U.S.
SECURITIES AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-K




(Mark
One)


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





For
Fiscal Year Ended: December 31, 2009





OR





 ̈
            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
              1311
              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




Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.  Yes  ̈  No  x




Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Exchange
Act.  Yes   ̈  No  x




Indicate
by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.  Yes  x  No   ̈




Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not 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-K or any amendment to this
Form 10-K.   ̈





Check
whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company.  See
definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):





Large
      Accelerated Filer  ̈
            Accelerated
      Filer
             ̈Non-accelerated
      Filer     ̈
            Smaller
      Reporting Company
            x(Do
      not check if a smaller reporting company.)




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





The
aggregate market value of the Registrant’s Common Stock held by non-affiliates
of the Registrant (based upon the closing price of the Registrant’s Common Stock
as of December 31, 2009) was approximately $972,000 (based on 4,228,000 shares
of common stock outstanding held by non-affiliates on such date). Shares of the
Registrant’s Common Stock held by each executive officer and director and by
each entity or person that, to the Registrant’s knowledge, owned 5% or more of
the Registrant’s outstanding Common Stock as of December 31, 2009 have been
excluded in that such persons may be deemed to be affiliates of the Registrant.
This determination of affiliate status is not necessarily a conclusive
determination for other purposes.




The
number of outstanding shares of the Registrant’s Common Stock, $0.001 par
value, was 8,918,000 shares as of March 31, 2010.




DOCUMENTS
INCORPORATED BY REFERENCE




None









TABLE OF
CONTENTS





Part I
              3Item
      1. Description of Business
              3Item
      2. Description of Property
              8Item
      3. Legal Proceedings
              8Item
      4. (Removed and Reserved.)
              8PART
      II
              8Item
      5. Market for Common Equity and Related Stockholder
Matters
              8Item
      6.  Selected Financial Data
              10Item
      7. Management's Discussion and Analysis or Plan of
    Operation
              10Item
      7A.  Quantitative and Qualitative Disclosures about Market
      Risk
              17Item
      8. Financial StatementsItem
      9. Changes In and Disagreements With Accountants on Accounting and
      Financial Disclosure
              18Item
      9A(T).  Controls and Procedures
              18ITEM
      9B. OTHER INFORMATION
              19PART
      III
              19Item
      10. Directors, Executive Officers, Promoters and Control Persons;
      Compliance With Section 16(a) of the Exchange Act
              19Item
      11. Executive Compensation
              22Item
      12. Security Ownership of Certain Beneficial Owners and
      Management
              24Item
      13. Certain Relationships and Related Transactions
              25Item 14. Principal Accounting Fees and
      Services
              26Item
      15. Exhibits, Financial Statement Schedules
              26




2




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 8,918,000 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 21.90 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 $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.
During 2008 the well was recompleted allowing for increased production with our
share of the recompletion costs totaling $4,780. This well currently has gas
reserves of 1.16 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 2008 and the Boucher #18-1 and
Stoltz #18-1 during the Fourth Quarter 2008. The Company’s share of drilling and
completion costs for these wells are as follows:





B.
      Ag #25-1:
                    
                    $
                    46,926Vandenbos
      #19-1:
                    
                    $
                    54,728Vandenbos
      #19-2:
                    
                    $
                    15,334Jody
      Fields #4-1:
                    
                    $
                    50,000Boucher
      #18-1
                    
                    $
                    60,039Stoltz
      #18-1
                    
                    $
                    59,687





As a
result, Majestic Oil & Gas, Inc. earned a 25% Working Interest in the B. Ag
#25-1, the Vandenbos #19-1, the Jody Fields #4-1, Boucher #18-1 and the Stoltz
#18-1.





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 28.48 million cubic feet of natural gas. The Boucher
#18-1 and  Stoltz #18-1 are also producing as economical natural gas
wells. These wells have combined natural gas reserves of 17.68 million cubic
feet of natural gas. The B. Ag. #25-1 well was successfully completed and is
currently producing as an economical natural gas well. The Vandenbos #19-2 was
subsequently plugged and abandoned and the Jody Fields #4-1, which was a wildcat
oil well, has also been plugged and abandoned.




3




Majestic
Oil & Gas, Inc. entered into a farm-out agreement with Mountain View Energy,
Inc. on September 1, 2009, outlining parameters for Mountain View Energy, Inc.
to drill a test well in the NWSE-Section 33-T27N-R4W, Teton County, MT at its
sole cost, risk and expense.    In doing so, Mountain View
Energy, Inc., would acquire 75% of the Working Interest, while Majestic Oil
& Gas, Inc. would retain a 25% Working Interest in any well drilled in the
40-acre tract.





Accordingly,
on September 9, 2009, drilling commenced on the Donovan #33-3 well located in
the SWNWSE – Section 33-T27N-R4W, Teton County, Montana.  The well was
successfully drilled and completed with an initial production of 15 barrels of
oil per day with no water.   The producing interval is the
Madison/Sun River Dolomite with 20 feet of pay from 2,125’ to
2,145’.





Due to
the success of the Donovan #33-3, a second oil well was drilled in the SENWSE -
Section 33-T27N-R4W, Teton County, Montana, being the Donovan
#33-2.  This oil well was successfully drilled and completed with an
initial production of 2 to 4 barrels of oil per day. These wells are planned to
be stimulated in early 2010, which typically increases production.





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
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 our control. The reserve estimates
in this annual report 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.




4


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.





