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

                                   Form 10-QSB
                                 Amendment No.1

|X|  QUARTERLY  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITITES
     EXCHANGE ACT OF 1934. For the quarter ended October 31, 2004

|_|  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT
     OF 1934




                                VTEX ENERGY, INC.
                 (Name of small business issuer in its charter)

                                     Nevada
                         (State or other jurisdiction of
                         incorporation or organization)

                                   76-0582614
                                (I.R.S. Employer
                               Identification No.)

                        8303 Southwest Freeway, Suite 950
                              Houston, Texas 77074
                     (Address of principal executive office)

                                 (713) 773-3284
                           (Issuer's telephone number)

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  |_|

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

        Yes  |_|  No  |X|

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:

     As of December 9, 2004, there were 6,824,240 shares of common stock, $0.001
par value, outstanding.

Transitional Small Business Disclosure Format (Check one).

        Yes  |_|  No  |X|

<PAGE>


                                VTEX ENERGY, INC.
                                   FORM 10-QSB
                     FOR THE QUARTER ENDED OCTOBER 31, 2004

                                EXPLANATORY NOTE

     We are filing this amendment to our quarterly  report for the quarter ended
October 31, 2004 to correct certain errors in the Company's financial statements
as of, and for the six months ended October 31, 2004 and 2003.  Such errors were
discovered in conjunction with the audit of the Company's  financial  statements
as of and for the year ended April 30, 2005 and  included  the failure to record
the correct amount of the asset retirement obligation ("ARO") in accordance with
Statement of Financial  Accounting  Standards ("SFAS") No. 143,  "Accounting for
Asset  Retirement  Obligations."  In  addition,  corresponding  amounts  of  ARO
capitalized  costs,  depletion expense and accretion expense were also misstated
for the six months ended  October 31, 2004 and 2003.  Additionally,  the Company
did not record certain property taxes owed and certain stock, warrant and option
transactions  which the Company was  obligated to issue or grant.  The effect of
the restatement is described more fully in Note 2 of these financial statements

     For  convenience  and ease of review we are filing our quarterly  report on
Form 10-QSB/A Amendment No. 1 for the quarterly period ended October 31, 2004 in
its entirety with the applicable  changes  necessary to reflect the  adjustments
described above. All information contained in this amended report, including the
related notes to the  consolidated  financial  statements  are as of October 31,
2004 as originally  included in our  quarterly  report on Form 10-QSB filed with
the SEC on December 21, 2004.

                                      INDEX
                                                                      PAGE
 PART I. FINANCIAL INFORMATION
     Item 1. Financial Statements
          Consolidated Balance Sheets as of October 31, 2004 (Restated)
               and April 30, 2004                                      3
          Consolidated Statements of Operations for the Three Months
               Ended October 31, 2004 (Restated) and 2003 (Restated)   5
          Consolidated Statements of Operations for the Six Months
               Ended October 31, 2004 (Restated) and 2003 (Restated)   6
          Consolidated Statements of Cash Flow for the Six Months
               Ended October 31, 2004 (Restated) and 2003 (Restated)   7
          Notes to Consolidated Financial Statements                   8
     Item 2. Management's Discussion and Analysis of Financial
          Condition and Results of Operations                         18
     Item 3. Procedures and Controls                                  25

PART II. OTHER INFORMATION
     Item 1. Legal Proceedings                                        26
     Item 2. Changes in Securities and Use of Proceeds                26
     Item 3. Defaults Upon Senior Securities                          27
     Item 4. Submission of Matters to a Vote of Security Holders      27
     Item 5. Other Information                                        27
     Item 6. Exhibits and Reports on Form 8-K                         27

SIGNATURES                                                            28


                                      -2-

<PAGE>


                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

                                VTEX ENERGY, INC.
                           CONSOLIDATED BALANCE SHEETS


                                                October 31, 2004  April 30, 2004
                                                 --------------   --------------
                                                   Unaudited
                                                    Restated
                                                    --------

    ASSETS

 CURRENT ASSETS
    Cash                                         $      76,343    $     156,575
    Certificates of deposit                             98,917           75,000
    Accounts receivable, trade                          84,019          165,262
    Joint interest billings receivable                  64,784           25,865
    Note receivable                                       -              67,000
    Advances to related parties                           -              10,000
    Deferred offering costs                             53,631             -
    Other current assets                               238,370           82,051
                                                 --------------   --------------
         Total current assets                          616,064          581,753
                                                 --------------   --------------

 OIL AND NATURAL GAS PROPERTIES - Full
    cost method of accounting                       17,969,159       16,996,853

    Less accumulated depletion,
       depreciation and amortization              (  1,440,665)    (  1,310,150)
                                                 --------------   --------------
          Oil and natural gas
             properties, net                        16,528,494       15,686,703
                                                 --------------   --------------

 OTHER ASSETS
    Other property and equipment, net of
       accumulated depreciation of $100,143
       and $91,720 at October 31, 2004 and
       April 30, 2004, respectively                     45,423           34,941
    Long term accounts receivable (net of
       allowance for doubtful accounts of
       $135,119 at October 31, 2004 and
       April 30, 2004)                                    -              28,000
    Deferred loan costs, net of accumulated
       amortization of $317,970 and $126,750
       at October 31, 2004 and April 30, 2004,
       respectively                                      9,178          134,350
    Other assets                                        46,750           19,277
                                                 --------------   --------------
          Total other assets                           101,351          216,568
                                                 --------------   --------------
TOTAL ASSETS                                     $  17,245,909    $  16,485,024
                                                 ==============   ==============




               The accompanying notes are an integral part of the
                        consolidated financial statements

                                      -3-
<PAGE>

                                VTEX ENERGY, INC.
                           CONSOLIDATED BALANCE SHEETS


                                                October 31, 2004  April 30, 2004
                                                 --------------   --------------
                                                   Unaudited
                                                    Restated
                                                    --------


    LIABILITIES AND STOCKHOLDERS' EQUITY

 CURRENT LIABILITIES
    Line of credit - related party               $   1,839,143    $   1,839,143
    Line of credit - bank                              246,537          100,000
    Notes payable, net of discount of $132,872
       at October 31, 2004                             761,786          306,092
    Production payments payable - related party        934,518          934,518
    Production payments payable                        254,000          254,000
    Accounts payable - trade                           969,420          805,533
    Royalties payable                                  753,611          654,191
    Working interest revenues payable                   64,801           94,232
    Taxes payable                                      201,728          201,478
    Advances from related parties                      244,906          252,406
    Accrued interest                                   608,360          486,043
                                                 --------------   --------------
          Total current liabilities                  6,878,810        5,927,636
                                                 --------------   --------------

 NONCURRENT LIABILITIES
    Asset retirement obligations                     1,209,440        1,165,330
                                                 --------------   --------------
          Total noncurrent liabilities               1,209,440        1,165,330
                                                 --------------   --------------

COMMITEMENTS AND CONTINGENCIES                           -                -

 STOCKHOLDERS' EQUITY
    Preferred stock class A-1, cumulative
       convertible; $0.001 par value per
       share, 3,000 shares authorized;
       no shares issued or outstanding                    -                -
    Preferred stock class AA-1, cumulative
       convertible; $0.01 par value per
       share, 500,000 shares authorized;
       395,879 shares issued and outstanding             3,959            3,959
    Preferred stock class B, noncumulative
       nonconvertible; $0.001 par value per
       share, 500,000 shares authorized;
       500,000 shares issued and outstanding              500               500
    Common stock, $0.001 par value per share;
       150,000,000 shares authorized; 6,824,240
       and 5,848,681 shares issued and
       outstanding at October 31, 2004 and
       April 30, 2004, respectively                      6,824            5,849
    Additional paid-in capital                      31,464,541       29,976,623
    Accumulated deficit                           ( 22,318,165)    ( 20,594,873)
                                                 --------------   --------------
          Total stockholders' equity                 9,157,659        9,392,058
                                                 --------------   --------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY       $  17,245,909    $  16,485,024
                                                 ==============   ==============





               The accompanying notes are an integral part of the
                       consolidated financial statements


                                      -4-
<PAGE>

                                VTEX ENERGY, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)



                                                 Three Months Ended October 31,
                                                 -------------------------------
                                                      2004             2003
                                                      ----             ----
                                                    Restated         Restated
                                                    --------         --------

REVENUES
   Oil sales                                     $        -    $         38,735
   Natural gas sales                                   309,379          270,311
                                                 --------------   --------------
         Total Revenues                                309,379          309,046
                                                 --------------   --------------

EXPENSES
   Production taxes                                     33,233           37,014
   Lease operating expense                             119,075          160,278
   Depletion expense                                    54,722           40,278
   General and administrative expense                1,133,801          190,102
   Accretion expense                                    22,260           20,326
                                                 --------------   --------------
         Total operating expenses                    1,363,091          447,998
                                                 --------------   --------------

OTHER INCOME (EXPENSE)
   Other income                                            992              358
   Interest expense                               (    207,070)    (     52,050)
                                                 --------------   --------------
         Total other income (expense)             (    206,078)    (     51,692)
                                                 --------------   --------------

NET LOSS                                         $(  1,259,790)   $(    190,644)
                                                 ==============   ==============

NET LOSS PER SHARE - Basic and Diluted           $(       0.17)   $(       0.04)
                                                 ==============   ==============

WEIGHTED AVERAGE NUMBER OF
   SHARES OUTSTANDING                                7,393,863        4,580,217
                                                 ==============   ==============




               The accompanying notes are an integral part of the
                       consolidated financial statements


                                      -5-
<PAGE>

                                VTEX ENERGY, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)



                                                   Six Months Ended October 31,
                                                 -------------------------------
                                                      2004             2003
                                                      ----             ----
                                                    Restated         Restated
                                                    --------         --------

REVENUES
   Oil sales                                     $      57,321    $     179,585
   Natural gas sales                                   693,865          533,129
                                                 --------------   --------------
         Total Revenues                                751,186          712,714
                                                 --------------   --------------

EXPENSES
   Production taxes                                     78,535           73,694
   Lease operating expense                             259,067          384,565
   Depletion expense                                   130,515           56,165
   General and administrative expense                1,556,918          633,971
   Accretion expense                                    44,110           40,652
                                                 --------------   --------------
         Total operating expenses                    2,069,145        1,189,047
                                                 --------------   --------------
OTHER INCOME (EXPENSE)
   Other income                                          7,421              624
   Interest expense                               (    412,754)    (    109,305)
                                                 --------------   --------------
         Total other income (expense)             (    405,333)    (    108,681)
                                                 --------------   --------------
Loss Before Cumulative Effect of Change
   in Accounting Principle                        (  1,723,292)    (    585,014)
Cumulative Effect of Change in Accounting
   Principle                                              -        (    275,533)
                                                 --------------   --------------
NET LOSS                                         $(  1,723,292)   $(    860,547)
                                                 ==============   ==============

NET LOSS PER SHARE - Basic and Diluted
   Loss Before Cumulative Effect of Change
      in Accounting Principle                    $(       0.25)   $(       0.11)
   Cumulative Effect of Change in Accounting
      Principle                                            -       (       0.05)
                                                 --------------   --------------
   Net Loss                                      $(       0.25)   $(       0.16)
                                                 ==============   ==============

WEIGHTED AVERAGE NUMBER OF
   SHARES OUTSTANDING                                6,917,852        5,263,235
                                                 ==============   ==============




               The accompanying notes are an integral part of the
                       consolidated financial statements


                                      -6-
<PAGE>

                                VTEX Energy, Inc.
                      CONSOLIDATED STATEMENTS OF CASH FLOW
                                   (Unaudited)


