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

                                 Form 10-QSB/A
                                Amendment No. 2

|X|  QUARTERLY  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITITES
     EXCHANGE ACT OF 1934. For the quarter ended July 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 July 31, 2004, there were 6,464,240 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/A
                       FOR THE QUARTER ENDED JULY 31, 2004

                                EXPLANATORY NOTE

     We are filing this amendment to our quarterly  report for the quarter ended
July 31, 2004 to correct certain errors in the Company's financial statements as
of, and for the three  months  ended July 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 months ended July 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 July
31, 2004 and 2003 by $157,389 and $139,652, respectively, or $0.02 and $0.02 per
share,  respectively.  These adjustments reduced total  stockholders'  equity by
$127,130  as of July 31,  2004.  The effects of the  restatement  are more fully
described in Note 2 to the consolidated  financial statements.  The consolidated
balance sheet as of April 30, 2004 contained  herein was previously  restated in
conjunction  with the filing of our annual report on Form 10-KSB as of April 30,
2005 filed on August 15, 2005.

     For  convenience  and ease of review we are filing our quarterly  report on
Form 10-QSB/A  Amendment  No. 2 for the quarterly  period ended July 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 July 31, 2004
as originally included in our quarterly report on Form 10-QSB filed with the SEC
on September 20, 2004, subsequently amended on October 20, 2004.

                                     INDEX

 PAGE PART I.  FINANCIAL INFORMATION
     Item 1. Financial Statements
          Consolidated Balance Sheets                                  3
               as of July 31, 2004 (Restated) and April 30, 2004
          Consolidated Statements of Operations                        5
               for the Three Months Ended July 31, 2004 (Restated)
               and 2003 (Restated
          Consolidated Statements of Cash Flow                         6
               for the Three Months Ended July 31, 2004 (Restated)
               and 2003 (Restated)
          Notes to Consolidated Financial Statements                   7

     Item 2. Management's Discussion and Analysis of Financial        16
          Condition and Results of Operations

     Item 3. Procedures and Controls                                  22

PART II. OTHER INFORMATION

     Item 1. Legal Proceedings                                        23

     Item 2. Changes in Securities and Use of Proceeds                23

     Item 3. Defaults Upon Senior Securities                          23

     Item 4. Submission of Matters to a Vote of Security Holders      23

     Item 5. Other Information                                        23

     Item 6. Exhibits and Reports on Form 8-K                         23

SIGNATURES                                                            24


                                      -2-

<PAGE>


                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

                                VTEX ENERGY, INC.
                           CONSOLIDATED BALANCE SHEETS


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

    ASSETS

 CURRENT ASSETS
    Cash                                         $     137,816    $     156,575
    Certificates of deposit                             75,000           75,000
    Accounts receivable, trade                         213,706          165,262
    Joint interest billings receivable                  49,821           25,865
    Note receivable                                       -              67,000
    Advances to related parties                           -              10,000
    Other current assets                                23,370           82,051
                                                 --------------   --------------
         Total current assets                          499,713          581,753
                                                 --------------   --------------

 OIL AND NATURAL GAS PROPERTIES - Full
    cost method of accounting                       17,444,651       16,996,853

    Less accumulated depreciation,
       depletion, amortization,
       and impairment                             (  1,385,943)    (  1,310,150)
                                                 --------------   --------------
          Oil and natural gas
             properties, net                        16,058,708       15,686,703
                                                 --------------   --------------

 OTHER ASSETS
    Other property and equipment, less
       accumulated depreciation of $95,796
       and $91,720 at July 31, 2004 and
       April 30, 2004, respectively                     37,199           34,941
    Long term accounts receivable (net of
       allowance for doubtful accounts of
       $135,119 at July 31, 2004 and
       April 30, 2004)                                    -              28,000
    Deferred loan costs, net of accumulated
       amortization of $268,332 and $126,750
       at July 31, 2004 and April 30, 2004,
       respectively                                      9,816          134,350
    Other assets                                       234,277           19,277
                                                 --------------   --------------
          Total other assets                           281,292          216,568
                                                 --------------   --------------
TOTAL ASSETS                                     $  16,839,713    $  16,485,024
                                                 ==============   ==============




