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

                                   Form 10-QSB
                                 Amendment No.1

|X|  QUARTERLY  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITITES
     EXCHANGE ACT OF 1934. For the quarter ended January 31, 2005

|_|  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 March 9, 2005,  there were 9,669,989  shares of common stock,  $0.001
par value, outstanding.

Transitional Small Business Disclosure Format (Check one).

        Yes  |_|  No  |X|

<PAGE>


                                VTEX ENERGY, INC.
                                   FORM 10-QSB
                     FOR THE QUARTER ENDED JANUARY 31, 2005

                                EXPLANATORY NOTE

     We are filing this amendment to our quarterly  report for the quarter ended
January 31, 2005 to correct certain errors in the Company's financial statements
as of, and for the nine months ended January 31, 2005 and 2004. 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 nine months ended January 31, 2005 and 2004.  Additionally,  the Company
did not record certain property taxes owed and certain stock, warrant and option
transactions  which the Company was  obligated to issue or grant.  The effect of
the restatement is described more fully in Note 2 of these financial statements

     For  convenience  and ease of review we are filing our quarterly  report on
Form 10-QSB/A Amendment No. 1 for the quarterly period ended January 31, 2005 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 January 31,
2005 as originally  included in our  quarterly  report on Form 10-QSB filed with
the SEC on April 15, 2005.

                                      INDEX
                                                                      PAGE
 PART I. FINANCIAL INFORMATION
     Item 1. Financial Statements
          Consolidated Balance Sheets as of January 31, 2005 (Restated)
               and April 30, 2004                                      3
          Consolidated Statements of Operations for the Three Months
               Ended January 31, 2005 (Restated) and 2003 (Restated)   5
          Consolidated Statements of Operations for the Nine Months
               Ended January 31, 2005 (Restated) and 2003 (Restated)   6
          Consolidated Statements of Cash Flow for the Nine Months
               Ended January 31, 2005 (Restated) and 2003 (Restated)   7
          Notes to Consolidated Financial Statements                   8
     Item 2. Management's Discussion and Analysis of Financial
          Condition and Results of Operations                         19
     Item 3. Procedures and Controls                                  25

PART II. OTHER INFORMATION
     Item 1. Legal Proceedings                                        26
     Item 2. Changes in Securities and Use of Proceeds                26
     Item 3. Defaults Upon Senior Securities                          27
     Item 4. Submission of Matters to a Vote of Security Holders      27
     Item 5. Other Information                                        27
     Item 6. Exhibits and Reports on Form 8-K                         28

SIGNATURES                                                            28


                                      -2-

<PAGE>


                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

                                VTEX ENERGY, INC.
                           CONSOLIDATED BALANCE SHEETS


                                                January 31, 2005  April 30, 2004
                                                 --------------   --------------
                                                   Unaudited
                                                    Restated
                                                    --------

    ASSETS

 CURRENT ASSETS
    Cash                                         $      68,089    $     156,575
    Certificates of deposit                             98,917           75,000
    Accounts receivable, trade                          59,876          165,262
    Joint interest billings receivable                  82,592           25,865
    Note receivable                                       -              67,000
    Advances to related parties                           -              10,000
    Other current assets                                23,370           82,051
                                                 --------------   --------------
         Total current assets                          332,844          581,753
                                                 --------------   --------------

 OIL AND NATURAL GAS PROPERTIES - Full
    cost method of accounting                       18,425,026       16,996,853

    Less accumulated depletion,
       depreciation and amortization              (  1,462,366)    (  1,310,150)
                                                 --------------   --------------
          Oil and natural gas
             properties, net                        176,962,660       15,686,703
                                                 --------------   --------------

 OTHER ASSETS
    Other property and equipment, net of
       accumulated depreciation of $105,661
       and $91,720 at January 31, 2004 and
       April 30, 2004, respectively                     52,597           34,941
    Long term accounts receivable (net of
       allowance for doubtful accounts of
       $135,119 at October 31, 2004 and
       April 30, 2004)                                    -              28,000
    Deferred loan costs, net of accumulated
       amortization of $338,114 and $126,750
       at January 31, 2004 and April 30, 2004,
       respectively                                     26,398          134,350
    Other assets                                        46,750           19,277
                                                 --------------   --------------
          Total other assets                           125,745          216,568
                                                 --------------   --------------
TOTAL ASSETS                                     $  17,421,249    $  16,485,024
                                                 ==============   ==============




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

                                      -3-
<PAGE>

                                VTEX ENERGY, INC.
                           CONSOLIDATED BALANCE SHEETS


                                                January 31, 2005  April 30, 2004
                                                 --------------   --------------
                                                   Unaudited
                                                    Restated
                                                    --------


    LIABILITIES AND STOCKHOLDERS' EQUITY

 CURRENT LIABILITIES
    Line of credit - related party               $   1,839,143    $   1,839,143
    Line of credit - bank                              246,537          100,000
    Notes payable, net of discount of $86,567
       at January 31, 2005                           1,100,910          306,092
    Production payments payable - related party        934,518          934,518
    Production payments payable                        305,503          254,000
    Accounts payable - trade                         1,501,264          805,533
    Royalties payable                                  752,112          654,191
    Working interest revenues payable                   69,856           94,232
    Taxes payable                                      201,727          201,478
    Advances from related parties                      244,906          252,406
    Accrued interest                                   632,946          486,043
                                                 --------------   --------------
          Total current liabilities                  7,829,422        5,927,636
                                                 --------------   --------------

 NONCURRENT LIABILITIES
    Asset retirement obligations                     1,209,617        1,165,330
                                                 --------------   --------------
          Total noncurrent liabilities               1,209,617        1,165,330
                                                 --------------   --------------

COMMITEMENTS AND CONTINGENCIES                           -                -

 STOCKHOLDERS' EQUITY
    Preferred stock class A-1, cumulative
       convertible; $0.001 par value per
       share, 3,000 shares authorized;
       no shares issued or outstanding                    -                -
    Preferred stock class AA-1, cumulative
       convertible; $0.01 par value per
       share, 500,000 shares authorized;
       395,879 shares issued and outstanding             3,959            3,959
    Preferred stock class B, noncumulative
       nonconvertible; $0.001 par value per
       share, 500,000 shares authorized;
       500,000 shares issued and outstanding              500               500
    Common stock, $0.001 par value per share;
       150,000,000 shares authorized; 7,540,489
       and 5,848,681 shares issued and
       outstanding at January 31, 2005 and
       April 30, 2004, respectively                      7,540            5,849
    Additional paid-in capital                      31,916,335       29,976,623
    Accumulated deficit                           ( 23,546,124)    ( 20,594,873)
                                                 --------------   --------------
          Total stockholders' equity                 8,382,210        9,392,058
                                                 --------------   --------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY       $  17,421,249    $  16,485,024
                                                 ==============   ==============





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


                                      -4-
<PAGE>

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



                                                 Three Months Ended January 31,
                                                 -------------------------------
                                                      2005             2004
                                                      ----             ----
                                                    Restated         Restated
                                                    --------         --------

REVENUES
   Oil sales                                     $        -    $         53,739
   Natural gas sales                                   140,362          204,624
                                                 --------------   --------------
         Total Revenues                                140,362          258,363
                                                 --------------   --------------

EXPENSES
   Lease operating expense                             128,239          152,566
   Production taxes                                     22,811           33,109
   Depletion expense                                    21,701           84,403
   General and administrative expense                  937,444          190,185
   Accretion expense                                    22,677           20,325
                                                 --------------   --------------
         Total operating expenses                    1,132,872          480,588
                                                 --------------   --------------