                                                   Six Months Ended October 31,
                                                 -------------------------------
                                                      2004             2003
                                                      ----             ----
                                                    Restated         Restated
                                                    --------         --------

 CASH FLOWS FROM OPERATING ACTIVITIES
    Net Loss                                     $(  1,723,292)   $(    860,547)
    Adjustments to reconcile net loss to net
       cash provided by operating activities
          Cumulative effect of change in
             accounting principle                         -             275,533
          Depletion expense                            130,515           56,165
          Amortization expense                         279,798             -
          Depreciation expense                           8,423            6,521
          Bad debt expense                              28,000             -
          Accretion expense                             44,110           40,652
          Common stock issued for services             972,652          355,577
          Common stock issued to settle
             accounts payable                           13,743             -
          Advances to related party applied to
             travel costs                               79,537             -
    Changes in operating assets and liabilities
          Accounts receivable, trade                    42,324     (     43,947)
          Other assets                                  31,208             -
          Accounts payable - trade                     163,887          122,568
          Royalties and working interest
             revenues payable                           69,989          296,842
          Other current liabilities                    122,567          116,088
                                                 --------------   --------------
Net cash provided by operating activities              263,461          365,452
                                                 --------------   --------------

 CASH FLOWS FROM INVESTING ACTIVITIES
    Investment in certificates of deposit         (     23,917)            -
    Oil and natural gas capital expenditures      (    972,306)    (    132,203)
    Purchase of property and equipment, other     (     18,905)
    Payments received on note receivable                67,000             -
    Advances to related party                     (    114,537)            -
    Payments received on advances to
       related party                                    45,000             -
                                                 --------------   --------------
Net cash used in investing activities             (  1,017,665)    (    132,203)
                                                 --------------   --------------

 CASH FLOWS FROM FINANCING ACTIVITIES
    Borrowings on notes payable                        700,000           14,948
    Repayments of notes payable                   (    111,434)    (    122,171)
    Borrowings on lines of credit                      149,300             -
    Repayments of lines of credit                 (      2,763)    (     50,000)
    Repayments of advances from related parties   (      7,500)    (     37,500)
    Deferred offering costs incurred              (     53,631)            -
    Issuance of common stock                              -              63,750
                                                 --------------   --------------
Net cash provided by (used in)
   financing activities                                673,972     (    130,973)
                                                 --------------   --------------

 NET DECREASE IN CASH
    AND CASH EQUIVALENTS                          (     80,232)         102,276

 CASH AND CASH EQUIVALENTS,
    BEGINNING OF PERIOD                                156,575           14,542
                                                 --------------   --------------

 CASH AND CASH EQUIVALENTS,
    END OF PERIOD                                $      76,343    $     116,818
                                                 ==============   ==============



               The accompanying notes are an integral part of the
                       consolidated financial statements

                                      -7-
<PAGE>
                                VTEX Energy, Inc.
              Notes to Unaudited Consolidated Financial Statements
                                October 31, 2004


Note 1.  Management's Representation of Interim Financial Information

The  accompanying  consolidated  financial  statements  have  been  prepared  by
management of VTEX Energy, Inc. (Formerly Vector Energy  Corporation),  a Nevada
corporation  (together  with  its  subsidiary,  Vector  Exploration,  Inc.,  the
"Company")  without  audit  pursuant  to the rules and  regulations  of the SEC.
Certain  information and footnote  disclosure normally included in the financial
statements  prepared  in  accordance  with U.S.  generally  accepted  accounting
principles  have  been  condensed  or  omitted  as  allowed  by such  rules  and
regulations,  and management  believes that the disclosures are adequate to make
the information presented not misleading. These financial statements include all
of the  adjustments  that, in the opinion of  management,  are necessary for the
fair  presentation  of the  financial  position and results of operations of the
Company.  These  financial  statements  should be read in  conjunction  with the
audited consolidated  financial statements for the year ended April 30, 2004, as
amended,  which are included in the Company's annual report on Form 10-KSB filed
with the SEC on August 15, 2005.

Business and Organization

The  Company was  incorporated  under the laws of the State of Texas on June 18,
1998 as Vector Energy Corporation.  Effective November 15, 2002, the Company was
reincorporated  into Nevada. The  reincorporation  was effected by the merger of
Vector Energy  Corporation with and into a newly created wholly owned subsidiary
VTEX Energy, Inc., a Nevada corporation,  which became the surviving entity. The
Company is primarily  engaged in the  acquisition,  development,  production and
exploration of oil and natural gas properties in the United States.

Going Concern

For the year ended April 30, 2004 our independent  registered  public accounting
firm issued a going concern opinion. As shown in the financial  statements,  the
Company has  historically  incurred net losses from  operations and has incurred
net losses of  approximately  $1,723,000  and  $861,000 for the six months ended
October 31, 2004 and 2003, respectively,  and losses are expected to be incurred
in the near term. Current  liabilities  exceeded current assets by approximately
$6,263,000 and $5,346,000 at October 31, 2004 and April 30, 2004,  respectively,
and the accumulated  deficit is  approximately  $22,318,000 at October 31, 2004.
Amounts  outstanding  and payable to creditors are in arrears and the Company is
in  negotiations   with  creditors  to  obtain  extensions  and  settlements  of
outstanding  amounts.   Management   anticipates  that  significant   additional
expenditures  will be  necessary  to develop  the  Company's  properties,  which
consist primarily of proved reserves that are non-producing,  before significant
positive operating cash flows will be achieved.  Without outside investment from
the sale of equity  securities  or debt  financing  our  ability to execute  our
business plan will be limited.  These factors are an indication that the Company
may be unable to continue in existence.

Management's  plans to alleviate these conditions  include the  renegotiation of
certain  trade  payables,  settlements  of debt amounts with stock,  deferral of
certain  scheduled  payments,  and sales of non core  properties,  as considered
necessary by management. In addition, management is pursuing business partnering
arrangements  for the acquisition  and  development of additional  properties as
well as debt and equity funding through private placements

The  accompanying  consolidated  financial  statements  are  prepared  as if the
Company will continue as a going concern. The consolidated  financial statements
do not  contain  adjustments,  including  adjustments  to  recorded  assets  and
liabilities,  which might be necessary if the Company were unable to continue as
a going concern.

Note 2.  Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated  financial statements include the accounts of VTEX Energy, Inc.
and its wholly  owned  subsidiary,  Vector  Exploration,  Inc.  All  significant
intercompany accounts and transactions have been eliminated in consolidation.

                                       -8-
<PAGE>

Restatement

We are filing this  amendment  to our  quarterly  report for the  quarter  ended
October 31, 2004 to correct certain errors in the Company's financial statements
as of, and for the six months ended October 31, 2004 and 2003.  Such errors were
discovered in conjunction with the audit of the Company's  financial  statements
as of and for the year ended April 30, 2005 and  included  the failure to record
the correct amount of the asset retirement obligation ("ARO") in accordance with
Statement of Financial  Accounting  Standards ("SFAS") No. 143,  "Accounting for
Asset  Retirement  Obligations."  In  addition,  corresponding  amounts  of  ARO
capitalized  costs,  depletion expense and accretion expense were also misstated
for the three and six months ended October 31, 2004 and 2003. Additionally,  the
Company did not record certain  property  taxes owed and certain stock,  warrant
and option  transactions  which the Company was obligated to issue or grant. The
effect of this  restatement  was to increase  the net loss for the three  months
ended October 31, 2004 and 2003 by $924,291 and $16,568,  respectively, or $0.12
per share and $0.00 per share for the three  months  ended  October 31, 2004 and
2003, respectively.  The effect of this restatement was to increase the net loss
for the six months ended October 31, 2004 and 2003 by  $1,081,680  and $156,220,
respectively,  or $0.15 and $0.03 per  share,  respectively.  These  adjustments
reduced total stockholders' equity by $293,563 as of October 31, 2004.

For  convenience  and ease of review we are filing our quarterly  report on Form
10-QSB/A  Amendment No. 1 for the quarterly period ended October 31, 2004 in its
entirety  with the  applicable  changes  necessary  to reflect  the  adjustments
described above. All information contained in this amended report, including the
related notes to the  consolidated  financial  statements  are as of October 31,
2004 as originally  included in our  quarterly  report on Form 10-QSB filed with
the SEC on December 21, 2004. Where  applicable,  corresponding  notes have been
adjusted to conform to this restatement.

The following is a comparison of the  previously  reported and restated  amounts
for the Consolidated  Balance Sheet and Consolidated  Statement of Operations as
of and for the six months ended October 31, 2004.

<TABLE>
<CAPTION>
                                             As Reported     Adjustment      As Restated
                                             ------------   ------------    ------------
        Consolidated Balance Sheet
        --------------------------
<S>                                          <C>            <C>             <C>
Oil and natural gas properties               $ 17,855,420   $    113,739    $ 17,969,159
Accumulated depletion,
   depreciation and amortization              ( 1,471,582)        30,916     ( 1,440,665)
Oil and natural gas properties, net            16,383,838        144,656      16,528,494
Deferred loan costs                               215,429    (   206,251)          9,178
Total other assets                                307,602    (   206,251)        101,351
Total assets                                   17,307,504    (    61,595)     17,245,909
Notes payable                                     894,658    (   132,872)        761,786
Accounts payable - trade                          809,033        160,387         969,420
Total current liabilities                       6,851,295         27,515       6,878,810
Asset retirement obligations                    1,004,987        204,453       1,209,440
Total noncurrent liabilities                    1,004,987        204,453       1,209,440
Additional paid-in capital                     30,389,794      1,074,747      31,464,541
Accumulated deficit                           (20,949,855)   ( 1,368,310)    (22,318,165)
Total stockholders' equity                      9,451,222    (   293,563)      9,157,659
Total liabilities and
   stockholders' equity                      $ 17,307,504   $(    61,595)   $ 17,245,909

   Consolidated Statement of Operations
   ------------------------------------
Lease operating expense                      $    250,549   $      8,518    $    259,067
General and administrative expense                743,014        813,904       1,556,918
Accretion expense                                  64,650    (    20,540)         44,110
Total operating expense                         1,267,263        801,882       2,069,145
Interest expense                                  132,956        279,798         412,754
Total other expense, net                          125,535        279,798         405,333
Net loss                                     $(   641,612)  $( 1,081,680)   $( 1,723,292)
Loss per share                               $(      0.10)  $(      0.15)   $(      0.25)
</TABLE>

                                      -9-
<PAGE>
The following is a comparison of the  previously  reported and restated  amounts
for the  Consolidated  Statement of Operations  for the six months ended October
31, 2003.

<TABLE>
<CAPTION>
                                             As Reported     Adjustment      As Restated
                                             ------------   ------------    ------------
   Consolidated Statement of Operations
   ------------------------------------
<S>                                          <C>            <C>             <C>
Lease operating expense                      $    297,574   $     86,991    $    384,565
Depletion expense                                  90,993    (    34,828)         56,165
Accretion expense                                  26,614         14,038          40,652
Total operating expense                         1,122,846         66,201       1,189,047
Loss before cumulative effect of
   change in accounting principle             (   518,813)   (    66,201)    (   585,014)
Cumulative effect of change in
   accounting principle                       (   185,514)   (    90,019)    (   275,533)
Net loss                                     $(   704,327)  $(   156,220)   $(   860,547)
Loss per share -
   Before cumulative effect of
      change in accounting principle         $(      0.10)  $(      0.01)   $(      0.11)
   Cumulative effect of change in
      accounting principle                   $(      0.03)  $(      0.02)   $(      0.05)
   Net loss                                  $(      0.13)  $(      0.03)   $(      0.16)
</TABLE>

The following is a comparison of the  previously  reported and restated  amounts
for the Consolidated  Statement of Operations for the three months ended October
31, 2004.