     The accompanying notes are an integral part of the financial statements

                                      -3-
<PAGE>

                                VTEX ENERGY, INC.
                           CONSOLIDATED BALANCE SHEETS


                                                 July 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                              249,300          100,000
    Notes payable, net of debt discount of
       $75,099 at July 31, 2004                        224,185          306,092
    Production payments payable - related party        934,518          934,518
    Production payments payable                        254,000          254,000
    Accounts payable - trade                           907,003          805,533
    Royalties payable                                  734,189          654,191
    Working interest revenues payable                   84,503           94,232
    Taxes payable                                      201,728          201,478
    Advances from related parties                      244,906          252,406
    Accrued interest                                   542,024          486,043
                                                 --------------   --------------
          Total current liabilities                  6,215,499        5,927.636
                                                 --------------   --------------

 NONCURRENT LIABILITIES
    Asset retirement obligations                     1,187,180        1,165,330
                                                 --------------   --------------
          Total noncurrent liabilities               1,187,180        1,165,330
                                                 --------------   --------------
 STOCKHOLDERS' EQUITY
    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; 6,464,240
       and 5,848,681 shares issued and
       outstanding at July 31, 2004 and
       April 30, 2004, respectively                      6,464            5,849
    Additional paid-in capital                      30,484,486       29,976,623
    Accumulated deficit                           ( 21,058,375)    ( 20,594,873)
                                                 --------------   --------------
          Total stockholders' equity                 9,,437,034       9,392,058
                                                 --------------   --------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY       $  16,839,713    $  16,485,024
                                                 ==============   ==============





     The accompanying notes are an integral part of the financial statements


                                      -4-
<PAGE>

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



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

REVENUES
   Oil sales                                     $      57,321    $     140,850
   Natural gas sales                                   384,486          262,818
   Other Income                                          6,429              266
                                                 --------------   --------------
         Total Revenues                                448,236          403,934
                                                 --------------   --------------

EXPENSES
   Production taxes                                     45,302           36,680
   Lease operating expense                             139,992          224,287
   Depletion expense                                    75,793           15,887
   Accretion expense                                    21,850           20,326
   Interest expense                                     64,102           57,255
   General and administrative expense                  564,699          443,869
                                                 --------------   --------------
         Total expenses                                911,738          798,304
                                                 --------------   --------------

Loss Before Cumulative Effect of Change
   in Accounting Principle                        (    463,502)    (    394,370)

Cumulative Effect of Change in Accounting
   Principle                                              -        (    275,533)
                                                 --------------   --------------
NET LOSS                                         $(    463,502)   $(    669,903)
                                                 ==============   ==============

NET LOSS PER SHARE - Basic and Diluted
   Loss Before Cumulative Effect of Change
      in Accounting Principle                    $(       0.07)   $(       0.07)
   Cumulative Effect of Change in Accounting
      Principle                                            -       (       0.04)
                                                 --------------   --------------
   Net Loss                                      $(       0.07)   $(       0.11)
                                                 ==============   ==============

WEIGHTED AVERAGE NUMBER OF
   SHARES OUTSTANDING                                6,449,646        5,969,546
                                                 ==============   ==============




     The accompanying notes are an integral part of the financial statements


                                      -5-
<PAGE>

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


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

 CASH FLOWS FROM OPERATING ACTIVITIES
    Net Loss                                     $(    463,502)   $(    669,903)
    Adjustments to reconcile net loss to net
       cash provided by operating activities
          Cumulative effect of change in
             accounting principle                         -             275,533
          Depletion expense                             75,793           15,887
          Amortization expense                         144,069             -
          Depreciation expense                           4,076            3,296
          Bad debt expense                              28,000             -
          Accretion expense                             21,850           20,326
          Common stock issued for services             185,100          291,000
          Common stock issued to settle
             accounts payable                           13,743             -
          Advances to related party applied to
             travel costs                               20,000             -
    Changes in operating assets and liabilities
          Increase in accounts receivable, trade  (     72,400)    (     70,947)
          Decrease in other assets                      58,681             -
          Increase in accounts payable                 101,470          117,796
          Increase in royalties and revenues
             payable                                    70,269          292,732
          Increase in other current liabilities         56,231           65,236
                                                 --------------   --------------
Net cash provided by operating activities              243,380          341,136
                                                 --------------   --------------