OTHER INCOME (EXPENSE)
   Other income                                          4,690              274
   Interest expense                               (    240,139)    (     52,435)
                                                 --------------   --------------
         Total other income (expense)             (    235,449)    (     52,161)
                                                 --------------   --------------

NET LOSS                                         $(  1,227,959)   $(    274,386)
                                                 ==============   ==============

NET LOSS PER SHARE - Basic and Diluted           $(       0.15)   $(       0.06)
                                                 ==============   ==============

WEIGHTED AVERAGE NUMBER OF
   SHARES OUTSTANDING                                8,311,114        4,413,959
                                                 ==============   ==============




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


                                      -5-
<PAGE>

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



                                                  Nine Months Ended January 31,
                                                 -------------------------------
                                                      2005             2004
                                                      ----             ----
                                                    Restated         Restated
                                                    --------         --------

REVENUES
   Oil sales                                     $      57,321    $     233,324
   Natural gas sales                                   834,227          737,753
                                                 --------------   --------------
         Total Revenues                                891,548          971,077
                                                 --------------   --------------

EXPENSES
   Lease operating expense                             387,306          537,131
   Production taxes                                    101,346          106,803
   Depletion expense                                   152,216          140,568
   General and administrative expense                2,494,362          824,156
   Accretion expense                                    66,787           60,977
                                                 --------------   --------------
         Total operating expenses                    3,202,017        1,669,635
                                                 --------------   --------------
OTHER INCOME (EXPENSE)
   Other income                                         12,111              898
   Interest expense                               (    652,893)    (    161,740)
                                                 --------------   --------------
         Total other income (expense)             (    640,782)    (    160,842)
                                                 --------------   --------------
Loss Before Cumulative Effect of Change
   in Accounting Principle                        (  2,951,251)    (    859,400)
Cumulative Effect of Change in Accounting
   Principle                                              -        (    275,533)
                                                 --------------   --------------
NET LOSS                                         $(  2,951,251)   $(  1,134,933)
                                                 ==============   ==============

NET LOSS PER SHARE - Basic and Diluted
   Loss Before Cumulative Effect of Change
      in Accounting Principle                    $(       0.40)   $(       0.17)
   Cumulative Effect of Change in Accounting
      Principle                                            -       (       0.06)
                                                 --------------   --------------
   Net Loss                                      $(       0.40)   $(       0.23)
                                                 ==============   ==============

WEIGHTED AVERAGE NUMBER OF
   SHARES OUTSTANDING                                7,382,708        4,979,108
                                                 ==============   ==============




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


                                      -6-
<PAGE>

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


                                                  Nine Months Ended January 31,
                                                 -------------------------------
                                                      2005             2004
                                                      ----             ----
                                                    Restated         Restated
                                                    --------         --------

 CASH FLOWS FROM OPERATING ACTIVITIES
    Net Loss                                     $(  2,951,251)   $(  1,134,933)
    Adjustments to reconcile net loss to net
       cash provided by operating activities
          Cumulative effect of change in
             accounting principle                         -             275,533
          Depletion expense                            152,216          140,568
          Amortization expense                         437,395             -
          Depreciation expense                          13,941           10,416
          Bad debt expense                              28,000             -
          Accretion expense                             66,787           60,977
          Common stock issued for services           1,296,650          366,767
          Advances to related party applied to
             travel costs                               92,655             -
          Deferred offering costs expensed             156,744             -
          Write off option to purchase oil and
             natural gas properties                    215,000             -
    Changes in operating assets and liabilities
          Accounts receivable, trade                    48,659           85,294
          Other assets                                  31,208             -
          Accounts payable - trade                     709,474           95,560
          Royalties and working interest
             revenues payable                           73,545          119,359
          Other current liabilities                    198,655          171,675
                                                 --------------   --------------
Net cash provided by operating activities              569,678          191,216
                                                 --------------   --------------

 CASH FLOWS FROM INVESTING ACTIVITIES
    Investment in certificates of deposit         (     23,917)            -
    Oil and natural gas capital expenditures      (  1,428,173)    (    172,426)
    Proceeds from sales of oil and natural
       gas properties                                     -               5,100
    Asset retirement obligations paid             (     22,500)            -
    Purchase of property and equipment, other     (     31,597)    (     20,000)
    Payments received on note receivable                67,000             -
    Advances to related party                     (    170,155)            -
    Payments received on advances to
       related party                                    87,500             -
                                                 --------------   --------------
Net cash used in investing activities             (  1,521,842)    (    187,326)
                                                 --------------   --------------

 CASH FLOWS FROM FINANCING ACTIVITIES
    Borrowings on notes payable                      1,002,500          184,356
    Repayments of notes payable                   (    121,115)    (    144,567)
    Borrowings on lines of credit                      149,300           25,000
    Repayments of lines of credit                 (      2,763)    (     50,000)
    Repayments of advances from related parties   (      7,500)    (     30,000)
    Deferred offering costs incurred              (    156,744)            -
    Proceeds from issuance of common stock                -              63,750
                                                 --------------   --------------
Net cash provided by financing activities              863,678           48,539
                                                 --------------   --------------

 NET INCREASE (DECREASE) IN CASH
    AND CASH EQUIVALENTS                          (     88,486)          52,429

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

 CASH AND CASH EQUIVALENTS,
    END OF PERIOD                                $      68,089    $      66,971
                                                 ==============   ==============



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

                                      -7-
<PAGE>
                                VTEX Energy, Inc.
              Notes to Unaudited Consolidated Financial Statements
                                January 31, 2005


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  $2,951,000 and $1,135,000 for the nine months ended
January 31, 2005 and 2004, respectively,  and losses are expected to be incurred
in the near term. Current  liabilities  exceeded current assets by approximately
$7,497,000 and $5,346,000 at January 31, 2005 and April 30, 2004,  respectively,
and the accumulated  deficit is  approximately  $23,546,000 at January 31, 2005.
Amounts  outstanding  and payable to creditors are in arrears and the Company is
in  negotiations   with  creditors  to  obtain  extensions  and  settlements  of
outstanding  amounts.   Management   anticipates  that  significant   additional
expenditures  will be  necessary  to develop  the  Company's  properties,  which
consist primarily of proved reserves that are non-producing,  before significant
positive operating cash flows will be achieved.  Without outside investment from
the sale of equity  securities  or debt  financing  our  ability to execute  our
business plan will be limited.  These factors are an indication that the Company
may be unable to continue in existence.

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

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

Note 2.  Summary of Significant Accounting Policies

Principles of Consolidation

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

                                       -8-
<PAGE>

Restatement

We are filing this  amendment  to our  quarterly  report for the  quarter  ended
January 31, 2005 to correct certain errors in the Company's financial statements
as of, and for the nine months ended January 31, 2005 and 2004. Such errors were
discovered in conjunction with the audit of the Company's  financial  statements
as of and for the year ended April 30, 2005 and  included  the failure to record
the correct amount of the asset retirement obligation ("ARO") in accordance with
Statement of Financial  Accounting  Standards ("SFAS") No. 143,  "Accounting for
Asset  Retirement  Obligations."  In  addition,  corresponding  amounts  of  ARO
capitalized  costs,  depletion expense and accretion expense were also misstated
for the three and nine months ended January 31, 2005 and 2004. 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  January 31, 2005 and 2004 by $223,136  and $16,867 or $0.01 and $0.00 per
share, respectively. The effect of this restatement was to increase the net loss
for the nine months ended January 31, 2005 and 2004 by $1,272,156  and $173,087,
respectively,  or $0.15 and $0.04 per  share,  respectively.  These  adjustments
reduced total stockholders' equity by $303,209 as of January 31, 2005.