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.




5




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.





Natural Gas
Reserves





Information
is presented in this document 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 a 12-month average
of natural gas prices to estimate reserves for SEC disclosure purposes, which
price is then held constant throughout the life of the properties. We based our
estimates of proved reserves upon the following 12-month average of prices: Year
ended December 31, 2009





Natural
      gas (per Thousand Cubic Feet)
                  
                  $
                  1.81





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.




6




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 April
15, 2010, the weighted net average price of natural gas we produced sold at
prices averaging approximately $3.05 per Thousand Cubic Feet.





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.





Oil
Sales





As a
result of a farm-out agreement between Majestic Oil & Gas, Inc. and Mountain
View Energy, Inc., the Company retained a 25% Working Interest in two oil wells
drilling during the 4th Quarter
2009.  There were no sales from these wells prior to the year ended
December 31, 2009.





As per
another farm-out agreement between Majestic Oil & Gas, Inc., and Hartford
Energy, Inc., the Company saw revenues from the sale of oil from the Fields
#14-34 during 2009.





The
Company has estimated oil reserves of 6,500 barrels associated with these
wells.





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.




7




Government
Regulation




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 1st 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 to 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. (Removed and Reserved.)




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 years 2009 and
2008.





High
                    
                    
                    LowJanuary
      1 – March 31, 2008
                    
                    $
                    0.55
                    
                    
                    $
                    0.26April
      1 – June 30, 2008
                    
                    $
                    0.80
                    
                    
                    $
                    0.40July
      1 – September 30, 2008
                    
                    $
                    0.31
                    
                    
                    $
                    0.54October 1 –
      December 31, 2008
                    
                    $
                    0.35
                    
                    
                    $
                    0.20January
      1 – March 31, 2009
                    
                    $
                    0.20
                    
                    
                    $
                    0.15April
      1 – June 30, 2009
                    
                    $
                    0.20
                    
                    
                    $
                    0.16July
      1 – September 30, 2009
                    
                    $
                    0.15
                    
                    
                    $
                    0.07October 1 –
      December 31, 2009
                    
                    $
                    0.51
                    
                    
                    $
                    0.15




8




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 or options as of April 14, 2010.





Recent Sale of
Securities





As per a
Letter of Understanding entered into on March 20, 2009 with an existing
Shareholder, we agreed to issue 1,100,000 shares of Majestic Oil & Gas, Inc.
stock at $0.10 per share for $110,000 in proceeds. These shares were issued on
December 15, 2009.





In
addition, 100,000 shares were issued on May 6, 2009 to our Securities Counsel
under Rule 144, for professional services rendered.





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:





o   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;


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


o   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


o  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.




9




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 34 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.  Selected Financial Data




As a
“smaller reporting company” as defined by Item 10 of Regulation S-K, the Company
is not required to provide this information.




Item
7. 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.





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.




10




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
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.





Majestic
Oil & Gas, Inc. has participated in drilling programs in the Lake Frances
Field during 2007 and 2008.  Four successful gas wells have been
drilled to-date; the B Ag #25-1, Vandenbos #19-1, Boucher #18-1 and Stoltz
#18-1.  Majestic Oil & Gas, Inc. holds a 25% Working Interest in
these four wells and the Company expects to see an increase in production
volumes, as a result of these 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, as was the Jody
Fields #4-1 well, which was a wildcat oil well.




Majestic
Oil & Gas, Inc. entered into a farm-out agreement with Mountain View Energy,
Inc. on September 1, 2009, outlining parameters for Mountain View Energy, Inc.
to drill a test well in the NWSE-Section 33-T27N-R4W, Teton County, MT at its
sole cost, risk and expense.    In doing so, Mountain View
Energy, Inc., would acquire 75% of the Working Interest, while Majestic Oil
& Gas, Inc. would retain a 25% Working Interest in any well drilled in the
40-acre tract.





Accordingly,
on September 9, 2009, drilling commenced drilling on the Donovan #33-3 well
located in the West Pondera Field, SWNWSE – Section 33-T27N-R4W, Teton County,
Montana.  The well was successfully drilled and completed with an
initial production of 15 barrels of oil per day with no
water.   The producing interval is the Madison/Sun River Dolomite
with 20 feet of pay from 2,125’ to 2,145’.





Due to
the success of the Donovan #33-3, a second oil well was drilled in the West
Pondera Field.  The Donovan #33-2 is located in the SENWSE - Section
33-T27N-R4W, Teton County, Montana.  This oil well was successfully
drilled and completed with initial production of 2 to 4 barrels of oil per
day.




11




Majestic
Oil & Gas, Inc. entered into a farm-out agreement with Altamont Oil &
Gas, Inc., and subsequently with Hartford Energy, Inc., to conduct the re-entry
of the Fields #14-34.  As per the farm-out agreement with Hartford
Energy, Inc., the Company retained a 25% Working Interest in this
well.  The Fields #14-34 is located in the Loneman Coulee Field,
Pondera County, Montana and was completed as a Madison/Sun River oil well with
initial production of 5 barrels of oil per day.





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 generate positive net income
from operations in the future, although our revenue and expenses will increase
as we expand our drilling and ownership activities. However, the current
economic crisis could have a negative impact on the Company’s revenues due to
the recent decrease in oil and natural gas prices.   During the
course of 2009, Majestic Oil & Gas, Inc. saw a significant decrease in the
price received per MCF at a high of $3.09 and a low of $1.19, as detailed under
“Results of Operation.”  The current trend shows a continued decline
in pricing.  The price we received for our production directly affects
the amount of revenues we generate, which in turn affects the Company’s
liquidity and overall financial position.





