U.S.
      SECURITIES AND EXCHANGE COMMISSION


WASHINGTON,
      D.C. 20549





FORM
      10-KSB




(Mark
      One)


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





For
      Fiscal Year Ended: December 2007





OR


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


For
      the
      transition period from ___ to ________





File
      No.
      333-127813





**Majestic
      Oil & Gas, Inc.**


(Name
      of
      small business issuer in our charter)





Nevada
            4600
            20-1673271(State
                or other jurisdiction of
              incorporation
                or organization)
            (Primary
                Standard
              Industrial
                Classification
              Code
                Number)
            (I.R.S.
                Employer
              Identification
                Number)





P.O
                Box 488 Cut Bank, Montana
            59427(Address
                of principal executive offices)
            (Zip
                Code)





Registrant’s
      telephone 406-873-5580





Check
      whether the issuer (1) filed all reports required to be filed by Section13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days. Yes: x  No: o





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B is not contained in this form, and no disclosure will be
      contained, to the best of registrant's knowledge, in definitive proxy or
      information statements incorporated by reference in Part III of the Form 10-KSB or
      any
      amendment to this Form 10-KSB o





State
      the
      number of shares outstanding of each of the issuer's classes of common equity,
      as of the latest practicable date: 7,508,000 shares of common stock outstanding
      as of March 5, 2008.





Transitional
      Small Business Disclosure Format (check one): Yes o  No x





Indicate
      by check mark whether the registrant is a shell company (as defined by Rule
      12b-2 of the Exchange Act).


Yes:
      o  No: x





Securities
      registered under Section 12(b) of the Act: NONE





Securities
      registered under Section 12(g) of the Act:


Common
      Stock, no par value





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days.


Yes
x 
No
o





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act) Yes o  Nox





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation SB is not contained in this form, and no disclosure will be
      contained, to the best of registrant's knowledge, in definitive proxy or
      information statements incorporated by reference in Part III of this Form 10-KSB or
      any
      amendment to this Form 10-KSB. o





State
      issuer's revenues for its most recent fiscal year: $41,189





State
      the
      aggregate market value of the voting and non-voting common equity held by
      non-affiliates computed by reference to the price at which the common equity
      was
      sold, or the average bid and asked prices of such common equity, as of a
      specified date within the past 60 days. (See definition of affiliate in Rule
      12b-2 of the Exchange Act.) As of March 10, 2008 the aggregate market value
      of
      the common equity held by non-affiliates totaled $1,296,280. This was calculated
      using 7,508,000 shares outstanding less 3,000,000 shares held by Patrick M.
      Montalban, President & CEO less 1,600,000 shares held by Altamont Oil &
Gas, Inc. less 90,000 shares held by Danny Mitchell, Director, multiplied by
      $0.46 per share.





Note:
      If
      determining whether a person is an affiliate will involve an unreasonable effort
      and expense, the issuer may calculate the aggregate market value of the common
      equity held by non-affiliates on the basis of reasonable assumptions, if the
      assumptions are stated.





**ISSUERS
      INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE
      YEARS**





Indicate
      by check mark whether the issuer has filed all documents and reports required
      to
      be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution
      of securities under a plan confirmed by a court. Yes o


No
o
      Not Applicable


2




**APPLICABLE
      ONLY TO CORPORATE REGISTRANTS**





State
      the
      number of shares outstanding of each of the issuer's classes of common equity,
      as of the latest practicable date: 7,508,000 shares of common stock outstanding
      as of March 10, 2008.





**DOCUMENTS
      INCORPORATED BY REFERENCE**





If
      the
      following documents are incorporated by reference, briefly describe them and
      identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into which
      the document is incorporated: (1) any annual report to security holders; (2)
      any
      proxy or information statement; and (3) any prospectus filed pursuant to Rule
      424(b) or (c) of the Securities Act of 1933 ("Securities Act"). The listed
      documents should be clearly described for identification purposes (e.g., annual
      report to security holders for fiscal year ended December 24,
      1990).





No
      documents are incorporated by reference into this Annual Report on Form
      10-KSB.





Transitional
      Small Business Disclosure Format (check one): Yes o; No
x


3


TABLE
      OF CONTENTS





To
      be inserted


4




**Part
      I**




Item
      1.
      Description of Business.





Business
      Development





We
      were
      incorporated in Nevada on April 16, 2002 as M2 Group Energy Corporation. On
      June
      21, 2004, we changed our name to Majestic Oil & Gas, Inc. We are authorized
      to issue 100,000,000 shares of common stock of which 7,508,000 shares are
      outstanding.





We,
      through our wholly-owned subsidiary, Grizzly Energy, Inc., own a 25% working
      interest in a producing gas well on a state of Montana lease located in Section
      36-T29N-R5W, Pondera County, Montana (Ludwig/State #36-1). It currently has
      gas
      reserves of 29.72 million cubic feet of Proved Net Producing Reserves, which
      are
      reserves established based upon actual production. Net Reserves are gross
      reserves less taxes, royalties and all expenses.





Grizzly
      Energy acquired the 25% working interest from Altamont Oil and Gas, Inc., a
      Montana corporation and an affiliate of our President, Mr. Patrick Montalban,
      in
      July 2004 for 16,000 shares of Grizzly Energy common stock. Mr. Patrick
      Montalban owns and manages Altamont Oil and Gas, Inc. Mr. Patrick Montalban
      owns
      and manages Grizzly Energy, Inc. Thereafter in July 2004, Majestic Oil &
Gas, Inc. acquired all 16,000 issued and outstanding shares of Grizzly Energy,
      Inc. common stock for the issuance of 1,600,000 shares of our common stock.
      Prior to the sale to Majestic Oil & Gas, Inc, Altamont Oil & Gas, Inc
      incurred an expense of $120,000 in the acquisition of a 50% Working Interest
      in
      this well. Altamont retained the remaining 25% interest in this
      well.





Majestic
      Oil & Gas, Inc participated in the drilling of the Boucher 27-1 with
      Altamont and our 33% of the proportionate share of the drilling and completion
      costs were $32,187. For this expenditure, we earned a 25% working interest.
      The
      Boucher 27-1 well is located in Section 27-T29N-5W, Pondera County, Montana.
      This well currently has gas reserves of 14.39 million cubic feet of Proved
      Net
      Producing Reserves.





In
      addition to the above two wells, Majestic Oil & Gas, Inc. participated in
      the drilling of the B. Ag #25-1, Vandenbos #19-1, Vandenbos #19-2 and Jody
      Fields #4-1 wells during the Third Quarter of 2007. The Company’s share of
      drilling and completion costs for these wells is as follows:





B.
                Ag #25-1:
            
            $
            46,926Vandenbos
                #19-1:
            
            $
            54,076Vandenbos
                #19-2:
            
            $
            15,334Jody
                Fields #4-1:
            
            $
            50,000.





As
      a
      result, Majestic Oil & Gas, Inc. earned a 25% Working Interest in the B. Ag
      #25-1, the Vandenbos #19-1 and the Jody Fields #4-1.





The
      Vandenbos #19-1 was the largest gas well drilled to-date, in the Lake Frances
      area, with initial production of 750 MCF per day. This well currently has
      natural gas reserves of 69.33 million cubic feet of Proved Net Producing
      Reserves. The B. Ag. #25-1 well was successfully completed and is currently
      producing as an economical natural gas well. This well currently has natural
      gas
      reserves of 3.0 million cubic feet of Proved Net Producing Reserves. The
      Vandenbos #19-2 was subsequently plugged and abandoned and the Jody Fields
      #4-1,
      which was drilled as a wildcat oil well has yet to be completed.


5





All
      wells, in which Majestic Oil & Gas, Inc hold a Working Interest are operated
      by Altamont Oil & Gas, Inc.





We
      believe that all the terms of the transactions and agreements with related
      parties in connection with our business development as described above were
      comparable to terms we could have obtained from unaffiliated
      parties.





Business





We
      are
      engaged in the exploration, development, acquisition and operation of oil and
      natural gas properties. Because oil and natural gas exploration and development
      and development requires significant capital and because our assets and
      resources are limited, we participate in the oil and natural gas industry
      through the purchase of interests in either producing wells or oil and natural
      gas exploration and development and production projects.





Estimates
      of proved reserves may vary and, as a result, revenues from production may
      vary
      significantly from our expectations. We base our estimates of our proved oil
      and
      natural gas reserves and future net revenues from those reserves upon analyses
      that rely upon various assumptions, including those required by the Securities
      and Exchange Commission, as to natural gas prices, taxes, development expenses,
      capital expenses, operating expenses and availability of funds. There are
      numerous uncertainties inherent in estimating quantities of reserves of gas
      and
      in projecting future rates of production and the timing of development
      expenditures, including many factors beyond the our control. The reserve
      estimates in this prospectus are based on various assumptions, including, for
      example, constant oil and natural gas prices, operating expenditures and the
      availability of funds, and, therefore, are inherently imprecise indications
      of
      future net cash flows. Actual future production, cash flows, taxes, operating
      expenses, development expenditures and quantities of recoverable oil and gas
      reserves may vary substantially from those in the estimates. Any significant
      variance in these assumptions could materially affect the estimated quantity
      and
      value of reserves set forth in this prospectus. Additionally, our reserves
      may
      be subject to downward or upward revision based upon actual production
      performance, results of future development and exploration, prevailing oil
      and
      gas prices and other factors, many of which are beyond our control.





As
      we
      have yet to have oil production, we have no basis for estimates of our proved
      oil reserves and future net revenues from those reserves.





Geologic
      Data





All
      wells
      in which the Company has working interests are located in the Lake Frances
      Prospect. The Lake Frances Prospect is approximately 10,000 acres in oil and
      gas
      leases. The Prospect is located less than three and one half miles west of
      the
      Williams Gas Field which has so far produced 4.7 billion cubic feet of gas.
      The
      Lake Frances Field is owned in majority and 100% operated by Altamont Oil &
Gas, Inc, which is a company owned and managed by Patrick M.
      Montalban.


6





Geologic
      data indicate structural and stratagraphic traps are found along the Lake
      Frances trend. The Bow Island Sandstones are approximately 100 to 115 million
      years old and were deposited during the Cretaceous Period. The Lake Frances
      Bow
      Island is genetically a Typical Bow Island Reservoir. The depositional
      environment is considered to be that of a transgressive, regressive Marine,
      Shoreline or Near Shelf Sandstone Bar trending in a north to northwest
      direction. The nature of the trap is a stratagraphic pinchout. During the Bow
      Island deposition there were numerous transgressive, regressive events, which
      created discontinuous lenses of sandstone interbedded with shales.


The
        production zones in the Lake Frances Area are the lst Bow Island “A” Sandstone,
        2nd Bow Island Sandstone, 3rd Bow Island Sandstone and
        4th Bow Island “A” and “C” Sandstone. The lithology for the lst Bow
        Island is Sandstone, grey, fine grained, quartzose, well sorted, rounded
        grains,
        micaceous in parts. Average thickness on the lst Bow Island is Sandstone,
        grey,
        fine to medium grained, grains (glauconitic). Average thickness in the
        4th Bow Island is 8 feet with porosity’s averaging from 18% to 22%.
        The geological sample description of the lst Bow Island in the angular to
        rounded, many black chert grains, trace fine pyrite and green glauconitic,
        calcareous.
 
 Each
        Sandstone has its own porosity and permeability characteristics. When comparing
        the 4th Bow Island in the Williams Gas Field, it is a continuous
        reservoir over a large area. The 4th Bow Island in the Lake Frances
        Field has also proved to be a continuous reservoir with the drilling and
        completion of the Boucher 27-1 well. Every well that has been drilled in
        the
        Lake Frances Area has produced from the same 4th Bow Island “C”
Sandstone. The drive mechanism for the Bow Island is pressure
        depletion. The
        character of Bow Island Gas is 900 to 910 BTU dry sweet methane
        gas.


The
      primary objective of the Jody Fields #4-1, a wildcat oil well was the
      Madison/Sun River Dolomite. Other potential zones of interest are the Bow Island
      and Sunburst Sandstones. A wildcat well is considered to be a well that is
      drilled, based on a large element of hope, in a frontier area where very little
      is known about the subsurface. The drilling of this well determined that the
      site is located on the upside block of a structural fault, which creates an
      excellent opportunity for an oil deposit. A study of the logs from offsetting
      wells show good oil or hydrocarbon shows in the Madison/Sun River Dolomite.





Title
      to Properties





We
      believe that we hold good and indefeasible title to our properties, in
      accordance with standards generally accepted in the natural gas industry. A
      title examination has been performed with respect to substantially all of our
      producing properties. Each of our leased properties represents a material
      portion of our holdings; and a title dispute could have adverse consequences
      for
      our production and retention of revenues from production of natural
      gas.





Our
      properties are subject to royalties and other customary outstanding interests.
      Our properties are also subject to operating agreements and current taxes.
      We do
      not believe that any of these burdens will materially interfere with the use
      of
      our properties.


