ability
      to find new production and reserves to offset declining production, economic
      factors influencing industrial demand, weather patterns affecting heating demand
      and the price of oil for fuel switching.




**Competition**




To
      our
      knowledge no other company is producing coalbed methane in Botswana but there
      is
      no assurance that other companies with greater resources than what we have
      will
      not explore for and produce coalbed methane in Botswana. CIC Energy Corp.,
      however, is engaged in the development and mining of two coal properties located
      in the Mmamabula Coalfields in Southeastern Botswana and has stated that its
      business objective is to develop two coal-integrated power stations in
      Mmamabula, Botswana.




**Governmental
      and Environmental Regulations**




Our
      operations in Botswana are or will be subject to various types of regulation
      under the laws of the Republic of Botswana. Such regulation includes requiring
      licenses for the drilling of exploratory wells; environmental impact studies
      and
      assessments depending on the phase of exploration or production; permitting
      and
      additional license requirements once operations approach commercial production.
      Following our exploration and identification of coalbed methane in commercial
      quantities, we will be required to obtain a mining license from the government
      of Botswana and potentially other permits. In addition, we will be required
      to
      fund an environmental assessment or study prior to producing commercial
      quantities of coalbed methane.




Failure
      to comply with any laws and regulations may result in the assessment of
      administrative penalties, the imposition of injunctive relief or both. Moreover,
      changes in any of these laws and regulations could have a material adverse
      effect on our business. In view of the many uncertainties with respect to
      current and future laws and regulations, including their applicability to us,
      we
      cannot predict the overall effect of such laws and regulations on our future
      operations.




We
      plan
      to establish guidelines and management systems to ensure compliance with
      governmental laws, rules and regulations. The existence of these controls
      cannot, however, guarantee total compliance with these laws, rules and
      regulations.




**Employees**




We
      currently have three full-time employees. We intend to hire additional employees
      upon receipt of additional financing.




6




**RISK
      FACTORS**




*You
      should carefully consider each of the following risk factors and all of the
      other information provided in this Annual Report. The risks described below
      are
      those we currently believe may materially affect us. Our future development
      is
      and will continue to be dependent upon a number of factors. You should carefully
      consider the following information, as well as the more detailed information
      concerning our Company contained elsewhere in this Annual
      Report.*




**We
      Have a History Of Losses Which Should Continue, Which May Negatively Impact
      Our
      Ability to Achieve Our Business Objectives.**




We
      incurred net losses of $2,365,412 and $1,418 for the years ended December 31,
      2007 and 2006, respectively. We are in the development stage and there can
      be no
      assurance that we can achieve revenues or profitability on a quarterly or annual
      basis in the future. Our operations are subject to the risks inherent in the
      establishment of a business enterprise, and the special risks of resource
      exploration. Due to the nature of our business plan to make substantial
      expenditures for exploration and development activities in 2008 without sources
      of revenues, we expect to incur a substantial loss in 2008. Revenues and
      profits, if any, in future years will depend upon various factors, including
      the
      results of our exploration and development programs. We may not achieve our
      business objectives and the failure to achieve our goals would have an adverse
      impact on us.




**Our
      Independent Auditors Have Expressed Substantial Doubt About Our Ability to
      Continue As a Going Concern, Which May Hinder Our Ability to Obtain Future
      Financing.**




In
      their
      report dated April 12, 2008, our independent auditors stated that our financial
      statements were prepared assuming that we would continue as a going concern.
      Our
      ability to continue as a going concern is an issue raised as a result of
      recurring losses from operations. We continue to experience net operating
      losses. Our ability to continue as a going concern is subject to our ability
      to
      obtain necessary funding from outside sources to commence and develop our
      operations and generate a profit, including obtaining additional funding from
      the sale of our securities, developing revenues or obtaining loans from various
      financial institutions where possible. Our continued net operating losses
      increase the difficulty in meeting such goals and there can be no assurance
      that
      our plans will prove successful.




**There
      Is No Assurance That We Will Establish Commercial Discoveries on Our Properties.**




We
      have
      no proven reserves on our properties in Botswana, and there is only limited
      data
      from neighboring areas. Although we believe the neighboring geologic strata
      may
      extend into our properties, until we explore the properties, we cannot be
      certain of the nature of the resource. We may not establish commercial
      discoveries on any of our properties.




**Because
      We Are Small and Do Not Have Much Capital, We May Not Be Able to Commence or
      Properly Execute Our Proposed Operations, Which May Result in a Loss of Your
      Investment** **.**




Because
      we are small and do not have much capital, we may not be able to commence or
      properly execute our proposed operations. We must raise capital to initiate
      and
      execute the initial exploration phases of our business strategy. We have no
      commitments or agreements for funding at this time. As such we may not be able
      to complete an exploration program that is as thorough as we would like. In
      that
      event, existing reserves may go undiscovered. Without finding reserves, we
      cannot generate revenues and you will lose your investment. Our plans to
      commercialize coalbed methane in Botswana will require additional substantial
      funding. Such funding is not guaranteed and if we are unable to raise such
      funds
      we will be unable to generate revenues and you will lose your investment.




7




**We
      Have a Limited Operating History and if We Are Not Successful in Commencing
      Our
      Exploration Operations and Growing Our Business, Then We May Have to Cease
      All
      of Our Operations.**




We
      have
      no history of revenues from operations. We have yet to generate earnings and
      there can be no assurance that we will ever operate profitably. Our success
      is
      significantly dependent on a successful exploration, development and production
      program. Our operations will be subject to all the risks inherent in the
      establishment of a developing enterprise and the uncertainties arising from
      the
      absence of a significant operating history. We may be unable to locate
      recoverable reserves or operate on a profitable basis. If our business plan
      is
      not successful, and we are not able to operate profitably, investors may lose
      some or all of their investment in our company.




**The
      Volatility of Natural Gas and Oil Prices Could Have a Material Adverse Effect
      on
      Our Business.**




We
      have
      not yet begun to produce and sell Coalbed Methane. However, the prices of
      natural gas and oil affect our business to the extent that such prices influence
      a decision to invest in our company. If the prices of natural gas and oil are
      low, investors may decide to invest in other industries.




**Terms
      of Subsequent Financings May Adversely Impact Your
      Investment.**




We
      may
      engage in common equity, debt, or preferred stock financings to finance our
      initial operations. Your rights and the value of your investment in our common
      stock could be reduced by any type of financing we do due to the senior rights
      and preferences granted in those financings, or the prices at which the
      securities are sold by us. In addition, any share of common stock that we sell
      could be sold into the market impacting the price of our common stock.




**If
      We Are Unable to Retain the Services of Mr. Paul Stroud or If We Are Unable
      to
      Successfully Recruit Qualified Managerial and Field Personnel Having Experience
      in Oil and Gas Exploration, We May Not Be Able to Continue Our Operations.**




Our
      success depends to a significant extent upon the continued services of Mr.
      Paul
      Stroud, our Chief Executive Officer, President, and a director. Loss of the
      services of Mr. Stroud could have a material adverse effect on our growth,
      revenues, and prospective business. In order to successfully implement and
      manage our business plan, we will be dependent upon, among other things,
      successfully recruiting qualified managerial and field personnel having
      experience in the oil and gas exploration business. Competition for qualified
      individuals is intense. There can be no assurance that we will be able to find,
      attract and retain existing employees or that we will be able to find, attract
      and retain qualified personnel on acceptable terms.




**The
      Term of Our Coalbed Methane Prospecting Licenses Expires in September
      2008** **,
      Renewal of These Licenses Cannot Be Assured, and We Could Incur Substantial
      Liability to the Republic of Botswana.**




Our
      nine
      Coalbed Methane Prospecting Licenses granted to us by the government of the
      Republic of Botswana have three year terms and expire in September 2008. We
      have
      not made the required expenditures as required by the license during the first
      and second years of the licenses. As a result, our financial statements reflect
      a liability of $4,561,363, which we may need to pay the Republic of Botswana.
      Our total liability could exceed $8 million. Although we plan to make
      substantial expenditures in mid 2008, renewal of our licenses cannot be assured.
      At a minimum, we expect that 50% of the lease acreage will not be included
      in
      any license renewal.




8




**The
      Potential Profitability of Our Project Depends Upon Factors Beyond the Control
      of Our Company.**




The
      potential profitability of oil and gas properties is dependent upon many factors
      beyond our control. For instance, world prices and markets for oil and gas
      are
      unpredictable, highly volatile, potentially subject to governmental fixing,
      pegging, controls, or any combination of these and other factors, and respond
      to
      changes in domestic, international, political, social, and economic
      environments. Additionally, due to worldwide economic uncertainty, the
      availability and cost of funds for production and other expenses have become
      increasingly difficult, if not impossible, to project. These changes and events
      may materially affect our financial performance.




The
      marketability of Coalbed Methane in Botswana is not assured and will be affected
      by numerous factors beyond our control. Infrastructure for the distribution
      or
      conversion of this energy resource would have to be created, which will involve
      planning, funding and governmental approval. Other factors include market
      fluctuations of prices, taxes, royalties, land tenure, allowable production
      and
      environmental protection. These factors cannot be accurately predicted and
      the
      combination of these factors may result in our company not receiving an adequate
      return on invested capital.




**The
      Oil And Gas Industry Is Highly Competitive.**




The
      oil
      and gas industry is intensely competitive. We will compete with numerous
      individuals and companies, including many major oil and gas companies, which
      have substantially greater technical, financial and operational resources and
      staffs. Accordingly, there is a high degree of competition for competent and
      experience personnel, exploration equipment, desirable leases, suitable
      properties for drilling operations and necessary drilling equipment, as well
      as
      for access to funds. We cannot predict if the necessary funds can be raised
      or
      that any projected work will be completed.




**Our
      Proposed Exploration and Development Operations are Subject to Regulation Which
      May Cause Substantial Delays or Require Capital Outlays in Excess of Those
      Anticipated Causing an Adverse Effect on Our Company.**




Our
      proposed exploration and development activities are subject to the regulations
      and laws of the Republic of Botswana, including laws regulating removal of
      natural resources from the ground and the discharge of materials into the
      environment. Various licenses and permits from government bodies are required
      for drilling operations to be conducted; no assurance can be given that such
      permits will be received. Environmental standards imposed by governmental
      authorities may be changed and any such changes may have material adverse
      effects on our activities. Moreover, compliance with such laws may cause
      substantial delays or require capital outlays in excess of those anticipated,
      thus causing an adverse effect on us. Additionally, we may be subject to
      liability for pollution or other environmental damages which we may elect not
      to
      insure against due to prohibitive premium costs and other reasons. To date
      we
      have not been required to spend any material amount on compliance with
      environmental regulations. However, we expect that we will be required to do
      so
      in future and this may affect our ability to expand or maintain our operations.