For  convenience  and ease of review we are filing our quarterly  report on Form
10-QSB/A  Amendment No. 1 for the quarterly period ended January 31, 2005 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 January 31,
2005 as originally  included in our  quarterly  report on Form 10-QSB filed with
the SEC on April 15,  2005.  Where  applicable,  corresponding  notes  have been
adjusted to conform to this restatement.

The following is a comparison of the  previously  reported and restated  amounts
for the Consolidated  Balance Sheet and Consolidated  Statement of Operations as
of and for the nine months ended January 31, 2005.

<TABLE>
<CAPTION>
                                             As Reported     Adjustment      As Restated
                                             ------------   ------------    ------------
        Consolidated Balance Sheet
        --------------------------
<S>                                          <C>            <C>             <C>
Oil and natural gas properties               $ 18,519,574   $(    94,548)   $ 18,425,026
Accumulated depletion,
   depreciation and amortization              ( 1,493,283)        30,917     ( 1,462,366)
Oil and natural gas properties, net            17,026,291    (    63,631)     16,962,660
Deferred loan costs                                15,942         10,456         26,398
Total other assets                                115,289         10,456        125,745
Total assets                                   17,474,424    (    53,175)     17,421,249
Notes payable                                   1,042,096         58,814      1,100,910
Accounts payable - trade                        1,310,044        191,220       1,501,264
Total current liabilities                       7,579,388        250,034       7,829,422
Additional paid-in capital                     30,660,762      1,255,573      31,916,335
Accumulated deficit                           (21,987,342)   ( 1,558,782)    (23,546,124)
Total stockholders' equity                      8,685,419    (   303,209)      8,382,210
Total liabilities and
   stockholders' equity                      $ 17,474,424   $(    53,175)   $ 17,421,249

   Consolidated Statement of Operations
   ------------------------------------
Lease operating expense                      $    374,529   $     12,777    $    387,306
General and administrative expense              1,519,853        974,409       2,494,362
Accretion expense                                  83,493    (    16,706)         66,787
Total operating expense                         2,231,537        970,480       3,202,017
Interest expense                                  351,217        301,676         652,893
Total other expense, net                          339,106        301,676         540,782
Net loss                                     $( 1,679,095)  $( 1,272,156)   $( 2,951,251)
Loss per share                               $(      0.25)  $(      0.15)   $(      0.40)
</TABLE>

                                      -9-
<PAGE>
The following is a comparison of the  previously  reported and restated  amounts
for the  Consolidated  Statement of Operations for the nine months ended January
31, 2004.

<TABLE>
<CAPTION>
                                             As Reported     Adjustment      As Restated
                                             ------------   ------------    ------------
   Consolidated Statement of Operations
   ------------------------------------
<S>                                          <C>            <C>             <C>
Lease operating expense                      $    438,764   $     98,367    $    537,131
Depletion expense                                 176,923    (    36,355         140,568
Accretion expense                                  39,921         21,056          60,977
Total operating expense                         1,586,567         83,068       1,669,635
Loss before cumulative effect of
   change in accounting principle             (   776,332)   (    83,068)   (   859,400)
Cumulative effect of change in
   accounting principle                       (   185,514)   (    90,019)   (   275,533)
Net loss                                     $(   961,846)  $(   173,087)  $( 1,134,933)
Loss per share -
   Before cumulative effect of change
      in accounting principle                $(       0.16) $(      0.01)  $(      0.17)
   Cumulative effect of change in
      accounting principle                   $(       0.03) $(      0.03)  $(      0.06)
   Net loss                                  $(       0.19) $(      0.04)  $(      0.23
</TABLE>

The following is a comparison of the  previously  reported and restated  amounts
for the Consolidated  Statement of Operations for the three months ended January
31, 2005.

<TABLE>
<CAPTION>
                                              As Reported     Adjustment      As Restated
                                             ------------   ------------    ------------
   Consolidated Statement of Operations
   ------------------------------------
<S>                                          <C>            <C>             <C>
Lease operating expense                      $    123,980   $      4,259   $    128,239
General and administrative expense                769,216        168,228        937,444
Accretion expense                                  18,843          3,834         22,677
Total operating expense                           956,551        176,321      1,132,872
Interest expense                                  193,324         46,815        240,139
Total other expense, net                          188,634         46,815        235,449
Net loss                                    $(  1,004,823   $(   223,136)  $( 1,227,959
Loss per share - Basic and diluted          $(       0.14)  $(      0.01)  $(      0.15)

</TABLE>

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

<TABLE>
<CAPTION>
                                            As Reported     Adjustment      As Restated
                                             ------------   ------------    ------------
   Consolidated Statement of Operations
   ------------------------------------
<S>                                          <C>            <C>             <C>
Lease operating expense                      $    141,190   $     11,376    $    152,566
Depletion expense                                  85,930    (     1,527)         84,403
Accretion expense                                  13,307          7,018          20,325
Total operating expense                           463,721         16,867         480,588
Net loss                                     $(   257,519)  $(    16,867)   $(   274,386)
</TABLE>

Changes in Accounting Principles

EEffective May 1, 2003, the Company  adopted  Statement of Financial  Accounting
Standards ("SFAS") No. 143, "Accounting for Asset Retirement Obligations," which
requires a liability  for an asset  retirement  obligation to be recorded at its
fair value in the period in which the obligation is incurred and a corresponding
increase in the carrying  amount of the related  long-lived  asset (see Note 6).
                                      -10-
<PAGE>
Revenue Recognition

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

Oil and Natural Gas Properties

The Company  follows the full cost method of accounting  for its oil and natural
gas properties. All costs associated with property acquisition, exploration, and
development  activities  are  capitalized in a single cost center located within
the United  States.  Internal costs directly  identified  with the  acquisition,
exploration  and  development  activities  of the Company are also  capitalized.
Capitalized costs are amortized on the unit-of-production basis using proved oil
and natural gas reserves.  Capitalized costs are subject to a "ceiling test" and
limited to the present  value of estimated  future net revenues  less  estimated
future  expenditures using a discount factor of ten percent.  Should capitalized
costs  exceed the present  value of our reserves  discounted  at ten percent the
excess is charged to operations. Once incurred, an impairment of oil and natural
gas  properties  can not be  reversed  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 January 31, 2005 and April 30, 2004, there were no costs
of unproved properties or major development projects included in the capitalized
cost pool.  The  depletion  rates per Mcfe for the three and nine  months  ended
January   31,  2005  and  2004  were  $1.06  and  $1.05  and  $1.66  and  $0.74,
respectively.

Other Property and Equipment

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

Deferred Loan Costs

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

Asset Retirement Obligations

The  Company  records a  liability  for legal  obligations  associated  with the
retirement  of  tangible  long-lived  assets  in the  period  in which  they are
incurred  in  accordance  with SFAS No.  143  "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  ("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,  capitalized
asset  retirement  costs and charges to  operations  during the periods in which
they become known.  At the time the  abandonment  cost is incurred,  the Company
will be  required to  recognize a gain or loss if the actual  costs do not equal
the estimated costs included in ARO (see Note 6).

Stock-Based Compensation

The Company  accounts for stock based  compensation  to employees under the fair
value  method   prescribed  by  SFAS  No.  123,   "Accounting   for  Stock-Based
Compensation." Under the fair value method, compensation cost is measured at the
grant date of each  common  stock  option or warrant  awarded  based on the fair
value of the award and is recognized over the vesting  period,  which is usually
the  service  period.  For common  stock  options  and  warrants,  fair value is
determined using the Black-Scholes  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, the dividend yield and the risk-free  interest rate

                                      -11-
<PAGE>
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 due to the Company incurring a net loss for all periods presented.
Additionally,  included in weighted  average  shares  outstanding  are 1,159,500
shares the  Company is  obligated  to issue at January  31,  2005,  of which the
weighted  average effect of such shares totals 783,454 and 516,093 for the three
and nine months ended January 31, 2005, respectively. At January 31, 2005, there
are 250,000 warrants that are potentially  dilutive common shares. There were no
potentially dilutive common shares at January 31, 2004.