 CASH FLOWS FROM INVESTING ACTIVITIES
    Development costs incurred                    (    447,798)    (    131,020)
    Property and equipment, other                 (      6,334)            -
    Payments received on note receivable                67,000             -
    Advances to related party                     (     30,000)            -
    Payments received of advances to
       related party                                    20,000             -
                                                 --------------   --------------
Net cash used in investing activities             (    397,131)    (    131,020)
                                                 --------------   --------------

 CASH FLOWS FROM FINANCING ACTIVITIES
    Borrowings on notes payable                         50,000           14,948
    Repayments of notes payable                   (     56,807)    (     76,054)
    Borrowings on lines of credit                      149,300             -
    Repayments of advances from related parties   (      7,500)    (     18,000)
    Issuance of common stock                              -              40,000
                                                 --------------   --------------
Net cash provided by (used in)
   financing activities                                134,993     (     39,106)
                                                 --------------   --------------

 NET INCREASE (DECREASE) IN CASH
    AND CASH EQUIVALENTS                          (     18,759)         171,010

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

 CASH AND CASH EQUIVALENTS,
    END OF PERIOD                                $     137,816    $     185,552
                                                 ==============   ==============



     The accompanying notes are an integral part of the financial statements
                                      -6-
<PAGE>

                                VTEX Energy, Inc.
              Notes to Unaudited Consolidated Financial Statements
                                  July 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  $464,000  and  $670,000 for the three months ended
July 31, 2004 and 2003, respectively,  and losses are expected to be incurred in
the near term.  Current  liabilities  exceeded  current assets by  approximately
$5,716,000 and $5,346,000 at July 31, 2004 and April 30, 2004, respectively, and
the accumulated  deficit is approximately  $21,058,000 at July 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 and 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 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.

                                      -7-
<PAGE>
Restatement

We are filing this amendment to our quarterly  report for the quarter ended July
31, 2004 to correct certain errors in the Company's financial  statements as of,
and for the  three  months  ended  July 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 months ended July 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 July
31, 2004 and 2003 by $157,389 and $139,652, respectively, or $0.02 and $0.02 per
share,  respectively.  These adjustments reduced total  stockholders'  equity by
$127,130 as of July 31, 2004.

For  convenience  and ease of review we are filing our quarterly  report on Form
10-QSB/A  Amendment  No. 2 for the  quarterly  period ended July 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 July 31, 2004
as originally included in our quarterly report on Form 10-QSB filed with the SEC
on September 20, 2004, subsequently amended on October 20, 2004.

The following is a comparison or the  previously  reported and restated  amounts
for the Consolidated  Balance Sheet and Consolidated  Statement of Operations as
of and for the quarter ended July 31 2004.

<TABLE>
<CAPTION>
                                             As Reported     Adjustment      As Restated
                                             ------------   ------------    ------------
        Consolidated Balance Sheet
        --------------------------
<S>                                          <C>            <C>             <C>
Oil and natural gas properties               $ 17,330,911   $    113,740    $ 17,444,651
Accumulated depletion,
   depreciation and amortization              ( 1,416,860)   (    30,917)    ( 1,385,943)
Oil and natural gas properties, net            15,914,051        144,657      16,058,708
Deferred loan costs                                15,700    (     5,884)          9,816
Total other assets                                287,176    (     5,884)        281,292
Total assets                                   16,700,940        138,773      16,839,713
Notes payable                                     299,285    (    75,100)        224,185
Accounts payable, trade                           766,690        140,313         907,003
Total current liabilities                       6,150,286         65,213       6,215,499
Asset retirement obligations                      986,490        200,690       1,187,180
Total noncurrent liabilities                      986,490        200,690       1,187,180
Additional paid-in capital                     30,167,601        316,885      30,484,486
Accumulated deficit                           (20,614,360)   (   444,015)    (21,058,375)
Total stockholders' equity                      9,564,164    (   127,130)      9,437,034
Total liabilities and
   stockholders' equity                      $ 16,700,940   $    138,773    $ 16,839,713
   Consolidated Statement of Operations
   ------------------------------------
Lease operating expense                      $    135,733   $      4,259    $    139,992
Accretion expense                                  46,153    (    24,303)         21,850
Interest expense                                   61,615          2,487          64,102
General and administrative expense                389,753        174,946         564,699
Total operating expense                           754,349        157,389         911,738
Loss before cumulative effect
   of change in accounting principle          (   306,113)   (   157,389)    (   463,502)
Net loss                                     $(   306,113)  $(   157,389)   $(   463,502)
Loss per share -
   Before cumulative effect of
      change in accounting principle         $(      0.05)  $(      0.02)   $(      0.07)
   Net loss                                  $(      0.05)  $(      0.02)   $(      0.07)
</TABLE>
                                       -8-
<PAGE>
The following is a comparison of the previously reported and restated amounts
for the Consolidated Statement of Operations for the quarter ended July 31,
2003.
<TABLE>
<CAPTION>