**Exploratory
      Drilling Involves Many Risks and We May Become Liable for Pollution or Other
      Liabilities Which May Have an Adverse Effect on Our Financial Position.**




Drilling
      operations generally involve a high degree of risk. Hazards such as unusual
      or
      unexpected geological formations, power outages, labor disruptions, blow-outs,
      sour gas leakage, fire, inability to obtain suitable or adequate machinery,
      equipment or labor, and other risks are involved. We may become subject to
      liability for pollution or hazards against which we cannot adequately insure
      or
      which we may elect not to insure. Incurring any such liability may have a
      material adverse effect on our financial position and operations.




9




**Any
      Change to Government Regulation/Administrative Practices May Have a Negative
      Impact on Our Ability to Operate and Our** **Ability
      to Achieve Profitability.**




The
      laws,
      regulations, policies or current administrative practices of any government
      body, organization or regulatory agency in the Republic of Botswana or any
      other
      jurisdiction, may be changed, applied or interpreted in a manner which will
      fundamentally alter the ability of our company to carry on our business.




The
      actions, policies or regulations, or changes thereto, of any government body
      or
      regulatory agency, or other special interest groups, may have a detrimental
      effect on us. Any or all of these situations may have a negative impact on
      our
      ability to operate and/or our profitably.




**ITEM
                2.**
            **DESCRIPTION
                OF PROPERTY**




As
      at
      December 31, 2007, our principal offices were located at 1066 West Hastings
      Street, Suite 2610, Vancouver, BC V68 3X2. We have since moved our principal
      offices to 122 N. Main Street, Sheridan, Wyoming 82801.




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




None.




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




During
      the period ended December 31, 2007, the Company did not submit any matters
      to a
      vote of its security holders.




**PART
      II**




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




Our
      common stock is listed for quotation on the OTC Bulletin Board under the symbol
      “ZLUE.” We began trading on January 1, 2007.




For
      the
      periods indicated, the following table sets forth the high and low bid prices
      per share of our common stock. These prices represent inter-dealer quotations
      without retail markup, markdown, or commission and may not necessarily represent
      actual transactions.




**Twelve Months Ended**
              **December
                31, 2007**
            
            **Twelve Months Ended**
              **December
                31, 2006****High**
            
            **Low**
            
            **High**
            
            **Low**Quarter
                ended March 31, 2007
            
            
            4.00
            
            
            1.00
            
            $
            n/a
            
            $
            n/aQuarter
                ended June 30, 2007
            
            
            2.25
            
            
            1.40
            
            
            n/a
            
            
            n/aQuarter
                ended September 30, 2007
            
            
            2.35
            
            
            2.20
            
            
            n/a
            
            
            n/aQuarter
                ended December 31, 2007
            
            
            2.00
            
            
            1.25
            
            
            n/a
            
            
            n/a




10




**Holders**




As
      of
      April 10, 2007, we have approximately 38 holders of our common stock and a
      total
      of 82,000,000 shares issued and outstanding. The number of record holders was
      determined from the records of our transfer agent and does not include
      beneficial owners of common stock whose shares are held in the names of various
      security brokers, dealers, and registered clearing agencies. The transfer agent
      of our common stock is Holladay Stock Transfer, Inc. with address at 2939 N
      67th
      place, Scottsdale, AZ 85251.




**Dividends**




On
      January 8, 2007, we declared a 10-for-1 forward stock split of our issued and
      outstanding commons stock. We have never declared or paid any cash dividends
      on
      our common stock. We do not anticipate paying any cash dividends to stockholders
      in the foreseeable future. In addition, any future determination to pay cash
      dividends will be at the discretion of the Board of Directors and will be
      dependent upon our financial condition, results of operations, capital
      requirements, and such other factors as the Board of Directors deem
      relevant.




**ITEM
                6.**
            **MANAGEMENT
                DISCUSSION AND ANALYSIS OR PLAN OF
                OPERATION**






*The
      following discussion and analysis should be read in conjunction with the
      consolidated financial statements and related notes included elsewhere in this
      Report on Form 10-KSB. This discussion contains forward-looking statements
      reflecting our current expectations and estimates and assumptions concerning
      events and financial trends that may affect our future operating results or
      financial position. Actual results and the timing of events may differ
      materially from those contained in these forward-looking statements due to
      a
      number of factors, including those discussed in the section entitled
“Forward-Looking Statements” and “Risk Factors” set forth above.*




**Operations
      Plan**




Our
      Prospecting Licenses allow us to explore for coalbed methane on approximately
      2.2 million acres of land in the Pandamatenga area located in the northeast
      region of the Republic of Botswana on the southern African continent. We have
      previously granted overriding royalty interests in the land that is subject
      to
      the Prospecting Licenses equal to 10% in the aggregate.




Our
      goal
      is to discover and produce substantial commercial quantities of coalbed methane
      on the property under our Prospecting Licenses. No assurance can be given that
      commercial quantities of coalbed methane will be produced, if at all. The
      execution of our business plan will require additional capital which we do
      not
      now have on hand. The availability for such funding is also not assured.




Our
      business plan involves three phases. During the first phase we plan to drill
      approximately nine exploration wells to confirm the coal deposit, identify
      the
      absorption rates and gas content of the coal and identify production pilot
      locations. We anticipate that this initial exploration phase will last
      approximately six months. We plan to begin test drilling and initiate this
      first
      phase as soon as practicable after we have received funding. We expect that
      approximately $7 million of capital will be necessary for the first phase.
      Assuming we are successful in locating coalbed methane and raising the required
      capital, the second phase will likely involve the drilling of approximately
      16
      production test wells with the intent of demonstrating production and commercial
      viability or commercial volumes of coalbed methane. This phase will also likely
      include the dewatering of the coal and gas production and is expected to last
      approximately six months. The third phase will likely involve adding more wells
      to the pilot wells drilled in the second phase, expanding then existing well
      footprint and increase production. We anticipate that phase three will last
      approximately nine months. Costs for the second and third phase are estimated
      at
      $20 million. The initiation and completion of each of the three contemplated
      phases will require us to raise sufficient capital.




11




If
      we
      conclude, based on our exploration and testing, that commercial quantities
      of
      coalbed methane can be extracted from the area to which we hold licenses we
      will
      need substantially more capital to construct required infrastructure to
      distribute the methane or otherwise bring the methane to market. Such financings
      could lie with development banks that are focused on this part of Southern
      Africa, including the United States Trade & Development Agency and the World
      Bank, or large institutional investors, but we have no commitments or
      arrangements in place for these financings.




Our
      current cash position is not sufficient to fund our cash requirements during
      the
      next twelve months, including operations and capital expenditures. We intend
      to
      seek equity and/or debt financing to support our proposed coalbed methane
      operations and capital expenditures. We cannot assure that continued funding
      will be available or available on terms acceptable to us.




Our
      future financial results will depend primarily on (1) our ability to discover
      and produce commercial quantities of coalbed methane; (2) the market price
      for
      oil and gas; and (3) our ability to fully implement our exploration and
      development program with respect to these and other matters. We cannot assure
      that we will be successful in any of these activities or that the prices of
      oil
      and gas prevailing at the time of production will be at a level allowing for
      profitable production.




We
      have
      not entered into commodity swap arrangements or hedging transactions. Although
      we have no current plans to do so, we may enter into commodity swap and/or
      hedging transactions in the future in conjunction with oil and gas production.
      We have no off-balance sheet arrangements.




**Liquidity
      and Capital Resources******




At
      December 31, 2007, we had $17,598 in available cash. At December 31, 2007,
      we
      had $329,713 in accrued expenses and accounts payables. On December 31, 2007
      we
      had $29,575 in capitalized oil and gas properties as expenses incurred towards
      exploration activities during the year 2007 and $3,000,000 in capitalized costs
      of prospecting licenses. At December 31, 2007, our working capital deficiency
      totaled $8,120,123 and our stockholders’ deficit totaled $5,090,332. Investment
      in fixed assets during the year ended December 31, 2007 was $298 as compared
      to
      $0 during the year ended December 31, 2006.




We
      intend
      to seek joint ventures and/or to obtain equity and/or debt financing to support
      our current and proposed operations and capital expenditures. We cannot assure
      that any such funding will be available. The included financial statements
      do
      not include any adjustments to the amount and classification of assets and
      liabilities that may be necessary should we be unable to continue as a going
      concern.




We
      will
      require additional financing in order to complete our stated plan of operations
      for the next twelve months. We do not believe that our existing capital
      resources will be sufficient to fund our current level of operating activities,
      capital expenditures and other obligations through the next three months and
      that we will require an additional financing in the range of $20,000,000 to
      $25,000,000 to carry out our intended objectives during the next twelve months.
      There can be no assurance, however, that such financing will be available or,
      if
      it is available, that we will be able to structure such financing on terms
      acceptable to us and that it will be sufficient to fund our cash requirements
      until we can reach a level of profitable operations and positive cash flows.
      If
      we are unable to obtain the financing necessary to support our operations,
      we
      may be unable to continue as a going concern. We currently have no firm
      commitments for any additional capital.




12




The
      trading price of our shares of common stock and the downturn in the United
      States stock and debt markets could make it more difficult to obtain financing
      through the issuance of equity or debt securities. Even if we are able to raise
      the funds required, it is possible that we could incur unexpected costs and
      expenses, fail to collect significant amounts owed to us, or experience
      unexpected cash requirements that would force us to seek alternative financing.
      Further, if we issue additional equity or debt securities, stockholders may
      experience additional dilution or the new equity securities may have rights,
      preferences or privileges senior to those of existing holders of our shares
      of
      common stock. If additional financing is not available or is not available
      on
      acceptable terms, we will have to curtail our operations.




**Results
      of operations for the year ended December 31, 2007 compared to the year ended
      December 31, 2006.**




***Revenues*** **.** For
      the
      year ended December 31, 2007 and December 31, 2006 there were no revenues from
      operating or any other activities.




***Operating
      Expenses*** .
      As of
      December 31, 2007 and based on Botswana law, management is of the opinion that
      the Company will not be able to renew 50% of the lease acreage and, accordingly,
      the financial statements reflect a liability of $4,561,393 (Pula 27,675,000
      converted at $.16482) to the government of Botswana representing the aggregate
      minimum required prospecting expenditures over the three year lease term. The
      Company plans to accelerate the exploration activity on the properties and
      is of
      the opinion that such activity will be sufficient to enable the renewal of
      the
      remaining 50%. There is no assurance that the government will renew any of
      the
      leases.




For
      the
      year ended December 31, 2007 operating expenses of $4,748,830 consisted
      primarily of accrued expense due to the government of Botswana of $4,561,393
      representing the aggregate minimum required prospecting expenditures over the
      three year lease term. For the year ended December 31, 2006 operating expenses
      of $1,418 consisted of general and administrative expenses.




**Summary
      of Significant Accounting Policies**




Basis
      of Presentation




The
      consolidated financial statements contained at Item 7 of this Annual Report
      on
      Form 10-KSB include the accounts of Zulu Energy and its wholly owned
      subsidiaries, Nyati Mauritius, Nyati Resources Limited, and Nyati Botswana.
      Collectively, the consolidated entities are referred to in the financial
      statements as the “Company.” All significant inter-company transactions have
      been eliminated.