7





Natural
      Gas Reserves





The
      following table summarizes information regarding our estimated proved natural
      gas reserves as of the dates indicated. All of our reserves are located in
      the
      United States. We base our estimates relating to our proved natural gas reserves
      and future net revenues of natural gas reserves upon reports prepared by Citadel
      Engineering Ltd, Petroleum Consultants. In accordance with SEC guidelines,
      we
      make the standardized and Proved Producing Reserves – 10% discount
      estimates of future net cash flows from proved reserves using natural gas sales
      prices in effect as of the dates of the estimates which are held constant
      throughout the life of the properties. We based our estimates of proved reserves
      upon the following end of the year prices: Year ended December 31,
      2007





Natural
                gas (per Thousand Cubic Feet)
            
            $
            4.06





Reserve
      estimates are imprecise and may change as additional information becomes
      available. Furthermore, estimates of natural gas reserves, of necessity, are
      projections based on engineering data. There are uncertainties inherent in
      the
      interpretation of this data as well as the projection of future rates of
      production and the timing of development expenditures. Reservoir engineering
      is
      a subjective process of estimating underground accumulations of natural gas
      that
      cannot be measured in an exact way and the accuracy of any reserve estimate
      is a
      function of the quality of available data and of engineering and geological
      interpretation and judgment. Reserve reports of other engineers might differ
      from the reports of our consultant, Citadel Engineering Ltd, Petroleum
      Consultants. Results of drilling, testing and production subsequent to the
      date
      of the estimate may justify revision of this estimate. The amounts and timing
      of
      future operating and development costs may also differ from those used. You
      should not construe the estimated Proved Producing Reserves – 10% Discount
      values as representative of the fair market value of our proved natural gas
      properties. Proved Producing Reserves – 10% Discount values are based upon
      projected cash inflows at a 10% discount, which do not provide for change in
      natural gas prices or for escalation of expenses and capital costs. The
      meaningfulness of these estimates depends upon the accuracy of the assumptions
      upon which they were based. We evaluate natural gas reserves at constant
      temperature and pressure. A change in either of these factors can affect the
      measurement of natural gas reserves. We deduct operating costs, development
      costs and production-related and ad valorem taxes in arriving at the estimated
      future cash flows. We make no provision for income taxes, and base the estimates
      on operating methods and conditions prevailing as of the dates indicated. We
      cannot assure you that these estimates are accurate predictions of future net
      cash flows from natural gas reserves or their present value.





Natural
      Gas Sales





We
      sell
      the natural gas we produce to gas transmission companies. As is customary in
      the
      industry, virtually all of our contract pricing provisions are tied to a market
      index, with certain adjustments based on, among other factors, whether a well
      delivers to a gathering or transmission line, quality of natural gas and
      prevailing supply and demand conditions, so that the price of the natural gas
      fluctuates to remain competitive with other available natural gas supplies.
      As a
      result, our revenues from the sale of natural gas will suffer if market prices
      decline and benefit if they increase. At this date, we do not currently engage
      in hedging transactions and do not have any contracts with future gas production
      under fixed price contracts.





At
      March
      1, 2008, the weighted net average price of natural gas we produced sold at
      prices averaging approximately $4.12 per Thousand Cubic Feet.


8





A
      variety
      of factors affect the market for natural gas, including the availability of
      other domestic production, natural gas imports, the availability and price
      of
      alternative fuels, the proximity and capacity of natural gas pipelines, general
      fluctuations in the supply and demand for natural gas and the effects of state
      and federal regulations on natural gas production and sales. In particular,
      gas
      production and related operations are or have been subject to price controls,
      taxes and other laws and regulations relating to the gas industry. Failure
      to
      comply with such laws and regulations can result in substantial penalties.
      The
      regulatory burden on the gas industry increases our cost of doing business
      and
      affects its profitability. Although we believe we are in compliance with all
      applicable laws and regulations, because such laws and regulations are
      frequently amended or reinterpreted, we are unable to predict the future cost
      or
      impact of complying with such laws and regulations.





The
      Company has no oil production thus we have yet to establish a market. However,
      the Company intends to continue the pursuit of oil prospects and has plans
      to
      participate in the drilling of two additional sites offsetting the Jody Fields
      #4-1 well.





Competition





The
      oil
      and gas industry is highly competitive in all its phases. Properties in which
      we
      have an interest will encounter strong competition from many other oil and
      gas
      producers, including many that possess substantial financial resources, in
      acquiring economically desirable producing properties and exploratory drilling
      prospects, and in obtaining equipment and labor to operate and maintain their
      properties.




We
      are a
      very small company in our industry. Many of our current and potential
      competitors have significantly greater name recognition and more established
      operations and relationships with persons and entities involved in the oil
      and
      natural gas drilling and production business. We compete based upon our
      management’s experience in the industry.




Government
      Regulation




The
      federal government and various state and local governments have adopted laws
      and
      regulations regarding the protection of human health and the environment. These
      laws and regulations may require the acquisition of a permit by operators before
      drilling commences, prohibit drilling activities on certain lands lying within
      wilderness areas, wetlands, or where pollution might cause serious harm, and
      impose substantial liabilities for pollution resulting from drilling operations,
      particularly with respect to operations in onshore and offshore waters or on
      submerged lands. These laws and regulations may increase the costs of drilling
      and operating wells. Because these laws and regulations change frequently,
      the
      costs of compliance with existing and future environmental regulations cannot
      be
      predicted with certainty. We do not currently plan to engage or anticipate
      that
      in the future we will engage in exploration and production activities on federal
      land.





The
      transportation and certain sales of oil and natural gas in interstate commerce
      are heavily regulated by agencies of the federal government. Production of
      any
      oil and gas by properties in which we have an interest will be affected to
      some
      degree by state regulations. States have statutory provisions regulating the
      production and sale of oil and gas, including provisions regarding
      deliverability. Such statutes, and the regulations promulgated in connection
      therewith, are generally intended to prevent waste of oil and gas and to protect
      correlative rights to produce oil and gas between owners of a common reservoir.
      State regulatory authorities may also regulate the amount of oil and gas
      produced by assigning allowable rates of production to each well or proration
      unit.


9





Any
      exploration or production on Federal land will have to comply with the Federal
      Land Management Planning Act which has the effect generally of protecting the
      environment. Any exploration or production on private property whether owned
      or
      leased will have to comply with the Endangered Species Act and the Clean Water
      Act. The cost of complying with environmental concerns under any of these acts
      varies on a case by case basis. In many instances the cost can be prohibitive
      to
      development. Environmental costs associated with a particular project must
      be
      factored into the overall cost evaluation of whether to proceed with the
      project.





Research
      and Development Expenditures





Since
      inception, we have not incurred any expenditures in research or
      development.





Employees





We
      have
      six part-time employees, one of whom is Mr. Patrick Montalban, our President
      and
      CEO. The person supervising our day-to-day operations is Mr. Patrick Montalban.
      In this capacity, he currently devotes approximately 50% of his time to our
      business and anticipates that during the next 12 months he will devote
      approximately 60% of his time to Majestic Oil & Gas. As our business
      develops, if we raise additional funds and drill or participate in additional
      wells, Mr. Montalban may devote 75% of his time to our business. Mr. Montalban
      may have conflicts in allocating his time between our business and his other
      activities.





We
      have
      no collective bargaining agreements. We consider our relationship with our
      employees to be excellent.




**Item
      2. Description of Property.** ****





Our
      offices are located at 33 1 st Avenue
      SW, Cut Bank, Montana 59427. Our telephone number is 406-873-5580. Our offices
      are in good condition and are sufficient to conduct our operations. This space
      is provided by our president at no cost.





We
      do not
      intend to renovate, improve, or develop properties. We are not subject to
      competitive conditions for property and currently have no property in insure.
      We
      have no policy with respect to investments in real estate or interests in real
      estate and no policy with respect to investments in real estate mortgages.
      Further, we have no policy with respect to investments in securities of or
      interests in persons primarily engaged in real estate activities.




**Item
      3. Legal Proceedings.**





None




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





None


10


**PART
      II**




**Item
      5. Market for Common Equity and Related Stockholder
      Matters.**





Market
      Information





There
      is
      no established public trading market for the Company’s shares of common stock.
      Quotations may be obtained by researching the stock symbol “MJOG.” Various
      Internet quotation services detail information about daily transaction volume
      and price. One such service is the OTC Bulletin Board ( www.otcbb.com )
      where a
      list of market makers is also detailed. The high and low range of actual
      transactions using the daily ending price, by quarters, for the Company’s last
      quarter of 2006 and the year 2007. The initial trade occurred on October 19,
      2006.




High
            
            LowOctober 1 –
                December 31, 2006
            
            $
            1.25
            
            $
            0.19January
                1 – March 31, 2007
            
            $
            0.51
            
            $
            0.19April
                1 – June 30, 2007
            
            $
            0.54
            
            $
            0.23July
                1 – September 30, 2007
            
            $
            0.63
            
            $
            0.30October 1 –
                December 31, 2007
            
            $
            0.57
            
            $
            0.29





The
      above
      quotations may not reflect inter-dealer prices and should not be considered
      over-the-counter market quotations as that term is customarily used.





Options,
      Warrants, Convertible Securities





We
      have
      no outstanding warrants as of March 10, 2008.





The
      Company granted an option to buy 125,000 shares at $0.38 per share to a member
      of the Company’s Board of Directors on August 9, 2007. Those options expire on
      August 9, 2008. The fair value of these options, $21,295, was recorded as stock
      compensation expense and additional paid in capital at the time the options
      were
      granted.





Penny
      Stock Considerations





Our
      shares are "penny stocks" as that term is generally defined in the Securities
      Exchange Act of 1934 to mean equity securities with a price of less than $5.00.
      Our shares thus are subject to rules that impose sales practice and disclosure
      requirements on broker-dealers who engage in certain transactions involving
      a
      penny stock.





Under
      the
      penny stock regulations, a broker-dealer selling a penny stock to anyone other
      than an established customer or accredited investor must make a special
      suitability determination regarding the purchaser and must receive the
      purchaser's written consent to the transaction prior to the sale, unless the
      broker-dealer is otherwise exempt. Generally, an individual with a net worth
      in
      excess of $1,000,000 or annual income exceeding $100,000 individually or
      $300,000 together with his or her spouse is considered an accredited investor.
      In addition, under the penny stock regulations the broker-dealer is required
      to:


11





·  Deliver,
      prior to any transaction involving a penny stock, a disclosure schedule prepared
      by the Securities and Exchange Commissions relating to the penny stock market,
      unless the broker-dealer or the transaction is otherwise exempt;


·  Disclose
      commissions payable to the broker-dealer and our registered representatives
      and
      current bid and offer quotations for the securities;


·  Send
      monthly statements disclosing recent price information pertaining to the penny
      stock held in a customer's account, the account's value and information
      regarding the limited market in penny stocks; and


·  Make
      a
      special written determination that the penny stock is a suitable investment
      for
      the purchaser and receive the purchaser's written agreement to the transaction,
      prior to conducting any penny stock transaction in the customer's
      account.





Because
      of these regulations, broker-dealers may encounter difficulties in their attempt
      to sell shares of our common stock, which may affect the ability of selling
      shareholders or other holders to sell their shares in the secondary market
      and
      have the effect of reducing the level of trading activity in the secondary
      market. These additional sales practice and disclosure requirements could impede
      the sale of our securities, if our securities become publicly traded. In
      addition, the liquidity for our securities may be decreased, with a
      corresponding decrease in the price of our securities.





Holders





As
      of the
      date of this registration statement, we had 43 holders of record of our common
      stock.





Dividends





We
      have
      not declared any cash dividends on our common stock since our inception and
      do
      not anticipate paying such dividends in the foreseeable future. We plan to
      retain any future earnings for use in our business. Any decisions as to future
      payments of dividends will depend on our earnings and financial position and
      such other facts, as the board of directors deems relevant.




**Item
      6. Management's Discussion and Analysis or Plan of
      Operation.**





FORWARD
      LOOKING STATEMENTS





The
      following discussion and analysis is provided to increase the understanding
      of,
      and should be read in conjunction with, the Financial Statements of the Company
      and Notes thereto included elsewhere in this Report. Historical results and
      percentage relationships among any amounts in these financial statements are
      not
      necessarily indicative of trends in operating results for any future period.
      The
      statements, which are not historical facts contained in this Report, including
      this Plan of Operations, and Notes to the Financial Statements, constitute
      "forward-looking statements" within the meaning of the Private Securities
      Litigation Reform Act of 1995. Such statements are based on currently available
      operating, financial and competitive information, and are subject to various
      risks and uncertainties. Future events and the Company's actual results may
      differ materially from the results reflected in these forward-looking
      statements. Factors that might cause such a difference include, but are not
      limited to, dependence on existing and future key strategic and strategic
      end-user customers, limited ability to establish new strategic relationships,
      ability to sustain and manage growth, variability of operating results, the
      Company's expansion and development of new service lines, marketing and other
      business development initiatives, the commencement of new engagements,
      competition in the industry, general economic conditions, dependence on key
      personnel, the ability to attract, hire and retain personnel who possess the
      technical skills and experience necessary to meet the service requirements
      of
      its clients, the potential liability with respect to actions taken by its
      existing and past employees, risks associated with international sales, and
      other risks described herein and in the Company's other SEC filings.