RESULTS OF
OPERATIONS





Year
ended December 31, 2009 vs. Year ended December 31, 2008:





Year Ended
                            December 31, 2009
                          
                          
                          Year Ended
                            December 31, 2008Revenue
                          
                          $
                          28,458
                          
                          
                          $
                          130,623Expenses
                          
                          $
                          123,335
                          
                          
                          $
                          199,303Net
      Income (Loss)
                          
                          $
                          (94,877
                          )
                          
                          $
                          (68,680
                          )





Revenues
for the period ending December 31, 2009 were $28,458 compared to $130,623 for
the period ending December 31, 2008. The large decrease in the revenues between
these two periods is a result of the decrease in natural gas production and the
price received per MCF. (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
                        MCF2009
                      
                      2008January
                      
                      
                      231.21
                      
                      3.09
                      
                      
                      284.63
                      
                      3.91February
                      
                      
                      211.20
                      
                      2.34
                      
                      
                      265.65
                      
                      4.45March
                      
                      
                      218.83
                      
                      1.80
                      
                      
                      261.73
                      
                      4.98April
                      
                      
                      194.49
                      
                      1.56
                      
                      
                      255.96
                      
                      5.36May
                      
                      
                      207.28
                      
                      1.41
                      
                      
                      255.54
                      
                      6.33June
                      
                      
                      198.83
                      
                      1.59
                      
                      
                      246.06
                      
                      6.75July
                      
                      
                      211.41
                      
                      1.39
                      
                      
                      243.17
                      
                      7.71August
                      
                      
                      201.92
                      
                      1.40
                      
                      
                      240.69
                      
                      5.90September
                      
                      
                      190.58
                      
                      1.19
                      
                      
                      225.84
                      
                      4.52October
                      
                      
                      188.93
                      
                      1.37
                      
                      
                      243.99
                      
                      3.47November
                      
                      
                      175.93
                      
                      2.35
                      
                      
                      229.35
                      
                      3.39December
                      
                      
                      192.02
                      
                      2.26
                      
                      
                      242.76
                      
                      3.36




12




Boucher
      27-1
                    
                    Share of
                      Production
                      Volumes
                    
                    Price
                      Per
                      MCF
                    
                    Share of
                      Production
                      Volumes
                    
                    Price
                      Per
                      MCF2009
                    
                    2008January
                    
                    
                    110.14
                    
                    3.09
                    
                    
                    89.10
                    
                    3.91February
                    
                    
                    71.16
                    
                    2.34
                    
                    
                    85.39
                    
                    4.45March
                    
                    
                    56.72
                    
                    1.80
                    
                    
                    73.22
                    
                    4.98April
                    
                    
                    44.76
                    
                    1.56
                    
                    
                    67.44
                    
                    5.36May
                    
                    
                    47.23
                    
                    1.41
                    
                    
                    67.03
                    
                    6.33June
                    
                    
                    47.64
                    
                    1.59
                    
                    
                    68.06
                    
                    6.75July
                    
                    
                    49.50
                    
                    1.39
                    
                    
                    64.76
                    
                    7.71August
                    
                    
                    47.85
                    
                    1.40
                    
                    
                    70.33
                    
                    5.90September
                    
                    
                    44.76
                    
                    1.19
                    
                    
                    81.26
                    
                    4.52October
                    
                    
                    46.41
                    
                    1.37
                    
                    
                    114.26
                    
                    3.47November
                    
                    
                    47.64
                    
                    2.35
                    
                    
                    112.61
                    
                    3.39December
                    
                    
                    47.64
                    
                    2.26
                    
                    
                    113.44
                    
                    3.36





B. Ag #25-1
                    
                    Share of
                      Production
                      Volumes
                    
                    Price
                      Per
                      MCF
                    
                    Share of
                      Production
                      Volumes
                    
                    Price
                      Per
                      MCF2009
                    
                    2008January
                    
                    
                    38.80
                    
                    3.09
                    
                    
                    40.80
                    
                    3.91February
                    
                    
                    33.80
                    
                    2.34
                    
                    
                    41.80
                    
                    4.45March
                    
                    
                    36.80
                    
                    1.80
                    
                    
                    42.20
                    
                    4.98April
                    
                    
                    35.60
                    
                    1.56
                    
                    
                    42.40
                    
                    5.36May
                    
                    
                    37.80
                    
                    1.41
                    
                    
                    41.00
                    
                    6.33June
                    
                    
                    38.60
                    
                    1.59
                    
                    
                    39.80
                    
                    6.75July
                    
                    
                    38.80
                    
                    1.39
                    
                    
                    41.00
                    
                    7.71August
                    
                    
                    35.20
                    
                    1.40
                    
                    
                    39.40
                    
                    5.90September
                    
                    
                    33.60
                    
                    1.19
                    
                    
                    37.80
                    
                    4.52October
                    
                    
                    33.40
                    
                    1.37
                    
                    
                    40.00
                    
                    3.47November
                    
                    
                    33.80
                    
                    2.35
                    
                    
                    37.40
                    
                    3.39December
                    
                    
                    31.00
                    
                    2.26
                    
                    
                    37.00
                    
                    3.36




Vandenbos #19-1
                      
                      Share of
                        Production
                        Volumes
                      
                      Price
                        Per
                        MCF
                      
                      Share of
                        Production
                        Volumes
                      