<TABLE>
<CAPTION>
                                              As Reported     Adjustment      As Restated
                                             ------------   ------------    ------------
   Consolidated Statement of Operations
   ------------------------------------
<S>                                          <C>            <C>             <C>
Lease operating expense                      $    114,816   $      4,259    $    119,075
General and administrative expense                353,261        780,540       1,133,801
Accretion expense                                  18,497          3,763          22,260
Total operating expense                           574,529        788,562       1,363,091
Interest expense                                   71,341        135,729         207,070
Total other expense, net                           70,349        135,729         206,078
Net loss                                     $(   335,499)  $(   924,291)   $( 1,259,790)
Net loss per share - basic and diluted       $(      0.05)  $(      0.12)   $(      0.17)

</TABLE>

The following is a comparison of the  previously  reported and restated  amounts
for the Consolidated  Statement of Operations for the three months ended October
31, 2003.

<TABLE>
<CAPTION>
                                            As Reported     Adjustment      As Restated
                                             ------------   ------------    ------------
   Consolidated Statement of Operations
   ------------------------------------
<S>                                          <C>            <C>             <C>
Lease operating expense                      $    148,902   $     11,376    $    160,278
Depletion expense                                  42,105    (     1,827)          40,278
Accretion expense                                  13,307          7,019          20,326
Total operating expense                           431,430         16,568         447,998
Net loss                                     $(   174,076)  $(    16,568)   $(   190,644)
</TABLE>

Changes in Accounting Principles

Effective May 1, 2003,  the Company  adopted  Statement of Financial  Accounting
Standards ("SFAS") No. 143, "Accounting for Asset Retirement Obligations," which
requires a liability  for an asset  retirement  obligation to be recorded at its
fair value in the period in which the obligation is incurred and a corresponding
increase in the carrying  amount of the related  long-lived  asset (see Note 6).

                                      -10-
<PAGE>
Revenue Recognition

The  Company  recognizes  oil and  natural gas  revenue  from its  interests  in
producing  wells as oil and natural gas is produced  and sold from those  wells.
Oil and natural gas sold by the Company is not significantly  different from the
Company's share of production.

Oil and Natural Gas Properties

The Company  follows the full cost method of accounting  for its oil and natural
gas properties. All costs associated with property acquisition, exploration, and
development  activities  are  capitalized in a single cost center located within
the United  States.  Internal costs directly  identified  with the  acquisition,
exploration  and  development  activities  of the Company are also  capitalized.
Capitalized costs are amortized on the unit-of-production basis using proved oil
and natural gas reserves.  Capitalized costs are subject to a "ceiling test" and
limited to the present  value of estimated  future net revenues  less  estimated
future  expenditures using a discount factor of ten percent.  Should capitalized
costs  exceed the present  value of our reserves  discounted  at ten percent the
excess is charged to operations. Once incurred, an impairment of oil and natural
gas properties is not recoverable at a later date. Impairment of oil and natural
gas  properties  is  assessed  on a  quarterly  basis  in  conjunction  with our
quarterly filings with the SEC. Sales of proved and unproved oil and natural gas
properties are treated as reductions of the capitalized  cost pool,  unless such
adjustments would significantly alter the relationship between capitalized costs
and proved reserves. At October 31, 2004 and April 30, 2004, there were no costs
of unproved properties or major development projects included in the capitalized
cost  pool.  The  depletion  rates per Mcfe for the three and six  months  ended
October   31,  2004  and  2003  were  $1.00  and  $1.04  and  $0.62  and  $0.40,
respectively.

Other Property and Equipment

Other  property  and  equipment  of the Company  consists  primarily of computer
equipment,  vehicles and  furniture  and fixtures,  which are  depreciated  over
estimated  useful lives,  ranging from three to seven years,  on a straight-line
basis.

Deferred Loan Costs

Deferred loan costs  consist of direct costs of securing  financing and includes
primarily  common  stock  and  warrants  issued as part of the  underlying  debt
instruments,  loan origination  fees paid to third parties,  extension fees, and
legal costs to prepare loan documents. These costs are capitalized and amortized
over the life of the loan on a straight line basis.

Asset Retirement Obligations

The  Company  records a  liability  for legal  obligations  associated  with the
retirement  of  tangible  long-lived  assets  in the  period  in which  they are
incurred in  accordance  with SFAS No.  143.  The  Company  adopted  this policy
effective  May  1,  2003,  using  a  cumulative  effect  approach  to  recognize
transition amounts for asset retirement  obligations  ("ARO"),  asset retirement
costs  and  accumulated  accretion  and  depletion.   Under  this  method,  when
liabilities for dismantlement and abandonment  costs,  excluding salvage values,
are  initially  recorded the carrying  amount of the related oil and natural gas
properties are increased.  Accretion of the liability is recognized  each period
using the interest method of allocation,  and the  capitalized  cost is depleted
over the useful life of the  related  asset.  Revisions  to such  estimates  are
recorded as adjustments to the ARO liability, capitalized asset retirement costs
and charges to  operations  during the  periods in which they become  known (see
Note 6).

Stock-Based Compensation

The Company  accounts for stock based  compensation  to employees under the fair
value  method   prescribed  by  SFAS  No.  123,   "Accounting   for  Stock-Based
Compensation." Under the fair value method, compensation cost is measured at the
grant date of each  common  stock  option or warrant  awarded  based on the fair
value of the award and is recognized over the vesting  period,  which is usually
the  service  period.  For common  stock  options  and  warrants,  fair value is
determined  using an  option-pricing  model that takes into  account  the common
stock market price at the grant date, the exercise  price,  the expected life of
the common  stock option or warrant,  the market  volatility  of the  underlying
common  stock,  and the  risk-free  interest  rate over the expected life of the
common  stock  option or  warrant.  The fair value of a common  stock  option or
warrant is  estimated  at the grant date and is not  subsequently  adjusted  for
changes in the assumptions used.

                                      -11-
<PAGE>
Loss Per Share

Loss per share has been calculated  using the weighted  average number of shares
outstanding. Outstanding warrants and other potentially dilutive securities have
been excluded from the  calculation of loss per share,  as their effect would be
anti-dilutive due to the Company incurring a net loss for all periods presented.
Additionally,  included in weighted  average  shares  outstanding  are 1,043,249
shares the  Company is  obligated  to issue at October  31,  2004,  of which the
weighted  average effect of such shares totals 746,766 and 532,514 for the three
and six months ended October 31, 2004, respectively.  At October 31, 2004, there
are 250,000 warrants that are potentially  dilutive common shares. There were no
potentially dilutive common shares at October 31, 2003.

Income Taxes

The Company  accounts  for income  taxes under the  provisions  of SFAS No. 109,
"Accounting  for  Income  Taxes,"  which  provides  for an asset  and  liability
approach for  accounting  for income taxes.  Under this  approach,  deferred tax
assets  and  liabilities  are  recognized   based  on  anticipated   future  tax
consequences,  using  currently  enacted tax laws,  attributable  to differences
between financial statement carrying amounts of assets and liabilities and their
respective tax bases. Management determined that it is more likely than not that
NOL's  accumulated  during prior years of in excess of  $15,000,000  will not be
recoverable.  Accordingly,  a valuation allowance has been provided for the full
value of its net tax assets.

Statement of Cash Flows

For purposes of the consolidated  statement of cash flows, the Company considers
all highly  liquid  investments  purchased  with an  original  maturity of three
months or less to be cash and cash equivalents.

The  following  is a summary of all payments  made for interest and  significant
noncash financing activities for the six months ended October 31, 2004 and 2003,
respectively.


         Supplemental Disclosures of Cash Flow Information:
                                                           2004         2003
                                                           ----         ----
                                                         Restated
                                                         --------
Cash Payments
   Interest                                           $    10,639   $     8,668

Noncash financing activities
   Common stock issued for services                   $   972,652   $   355,577
   Common stock and warrants issued to note holders
      recorded as deferred loan costs                 $    66,048   $      -
   Common stock and warrants issued to note holders
      recorded as debt discount                       $   221,449   $      -
   Common stock issued to settle accounts payable     $    13,743   $      -
   Common stock warrants issued for option to
      purchase oil and natural gas properties         $   215,000          -

Use of Estimates

The  preparation  of financial  statements  in  conformity  with U.S.  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of contingent  assets and liabilities as of the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual amounts could differ from these estimates.

Significant  estimates  include  volumes of oil and natural gas reserves used in
calculating  depletion,  depreciation and amortization of proved oil and natural
gas properties,  asset  retirement  obligations,  bad debts,  contingencies  and
litigation.  Oil and  natural  gas  reserve  estimates,  which are the basis for
unit-of-production  depletion  and the  ceiling  test,  have  numerous  inherent
uncertainties. The accuracy of any reserve estimate is a function of the quality
of available data and of engineering and geological interpretation and judgment.
Results of  drilling,  testing,  and  production  subsequent  to the date of the
estimate  may  justify  revision  of  such  estimate   (positive  or  negative).
Accordingly,  reserve  estimates are most often different from the quantities of
oil and  natural  gas  that  are  ultimately  recovered.  In  addition,  reserve
estimates are vulnerable to changes on wellhead  prices of crude oil and natural
gas.  Such  prices  have been  volatile  in the past and can be  expected  to be
volatile in the future. Note 3. Certificates of Deposit

                                      -12-
<PAGE>
Note 3.  Certificates of Deposit

At October 31, 2004 and April 30, 2004, the Company had  certificates of deposit
totaling $98,917 and $75,000,  respectively.  Such certificates bore interest at
rates  ranging  from  1.099% to 1.1% at October  31,  2004 and 1.1% at April 30,
2004.  The maturity  dates of the  certificates  ranged from February 8, 2005 to
March 20,  2005.  The  certificates  of deposit  are  collateral  for letters of
credit,  with  expiration  dates  corresponding  to the  maturity  dates  of the
certificates,  issued in favor of  governmental  agencies in states in which the
Company operates wells. It is anticipated that such  certificates of deposit and
the corresponding letters of credit will be renewed at maturity.

Note 4.  Acquisitions of Oil and Natural Gas Properties

On July 13,  2004,  the Company  entered  into an option  with CLK Energy,  Inc.
("CLK"). Under the option, the Company has the right to purchase from CLK 50% of
their  interest in the Bayou  Choctaw  Field,  located in the Iberville and West
Baton  Rouge  Parishes of  Louisiana  for  $1,250,000  and the  assumption  of a
production payment of $1,500,000 payable contingent upon reaching 110% of payout
of the  Company's  investment.  The  Company's  investment  is  comprised of its
original purchase price (as defined),  value of common stock and warrants issued
as purchase  price  consideration,  and its  commitment  to fund  $5,000,000  of
workover and well development  costs. Upon exercise of the option and completion
of the  purchase,  the Company has agreed to reimburse  CLK for its  acquisition
costs, as adjusted for intervening operations,  and will deliver a commitment to
fund future well workover and field development drilling totaling $5,000,000, as
defined.  Under the terms of the  option,  CLK was issued  warrants  to purchase
500,000  shares of the Company's  common stock at an exercise price of $0.50 per
share.  Such warrants had a fair value of $215,000  which has been recorded as a
noncurrent asset.  Upon exercise of the option,  such amount will be included in
oil and natural gas  properties  as a component  of the purchase  price.  If the
option  expires,  the Company will expense the fair value of the warrants during
the period in which the option  expires.  The option had an original  expiration
date of October 31, 2004 which was subsequently extended to December 10, 2004.