12





The
      safe
      harbors of forward-looking statements provided by Section 21E of the Exchange
      Act are unavailable to issuers of penny stock. As we issued securities at a
      price below $5.00 per share, our shares are considered penny stock and such
      safe
      harbors set forth under the Reform Act are unavailable to us.





The
      following discussion of our financial condition and results of operations should
      be read in conjunction with the Financial Statements and Notes to the Condensed
      Consolidated Financial Statements appearing elsewhere in this
      report.





OVERVIEW





Majestic
      Oil & Gas, Inc is engaged in the exploration, development, acquisition and
      operation of oil and natural gas properties. Because oil and natural gas
      exploration and development requires significant capital and because our assets
      and resources are limited, we participate in the gas industry through the
      purchase of interests in either producing wells or oil and natural gas
      exploration, development and production projects.





Majestic
      Oil & Gas, Inc. is a development stage company, and as such it is difficult
      for us to forecast our revenues or earnings accurately. We believe that future
      period-to-period comparisons of our operating results may not be meaningful
      and
      should not be relied upon as an indication of future performance as we have
      and
      will have no backlog of orders. Our operating results in one or more future
      quarters may fall below investor expectations which, assuming our common stock
      trades on a recognized market, would almost certainly cause the future trading
      price of our common stock to decline. You should read the following discussion
      together with the condensed consolidated financial statements and their
      accompanying notes, included elsewhere in the report.





Based
      upon our Management's experience in the oil and natural gas industry and on
      recent events, including increasing global demand for energy and energy
      disruptions caused by natural disasters, we believe the trend in oil and gas
      prices will remain relatively stable or decrease slightly, but over the
      long-term are more likely to increase. We expect to continue to generate
      positive net income from operations in the future, although our revenue and
      expenses will increase as we expand our drilling and ownership
      activities.




Majestic
      Oil & Gas, Inc participated in a drilling program in the Lake Frances Field
      during 2007. Two successful gas wells have been drilled to-date; the B Ag,
      Inc
      #25-1 and the Vandenbos #19-1. Majestic Oil & Gas, Inc holds a 25% Working
      Interest in these two wells and the Company expects to see an increase in
      production volumes, as a result of these two wells. In addition, Majestic Oil
      & Gas, Inc participated in the drilling of the Vandenbos #19-2 and the Jody
      Fields #4-1. The Vandenbos #19-2 well was subsequently plugged and abandoned.
      The Jody Fields #4-1 well, was a wildcat oil well, which is yet to be
      completed.


13





RESULTS
      OF OPERATIONS





Year
      ended December 31, 2007 vs. Year ended December 31, 2006:





Year Ended
              December 31, 2007
            
            Year Ended
              December 31, 2006Revenue
            
            $
            41,189
            
            $
            48,727Expenses
            
            $
            296,214
            
            $
            68,795Net
                Income (Loss)
            
            $
            (255,025
            )
            $
            (20,068
            )





Revenues
      for the period ending December 31, 2007 were $41,189 compared to $48,727 for
      the
      period ending December 31, 2006. There was a small decrease in the revenues
      between these two periods as result of the decrease in the price received for
      our natural gas production, along with a decrease in production volumes for
      2007, as shown in the chart below. (MCF stands for the price per thousand cubic
      feet of natural gas)





Ludwig State 36-1
            
            Share of
              Production
              Volumes
            
            Price
              Per
              MCF
            
            Share of
              Production
              Volumes
            
            Price
              Per
              MCF2007
            
            2006January
            
            
            426.94
            
            
            3.57
            
            
            446.33
            
            
            9.00February
            
            
            365.06
            
            
            3.53
            
            
            380.33
            
            
            5.80March
            
            
            397.24
            
            
            3.83
            
            
            434.36
            
            
            4.60April
            
            
            378.47
            
            
            3.50
            
            
            363.00
            
            
            3.75May
            
            
            370.43
            
            
            3.67
            
            
            389.81
            
            
            4.00June
            
            
            339.08
            
            
            3.80
            
            
            374.55
            
            
            3.15July
            
            
            348.36
            
            
            3.60
            
            
            399.30
            
            
            3.20August
            
            
            336.39
            
            
            2.95
            
            
            402.60
            
            
            3.33September
            
            
            309.58
            
            
            2.55
            
            
            380.33
            
            
            3.35October
            
            
            310.61
            
            
            3.07
            
            
            382.39
            
            
            2.25November
            
            
            265.03
            
            
            3.78
            
            
            394.35
            
            
            3.13December
            
            
            278.85
            
            
            4.06
            
            
            472.31
            
            
            4.12





Boucher
                27-1
            
            Share of
              Production
              Volumes
            
            Price
              Per
              MCF
            
            Share of
              Production
              Volumes
            
            Price
              Per
              MCF2007
            
            2006January
            
            
            297.83
            
            
            3.57
            
            
            590.70
            
            
            9.00February
            
            
            242.14
            
            
            3.53
            
            
            408.17
            
            
            5.80March
            
            
            262.14
            
            
            3.83
            
            
            422.19
            
            
            4.60April
            
            
            238.84
            
            
            3.50
            
            
            327.53
            
            
            3.75May
            
            
            222.13
            
            
            3.67
            
            
            373.73
            
            
            4.00June
            
            
            166.24
            
            
            3.80
            
            
            370.63
            
            
            3.15July
            
            
            190.58
            
            
            3.60
            
            
            370.84
            
            
            3.20August
            
            
            160.67
            
            
            2.95
            
            
            352.48
            
            
            3.33September
            
            
            139.01
            
            
            2.55
            
            
            341.14
            
            
            3.35October
            
            
            133.86
            
            
            3.07
            
            
            317.83
            
            
            2.25November
            
            
            95.91
            
            
            3.78
            
            
            278.64
            
            
            3.13December
            
            
            104.98
            
            
            4.06
            
            
            324.84
            
            
            4.12




14




B. Ag #25-1
            
            Share of
              Production
              Volumes
            
            Price
              Per
              MCF
            
            Share of
              ProductionVolumes
            
            Price
              Per
              MCF2007
            
            2006November
            
            
            21.45
            
            
            3.78
            
            
            0
            
            
            0December
            
            
            51.15
            
            
            4.06
            
            
            0
            
            
            0




Vandenbos #19-1
            
            Share of
              Production
              Volumes
            
            Price
              Per
              MCF
            
            Share of
              Production
              Volumes
            
            Price
              Per
              MCF2007
            
            2006November
            
            
            963.19
            
            
            3.78
            
            
            0
            
            
            0December
            
            
            1,897.09
            
            
            4.06
            
            
            0
            
            
            0





Majestic
      Oil & Gas Operations, Inc’s Net Share of the production volumes from the
      Ludwig State #36-1, Boucher #27-1, B. Ag #25-1 and Vandenbos #19-1 wells for
      period ending December 31, 2007 were 9,313 MCF compared to 9,298 MCF for period
      ending December 31, 2006. The production increased slightly in 2007, as a result
      of Majestic Oil & Gas, Inc’s participation in the drilling of two new wells
      being the B. Ag #25-1 and Vandenbos #19-1. The Company expects to see an
      increase in production volumes in 2008 due to these two new wells. The Company
      has plans to continue its development of oil and natural gas prospects in the
      Lake Frances area.





Our
      expenses increased by $227,419 from the $68,795 reported for the period ending
      December 31, 2006 compared to the $296,214 reported for the period ending
      December 31, 2007. There was a small decrease in the expense for taxes and
      royalties of $1,894 from the $12,249 reported for the period ending December
      31,
      2006 compared to the $10,355 reported for the period ending December 31,
      2007 **** due
      to a
      decrease in price per MCF. This is offset by a significant increase in legal,
      accounting and filing expenses of $173,036 from the $27,196 reported for the
      period ending December 31, 2006 compared to the $200,232 reported for the period
      ending December 31, 2007. The majority of the legal and accounting fees are
      a
      result of common stock issued to Michael Williams, Esq., a non-cash expense
      in
      the amount of $147,000 during the year ended December 31, 2007, for legal
      services, and audit fees paid to Gordon, Hughes & Banks, LLP for the audit
      of the 2006 financial statements and the review of our 2007 quarterly financial
      statements. Also included in this category are the expenses for filing on EDGAR
      the Company’s quarterly financial statements. The Company also incurred a
      one-time expense for options granted to a Director of the Company to purchase
      125,000 shares at $0.38 per share. The fair value of these options, $21,295,
      is
      recorded as a Stock compensation expense and additional paid in capital at
      the
      time the options were granted.


15




The
      Company showed a Net Loss of ($255,025) for the period ending December 31,
      2007.
      This compares to the Net Loss of ($20,068) for the period ending December 31,
      2006. The variance between these periods is directly related to the decrease
      in
      revenues and volumes during 2007, as well as the increase in expenses for the
      period. We expect to see an increase in revenues during 2008, as a result of
      the
      volumes expected from the two new wells. The Company continues to see an
      increasing trend in natural gas pricing as of the date of this
      report.





The
      Company also plans to continue its pursuit of oil prospects in the Lake Frances
      Area, which if successful, could contribute to an increase in future revenues
      due to the price per barrel of oil. With the price of crude oil reaching $110.00
      per barrel recently and natural gas escalating to $10.00 per MCF, Management
      is
      confident that we will build the Company through drilling oil and natural gas
      prospects.





*Drilling
      Activity*





The
      following table sets forth the results of our drilling activities during the
      years 2007 and 2006:





Drilling
                ActivityGross
                Wells
            
            Net
                WellsYear
            
            
            Total
            
            
            Producing
            
            
            Dry
            
            
            Total
            
            
            Producing
            
            
            Dry2007
            
            
            3
            
            
            2
            
            
            1
            
            
            0.75
            
            
            0.50
            
            
            0.252006
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -




*Net
      Production, Average Sales Price and Average Production Costs
      (Lifting)*





The
      table
      below sets forth the net quantities of oil and gas production (net of all
      royalties, overriding royalties and production due to others) attributable
      to
      the Company for the years 2007 and 2006, and the average sales price, and
      average production costs (including depreciation, depletion and amortization,
      lease operating costs and all associated taxes) on a per unit of production
      basis:





2007
            
            2006Net
                ProductionOil
                (Bbls)
            
            
            -
            
            
            -Gas
                (Mcf)
            
            
            9,313.2
            
            
            9,298.4Average
                Sales PricesOil
                (per Bbl)
            
            $
            -
            
            $
            -Gas
                (per Mcf)
            
            $
            3.31
            
            $
            3.92Average
                Production Cost Per equivalent Bbl of oil
            
            $
            20.36
            
            $
            20.38




LIQUIDITY
      AND RESOURCE CAPITAL





We
      are
      still a development stage company. From our inception to December 31, 2007,
      we
      incurred an accumulated deficit of ($555,134). This deficit is primarily the
      result of approximately $300,000 in expenses associated with stock issuances
      during fiscal year ended December 31, 2002, and $266,868 in legal, accounting
      and filing fees incurred since inception associated with be a publicly traded
      company. In addition, as of December 31, 2007, we had $77,329 of current cash
      available. Our cash resources of $77,329 are not sufficient to satisfy our
      cash
      requirements over the next 12 months.




16




We
      need
      an additional minimum of $1,000,000 to finance our planned expansion in the
      next
      12 months, which funds will be used for drilling of development oil and natural
      gas wells in the Lake Frances and Williams Fields. We hope to be able to raise
      additional funds from an offering of our stock in the future. However, this
      offering may not occur, or if it occurs, may not raise the required funding.
      We
      may also consider securing debt financing. We may not raise other equity or
      debt
      financing sufficient to fund this amount. If we don't raise or generate these
      funds, the implementation of our short-term business plan will be delayed or
      eliminated.





Our
      ability to continue as a going concern is dependent on our ability to raise
      funds to implement our planned development; however we may not be able to raise
      sufficient funds to do so. Our independent auditors have indicated that there
      is
      substantial doubt about our ability to continue as a going concern over the
      next
      twelve months. Our poor financial condition could inhibit our ability to achieve
      our business plan.





COMMITMENTS
      AND CONTINGENCIES





On
      July
      1, 2004, the Company entered into an operating agreement with Altamont Oil
&
Gas, Inc., through which Altamont Oil & Gas, Inc. will operate the wells in
      which we have acquired a working interest. Our share of monthly operating costs
      will be deducted from our monthly share of production revenue.





The
      Company acquired leases covering approximately 3,962.56 net acres of undeveloped
      land during 2007, for the purposes of future oil and gas development. This
      acreage is located in Pondera County, Montana in the vicinity of the Williams
      and Lake Frances Gas Fields. These leases remain in good standing with the
      term
      of the leases being for periods 3 or 5 years. Management considers the value
      of
      the properties to be as much or more than for what they were
      acquired.