                      Price
                        Per
                        MCF2009
                      
                      2008January
                      
                      
                      708.06
                      
                      3.09
                      
                      
                      1792.93
                      
                      3.91Febtuary
                      
                      
                      632.57
                      
                      2.34
                      
                      
                      1658.87
                      
                      4.45March
                      
                      
                      683.72
                      
                      1.80
                      
                      
                      1578.84
                      
                      4.98April
                      
                      
                      551.10
                      
                      1.56
                      
                      
                      1390.95
                      
                      5.36May
                      
                      
                      494.59
                      
                      1.41
                      
                      
                      1328.66
                      
                      6.33June
                      
                      
                      451.69
                      
                      1.59
                      
                      
                      1219.14
                      
                      6.75July
                      
                      
                      449.21
                      
                      1.39
                      
                      
                      1144.48
                      
                      7.71August
                      
                      
                      434.36
                      
                      1.40
                      
                      
                      1047.34
                      
                      5.90September
                      
                      
                      388.58
                      
                      1.19
                      
                      
                      958.44
                      
                      4.52October
                      
                      
                      369.60
                      
                      1.37
                      
                      
                      952.67
                      
                      3.47November
                      
                      
                      361.56
                      
                      2.35
                      
                      
                      823.97
                      
                      3.39December
                      
                      
                      352.48
                      
                      2.26
                      
                      
                      736.11
                      
                      3.36




13


Boucher
      #18-1
                    
                    Share of
                      Production
                      Volumes
                    
                    Price
                      Per
                      MCF
                    
                    Share of
                      Production
                      Volumes
                    
                    Price
                      Per
                      MCF2009
                    
                    2008January
                    
                    
                    413.33
                    
                    3.09Febtuary
                    
                    
                    356.40
                    
                    2.34March
                    
                    
                    365.48
                    
                    1.80April
                    
                    
                    299.89
                    
                    1.56May
                    
                    
                    237.81
                    
                    1.41June
                    
                    
                    196.76
                    
                    1.59July
                    
                    
                    187.69
                    
                    1.39August
                    
                    
                    194.49
                    
                    1.40
                    
                    
                    471.49
                    
                    5.90September
                    
                    
                    189.75
                    
                    1.19
                    
                    
                    546.77
                    
                    4.52October
                    
                    
                    185.21
                    
                    1.37
                    
                    
                    529.03
                    
                    3.47November
                    
                    
                    174.08
                    
                    2.35
                    
                    
                    461.38
                    
                    3.39December
                    
                    
                    175.11
                    
                    2.26
                    
                    
                    444.88
                    
                    3.36





Stoltz
      #18-1
                    
                    Share of
                      Production
                      Volumes
                    
                    Price
                      Per
                      MCF
                    
                    Share of
                      Production
                      Volumes
                    
                    Price
                      Per
                      MCF2009
                    
                    2008January
                    
                    
                    27.83
                    
                    3.09Febtuary
                    
                    
                    19.50
                    
                    2.34March
                    
                    
                    13.41
                    
                    1.80April
                    
                    
                    8.13
                    
                    1.56May
                    
                    
                    10.77
                    
                    1.41June
                    
                    
                    15.03
                    
                    1.59July
                    
                    
                    12.80
                    
                    1.39August
                    
                    
                    5.28
                    
                    1.40
                    
                    
                    43.27
                    
                    5.90September
                    
                    
                    0.41
                    
                    1.19
                    
                    
                    54.03
                    
                    4.52October
                    
                    
                    0.41
                    
                    1.37
                    
                    
                    73.13
                    
                    3.47November
                    
                    
                    0.20
                    
                    2.35
                    
                    
                    52.61
                    
                    3.39December
                    
                    
                    0.41
                    
                    2.26
                    
                    
                    38.80
                    
                    3.36





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, Vandenbos #19-1, Boucher #18-1
and Stoltz #18-1 wells for period ending December 31, 2009 were 12,479 MCF
compared to 21,830 MCF for period ending December 31, 2008. The production
decreased significantly, as a result of natural decline.





The
Company received oil revenue from the Fields #14-34 during 2009.  This
was an existing well, which was re-entered through a farm-out agreement between
Majestic Oil & Gas, Inc., and Hartford Energy, Inc.  The Company
retained a 25% Working Interest in this well.  Also, as previously
discussed, Majestic Oil & Gas, Inc. holds a 25% Working Interest in the two
wells drilled on the Donovan Lease.  The Company expects to see oil
revenues from this project in the ensuing year.




14




Fields
      #14-34
                                                            
                                                            Share of
                                                              Production
                                                              Volumes
                                                              (Barrels)
                                                            
                                                            
                                                            Price
                                                              Per
                                                              Barrel
                                                            
                                                            
                                                            Share of
                                                              Production
                                                              Volumes
                                                              Barrels
                                                            
                                                            
                                                            Price
                                                              Per
                                                              Barrel2009
                                                            
                                                            
                                                            2008JanuaryFebtuaryMarchAprilMayJuneJuly
                                                            
                                                            
                                                            40.06
                                                            
                                                            
                                                            
                                                            53.08AugustSeptemberOctoberNovemberDecember





The
Company produced from the Fields #14-34 well for a short time to establish the
viability of the well, but the well produced significant volumes of water.
Production was shut in until the Company could establish a water disposal well,
which is expected to occur in early 2010.