Income Taxes

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

Statement of Cash Flows

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

The  following  is a summary of all payments  made for interest and  significant
noncash  financing  activities  for the nine months  ended  January 31, 2005 and
2004, respectively.

         Supplemental Disclosures of Cash Flow Information:
                                                           Nine Months Ended
                                                              January 31,
                                                           -----------------
                                                           2005         2004
                                                           ----         ----
                                                         Restated
                                                         --------
Cash Payments
   Interest                                           $    15,816   $     9,685

Noncash financing activities
   Accrued interest converted into
      production payments                             $    51,503   $      -
   Common stock and warrants issued for services      $ 1,296,650   $   366,767
   Common stock and warrants issued to note holders
      recorded as debt discounts                      $   312,598   $      -
   Common stock and warrants issued for debt
      extensions and a guarantee                      $   103,412   $      -
   Common stock issued to settle accounts payable     $    13,743   $      -
   Common stock warrants issued for option to
      purchase oil and natural gas properties         $   215,000   $      -
   Stock appreciation rights issued for accrued
      payroll and advances from related party         $      -   $      240,000
  Oil and natural gas properties sold for the
      assumption of accounts payable                  $      -   $      500,278
  Common stock issued for the purchase of
      other assets                                    $      -   $       27,500


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.

                                      -12-
<PAGE>
Significant  estimates  include  volumes of oil and natural gas reserves used in
calculating  depletion,  depreciation and amortization of proved oil and natural
gas properties,  asset  retirement  obligations,  bad debts,  contingencies  and
litigation.  Oil and  natural  gas  reserve  estimates,  which are the basis for
unit-of-production  depletion  and the  ceiling  test,  have  numerous  inherent
uncertainties. The accuracy of any reserve estimate is a function of the quality
of available data and of engineering and geological interpretation and judgment.
Results of  drilling,  testing,  and  production  subsequent  to the date of the
estimate  may  justify  revision  of  such  estimate   (positive  or  negative).
Accordingly,  reserve  estimates are most often different from the quantities of
oil and  natural  gas  that  are  ultimately  recovered.  In  addition,  reserve
estimates are vulnerable to changes on wellhead  prices of crude oil and natural
gas.  Such  prices  have been  volatile  in the past and can be  expected  to be
volatile in the future.

Note 3.  Certificates of Deposit

At January 31, 2005 and April 30, 2004, the Company had  certificates of deposit
totaling $98,917 and $75,000, respectively. Such certificates bore interest at a
rate of approximately  1.1% at January 31, 2005 and 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 had the right to purchase from CLK 50% of
their  interest in the Bayou  Choctaw  Field,  located in the Iberville and West
Baton  Rouge  Parishes of  Louisiana  for  $1,250,000  and the  assumption  of a
production payment of $1,500,000 payable contingent upon reaching 110% of payout
of the  Company's  investment.  Under the terms of the  option,  CLK was  issued
warrants to purchase 500,000 shares of the Company's common stock at an exercise
price of $0.50 per share.  Such warrants had a fair value of $215,000  which was
recorded as a  noncurrent  asset.  The asset was  charged to expense  during the
quarter ended January 31, 2005 due to the expiration of the option. To fund this
potential acquisition,  the Company was simultaneously in the process of raising
capital through a private  placement  memorandum.  The Company incurred offering
costs totaling $156,744 relating to this private placement  memorandum which was
initially  capitalized as deferred offering costs to be offset with the proceeds
when they are received. Due to the Company not exercising its option to purchase
from CLK its 50%  interest  in the Bayou  Choctaw  Field the  private  placement
memorandum was abandoned and the deferred offering costs were charged to expense
during the quarter ended January 31, 2005.

Note 5.  Debt

Total debt at January 31, 2005 and April 30, 2004 consists of the following:

                                        January 31, 2005   April 30, 2004
                                         --------------    --------------
                                            (Restated)

       Lines-of-credit                   $   2,085,680     $   1,939,143
       Production payments payable           1,240,021         1,188,518
       Other notes payable                   1,100,910           306,092
                                         --------------    --------------
                                             4,426,611         3,433,753
       Less current portion             (    4,426,611)     (  3,433,753)
                                        ---------------    --------------
                                        $        -         $      -
                                        ===============    ==============
Lines of Credit

The Company has a $10.0 million  revolving credit line with an entity controlled
by the  brother  of the  Company's  president.  The  borrowing  base  under this
revolving  credit line is $1,839,143 at January 31, 2005,  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  $353,069 and $248,767 at January 31, 2005 and April 30, 2004,
respectively.  Under the currently  scheduled  reductions in the borrowing base,
the  principal  balance and unpaid  interest  was due at maturity on January 31,
2005 and is currently due on demand.  The Company is currently  negotiating with
the lender to  restructure  the terms of the note and extend the maturity  date.
However, there can be no assurance that such a restructuring will occur, or that
its terms will be favorable to the Company.

                                      -13-
<PAGE>

On April 8, 2004, the Company entered into a $250,000 revolving credit agreement
with Hibernia Bank. The note has been guaranteed by a private investor who
received 100,000 shares of the Company's common stock with a fair value of
$49,000 as consideration for such guarantee. The fair value of the common stock
was expensed when incurred. Interest on this note is payable monthly at a
floating rate of prime plus 1.097% (6.347% and 5.097% at January 31, 2005 and
April 30, 2004, respectively.) The outstanding balance under the note, which was
$246,537 and $100,000 at January 31, 2005 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 January 31, 2005
and April 30, 2004, respectively.

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

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

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  $102,127 and $150,000 at January
31, 2005 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 January  31,  2005,  4,500  shares of the common  stock had not been  issued,
however their fair value has been included in stockholders' equity.

During the period June through  November of 2004, the Company issued a series of
12% notes totaling  $1,002,500 to investors for working  capital  purposes.  The
Company also provided for the issuance to the investors of 452,500 shares of its
common  stock with a fair value of $222,025  and  warrants  to purchase  200,000
shares of the  Company's  common  stock at $0.50 per share  with a fair value of
$95,673  which expire on dates  ranging from June 18, 2006 to November 22, 2006.
The common stock and warrants were recorded at their fair value and treated as a
debt discount which is being amortized over the terms of the loans.  Interest on
the  notes is  payable  quarterly  and the  principal  balances  mature on dates
ranging from June 18, 2005 to November 22, 2005.  Unamortized  debt discount was
$86,567 at January 31, 2005.

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 $1,990 and $44,103 at January 31, 2005 and April 30, 2004, respectively.
Although  certain  of the  wells  covered  by the  production  loans  have  been

                                      -14-
<PAGE>
producing,  the Company has not made any principal  payments under the loans. In
January and February of 2004,  the Company  issued the holders of the production
loans  100,000  shares  of the  Company's  common  stock  in  return  for  their
forbearance  under the  production  loans  until the  earlier of the first month
following  the month in which the  Company has  positive  cash flow or August 1,
2004.  The stock  issued was  recorded at its fair  market  value of $57,500 and
treated as deferred loan cost which was amortized  over six months.  In December
of 2004,  the  Company  reached an  agreement  with the  holders of the loans to
increase the interest rate to 6%, begin paying interest monthly on the loans and
to convert the accrued interest of $51,503 into principal.  Negotiations between
the Company and the holders of the loans are being held on further restructuring
of the terms of the  loans.  However,  there can be no  assurance  that any such
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 $228,475 and $191,376 at January 31, 2005 and April
30, 2004,  respectively.  The balance due under the production loan was $934,518
at January 31, 2005 and April 30, 2004. In March,  2004,  the Company issued Old
Jersey Oil Ventures,  LLC 400,000 shares of the Company's common stock in return
for  forbearance  under the  production  payment  until the earlier of the first
month  following the month in which the Company has positive cash flow or August
1, 2004.  The stock issued was recorded at its fair market value of $176,000 and
treated  as  a  deferred  loan  cost  which  was  amortized  over  five  months.
Forbearance  under the production  loan has continued  under a verbal  agreement
between the Company and Old Jersey Oil Ventures, LLC while discussions are being
held on restructuring the terms of the loans. However, there can be no assurance
that any restructuring will occur.