During
      the Second Quarter 2007, the Company entered into a Farm-out Agreement with
      Altamont Oil & Gas, Inc and Numbers, Inc to conduct a 10-well natural gas
      development program. This development program is still pending and will involve
      the drilling of 5 wells in the Lake Frances Gas Field and 5 wells in the
      Williams Gas Field, located in Pondera County, Montana. The Lake Frances Field
      is located south of Valier, Montana just offsetting the Lake Frances reservoir.
      The Williams Field is located 7 miles east of the town of Valier, Montana.




17




**Item
      7. Financial Statements.**






**MAJESTIC
      OIL & GAS, INC. AND SUBSIDIARY**


**(A
      Development Stage Company)**





**CONSOLIDATED
      FINANCIAL STATEMENTS**


**YEARS
      ENDED DECEMBER 31, 2007 AND 2006,**


**AND**


**INCEPTION
      (APRIL 16, 2002) TO DECEMBER 31, 2007**









**MAJESTIC
      OIL & GAS, INC. AND SUBSIDIARY**


**(A
      Development Stage Company)**





Table
      of
      Contents










**Page****INDEPENDENT
                AUDITORS’ REPORT**
            F-1**CONSOLIDATED
                FINANCIAL STATEMENTS**Balance
                Sheets
            F-2Income
            F-3Changes
                in Stockholders’ Equity
            F-4Cash
                Flows
            F-5Notes
                to Consolidated Financial Statements
            F-6 through F-16**SUPPLEMENTAL
                INFORMATION**Disclosures
                about Oil and Gas Producing Activities and Properties -
                Unaudited
            F-17 through F-20









**Report
      of Independent Registered Public Accounting Firm**




To
      the
      Board of Directors and Stockholders


Majestic
      Oil and Gas, Inc.


(A
      development stage company)


Cut
      Bank,
      Montana





We
      have
      audited the consolidated balance sheets of Majestic Oil and Gas, Inc. (a
      development stage company - the “Company”) as of December 31, 2007 and 2006 and
      the related consolidated statements of operations, stockholders’ equity, and
      cash flows for the years ended December 31, 2007 and 2006 and for the cumulative
      period from Inception (April 16, 2002) to December 31, 2007. These financial
      statements are the responsibility of the Company’s management. Our
      responsibility is to express an opinion on these financial statements based
      on
      our audits.





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





In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the consolidated financial position of Majestic Oil and
      Gas
      Inc. as of December 31, 2007 and 2006, and the consolidated results of their
      operations and cash flows for the years ended December 31, 2007 and 2006 and
      for
      the cumulative period from Inception (April 16, 2002) to December 31, 2007
      in
      conformity with accounting principles generally accepted in the United States
      of
      America.





The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern. As discussed in Note 1, the Company has
      incurred losses since inception and has only recently commenced principal
      operations. These factors, among others, raise substantial doubt about the
      Company’s ability to continue as a going concern. Management’s plans in regard
      to these matters are described in Note 1. The financial statements do not
      include any adjustments that might result from the outcome of this
      uncertainty.




***Gordon,
      Hughes & Banks, LLP***




Greenwood
      Village, Colorado


March
      14,
      2008





F-1




**MAJESTIC
      OIL & GAS, INC. AND SUBSIDIARY**


**(A
      Development Stage Company)**


**CONSOLIDATED
      BALANCE SHEETS**


**DECEMBER
      31, 2007 AND 2006**







**2007**
            
            2006**ASSETS**Cash
                and cash equivalents
            
            **$**
            **77,329**
            
            $
            189,304Trade
                receivables
            
            
            **17,641**
            
            
            8,444Total
                current assets
            
            
            **94,970**
            
            
            197,748**PROPERTY
                AND EQUIPMENT**Oil
                and gas properties, using the full cost pool method of
                accounting:Properties
                being amortized
            
            
            **325,051**
            
            
            192,187Properties
                not subject to amortization
            
            
            **124,526**
            
            
            -Less
                accumulated depletion, amortization and impairment
            
            
            **(68,800**
            **)**
            
            (50,500
            )Net
                property and equipment
            
            
            **380,777**
            
            
            141,687**OTHER
                ASSETS**Website
                development costs (less accumulated amortization)
            
            
            **2,080**
            
            
            -Total
                other assets
            
            
            **2,080**
            
            
            -Total
                assets
            
            **$**
            **477,827**
            
            $
            339,435**LIABILITIES**Accounts
                payable
            
            **$**
            **538**
            
            $
            3,319Production
                taxes and royalties payable
            
            
            **4,435**
            
            
            12,225Total
                current liabilities
            
            
            **4,973**
            
            
            15,544Asset
                retirement obligation
            
            
            **3,193**
            
            
            -Total
                liabilities
            
            
            **8,166**
            
            
            15,544**STOCKHOLDERS'
                EQUITY**Common
                  stock, no par value-Authorized, 100,000,000 shares Issued and
                  outstanding, 7,508,000 in 2007 and 6,240,000 shares in
                  2006
            
            
            **1,005,500**
            
            
            624,000Additional
                paid in capital
            
            
            **21,295**
            
            
            -Stock
                subscription receivable
            
            
            **(2,000**
            **)**
            
            -(Deficit)
                accumulated during the development stage
            
            
            **(555,134**
            **)**
            
            (300,109
            )**469,661**
            
            
            323,891Total
                liabilities and stockholders' equity
            
            **$**
            **477,827**
            
            $
            339,435





See
      notes
      to consolidated financial statements.





F-2




**MAJESTIC
      OIL & GAS, INC. AND SUBSIDIARY**


**(A
      Development Stage Company)**


**CONSOLIDATED
      STATEMENTS OF INCOME**


**YEARS
      ENDED DECEMBER 31, 2007 AND 2006,**


**AND
      THE PERIOD FROM INCEPTION (APRIL 16, 2002) TO DECEMBER 31,
      2007**







**Inception****Year Ended**
            
            Year Ended
            
            **(April 16, 2002)****December 31,**
            
            December 31,
            
            **to December 31,****2007**
            
            2006
            
            **2007****REVENUE**
            
            **$**
            **41,189**
            
            $
            48,727
            
            **$**
            **296,596****PRODUCTION
                (LIFTING) COSTS**
            
            
            **12,885**
            
            
            15,091
            
            
            **91,951****EXPLORATION
                EXPENSES**
            
            
            **2,362**
            
            
            -
            
            
            **3,862****DEPLETION,
                DEPRECIATION, AMORTIZATION & IMPAIRMENT**
            
            
            **18,720**
            
            
            16,500
            
            
            **69,220****INCOME
                FROM OIL & GAS PRODUCING ACTIVITIES**
            
            
            **7,222**
            
            
            17,136
            
            
            **131,563****SELLING,
                GENERAL & ADMINISTRATIVE EXPENSES**
            
            
            **262,247**
            
            
            37,204
            
            
            **686,697****NET
                LOSS**
            
            **$**
            **(255,025**
            **)**
            $
            (20,068
            )
            **$**
            **(555,134**
            **)****EARNINGS
                PER SHARE**Net
                income (loss), basic and diluted
            
            **$**
            **(0.04**
            **)**
            $
            (0.00
            )Weighted
                average number of shares outstanding
            
            
            **6,715,595**
            
            
            6,240,000Dilutive
                potential shares-stock warrants
            
            
            **-**
            
            
            -Adjusted
                weighted average shares
            
            
            **6,715,595**
            
            
            6,240,000





See
      notes
      to consolidated financial statements.




F-3




**MAJESTIC
      OIL & GAS, INC. AND SUBSIDIARY**


**(A
      Development Stage Company)**


**CONSOLIDATED
      STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY**


**YEARS
      ENDED DECEMBER 31, 2007 AND 2006,**


**AND
      THE PERIOD FROM INCEPTION (APRIL 16, 2002) TO DECEMBER 31,
      2007**









(Deficit)AccumulatedAdditional
              
              Stock
              
              DuringCommon
                    Stock
              
              Paid
                  In
              
              Subscription
              
              DevelopmentShares
              
              Amount
              
              Capital
              
              Receivable
              
              Stage
              
              Total**BEGINNING
                    BALANCE, INCEPTION (APRIL 16, 2002) TO **DECEMBER
                    31, 2005****
              
              
              -
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              -Common
                  stock issued
              
              
              6,240,000
              
              
              624,000
              
              
              -
              
              
              -
              
              
              -
              
              
              624,000Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (280,041
              )
              
              (280,041
              )**BALANCE,
                  DECEMBER 31, 2005**
              
              
              6,240,000
              
              
              624,000
              
              
              -
              
              
              -
              
              
              (280,041
              )
              
              343,959Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (20,068
              )
              
              (20,068
              )**BALANCE,
                  DECEMBER 31, 2006**
              
              
              6,240,000
              
              
              624,000
              
              
              -
              
              
              -
              
              
              (300,109
              )
              
              323,891Common
                  stock issued for services
              
              
              330,000
              
              
              147,000
              
              
              -
              
              
              -
              
              
              -
              
              
              147,000Warrants
                  exercised
              
              
              938,000
              
              
              234,500
              
              
              -
              
              
              (2,000
              )
              
              -
              
              
              232,500Common
                  stock options issued
              
              
              -
              
              
              -
              
              
              21,295
              
              
              -
              
              
              -
              
              
              21,295Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (255,025
              )
              
              (255,025
              )**BALANCE,
                  DECEMBER 31, 2007**
              
              
              **7,508,000**
              
              **$**
              **1,005,500**
              
              **$**
              **21,295**
              
              **$**
              **(2,000**
              **)**
              **$**
              **(555,134**
              **)**
              **$**
              **469,661**





See
      notes
      to consolidated financial statements.




F-4




**MAJESTIC
      OIL & GAS, INC. AND SUBSIDIARY**


**(A
      Development Stage Company)**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**YEARS
      ENDED DECEMBER 31, 2007 AND 2006,**


**AND
      THE PERIOD FROM INCEPTION (APRIL 16, 2002) TO DECEMBER 31,
      2007**




**Inception****(April 16, 2002)****Year
                  Ended**
              
              Year
                  Ended
              
              **to****December
                  31,**
              
              December
                  31,
              
              **December
                  31,****2007**
              
              2006
              
              **2007****OPERATING
                  ACTIVITIES**Net
                  income (loss)
              
              **$**
              **(255,025**
              **)**
              $
              (20,068
              )
              **$**
              **(555,134**
              **)**Changes
                    and credits to net income (loss) not affecting cash Depletion
                    and
                    amortization
              
              
              **18,720**
              
              
              16,500
              
              
              **69,220**Organizational
                    expenses paid with stock
              
              
              **-**
              
              
              -
              
              
              **300,000**Legal
                  fees paid with stock
              
              
              **147,000**
              
              
              -
              
              
              **172,000**Stock
                  compensation expense
              
              
              **21,295**
              
              
              -
              
              
              **21,295**Changes
                  in assets and liabilitiesTrade
                  receivables
              
              
              **(9,197**
              **)**
              
              24,265
              
              
              **(17,641**
              **)**Accounts
                  payable
              
              
              **(2,781**
              **)**
              
              3,319
              
              
              **538**Production
                    taxes and royalties payable
              
              
              **(7,790**
              **)**
              
              2,556
              
              
              **4,435****NET
                    CASH (USED) PROVIDED BY OPERATING
                    ACTIVITIES**
              
              
              **(87,778**
              **)**
              
              26,572
              
              
              **(5,287**
              **)****INVESTING
                  ACTIVITIES**Website
                  development
              
              
              **(2,500**
              **)**
              
              -
              
              
              **(2,500**
              **)**Additions
                  to property and equipment
              
              
              **(254,197**
              **)**
              
              -
              
              
              **(286,384**
              **)****NET
                    CASH (USED) BY INVESTING ACTIVITIES**
              
              
              **(256,697**
              **)**
              
              -
              
              
              **(288,884**
              **)****FINANCING
                  ACTIVITIES**Proceeds
                    from issuance of common stock
              
              
              **232,500**
              
              
              -
              
              
              **371,500****NET
                    CASH PROVIDED BY FINANCING ACTIVITIES**
              
              
              **232,500**
              
              
              -
              
              
              **371,500****NET
                    CHANGE IN CASH AND CASH EQUIVALENTS**
              
              
              **(111,975**
              **)**
              
              26,572
              
              
              **77,329****CASH
                    AND CASH EQUIVALENTS AT BEGINNING OF PERIOD**
              
              
              **189,304**
              
              
              162,732
              
              
              **-****CASH
                    AND CASH EQUIVALENTS AT END OF PERIOD**
              
              **$**
              **77,329**
              
              $
              189,304
              
              **$**
              **77,329**




See
      notes to consolidated financial
      statements.




F-5




**MAJESTIC
      OIL & GAS, INC. AND SUBSIDIARY**


**(A
      Development Stage Company)**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**DECEMBER
      31, 2007 AND 2006**







**NOTE
      1 -**  **BUSINESS
      ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES**





*Principal
      Business Activity and Principles of Consolidation*





The
      accompanying consolidated financial statements include the accounts of Majestic
      Oil & Gas, Inc. and its wholly owned subsidiary, Grizzly Energy, Inc. All
      material inter-company transactions and balances between the entities have
      been
      eliminated.