The
Company has plans to continue its development of oil and natural gas prospects
in the Lake Frances, Loneman Coulee and West Pondera Field areas.





Our total
expenses decreased by $75,968 from the $199,303 reported for the year ending
December 31, 2008 compared to the $123,335 reported for the year ending December
31, 2009. Of those expenses, Production (Lifting) Costs decreased by $16,928
from $32,155 for the year ended December 31, 2008 to $15,857 for the year ended
December 31, 2009. This decrease was attributable to the decrease in production
between the two periods. There was also a decrease in the Selling, General &
Administrative Expenses of $33,670 from the $105,708 reported for the period
ending December 31, 2008 compared to the $72,038 reported for the same period in
2009. The primary reason for the decrease was a reduction in professional and
consulting fees incurred. Revenues for the period significantly decreased, as a
result of the decrease in production volumes and the price per MCF.





The
Company showed a Net Loss of ($94,877) for the period ending December 31, 2009.
This compares to the Net Loss of ($68,680) for the period ending December 31,
2008. The variance between these periods is directly related to the decrease in
revenues and volumes during 2009. The Companies revenues are subject to the
volatility of natural gas prices, which continue to fluctuate.





The
Company also plans to continue its pursuit of oil prospects, which if
successful, could contribute to an increase in future revenues due to the price
per barrel of oil.  However, the price of natural gas continues to
decline, which has led to a significant decrease in the Company’s
revenue.  In spite of the drop in the price of Natural Gas, Management
is still confident that we will build the Company through continued drilling of
oil and natural gas prospects.




15




Drilling
Activity





The
following table sets forth the results of our drilling activities during the
years 2009 and 2008:





Drilling
      ActivityGross
      Wells
                                                                    
                                                                    Net
      WellsYear
                                                                    
                                                                    Total
                                                                    
                                                                    
                                                                    Producing
                                                                    
                                                                    Dry
                                                                    
                                                                    Total
                                                                    
                                                                    
                                                                    Producing
                                                                    
                                                                    Dry2009
                                                                    
                                                                    2
                                                                    
                                                                    
                                                                    2
                                                                    
                                                                    
                                                                    
                                                                    0.50
                                                                    
                                                                    
                                                                    0.502008
                                                                    
                                                                    3
                                                                    
                                                                    
                                                                    2
                                                                    
                                                                    1
                                                                    
                                                                    0.75
                                                                    
                                                                    
                                                                    0.50
                                                                    
                                                                    0.25




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 2009 and 2008, 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:





2009
                          
                          
                          2008Net
      ProductionOil
      (Bbls)
                          
                          
                          40.06Gas
      (Mcf)
                          
                          
                          12,479
                          
                          
                          
                          21,831Average
      Sales Prices
                          
                          
                          
                          
                          
                          
                          -Oil
      (per Bbl)
                          
                          $
                          53.08
                          
                          
                          $Gas
      (per Mcf)
                          
                          $
                          2.28
                          
                          
                          $
                          5.98Average
      Production Cost Per MCF
                          
                          $
                          1.27
                          
                          
                          $
                          1.47




LIQUIDITY AND RESOURCE
CAPITAL





We are
still a development stage company. From our inception to December 31, 2009, we
incurred an accumulated deficit of ($718,691). This deficit is primarily the
result of approximately $300,000 in expenses associated with stock issuances
during fiscal year ended December 31, 2002, and $322,000 in legal, accounting
and filing fees incurred since inception associated with being a publicly traded
company. As of December 31, 2009, we had $110,701 of current cash available. Our
cash resources of $110,701 are not sufficient to satisfy our cash requirements
over the next 12 months.




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, Williams, Fields, and Donovan prospects. 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.




16




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 of 3 or 5 years. Management considers the value
of the properties to be as much or more than for what they were
acquired.





Majestic
Oil & Gas, Inc. entered into a farm-out agreement with Mountain View Energy,
Inc. on September 1, 2009, outlining parameters for Mountain View Energy, Inc.
to drill a test well in the NWSE-Section 33-T27N-R4W, Teton County, MT at its
sole cost, risk and expense.    In doing so, Mountain View
Energy, Inc. would acquire 75% of the Working Interest, while Majestic Oil &
Gas, Inc. would retain a 25% Working Interest in any well drilled in the 40-acre
tract.





Accordingly,
on September 9, 2009, drilling commenced drilling on the Donovan #33-3 well
located in the SWNWSE – Section 33-T27N-R4W, Teton County,
Montana.  The well was successfully drilled and completed with an
initial production of 15 barrels of oil per day with no
water.   The producing interval is the Madison/Sun River Dolomite
with 20 feet of pay from 2,125’ to 2,145’.





Due to
the success of the Donovan #33-3, a second oil well was drilled, the Donovan
#33-2, in the SENWSE - Section 33-T27N-R4W, Teton County,
Montana.  This oil well was successfully drilled and completed with an
initial production of 2 to 4 barrels of oil per day.




Item
7A.  Quantitative and Qualitative Disclosures about Market
Risk.





As a
“smaller reporting company” as defined by Item 10 of Regulation S-K, the Company
is not required to provide this information.




17






Item
8. Financial Statements.