Going
      Concern




The
      Company’s financial statements have been prepared on a going concern basis which
      contemplates the realization of assets and the settlement of liabilities and
      commitments in the normal course of business. The Company’s net loss for the
      year ended December 31, 2007 totaled $2,365,412 and accumulated losses through
      December 31, 2007 totaled $4,760,510. As of December 31, 2007 the Company’s
      working capital deficiency totaled $8,120,123 and its shareholder deficit
      totaled $5,090,332. These factors raise substantial doubt about the Company’s
      ability to continue as a going concern.




13




The
      Company’s ability to continue as a going concern will be dependent upon its
      ability to obtain sufficient financing to pay its existing creditors, cover
      its
      operating overhead, and fund oil and gas exploration and production projects.
      Other market factors such as the price of oil, gas and other natural resources
      upon extraction at prices sufficient to generate profitable operations may
      impact the Company’s ability to continue as a going concern.




The
      financial statements do not include any adjustments that might be necessary
      if
      the Company is unable to continue as a going concern.




Exploration
      Stage Company




The
      Company is in the exploration stage. The Company is in the process of acquiring
      oil and gas licenses and drilling rights located in Botswana, Africa. The
      recoverability of the cost of capitalized oil and gas properties are dependent
      upon the discovery of recoverable reserves, the Company’s ability to obtain the
      necessary funding to extract the reserves and the sale of production at
      profitable market prices.




The
      Company complies with Financial Accounting Standards Board Statement No.7 and
      SEC Guide 7 for its characterization of the Company as exploration
      stage.




Cash
      and Cash Equivalents




The
      Company considers all investments purchased with a maturity of three months
      or
      less to be cash equivalents.




Concentration
      of Credit Risk




Financial
      instruments which potentially subject the Company to credit risk consist
      principally of cash. The Company maintains its cash with a quality financial
      institution. The Company did not maintain a balance in excess of the FDIC
      insured amount of $100,000 at any time during the year ended December 31, 2007.




Oil
      and Gas Activities - Successful Efforts Method of Accounting




On
      April
      4, 2005, the FASB adopted FASB Staff Position FSP FAS 19-1 that amends Statement
      of Financial Accounting Standards No. 19 (FAS 19), Financial Accounting and
      Reporting by Oil and Gas Producing Companies, to permit the continued
      capitalization of exploratory well costs beyond one year if (a) the well found
      a
      sufficient quantity of reserves to justify its completion as a producing well
      and (b) the entity is making sufficient progress assessing the reserves and
      the
      economic and operating viability of the project.




The
      Company accounts for its crude oil development and natural gas development
      activities utilizing the successful efforts method of accounting. Under this
      method, costs of productive exploratory wells, development dry holes and
      productive wells and undeveloped leases are capitalized. Oil and gas lease
      acquisition costs are also capitalized. Exploration costs, including personnel
      costs, certain geological and geophysical expenses and daily rentals for oil
      and
      gas leases, are charged to expense as incurred. Exploratory drilling costs
      are
      initially capitalized, but charged to expense if and when the well is determined
      not to have found reserves in commercial quantities. The sale of a partial
      interest in a proved property is accounted for as a cost recovery and no gain
      or
      loss is recognized as long as this treatment does not significantly affect
      the
      unit-of-production amortization rate. A gain or loss is recognized for all
      other
      sales of producing properties.




14




The
      application of the successful efforts method of accounting requires managerial
      judgment to determine that proper classification of wells designated as
      developmental or exploratory which will ultimately determine the proper
      accounting treatment of the costs incurred. The results from a drilling
      operation can take considerable time to analyze and the determination that
      commercial reserves have been discovered requires both judgment and industry
      experience. Wells may be completed that are assumed to be productive and
      actually deliver oil and gas in quantities insufficient to be economic, which
      may result in the abandonment of the wells at a later date. Wells are drilled
      that have targeted geologic structures that are both developmental and
      exploratory in nature and an allocation of costs is required to properly account
      for the results. Delineation seismic incurred to select development locations
      within an oil and gas field is typically considered a development cost and
      capitalized, but often these seismic programs extend beyond the reserve area
      considered proved and management must estimate the portion of the seismic costs
      to expense. The evaluation of oil and gas leasehold acquisition costs requires
      managerial judgment to estimate the fair value of these costs with reference
      to
      drilling activity in a given area. Drilling activities in an area by other
      companies may also effectively condemn leasehold positions.




Revenue
      Recognition




The
      Company has not earned any revenues since its inception. Oil and gas revenues
      will be recorded at such time as the Company has delivered and transferred
      title
      to a purchaser of its product and the price has been reasonably determined.




Asset
      Retirement Obligations




The
      Corporation recognizes the value of a liability for an asset retirement
      obligation in the year in which a reasonable estimate of value can be made.




Changes
      in the liability for an asset retirement obligation due to the passage of time
      will be measured by applying an interest method of allocation. The amount will
      be recognized as an increase in the liability and an accretion expense in the
      statement of operations. Changes resulting from revisions to the timing or
      the
      amount of the original estimate of undiscounted cash flows are recognized as
      an
      increase or a decrease in the carrying amount of the liability for an asset
      retirement obligation and the related asset retirement cost capitalized as
      part
      of the carrying amount of the related long-lived asset. At December 31, 2007
      the
      value of the oil and gas property’s site restoration costs is
      insignificant.




Environmental
      Costs




Environmental
      expenditures that relate to current operations are expensed or capitalized
      as
      appropriate. Expenditures that relate to an existing condition caused by past
      operations, and which do not contribute to current or future revenue generation,
      are expensed. Liabilities are recorded when environmental assessments and/or
      remedial efforts are probable, and the cost can be reasonably estimated.
      Generally, the timing of these accruals coincides with the earlier of completion
      of a feasibility study or the Company’s commitments to plan of action based on
      the then known facts.




Goodwill
      and Intangible Assets




The
      Company has adopted the provisions of the FAS No. 142, “Goodwill and Intangible
      Assets.” Under FAS No. 142, goodwill and intangible assets with indefinite lives
      are not amortized but are annually tested for impairment. The determination
      of
      any impairment includes a comparison of the estimated future operating cash
      flows anticipated during the remaining life for the net carrying value of the
      asset as well as a comparison of the fair value to the book value of the Company
      or the reporting unit to which the goodwill can be attributed.




15




Stock-based
      Compensation




In
      December 2004, the Financial Accounting Standards Board issued FAS 123R
“Share-Based Payment,” a revision to FAS 123. FAS 123R replaces existing
      requirements under FAS 123 and APB 25, and requires public companies to
      recognize the cost of employee services received in exchange for equity
      instruments, based on the grant-date fair value of those instruments, with
      limited exceptions. FAS 123R also affects the pattern in which compensation
      cost
      is recognized, the accounting for employee share purchase plans, and the
      accounting for income tax effects of share-based payment transactions. The
      Company adopted FAS 123R on November 1, 2006.




Income
      Taxes




The
      Company accounts for income taxes by the asset and liability method as mandated
      by Statement of Financial Standards Number 109. Under this method, current
      income taxes are recognized for the estimated income taxes payable for the
      current year. Future income tax assets and liabilities are recognized in the
      current year for temporary differences between the tax and accounting basis
      of
      assets and liabilities as well as for the benefit of losses available to be
      carried forward to future years for tax purposes that are likely to be realized.
      The Company is subject to income taxes in the Country of Mauritius.




Financial
      Instruments




The
      carrying values of cash, accounts payable and accrued liabilities and due to
      related parties approximate their fair value because of the short maturity
      of
      these instruments. It is management’s opinion that the Company is not exposed to
      significant interest, currency or credit risks arising from these financial
      instruments.




Basic
      and Diluted Loss Per Share




The
      Company reports basic loss per share in accordance with the FAS No. 128,
“Earnings per Share.” Basic loss per share is computed using the weighted
      average number of shares outstanding during the period. Diluted EPS gives effect
      to all dilutive potential common shares outstanding during the year including
      stock options, using the treasury stock method. The diluted EPS computation
      uses
      the average stock price for the year to determine the number of shares assumed
      to be purchased from the exercise of stock options or warrants. As at December
      31, 2007 the Company has sustained operating losses and, accordingly, any
      dilutive potential common shares would have an anti-dilutive effect and are
      therefore not considered in computing diluted EPS.




Foreign
      Currency Translation




The
      accounts of the Company are translated in accordance with Statement of Financial
      Accounting Standard No. 52, which requires that foreign currency assets and
      liabilities be translated using the exchange rates in effect at the balance
      sheet date. Results of operations are translated using the average rates
      prevailing throughout the period. The effects of unrealized exchange rate
      fluctuations on translating foreign currency assets and liabilities into U.S.
      dollars are accumulated as the accumulated other comprehensive adjustment in
      shareholders’ equity.




16




Accounting
      for Derivative Instruments and Hedging Activities




We
      have
      adopted SFAS No. 133 “Accounting for Derivative and Hedging Activities,” which
      requires companies to recognize all derivative contracts as either assets or
      liabilities in the balance sheet and to measure them at fair value. If certain
      conditions are met, a derivative may be specifically designated as a hedge,
      the
      objective of which is to match the timing of gain and loss recognition on the
      hedging derivative with the recognition of (i) the changes in the fair value
      of
      the hedged asset or liability that are attributable to the hedged risk or (ii)
      the earnings effect of the hedged forecasted transaction. For a derivative
      not
      designated as a hedging instrument, the gain or loss is recognized in income
      in
      the period of change. We have not entered into derivative contracts either
      to
      hedge existing risks or for speculative purposes, but we plan to use derivative
      contracts in the future solely for hedging prices on production.




Use
      of
      Estimates




The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America (“GAAP”) requires management
      to make assumptions and estimates that effect the reported amounts of assets
      and
      liabilities and the disclosures of contingent assets and liabilities at the
      date
      of the financial statements and reported amounts of revenue and expenses during
      the reporting period. Actual results may differ from those
      estimates.




**Recent
      Accounting Pronouncements**




In
      July 2006, the FASB issued Interpretation No. 48, Accounting for
      Uncertainty in Income Taxes–an interpretation of FASB Statement No. 109
      (“FIN 48”). This interpretation clarifies the application of SFAS 109 by
      defining the criterion that an individual tax position must meet for any part
      of
      the benefit of that position to be recognized in an enterprise’s financial
      statements and also provides guidance on measurement, de-recognition,
      classification, interest and penalties, accounting in interim periods and
      disclosure. FIN 48 is effective for our fiscal year commencing November 1,
      2007. The adoption of FIN 48 is not expected to have an impact on our results
      of
      operations or financial condition.