Note 6.  Asset Retirement Obligations

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

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

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:

                                                 Nine Months Ended January 31,
                                              ----------------------------------
                                                    2005              2004
                                                    ----              ----
                                                 (Restated)        (Restated)

Beginning asset retirement obligations        $   1,165,330     $     1,084,028
   Accretion expense                                 66,787              60,977
   Asset retirement costs incurred             (     22,500)               -
                                              --------------    ----------------
Ending asset retirement obligations           $   1,209,617     $     1,145,005
                                              ==============    ================

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

The Texas Railroad  Commission declined a request by the Company for a reduction
in bonding  requirements which were recently increased by the State of Texas for
operators of certain  wells  located in offshore and bay State of Texas  waters.
The Company is working on obtaining a bond at this increased  level but does not
have such bond in place at this time.  The Company will request  reconsideration
by the Texas  Railroad  Commission of this  decision.  Until a final decision in
this matter,  the Company will be allowed to continue its  operations  under its
current  bond.  Should the Company not be successful in reducing the bond level,
or in the alternative  obtaining a bond at the increased level, or provide other
satisfactory  security the Company could  outsource  offshore  operations of the
property

In June 2001, the Company  entered into a long-term  lease for office space with
an annual rent of  $65,124.  Rent  expense  for the three and nine months  ended
January 31,  2005 and 2004 was  $16,281  and  $48,843  and $16,281 and  $48,843,
respectively.  As of January 31, 2005,  future minimum lease payments under this
lease were as follows:

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

                  2005                   $    16,281
                  2006                        65,124
                  2007                        16,281
                                         -------------
                  Total                  $    97,686
                                         =============

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

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

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

Note 8.  Stockholder's Equity

Preferred Stock

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

The  Company is  authorized  to issue  500,000  shares of Class AA-1  Cumulative
Convertible  Preferred Stock (Class AA-1 Preferred Stock).  Class AA-1 Preferred
Stock has a par value of $0.01 per share and is entitled  to receive  cumulative
dividends at the rate of 10% payable  annually in shares of Class AA-1 Preferred
Stock (or 39,588  shares)  when and as  declared by the Board of  Directors.  At
January 31, 2005,  no  dividends  have been  declared.  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,

                                      -16-
<PAGE>
entitled to receive  $1.00 per share.  Alternatively,  and at the sole option of
the holders, the holders of the Class AA-1 Preferred Stock, upon the liquidation
of the  Company,  may retain the rights  provided  under the  original  judgment
liens.  The Class AA-1 Preferred  Stock is redeemable in whole or in part at any
time, at the option of the Company, at $1.00 per share. The holders of the Class
AA-1  Preferred  Stock are entitled to a 20 day written  notice of the Company's
intent to redeem and the  opportunity to convert the Class AA-1 Preferred  Stock
into common stock of the Company.  The Class AA-1 Preferred Stock is convertible
by the holder 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 January 31, 2005 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  7,540,489 and 5,848,681  shares were issued and outstanding at January
31, 2005 and April 30, 2004, respectively.

During the nine months ended January 31, 2005, the Company issued 579,999 shares
of its common  stock  having a fair value of $300,350  for  services  and 50,000
shares of the  Company's  common  stock having a fair value of $13,743 to settle
outstanding accounts payable.

During the nine months ended January 31, 2005, the Company issued 100,000 shares
of its common  stock  having a fair value of  $49,000 to a private  investor  as
consideration for providing a guarantee on its line of credit with a bank.

During the nine months ended January 31, 2005,  the Company issued 43,750 shares
of its common  stock  having a fair value of  $15,313 to  investors  in order to
extend the due dates of notes payable.

During the nine months ended January 31, 2005, the Company incurred  obligations
to issue 825,000  shares of common stock to  consultants  for services  having a
fair  value of  $314,750.  As of January  31,  2005,  these  shares had not been
issued, but their fair value has been included in stockholders' equity.


Stock Options and Warrants

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

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

During the nine months ended January 31, 2005,  the Company  issued  warrants to
purchase  205,000  shares of its  common  stock at $0.50 per share to  investors
under the terms of notes  payable.  The warrants had a fair value of $98,418 and
expire on dates ranging from June 18, 2006 to November 22, 2006.

                                      -17-
<PAGE>

During the nine months ended January 31, 2005,  the Company  issued  warrants to
purchase  500,000  shares of its common stock at $0.50 per share under the terms
of an option agreement to purchase oil and natural gas properties.  The warrants
had a fair value of $215,000 and expire on July 13, 2009.

During the nine months ended January 31, 2005,  the Company  issued  warrants to
purchase  1,500,000  shares  of its  common  stock at $0.50  for  services.  The
warrants had a fair value of $681,550  and expire on dates  ranging from October
12, 2006 to December 27, 2006.

Stock Appreciation Rights

On December 5, 2003, the Company granted stock appreciation  rights on 1,000,000
shares of the  Company's  common  stock to a former  officer and director of the
Company  in  exchange  for the  cancellation  of  $503,975  in debt.  Such  debt
consisted  of $397,092 in advances  made to the Company and  $106,883 in accrued
salary.  The stock appreciation  rights are fully vested,  have a grant price of
$0.10 per share and expire on December 5, 2013.  The exercise price of the stock
appreciation  rights is equal to the  average of the means  between the high and
low trading prices of the Company's common stock for the ten consecutive trading
days immediately preceding the date of exercise.  Upon the exercise of the stock
appreciation  rights,  the grantee is due the  difference  between the  exercise
price and the grant price multiplied by the number of stock appreciation  rights
being exercised.  The Company,  at its sole option, may elect to pay the grantee
in shares of the Company's  common stock valued at the exercise price. The stock
appreciation  rights were valued at  $240,000,  on the date of grant,  using the
Black-Scholes  option  pricing model.  The  difference  between the value of the
stock  appreciation  rights  and the  debt  cancelled  has  been  recorded  as a
contribution  of capital.  During the nine months ended  January 31,  2005,  the
grantee has exercised 652,833 stock appreciation rights receiving 528,653 shares
of the  Company's  common  stock in lieu of cash  settlement.  As of January 31,
2005, there remains no stock  appreciation  rights to be exercised.  The Company
has elected to pay all of the stock  appreciation  rights by the issuance of the
Company's common stock.  The Company also issued an additional  56,906 shares of
common  stock with a fair value of $28,453 to the grantee as  consideration  for
services.

Note 9.  Related Party Transactions

From time to time,  officers,  directors  and  shareholders  of the Company make
unsecured  advances to the Company and receive  advances  from the Company.  The
Company  made  repayments  of such  advances in the amount of $7,500 and $30,000
during the nine  months  ended  January  31,  2005 and 2004,  respectively.  The
balance of advances  from  related  parties was $244,906 and $252,406 at January
31, 2005 and April 30, 2004, respectively.  Additionally, during the nine months
ended January 31, 2005,  the Company  received  repayment of advances to related
parties of $35,000 and made advances to related parties of $170,155.  During the
nine months ended  January 31, 2005,  advances to a related party of $92,655 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 January 31, 2005 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 was due on January 31, 2005.  Accrued  interest
on the loan  totaled  $353,069  and  $248,767  at January 31, 2005 and April 30,
2004,  respectively.  The Company is  currently  negotiating  with the lender to
restructure the terms of the note and extend the maturity date.  However,  there
can be no assurance that such a restructuring will occur, or that its terms will
be favorable to the Company.