In the event that the Company  elects to exercise this option,  it will issue to
CLK,  warrants to purchase  1,500,000  shares of additional  common stock of the
Company at an exercise price of $0.50 per share.  CLK has indicated that it will
combine operations,  technical and executive staff within the Company's expanded
future operations. In further consideration,  the Company would issue 10% of its
then fully  diluted  common  shares to CLK and expand its Board of  Directors to
accommodate  nomination of certain  members of CLK's  executive  management (see
Note 10).

Note 5.  Debt

Total debt at October 31, 2004 and April 30, 2004 consists of the following:

                                        October 31, 2004   April 30, 2004
                                         --------------    --------------
                                            (Restated)

       Lines-of-credit                   $   2,085,680     $   1,939,143
       Production payments payable           1,188,518         1,188,518
       Other notes payable                     761,786           306,092
                                         --------------    --------------
                                             4,035,984         3,433,753
       Less current portion             (    4,035,984)     (  3,433,753)
                                        ---------------    --------------
                                        $        -         $      -
                                        ===============    ==============
Lines of Credit

The Company has a $10 million revolving credit line with an entity controlled by
the brother of the Company's president.  The borrowing base under this revolving
credit line is $1,839,143 at October 31, 2004, which is equal to the outstanding
balance and cannot be increased  without the consent of the lender.  The line of
credit is secured by all of the  Company's  oil and natural gas  properties  and
bears  interest  at the rate of 7.5%.  Accrued  interest  on the line of  credit
totaled  $318,302  and  $248,767  at  October  31,  2004  and  April  30,  2004,
respectively.  Under the currently  scheduled  reductions in the borrowing base,
the principal balance and unpaid interest will be due at maturity on January 31,
2005.

On April 8, 2004, the Company entered into a $250,000 revolving credit agreement
with  Hibernia  Bank.  The note has been  guaranteed  by a private  investor who
received  100,000  shares of the  Company's  common  stock  with a fair value of
$49,000 as consideration for such guarantee.  The fair value of the common stock
has been recorded as a deferred loan cost and is being  amortized over one year.
Interest on this note is payable monthly at a floating rate of prime plus 1.097%

                                      -13-
<PAGE>
(5.597% at October 31, 2004 and April 30, 2004.) The  outstanding  balance under
the note,  which was  $246,537  and  $100,000  at October 31, 2004 and April 30,
2004, respectively, is due upon demand.

Other Notes Payable

Included  in other  notes  payable are  unsecured  10% to 13.6% notes  issued to
vendors in settlement of accounts  payable.  Certain of the notes are past their
due dates and are due on demand. These notes totaled $42,850 at October 31, 2004
and April 30, 2004, respectively.

Also  included in other notes  payable is a financing  obligation  for insurance
premiums,  payable in monthly  installments,  with  interest  at 5.57%,  through
October 2004 and was paid in full.  Such  obligation had a balance of $63,242 at
April 30, 2004.

In November, 2003, the Company issued a note payable for the purchase of seismic
data. The note is payable in monthly installments,  with interest at 6%, matured
on  August  21,  2004 and was paid in full in  November  2004.  Such  note had a
balance  of  $2,000  and  $10,000  at  October  31,  2004 and  April  30,  2004,
respectively.

During  October and November of 2003,  the Company  issued a series of 12% notes
totaling $40,000 to investors for working capital loans. The Company also issued
the investors  40,000 shares of its common stock.  The stock issued was recorded
at its fair market  value of $27,600 and treated as deferred  loan cost which is
being amortized over six months.  The notes were due on dates ranging from April
29, 2004 to May 26, 2004. The Company  subsequently  reached  agreement with the
investors  to extend the due dates of the notes to dates  ranging from April 29,
2005 to May 26, 2005 in return for the  issuance of 28,250  shares of its common
stock and  warrants  to  purchase  5,000 of its common  stock at $0.50 per share
which expire on dates ranging from April 29, 2006 to May 26, 2006. The stock and
warrants  were  recorded  at their fair  market  value of $17,048 and treated as
deferred loan cost which is being amortized over the terms of the extensions. As
of October 31, 2004,  the common stock had not been issued,  however  their fair
value has been included in stockholders' equity.

In March,  2004,  the Company  issued a $150,000 note payable to Mustang  Island
Gathering,  LLC (the "LLC") for indemnification of litigation  settlement costs.
Mustang  Island  Gathering,  LLC  purchases  the natural gas  produced  from the
Company's  Mustang Island property,  and the Company is an approximate 10% owner
in the LLC. The note is payable in monthly installments,  with interest at 4.5%,
at the rate of $0.03 per MCF of natural gas purchased, beginning with April 2004
production  The balance due under the note was  $109,808 and $150,000 at October
31, 2004 and April 30, 2004, respectively.

During the period June through September of 2004, the Company issued a series of
12% notes  totaling  $700,000 to investors  for working  capital  purposes.  The
Company also provided for the issuance to the investors of 300,000 shares of its
common stock and warrants to purchase  150,000  shares of the  Company's  common
stock at $0.50 per share  which  expire on dates  ranging  from June 18, 2006 to
September  8, 2006.  The stock and warrants  were  recorded at their fair market
value of $221,449 and treated as a debt discount  which is being  amortized over
the terms of the notes. The unamortized debt discount is $132,872 at October 31,
2004.  As of October 31, 2004,  140,000  shares of the common stock had not been
issued, however their fair value has been included in stockholders' equity.

Production Payments Payable

During  October and November of 2000,  the Company  issued  31,687 shares of its
common stock and  undivided  working  interests,  ranging from 3.7% to 4.4%,  in
three  nonproducing  wells in the Mustang Island Field to private  investors for
total cash consideration of $254,000. The proceeds were used to fund development
of the wells.  The investors are entitled to recoup their investment out of 100%
of the future  production,  if any,  from the  wells.  These  transactions  were
treated,  by the Company,  as loans  repayable out of production from designated
wells for accounting purposes.  The stock issued was recorded at its fair market
value as a loan cost which has been fully amortized.  The production loans began
accruing  interest on January 1, 2001 at 5.25% and accrued interest on the loans
totaled   $50,825  and  $44,103  at  October  31,  2004  and  April  30,   2004,
respectively. Although certain of the wells covered by the production loans have
been producing, the Company has not made any principal payments under the loans.
In  January  and  February  of 2004,  the  Company  issued  the  holders  of the
production  loans  100,000  shares of the  Company's  common stock in return for
their  forbearance  under the  production  loans  until the earlier of the first
month  following the month in which the Company has positive cash flow or August
1, 2004.  The stock  issued was recorded at its fair market value of $57,500 and
treated as deferred loan cost which was amortized  over six months.  Forbearance
under the production  loans has continued under a verbal  agreement  between the
Company  and the  holders  of the loans  while  discussions  are  being  held on

                                      -14-
<PAGE>
restructuring  the terms of the loans.  However,  there can be no assurance that
any restructuring will occur.

In December  2000,  the Company  issued an  undivided  10% interest in six wells
located in the Mustang  Island  Field to Old Jersey Oil  Ventures,  LLC for cash
consideration  of  $1,000,000.  The brother of the President of the Company is a
principal  in Old Jersey Oil  Ventures,  LLC.  Old Jersey Oil  Ventures,  LLC is
entitled to recoup its investment out of future production from the wells in the
Mustang Island Field.  The  transaction was treated,  by the Company,  as a loan
repayable out of production from designated wells for accounting  purposes.  The
production loan began accruing  interest on January 1, 2001 at 5.25% and accrued
interest on the loan totaled $216,109 and $191,376 at October 31, 2004 and April
30, 2004,  respectively.  The balance due under the production loan was $934,518
at October 31, 2004 and April 30, 2004. In March,  2004,  the Company issued Old
Jersey Oil Ventures,  LLC 400,000 shares of the Company's common stock in return
for  forbearance  under the  production  payment  until the earlier of the first
month  following the month in which the Company has positive cash flow or August
1, 2004.  The stock issued was recorded at its fair market value of $176,000 and
treated as a loan cost which was amortized over five months.  Forbearance  under
the production loan has continued under a verbal  agreement  between the Company
and  Old  Jersey  Oil  Ventures,   LLC  while  discussions  are  being  held  on
restructuring  the terms of the loans.  However,  there can be no assurance that
any restructuring will occur.

Note 6.  Asset Retirement Obligations

Beginning  in fiscal  2004,  SFAS No. 143  requires  the Company to recognize an
estimated  liability for the plugging and abandonment of its oil and natural gas
wells  and  associated  pipelines,  platforms,  and  equipment.  This  statement
requires  the  Company  to record a  liability  in the period in which its asset
retirement  obligation  ("ARO") is  incurred.  Upon initial  recognition  of the
liability,  the Company must capitalize a corresponding  asset cost equal to the
amount of the  liability.  Upon adoption of SFAS No. 143 the Company  recognized
(1) a liability  for any existing  ARO's,  (2)  corresponding  capitalized  cost
related  to  the  liability,   (3)  accumulated   depletion,   depreciation  and
amortization on that capitalized cost, and (4) a cumulative effect of accounting
change.

The  estimated  liability  is based on  historical  experience  in plugging  and
abandoning wells and associated pipelines,  platforms, and equipment,  estimated
remaining lives of those wells based on reserve  estimates and federal and state
regulatory   requirements.   The  liability  is  discounted   using  an  assumed
credit-adjusted  risk-free rate of 7.5%.  Revisions to the liability could occur
due to changes in estimates of plugging and  abandonment  costs,  changes in the
risk-free  rate  or  remaining  lives  of the  wells,  or if  federal  or  state
regulators  enact new  plugging  and  abandonment  requirements.  At the time of
abandonment,  the  Company  will  be  required  to  recognize  a gain or loss on
abandonment if the actual costs do not equal the estimated costs.

The adoption of SFAS No. 143 was effective beginning May 1, 2003 and resulted in
an adjustment to record (1) an  $1,084,028  ARO, (2) a $850,194  increase in the
carrying  value of proved  properties,  (3) a $41,699  increase  in  accumulated
depletion, and (4) a $275,533 one-time cumulative effect of change in accounting
principle.

The following table describes all changes to the Company's ARO liability:

                                                 Six Months Ended October 31,
                                              ----------------------------------
                                                    2004              2003
                                                    ----              ----
                                                 (Restated)        (Restated)
                                                 ----------        ----------

Beginning asset retirement obligations        $   1,165,330     $     1,084,028
   Accretion expense                                 44,110              40,652
                                              --------------    ----------------
Ending asset retirement obligations           $   1,209,440     $     1,124,680
                                              ==============    ================

                                      -15-
<PAGE>
Note 7. Commitments and Contingencies

In June 2001, the Company  entered into a long-term  lease for office space with
an annual  rent of  $65,124.  Rent  expense  for the three and six months  ended
October 31,  2004 and 2003 was  $16,281  and  $32,562  and $16,281 and  $32,562,
respectively.  As of October 31, 2004,  future minimum lease payments under this
lease were as follows:

              Fiscal Year
            Ended April 30,
            ---------------

                  2005                   $    32,562
                  2006                        65,124
                  2007                        16,281
                                         -------------
                  Total                  $   113,967
                                         =============

As a member of Mustang Island Gathering,  LLC, a Texas limited liability company
and pipeline  operator,  the Company has been required to guarantee a portion of
the LLC's bank debt, which is approximately  $1.1 million in the aggregate.  The

Company's  share of such  guarantee is  approximately  $40,000.  Due to positive
financial  performance of the pipeline,  the likelihood that the Company will be
required to perform under this guarantee is remote thus no amount is recorded to
reflect the obligation under this guarantee.