In
      November 2007, the FASB issued SFAS No. 141 (revised 2007), Business
      Combination (FAS 141(R)) and SFAS No. 160, Non-controlling Interests in
      Consolidated Financial Statements, an amendment of ARB No. 51 (FAS 160).
      FAS 141(R) will change how business acquisitions are accounted for and will
      impact financial statements both on the acquisition date and in subsequent
      periods. FAS 160 will change the accounting and reporting for minority
      interests, which will be recharacterized as non-controlling interests and
      classified as a component of equity. FAS 141(R) and FAS 160 are effective for
      both public and private companies for fiscal years beginning on or after
      December 15, 2008 (fiscal 2010 for the Company). FAS 141(R) will be applied
      prospectively. FAS 160 requires retroactive adoption of the presentation and
      disclosure requirements for existing minority interests. All other requirements
      of FAS 160 will be applied prospectively. Early adoption is prohibited for
      both
      standards. Management is currently evaluating the requirements of FAS 141(R)
      and
      FAS 160 and has not yet determined the impact on its financial
      statements.




In
      December 2007, the FASB issued FSAS No.157, Fair Value Measurements. This
      Statement does not require any new fair value measurements, but rather, it
      provides enhanced guidance to other pronouncements that require or permit assets
      or liabilities to be measured at fair value. However, the application of this
      Statement may change how fair value is determined. The Statement is effective
      for financial statements issued for fiscal years beginning after
      November 15, 2007, and interim periods within those fiscal years. As of
      December 1, 2007 the FASB has proposed a one-year deferral for the
      implementation of the Statement for nonfinancial assets and nonfinancial
      liabilities that are recognized or disclosed at fair value in the financial
      statements on a nonrecurring basis. Management is currently evaluating the
      requirements of FAS 157 and has not yet determined the impact on its financial
      statements.




17




In
      December 2007, the FASB issued FSAS No.159, The Fair Value Option for Financial
      Assets and Financial Liabilities – Including an amendment of FASB Statement
      No. 115 . This Statement provides all entities with an option to report
      selected financial assets and liabilities at fair value. The Statement is
      effective as of the beginning of an entity’s first fiscal year beginning after
      November 15, 2007, with early adoption available in certain circumstances.
      Management is currently evaluating the requirements of FAS 159 and has not
      yet
      determined the impact on its financial statements.




**ITEM
                7.**
            **FINANCIAL
                STATEMENTS**




Audited
      financial statements for the period ended December 31, 2007.




**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**




To
      the
      Board of Directors and


Stockholders
      of ZULU ENERGY CORP. AND SUBSIDIARIES




We
      have
      audited the accompanying consolidated balance sheets of ZULU Energy Corp. and
      Subsidiaries as of December 31, 2007 and 2006, and the related consolidated
      statements of income, stockholders' equity and comprehensive income, and cash
      flows for each of the years in the two-year period ended December 31, 2007,
      and
      for the period from August 11, 2005 (inception) to December 31, 2007. ZULU
      Energy Corp.'s management is responsible for these financial statements. Our
      responsibility is to express an opinion on these financial statements based
      on
      our audits.




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




In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the financial position of ZULU Energy Corp. and
      Subsidiaries as of December 31, 2007 and 2006, and the results of its operations
      and its cash flows for each of the years in the two-year period ended December
      31, 2007, and for the period from August 11, 2005 (inception) to December 31,
      2007 in conformity with accounting principles generally accepted in the United
      States of America.




The
      accompanying consolidated financial statements have been prepared assuming
      that
      the Company will continue as a going concern. As discussed in Note 1 to the
      financial statements, the Company has suffered recurring losses from operations,
      net capital deficiencies, and negative cash flows from operations that raise
      substantial doubt about its ability to continue as a going concern. Management's
      plan in regard to these matters are also described in Note 1. The financial
      statements do not include any adjustments that might result from the outcome
      of
      this uncertainty.




/s/
      De
      Leon & Company, P.A.




Pembroke
      Pines, Florida




April
      12,
      2008




18




**ZULU
      ENERGY CORP. & SUBSIDIARIES**


(Formerly
      Global Sunrise, Inc.)


(An
      Exploration Stage Company)


AUDITED
      CONSOLIDATED BALANCE SHEETS AS AT


December 31,
              
              December 31,2007
              
              2006**ASSETS**Current
                  AssetsCash
                  and cash equivalents
              
              $
              17,598
              
              $
              -Prepaid
                  Expenses
              
              
              5,468
              
              
              3,723Total
                  Current Assets
              
              
              23,066
              
              
              3,723Fixed
                  Assets, net
              
              
              216
              
              
              -Oil
                  and Gas Properties
              
              
              29,575
              
              
              -Prospecting
                  Licenses
              
              
              3,000,000
              
              
              -Total
                  Assets
              
              $
              3,052,857
              
              $
              3,723**LIABILITIES
                  AND STOCKHOLDERS’ DEFICIT**Current
                  LiabilitiesAccounts
                  Payables
              
              $
              266,380
              
              $
              -Accrued
                  Expenses
              
              
              63,333
              
              
              -Loan
                  payable to shareholder
              
              
              252,083
              
              
              34,826Liability
                  – acquisition of prospecting licenses rights
              
              
              3,000,000
              
              
              -Liabilities
                  to Government of Botswana
              
              
              4,561,393
              
              
              -Total
                  Current Liabilities
              
              $
              8,143,189
              
              $
              34,826Stockholders’
                  Deficit:Preferred
                  Stock, $.001 par value; authorized 10,000,000shares,
                  none issued
              
              
              -
              
              
              -Common
                  stock500,000,000  shares
                  authorized at $0.0001 par value, 82,000,000 shares and 600,000
                  shares
                  issued and outstanding at 12/31/2007 and 12/31/2006
                  respectively.
              
              
              8,200
              
              
              60Additional
                  paid-in capital
              
              
              (337,924
              )
              
              (58
              )Deficit
                  accumulated during the exploration stage
              
              
              (4,840,906
              )
              
              (31,105
              )Subscription
                  receivable
              
              
              (98
              )Accumulated
                  other comprehensive income
              
              
              80,396
              
              
              -Total
                  Stockholders’ Deficit
              
              
              (5,090,332
              )
              
              (31,103
              )Total
                  Liabilities and Stockholders’ Deficit
              
              $
              3,052,857
              
              $
              3,723
 
 The
        accompanying notes are an integral part of these financial
        statements
  19
  **ZULU
        ENERGY CORP. & SUBSIDIARIES**
 (Formerly
        Global Sunrise, Inc.)
 (An
        Exploration Stage Company)
 
 CONSOLIDATED
        STATEMENT OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006 AND
        THE
        PERIOD FROM AUGUST 11, 2005 (INCEPTION) TO DECEMBER 31, 2007
 
 YEAR ENDED
                DECEMBER 31,
                2007
              
              YEAR ENDED
                DECEMBER 31,
                2006
              
              FOR THE PERIOD
                FROM AUGUST 11, 2005
                (INCEPTION) TO
                DECEMBER 31, 2007Revenue
              
              $
              -
              
              $
              -
              
              $
              -Operating
                  expenses
              
              
              4,748,830
              
              
              1,418
              
              
              4,779,935Loss
                  from operations before Minority Interest
              
              
              (4,748,830
              )
              
              (1,418
              )
              
              (4,779,935
              )Minority
                  Interest
              
              
              2,303,022
              
              
              -
              
              
              2,303,022Taxes
              
              
              -
              
              
              -
              
              
              -Loss
                  for the period
              
              $
              (2,445,808
              )
              $
              (1,418
              )
              $
              (2,476,913
              )Other
                Comprehensive Income:Foreign
                  currency translation
              
              
              80,396
              
              
              -
              
              
              80,396Total
                  Comprehensive Loss
              
              $
              (2,365,412
              )
              $
              (1,418
              )
              $
              (2,396,517
              )Comprehensive
                  Loss per Share:Primary
              
              $
              (0.14
              )
              $
              (0.00
              )Weighted
                  AverageShares
                  Outstanding
              
              
              16,969,315
              
              
              600,000
 
 The
        accompanying notes are an integral part of these financial
        statements
 20
  **ZULU
        ENERGY CORP. & SUBSIDIARIES**
 (Formerly
        Global Sunrise, Inc.)
 (An
        Exploration Stage Company)
 CONSOLIDATED
        STATEMENT OF STOCKHOLDERS’ DEFICIT
 For
        the
        period from August 11, 2005 (Date of Inception) to December 31,
        2007
 DeficitAccumulatedCommon
                    Stock
                
                Additional
                
                Other
                
                During
                    the
                
                
                
                TotalNumber
                
                
                
                Paid
                    In
                
                Comprehensive
                
                Exploration
                
                Subscription
                
                StockholdersShares
                
                Amount
                
                Capital
                
                Income
                
                Stage
                
                Receivable
                
                (Deficiency)Balance
                    on Date of Inception
                
                
                -
                
                $
                -
                
                $
                -
                
                $
                -
                
                $
                -
                
                
                
                
                $
                -Issuance
                    of common stock–Aug. 11, 2005
                
                
                600,000
                
                
                60
                
                
                (58
                )
                
                -
                
                
                -
                
                
                
                
                
                2Net
                    loss for the year 2005
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (7,087
                )
                
                -
                
                
                (7,087
                )Balance,
                    December 31, 2005
                
                
                600,000
                
                
                60
                
                
                (58
                )
                
                -
                
                
                (7,087
                )
                
                
                
                
                (7,085
                )Net
                    loss for the year 2006
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (24,018
                )
                
                -
                
                
                (24,018
                )Balance,
                    December 31, 2006
                
                
                600,000
                
                
                60
                
                
                (58
                )
                
                -
                
                
                (31,105
                )
                
                
                
                
                (31,103
                )Net
                    Loss for the year ended Dec 31, 2007
                
                
                -
                
                
                -
                
                
                -
                
                
                80,396
                
                
                (2,445,808
                )
                
                
                
                
                (2,365,412
                )Shares
                    Issued – Subscription receivable
                
                
                29,400,000
                
                
                2,940
                
                
                (2,842
                )
                
                -
                
                
                -
                
                
                (98
                )
                
                -Issuance
                    of common stock Dec 20, 2007 for Net Assets of Zulu Energy
                    Corp.
                