The Company is obligated under a production payment to an entity whose principal
is the  brother of the  Company's  president.  At January 31, 2005 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 $228,475 and $191,376 at January 31, 2005 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 $102,127 and $150,000 at January 31, 2005 and
April 30, 2004, respectively.

                                      -18-
<PAGE>

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. 1 and with
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations and our audited consolidated  financial statements for the year ended
April 30, 2004, as amended, included in our annual report on Form 10-KSB for the
year ended April 30, 2005 filed with the SEC on August 15, 2005.

Forward-Looking Statements

     The statements contained in all parts of this document,  including, but not
limited to, those relating to our outlook,  including any expectations regarding
increases  in our  liquidity  or  available  credit,  our  ability to access the
capital  markets  to raise  additional  capital,  our  drilling  plans,  capital
expenditures,  future  capabilities,  the  sufficiency of capital  resources and
liquidity  to support  working  capital  and capital  expenditure  requirements,
reinvestment  of cash flows,  use of NOLs, tax rates,  the outcome of litigation
and audits,  and any other  statements  regarding future  operations,  financial
results,  business  plans,  sources  of  liquidity  and  cash  needs  and  other
statements that are not historical  facts are forward looking  statements.  When
used in this document,  the words  "anticipate,"  "estimate,"  "expect,"  "may,"
"project,"  "believe,"  "budgeted,"  "intend," "plan," "potential,"  "forecast,"
"might,"  "predict,"  "should" and similar  expressions are intended to be among
the statements that identify forward looking statements. Such statements involve
risks and  uncertainties,  including,  but not limited to, those relating to the
results  of and our  dependence  on our  exploratory  and  development  drilling
activities,  the  volatility of oil and natural gas prices,  the need to replace
reserves  depleted  by  production,  operating  risks  of oil  and  natural  gas
operations,  our  dependence  on key  personnel,  our reliance on  technological
development and possible  obsolescence  of the technology  currently used by us,
the  significant  capital  requirements  of our  exploration and development and
technology  development programs, the potential impact of government regulations
and  liability for  environmental  matters,  results of  litigation  and audits,
expansion of our capital  budgets,  our ability to manage our growth and achieve
our business  strategy,  competition  from larger oil and natural gas companies,
the  uncertainty  of  reserve  information  and future  net  revenue  estimates,
property acquisition risks and other factors detailed in this Form 10QSB for the
quarterly  period ended  January 31, 2005 and in our Form  10-KSB/A for the year
ended April 30, 2004 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 in Nevada. The reincorporation
was effected by the merger of Vector with and into a newly created, wholly owned
subsidiary, VTEX Energy, Inc., a Nevada Corporation,  which became the surviving
entity (the "Company").

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

     A lack of working capital and the service  requirements of the debt assumed
by the Company in its  acquisitions  prevented the Company from fully developing
the  properties  it had  acquired.  Accordingly,  the Company  identified  those
properties that had the most potential for future development,  and beginning in
July  2002  began  selling  its non  core  non  strategic  oil and  natural  gas

                                      -19-
<PAGE>
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  69,000  barrels  of oil and
14,872,000  Mcf of  natural  gas  relate to  properties  that are not  currently
producing.  It is expected  that a majority of these  properties  can be brought
on-line after conducting  workovers,  recompletions  or offset  drilling.  These
reserves  (producing and non-producing)  have an estimated $44 million in future
net cash flow, discounted at 10%, and are all considered to be proved developed.
The  Company's  reserves  are  located in two fields,  Bateman  Lake and Mustang
Island 818-L.
<TABLE>
<CAPTION>
                                                                Percent of          Percent of        Percent of
                                                              April 30, 2004          Revenue          Revenue
                                                             Estimated Future       Six Months        Six Months
                                                              Net Cash Flows           Ended            Ended
          Field                       Location               Discounted at 10%   January 31, 2005  January 31, 2004
          -----                       --------               -----------------     -------------    -------------
<S>                        <C>                               <C>                   <C>              <C>
Bateman Lake               St. Mary Parish, Louisiana             66.62%              18.50%            20.66%

Mustang Island 818-L       State Waters Offshore Texas            33.38%              81.50%            53.71%

Properties Sold            Various                                   -                   -              25.63%
</TABLE>

Results of Operations

Three Months Ended January 31, 2005 Compared to Three Months Ended
January 31, 2004

     Oil and natural gas revenues  for the three  months ended  January 31, 2005
decreased  46% to  $140,362,  compared to $258,363 for the same period in fiscal
2004.  Production  volumes for natural gas during the three months ended January
31, 2005  decreased  49%,  to 20,421  Mcf,  compared to 39,670 Mcf for the three
months ended January 31, 2004.  Average  natural gas prices for the three months
ended January 31, 2005 increased 33% to $6.87 per Mcf, compared to $5.16 per Mcf
for the same  period in fiscal  2004.  Production  volumes for oil for the three
months ended January 31, 2005 decreased 100% from 1,867 barrels  produced during
the three months ended January 31, 2004. Average oil prices for the three months
ended  January 31, 2004 were $28.78 per barrel.  The decrease in oil and natural
gas  production  was primarily  due to declines in production  from the main oil
producing  well at the Bateman  Lake Field,  which was  partially  offset by the
increase in natural gas prices.

     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 January 31, 2005 and 2004.

<TABLE>
<CAPTION>
                                                                                2005 Period
                                                                          Compared to 2004 Period
                                Three Months Ended January 31,     --------------------------------
                               --------------------------------       Increase         % Increase
                                    2005              2004            Decrease)         (Decrease)
                               --------------    --------------    --------------    --------------
<S>                            <C>               <C>               <C>               <C>
Production volumes -
   Oil (Bbls)                           -                1,867      (      1,867)     (       100%)
   Natural Gas (MCF)                  20,421            39,670      (     19,249)     (        49%)
Average sales prices -
   Oil (per Bbl)               $        -        $       28.78     $(      28.78)     (       100%)
   Natural gas (per MCF)                6.87              5.16              1.71               33%
Operating revenue
   Oil                         $        -        $      53,739     $(     53,739)     (       100%)
   Natural gas                       140,362           204,624      (     64,262)     (        31%)
                               --------------    --------------    --------------
                               $     140,362     $     258,363     $(    118,001)     (        46%)
                               ==============    ==============    ==============
</TABLE>

     Production  expenses for the three months ended January 31, 2005  decreased
19% to  $151,050  compared  to  $185,675  for the same  period in  fiscal  2004.
Production expense per equivalent unit increased to $7.40 per Mcfe for the three
months  ended  January 31,  2005  compared to $3.65 in the same period in fiscal
2004.  This increase in  production  expense per Mcfe is caused by the effect of
                                      -20-
<PAGE>
fixed  lease  operating  expenses  combined  with  a  significant   decrease  in
production volumes.me period in fiscal 2004.

     Depletion expense decreased from $84,403 for the three months ended January
31, 2004 to $21,701  for the three  months  ended  January  31,  2005.  This 74%
decrease was  primarily due to a 60% decrease in Mcfe  production  volumes and a
positive  revision  in  reserve  volume  estimates  since  April 30,  2003 which
decreased the depletion rate on an Mcfe basis.