MAJESTIC
OIL & GAS, INC. AND SUBSIDIARY


(A
Development Stage Company)





CONSOLIDATED
FINANCIAL STATEMENTS


YEARS
ENDED DECEMBER 31, 2009 AND 2008,


AND


INCEPTION
(APRIL 16, 2002) TO DECEMBER 31, 2009









MAJESTIC
OIL & GAS, INC. AND SUBSIDIARY


(A
Development Stage Company)





Table of
Contents







PageINDEPENDENT
      AUDITORS’ REPORT
                
                F-1CONSOLIDATED
      FINANCIAL STATEMENTSBalance
      Sheets
                
                F-2Income
                
                F-3Changes
      in Stockholders’ Equity
                
                F-4Cash
      Flows
                
                F-5Notes
      to Consolidated Financial Statements
                
                F-6
      through F-15SUPPLEMENTAL
      INFORMATIONDisclosures
      about Oil and Gas Producing Activities and Properties -
      Unaudited
                
                F-16 through F-19









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, 2009 and 2008 and
the related consolidated statements of operations, stockholders’ equity, and
cash flows for the years then ended and for the cumulative period from Inception
(April 16, 2002) to December 31, 2009. 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 audits 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, 2009 and 2008, and the consolidated results of their
operations and cash flows for the years then ended and for the cumulative period
from Inception (April 16, 2002) to December 31, 2009 in conformity with
accounting principles generally accepted in the United States of
America.





As
discussed in Note 1 to the consolidated financial statements, the Company
changed its method of oil and gas reserve estimation and related required
disclosures in 2009 with the implementation of new accounting
guidance.





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.








Englewood,
Colorado


April 15,
2010




F-1




MAJESTIC
OIL & GAS, INC. AND SUBSIDIARY


(A
Development Stage Company)


CONSOLIDATED
BALANCE SHEETS


DECEMBER
31, 2009 AND 2008





2009
                    
                    
                    2008ASSETSCash
      and cash equivalents
                    
                    $
                    110,701
                    
                    
                    $
                    79,790Trade
      receivables
                    
                    
                    5,823
                    
                    
                    
                    24,070Total
      current assets
                    
                    
                    116,524
                    
                    
                    
                    103,860PROPERTY
      AND EQUIPMENTOil
      and gas properties, using the full cost pool method of
      accounting:Properties
      being amortized
                    
                    
                    455,894
                    
                    
                    
                    455,894Properties
      not subject to amortization
                    
                    
                    202,531
                    
                    
                    
                    138,383Less
      accumulated depletion, amortization and impairment
                    
                    
                    (164,000
                    )
                    
                    
                    (129,400
                    )Net
      property and equipment
                    
                    
                    494,425
                    
                    
                    
                    464,877OTHER
      ASSETSWebsite
      development costs (less accumulated amortization)
                    
                    
                    400
                    
                    
                    
                    1,240Total
      other assets
                    
                    
                    400
                    
                    
                    
                    1,240Total
      assets
                    
                    $
                    611,349
                    
                    
                    $
                    569,977LIABILITIESAccounts
      payable
                    
                    $
                    5,028
                    
                    
                    $
                    5,708Production
      taxes and royalties payable
                    
                    
                    1,379
                    
                    
                    
                    4,409Well
      settlement payable
                    
                    
                    22,959
                    
                    
                    
                    -Total
      current liabilities
                    
                    
                    29,366
                    
                    
                    
                    10,117Asset
      retirement obligation
                    
                    
                    8,879
                    
                    
                    
                    8,879Total
      liabilities
                    
                    
                    38,245
                    
                    
                    
                    18,996STOCKHOLDERS'
      EQUITYCommon
      stock, no par value-Authorized,
      100,000,000 sharesIssued
      and outstanding, 8,918,000 in 2009 and 7,808,000 shares in
      2008
                    
                    
                    1,272,500
                    
                    
                    
                    1,155,500Additional
      paid in capital
                    
                    
                    19,295
                    
                    
                    
                    21,295Stock
      subscription receivable
                    
                    
                    -
                    
                    
                    
                    (2,000
                    )(Deficit)
      accumulated during the development stage
                    
                    
                    (718,691
                    )
                    
                    
                    (623,814
                    )573,104
                    
                    
                    
                    550,981Total
      liabilities and stockholders' equity
                    
                    $
                    611,349
                    
                    
                    $
                    569,977





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, 2009 AND 2008,


AND
THE PERIOD FROM INCEPTION (APRIL 16, 2002) TO DECEMBER 31, 2009







InceptionYear Ended
                        
                        
                        Year Ended
                        
                        
                        (April 16, 2002)December 31,
                        
                        
                        December 31,
                        
                        
                        to December 31,2009
                        
                        
                        2008
                        
                        
                        2009REVENUE
                        
                        $
                        28,458
                        
                        
                        $
                        130,623
                        
                        
                        $
                        455,677PRODUCTION
      (LIFTING) COSTS
                        
                        
                        15,857
                        
                        
                        
                        32,155
                        
                        
                        
                        139,963EXPLORATION
      EXPENSES
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        3,862DEPLETION,
      DEPRECIATION, AMORTIZATION & IMPAIRMENT
                        
                        
                        35,440
                        
                        
                        
                        61,440
                        
                        
                        
                        166,100INCOME
      FROM OIL & GAS PRODUCING ACTIVITIES
                        
                        
                        (22,839
                        )
                        
                        
                        37,028
                        
                        
                        
                        145,752SELLING,
      GENERAL & ADMINISTRATIVE EXPENSES
                        
                        
                        72,038
                        
                        
                        
                        105,708
                        
                        
                        