                
                52,000,000
                
                
                5,200
                
                
                (335,024
                )
                
                
                
                
                
                
                
                
                
                
                (329,824
                )Minority
                    Interest Acquired
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (2,363,993
                )
                
                -
                
                
                (2,363,993
                )Balance,
                    December 31, 2007
                
                
                82,000,000
                
                
                8,200
                
                
                (337,924
                )
                
                80,396
                
                
                (4,840,906
                )
                
                (98
                )
                
                (5,090,332
                )
  The
        accompanying notes are an integral part of these financial
        statements
  21
 **ZULU
        ENERGY CORP. & SUBSIDIARIES**
 (Formerly
        Global Sunrise, Inc.)
 (An
        Exploration Stage Company)
 AUDITED
        CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE
 YEARS  ENDED
        DECEMBER 31, 2007 AND 2006 AND FOR THE PERIOD FROM
  AUGUST
        11, 2005 (DATE OF INCEPTION) TO DECEMBER 31, 2007
 For the PeriodFrom August
                  11, 2005Year Ended
                
                Year Ended
                
                (Inception) toDecember 31,
                
                December 31,
                
                December 31,2007
                
                2006
                
                2007Cash
                    Flows from Operating Activities :Net
                    loss for the period
                
                $
                (2,445,808
                )
                $
                (1,418
                )
                $
                (2,476,913
                )Adjustments
                    to reconcile net income to net cash used by operating
                    activities:Depreciation
                
                
                82
                
                
                —
                
                
                82Changes
                    in working capital balances:Prepaid
                    expenses
                
                
                (1,745
                )
                
                -
                
                
                (5,468
                )Other
                    liabilities, net of minority interest
                
                
                2,197,400
                
                
                -
                
                
                2,197,400Accounts
                    payable and accrued expenses
                
                
                35,448
                
                
                -
                
                
                35,448Net
                    cash used by operating activities
                
                
                (214,623
                )
                
                (1,418
                )
                
                (249,451
                )Cash
                    Flows used in Investing Activities:Cash
                    acquired upon investment in subsidiary
                
                
                17,452
                
                
                -
                
                
                17,452Fixed
                    Assets
                
                
                (298
                )
                
                
                
                
                (298
                )Oil
                    and gas properties
                
                
                (29,575
                )
                
                —
                
                
                (29,575
                )Net
                    cash used by investing activities
                
                
                (12,421
                )
                
                —
                
                
                (12,421
                )Cash
                    Flows from Financing Activities:Issuance
                    of common stock
                
                
                -
                
                
                -
                
                
                2Increase
                    in shareholder loan
                
                
                164,246
                
                
                1,418
                
                
                199,072Net
                    cash provided by financing activities
                
                
                164,246
                
                
                1,418
                
                
                199,074Effects
                    on exchange rates on cash
                
                
                80,396
                
                
                -
                
                
                80,396Increase
                    in cash and cash equivalents
                
                
                17,598
                
                
                -
                
                
                17,598Cash
                    and cash equivalents, beginning of period
                
                
                -
                
                
                -
                
                
                -Cash
                    and cash equivalents, end of the period
                
                $
                17,598
                
                $
                0
                
                $
                17,598Supplemental
                    Disclosures:The
                    Company did not pay any interest or taxes during the above
                    periods.Non-cash
                    financing and investing activities:The
                    Company issued 52,000,000 shares of common stock for net monetary
                    liabilities of $329,824.


The
        accompanying notes are an integral part of these financial
        statements
  22


Zulu
      Energy Corp. & subsidiaries


(An
      Exploration Stage Company)


Notes
      to
      the Audited Consolidated Financial Statements


For
      the
      Period from August 11, 2005 (inception) to December 31, 2007




Note
                1
            Significant
                Accounting Policies




Basis
      of Presentation




These
      consolidated financial statements include the accounts of Zulu Energy Corp.
      (“Parent” or “ZULU”) and its wholly owned subsidiaries, Nyati Mauritius Limited
      (“Mauritius”), Nyati Resources Limited (“Resources”), and Nyati Botswana
      (“Proprietary”) Limited (Botswana). Collectively, the consolidated entities are
      referred to herein as the (“Company”). All significant inter-company
      transactions have been eliminated.




GoingConcern




The
      Company’s financial statements have been prepared on a going concern basis which
      contemplates the realization of assets and the settlement of liabilities and
      commitments in the normal course of business. The Company’s net loss for the
      year ended December 31, 2007 totaled $2,365,412 and accumulated losses through
      December 31, 2007 totaled $4,760,510. As of December 31, 2007 the Company’s
      working capital deficiency totaled $8,120,123 and its shareholder deficit
      totaled $5,090,332. These factors raise substantial doubt the Company’s ability
      to continue as a going concern.




The
      Company’s ability to continue as a going concern will be dependent upon its
      ability to obtain sufficient financing to pay its existing creditors, cover
      its
      operating overhead, and fund oil and gas exploration and production projects.
      Other market factors such as the price of oil, gas and other natural resources
      upon extraction at prices sufficient to generate profitable operations may
      impact the Company’s ability to continue as a going concern.




The
      financial statements do not include any adjustments that might be necessary
      if
      the Company is unable to continue as a going concern.




Exploration
      Stage Company




The
      Company is in the exploration stage. The Company is in the process of acquiring
      oil and gas licenses and drilling rights located in Botswana, Africa. The
      recoverability of the cost of capitalized oil and gas properties are dependent
      upon the discovery of recoverable reserves, the Company’s ability to obtain the
      necessary funding to extract the reserves and the sale of production at
      profitable market prices.




The
      Company complies with Financial Accounting Standards Board Statement No.7 and
      SEC Guide 7 for its characterization of the Company as exploration
      stage.




Cash
      and Cash Equivalents




The
      Company considers all investments purchased with a maturity of three months
      or
      less to be cash equivalents.




Concentration
      of Credit Risk




Financial
      instruments which potentially subject the Company to credit risk consist
      principally of cash. The Company maintains its cash with a quality financial
      institution. The Company did not maintain a balance in excess of the FDIC
      insured amount of $100,000 at any time during the year ended December 31, 2007.




23


Zulu
        Energy Corp. & subsidiaries
 (An
        Exploration Stage Company)
 Notes
        to
        the Audited Consolidated Financial Statements
 For
        the
        Period from August 11, 2005 (inception) to December 31, 2007




Oil
      and
      Gas Activities -Successful
      Efforts Method of Accounting




On
      April
      4, 2005, the FASB adopted FASB Staff Position FSP FAS 19-1 that amends Statement
      of Financial Accounting Standards No. 19 (FAS 19), Financial Accounting and
      Reporting by Oil and Gas Producing Companies, to permit the continued
      capitalization of exploratory well costs beyond one year if (a) the well found
      a
      sufficient quantity of reserves to justify its completion as a producing well
      and (b) the entity is making sufficient progress assessing the reserves and
      the
      economic and operating viability of the project.




The
      Company accounts for its crude oil development and natural gas development
      activities utilizing the successful efforts method of accounting. Under this
      method, costs of productive exploratory wells, development dry holes and
      productive wells and undeveloped leases are capitalized. Oil and gas lease
      acquisition costs are also capitalized. Exploration costs, including personnel
      costs, certain geological and geophysical expenses and daily rentals for oil
      and
      gas leases, are charged to expense as incurred. Exploratory drilling costs
      are
      initially capitalized, but charged to expense if and when the well is determined
      not to have found reserves in commercial quantities. The sale of a partial
      interest in a proved property is accounted for as a cost recovery and no gain
      or
      loss is recognized as long as this treatment does not significantly affect
      the
      unit-of-production amortization rate. A gain or loss is recognized for all
      other
      sales of producing properties.




The
      application of the successful efforts method of accounting requires managerial
      judgment to determine that proper classification of wells designated as
      developmental or exploratory which will ultimately determine the proper
      accounting treatment of the costs incurred. The results from a drilling
      operation can take considerable time to analyze and the determination that
      commercial reserves have been discovered requires both judgment and industry
      experience. Wells may be completed that are assumed to be productive and
      actually deliver oil and gas in quantities insufficient to be economic, which
      may result in the abandonment of the wells at a later date. Wells are drilled
      that have targeted geologic structures that are both developmental and
      exploratory in nature and an allocation of costs is required to properly account
      for the results. Delineation seismic incurred to select development locations
      within an oil and gas field is typically considered a development cost and
      capitalized, but often these seismic programs extend beyond the reserve area
      considered proved and management must estimate the portion of the seismic costs
      to expense. The evaluation of oil and gas leasehold acquisition costs requires
      managerial judgment to estimate the fair value of these costs with reference
      to
      drilling activity in a given area. Drilling activities in an area by other
      companies may also effectively condemn leasehold positions.




Revenue
      Recognition




The
      Company has not earned any revenues since its inception. Oil and gas revenues
      will be recorded at such time as the Company has delivered and transferred
      title
      to a purchaser of its product and the price has been reasonably determined.




24


Zulu
        Energy Corp. & subsidiaries
 (An
        Exploration Stage Company)
 Notes
        to
        the Audited Consolidated Financial Statements
 For
        the
        Period from August 11, 2005 (inception) to December 31, 2007


AssetRetirement
      Obligations




The
      Corporation recognizes the value of a liability for an asset retirement
      obligation in the year in which a reasonable estimate of value can be made.




Changes
      in the liability for an asset retirement obligation due to the passage of time
      will be measured by applying an interest method of allocation. The amount will
      be recognized as an increase in the liability and an accretion expense in the
      statement of operations. Changes resulting from revisions to the timing or
      the
      amount of the original estimate of undiscounted cash flows are recognized as
      an
      increase or a decrease in the carrying amount of the liability for an asset
      retirement obligation and the related asset retirement cost capitalized as
      part
      of the carrying amount of the related long-lived asset. As at December 31,
      2007
      the value of the oil and gas property’s site restoration costs is
      insignificant.




Environmental
      Costs




Environmental
      expenditures that relate to current operations are expensed or capitalized
      as
      appropriate. Expenditures that relate to an existing condition caused by past
      operations, and which do not contribute to current or future revenue generation,
      are expensed. Liabilities are recorded when environmental assessments and/or
      remedial efforts are probable, and the cost can be reasonably estimated.
      Generally, the timing of these accruals coincides with the earlier of completion
      of a feasibility study or the Company’s commitments to plan of action based on
      the then known facts.




Goodwill
      and Intangible Assets




The
      Company has adopted the provisions of the FAS No. 142, “Goodwill and Intangible
      Assets.” Under FAS No. 142, goodwill and intangible assets with indefinite lives
      are not amortized but are annually tested for impairment. The determination
      of
      any impairment includes a comparison of the estimated future operating cash
      flows anticipated during the remaining life for the net carrying value of the
      asset as well as a comparison of the fair value to the book value of the Company
      or the reporting unit to which the goodwill can be attributed.




Stock-based
      Compensation




In
      December 2004, the Financial Accounting Standards Board issued FAS 123R
“Share-Based Payment,” a revision to FAS 123. FAS 123R replaces existing
      requirements under FAS 123 and APB 25, and requires public companies to
      recognize the cost of employee services received in exchange for equity
      instruments, based on the grant-date fair value of those instruments, with
      limited exceptions. FAS 123R also affects the pattern in which compensation
      cost
      is recognized, the accounting for employee share purchase plans, and the
      accounting for income tax effects of share-based payment transactions. The
      Company adopted FAS 123R on November 1, 2006.




25


Zulu
        Energy Corp. & subsidiaries
 (An
        Exploration Stage Company)
 Notes
        to
        the Audited Consolidated Financial Statements
 For
        the
        Period from August 11, 2005 (inception) to December 31, 2007




Income
      Taxes




The
      Company accounts for income taxes by the asset and liability method as mandated
      by Statement of Financial Standards Number 109. Under this method, current
      income taxes are recognized for the estimated income taxes payable for the
      current year. Future income tax assets and liabilities are recognized in the
      current year for temporary differences between the tax and accounting basis
      of
      assets and liabilities as well as for the benefit of losses available to be
      carried forward to future years for tax purposes that are likely to be realized.
      The Company is subject to income taxes in the Country of Mauritius.