     General and Administrative  expenses for the three months ended January 31,
2005 increased by $747,259 to $937,444 compared to $190,185 for the three months
ended January 31, 2004.  The increase was primarily due to the value of warrants
issued for an option to purchase oil and natural gas  properties of $215,000 and
deferred  offering  costs of $156,744,  both of which were expensed in the third
quarter of fiscal 2005. Contract services incurred by the Company increased from
$62,699 for the three  months  ended  January 31, 2004 to $419,382 for the three
months ended January 31, 2005.

     Accretion  expense for the three months ended January 31, 2005 increased by
$2,441 to $22,676  compared to $20,235 for the three  months  ended  January 31,
2004.  This  increase  was due to the  normal  compound  effect of the  discount
factor.

     Interest  expense for the three months ended January 31, 2005  increased by
358% to $240,139  from $52,435 for the same period in fiscal 2004.  The increase
was due  primarily to the  addition of a $250,000  line of credit with a bank in
April 2004,  the addition of $950,000 in notes  payable to investors  during the
current  fiscal  year and an  increase  in  amortization  of loan  discount  and
deferred  loan  costs of  $157,597  relating  to the  notes  payable  issued  to
investors during the current fiscal quarter.

Nine Months Ended January 31, 2005 Compared to Nine Months Ended
January 31, 2004

     Oil and natural gas  revenues  for the nine months  ended  January 31, 2005
decreased  8% to  $891,548,  compared to $971,077  for the same period in fiscal
2004.  Production  volumes for natural gas during the nine months ended  January
31,  2004  decreased  4%, to 135,882  Mcf,  compared to 142,064 Mcf for the nine
months ended  January 31, 2004.  Average  natural gas prices for the nine months
ended January 31, 2005 increased 18% to $6.14 per Mcf, compared to $5.19 per Mcf
for the same  period in fiscal  2004.  Production  volumes  for oil for the nine
months ended January 31, 2005  decreased 80% to 1,628 barrels  compared to 8,128
barrels in the same period 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.  Average oil prices for the nine months  ended  January 31,
2005  increased 23% to $35.21 per barrel,  compared to $28.71 per barrel for the
same period in fiscal 2004.

     The following table summarizes production volumes, average sales prices and
operating revenues for the Company's oil and natural gas operations for the nine
months ended January 31, 2005 and 2004.

<TABLE>
<CAPTION>
                                                                               2005 Period
                                                                         Compared to 2004 Period
                               Nine  Months Ended January 31,      --------------------------------
                               --------------------------------       Increase         % Increase
                                    2005              2004            Decrease)         (Decrease)
                               --------------    --------------    --------------    --------------
<S>                            <C>               <C>               <C>               <C>
Production volumes -
   Oil (Bbls)                          1,628             8,128      (      6,500)    (         80%)
   Natural Gas (MCF)                 135,882           142,064      (      6,182)    (          4%)
Average sales prices -
   Oil (per Bbl)               $       35.21     $       28.71     $        6.50               23%
   Natural gas (per MCF)                6.14              5.19              0.95               18%
Operating revenue
   Oil                         $      57,321     $     233,324     $(    176,003)     (        75%)
   Natural gas                       834,227           737,753            96,474               13%
                               --------------    --------------    --------------
                               $     891,548     $     971,077     $(     79,529)     (         8%)
                               ==============    ==============    ==============
</TABLE>
     Production  expenses for the nine months ended  January 31, 2005  decreased
24% to  $488,652,  compared  to  $643,934  for the same  period in fiscal  2004.
Production expense per equivalent unit remained virtually unchanged at $3.35 per
Mcfe for the nine months  ended  January 31, 2005  compared to $3.37 in the same
period in fiscal 2004.

                                      -21-
<PAGE>
     Depletion expense increased from $140,568 for the nine months ended January
31,  2004 to $152,216  for the nine  months  ended  January  31,  2005.  This 8%
increase  was  primarily  due to a 42% increase in the  depletion  rate per Mcfe
partially offset by a 24% decrease in Mcfe production volumes.

     General and  Administrative  expenses for the nine months ended January 31,
2005  increased by $1,670,206  to  $2,494,362  compared to $824,156 for the nine
months ended January 31, 2004.  The increase was primarily due to an increase of
$1,046,741 in consulting services, the value of warrants issued for an option to
purchase oil and natural gas properties of $215,000 and deferred  offering costs
of  $156,744.  In addition  during the nine months ended  January 31, 2005,  the
Company  incurred  $149,406 in travel costs relating to fund raising efforts and
$35,961 in costs to a vendor  associated  with the  settlement of a dispute over
past due accounts  payable.  To conserve  cash the Company paid  $1,296,650  and
$366,767 of  consulting  expense by the issuance of common stock and warrants to
purchase  common stock  during the nine months ended  January 31, 2005 and 2004,
respectively.

     Accretion  expense for the nine months ended January 31, 2005  increased by
$5,810 to $66,787  compared  to $60,977 for the nine  months  ended  January 31,
2004.  This  increase  was due to the  normal  compound  effect of the  discount
factor.

     Interest  expense for the nine months ended  January 31, 2005  increased by
304% to $652,873 from $161,740 for the same period in fiscal 2004.  The increase
was due  primarily to the  addition of a $250,000  line of credit with a bank in
April 2004,  the addition of $950,000 in notes  payable to investors  during the
current  fiscal  year and an  increase  in  amortization  of loan  discount  and
deferred loan costs relating to the notes payable issued to investors during the
current fiscal year totaling $437,395.

     We adopted  SFAS No. 143  effective  May 1, 2003 and  recorded a cumulative
effect of change in  accounting  principle  of  $275,533  during the nine months
ended January 31, 2004.

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 nine months
ended January 31, 2005 and 2004, the Company  reported  losses of  approximately
$2,951,000  and  $1,135,000,  respectively.  The Company's  continuing  negative
operating  results  have  produced a working  capital  deficit of  approximately
$7,497,000 at January 31, 2005. These factors raise  substantial doubt about the
Company's  ability to  continue  as a going  concern.  The  Company's  long-term
viability as a going concern is dependent  upon the Company's  ability to obtain
sources of outside  financing to support near term  operations  and to allow the
Company to make strategic investments in new oil and natural gas prospects which
will  provide the Company  the ability to increase  profitability  and sustain a
cash flow level that will ensure support for continuing operations.

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

     The Texas  Railroad  Commission  declined  a request by the  Company  for a
reduction in bonding  requirements which were recently increased by the State of
Texas for  operators of certain wells located in offshore and bay State of Texas
waters.  The Company is working on obtaining a bond at this increased  level but
does not  have  such  bond in  place at this  time.  The  Company  will  request
reconsideration by the Texas Railroad Commission of this decision. Until a final
decision in this matter,  the Company will be allowed to continue its operations

                                      -22-
<PAGE>
under its current  bond.  Should the Company not be  successful  in reducing the
bond level,  or in the alternative  obtaining a bond at the increased  level, or
provide  other  satisfactory  security  the  Company  could  outsource  offshore
operations of the property

     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 $10.0  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 January 31, 2005, which is
equal to the outstanding balance. The borrowing base cannot be increased without
the consent of the lender.  This principal  balance plus unpaid interest was due
at maturity on January 31, 2005. The Company is currently  negotiating  with the
lender  to  restructure  the terms of the note and  extend  the  maturity  date.
However, there can be no assurance that such a restructuring will occur, or that
its terms will be favorable to the Company. The Company also has a $250,000 line
of credit  with a bank.  The  outstanding  balance  under this line of credit is
$246,537 at January 31, 2005, and is due upon demand.