                        864,443NET
      LOSS
                        
                        $
                        (94,877
                        )
                        
                        $
                        (68,680
                        )
                        
                        $
                        (718,691
                        )EARNINGS
      PER SHARENet
      income (loss), basic and diluted
                        
                        $
                        (0.01
                        )
                        
                        $
                        (0.01
                        )Weighted
      average number of shares outstanding
                        
                        
                        7,952,959
                        
                        
                        
                        7,739,868Dilutive
      potential shares-stock warrants
                        
                        
                        -
                        
                        
                        
                        -Adjusted
      weighted average shares
                        
                        
                        7,952,959
                        
                        
                        
                        7,739,868





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, 2009 AND 2008,


AND
THE PERIOD FROM INCEPTION (APRIL 16, 2002) TO DECEMBER 31, 2009







(Deficit)AccumulatedCommon Stock
                  
                  
                  Additional
                  
                  
                  Stock
                  
                  
                  DuringPaid In
                  
                  
                  Subscription
                  
                  
                  DevelopmentShares
                  
                  
                  Amount
                  
                  
                  Capital
                  
                  
                  Receivable
                  
                  
                  Stage
                  
                  
                  TotalBEGINNING
      BALANCE, INCEPTION (APRIL 16, 2002) TO 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
                  )
                  
                  
                  469,661Common
      stock issued
                  
                  
                  300,000
                  
                  
                  
                  150,000
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  150,000Net
      loss
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (68,680
                  )
                  
                  
                  (68,680
                  )BALANCE,
      DECEMBER 31, 2008
                  
                  
                  7,808,000
                  
                  
                  
                  1,155,500
                  
                  
                  
                  21,295
                  
                  
                  
                  (2,000
                  )
                  
                  
                  (623,814
                  )
                  
                  
                  550,981Common
      stock issued for services
                  
                  
                  100,000
                  
                  
                  
                  16,000
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  16,000Common
      stock issued
                  
                  
                  1,010,000
                  
                  
                  
                  101,000
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  101,000Elimination
      of subscription receivable
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (2,000
                  )
                  
                  
                  2,000
                  
                  
                  
                  -
                  
                  
                  
                  -Net
      loss
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (94,877
                  )
                  
                  
                  (94,877
                  )BALANCE,
      DECEMBER 31, 2009
                  
                  
                  8,918,000
                  
                  
                  $
                  1,272,500
                  
                  
                  $
                  19,295
                  
                  
                  $
                  -
                  
                  
                  $
                  (718,691
                  )
                  
                  $
                  573,104





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, 2009 AND 2008,


AND
THE PERIOD FROM INCEPTION (APRIL 16, 2002) TO DECEMBER 31, 2009







Inception(April 16, 2002)Year Ended
                
                
                Year Ended
                
                
                toDecember 31,
                
                
                December 31,
                
                
                December 31,2009
                
                
                2008
                
                
                2009OPERATING
      ACTIVITIESNet
      income (loss)
                
                $
                (94,877
                )
                
                $
                (68,680
                )
                
                $
                (718,691
                )Charges
      and credits to net income (loss) not affecting cashDepletion
      and amortization
                
                
                35,440
                
                
                
                61,440
                
                
                
                166,100Organizational
      expenses paid with stock
                
                
                -
                
                
                
                -
                
                
                
                300,000Legal
      fees paid with stock
                
                
                16,000
                
                
                
                -
                
                
                
                188,000Stock
      compensation expense
                
                
                -
                
                
                
                -
                
                
                
                21,295Changes
      in assets and liabilitiesTrade
      receivables
                
                
                18,247
                
                
                
                (6,429
                )
                
                
                (5,823
                )Accounts
      payable & well settlement payable
                
                
                22,279
                
                
                
                5,170
                
                
                
                27,987Production
      taxes and royalties payable
                
                
                (3,030
                )
                
                
                (26
                )
                
                
                1,379NET
      CASH (USED) PROVIDED BY OPERATING ACTIVITIES
                
                
                (5,941
                )
                
                
                (8,525
                )
                
                
                (19,753
                )INVESTING
      ACTIVITIESWebsite
      development
                
                
                -
                
                
                
                -
                
                
                
                (2,500
                )Additions
      to property and equipment
                
                
                (64,148
                )
                
                
                (139,014
                )
                
                
                (489,546
                )NET
      CASH (USED) BY INVESTING ACTIVITIES
                
                
                (64,148
                )
                
                
                (139,014
                )
                
                
                (492,046
                )FINANCING
      ACTIVITIESProceeds
      from issuance of common stock and warrants
                
                
                101,000
                
                
                
                150,000
                
                
                
                622,500NET
      CASH PROVIDED BY FINANCING ACTIVITIES
                
                
                101,000
                
                
                
                150,000
                
                
                
                622,500NET
      CHANGE IN CASH AND CASH EQUIVALENTS
                
                
                30,911
                
                
                
                2,461
                
                
                
                110,701CASH
      AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
                
                
                79,790
                
                
                
                77,329
                
                
                
                -CASH
      AND CASH EQUIVALENTS AT END OF PERIOD
                
                $
                110,701
                
                
                $
                79,790
                
                
                $
                110,701





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, 2009 AND 2008







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.  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. 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.