Financial
      Instruments




The
      carrying values of cash, accounts payable and accrued liabilities and due to
      related parties approximate their fair value because of the short maturity
      of
      these instruments. It is management’s opinion that the Company is not exposed to
      significant interest, currency or credit risks arising from these financial
      instruments.




Basicand
      Diluted Loss Per Share




The
      Company reports basic loss per share in accordance with the FAS No. 128,
“Earnings per Share.” Basic loss per share is computed using the weighted
      average number of shares outstanding during the period. Diluted EPS gives effect
      to all dilutive potential common shares outstanding during the year including
      stock options, using the treasury stock method. The diluted EPS computation
      uses
      the average stock price for the year to determine the number of shares assumed
      to be purchased from the exercise of stock options or warrants. As at December
      31, 2007 the Company has sustained operating losses and, accordingly, any
      dilutive potential common shares would have an anti-dilutive effect and are
      therefore not considered in computing diluted EPS.




Foreign
      Currency Translation




The
      accounts of the Company are translated in accordance with Statement of Financial
      Accounting Standard No. 52, which requires that foreign currency assets and
      liabilities be translated using the exchange rates in effect at the balance
      sheet date. Results of operations are translated using the average rates
      prevailing throughout the period. The effects of unrealized exchange rate
      fluctuations on translating foreign currency assets and liabilities into U.S.
      dollars are accumulated as the accumulated other comprehensive adjustment in
      shareholders’ equity.




Accounting
      for Derivative Instruments and Hedging Activities




We
      have
      adopted SFAS No. 133 “Accounting for Derivative and Hedging Activities,” which
      requires companies to recognize all derivative contracts as either assets or
      liabilities in the balance sheet and to measure them at fair value. If certain
      conditions are met, a derivative may be specifically designated as a hedge,
      the
      objective of which is to match the timing of gain and loss recognition on the
      hedging derivative with the recognition of (i) the changes in the fair value
      of
      the hedged asset or liability that are attributable to the hedged risk or (ii)
      the earnings effect of the hedged forecasted transaction. For a derivative
      not
      designated as a hedging instrument, the gain or loss is recognized in income
      in
      the period of change. We have not entered into derivative contracts either
      to
      hedge existing risks or for speculative purposes, but we plan to use derivative
      contracts in the future solely for hedging prices on production.




26


Zulu
        Energy Corp. & subsidiaries
 (An
        Exploration Stage Company)
 Notes
        to
        the Audited Consolidated Financial Statements
 For
        the
        Period from August 11, 2005 (inception) to December 31, 2007


Use
      of
      Estimates




The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America (“GAAP”) requires management
      to make assumptions and estimates that effect the reported amounts of assets
      and
      liabilities and the disclosures of contingent assets and liabilities at the
      date
      of the financial statements and reported amounts of revenue and expenses during
      the reporting period. Actual results may differ from those
      estimates.




Recent
      Accounting Pronouncements




In
      July 2006, the FASB issued Interpretation No. 48, Accounting for
      Uncertainty in Income Taxes–an interpretation of FASB Statement No. 109
      (“FIN 48”). This interpretation clarifies the application of SFAS 109 by
      defining the criterion that an individual tax position must meet for any part
      of
      the benefit of that position to be recognized in an enterprise’s financial
      statements and also provides guidance on measurement, de-recognition,
      classification, interest and penalties, accounting in interim periods and
      disclosure. FIN 48 is effective for our fiscal year commencing November 1,
      2007. The adoption of FIN 48 is not expected to have an impact on our results
      of
      operations or financial condition.




In
      November 2007, the FASB issued SFAS No. 141 (revised 2007), Business
      Combination (FAS 141(R)) and SFAS No. 160, Non-controlling Interests in
      Consolidated Financial Statements, an amendment of ARB No. 51 (FAS 160).
      FAS 141(R) will change how business acquisitions are accounted for and will
      impact financial statements both on the acquisition date and in subsequent
      periods. FAS 160 will change the accounting and reporting for minority
      interests, which will be recharacterized as non-controlling interests and
      classified as a component of equity. FAS 141(R) and FAS 160 are effective for
      both public and private companies for fiscal years beginning on or after
      December 15, 2008 (fiscal 2010 for the Company). FAS 141(R) will be applied
      prospectively. FAS 160 requires retroactive adoption of the presentation and
      disclosure requirements for existing minority interests. All other requirements
      of FAS 160 will be applied prospectively. Early adoption is prohibited for
      both
      standards. Management is currently evaluating the requirements of FAS 141(R)
      and
      FAS 160 and has not yet determined the impact on its financial
      statements.




In
      December 2007, the FASB issued FSAS No.157, Fair Value Measurements. This
      Statement does not require any new fair value measurements, but rather, it
      provides enhanced guidance to other pronouncements that require or permit assets
      or liabilities to be measured at fair value. However, the application of this
      Statement may change how fair value is determined. The Statement is effective
      for financial statements issued for fiscal years beginning after
      November 15, 2007, and interim periods within those fiscal years. As of
      December 1, 2007 the FASB has proposed a one-year deferral for the
      implementation of the Statement for nonfinancial assets and nonfinancial
      liabilities that are recognized or disclosed at fair value in the financial
      statements on a nonrecurring basis. Management is currently evaluating the
      requirements of FAS 157 and has not yet determined the impact on its financial
      statements.




27




Zulu
        Energy Corp. & subsidiaries
 (An
        Exploration Stage Company)
 Notes
        to
        the Audited Consolidated Financial Statements
 For
        the
        Period from August 11, 2005 (inception) to December 31, 2007




In
      December 2007, the FASB issued FSAS No.159, The Fair Value Option for Financial
      Assets and Financial Liabilities – Including an amendment of FASB Statement
      No. 115. This Statement provides all entities with an option to report
      selected financial assets and liabilities at fair value. The Statement is
      effective as of the beginning of an entity’s first fiscal year beginning after
      November 15, 2007, with early adoption available in certain circumstances.
      Management is currently evaluating the requirements of FAS 159 and has not
      yet
      determined the impact on its financial statements.




Note
                2
            Nature
                and Continuance of Operations




**Zulu
      Energy Corp.**


Zulu
      Energy Corp. (“Parent” or “ZULU”) was incorporated under the laws of the State
      of Colorado on May 6, 2005 under the name of Global Sunrise, Inc. On January
      16,
      2007 the Parent changed its name to Zulu Energy Corp. Prior to the share
      exchange agreement dated December 20, 2007, as more fully explained below,
      the
      Parent utilized a June 30 fiscal year-end. The Parent changed its year-end
      to
      December 31 as a result of the merger with Nyati Mauritius Limited (Mauritius).
      The focus of the Parent’s business plan is the acquisition of oil and gas
      properties and leasing rights and their exploration, development and
      production.




Effective
      December 20, 2007, the Parent acquired 100% of the outstanding common stock
      of
      Mauritius (including the subsidiary of Mauritius named Resources) in exchange
      for 30,000,000 common shares of the Parent. The Parent’s acquisition of
      Mauritius (an operating company) and its subsidiary has been recorded as a
      recapitalization of ZULU because the Parent is a “shell” company, accordingly,
      Mauritius is deemed to be the accounting acquirer. The 30,000,000 common shares
      issued have been recorded as if issued by Mauritius for the net monetary assets
      of the Parent. The statement of stockholder’s deficit reflects the accumulated
      deficit of Mauritius from its inception and that of the Parent from December
      21,
      2007 through December 31, 2007 and has been restated to reflect the 10 to 1
      forward stock split of January 8, 2007 (see below) as if it had occurred at
      inception. The prior year comparative financial statements presented are those
      of Mauritius and its subsidiary.




**Nyati
      Mauritius Limited**


The
      Company was incorporated under the laws of the country of Mauritius on August
      11, 2005 as Nyati Mauritius Limited.




The
      Company’s share capital is comprised of authorized common stock of 50,000 shares
      at $1 par value. The common shareholders have a right to one vote per share
      held.




At
      inception, the company issued 2 shares at $1 par value to the subscribers of
      the
      company.




Nyati
      Resources Limited acquired a controlling stake (90%) in a company called Nyati
      Botswana (Proprietary) Limited, when 90 shares of Nyati Botswana were issued
      to
      Nyati Resources on February 14, 2007 at par value i.e. Pula 1 per share. Nyati
      Botswana (Proprietary) Limited is an oil and gas (exploration stage) company.
      As
      on this date, the other 10% shares of Nyati Botswana were held by Swansi
      Holdings Corp.




On
      March
      2, 2007 Swansi Holdings Corp. had entered into a call options agreement to
      buy
      40 shares of Nyati Botswana (Proprietary) Limited from Nyati Resources Limited
      at $1 per share. On June 6 ,
      2007
      Nyati Resources Limited sold 40 shares of Nyati Botswana (Proprietary) Limited
      to Swansi Holdings Corp. pursuant to their exercising the call options agreement
      mentioned above, thus bringing down the ownership of Nyati Resources Limited
      in
      Nyati Botswana (Proprietary) Limited from 90% to 50%. As of December 31, 2007
      the Company’s shareholding in Nyati Botswana (Proprietary) Limited was 50%.
      Prior to the December 20, 2007 share exchange agreement referred to below,
      the
      remaining 50% stock ownership interest in Nyati Botswana (Proprietary) Limited
      was held by Swansi Holdings Corp.




28


Zulu
        Energy Corp. & subsidiaries
 (An
        Exploration Stage Company)
 Notes
        to
        the Audited Consolidated Financial Statements
 For
        the
        Period from August 11, 2005 (inception) to December 31, 2007




The
      Company issued 98 shares to its holding company LMA Hughes, LLP on July 2,
      2007
      at par value, thus bringing the total shares issued and outstanding of the
      company to 100. All shares of the company were acquired by ZULU on December
      20,
      2007.




Entry
      into a Material Definitive Agreement




On
      December 20, 2007, Zulu Energy Corp. (“Parent”) entered into a Share Exchange
      Agreement and Plan of Reorganization (the “Exchange Agreement”), dated as of
      December 19, 2007, with Nyati Mauritius Limited (“Nyati Mauritius”) and LMA
      Hughes LLLP (“LMA Hughes”). Nyati Mauritius is the parent entity of Nyati
      Resources Limited, which holds 50% of the issued and outstanding capital stock
      of Nyati Resources Botswana (Proprietary) Limited (“Nyati Botswana”), which
      holds certain exploration licenses issued by the government of the Republic
      of
      Botswana. On December 20, 2007, Parent also entered into a Stock Purchase
      Agreement (the “Stock Purchase Agreement”), dated as of December 19, 2007, with
      Swansi Holdings Corp. (“Swansi”) to acquire the remaining 50% of the issued and
      outstanding common stock of Nyati Botswana. The transactions contemplated by
      the
      Exchange Agreement and the Stock Purchase agreement were consummated and all
      closing conditions were met on December 20, 2007. As a result of the
      transactions contemplated by the Exchange Agreement and Stock Purchase
      Agreement, Nyati Mauritius and Nyati Botswana became the wholly-owned of
      subsidiaries of Zulu Energy Corp.