Majestic
      Oil & Gas, Inc. (Company) is a development stage enterprise and its
      operations consist of oil and natural gas development and production in the
      Rocky Mountain region. The financial statements and notes to the financial
      statements are the representation of the Company’s management, who is
      responsible for their integrity and objectivity. The accounting polices of
      the
      Company are in accordance with generally accepted accounting principles and
      conform to the standards applicable to development stage
      enterprises.





*Going
      Concern*





The
      Company is in the development stage and has incurred losses since its inception
      that have resulted in an accumulated deficit. Also, management of the Company
      believes it will require additional financing that it has not yet secured in
      order to emerge from the development stage. These factors raise substantial
      doubt about the Company’s ability to continue as a going concern. Management
      intends to vigorously pursue financing either from creditors or from a future
      stock offering. However, such financing may not occur, or if it does occur,
      may
      not raise sufficient funds to emerge from the development stage. The Company’s
      financial statements do not include any adjustments related to the realization
      of the carrying value of assets or the amounts and classification of liabilities
      that might be necessary should the Company be unable to continue in
      existence.





*Estimates*





The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires management to make estimates and assumptions
      that
      affect certain reported amounts and disclosures. Those estimates and assumptions
      affect the reported amounts of assets and liabilities, the disclosure of
      contingent assets and liabilities, and the reported revenue and expenses. Actual
      results could differ from these estimates.





The
      oil
      and gas industry is subject, by its nature, to environmental hazards and clean
      up costs. At this time, management knows of no substantial losses from
      environmental accidents or events for which the Company may be currently
      liable.





*Income
      Taxes*





Income
      taxes are provided for the tax effects of transactions reported in the financial
      statements and consist of taxes currently due plus deferred taxes related
      primarily to differences between financial and income tax reporting. The
      deferred tax assets and liabilities, if any, represent the future tax return
      consequences of those differences, which will either be taxable or deductible
      when the assets and liabilities are recovered or settled.






F-6




**MAJESTIC
        OIL & GAS, INC. AND SUBSIDIARY**
 **(A
        Development Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2007 AND 2006**


Effective
      January 1, 2007, the Company adopted the provisions of Financial Accounting
      Standards Board (FASB) Interpretation No. 48 (“FIN 48”), “Accounting for
      Uncertainty in Income Taxes — An Interpretation of FASB Statement No. 109.” FIN
      48 provides detailed guidance for the financial statement recognition,
      measurement and disclosure of uncertain tax positions recognized in the
      financial statements in accordance with SFAS No. 109. Tax positions must meet
      a
“more-likely-than-not” recognition threshold at the effective date to be
      recognized upon the adoption of FIN 48 and in subsequent periods. Upon the
      adoption of FIN 48, the Company had no unrecognized tax benefits. During the
      year ended December 31, 2007, the Company recognized no adjustments for
      uncertain tax benefits.





Deferred
      income tax assets, if any, are adjusted by a valuation allowance, if necessary,
      to recognize future tax benefits only to the extent, based on available
      evidence, it is more likely than not such benefits will be realized. The Company
      would recognize interest and penalties, if any, related to uncertain tax
      positions in general and administrative expenses. No interest and penalties
      related to uncertain tax positions were accrued at December 31, 2007. The
      Company expects no material changes to unrecognized tax positions within the
      next twelve months.




*Cash
      Equivalents*





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





*Trade
      Receivables*





The
      Company is subject to credit risk associated with the purchases of its produced
      natural gas. Exposure to this risk is controlled through credit approvals and
      monitoring procedures. Collateral is not required. The Company believes all
      trade receivables currently outstanding are collectible, accordingly, no
      allowance for doubtful accounts has been established.





*Concentrations
      of Credit Risk*





The
      Company’s cash balance is maintained in a single financial institution. Also,
      the Company’s receivables are due from entities within the oil & gas
      industry and are dependent on the general economic conditions of the industry.
      The receivables are not collateralized.





*Fair
      Value of Financial Instruments*





The
      Company’s financial instruments consist of primarily of trade receivables,
      accounts payable and accrued production taxes and royalties. The carrying amount
      of trade receivables, accounts payable and accrued production taxes and
      royalties approximates its fair value because of the short-term maturity of
      such
      instruments




F-7


**MAJESTIC
        OIL & GAS, INC. AND SUBSIDIARY**
 **(A
        Development Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2007 AND 2006**




*Impairment
      of Long-Lived Assets*





Long-lived
      assets and identifiable intangibles are reviewed for impairment whenever events
      or changes in circumstances indicate that the carrying amount may not be
      recoverable. If the expected undiscounted future cash flows from the use of
      the
      assets and their eventual disposition is less than the carrying amount of the
      assets, an impairment loss is recognized and measured using the assets’ fair
      value or discounted cash flows.





*Earnings
      per Share of Common Stock*





Basic
      earnings per share is determined in accordance with Statement of Financial
      Accounting Standard (SFAS) No. 128 using net income divided by the weighted
      average shares outstanding during the period. Diluted earnings per share is
      computed by dividing net income by the weighted average shares outstanding,
      assuming all dilutive potential common shares were issued. The effect of
      outstanding common stock warrants was anti-dilutive for 2007 and
      2006.





*Oil
      and Gas Properties*





The
      Company utilizes the full cost method of accounting for oil and gas properties.
      Accordingly, all costs associated with the acquisition, exploration and
      development of oil and gas reserves (including costs of abandoned leaseholds,
      delay lease rentals, dry hole costs, geological and geophysical costs, certain
      internal costs associated directly with acquisition, drilling and well equipment
      inventory, exploration and development activities, estimated dismantlement
      and
      abandonment costs, site restoration and environmental exit costs, etc.) are
      capitalized.





All
      capitalized costs of oil and gas properties, net of estimated salvage values,
      plus the estimated future costs to develop proved reserves, are amortized on
      the
      unit-of-production method using estimates of proved reserves. Investments in
      unproved properties and major development projects are not amortized until
      proved reserves associated with the projects can be determined or until
      impairment occurs. If the results of an assessment indicate that the properties
      are impaired, the amount of the impairment is added to the capitalized costs
      to
      be amortized.





In
      addition, the capitalized costs are subject to a “ceiling test” which basically
      limits such costs to the aggregate of the “estimated present value,” discounted
      at a 10-percent interest rate, of future net revenues from proved reserves,
      based on current economic and operating conditions, plus the lower of cost
      or
      fair market value of unproved properties.





Gains
      or
      losses are not recognized upon the sale or other disposition of oil and gas
      properties, unless the sale represents a significant portion of oil and gas
      interests and the gain significantly alters the relationship between capitalized
      costs and proved oil and gas reserves of the cost center.




F-8


**MAJESTIC
        OIL & GAS, INC. AND SUBSIDIARY**
 **(A
        Development Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2007 AND 2006**


*Website
      Development Costs*





The
      Company has capitalized the costs associated with development of its website,
      and is amortizing the cost over a three year period.





*Asset
      Retirement Obligations*





The
      Company follows SFAS No. 143 “Accounting for Asset Retirement Obligations”. SFAS
      No. 143 addresses financial accounting and reporting for obligations associated
      with the retirement of tangible long-lived assets and the associated asset
      retirement costs. SFAS No. 143 requires recognition of the present value of
      obligations associated with the retirement of tangible long-lived assets in
      the
      period in which it is incurred. The liability is capitalized as part of the
      related asset’s carrying amount. Over time, accretion of the liability is
      recognized as an operating expense and the capitalized cost is depreciated
      over
      the expected useful life of the related asset. The Company’s retirement
      obligations related to plugging, dismantlement, removal, site reclamation and
      similar activities of its oil and gas exploration activities.





*Revenue
      Recognition*





Revenue
      from the sale of oil and gas production is recognized at the time of delivery
      of
      the product to the purchaser.





*Stock
      Based Compensation*





The
      Company accounts for stock based compensation in accordance with SFAS No.123(R),
      “Share-Based Payment,” which specifies the revised accounting alternative
      requirements for pre-2006 stock based compensation grants existing at
      January 1, 2006 and the required accounting for new grants starting
      January 1, 2006.





The
      Company values its stock options awarded on or after January 1, 2006 at the
      fair value at grant date using the Black-Scholes option pricing model.
      Compensation expense for stock options is recorded over the vesting period
      on a
      straight line basis. Compensation paid in vested stock is valued at the fair
      value at the applicable measurement date and charged to expense at that date.
      The Company did not make any stock option awards prior to January 1,
      2006.





During
      the year ended December 31, 2007, the Company incurred a one-time expense for
      options granted to a Director of the Company to purchase 125,000 shares at
      $0.38
      per share. The fair value of these options, $21,295, was recorded as stock
      compensation expense and additional paid in capital at the time the options
      were
      granted. The fair value of these options was estimated on the date of grant
      using the Black-Scholes valuation model. The key input variables used in valuing
      these options granted in 2007 were: risk-free interest rate 5.1%; dividend
      yield
      of zero; stock price volatility of 165% based on historical volatility of the
      Company’s stock; and expected option lives of one half year based on stated life
      of the options and future expectations.




F-9


**MAJESTIC
        OIL & GAS, INC. AND SUBSIDIARY**
 **(A
        Development Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2007 AND 2006**




*Recently
      Issued Accounting Pronouncements*




On
      December 4, 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
      Consolidated Financial Statements – an amendment of ARB No. 51.” This
      Statement changes the accounting and reporting for noncontrolling interests
      in
      consolidated financial statements. A noncontrolling interest, sometimes referred
      to as a minority interest, is the portion of equity in a subsidiary not
      attributable, directly or indirectly, to a parent.




Specifically,
      SFAS No. 160 establishes accounting and reporting standards that require (i)
      the
      ownership interests in subsidiaries held by parties other than the parent be
      clearly identified, labeled, and presented in the consolidated balance sheet
      within equity, but separate from the parent’s equity; (ii) the equity amount of
      consolidated net income attributable to the parent and to the noncontrolling
      interest be clearly identified and presented on the face of the consolidated
      income statement (consolidated net income and comprehensive income will be
      determined without deducting minority interest, however, earnings-per-share
      information will continue to be calculated on the basis of the net income
      attributable to the parent’s shareholders); and (iii) changes in a parent’s
      ownership interest while the parent retains its controlling financial interest
      in its subsidiary be accounted for consistently and similarly—as equity
      transactions.




This
      Statement is effective for fiscal years, and interim period within those fiscal
      years, beginning on or after December 15, 2008. Early adoption is not permitted.
      SFAS No. 160 shall be applied prospectively as of the beginning of the fiscal
      year in which it is initially applied, except for its presentation and
      disclosure requirements, which shall be applied retrospectively for all periods
      presented. The Company is currently evaluating the impact that this statement
      may have on its consolidated financial statements.




In
      December 2007, the Securities and Exchange Commission issued SAB 110, “Certain
      Assumptions Used in Valuation Methods,” which extends the use of the
      "simplified" method, under certain circumstances, in developing an estimate
      of
      expected term of "plain vanilla" share options in accordance with SFAS No.
      123R.
      Prior to SAB 110, SAB 107 stated that the simplified method was only available
      for grants made up to December 31, 2007. The Company is currently evaluating
      the
      impact that this statement may have on its consolidated financial
      statements.





In
      December 2006, the FASB issued Statement of Financial Accounting Standards
      (“SFAS”) No. 159, “The Fair Value Option for Financial Assets and Financial
      Liabilities – Including an amendment of FASB Statement No. 115.” This statement
      provides all entities with an option to report selected financial assets and
      liabilities at fair value. The statement is effective as of the beginning of
      an
      entity’s first fiscal year beginning after November 15, 2007, with early
      adoption available in certain circumstances. The Company is currently evaluating
      the impact that this statement may have on its consolidated financial
      statements.




F-10


**MAJESTIC
        OIL & GAS, INC. AND SUBSIDIARY**
 **(A
        Development Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2007 AND 2006**




**NOTE
      2 -**  **ORGANIZATION
      AND DEVELOPMENT OF THE COMPANY**




The
      Company was formed on April 16, 2002 as a corporation. The Company is a
      development stage enterprise and it is management’s intention that operations
      will ultimately consist of oil and natural gas development and production in
      the
      Rocky Mountain region. The accompanying financial statements reflect
      organizational activities and limited oil and gas development and production
      activities and they are not necessarily indicative of what the financial
      statements will reflect once the intended operations of the Company are fully
      underway.





The
      Company is currently traded on the Over the Counter Bulletin Board under the
      symbol MJOG.OB.





**NOTE
      3 -**  **NON-CASH
      TRANSACTIONS AND BUSINESS COMBINATION**





During
      the year ended December 31, 2007, the Company issued a total of 330,000 shares
      of its common stock to Michael Williams, Esq. in payment of ongoing legal fees
      associated with compliance with securities law. This resulted in a $147,000
      charge to legal expense during the year ended December 31, 2007.