From time to time,  the  Company is party to certain  legal  actions  and claims
arising in the ordinary  course of  business.  While the outcome of these events
cannot be predicted with certainty,  management does not expect these matters to
have a materially adverse effect on the financial position of the Company.

The  operations  and financial  position of the Company  continue to be affected
from time to time in varying  degrees by domestic and political  developments as
well as  legislation  and  regulations  pertaining  to  restrictions  on oil and
natural gas  production,  natural gas regulation,  tax increases,  environmental
regulations and cancellation of contract rights. Both the likelihood and overall
effect of such occurrences on the Company vary greatly and are not predictable.

Note 8.  Stockholder's Equity

Preferred Stock

The  Company  is  authorized  to issue  3,000  shares  of Class  A-1  Cumulative
Convertible  Preferred  Stock (Class A-1 Preferred  Stock).  Class A-1 Preferred
Stock was issued for $1,000 per share and is entitled to receive cumulative cash
dividends  at the annual  rate of 8%  payable  annually  in  arrears  commencing
December 1, 2001 when and as declared by the Board of  Directors.  All shares of
Class A-1  Preferred  Stock  were  issued  to the  Company's  secured  lender on
December 27, 2000 as consideration  for a $3,000,000  reduction in the Company's
secured indebtedness.  On January 16, 2003 all shares of the Class A-1 Preferred
Stock, and accrued and unpaid dividends in the amount of $510,000 were converted
into  2,361,439  shares of the Company's  common stock.  On August 8, 2003,  the
Company  completed a transaction with Wachovia Bank whereby the Company acquired
all of the bank's holdings in VTEX Energy, Inc.  securities,  which consisted of
2,369,033 shares of the Company's common stock, and received cancellation of the
$250,000  note  payable  to the bank in return  for a  payment  of  $50,000  and
warrants to purchase up to 250,000 shares of the Company's common stock at $0.10
per share until  August 8, 2006.  The options  were  valued at  $200,000,  which
approximates  their value using the  Black-Scholes  option pricing  model.  Such
value was included in additional paid in capital.

The  Company is  authorized  to issue  500,000  shares of Class AA-1  Cumulative
Convertible  Preferred Stock (Class AA-1 Preferred Stock).  Class AA-1 Preferred
Stock has a par value of $0.01 per share and is entitled  to receive  cumulative
dividends at the rate of 10% payable  annually in shares of Class AA-1 Preferred
Stock (or 39,588  shares)  when and as  declared by the Board of  Directors.  At
October 31,  2004,  dividends  in arrears  totaled  21,421  shares of Class AA-1
Preferred Stock. All shares of Class AA-1 Preferred Stock were issued to holders
of judgment liens against the Company,  in the amount of $395,879,  on April 15,
2004 and remain outstanding.  The holders of the Class AA-1 Preferred Stock are,
upon the  liquidation  of the  Company,  entitled  to  receive  $1.00 per share.
Alternatively,  and at the sole option of the holders,  the holders of the Class
AA-1 Preferred Stock, upon the liquidation of the Company, may retain the rights
provided under the original  judgment  liens.  The Class AA-1 Preferred Stock is
redeemable  in whole or in part at any time,  at the option of the  Company,  at
$1.00 per share. The holders of the Class AA-1 Preferred Stock are entitled to a
20 day written notice of the Company's  intent to redeem and the  opportunity to
convert the Class AA-1  Preferred  Stock into common stock of the  Company.  The
Class AA-1 Preferred  Stock is  convertible  into common stock of the Company at
any time. Each share of Class AA-1 Preferred Stock is convertible into one share
of the Company's  common stock,  adjusted for stock  dividends and stock splits.
The  holders  of Class AA-1  Preferred  Stock  have no voting  rights  except as

                                      -16-
<PAGE>
expressly  required by Nevada law. The Class AA-1  Preferred  Stock is senior to
all other series of preferred stock and all of the Company's common stock.

The  Company is  authorized  to issue  500,000  shares of Class B Preferred
Stock,  par value $0.001 per share.  The holders of Class B Preferred  Stock are
not  entitled  to receive  any  dividends.  As of October 31, 2004 and April 30,
2004, 500,000 shares of the Class B Preferred Stock were issued and outstanding.
The Class B Preferred  Stock is  redeemable  in whole,  but not in part,  at the
option of the Company by  resolution  of the  Company's  Board of  Directors  at
anytime at $1.00 per share.  Each  share of Class B  Preferred  Stock has voting
rights equal to 100 shares of the Company's common stock. The holders of Class B
shares are entitled to elect at least two directors to the Board of Directors of
the Company.  The holders of Class B Preferred Stock voting as a class will have
the right to remove  without  cause at any time and  replace any  director  such
holders have elected.

Common Stock

The Company has 150,000,000  shares of authorized $0.001 par value common stock,
of which  6,824,240 and 5,848,681  shares were issued and outstanding at October
31, 2004 and April 30, 2004, respectively.

During the six months ended October 31, 2004,  the Company  issued 80,000 shares
of its  common  stock  having a fair value of $45,350  for  services  and 50,000
shares of the  Company's  common  stock having a fair value of $13,743 to settle
outstanding accounts payable.

During the six months ended October 31, 2004,  the Company issued 100,000 shares
of its common  stock  having a fair value of  $49,000 to a private  investor  as
consideration for providing a guarantee on its line of credit with a bank.

During the six months ended October 31, 2004, the Company  incurred  obligations
to issue 825,000  shares of common stock to  consultants  for services  having a
fair  value of  $394,749.  As of October  31,  2004,  these  shares had not been
issued, but their fair value has been included in stockholders' equity.

Stock Options and Warrants

The Company has granted  options to certain  key  employees  to purchase  69,336
shares of the Company's  common stock at purchase  prices  ranging from $4.50 to
$6.90 per share.  These options  expire on dates ranging from August 25, 2005 to
March 1, 2006 and are  non-transferable.  The  options,  which were  issued at a
price equal to or exceeding the market value of the underlying stock on the date
of the grant,  are not  intended to qualify as  incentive  stock  options  under
Internal  Revenue Code Section 422. The Company  follows the  provisions of SFAS
No. 123  recording  the fair value of common stock  options on the date of grant
using a Black Scholes option  pricing model.  The amounts are charged to expense
over the vesting period, which is usually the service period.

In August 2003 the Company  issued  warrants to the former holder of its line of
credit to purchase  250,000  shares of the Company's  common stock at a purchase
price of $0.10  per  share.  The  warrants  expire  on  August  8,  2006 and are
transferable.

During the six months ended  October 31, 2004,  the Company  issued  warrants to
purchase  155,000  shares of its  common  stock at $0.50 per share to  investors
under the terms of notes  payable.  The warrants had a fair value of $74,594 and
expire on dates ranging from June 18, 2006 to September 8, 2006.

During the six months ended  October 31, 2004,  the Company  issued  warrants to
purchase  500,000  shares of its common stock at $0.50 per share under the terms
of an option agreement to purchase oil and natural gas properties.  The warrants
had a fair value of $215,000 and expire on July 13, 2009.

During the six months ended  October 31, 2004,  the Company  issued  warrants to
purchase  1,000,000 shares of its common stock at $0.50 per share to consultants
for  services.  The  warrants had a fair value of $504,100 and expire on October
12, 2006.

Stock Appreciation Rights

On December 5, 2003, the Company granted stock appreciation  rights on 1,000,000
shares of the  Company's  common  stock to a former  officer and director of the
Company  in  exchange  for the  cancellation  of  $503,975  in debt.  Such  debt
consisted  of $397,092 in advances  made to the Company and  $106,883 in accrued
salary.  The stock appreciation  rights are fully vested,  have a grant price of

                                      -17-
<PAGE>
$0.10 per share and expire on December 5, 2013.  The exercise price of the stock
appreciation  rights is equal to the  average of the means  between the high and
low trading prices of the Company's common stock for the ten consecutive trading
days immediately preceding the date of exercise.  Upon the exercise of the stock
appreciation  rights,  the grantee is due the  difference  between the  exercise
price and the grant price multiplied by the number of stock appreciation  rights
being exercised.  The Company,  at its sole option, may elect to pay the grantee
in shares of the Company's  common stock valued at the exercise price. The stock
appreciation  rights were valued at  $240,000,  on the date of grant,  using the
Black-Scholes  option  pricing model.  The  difference  between the value of the
stock  appreciation  rights  and the  debt  cancelled  has  been  recorded  as a
contribution  of capital.  During the six months  ended  October 31,  2004,  the
grantee has exercised 652,833 stock appreciation rights receiving 528,653 shares
of the  Company's  common  stock in lieu of cash  settlement.  As of October 31,
2004, there remains no stock  appreciation  rights to be exercised.  The Company
has elected to pay all of the stock  appreciation  rights by the issuance of the
Company's common stock.  The Company also issued an additional  56,906 shares of
common  stock with a fair value of $28,453 to the grantee as  consideration  for
services.

Note 9.  Related Party Transactions

From time to time,  officers,  directors  and  shareholders  of the Company make
unsecured  advances to the Company and receive  advances  from the Company.  The
Company  made  repayments  of such  advances in the amount of $7,500 and $18,000
during the six months ended October 31, 2004 and 2003, respectively. The balance
of advances  from related  parties was $244,906 and $252,406 at October 31, 2004
and April 30,  2004,  respectively.  Additionally,  during the six months  ended
October 31, 2004, the Company received  repayment of advances to related parties
of $45,000 and made  advances  to related  parties of  $114,537.  During the six
months ended October 31, 2004,  advance to related party of $79,537 was utilized
to reimburse travel costs and was charged to expense.

The Company is obligated  under a line of credit to an entity  controlled by the
brother of the Company's  president.  At October 31, 2004 and April 30, 2004 the
balance  due  under  line of credit  was  $1,839,143.  The line of credit  bears
interest at the rate of 7.5% and is due on January 31, 2005. Accrued interest on
the loan  totaled  $318,302 and $248,767 at October 31, 2004 and April 30, 2004,
respectively.

The Company is obligated under a production payment to an entity whose principal
is the  brother of the  Company's  president.  At October 31, 2004 and April 30,
2004 the balance due under such production payment was $934,518. Such production
loan began accruing  interest on January 1, 2001 at 5.25%.  Accrued  interest on
the loan  totaled  $216,109 and $191,376 at October 31, 2004 and April 30, 2004,
respectively.

In March,  2004,  the Company  issued a $150,000 note payable to Mustang  Island
Gathering,  LLC for  indemnification  of litigation  settlement  costs.  Mustang
Island  Gathering,  LLC  purchases  the natural gas produced  from the Company's
Mustang Island property, and the Company is an approximate 10% owner in the LLC.
The note is payable in monthly installments,  with interest at 4.5%, at the rate
of $0.03 per MCF of natural gas purchased, beginning with April 2004 production.
The balance due under the note was $109,808 and $150,000 at October 31, 2004 and
April 30, 2004, respectively.