                                              As Reported     Adjustment    As Restated
                                             ------------   ------------    ------------
   Consolidated Statement of Operations
   ------------------------------------
<S>                                          <C>            <C>             <C>
Lease operating expense                      $    148,672   $      75,615   $    224,287
Depletion expense                                  48,888    (     33,001)        15,887
Accretion expense                                  13,307           7,019         20,326
Total operating expense                           748,671          49,633        798,304
Loss before cumulative effect
   of change in accounting principle          (   344,737)   (     49,633)   (   394,370)
Cumulative effect of change in
   accounting principle                       (   185,514)   (     90,019)   (   275,533)
Net loss                                     $(   530,251)  $(    139,652)  $(   669,903)
Loss per share -
   Before cumulative effect of
      change in accounting principle         $(      0.06)  $(       0.01)  $(      0.07)
   Cumulative effect of change in
      accounting principle                   $(      0.03)  $(       0.01)  $(      0.04)
   Net loss                                  $(      0.09)  $(       0.02)  $(      0.11)

</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).

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 all 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 July 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 months ended July 31, 2004 and 2003 were $1.07 and $0.21, 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.
                                      -9-
<PAGE>

Deferred Loan Costs

Deferred loan costs  consist of direct costs of securing  financing and includes
primarily loan origination fees, 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 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.

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.  At July 31,  2004,  there are 250,000  warrants and 52,833 stock
appreciation rights that are potentially  dilutive common shares.  There were no
potentially dilutive common shares at July 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.

                                      -10-
<PAGE>

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

         Supplemental Disclosures of Cash Flow Information:
                                                           2004         2003
                                                           ----         ----
                                                         (Restated)   (Restated)
Cash Payments
   Interest                                           $     5,634   $     1,779

Noncash financing activities
   Common stock issued for services                   $   185,100   $   291,000
   Common stock issued to settle accounts payable     $    13,743   $      -
   Common stock and warrants issued to note
      holders recorded as debt discount               $    77,587   $      -
   Common stock and warrants issued for
      debt extensions                                 $    17,048   $      -
   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  depreciation,  depletion 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

At July 31, 2004 and April 30,  2004,  the Company had  certificates  of deposit
totaling $75,000.  Such certificates bore interest at rates ranging from 0.9% to
1.1% at July 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 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 will be issued warrants to purchase 500,000 shares
of the  Company's  common  stock at an exercise  price of $0.50 per share.  Such
warrants  have 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 expires on October 31, 2004.

                                      -11-
<PAGE>

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 in 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.

Note 5.  Debt

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

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

       Lines-of-credit                   $   2,088,443     $   1,939,143
       Production payments payable           1,188,518         1,188,518
       Other notes payable, net of
          discount                             224,185           306,092
                                         --------------    --------------
                                             3,501,146         3,433,753
       Less current portion             (    3,501,146)     (  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 the revolving
credit line is  $1,839,143 at July 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 $283,534 and $248,767 at July 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.  Interest on this note is payable monthly at a floating rate
of prime plus 1.097%,  and was 5.097% at July 31, 2004 and April 30,  2004.  The
outstanding  balance under the note, which was $249,300 and $100,000 at July 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 July 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.  Such  obligation had a balance of $31,840 and $63,242 at July 31,
2004 and April 30, 2004 respectively.

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%, and
matured  on August  21,  2004 and was paid in full.  Such note had a balance  of
$6,000 and $10,000 at July 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 July 31, 2004, the common stock had not been issued, however their fair value
has been included in stockholders' equity.