The
      Company follows SFAS No. 143 “Accounting for Asset Retirement Obligations”. SFAS
      No. 143 addresses financial accounting and reporting for obligations associated
      with the retirement of tangible long-lived assets and the associated asset
      retirement costs. SFAS No. 143 requires recognition of the present value of
      obligations associated with the retirement of tangible long-lived assets in
      the
      period in which it is incurred. As of December 31, 2007, an asset retirement
      obligation of $3,193 was recorded, and a corresponding amount was added to
      the
      full cost pool. No accretion expense was recorded for the year ended December
      31, 2007, as it was not considered to be significant. As of December 31, 2006,
      the estimated future cost to plug and abandon the Company’s gas wells was not
      significant and, accordingly, no asset retirement obligation was
      recorded.





**NOTE
      4 -**  **COMMON
      STOCK WARRANTS**





The
      Company issued common stock warrants to the stockholders that purchased common
      stock from the Company for cash. These warrants entitle the holders to purchase
      additional shares of common stock from the Company for $0.25 per share. During
      the year ended December 31, 2007, a total of 938,000 of the 1,390,000 warrants
      issued and outstanding were exercised for a total of $234,500. As of December
      31, 2007, $2,000 remained to be collected, and is reflected as a stock
      subscription receivable. The remaining 452,000 warrants expired.





The
      warrants were issued 1:1 for each common share purchased for cash as follows:
      during the years ended December 31, 2007 and 2006 no warrants were issued,
      and
      during the period from inception (April 16, 2002) through December 31, 2007
      a
      total of 1,390,000 warrants were issued.




F-11




**MAJESTIC
      OIL & GAS, INC. AND SUBSIDIARY**


**(A
      Development Stage Company)**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**DECEMBER
      31, 2007 AND 2006**





**NOTE
      5 -**  **RELATED
      PARTY TRANSACTIONS**





Altamont
      Oil & Gas, Inc. (Altamont), an entity related through common ownership and
      management, is the operator of the wells in which the Company owns its working
      interests. As the operator of the wells, Altamont is responsible for remitting
      production taxes to the taxing authorities and royalty payments to the royalty
      interest owners. Currently, all revenue earned by the Company is received from
      Altamont. As of December 31, 2007, the Company had an outstanding receivable
      from Altamont of $17,641 for gas sales, and a payable to Altamont of $4,435
      for
      production taxes and royalties.





During
      2007, the Company entered into a Farm-out Agreement with Altamont Oil & Gas,
      Inc and Numbers, Inc., an entity related through common ownership and
      management, to conduct a 10-well natural gas development program. This
      development program is still pending and will involve the drilling of 5 wells
      in
      the Lake Frances Gas Field and 5 wells in the Williams Gas Field, located in
      Pondera County, Montana. The Lake Frances Field is located south of Valier,
      Montana just offsetting the Lake Frances reservoir. The Williams Field is
      located 7 miles east of the town of Valier, Montana.





**NOTE
      6 -**  **INCOME
      TAXES**





The
      effective income tax rate differs from the U.S. Federal statutory income tax
      rate due to the following:





**2007**
            
            2006Federal
                statutory income tax rate
            
            
            **34.00**
            **%**
            
            34.00
            %State
                income tax rate
            
            
            **6.75**
            **%**
            
            6.75
            %Permanent
                differencesValuation
                allowance
            
            
            **-40.75**
            **%**
            
            **-40.75**
            **%**Effective
                tax rate
            
            
            **0.00**
            **%**
            
            0.00
            %





The
      principal sources of temporary differences resulting in deferred tax assets
      and
      deferred tax liabilities are as follows:





Deferred
                tax assetsFederal
                and state net operating loss carryovers
            
            **$**
            **93,900**
            
            $
            44,900Organizational
                costs
            
            
            **7,400**
            
            
            12,500Total
                deferred tax assets
            
            
            **101,300**
            
            
            57,400Deferred
                tax liabilitiesOil
                and gas properties and related equipment
            
            
            **(59,600**
            **)**
            
            (54,400
            )Total
                deferred tax liabilities
            
            
            **(59,600**
            **)**
            
            (54,400
            )Net
                deferred tax asset
            
            
            **41,700**
            
            
            3,000Less:
                Valuation allowance
            
            
            **(41,700**
            **)**
            
            (3,000
            )Deferred
                tax liability
            
            **$**
            **-**
            
            $
            -


F-12




**MAJESTIC
      OIL & GAS, INC. AND SUBSIDIARY**


**(A
      Development Stage Company)**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**DECEMBER
      31, 2007 AND 2006**





During
      the years ended December 31, 2007 and 2006, the Company recorded valuation
      allowances that reduced the total deferred tax assets to zero. Realization
      of
      deferred tax assets is dependent upon sufficient future taxable income during
      the period that the carry-forwards are expected to be available to reduce
      taxable income. Because the Company is in the development stage, and may not
      achieve its desired level of profitability in its intended area of operation,
      a
      valuation allowance has been established that reduces the deferred tax asset
      to
      zero in all periods presented. There was no other activity in the valuation
      allowance during the years ended December 31, 2007 and 2006, or during the
      period from inception (April 16, 2002) to December 31, 2007.





Operating
      loss carry-forwards total approximately $244,000 as of December 31, 2007 and
      for
      tax purposes expire in the years 2026 through 2027.





**NOTE
      7 -**  **STOCK
      OPTIONS**





Although
      the Company does not have a formal stock option plan, all options granted in
      the
      past have been approved by the Board of Directors.





The
      Company granted a non-qualified stock option to buy 125,000 shares at $0.38
      per
      share to a member of the Company’s Board of Directors on August 9, 2007. Those
      options expire on August 9, 2008 and were 100% vested as of the grant date.
      The
      Company recorded a total of $21,295 for stock compensation expense.





The
      following table presents the stock options outstanding at December
      31:





Weighted
                AverageShares
            
            Exercise
                PriceOutstanding
                at January 1, 2007
            
            
            -
            
            $
            -Granted
            
            
            125,000
            
            
            0.38Exercised
            
            
            -
            
            
            -Forfeited
            
            
            -
            
            
            -Outstanding
                at December 31, 2007
            
            
            125,000
            
            $
            0.38Exercisable
                at December 31, 2007
            
            
            125,000
            
            $
            0.38





**NOTE
      8 -**  **COMMITMENTS
      AND CONTINGENCIES**





On
      July
      1, 2004, the Company entered into an operating agreement with Altamont Oil
&
Gas, Inc., through which Altamont Oil & Gas, Inc. will operate the wells in
      which the Company has acquired a working interest. The payments received by
      the
      Company for its share of monthly production revenue from Altamont Oil & Gas,
      Inc. are net of its share of monthly operating costs and production royalty
      payments, both of which are paid directly by Altamont Oil & Gas,
      Inc.


F-13


**MAJESTIC
      OIL & GAS, INC. AND SUBSIDIARY**


**(A
      Development Stage Company)**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**DECEMBER
      31, 2007 AND 2006**




**NOTE
      9 -**  **OIL
      AND GAS PROPERTY ACQUISITIONS**





During
      the year ended December 31, 2007 the Company entered into a Farm-out Agreement
      with Altamont and Numbers, Inc., an entity whose owner is a member of the Board
      of Directors of the Company, to drill a 10-well natural gas development program.
      This development program will involve the drilling of 5 wells in the Lake
      Frances Gas Field and 5 wells in the Williams Gas Field, located in Pondera
      County, Montana. The Lake Frances Field is located south of Valier, Montana
      just
      offsetting the Lake Frances reservoir. The Williams Field is located 7 miles
      east of the town of Valier, Montana. The locations for the development program
      were determined from information gathered from a geological and engineering
      study. The surveying of each location and the permitting of each drill site
      with
      the Montana Board of Oil & Gas is currently being completed. The Company
      will receive 100% of the revenues until the drilling and completion costs have
      been recovered, at which time the Company's interest will revert to
      50%.




The
      Company participated in a drilling program during the month of October 2007.
      As
      part of this drilling program, the Company has a 25% working interest in the
      B.
      Ag 25-1 well, a 25% working interest in the Vandenbos 19-1 well and a 12.5%
      working interest in the Vandenbos 19-2 well, all of which are in Pondera County,
      Montana. The B. Ag 25-1 well and the Vandenbos 19-1 well are producing gas
      wells. The Vandenbos 19-2 well was a dry hole.





The
      Company acquired a variety of oil and gas leases during the year ended December
      31, 2007, both from unrelated third parties and from Altamont. These leases
      are
      for future oil and gas development and are not part of any current drilling
      program. The amount paid to Altamont was the same amount originally paid by
      Altamont to acquire the leases.





On
      June
      10, 2004, the Company acquired a 25% working interest the Boucher 27-1 well
      in
      Pondera County, Montana from an unrelated third party for $32,187. The Boucher
      27-1 well is a producing gas well.





On
      July
      1, 2004, the Company acquired 100% of the outstanding stock of Grizzly Energy,
      Inc. from Altamont Oil & Gas, Inc., an entity related through common
      ownership and management. Grizzly Energy, Inc. was acquired in a stock-for-stock
      exchange where 100% of the outstanding shares of Grizzly Energy, Inc. were
      acquired for 1,600,000 shares of the Company. Grizzly Energy, Inc. owns a 25%
      working interest in the State 36-1 well, a producing gas well in Pondera County,
      Montana.


F-14




**MAJESTIC
      OIL & GAS, INC. AND SUBSIDIARY**


**(A
      Development Stage Company)**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**DECEMBER
      31, 2007 AND 2006**





Net
      capitalized costs related to the Company’s oil and gas producing activities are
      summarized as follows as of December 31, 2007 and 2006:





**2007**
            
            2006Proved
                properties:Capitalized
                costs
            
            **$**
            **325,051**
            
            $
            192,187Less
                accumulated depletion, depreciation, amortization and
                impairment
            
            
            **(68,800**
            **)**
            
            (50,500
            )Net
                capitalized costs - proved properties
            
            **$**
            **256,251**
            
            $
            141,687Unproved
                propertiesCapitalized
                costs
            
            
            **124,526**
            
            
            -Net
                capitalized costs
            
            **$**
            **380,777**
            
            $
            141,687





Under
      the
      full cost method, depletion is computed on the units of production method based
      on proved reserves, or upon reasonable estimates where proved reserves have
      not
      been established due to the recent commencement of production. Depletion expense
      recognized was $18,300 and $16,500 for the years ended December 31, 2007 and
      2006, respectively.




The
      unproved properties include a variety of lease acquisitions in Pondera County,
      and costs associated with an exploratory oil well in Pondera County which has
      not been completed. These capitalized costs associated with unproved properties
      have been excluded from amortization, and we do not know when they will be
      complete and added to the amortization base.





The
      Company follows SFAS No. 143 “Accounting for Asset Retirement Obligations”. SFAS
      No. 143 addresses financial accounting and reporting for obligations associated
      with the retirement of tangible long-lived assets and the associated asset
      retirement costs. SFAS No. 143 requires recognition of the present value of
      obligations associated with the retirement of tangible long-lived assets in
      the
      period in which it is incurred. As of
      December 31, 2007, an asset retirement obligation of $3,193 was recorded, and
      a
      corresponding amount was added to the full cost pool. No accretion expense
      was
      recorded for the year ended December 31, 2007, as it was not considered to
      be
      significant. As of December 31, 2006, the estimated future cost to plug and
      abandon the Company’s gas wells was not significant and, accordingly, no asset
      retirement obligation was recorded. The estimated liability is based on
      historical experience in plugging and abandoning wells, estimated cost to plug
      and abandon wells in the future and federal and state regulatory requirements.