Pursuant
      to the terms of the Exchange Agreement, Zulu Energy Corp. issued 30,000,000
      shares of its common stock to LMA Hughes, which was the sole shareholder of
      Nyati Mauritius prior to the closing, in exchange for all of the issued and
      outstanding shares of common stock of Nyati Mauritius. As a result of the
      foregoing issuance, LMA Hughes became the largest shareholder of Zulu Energy
      Corp. Parent also granted LMA Hughes a 10% over-riding royalty interest in
      any
      properties that the Companies acquire from LMA Hughes in the future and the
      Company agreed to reimburse LMA Hughes for certain expenses it incurred as
      part
      of this transaction.




Pursuant
      to the terms of the Stock Purchase Agreement, the Company is obligated to pay
      Swansi $3 million in the aggregate in two tranches of $1.5 million each. The
      first tranche is payable within thirty business days of the December 20, 2007
      closing date and the second tranche is payable nine months following the closing
      date. The initial tranche period expired without the payment of the $1.5 million
      term amount. On March 26, 2008, Swansi transferred their 50% interest in Nyati
      Botswana to the Company. Upon the completion of a private placement and payment
      to Swansi of the initial $1.5 million tranche, the Company is obligated to
      issue
      to Swansi 15,000,000 common stock warrants expiring five years from issuance
      at
      an exercise price of $1.50 per share.




The
      issuances of the common stock to LMA Hughes was made pursuant to Rule 506 of
      Regulation D and Section 4(2) of the Securities Act of 1933, as amended, as,
      among other things, each transaction did not involve a public offering, the
      investor was an accredited investor, the investor had access to information
      about the company and their investment, the investor took the securities for
      investment and not resale, and the Company took appropriate measures to restrict
      the transfer of the common stock.




29


Zulu
        Energy Corp. & subsidiaries
 (An
        Exploration Stage Company)
 Notes
        to
        the Audited Consolidated Financial Statements
 For
        the
        Period from August 11, 2005 (inception) to December 31, 2007




Note
                3
            Preferred
                Stock And Common Stock




Preferred
      Stock




The
      Company is authorized to issue up to 10,000,000 shares of preferred stock having
      a par value of $.001 per share. The Company has not issued any shares of
      preferred stock.




Common
      Stock




The
      Company issued 600,000 shares of its common stock on August 11, 2005 to its
      founders for $2.




The
      Company issued 29,400,000 shares of its common stock on July 2, 2007 for a
      subscription receivable of $98.




The
      Company issued 52,000,000 shares of its common stock on December 20, 2007 for
      the net monetary assets of Zulu Energy Corp.




On
      January 8, 2007, the Board of Directors of the Company authorized a ten to
      one
      (10 – 1) forward split of the Company’s issued and outstanding shares of common
      stock. In addition the Company changed the par value of its common stock from
      $0.001 to $.0001. The effect of this stock split has been reflected
      retroactively in the financial statements as if the stock split had occurred
      at
      the inception of the Company.




Note
                4
            Fixed
                Assets




All
      fixed
      assets are recorded at cost. Depreciation is provided for using the
      straight-line method as follows:




December
                31,
            
            December 31,2007
            
            2006AccumulatedAsset
                Class
            
            Cost
            
            Depreciation
            
            Net
            
            NetProperty,
                Plant & Equipment
            
            $
            298
            
            $
            82
            
            $
            216
            
            $
            —Total
            
            $
            298
            
            $
            82
            
            $
            216
            
            $
            —





Estimate
      for the life of property, plant and equipment is 10 years and a 10% rate of
      depreciation is assumed fair.




Note
                5
            Oil
                and Gas Properties




The
      Company has acquired nine leases in unproved oil and gas properties located
      in
      Botswana. Under the terms of the lease agreements the Company is required to
      pay
      its share of royalties and other obligations. The Company paid $7,579 and $7,996
      for the lease years ended September 30, 2007 and 2006, respectively to the
      Government of Botswana under such lease agreements. Such leases expire in
      September 30, 2008. There is no assurance that the leases will be extended
      by
      the government.




30




Zulu
        Energy Corp. & subsidiaries
 (An
        Exploration Stage Company)
 Notes
        to
        the Audited Consolidated Financial Statements
 For
        the
        Period from August 11, 2005 (inception) to December 31, 2007




Pursuant
      to such contracts, as at December 31, 2007 the Company was obligated to pay
      $5,684 to maintain the leases. This amount does not contemplate funds required
      for exploration.




Pursuant
      to the lease agreements the Company was required to expend the following amounts
      during the lease period:





LeasePeriod
                Ended
            
            Description
            
            Amount
              in
                Pulas9/30/06
            
            Study
                of Data, Bore hole to 300m, Desorption study for 6 months
            
            1,150,0009/30/07
            
            Data
                interpretation, Permeability study, Drill production Bore hole, Test
                CBM
                produced
            
            2,000,0009/30/08
            
            Full
                feasibility Study, Production and marketing Study
            
            3,000,000





As
      of
      December 31, 2007 the Company has not expended the amounts required during
      the
      lease periods. Amounts that were to be spent on exploration are due to the
      government by Botswana law. As of December 31, 2007 and based on Botswana law,
      management is of the opinion that the Company will not be able to renew 50%
      of
      the lease acreage and, accordingly, the financial statements reflect a liability
      of $4,561,393 (P 27,675,000 converted at $.16482) to the government of Botswana
      representing the aggregate minimum required prospecting expenditures over the
      three year lease term. The Company plans to accelerate the exploration activity
      on the properties and is of the opinion that such activity will be sufficient
      to
      enable the renewal of the remaining 50%. There is no assurance that the
      government will renew any of the leases.




The
      company has capitalized $29,575 spent during the year ended December 31, 2007
      towards exploration activities as oil and gas properties.




Note
                6
            Related
                Party Transactions




Amounts
      due to related parties consist of loan in the amount of $252,083 from LMA
      Hughes, LLLP which is an affiliate of a shareholder of the company. As at
      December 31, 2007 these loans remain payable to LMA Hughes, LLLP and are
      unsecured, non-interest bearing and without specific terms for
      repayment.




31


Zulu
        Energy Corp. & subsidiaries
 (An
        Exploration Stage Company)
 Notes
        to
        the Audited Consolidated Financial Statements
 For
        the
        Period from August 11, 2005 (inception) to December 31, 2007




Note
                7
            Stock-based
                Compensation




We
      have
      adopted SFAS No. 123 “Accounting for Stock Based Compensation” as amended by
      SFAS No. 148 “Accounting for Stock-based Compensation - Transition and
      Disclosure.” We recognize stock-based compensation expense using a fair value
      based method. We do not have a qualified stock option plan in place as of the
      reporting date.




On
      September 24, 2007, the Company granted 3,000,000 stock options exercisable
      at
      $1.81 until September 24, 2012. All these options vest on the date of the
      grant.




The
      fair
      value of these share purchase options was determined using the Company’s
      historical stock prices and the Black-Scholes option-pricing model with the
      following assumptions:


Risk
                  free rate
              
              
              3.875
              %Dividend
                  yield
              
              
              0
              %Weighted
                  average expected volatility
              
              
              90
              %Weighted
                  average expected option life
              
              
              5
                  yrsWeighted
                  average fair value of options
              
              $
              1.292Total
                  options outstanding
              
              
              3,000,000Total
                  fair value of options outstanding
              
              $
              3,876,000





These
      options were granted by the legal parent who is the accounting acquiree for
      financial reporting purposes. Accordingly, due to the vesting of the stock
      options prior to the December 20, 2007 stock exchange agreement the statement
      of
      operations does not reflect the effect of this transaction.




Note
                8
            Accrued
                Expenses




Accrued
      salary payable to the CEO of the Company for $63,333 has been recorded as
      accrued expenses as on December 31, 2007.




Note
                9
            Income
                Taxes




As
      of
      December 31, 2007 the Company had net operating loss (NOL’s) carry-forwards of
      approximately $387,869 expiring in years 2026 through 2027. Total deferred
      net
      tax assets and the related valuation allowance as of December 31, 2007 and
      2006
      is as follows:




2007
            
            2006Deferred
                tax assets, net of liabilities
            
            $
            131,875
            
            $
            5,630Valuation
                allowance
            
            
            (131,875
            )
            
            (5,630
            )-0-
            
            
            -0-





The
      deferred net tax assets are computed using a corporate tax rate of 34%. The
      value of the net deferred tax assets was offset by a valuation allowance due
      to
      the uncertainty of the future realization of the net deferred tax assets.




Note
                10
            Commitments
                and Contingencies




The
      Company is obligated to spend Pula (“P”) 6,150,000 or approximately $1,000,000
      US per lease over the term of the lease (three years). If such expenditures
      do
      not occur then such amounts are payable to the government of Botswana. The
      total
      expenditure committed is $9,000,000 US for nine leases. The Company believes
      that it will be able to perform sufficient work on the leaseholds so that the
      maximum amount it will owe the government is $4.5 million.




32


Zulu
        Energy Corp. & subsidiaries
 (An
        Exploration Stage Company)
 Notes
        to
        the Audited Consolidated Financial Statements
 For
        the
        Period from August 11, 2005 (inception) to December 31, 2007




Note
                11
            Subsequent
                Events




The
      Company was obligated to conclude a private placement by January 19, 2008 for
      five million dollars pursuant to the stock purchase agreement with Swansi.
      The
      Company was not able to conclude such private placement and is in
      default under the stock purchase agreement. There were no monetary
      consequences as a result of not concluding the private placement by the
      foregoing date.




The
      Company has received a non compliance letter from the government of Botswana
      regarding the committed work and required expenditures on its leased acreage.
      The Company expects to accelerate its drilling process prior to the renewal
      application deadline at the end of June for its leases. As of April 10, 2008,
      the Company has not commenced drilling, however, subject to the completion
      of a
      financing, the Company expects to have at least 3 holes drilled by the end
      of
      June 2008.




The
      Company is in the process of conducting a $5 million private placement to
      fulfill its obligations under the stock purchase agreement with Swansi, which
      is
      expected to close in April 2008.




The
      Company has finalized employment contracts with three individuals and has
      amended its CEO’s employment
      agreement.




33




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




On
      February 12, 2008, the Company dismissed Madsen
      & Associates CPA’s, Inc. (“Madsen
& Associates”) as its registered independent public accountant and appointed De
      Leon
& Company, P.A. as its registered independent public accountant. The
      disclosure required by Item 304 of Regulation S-B was filed with the Securities
      and Exchange Commission (“SEC”) under
      Item 4.01 of the Current Report on Form 8-K, which was filed with the SEC on
      February 12, 2008. Madsen
      & Associates furnish
      us a letter required by Item 304 of Regulation S-B, which was addressed
      to the SEC and which was filed as Exhibit 16.1 to the Current Report on
      Form 8-K filed by the Company with the SEC on February 12,
      2008.