                                      -12-
<PAGE>

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 $128,595 and $150,000 at July 31,
2004 and April 30, 2004, respectively.

During June and July of 2004,  the Company issued a series of 12% notes totaling
$220,000 to investors for working  capital  purposes.  The Company also provided
for the  issuance to the  investors  of 100,000  shares of its common  stock and
warrants to purchase  50,000 shares of its common stock at $0.50 per share which
expire on dates  ranging  from  June 18,  2006 to July 31,  2006.  The stock and
warrants  were  recorded at their fair market  value of $77,587 and treated as a
debt discount which is being  amortized over the terms of the notes.  As of July
31, 2004,  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  $47,464 and $44,103 at July 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  booked at its fair  market  value of  $57,500  and
treated  as  deferred  loan  cost  which is  being  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 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  $203,743  and $191,376 at July 31, 2004 and April
30, 2004,  respectively.  The balance due under the production loan was $934,518
at July 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 booked at its fair market  value of $176,000 and
treated as a loan cost which is being  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   depreciation,   depletion  and
amortization on that capitalized cost, and (4) a cumulative effect of accounting
change.

                                      -13-
<PAGE>

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:

                                                  Three Months Ended July 31,
                                              ----------------------------------
                                                    2004              2003
                                                    ----              ----
                                                 (Restated)        (Restated)

Beginning asset retirement obligations        $   1,165,330     $     1,084,028
   Accretion expense                                 21,850              20,326
                                              --------------    ----------------
Ending asset retirement obligations           $   1,187,180     $     1,104,354
                                              ==============    ================

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 months ended July 31, 2004
and 2003 was $16,281.  As of July 31, 2004,  future minimum lease payments under
this lease were as follows:



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

                  2005                   $    48,843
                  2006                        65,124
                  2007                        16,281
                                         ------------
                  Total                  $   130,248
                                         =============

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

                                      -14-
<PAGE>

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 the reduction in the Company's  secured
indebtedness  by  $3,000,000.  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 a 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 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 when and as declared by the Board of  Directors.  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 twenty  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 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 July 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 6,464,240 and 5,848,681  shares were issued and outstanding at July 31,
2004 and April 30, 2004, respectively.

During the three months ended July 31, 2004, the Company issued 80,000 shares of
the  Company's  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  June  2004,  the  Company  issued  325,000  shares of common  stock to a
consultant  for services  having a fair value of $139,750.  As of July 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.

                                      -15-
<PAGE>

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.

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
$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 a
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 three months ended July 31, 2004 the grantee
has exercised 600,000 stock appreciation  rights receiving 485,559 shares of the
Company's  common stock in lieu of cash  settlement.  As of July 31, 2004, their
remains  52,833  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.

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 three months ended July 31, 2004 and 2003, respectively.  The balance
of advances from related  parties was $244,906 and $252,406 at July 31, 2004 and
April 30, 2004, respectively.  Additionally,  during the three months ended July
31,  2004,  the Company  received  repayment  of advances to related  parties of
$20,000 and made advances to related parties of $30,000. During the three months
ended July 31,  2004,  advance  to related  party of  $20,000  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 July 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  $283,534  and  $248,767 at July 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 July 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  $203,743  and  $191,376  at July 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  $128,595  and  $150,000 at July 31, 2004 and
April 30, 2004, respectively.

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 with the accompanying  unaudited  condensed  consolidated  financial
statements  included  elsewhere in this Form  10-QSB/A  Amendment No. 2 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 filed
with the SEC on August 15, 2005.

                                      -16-
<PAGE>
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. 2 for the  quarterly  period  ended July 31, 2004 and our audited
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 ("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   into  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 assumption,  by the Company,  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.

     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  properties  contained  69,000
barrels  of oil and  14,872,000  MCF of natural  gas are 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

                                      -17-
<PAGE>
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         Quarter          Quarter
                                                              Net Cash Flows           Ended            Ended
          Field                       Location               Discounted at 10%     July 31, 2004    July 31, 2003
          -----                       --------               -----------------     -------------    -------------
<S>                        <C>                               <C>                   <C>              <C>
Bateman Lake               St. Mary Parish, Louisiana             66.62%              85.49%            55.92%

Mustang Island 818-L       State Waters Offshore Texas            33.38%              14.51%            19.12%

Properties Sold            Various                                   -                   -              24.96%
</TABLE>

     July 31, 2004  decreased 66% to 1,628 barrels  compared to 4,813 barrels in
the same period in fiscal  2004.  Average oil prices for the three  months ended
July 31, 2004 increased 20% to $35.21 per barrel,  compared to $29.26 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
three months ended July 31, 2004 and 2003.