F-15


**MAJESTIC
      OIL & GAS, INC. AND SUBSIDIARY**


**(A
      Development Stage Company)**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**DECEMBER
      31, 2007 AND 2006**





The
      following table presents the Company’s current asset retirement obligation
      activity in 2007:





Asset
                retirement obligations at January 1, 2007
            
            $
            -Liabilities
                incurred during the year
            
            
            3,193Liabilities
                settled during the year
            
            
            -Accretion
                expense
            
            
            -Asset
                retirement obligations at December 31, 2007
            
            $
            3,193





The
      Company’s results of operations from oil and gas producing activities (excluding
      corporate overhead and financing costs) are presented below for the years ended
      December 31, 2007, 2006 and the period from April 16, 2002 (Inception) to
      December 31, 2007:





**Period
                From****Year**
            
            Year
            
            **Inception****Ended**
            
            Ended
            
            **(April 16, 2002)****December 31,**
            
            December 31,
            
            **to****2007**
            
            2006
            
            **December 31, 2007**Oil and gas sales
            
            **$**
            **41,189**
            
            $
            48,727
            
            **$**
            **296,596**Production
                costs
            
            
            **(12,885**
            **)**
            
            (15,091
            )
            
            **(91,951**
            **)**Depletion,
                depreciation and amortization
            
            
            **(18,300**
            **)**
            
            (16,500
            )
            
            **(68,800**
            **)****10,004**
            
            
            17,136
            
            
            **135,845**Income
                tax provision
            
            
            **-**
            
            
            -
            
            
            **-****$**
            **10,004**
            
            $
            17,136
            
            **$**
            **135,845**


F-16





**MAJESTIC
      OIL & GAS, INC. AND SUBSIDIARY**





***SUPPLEMENTARY
      INFORMATION***





**MAJESTIC
      OIL & GAS, INC. AND SUBSIDIARY**


**(A
      Development Stage Company)**


**SUPPLEMENTARY
      INFORMATION**


**DISCLOSURE
      OF OIL & GAS PRODUCING ACTIVITIES AND PROPERTIES -
      UNAUDITED**


**DECEMBER
      31, 2007 AND 2006**





**OIL
      AND GAS PRODUCING ACTIVITIES AND PROPERTIES**





Net
      capitalized costs related to the Company’s oil and gas producing activities are
      summarized as follows as of December 31, 2007 and 2006:





**2007**
            
            2006Proved
                properties:Capitalized
                costs
            
            **$**
            **325,051**
            
            $
            192,187Less
                accumulated depletion, depreciation, amortization and
                impairment
            
            
            **(68,800**
            **)**
            
            (50,500
            )Net
                capitalized costs - proved properties
            
            **$**
            **256,251**
            
            $
            141,687Unproved
                propertiesCapitalized
                costs
            
            
            **124,526**
            
            
            -Net
                capitalized costs
            
            **$**
            **380,777**
            
            $
            141,687




Costs
      incurred in oil and gas property acquisition, exploration and development
      activities, including capital expenditures are summarized as follows for the
      years ended December 31, 2007, 2006, and the period from April 16, 2002
      (Inception) to December 31, 2007:








**Period
                From****Year**
            
            Year
            
            **Inception****Ended**
            
            Ended
            
            **(April 16, 2002)****December 31,**
            
            December 31,
            
            **to****2007**
            
            2006
            
            **December 31, 2007**Property
                acquisition costs:Proved
            
            **$**
            **-**
            
            $
            -
            
            **$**
            **192,187**Unproved
            
            
            **124,526**
            
            
            -
            
            
            **124,526**Exploration
                costs
            
            
            **13,335**
            
            
            -
            
            
            **13,335**Development
                costs
            
            
            **116,336**
            
            
            -
            
            
            **116,336**Asset
                retirement obligation
            
            
            **3,193**
            
            
            
            
            
            **3,193****$**
            **257,390**
            
            $
            -
            
            **$**
            **449,577**


F-17




**MAJESTIC
      OIL & GAS, INC. AND SUBSIDIARY**


**(A
      Development Stage Company)**


**SUPPLEMENTARY
      INFORMATION**


**DISCLOSURE
      OF OIL & GAS PRODUCING ACTIVITIES AND PROPERTIES -
      UNAUDITED**


**DECEMBER
      31, 2007 AND 2006**





The
      Company’s results of operations from oil and gas producing activities (excluding
      corporate overhead and financing costs) are presented below for the years ended
      December 31, 2007 and 2006, and the period from April 16, 2002 (Inception)
      to
      December 31, 2007:





**Period
                From****Year**
            
            Year
            
            **Inception****Ended**
            
            Ended
            
            **(April
                16, 2002)****December
                31,**
            
            December
                31,
            
            **to****2007**
            
            2006
            
            **December
                31, 2007**Oil
                and gas sales
            
            **$**
            **41,189**
            
            $
            48,727
            
            **$**
            **296,596**Production
                costs
            
            
            **(12,885**
            **)**
            
            (15,091
            )
            
            **(91,951**
            **)**Depletion,
                depreciation and amortization
            
            
            **(18,300**
            **)**
            
            (16,500
            )
            
            **(68,800**
            **)****10,004**
            
            
            17,136
            
            
            **135,845**Income
                tax provision
            
            
            **-**
            
            
            -
            
            
            **-****$**
            **10,004**
            
            $
            17,136
            
            **$**
            **135,845**





*Estimated
      Quantities of Proved Oil and Gas Reserves (Unaudited)*





The
      reserve information presented below is based upon reports prepared by the
      independent petroleum engineering firm of Citadel Engineering Ltd. The Company
      emphasizes that reserve estimates are inherently imprecise and that estimates
      of
      new discoveries are more imprecise than those of mature producing oil and gas
      properties. Accordingly, these estimates are expected to change as future
      information becomes available. All of the Companies reserves are located in
      the
      United States.





Proved
      oil and gas reserves are the estimated quantities of crude oil, natural gas,
      and
      natural gas liquids which geological and engineering data demonstrate with
      reasonable certainty to be recoverable in future years from known reservoirs
      under existing economic and operating conditions.





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


F-18


**MAJESTIC
      OIL & GAS, INC. AND SUBSIDIARY**


**(A
      Development Stage Company)**


**SUPPLEMENTARY
      INFORMATION**


**DISCLOSURE
      OF OIL & GAS PRODUCING ACTIVITIES AND PROPERTIES -
      UNAUDITED**


**DECEMBER
      31, 2007 AND 2006**





Presented
      below is a summary of the changes in estimated proved reserves of the Company
      for the years ended December 31, 2007 and 2006:





**2007**
            
            2006***Oil***
            
            ***Gas***
            
            *Oil*
            
            *Gas****(Bbls)***
            
            ***(Mcf)***
            
            *(Bbls)*
            
            *(Mcf)*Proved
                reservesBeginning
                of the year
            
            
            **-**
            
            
            **81,426**
            
            
            -
            
            
            144,653Revisions
                of previous estimates
            
            
            **-**
            
            
            **(30,934**
            **)**
            
            -
            
            
            (53,929
            )Improved
                recovery
            
            
            **-**
            
            
            **-**
            
            
            -
            
            
            -Purchases
                of reserves in place
            
            
            **-**
            
            
            **-**
            
            
            -
            
            
            -Extensions
                and discoveries
            
            
            **-**
            
            
            **75,283**
            
            
            -
            
            
            -Production
            
            
            **-**
            
            
            **(9,313**
            **)**
            
            -
            
            
            (9,298
            )Sales
                of reserves in place
            
            
            **-**
            
            
            **-**
            
            
            -
            
            
            -End
                of the year
            
            
            **-**
            
            
            **116,462**
            
            
            -
            
            
            81,426





All
      of
      the proved reserves currently owned by the Company are proved developed
      reserves. Proved developed reserves are those expected to be recovered through
      existing wells, equipment, and operating methods.





**2007**
            
            2006Standardized
                Measure of Discounted FutureNet
                Cash FlowsFuture
                cash inflows
            
            **$**
            **477,000**
            
            $
            335,000Future
                production costs
            
            
            **(34,000**
            **)**
            
            (19,000
            )Future
                development costs
            
            
            **(5,000**
            **)**
            
            (15,000
            )Future
                income tax expenses
            
            
            **(44,000**
            **)**
            
            (29,000
            )Future
                net cash flows
            
            
            **394,000**
            
            
            272,00010%
                annual discount for estimated timing of cash flows
            
            
            **(130,000**
            **)**
            
            (110,000
            )Standardized
                measures of discounted future net cash flows relating to proved oil
                and
                gas reserves
            
            **$**
            **264,000**
            
            $
            162,000


F-19




**MAJESTIC
      OIL & GAS, INC. AND SUBSIDIARY**


**(A
      Development Stage Company)**


**SUPPLEMENTARY
      INFORMATION**


**DISCLOSURE
      OF OIL & GAS PRODUCING ACTIVITIES AND PROPERTIES -
      UNAUDITED**


**DECEMBER
      31, 2007 AND 2006**





The
      following reconciles the standardized measure of discounted future net cash
      flow
      during 2007 and 2006:





**2007**
            
            2006Beginning
                of the year
            
            **$**
            **162,000**
            
            $
            909,000Net
                change in prices and production costs
            
            
            **(3,000**
            **)**
            
            (575,000
            )Extensions
                and discoveries
            
            
            **170,000**
            
            
            -Revision
                of previous estimates
            
            
            **(47,000**
            **)**
            
            (122,000
            )Net
                change in estimated future development costs
            
            
            **10,000**
            
            
            (15,000
            )Sales
                of oil and gas produced, net of production costs
            
            
            **(28,000**
            **)**
            
            (35,000
            )End
                of the year
            
            **$**
            **264,000**
            
            $
            162,000


F-20




**Item
      8. Changes In and Disagreements With Accountants on Accounting and Financial
      Disclosure.**





None




**ITEM
      8A. CONTROLS AND PROCEDURES**





We
      carried out an evaluation of the effectiveness of the design and operation
      of
      our disclosure controls and procedures (as defined in Exchange Act Rules
      13a-15(e) and 15d-15(e)) as of December 31, 2007. This evaluation was
      carried out under the supervision and with the participation of our Chief
      Executive Officer and Chief Financial Officer, Patrick Montalban. Based upon
      that evaluation, our Chief Executive Officer and Chief Financial Officer
      concluded that, as of December 31, 2007, our disclosure controls and procedures
      have been identified, but we have not yet tested their effectiveness. Because
      of
      this lack of testing, we cannot assure the effectiveness of the controls and
      procedures. There have been no significant changes in our internal controls
      over
      financial reporting during the year ended December 31, 2007 that have materially
      affected or are reasonably likely to materially affect such
      controls.





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





The
      Company has established disclosure controls and procedures to ensure that
      information disclosed in this MD&A and the related financial statements was
      properly recorded, processed, summarized and reported to the Company‘s Board of
      Directors. A control system, no matter how well conceived or operated, can
      provide only reasonable, not absolute, assurance that the objectives of the
      control system are met.




There
      has
      been no change in the Company’s disclosure controls during 2007 that has
      materially affected or is likely to materially affect its control over financial
      reporting.





***Management's
      annual report on internal control over financial
      reporting*** **.**




The
      CEO
      and CFO of the Company acknowledge that they are responsible for designing
      internal controls over financial reporting or causing them to be designed under
      their supervision in order to provide reasonable assurance regarding the
      reliability of financial reporting and the preparation of financial statements
      for external purposes in accordance with Rule 240.13a-15(f) or Rule
240.15d-15(f) . This report shall not be deemed to be filed for purposes
      of Section 18 of the Exchange Act or otherwise subject to the liabilities of
      that section.


18


Management
      and the Board of Directors work to mitigate the risk of a material misstatement
      in financial reporting, however, there can be no assurance that this risk can
      be
      reduced to less than a remote likelihood of a material misstatement.




Management
      has identified the critical disclosure controls and procedures associated with
      the Company’s internal control over financial reporting for the fiscal year
      ending December 31, 2007, but has not yet tested the effectiveness of these
      disclosure controls and procedures and, therefore, cannot yet deem these
      controls to be effective. Therefore, the Company has determined that a material
      weakness exists related to the lack of testing of disclosure controls and
      procedures associated with the Company’s internal control over financial
      reporting for the fiscal year ending December 31, 2007. This material weakness
      could materially affect the Company’s control over financial
      reporting.




Limitations
      on the Effectiveness of Internal Controls





Our
      management does not expect that our disclosure controls and procedures or our
      internal control over financial reporting will necessarily prevent all fraud
      and
      material error. Our disclosure controls and procedures are designed to provide
      reasonable assurance of achieving our objectives and our Chief Executive Officer
      and Chief Financial Officer concluded that our disclosure controls and
      procedures are effective at that reasonable assurance level.  Further,
      the design of a control system must reflect the fact that there are resource
      constraints, and the benefits of controls must be considered relative to their
      costs. Because of the inherent limitations in all control systems, no evaluation
      of controls can provide absolute assurance that all control issues and instances
      of fraud, if any, within our company have been detected. These inherent
      limitations include the realities that judgments in decision-making can be
      faulty, and that breakdowns can occur because of simple error or mistake.
      Additionally, controls can be circumvented by the individual acts of some
      persons, by collusion of two or more people, or by management override of the
      internal control. The design of any system of controls also is based in part
      upon certain assumptions about the likelihood of future events, and there can
      be
      no assurance that any design will succeed in achieving its stated goals under
      all potential future conditions. Over time, control may become inadequate
      because of changes in conditions, or the degree of compliance with the policies
      or procedures may deteriorate.




This
      annual report does not include an attestation report of the company's registered
      public accounting firm regarding internal control over financial reporting.
      Management's report was not subject to attestation by the company's registered
      public accounting firm pursuant to temporary rules of the Securities and
      Exchange Commission that permit the company to provide only management's report
      in this annual report.