     The Company has outstanding production payments in the amount of $1,240,021
at January 31, 2005.  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  $1,100,910,  net of a
discount of  $86,567,  and  $306,092  at January  31,  2005 and April 30,  2004,
respectively.

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

Net Cash Provided by Operating Activities

     Cash flows  provided by  operating  activities  were  $569,678 for the nine
months ended  January 31, 2005 as compared to $191,216 for the nine months ended
January 31, 2004.  This  increase  was  primarily  due to the Company  deferring
payment of operating costs and the issuance of common stock and warrants in lieu
of settling obligations with cash.

Net Cash Used in Investing Activities

     Cash flows used in investing  activities  increased to  $1,521,842  for the
nine  months  ended  January 31, 2005 from  $187,326  for the nine months  ended
January 31, 2004.  This  increase was due  primarily  to  $1,428,173  in oil and
natural  gas  capital   expenditures   incurred   related  to  workovers  and  a
recompletion performed on three wells in the Bateman Lake field.

Net Cash Provided by Financing Activities

     Net cash flows provided by financing  activities  totaled  $863,678 for the
nine months ended January 31, 2005 primarily from borrowings under a new line of
credit from a bank and notes payable to investors totaling  $1,002,500 offset by
offering costs  incurred of $156,774 as a result of a private  placement that we
elected to not complete.  Net cash provided from  financing  activities  totaled
$48,539 for the nine months ended January 31, 2004  primarily  from the sales of
the Company's common stock totaling $63,750 offset by the net repayments of debt
totaling $15,211.

                                      -23-
<PAGE>

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 rates per Mcfe for the three and nine months ended January
31, 2005 and 2004 were $1.06 and $1.05 and $1.66 and $0.74, respectively.

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

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

Oil and Natural Gas Reserve Estimates

     The reserve data  included in this document for the fiscal year ended April
30, 2004 and  thereafter  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.

     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,

                                      -24-
<PAGE>
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 had the right to purchase from CLK 50% of
their  interest in the Bayou  Choctaw  Field,  located in the Iberville and West
Baton  Rouge  Parishes of  Louisiana  for  $1,250,000  and the  assumption  of a
production payment of $1,500,000 payable contingent upon reaching 110% of payout
of the  Company's  investment.  Under the terms of the  option,  CLK was  issued
warrants to purchase 500,000 shares of the Company's common stock at an exercise
price of $0.50 per share.  Such warrants had a fair value of $215,000  which was
originally  recorded as a  noncurrent  asset  which when  expired was charged to
expense  during the quarter  ended  January  31,  2005.  To fund this  potential
acquisition,  the Company was  simultaneously  in the process of raising capital
through a private  placement  memorandum.  The Company  incurred  offering costs
totaling  $156,744  relating  to this  private  placement  memorandum  which was
capitalized as deferred  offering  costs.  Due to the Company not exercising its
option to  purchase  from CLK its 50%  interest in the Bayou  Choctaw  Field the
private placement  memorandum was abandoned and the deferred offering costs were
charged to expense during the quarter ended January 31, 2005.

Item 3.     Controls and Procedures

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

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

The Company currently employs one person in the accounting department (the Chief
Financial  Officer) who is  responsible  for the day to day  accounting  and SEC
reporting  function  of the  Company.  Daily  transactions  are  accounted  for,
reconciled and processed to our accounting  records solely by this person.  This
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 periods ended July 31, 2005,  October 31, 2005 and January 31, 2006 on
a timely basis. As of the date of this filing the Company is compliant in all of
its SEC required filings. Furthermore, during the course of completing the audit
for  the  year  ended  April  30,  2005,  several  accounting  adjustments  were
identified requiring

                                      -25-
<PAGE>
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
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 January 31, 2005 that has materially
affected,  or is reasonably likely to materially  affect,  our internal controls
over financial reporting.

                          PART II - OTHER INFORMATION

Item 1.   Legal Proceedings

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

Item 2.   Changes in Securities and Use of Proceeds

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

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

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

     In June and  December of 2004,  the Company  issued  196,666  shares of its
common stock to Marshall Smith in exchange for services valued at $75,433.

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

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

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

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

     In December  2004,  the Company  issued 5,000 shares of its common stock to
Larry Gussman as consideration under the terms of a loan extension agreement.

     In December  2004,  the Company  issued 5,000 shares of its common stock to
the Carl Hannah Corporation as consideration under the terms of a loan extension
agreement.

     In December  2004,  the Company  issued 5,000 shares of its common stock to
Ben Louviere as consideration under the terms of a loan extension agreement.

     In December  2004,  the Company  issued 5,000 shares of its common stock to
the Talisman Production Company, Inc. as consideration under the terms of a loan
extension agreement.

                                      -26-
<PAGE>

     In December  2004,  the Company  issued 3,750 shares of its common stock to
Ned Fowler as consideration under the terms of a loan extension agreement.

     In December  2004,  the Company issued 10,000 shares of its common stock to
Robert J. LeBlanc as consideration under the terms of a loan agreement.

     In December  2004,  the Company issued 10,000 shares of its common stock to
Giovanni Muccicciaro as consideration under the terms of a loan agreement.

     In December  2004, the Company issued 112,500 shares of its common stock to
Star Investments, Ltd. as consideration under the terms of loan agreements.

     In December  2004,  the Company issued 40,000 shares of its common stock to
Select Properties, Ltd. as consideration under the terms of a loan agreement.

     In December  2004,  the Company issued 20,000 shares of its common stock to
Daniel Murphy as consideration under the terms of a loan agreement.

     In December  2004, the Company issued 166,666 shares of its common stock to
W. Ray Nesbitt in exchange for services valued at $58,333.

     In December  2004, the Company issued 166,667 shares of its common stock to
Wynden Energy, Inc. in exchange for services valued at $58,333.

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

Item 3.   Defaults Upon Senior Securities

     The  Company  has a $10.0  million  revolving  credit  line  with an entity
controlled by the brother of the Company's  president.  The borrowing base under
this revolving  credit line is $1,839,143 at January 31, 2005, 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  $353,069 at January 31,  2005 and is  currently  due on
demand.  Under the currently  scheduled  reductions in the borrowing  base,  the
principal  balance and unpaid  interest was due at maturity on January 31, 2005.
The Company is currently negotiating with the lender to restructure the terms of
the note and extend the maturity date.  However,  there can be no assurance that
such a  restructuring  will occur,  or that its terms will be  favorable  to the
Company.

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

         None

Item 5.   Other Information

         None

                                      -27-
<PAGE>


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

       (b) Reports on Form 8-K.

                   The Company filed a Current Report on Form 8-K on November 1,
                  2004 announcing an extension of the option agreement with CLK.

                  The Company filed a Current Report on Form 8-K on November 23,
                  2004 announcing an extension of the option agreement with CLK.

                  The Company filed a Current Report on Form 8-K on December 1,
                  2004 announcing an extension of the option agreement with CLK.

                  The Company filed a Current Report on Form 8-K on December 15,
                  2004 announcing its intention not to exercise the option
                  agreement with CLK.

                  The Company filed a Current Report on Form 8-K on January 3,
                  2005 announcing its unregistered sales of equity securities.

                  The Company filed a Current Report on Form 8-K on January 20,
                  2005 announcing a definitive agreement with ARCOA Oil & Gas,
                  Inc..



                                   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/    Stephen F. Noser
                                     -------------------------
                                     Stephen F. Noser
                                     President
                                     Principal Executive Officer
                                     Date:    May 1, 2006

                            By       /S/    Randal B. McDonald, Jr.
                                     -------------------------------
                                     Randal B. McDonald, Jr.
                                     Chief Financial Officer
                                     Principal Financial and Accounting Officer
                                     Date:    May 1, 2006