Note 10.  Subsequent Event

On December 10, 2004, the Company notified CLK Energy,  Inc. ("CLK") that it did
not intend to exercise its option to purchase from CLK 50% of their  interest in
the Bayou Choctaw Field,  located in the Iberville and West Baton Rouge Parishes
Louisiana.  Under the terms of the option,  CLK was issued  warrants to purchase
500,000  shares of the Company's  common stock at an exercise price of $0.50 per
share.  Such warrants had a fair value of $215,000  which has been recorded as a
noncurrent  asset  which will be charged to  expense  during the  quarter  ended
January  31,  2004.  To  fund  this  potential  acquisition,   the  Company  was
simultaneously  in the process of raising  capital  through a private  placement
memorandum.  The Company  incurred  offering costs totaling  $53,631 relating to
this private  placement  memorandum  which was capitalized as deferred  offering
costs. Due to the Company not exercising its option to purchase from CLK its 50%
interest  in the  Bayou  Choctaw  Field the  private  placement  memorandum  was
abandoned  and the deferred  offering  costs were charged to expense  during the
quarter ended January 31, 2005.

Item 2. Management's  Discussion and Analysis of Financial Condition and
        Results of Operations

     The  following  is  management's  discussion  and  analysis of  significant
factors  that have  affected  certain  aspects  of our  financial  position  and
operating  results  during the periods  included in the  accompanying  unaudited
condensed consolidated  financial statements.  This discussion should be read in
conjunction

                                      -18-
<PAGE>
with the accompanying  unaudited  condensed  consolidated  financial  statements
included  elsewhere in this Form 10-QSB/A  Amendment No. 1 and with Management's
Discussion and Analysis of Financial Condition and Results of Operations and our
audited consolidated  financial statements for the year ended April 30, 2004, as
amended,  included in our annual  report on Form 10-KSB for the year ended April
30, 2004 filed with the SEC on August 15, 2005.

Forward-Looking Statements

     The statements contained in all parts of this document,  including, but not
limited to, those relating to our outlook,  including any expectations regarding
increases  in our  liquidity  or  available  credit,  our  ability to access the
capital  markets  to raise  additional  capital,  our  drilling  plans,  capital
expenditures,  future  capabilities,  the  sufficiency of capital  resources and
liquidity  to support  working  capital  and capital  expenditure  requirements,
reinvestment  of cash flows,  use of NOLs, tax rates,  the outcome of litigation
and audits,  and any other  statements  regarding future  operations,  financial
results,  business  plans,  sources  of  liquidity  and  cash  needs  and  other
statements that are not historical  facts are forward looking  statements.  When
used in this document,  the words  "anticipate,"  "estimate,"  "expect,"  "may,"
"project,"  "believe,"  "budgeted,"  "intend," "plan," "potential,"  "forecast,"
"might,"  "predict,"  "should" and similar  expressions are intended to be among
the statements that identify forward looking statements. Such statements involve
risks and  uncertainties,  including,  but not limited to, those relating to the
results  of and our  dependence  on our  exploratory  and  development  drilling
activities,  the  volatility of oil and natural gas prices,  the need to replace
reserves  depleted  by  production,  operating  risks  of oil  and  natural  gas
operations,  our  dependence  on key  personnel,  our reliance on  technological
development and possible  obsolescence  of the technology  currently used by us,
the  significant  capital  requirements  of our  exploration and development and
technology  development programs, the potential impact of government regulations
and  liability for  environmental  matters,  results of  litigation  and audits,
expansion of our capital  budgets,  our ability to manage our growth and achieve
our business  strategy,  competition  from larger oil and natural gas companies,
the  uncertainty  of  reserve  information  and future  net  revenue  estimates,
property  acquisition  risks and other  factors  detailed  in this Form  10QSB/A
Amendment No. 1 for the quarterly  period ended October 31, 2004 and our audited
consolidated financial statements for the year ended April 30, 2004, as amended,
included in our annual  report on Form  10-KSB  filed with the SEC on August 15,
2005  and  other  filings  with the SEC.  Should  one or more of these  risks or
uncertainties  materialize,  or should  underlying  assumptions prove incorrect,
actual outcomes may vary materially from those indicated. All subsequent written
and oral forward-looking  statements  attributable to the Company or the persons
acting on its behalf are expressly  qualified in their entirety by the reference
to these risks and uncertainties.

General Overview

     VTEX Energy, Inc., a Nevada corporation (the "Company"),  is an independent
oil and natural gas company  engaged in acquiring,  exploiting,  developing  and
operating oil and natural gas  properties,  with a focus on Texas and Louisiana.
The Company has one wholly owned subsidiary,  Vector  Exploration,  Inc., and is
headquartered in Houston, Texas.

     The Company was  incorporated  under the laws of the State of Texas on June
18,  1998 as Vector  Energy  Corporation  ("Vector")  which  was a wholly  owned
subsidiary of Sunburst Acquisitions II, Inc. ("Sunburst"). Vector was formed for
the purpose of  completing  a reverse  merger  with  Sunburst in order to change
Sunburst's name to Vector Energy Corporation and its state of incorporation from
Colorado  to Texas.  This  merger  was  completed  on June 19,  1998.  Effective
November 15, 2002, the Company was reincorporated in Nevada. The reincorporation
was effected by the merger of Vector with and into a newly created, wholly owned
subsidiary, VTEX Energy, Inc., a Nevada Corporation,  which became the surviving
entity (the "Company").

     From its inception through March 2000, the Company  consummated a series of
oil and natural gas property  acquisitions  in Texas,  Louisiana  and  Oklahoma.
These  acquisitions  were funded primarily through the issuance of the Company's
stock and the Company's assumption of debt and other liabilities. The properties
acquired were a combination of producing properties and properties considered to
have future development potential.

     A lack of working capital and the service  requirements of the debt assumed
by the Company in its  acquisitions  prevented the Company from fully developing
the  properties  it had  acquired.  Accordingly,  the Company  identified  those
properties that had the most potential for future development,  and beginning in
July  2002  began  selling  its non  core  non  strategic  oil and  natural  gas
properties.  The proceeds from the property  sales allowed the Company to reduce
and restructure its debt, while retaining enough capital to begin development of
the properties retained.

                                      -19-
<PAGE>
     The  estimated  proved oil and natural gas reserves of the Company at April
30, 2004 were 84,000  barrels of crude oil and  condensate  and  15,516,000  MCF
(thousand  cubic  feet)  of  natural  gas of  which  69,000  barrels  of oil and
14,872,000  MCF of  natural  gas  relate to  properties  that are not  currently
producing.  It is expected  that a majority of these  properties  can be brought
on-line after conducting  workovers,  recompletions  or offset  drilling.  These
reserves  (producing and non-producing)  have an estimated $44 million in future
net cash flow, discounted at 10%, and are all considered to be proved developed.
The  Company's  reserves  are  located in two fields,  Bateman  Lake and Mustang
Island 818-L.
<TABLE>
<CAPTION>
                                                                Percent of          Percent of        Percent of
                                                              April 30, 2004          Revenue          Revenue
                                                             Estimated Future       Six Months        Six Months
                                                              Net Cash Flows           Ended            Ended
          Field                       Location               Discounted at 10%   October 31, 2004  October 31, 2003
          -----                       --------               -----------------     -------------    -------------
<S>                        <C>                               <C>                   <C>              <C>
Bateman Lake               St. Mary Parish, Louisiana             66.62%              20.60%            19.39%

Mustang Island 818-L       State Waters Offshore Texas            33.38%              79.40%            51.63%

Properties Sold            Various                                   -                   -              28.88%
</TABLE>

Results of Operations

Three Months Ended October 31, 2004 Compared to Three Months Ended
October 31, 2003

     Oil and natural gas revenues  for the three  months ended  October 31, 2004
remained  virtually  unchanged  from the same period in fiscal 2004.  Production
volumes for natural gas during the three months ended October 31, 2004 decreased
3%, to 54,479 MCF, compared to 56,420 MCF for the three months ended October 31,
2003.  Average  natural gas prices for the three months  ended  October 31, 2004
increased 19% to $5.68 per MCF,  compared to $4.79 per MCF in the same period in
fiscal 2004.  Production  volumes for oil for the three months ended October 31,
2004  decreased  100% from  1,449  barrels  in the same  period in fiscal  2004.
Average oil prices for the three months  ended  October 31, 2003 were $26.73 per
barrel. The decrease in oil production was offset by the increase in natural gas
prices  and was  primarily  due to  declines  in  production  from  the main oil
producing well at the Bateman Lake Field.

     The following table summarizes production volumes, average sales prices and
operating  revenues for the  Company's  oil and natural gas  operations  for the
three months ended October 31, 2004 and 2003.

<TABLE>
<CAPTION>
                                                                                2004 Period
                                                                          Compared to 2003 Period
                                Three Months Ended October 31,     --------------------------------
                               --------------------------------       Increase         % Increase
                                    2004              2003            Decrease)         (Decrease)
                               --------------    --------------    --------------    --------------
<S>                            <C>               <C>               <C>               <C>
Production volumes -
   Oil (Bbls)                           -                1,449      (      1,449)     (       100%)
   Natural Gas (MCF)                  54,479            56,420      (      1,941)     (         3%)
Average sales prices -
   Oil (per Bbl)               $        -        $       26.73     $(      26.73)     (       100%)
   Natural gas (per MCF)                5.68              4.79              0.89               19%
Operating revenue
   Oil                         $        -        $      38,735     $(     38,735)     (       100%)
   Natural gas                       309,379           270,311            39,068               14%
                               --------------    --------------    --------------
                               $     309,379     $     309,046     $         333              -
                               ==============    ==============    ==============
</TABLE>

     Production  expenses  decreased by $44,984 to $152,308 for the three months
ended October 31, 2004 compared to the three months ended October 31, 2003. This
23% decrease was primarily due to a decrease in ad valorem taxes relating to the
Company's  working  interest  in the  Mustang  Island  property  as a result  of
negotiations with the taxing authorities. Production expense per equivalent unit
showed a  corresponding  $0.23  decrease to $2.80 per Mcfe for the three  months
ended October 31, 2004 compared to $3.03 in the same period in fiscal 2004.

                                      -20-
<PAGE>
     Depletion expense increased from $40,278 for the three months ended October
31, 2003 to $54,722  for the three  months  ended  October  31,  2004.  This 36%
increase was primarily due to a negative  revision in reserve  volume  estimates
since  April 30, 2003  partially  offset by a 16%  decrease  in Mcfe  production
volumes.

     General and  Administrative  expenses for the thee months ended October 31,
2004  increased  by $943,699 to  $1,133,801  compared to $190,102  for the three
months ended October 31, 2003.  The increase was primarily due to an increase in
consulting  fees  incurred by the Company  which  increased  by $833,748 for the
three months ended October 31, 2004.

     Accretion  expense for the three months ended October 31, 2004 increased by
$1,934 to $22,260  compared to $20,326 for the three  months  ended  October 31,
2003.  This  increase  was due to the  normal  compound  effect of the  discount
factor.

     Interest  expense for the three months ended October 31, 2004  increased by
298% to $207,070  from $52,050 for the same period in fiscal 2004.  The increase
was due  primarily to the  addition of a $250,000  line of credit with a bank in
April 2004,  the addition of $700,000 in notes  payable to investors  during the
current  fiscal  year and an  increase  in  amortization  of loan  discount  and
deferred  loan  costs of  $135,729  relating  to the  notes  payable  issued  to
investors during the current fiscal quarter.