**PART
      II - ITEM 8B. OTHER INFORMATION**





None—Not
      Applicable




**PART
      III**




**Item
      9. Directors, Executive Officers, Promoters and Control Persons; Compliance
      With
      Section 16(a) of the Exchange Act.**


19





Name
            
            Age
            
            PositionPatrick
                M. Montalban
            
            50
            
            President,
                CEO and DirectorDanny
                M. Mitchell
            
            79
            
            Corporate
                Secretary and DirectorBruce
                D. Hirsche
            
            59
            
            Director





Mr.
      Patrick M. Montalban has been our President, CEO, and director since our
      inception. He has been President, CEO and director of our wholly-owned
      subsidiary Grizzly Energy Inc. from August 2002 to date. He has been President,
      CEO and director of Altamont Oil and Gas which owns and operates gas producing
      wells in Montana from April 1999 to date. From September 2000 to January 2002
      he
      was Director, President and CEO of Mountainview Energy Ltd. a publicly listed
      oil and gas company on the CDNX. From January 1999 to date, he has
      beenVice-President of Exploration and Production and Director for Montalban
      Oil
& Gas Operations, Inc, a company primarily engaged in the business of the
      exploration and production of oil and gas properties. Previously, Mr. Montalban
      was a director, Executive Vice President and Chief Operating Officer of
      Quicksilver Resources, Inc., formerly MSR Exploration Ltd., and predecessor
      companies from July 1983 to January 1999. Between January, 1990 and January,
      1999, Mr. Montalban was director, President and Chief Operating Officer of
      Gypsy
      Highview Gathering System Inc., a gas gathering, compression and pipeline
      company and subsidiary of Quicksilver Resources Inc. Mr. Montalban is currently
      a director Great Northern Drilling Company a private oil and gas company. He
      is
      a petroleum geologist who obtained a BA in Geology from the University of
      Montana in 1981. He devotes 50% of his time to our business.





Mr.
      Danny
      Mack Mitchell has been our Vice President and director since our inception.
      He
      has been President and CEO and director of Comanche Drilling Company from 1961
      to date. Comanche Drilling Co. owned and operates oil and gas wells in the
      State
      of Montana from 1959 to date. Comanche Drilling has drilled over 2000 wells
      in
      the Northern Rockies from 1961 to July 2000. From 1965 to July 2000 he was
      President and CEO of Danco a private Pipe and Sales Company. From 1986 to July
      2000 he was owner President and CEO and director of Tulsa Tool Works. Tulsa
      Tool
      Works manufactured and fabricated oil field equipment. He is a Mechanical
      Engineer who obtained a BS in Mechanical Engineer from Gonzaga University in
      1959.





Bruce
      D.
      Hirsche, Barrister & Solicitor was appointed to the Board of Directors on
      December 13, 2006. Mr. Hirsche is a partner with Parlee McLaws, a law firm,
      specializing in Securities Law. He received his Bachelor of Law (L.L.B.) Degree
      in 1974 from the University of Alberta and his Masters Degree (L.L.M.) in 2003
      from York University, Osgoode Hall Law School. Mr. Hirsche is currently a member
      of the Law Society of Alberta, the Canadian Bar Association and the Edmonton
      Bar
      Association. Mr. Hirsche is currently a Director and Officer of several public
      and private companies, as follows:





Mr.
      Hirsche was a Director and Officer of MSR Exploration Ltd, now Quicksilver
      Resources, Inc from July 1991 to September 1997. Other Directorship and Officer
      positions include Global Tree Technologies from January 1991 to present, Shelton
      Canada Corp from June 1997 to present, Rock Resources, Inc from February 2000
      to
      July 2003, EquiTech Corporation from June 2000 to February 2004, Innovotech
      Inc
      from January 2001 to present, AltaRex Corp (now Twin Butte Energy) from May
      2003
      to February 2004, AltaRex Medical Corp from December 2003 to present, ViRexx
      Medical Corp from December 2003 to Present, Arrow Energy Ltd from September
      2007
      to present.


20


Directors
      serve for a one-year **** term.
      Our
      bylaws currently provide for a board of directors comprised of a minimum of
      one
      director.





Board
      Committees





We
      currently have no compensation committee or other board committee performing
      equivalent functions. Currently, all members of our board of directors
      participate in discussions concerning executive officer
      compensation.





Family
      Relationships





There
      are
      no family relationships among our officers or directors.





Legal
      matters





No
      officer, director, or persons nominated for such positions, promoter or
      significant employee has been involved in the last five years in any of the
      following, except as set forth below:





·
            Any
                bankruptcy petition filed by or against any business of which such
                person
                was a general partner or executive officer either at the time of
                the
                bankruptcy or within two years prior to that
                time.





·
            Any
                conviction in a criminal proceeding or being subject to a pending
                criminal
                proceeding (excluding traffic violations and other minor
                offenses);





·
            Being
                subject to any order, judgment, or decree, not subsequently reversed,
                suspended or vacated, of any court of competent jurisdiction, permanently
                or temporarily enjoining, barring, suspending or otherwise limiting
                his
                involvement in any type of business, securities or banking activities;
                and





·
            Being
                found by a court of competent jurisdiction (in a civil action), the
                Commission or the Commodity Futures Trading Commission to have violated
                a
                federal or state securities or commodities law, and the judgment
                has not
                been reversed, suspended, or
                vacated.





Section
      16(a) of the Securities Exchange Act of 1934, as amended





Section
      16(a) of the Securities Exchange Act of 1934, as amended, requires the Company's
      directors and executive officers, and persons who beneficially own more than
      10%
      of a registered class of the Company's equity securities, to file reports of
      beneficial ownership and changes in beneficial ownership of the Company's
      securities with the SEC on Forms 3 (Initial Statement of Beneficial Ownership),
      4 (Statement of Changes of Beneficial Ownership of Securities) and 5 (Annual
      Statement of Beneficial Ownership of Securities). Directors, executive officers
      and beneficial owners of more than 10% of the Company's Common Stock are
      required by SEC regulations to furnish the Company with copies of all Section
      16(a) forms that they file. Our directors and executive officers have filed
      such reports as required, except for a Form 4 for options to Mr. Hirsche, which
      has now been filed.


21




**Item
      10. Executive Compensation.**





We
      paid
      no compensation to Mr. Montalban in fiscal years ended December 31, 2007 and
      2006. We have no agreements concerning compensation with Mr.
      Montalban.





Board
      Compensation





The
      Company granted options to Bruce Hirsche, Director of the Company, to purchase
      125,000 shares at $0.38 per share. The fair value of these options, $21,295,
      was
      recorded as a Stock compensation expense and additional paid in capital at
      the
      time the options were granted.





We
      paid
      Mr. Danny Mitchell $100 as a director’s fee and not for services as an officer
      in December 2007.





No
      other
      members of our Board of Directors received compensation for their services
      as
      Directors.




**Item
      11. Security Ownership of Certain Beneficial Owners and
      Management.**





The
      following table sets forth the ownership, as of the date of this annual report,
      of our common stock by each person known by us to be the beneficial owner of
      more than 5% of our outstanding common stock, our directors, and our executive
      officers and directors as a group. There are not any pending or anticipated
      arrangements that may cause a change in control.




The
      information presented below regarding beneficial ownership of our voting
      securities has been presented in accordance with the rules of the Securities
      and
      Exchange Commission and is not necessarily indicative of ownership for any
      other
      purpose. Under these rules, a person is deemed to be a "beneficial owner" of
      a
      security if that person has or shares the power to vote or direct the voting
      of
      the security or the power to dispose or direct the disposition of the security.
      A person is deemed to own beneficially any security as to which such person
      has
      the right to acquire sole or shared voting or investment power within 60 days
      through the conversion or exercise of any convertible security, warrant, option
      or other right. More than one person may be deemed to be a beneficial owner
      of
      the same securities. The percentage of beneficial ownership by any person as
      of
      a particular date is calculated by dividing the number of shares beneficially
      owned by such person, which includes the number of shares as to which such
      person has the right to acquire voting or investment power within 60 days,
      by
      the sum of the number of shares outstanding as of such date plus the number
      of
      shares as to which such person has the right to acquire voting or investment
      power within 60 days. Consequently, the denominator used for calculating such
      percentage may be different for each beneficial owner. Except as otherwise
      indicated below and under applicable community property laws, we believe that
      the beneficial owners of our common stock listed below have sole voting and
      investment power with respect to the shares shown.





Name
                and Address
            
            Number
                of Shares of Common Stock
            
            PercentagePatrick
                M. Montalban [1]
              P.O
                Box 488 Cut Bank, Montana 59427
            
            
            4,600,000
            
            
            61.3Danny
                Mitchell
              P.O
                Box 488 Cut Bank, Montana 59427
            
            
            90,000
            
            
            1.2Bruce
                Hirsche [1]
            
            
            125,000
            
            
            1.7All
                officers and directors as a group [three persons]
            
            
            4,815,000
            
            
            63.1


22





[1]
      Represents currently exercisable options.





This
      table is based upon information derived from our stock records. Unless otherwise
      indicated in the footnotes to this table and subject to community property
      laws
      where applicable, each of the shareholders named in this table has sole or
      shared voting and investment power with respect to the shares indicated as
      beneficially owned. Except as set forth above, applicable percentages are based
      upon 7,508,000 shares of common stock outstanding as of December 31,
      2007.




**Item
      12. Certain Relationships and Related Transactions.**





Grizzly
      Energy acquired a 25% working interest from Altamont Oil and Gas, Inc., a
      Montana corporation and an affiliate of our President, Mr. Patrick Montalban,
      in
      July 2004 for 16,000 shares of Grizzly Energy common stock. Mr. Patrick
      Montalban owns and manages Altamont Oil and Gas, Inc. Thereafter in July 2004,
      Majestic Oil & Gas, Inc. acquired all 16,000 issued and outstanding shares
      of Grizzly Energy, Inc. common stock for the issuance of 1,600,000 shares of
      our
      common stock. Prior to the sale to Majestic Oil & Gas, Inc, Altamont Oil
& Gas, Inc. incurred an expense of $120,000 in the acquisition of a 50%
      Working Interest in this well. Altamont retained the remaining 25% interest
      in
      this well. The purpose of this transaction was to acquire the working
      interest.





During
      the period from inception (April 16, 2002) to December 31, 2002, the Company
      paid consulting fees totaling $28,000 to Patrick M. Montalban, President, CEO
      and director to the Company, for studies of various oil and natural gas
      prospects. There has been no other cash compensation paid to Mr. Montalban
      during the period from inception (April 16, 2002) through December 31, 2007
      for
      his services to the Company.





Majestic
      Oil & Gas, Inc has participated in the drilling and completion of the
      following producing natural gas wells, earning a 25% Working Interest: Boucher
      #27-1, B. Ag #25-1 and Vandenbos #19-1. Altamont Oil & Gas, Inc. is the
      operator of all the wells in which the Company owns a working interest. As
      the
      operator of the wells, Altamont is responsible for remitting production taxes
      to
      the taxing authorities and royalty payments to the royalty interest owners.
      The
      Company pays Altamont a fee of $250 per month per well as an operating fee.
      The
      purpose of this transaction was to obtain the services of an experienced
      operator necessary for the operation of the wells in which we have a working
      interest.





During
      the Second Quarter 2007, the Company entered into a Farm-out Agreement with
      Altamont Oil & Gas, Inc and Numbers, Inc, a Montana corporation and an
      affiliate of our Director, Mr. Bruce Hirsche, to conduct a 10-well natural
      gas
      development program. This development program is still pending and will involve
      the drilling of 5 wells in the Lake Frances Gas Field and 5 wells in the
      Williams Gas Field, located in Pondera County, Montana. The Lake Frances Field
      is located south of Valier, Montana just offsetting the Lake Frances reservoir.
      The Williams Field is located 7 miles east of the town of Valier,
      Montana.


23





We
      believe the transactions and agreements with related parties were comparable
      to
      terms we could have obtained from non-affiliated parties.





We
      have
      adopted an oral policy that any opportunity to acquire or develop any oil and
      gas property or any working interest therein which becomes known to Mr.
      Montalban or Altamont will be first offered to us. As we would then develop
      the
      property or interest, and not Altamont, we would bear all the costs and receive
      all the profits from these properties or interests, if acquired.




**Item
      13. Exhibits and Reports on Form 8-K.**





(a)
      List
      of documents filed as part of this Report:





None





(b)
      Exhibits:





31.1
      Rule
      13a-14(a)/15d-14(a) Certification of Chief Executive Officer and Chief Financial
      Officer, Patrick Montalban




32.1
      Section 1350 Certification, Patrick Montalban




**Item
      14.** **Audit
      Fees**





***Audit
      Fees***





Audit
                fees paid during:The
                year ended December 31, 2007:
            
            $
            23,400The
                year ended December 31, 2006:
            
            $
            16,000





No
      other
      fees as specified in Item 9(e) of Schedule 14A charged.


24


Signatures





In
      accordance with Section 13 or 15(d) of the Exchange Act, the
      registrant


caused
      this report to be signed on its behalf by the undersigned, thereunto
      duly


authorized.





Title
            
            Name
            
            Date
            
            SignaturePrincipal
                ExecutiveOfficer
            
            Patrick
                Montalban
            
            April
                8, 2008/s/
                Patrick MontalbanPrincipal
                Accounting
            
            Patrick
                Montalban
            
            April
                8, 2008/s/
                Patrick MontalbanOfficerPrincipal
                FinancialOfficer
            
            Patrick
                Montalban
            
            April
                8, 2008/s/
                Patrick Montalban





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





SIGNATURE
            
            NAME
            
            TITLE
            
            DATE/s/
                Patrick Montalban
            
            Patrick
                Montalban
            
            Director
            
            April
                8, 2008/s/
                Danny Mitchell
            
            Danny
                Mitchell
            
            Director
            
            April
                8, 2008


25