**ITEM
                8A**
            **CONTROLS
                AND PROCEDURES**




**Evaluation
      of Disclosure Controls and Procedures.**




Our
      management, with the participation of our chief executive officer and chief
      financial officer, evaluated the effectiveness of our disclosure controls and
      procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934,
      as
      amended (the “Exchange Act”) as of December 31, 2007. In designing and
      evaluating the disclosure controls and procedures, management recognizes that
      any controls and procedures, no matter how well designed and operated, can
      provide only reasonable assurance of achieving the desired control objectives.
      In addition, the design of disclosure controls and procedures must reflect
      the
      fact that there are resource constraints and that management is required to
      apply its judgment in evaluating the benefits of possible controls and
      procedures relative to their costs.




Based
      on
      our evaluation, our chief executive officer and chief financial officer
      concluded that our disclosure controls and procedures are designed at a
      reasonable assurance level and were fully effective as of December 31, 2007
      in
      providing reasonable assurance that information we are required to disclose
      in
      reports that we file or submit under the Exchange Act is recorded, processed,
      summarized and reported within the time periods specified in Securities and
      Exchange Commission rules and forms, and that such information is accumulated
      and communicated to our management, including our chief executive officer and
      chief financial officer, as appropriate, to allow timely decisions regarding
      required disclosure.




**Management’s
      Annual Report on Internal Control Over Financial Reporting**




Zulu
      Energy’s management is responsible for establishing and maintaining adequate
      internal control over financial reporting as defined in Rules 13a-15(f) and
      15d-15(f) under the Exchange Act. Our internal control over financial reporting
      is designed to provide reasonable assurance regarding the reliability of
      financial reporting and the preparation of financial statements for external
      purposes in accordance with generally accepted accounting principles. Our
      internal control over financial reporting includes those policies and procedures
      that:




(1)  pertain
      to the maintenance of records that, in reasonable detail, accurately and fairly
      reflect the transactions and dispositions of our assets;




(2)  provide
      reasonable assurance that transactions are recorded as necessary to permit
      preparation of financial statements in accordance with U.S. GAAP, and that
      our
      receipts and expenditures are being made only in accordance with the
      authorization of its management and directors; and




(3)  provide
      reasonable assurance regarding prevention or timely detection of unauthorized
      acquisition, use or disposition of our assets that could have a material effect
      on the financial statements.




34




Zulu
      Energy’s management assessed the effectiveness of its internal control over
      financial reporting as of December 31, 2007. In making this assessment,
      management used the framework set forth in the report entitled Internal
      Control—Integrated Framework issued by the Committee of Sponsoring Organizations
      of the Treadway Commission, or COSO. The COSO framework summarizes each of
      the
      components of a company’s internal control system, including (i) the control
      environment, (ii) risk assessment, (iii) control activities, (iv) information
      and communication, and (v) monitoring. Based on this assessment, our management
      believes that, as of December 31, 2007, Zulu Energy’s internal control over
      financing reporting is effective based on those criteria.




This
      Annual Report on Form 10-KSB does not include an attestation report of our
      registered public accounting firm regarding internal control over financial
      reporting. Management’s report was not subject to attestation by the Company’s
      registered public accounting firm pursuant to temporary rules of the SEC that
      permit the Company to provide only management’s report in this Annual Report on
      Form 10-KSB.




**Changes
      in internal control over financial reporting.**




We
      regularly review our system of internal control over financial reporting and
      make changes to our processes and systems to improve controls and increase
      efficiency, while ensuring that we maintain an effective internal control
      environment. Changes may include such activities as implementing new, more
      efficient systems, consolidating activities, and migrating
      processes.




There
      were no changes in our internal controls over financial reporting that occurred
      during the period covered by this Annual Report on Form 10-KSB that has
      materially affected, or is reasonably likely to materially affect, our internal
      control over financial reporting.




**ITEM
                8B**
            **OTHER
                INFORMATION**




**None.**




**PART
      III**




**ITEM
                9.**
            **DIRECTORS,
                EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE
                GOVERNANCE**




The
      required information concerning directors and executive officers has been
      omitted in accordance with General Instruction G. Such information
      regarding directors and executive officers will be set forth under the headings
      of “Election of Directors” and “Executive Officers who are not Directors” of the
      Proxy Statement relating to the 2008 Annual Meeting of Stockholders and is
      incorporated herein by reference.




The
      information relating to compliance with Section 16(a) of the Exchange Act
      has been omitted in accordance with General Instruction G. Such information
      will be set forth under the heading of “Section 16(a) Beneficial Ownership
      Reporting Compliance” of the Proxy Statement relating to the 2008 Annual Meeting
      of Stockholders and is incorporated herein by reference.




The
      required information concerning a Code of Ethics has been omitted in accordance
      with General Instruction G. Such information will be set forth under the
      heading of “Code of Ethics” of the Proxy Statement relating to the 2008 Annual
      Meeting of Stockholders and is incorporated herein by reference.




35




The
      information relating to the Audit Committee and the Audit Committee Financial
      Expert has been omitted in accordance with General Instruction G. Such
      information regarding the Audit Committee and the Audit Committee Financial
      Expert will be set forth under the heading “Report of the Audit Committee” of
      the Proxy Statement relating to the 2008 Annual Meeting of Stockholders and
      is
      incorporated herein by reference.




**ITEM
                10.**
            **EXECUTIVE
                COMPENSATION.**




The
      required information concerning executive officer and director compensation
      has
      been omitted in accordance with General Instruction G. Such information
      regarding executive officer and director compensation will be set forth under
      the headings of “Executive Compensation” of the Proxy Statement and is
      incorporated herein by reference.




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




The
      required information concerning security ownership of certain beneficial owners,
      management and related stockholder matters has been omitted in accordance with
      General Instruction G. Such information will be set forth under the
      headings of “Security Ownership of Certain Beneficial Owners” of the Proxy
      Statement and is incorporated herein by reference.




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




The
      required information concerning certain relationships and related transactions
      and director independence has been omitted in accordance with General
      Instruction G. Such information will be set forth under the headings of
“Certain Relationship and Related Transactions” of the Proxy Statement and is
      incorporated herein by reference.




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




Pursuant
      to Rule 601 of Regulation SB, the following exhibits are included herein or
      incorporated by reference.


ExhibitNumber
              
              Description2.1
              
              Stock
                  Exchange Agreement and Plan of Reorganization among Zulu Energy
                  Corp,
                  Nyati Mauritius Limited and LMA Hughes LLLP dated December 19,
                  200713.1
              
              Amended
                  and Restated Articles of Incorporation13.2
              
              Bylaws210.2
              
              Stock
                  Purchase Agreement between Zulu Energy Corp. and Swansi Holdingss
                  Corp.
                  dated as of December 19, 2007110.3
              
              Tax
                  Indemnification Letter Agreement between Zulu Energy Corp. and
                  LMA Hughes
                  LLLP dated December 19, 2007116.1
              
              Letter
                  from Former Accountant3
  36
  ExhibitNumber
                
                Description21.1*
                
                Schedule
                    of Subsidiaries of the Company31.1*
                
                Certification
                    of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
                    Act of 200231.2
                    *
                
                Certification
                    of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
                    Act of 200232.1*
                
                Certification
                    of Chief Executive Officer and Chief Financial Officer pursuant
                    to 18
                    U.S.C. Section 1350, as adopted pursuant to Section 906 of the
                    Sarbanes-Oxley Act of 2002


1.
            Incorporated
                by reference to the Company’s Current Report on Form 8-K filed with the
                Commission on December 27, 2007, File No.
                000-52272.




2.
            Incorporated
                by reference to the Company’s Registration Statement on Form SB-2 filed
                with the Commission on September 1, 2006, File No.
                333-137076.




3.
            Incorporated
                by reference to the Company’s Current Report on Form 8-K filed with the
                Commission on February 12, 2008, File No.
                000-52272.




*
            Filed
                herewith.




**ITEM
                14.**
            **PRINCIPAL
                ACCOUNTANT FEES AND
                SERVICES**




The
      required information concerning our principal accountant’s fees and services has
      been
      omitted in accordance with General Instruction G. Such information will be
      set forth under the headings of “Appointment
      of Independent Registered Public Accountants” of the
      Proxy Statement and is incorporated herein by reference.




37


**SIGNATURES**




Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
      1934, the registrant has duly caused this report to be signed on its behalf
      by
      the undersigned, thereunto duly authorized.




**ZULU
              ENERGY CORP.**By:
            /s/
                Paul StroudPaul
              Stroud, President, Chief Executive Officer and DirectorDate:
              April 14, 2008




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


By:
              /s/
                  Paul StroudPaul
                Stroud, President, Chief Executive Officer and DirectorDate:
                April 14, 2008By:
              /s/
                  Satyendra DeshpandeSatyendra
                Deshpande, Secretary, Treasurer, Chief Financial Officer, Principal
                Accounting Officer and DirectorDate:
                April 14, 2008By:Abdul
                Majeed Al Fahim, DirectorDate:
                April 14, 2008By:
              /s/
                  Pierre BesuchetPierre
                Besuchet, DirectorDate:
                April 14, 2008By:
              /s/
                  Mohammed GovaMohammed
                Gova, DirectorDate:
                April 14, 2008By:
              /s/
                  Brian HughesBrian
                  Hughes, DirectorDate:
                April 14, 2008









**Exhibit
      List**


ExhibitNumber
              
              Description2.1
              
              Stock
                  Exchange Agreement and Plan of Reorganization among Zulu Energy
                  Corp,
                  Nyati Mauritius Limited and LMA Hughes LLLP dated December 19,
                  200713.1
              
              Amended
                  and Restated Articles of Incorporation13.2
              
              Bylaws210.2
              
              Stock
                  Purchase Agreement between Zulu Energy Corp. and Swansi Holdingss
                  Corp.
                  dated as of December 19, 2007110.3
              
              Tax
                  Indemnification Letter Agreement between Zulu Energy Corp. and
                  LMA Hughes
                  LLLP dated December 19, 2007116.1
              
              Letter
                  from Former Accountant321.1*
              
              Schedule
                  of Subsidiaries of the Company31.1*
              
              Certification
                  of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
                  Act of 200231.2
                  *
              
              Certification
                  of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
                  Act of 200232.1*
              
              Certification
                  of Chief Executive Officer and Chief Financial Officer pursuant
                  to 18
                  U.S.C. Section 1350, as adopted pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002




1.
            Incorporated
                by reference to the Company’s Current Report on Form 8-K filed with the
                Commission on December 27, 2007, File No.
                000-52272.




2.
            Incorporated
                by reference to the Company’s Registration Statement on Form SB-2 filed
                with the Commission on September 1, 2006, File No.
                333-137076.




3.
            Incorporated
                by reference to the Company’s Current Report on Form 8-K filed with the
                Commission on February 12, 2008, File No.
                000-52272.




*
            Filed
                herewith.