Six Months Ended October 31, 2004 Compared to Six Months Ended October 31, 2003

     Oil and  natural gas  revenues  for the six months  ended  October 31, 2004
increased  5% to  $751,186,  compared to $712,714  for the same period in fiscal
2004. Production volumes for natural gas during the six months ended October 31,
2004 increased  13%, to 115,461 MCF,  compared to 102,394 MCF for the six months
ended  October 31,  2003.  Average  natural gas prices for the six months  ended
October 31, 2004  increased  15% to $6.01 per MCF,  compared to $5.21 per MCF in
the same period in fiscal  2004.  Production  volumes for oil for the six months
ended October 31, 2004 decreased 74% to 1,628 barrels  compared to 6,262 barrels
in the same period in fiscal  2004.  Average oil prices for the six months ended
October 31,  2004  increased  23% to $35.21 per  barrel,  compared to $28.68 per
barrel  for the same  period  in  fiscal  2004.  The  increase  in  natural  gas
production  was due to increased  production  at the Mustang  Island Field and a
workover performed on a well at the Bateman Lake Field which began production in
July 2004.  These  increases  were partially  offset by natural  declines in the
production  from the  remaining  wells at the  Bateman  Lake  Field and sales of
producing  properties  in  fiscal  2004.  The  decrease  in oil  production  was
primarily due to declines in production  from the main oil producing well at the
Bateman Lake Field.

         The following table summarizes production volumes, average sales prices
and operating revenues for the Company's oil and natural gas operations for the
six months ended October 31, 2004 and 2003.
<TABLE>
<CAPTION>
                                                                               2004 Period
                                                                         Compared to 2003 Period
                                Six  Months Ended October 31,      --------------------------------
                               --------------------------------       Increase         % Increase
                                    2004              2003            Decrease)         (Decrease)
                               --------------    --------------    --------------    --------------
<S>                            <C>               <C>               <C>               <C>
Production volumes -
   Oil (Bbls)                          1,628             6,262      (      4,634)    (         74%)
   Natural Gas (MCF)                 115,461           102,394            13,067               13%
Average sales prices -
   Oil (per Bbl)               $       35.21     $       28.68     $        6.53               23%
   Natural gas (per MCF)                6.01              5.21              0.80               15%
Operating revenue
   Oil                         $      57,321     $     179,585     $(    122,264)     (        68%)
   Natural gas                       693,865           533,129           160,736               30%
                               --------------    --------------    --------------
                               $     751,186     $     712,714     $      38,472                5%
                               ==============    ==============    ==============
</TABLE>
     Production  expenses  decreased  by $120,657 to $337,602 for the six months
ended October 31, 2004  compared to the six months ended October 31, 2003.  This
26% decrease was primarily due to a decrease in ad valorem taxes relating to the
Company's  working  interest  in the  Mustang  Island  property  as a result  of
negotiations with the taxing authorities. Production expense per equivalent unit
showed a corresponding $0.57 decrease to $2.70 per Mcfe for the six months ended
October 31, 2004 compared to $3.27 in the same period in fiscal 2004.

                                      -21-
<PAGE>
     Depletion  expense  increased from $56,165 for the six months ended October
31, 2003 to  $130,515  for the six months  ended  October  31,  2004.  This 132%
increase was primarily due to a negative  revision in reserve  volume  estimates
since  April 30, 2003  partially  offset by a 11%  decrease  in Mcfe  production
volumes.

     General and  Administrative  expenses for the six months ended  October 31,
2004 increased by $922,947 to $1,556,918 compared to $633,971 for the six months
ended  October  31,  2003.  The  increase  was  primarily  due to an increase in
consulting fees incurred by the Company which increased by $1,045,636 during the
six months ended October 31, 2004.

     Accretion  expense for the six months ended  October 31, 2004  increased by
$3,458 to $44,110 compared to $40,652 for the six months ended October 31, 2003.
This increase was due to the normal compound effect of the discount factor.

     Interest  expense for the six months  ended  October 31, 2004  increased by
278% to $412,754 from $109,305 for the same period in fiscal 2004.  The increase
was due  primarily to the  addition of a $250,000  line of credit with a bank in
April 2004,  the addition of $700,000 in notes  payable to investors  during the
current  fiscal  year and an  increase  in  amortization  of loan  discount  and
deferred loan costs relating to the notes payable issued to investors during the
current fiscal year totaling $279,798.

     We adopted  SFAS No. 143  effective  May 1, 2003 and  recorded a cumulative
effect of change in accounting principle of $275,533 during the six months ended
October 31, 2003.

Financial Condition and Capital Resources

     Since its  inception,  the  Company  has  suffered  recurring  losses  from
operations and has been dependent on existing  stockholders and new investors to
provide  the cash  resources  to sustain its  operations.  During the six months
ended October 31, 2004 and 2003, the Company  reported  losses of $1,723,292 and
$860,547, respectively. The Company's continuing negative operating results have
produced a working  capital  deficit of  $6,262,746  at October 31, 2004.  These
factors raise  substantial  doubt about the  Company's  ability to continue as a
going concern. The Company's long-term viability as a going concern is dependent
upon the  Company's  ability to obtain  sources of outside  financing to support
near term  operations and to allow the Company to make strategic  investments in
new oil and natural gas prospects  which will provide the Company the ability to
increase  profitability  and sustain a cash flow level that will ensure  support
for continuing operations.

     For the past six months,  the  Company's  oil and natural gas revenues have
been  sufficient  to satisfy  its oil and  natural gas  operating  expenses  and
general and administrative  expenses.  The Company has funded the development of
its oil and natural gas properties through additional  borrowings under its line
of credit and through short term investor notes.  Additional equity funding will
be  required  in the near term to meet the  capital  needs of the  Company.  The
Company is evaluating  various  financing  alternatives  such as the issuance of
debt,  private  placements of its common and preferred  stock and joint ventures
with  industry  partners.  There  is no  guarantee  that  the  Company  will  be
successful in obtaining such financing, or that the terms of any financing which
may be obtained will be on terms favorable to the Company.  Any inability of the
Company to raise  additional  capital will limit the  development of most of its
oil and natural gas properties and may prevent the Company from meeting its cash
requirements.  If the wells which are currently  being  brought into  production
through  development and workovers perform as expected additional cash flows may
be available;  however,  there is no assurance that such cash flows will in fact
be  available  or that the wells  will,  in fact,  perform as  expected.  In the
absence of such well  performance or financing,  the company will not be able to
meet its financial obligations.

     The  Company is  currently  negotiating  with many of the vendors for which
accounts  payable  were  assumed in prior asset  acquisition  transactions,  and
believes that a significant  portion of these payables can be satisfied  through
the issuance of common stock.

Financing Arrangements

     The  Company  has a $10  million  revolving  credit  line  with  an  entity
controlled by the brother of the  Company's  president.  However,  the borrowing
base under the revolving credit line is $1,839,143 at October 31, 2004, which is
equal to the outstanding balance. This principal balance plus unpaid interest is
due at maturity on January 31,  2005.  The  borrowing  base cannot be  increased
without  the  consent of the lender.  The  Company  also has a $250,000  line of

                                      -22-
<PAGE>

credit  with a bank.  The  outstanding  balance  under  this  line of  credit is
$246,537 at October 31, 2004, and is due upon demand.

     The Company has outstanding production payments in the amount of $1,188,518
at October 31, 2004.  The holders of such  production  payments have agreed to a
temporary  forbearance of the Company's  obligation.  If such forbearance is not
continued,  the Company will be required to remit the revenue from a substantial
portion of the Company's production.

     From time to time the Company  incurs notes  payable to settle  outstanding
accounts  payable  and other  liabilities,  finance  expenditures  and  generate
working  capital.  The balances of such notes  payable were  $761,786,  net of a
discount of  $132,872,  and  $306,092  at October  31, 2004 and April 30,  2004,
respectively.

     As a member of Mustang Island Gathering,  LLC ( the "LLC"), a Texas limited
liability  company and  pipeline  operator,  the  Company  has been  required to
guarantee a portion of the LLC's bank debt, which is approximately  $1.1 million
in the  aggregate.  The  Company's  share  of such  guarantee  is  approximately
$40,000. Due to the financial  performance of the pipeline,  the likelihood that
the Company will be required to perform  under this  guarantee is remote thus no
amount is recorded to reflect the obligation under this guarantee.

Net Cash Provided by Operating Activities

     Cash flows  provided by  operating  activities  were  $263,461  for the six
months  ended  October 31, 2004 as compared to $365,452 for the six months ended
October 31,  2003.  This  decrease  was  primarily  due to the Company  paying a
substantial  portion of ongoing  operating  expenses on a current basis which in
the past were deferred for a longer period of time.  Working  capital  decreased
$491,551  during the six months ended October 31, 2003 compared to a decrease of
working  capital of $429,975  for the six months  ended  October 31,  2004.  The
Company's  loss  before  cumulative  effect of change  in  accounting  principle
increased to $1,723,292  for the six months ended October 31, 2004 from $585,014
for the six months ended October 31, 2003.

Net Cash Used in Investing Activities

     Cash flows used in investing activities increased to $1,017,665 for the six
months ended October 31, 2004 from $132,203 for the six months ended October 31,
2003. This increase was due primarily to $972,306 in oil and natural gas capital
expenditures  incurred related to workovers and a recompletion  performed on two
wells in the Bateman Lake field.

Net Cash Provided by Financing Activities

     Net cash flows provided by financing  activities  totaled  $673,972 for the
six months ended October 31, 2004 primarily from borrowings  under a new line of
credit from a bank and notes payable to investors  totaling  $700,000  offset by
repayments  of debt of $121,697 and  deferred  offering  costs  incurred on debt
raises of $53,631.  Net cash used by financing  activities  totaled $130,973 for
the six months ended October 31, 2003 primarily from repayments of debt totaling
$172,171  which were  partially  offset by sales of the  Company's  common stock
totaling $63,750.

Critical Accounting Policies

         The following summarizes several of our critical accounting policies:

Use of Estimates

     The preparation of financial  statements in conformity with U.S.  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting periods. Actual results could differ from these estimates.  The use of
these estimates  significantly  affects  natural gas and oil properties  through
depletion and the full cost ceiling test, as discussed in more detail below.

                                      -23-
<PAGE>
Oil and Natural Gas Properties

     We account  for  investments  in natural gas and oil  properties  using the
full-cost  method  of  accounting.   All  costs  directly  associated  with  the
acquisition,  exploration  and development of natural gas and oil properties are
capitalized.  These costs  include  lease  acquisitions,  seismic  surveys,  and
drilling and completion  equipment.  We expense  maintenance and repairs as they
are incurred.

     We amortize natural gas and oil properties based on the  unit-of-production
method using  estimates  of proved  reserve  quantities.  The  amortizable  base
includes   estimated   future   development   costs  and,   where   significant,
dismantlement,  restoration  and  abandonment  costs,  net of estimated  salvage
values.  The depletion rates per Mcfe for the three and six months ended October
31, 2004 and 2003 were $1.00 and $0.62 and $1.04 and $0.40, respectively.

     We  account  for   dispositions  of  natural  gas  and  oil  properties  as
adjustments to capitalized  costs with no gain or loss  recognized,  unless such
adjustments would significantly alter the relationship between capitalized costs
and proved reserves.  We have not had any transactions that significantly  alter
that relationship.

     The net  capitalized  costs of proved oil and  natural gas  properties  are
subject to a "ceiling  test" which  limits such costs to the  estimated  present
value,  discounted  at a 10% interest  rate,  of future net revenues from proved
reserves, based on current economic and operating conditions. If net capitalized
costs exceed this limit, the excess is charged to operations  through depletion,
depreciation and amortization.

Oil and Natural Gas Reserve Estimates

     The reserve data  included in this  document are  estimates  prepared by D.
Raymond Perry, Jr.,  Independent  Petroleum  Engineer.  Reserve engineering is a
subjective process of estimating underground  accumulations of hydrocarbons that
cannot be measured in an exact manner.  The process relies on  interpretation of
available  geologic,  geophysical,  engineering and production data. The extent,
quality and reliability of this data can vary. The process also requires certain
economic   assumptions   regarding  drilling  and  operating  expense,   capital
expenditures,  taxes and  availability of funds.  The SEC mandates some of these
assumptions  such as oil and natural gas prices and the present  value  discount
rate.