<TABLE>
<CAPTION>
                                                                                2004 Quarter
                                                                          Compared to 2003 Quarter
                                 Three Months Ended July 31,       -------------------------------------
                               --------------------------------       Increase         % Increase
                                    2004              2003            Decrease)        (Decrease)
                               --------------    --------------    --------------    --------------
<S>                            <C>               <C>               <C>               <C>
Production volumes -
   Oil (Bbls)                          1,628             4,813      (      3,185)     (        66%)
   Natural Gas (MCF)                  60,982            45,974            15,008               33%
Average sales prices -
   Oil (per Bbl)               $       35.21     $       29.26     $        5.95     $         20%
   Natural gas (per MCF)                6.30              5.72              0.58               10%
Operating revenue
   Oil                         $      57,321     $     140,850     $(     83,529)    $(        59%)
   Natural gas                       384,486           262,818           121,668               46%
                               --------------    --------------    --------------
                                     441,807           403,668            38,139                9%
                               ==============    ==============    ==============
</TABLE>

     Production  expenses  decreased by $75,673 to $185,294 for the three months
ended July 31, 2004  compared to the three months ended July 31, 2003.  This 41%
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  $0.87  decrease to $2.62 per Mcfe for the three  months
ended July 31, 2004 compared to $3.49 in the same period in fiscal 2004.

                                      -18-
<PAGE>
         Depletion expense increased from $15,887 for the three months ended
July 31, 2003 to $75,793 for the three months ended July 31, 2004. This increase
was primarily due to a negative revision in reserve volume estimates since April
30, 2003 partially offset by a 5% decrease in Mcfe production volumes.

         Interest expense for the three months ended July 31, 2004 increased by
12% to $64,102 from $57,255 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.

         General and Administrative expenses for the three months ended July 31,
2004 increased by $120,830 to $564,699 compared to $443,869 for the three months
ended July 31, 2003. The increase was primarily due to a increase of $144,069 in
amortization of deferred loan costs.

         We adopted SFAS No. 143 effective May 1, 2003 and recorded a cumulative
effect of change in accounting principle of $275,533 during the three months
ended July 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 three months
ended July 31, 2004 and 2003, the Company reported losses of $463,502 and
$669,903, respectively. The Company's continuing negative operating results have
produced a working capital deficit of $5,715,786 at July 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 on
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 three 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 to meet the  capital  needs of 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 such financing should be
available;  however,  there is no assurance  that such financing 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 July 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
credit  with a bank.  The  outstanding  balance  under  this  line of  credit is
$249,300 at July 31, 2004, and is due upon demand.

     The Company has outstanding production payments in the amount of $1,188,518
at July 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 $224,185 and $306,092
at July 31, 2004 and April 30, 2004, respectively.

                                      -19-
<PAGE>

     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  $243,380 for the three
months  ended July 31, 2004 as compared to $341,136  for the three  months ended
July  31,  2003.  This  decrease  was  primarily  due to the  company  paying  a
substantial  portion ongoing operating  expenses on a current basis which in the
past were  deferred  for a longer  period  of time.  Working  capital  decreased
$404,997  during the three months ended July 31, 2003  compared to a decrease of
working  capital of  $214,251  for the three  months  ended July 31,  2004.  The
Company's  loss  before  cumulative  effect of change  in  accounting  principle
increased to $463,502 for the three months ended July 31, 2004 from $394,370 for
the three months ended July 31, 2003. This increase was offset by an increase in
noncash components of expense, including depreciation,  depletion, amortization,
accretion,  and common  stock  issued for  services,  to $492,631  for the three
months  ended July 31, 2004 from  $330,509  for the three  months ended July 31,
2003.

Net Cash Used in Investing Activities

     Cash flows used in investing activities increased to $397,132 for the three
months  ended July 31, 2004 from  $131,020  for the three  months ended July 31,
2003. This increase was due primarily to $447,798 in development  costs 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  $134,993 for the
three months ended July 31, 2004 primarily from  borrowings  under a new line of
credit from a bank. Net cash used by financing  activities  totaled  $39,106 for
the three months ended July 31, 2003 primarily from  repayments of notes payable
totaling  $76,054 which were partially  offset by sales of the Company's  common
stock totaling $40,000.

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.

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 rate per Mcfe for the three months ended July 31, 2004 and
2003 was $1.07 and $0.21, respectively.

                                      -20-
<PAGE>
         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
depreciation, depletion 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  quantitiesactually
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.

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

                                      -21-
<PAGE>

Baton Rouge Parishes 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 will be issued warrants to purchase 500,000 shares
of the  Company's  common  stock at an exercise  price of $0.50 per share.  Such
warrants  have 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 expires on October 31, 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 in 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.

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
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 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.

     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

                                      -22-
<PAGE>
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 three months ended July 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 and July of 2004, the Company issued a total of 485,559 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 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.
nt Report on Form 8-K on July 30,

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.

                                      -23-
<PAGE>

    (b) Reports on Form 8-K.

     The Company filed a Current Report on Form 8-K on July 30, 2004  announcing
the option agreement with CLK.


                                   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:    September 28, 2005

                         By       /S/ Randal B. McDonald, Jr.
                                  ---------------------------
                                  Randal B. McDonald, Jr.
                                  Chief Financial Officer
                                  Principal Financial and Accounting Officer
                                  Date:    September 28, 2005

                                      -24-

<PAGE>



                                                                    Exhibit 31.1

                                 CERTIFICATIONS
                             Chief Executive Officer



I, Grant G. Emms, certify that:

1.   I have reviewed this quarterly  report on Form 10-QSB/A  Amendment No. 2 of
     VTEX Energy, Inc.;

2.   Based on my  knowledge,  this  annual  report  does not  contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in  this  report,  fairly  present  in all  material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this report;

4.   The  small  business  issuer's  other  certifying   officer(s)  and  I  are
     responsible  for  establishing  and  maintaining  disclosure  controls  and
     procedures  (as defined in Exchange Act Rules  13a-15(e)  and 15d-15(e) for
     the small business issuer and have:

     a)   Designed  such  disclosure  controls  and  procedures,  or caused such
          disclosure   controls  and   procedures  to  be  designed   under  our
          supervision, to ensure that material information relating to the small
          business  issuer,  including its  consolidated  subsidiaries,  is made
          known to us by others within those entities,  particularly  during the
          period in which this report is being prepared;

     b)   Omitted

     c)   Evaluated the effectiveness of the small business issuer's  disclosure
          controls and procedures  and presented in this report our  conclusions
          about the effectiveness of the disclosure controls and procedures,  as
          of the  end of the  period  covered  by  this  report  based  on  such
          evaluation; and

     d)   Disclosed  in this  report any change in the small  business  issuer's
          internal  control over financial  reporting  that occurred  during the
          small business issuer's most recent fiscal quarter (the small business
          issuer's  fourth fiscal  quarter in the case of an annual report) that
          has materially affected, or is reasonably likely to materially affect,
          the small business issuer's internal control over financial reporting;
          and

5.   The  small  business  issuer's  other  certifying  officer(s)  and  I  have
     disclosed,  based on our most recent  evaluation  of internal  control over
     financial reporting,  to the small business issuer's auditors and the audit
     committee of the small  business  issuer's  board of directors  (or persons
     performing the equivalent functions):

     a)   All significant  deficiencies and material weaknesses in the design or
          operation  of internal  control  over  financial  reporting  which are
          reasonably  likely to  adversely  affect the small  business  issuer's
          ability   to  record,   process,   summarize   and  report   financial
          information; and

     b)   Any fraud, whether or not material,  that involves management or other
          employees who have a significant  role in the small business  issuer's
          internal control over financial reporting.