     Proved reserve estimates prepared by others may be substantially  higher or
lower than these estimates.  Because these estimates depend on many assumptions,
all of which  may  differ  from  actual  results,  reserve  quantities  actually
recovered may be significantly  different than estimated.  Material revisions to
reserve estimates may be made depending on the results of drilling, testing, and
rates of production.

     You should not assume  that the  present  value of future net cash flows is
the current market value of our estimated  proved  reserves.  In accordance with
SEC requirements,  we based the estimated  discounted future net cash flows from
proved reserves on prices and costs on the date of the estimate.

     Our rate of recording depreciation,  depletion and amortization expense for
proved properties  depends on our estimate of proved reserves.  If these reserve
estimates decline, the rate at which we record these expenses will increase.

Asset Retirement Obligations

     The Company records a liability for legal  obligations  associated with the
retirement  of  tangible  long-lived  assets  in the  period  in which  they are
incurred in  accordance  with SFAS No.  143,  "Accounting  for Asset  Retirement
Obligations."  The Company  adopted this policy  effective May 1, 2003,  using a
cumulative effect approach to recognize  transition amounts for asset retirement
obligations,  asset  retirement  costs and accumulated  accretion and depletion.
Under this method,  when liabilities for  dismantlement  and abandonment  costs,
excluding  salvage values,  are initially  recorded,  the carrying amount of the
related oil and natural gas properties are increased. Accretion of the liability
is  recognized  each period using the  interest  method of  allocation,  and the
capitalized cost is depleted over the useful life of the related asset.

                                      -24-
<PAGE>
Contingencies

     Liabilities and other contingencies are recognized upon determination of an
exposure,  which when analyzed  indicates that it is both probable that an asset
has been  impaired or that a liability  has been incurred and that the amount of
such loss is reasonably estimable.

Volatility of Oil and Natural Gas Prices

     Our  revenues,  future  rate of growth,  results of  operations,  financial
condition and ability to borrow funds or obtain additional  capital,  as well as
the  carrying  value  of  our  properties,   are  substantially  dependent  upon
prevailing prices of oil and natural gas.

Acquisition of Oil and Natural Gas Properties

     On July 13, 2004, the Company entered into an option with CLK Energy,  Inc.
("CLK"). Under the option, the Company has the right to purchase from CLK 50% of
their  interest in the Bayou  Choctaw  Field,  located in the Iberville and West
Baton  Rouge  Parishes of  Louisiana  for  $1,250,000  and the  assumption  of a
production payment of $1,500,000 payable contingent upon reaching 110% of payout
of the  Company's  investment.  The  Company's  investment  is  comprised of its
original purchase price (as defined),  value of common stock and warrants issued
as purchase  price  consideration,  and its  commitment  to fund  $5,000,000  of
workover and well development  costs. Upon exercise of the option and completion
of the  purchase,  the Company has agreed to reimburse  CLK for its  acquisition
costs, as adjusted for intervening operations,  and will deliver a commitment to
fund future well workover and field development drilling totaling $5,000,000, as
defined.  Under the terms of the  option,  CLK was issued  warrants  to purchase
500,000  shares of the Company's  common stock at an exercise price of $0.50 per
share.  Such warrants had a fair value of $215,000  which has been recorded as a
noncurrent asset.  Upon exercise of the option,  such amount will be included in
oil and natural gas  properties  as a component  of the purchase  price.  If the
option  expires,  the Company will expense the fair value of the warrants during
the period in which the option  expires.  The option had an original  expiration
date of October 31, 2004 which was  subsequently  extended to December 10, 2004.
On  December  10,  2004,  the  Company  notified  CLK that it did not  intend to
exercise  its option  under the  agreement.  Accordingly,  the fair value of the
warrants  of  $215,000  has been  charged to expense  during the  quarter  ended
January  31,  2005.  To  fund  this  potential  acquisition,   the  Company  was
simultaneously  in the process of raising  capital  through a private  placement
memorandum.  The Company  incurred  offering costs totaling  $53,631 relating to
this private  placement  memorandum  which was capitalized as deferred  offering
costs. Due to the Company not exercising its option to purchase from CLK its 50%
interest  in the  Bayou  Choctaw  Field the  private  placement  memorandum  was
abandoned  and the deferred  offering  costs were charged to expense  during the
quarter ended January 31, 2005.

Item 3.     Controls and Procedures

     Disclosure  controls and procedures are controls and other  procedures that
are  designed to ensure that  information  required to be  disclosed  in Company
reports  filed or submitted  under the  Security and Exchange Act are  recorded,
processed,  summarized  and reported  within the time  periods  specified in the
Securities and Exchange  Commission's rules and forms.  Disclosure  controls and
procedures  include,  without  limitation,  controls and procedures  designed to
ensure that information  required to be disclosed in Company reports filed under
the Securities and Exchange Act is accumulated  and  communicated to management,
including the  Company's  President  and Chief  Executive  Officer and the Chief
Financial Officer, as appropriate,  to allow timely decisions regarding required
disclosure.

     The  Company's  Chief  Executive   Officer  and  Chief  Financial   Officer
(collectively,  the "Certifying  Officers") are responsible for establishing and
maintaining  disclosure  controls  and  procedures  (as  defined  in  Securities
Exchange Act Rule  13a-15(e))  for the Company.  Such  officers  have  concluded
(based upon their  evaluation  of these  controls  and  procedures  as of a date
within  90 days of the  filing of this  report)  that the  Company's  disclosure
controls and  procedures  are not adequate  and  effective  for purposes of Rule
13a-14(c)  in timely  alerting  them to  material  information  relating  to the
Company required to be included in the Company's  filings with the SEC under the
Securities  Exchange  Act of 1934.  The reasons for our  determination  that our
internal controls and procedures are not effective are detailed below.

     The Company currently employs one person in the accounting  department (the
Chief  Financial  Officer) who is responsible  for the day to day accounting and
SEC reporting  function of the Company.  Daily  transactions  are accounted for,
reconciled and processed to our accounting  records solely by this person.  This

                                      -25-
<PAGE>

is   considered   a   material   weakness   due  to  lack  of   segregation   of
responsibilities. The lack of resources in the accounting and reporting function
of our internal controls also resulted in the Company not being able to file its
quarterly financial  statements during the year ended April 30, 2005 and for the
quarterly  period ended July 31, 2005 on a timely basis.  As of the date of this
filing the Company is compliant in all of its SEC required filings. Furthermore,
during the course of  completing  the audit for the year ended  April 30,  2005,
several  accounting  adjustments  were identified  requiring  adjustments to the
current year and  restatement  of the  financial  statements  for the year ended
April 30, 2004 and to various of its Form 10-QSBs for each respective year. PART

     As a result  of the items  mentioned  above,  the  Company  has a  material
weakness in its internal  control over the financial  reporting  and  disclosure
function due to the lack accounting resources available for the daily processing
of transactions and account  reconciliations  and the reporting of our financial
statements  within the  appropriate  filings in the time required.  This void in
available accounting resources increases the likelihood to more than remote that
a material  misstatement of the Company's annual or interim financial statements
will not be prevented or detected in a timely manner.

     Executive  management of the Company is currently evaluating its accounting
resource needs and anticipates  employing further  accounting  assistance in the
near term. Management believes that additional accounting assistance,  including
increased  technical  resources,  will  mitigate  the  circumstances  that  have
resulted  in our  evaluation  of  internal  controls  and  procedures  as having
material weaknesses.

     There has been no change in our internal controls over financial  reporting
that occurred  during the six months ended October 31, 2004 that has  materially
affected,  or is reasonably likely to materially  affect,  our internal controls
over financial reporting.

                           PART II - OTHER INFORMATION

Item 1.   Legal Proceedings

     The Company is involved from time to time in various  claims,  lawsuits and
administrative  proceedings  incidental  to  its  business.  In the  opinion  of
management,  the ultimate liability,  if any, will not have a materially adverse
effect on the financial condition or results of operations of the Company

Item 2.   Changes in Securities and Use of Proceeds

     In May 2004 the Company  issued 50,000 shares of its common stock to Samuel
M. Skipper in return for the  assumption  of $13,743 of the  Company's  accounts
payable.

     In May and June of 2004, the Company issued a total of 50,000 shares of its
common stock to Arcoa Advisors, LLC in exchange for services valued at $28,250.

     In May, July and September of 2004,  the Company  issued a total of 528,653
shares of its common  stock to Samuel M.  Skipper  under its Stock  Appreciation
Rights Plan.

     In June 2004,  the  Company  issued  30,000  shares of its common  stock to
Marshall Smith in exchange for services valued at $17,100.

     In September of 2004,  the Company  issued a total of 56,906  shares of its
common  stock to Samuel M.  Skipper  as  consideration  for  services  valued at
$28,453.

     In October 2004 the Company  issued  100,000  shares of its common stock to
the Bargus Partnership as consideration under the terms of a loan agreement.

     In October 2004 the Company  issued 60,000 shares of its common stock to W.
Douglas Moreland as consideration under the terms of a loan agreement.

     In October 2004 the Company issued 100,000 shares of its common stock to W.
Ray Nesbitt as consideration under the terms of a loan agreement.

                                      -26-
<PAGE>
     In each of the  aforementioned  cases, the Company issued the shares of its
common stock in reliance upon the exemption from registration under Section 4(2)
of the  Securities  Act of 1933,  as  amended.  The  Company  did not engage any
underwriters in connection with their issuances.

Item 3.   Defaults Upon Senior Securities

         None

Item 4.   Submission of Matters to a Vote of Security Holders

         None

Item 5.   Other Information

         None

Item 6. Exhibits and Reports on Form 8-K

    (a) Additional Exhibits

        Exhibit 31.1 Certification pursuant to Section 302 of the
                     Sarbanes-Oxley Act of 2002.

        Exhibit 31.2 Certification pursuant to Section 302 of the
                     Sarbanes-Oxley Act of 2002.

        Exhibit 32.2 Certification of Chief Executive Officer and
                     President of the Company, pursuant to 18 U.S.C. Section
                     1350, as adopted pursuant to Section 906 of the
                     Sarbanes-Oxley Act of 2002.

        Exhibit 32.2 Certification of Chief Financial Officer of the
                     Company, Pursuant to 18 U.S.C. Section 1350, as adopted
                     pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

    (b) Reports on Form 8-K.

     The  Company  filed a  Current  Report  on Form 8-K on  September  8,  2004
     announcing an extension of the option agreement with CLK.

     The  Company  filed a Current  Report  on Form 8-K on  September  30,  2004
     announcing a change in auditor from  Comiskey and Company,  P.C. to Pannell
     Kerr Forster of Texas, P.C.

     The  Company  filed  a  Current  Report  on Form  8-K on  October  5,  2004
     announcing an extension of the option agreement with CLK.

                                      -27-
<PAGE>
                                   SIGNATURES

     In accordance  with the Exchange Act, the registrant  caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

                         VTEX Energy, Inc.
                         (Registrant)

                         By       /S/ Grant G. Emms
                                  --------------------------
                                  Grant G. Emms
                                  President
                                  Principal Executive Officer
                                  Date:    December 20, 2005

                         By       /S/ Randal B. McDonald, Jr.
                                  ---------------------------
                                  Randal B. McDonald, Jr.
                                  Chief Financial Officer
                                  Principal Financial and Accounting Officer
                                  Date:    December 20, 2005


                                      -28-