     Date: September 28, 2005       By: /s/ Grant G. Emms
           ------------------           ------------------
                                        Grant G. Emms
                                        Chief Executive Officer

                                      -25-

<PAGE>



                                                                    Exhibit 31.2

                                 CERTIFICATIONS
                             Chief Financial Officer



I, Randal B. McDonald, Jr., certify that:

1.   I have reviewed this quarterly  report on Form 10-QSB/A  Amendment No. 2 of
     VTEX Energy, Inc.;

2.   Based on my  knowledge,  this  annual  report  does not  contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in  this  report,  fairly  present  in all  material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this report;

4.   The  small  business  issuer's  other  certifying   officer(s)  and  I  are
     responsible  for  establishing  and  maintaining  disclosure  controls  and
     procedures  (as defined in Exchange Act Rules  13a-15(e)  and 15d-15(e) for
     the small business issuer and have:

     a)   Designed  such  disclosure  controls  and  procedures,  or caused such
          disclosure   controls  and   procedures  to  be  designed   under  our
          supervision, to ensure that material information relating to the small
          business  issuer,  including its  consolidated  subsidiaries,  is made
          known to us by others within those entities,  particularly  during the
          period in which this report is being prepared;

     b)   Omitted

     c)   Evaluated the effectiveness of the small business issuer's  disclosure
          controls and procedures  and presented in this report our  conclusions
          about the effectiveness of the disclosure controls and procedures,  as
          of the  end of the  period  covered  by  this  report  based  on  such
          evaluation; and

     d)   Disclosed  in this  report any change in the small  business  issuer's
          internal  control over financial  reporting  that occurred  during the
          small business issuer's most recent fiscal quarter (the small business
          issuer's  fourth fiscal  quarter in the case of an annual report) that
          has materially affected, or is reasonably likely to materially affect,
          the small business issuer's internal control over financial reporting;
          and

5.   The  small  business  issuer's  other  certifying  officer(s)  and  I  have
     disclosed,  based on our most recent  evaluation  of internal  control over
     financial reporting,  to the small business issuer's auditors and the audit
     committee of the small  business  issuer's  board of directors  (or persons
     performing the equivalent functions):

     a)   All significant  deficiencies and material weaknesses in the design or
          operation  of internal  control  over  financial  reporting  which are
          reasonably  likely to  adversely  affect the small  business  issuer's
          ability   to  record,   process,   summarize   and  report   financial
          information; and

     b)   Any fraud, whether or not material,  that involves management or other
          employees who have a significant  role in the small business  issuer's
          internal control over financial reporting.




     Date: September 28, 2005       By: /s/ Randal B. McDonald, Jr.
           ------------------           ---------------------------
                                        Randal B. McDonald, Jr.
                                        Chief Financial Officer

                                      -26-

<PAGE>


                                                                   Exhibit 32.1


                CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
                       AS ADOPTED PURSUANT TO SECTION 906
                        OF THE SARBANES-OXLEY ACT OF 2002



In connection with the Quarterly Report of VTEX Energy,  Inc. (the "Company") on
Form  10-QSB/A  Amendment  No.  2 for the  period  ending  July  31,  2004  (the
"Report"),  I, Grant G. Emms, Chief Executive  Officer of the Company,  certify,
pursuant to 18 U.S.C.  Section 1350,  as adopted  pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:

1)   The Report fully  complies with the  requirement of Section 13(a) or 15 (d)
     of the Securities Exchange Act of 1934; and

2)   The information  contained in the Report fairly  presents,  in all material
     respects, the Company's financial position and results of operations.



/s/Grant G. Emms
----------------
Grant G. Emms
Chief Executive Officer
September 28, 2005

                                      -27-

<PAGE>


                                                                    Exhibit 32.2


                CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
                       AS ADOPTED PURSUANT TO SECTION 906
                        OF THE SARBANES-OXLEY ACT OF 2002



In connection with the Quarterly Report of VTEX Energy,  Inc. (the "Company") on
Form  10-QSB/A  Amendment  No.  2 for the  period  ending  July  31,  2004  (the
"Report"),  I, Randal B. McDonald,  Jr., Chief Financial Officer of the Company,
certify,  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that:

1)   The Report fully  complies with the  requirement of Section 13(a) or 15 (d)
     of the Securities Exchange Act of 1934; and

2)   The information  contained in the Report fairly  presents,  in all material
     respects, the Company's financial position and results of operations.



/s/Randal B. McDonald, Jr.
--------------------------
Randal B. McDonald, Jr.
Chief Financial Officer
September 28, 2005