F-6




MAJESTIC
OIL & GAS, INC. AND SUBSIDIARY


(A
Development Stage Company)


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
31, 2009 AND 2008







Effective
January 1, 2007, the Company adopted the provisions of Financial Accounting
Standards Board (FASB) Codification Topic ASC 740-10 (previously Financial
Interpretation No. 48, “Accounting for Uncertainty in Income Taxes”). This topic
provides detailed guidance for the financial statement recognition, measurement
and disclosure of uncertain tax positions recognized in the financial
statements. Tax positions must meet a “more-likely-than-not” recognition
threshold at the effective date to be recognized upon the adoption and in
subsequent periods. Upon adoption, the Company had no unrecognized tax benefits.
During the years ended December 31, 2009 and 2008, the Company recognized no
adjustments for uncertain tax benefits. 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, 2009. 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, 2009 AND 2008







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 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.  There were no outstanding common stock warrants and options
in 2009 and the effect was anti-dilutive for 2008.





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, 2009 AND 2008







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 recognizes 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 are 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 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 years ended December 31, 2009 and 2008, the Company did not make any stock
option awards.





Recently
Issued Accounting Pronouncements




Effective
January 1, 2008, the Company adopted a framework for measuring fair value under
generally accepted accounting principles. This would apply to all financial
instruments that are being measured and reported on a fair value basis.
Currently, the Company has no financial instruments to which this statement
would apply.




In
December 2008 the SEC unanimously approved amendments to revise its oil and gas
reserves estimation and disclosure requirements. The amendments, among other
things, allows the use of new technologies to determine proved reserves; permits
the optional disclosure of probable and possible reserves; modifies the prices
used to estimate reserves for SEC disclosure purposes to a 12-month average
instead of a period end price; and requires that if a third party is primarily
responsible for preparing or auditing reserve estimates, the Company make
disclosures relating to the independence and qualifications
of the third party, including filing as an exhibit any report received from the
third party. The revised rules are effective January 1, 2010. The Company
adopted these new rules and interpretations as of December 31,
2009.




F-9




MAJESTIC
OIL & GAS, INC. AND SUBSIDIARY


(A
Development Stage Company)


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
31, 2009 AND 2008







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, 2009, the Company issued a total of 100,000 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 $16,000
charge to legal expense during the year ended December 31, 2009.





The
Company recognizes 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, 2008, an additional asset retirement obligation of $5,686 was
recorded, and a corresponding amount was added to the full cost pool bringing
the total asset retirement obligation to $8,879. No accretion expense was
recorded for the years ended December 31, 2009 and 2008, as it was not
considered to be significant.





NOTE 4 -  COMMON STOCK
WARRANTS





The
Company has in the past 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. During
the years ended December 31, 2009 and 2008 no warrants were issued, and during
the period from inception (April 16, 2002) through December 31, 2009 a total of
1,390,000 warrants were issued.




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, 2009, the Company had an outstanding receivable from Altamont of
$5,823 for gas sales,
and payables to Altamont of $1,379 for production taxes and royalties and
$22,959 for well settlement charges.




F-10




MAJESTIC
OIL & GAS, INC. AND SUBSIDIARY


(A
Development Stage Company)


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
31, 2009 AND 2008







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:


2009
                  
                  
                  2008Federal
      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
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
                                  
                                  $
                                  218,100
                                  
                                  
                                  $
                                  197,700Organizational
      costs
                                  
                                  
                                  2,300
                                  
                                  
                                  
                                  2,300Total
      deferred tax assets
                                  
                                  
                                  220,400
                                  
                                  
                                  
                                  200,000Deferred
      tax liabilitiesOil
      and gas properties and related equipment
                                  
                                  
                                  (95,000
                                  )
                                  
                                  
                                  (83,600
                                  )Total
      deferred tax liabilities
                                  
                                  
                                  (95,000
                                  )
                                  
                                  
                                  (83,600
                                  )Net
      deferred tax asset
                                  
                                  
                                  125,400
                                  
                                  
                                  
                                  116,400Less:
      Valuation allowance
                                  
                                  
                                  (125,400
                                  )
                                  
                                  
                                  (116,400
                                  )Deferred
      tax liability
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  -





During
the years ended December 31, 2009 and 2008, 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, 2009 and 2008, or during the
period from inception (April 16, 2002) to December 31, 2009.




F-11




MAJESTIC
OIL & GAS, INC. AND SUBSIDIARY


(A
Development Stage Company)


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
31, 2009 AND 2008







Operating
loss carry-forwards total approximately $573,000 as of December 31, 2009 and for
tax purposes expire in the years 2026 through 2029.




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.  These options expired on August 9, 2008, without being
exercised. 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 December 31, 2007
                  
                  
                  125,000
                  
                  
                  $
                  0.38Granted
                  
                  
                  -
                  
                  
                  
                  -Exercised
                  
                  
                  -
                  
                  
                  
                  -Forfeited
                  
                  
                  (125,000
                  )
                  
                  
                  (0.38
                  )Outstanding
      at December 31, 2009 and 2008
                  
                  
                  -
                  
                  
                  $
                  -Exercisable
      at December 31, 2009 and 2008
                  
                  
                  -
                  
                  
                  $
                  -





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.





NOTE 9 -  OIL AND GAS
PROPERTY ACQUISITIONS





Majestic
Oil & Gas, Inc. entered into a farm-out agreement with Mountain View Energy,
Inc. on September 1, 2009, outlining parameters for Mountain View Energy, Inc.
to drill a test well in Teton County, MT at its sole cost, risk and expense. In
doing so, Mountain View Energy, Inc., would acquire 75% of the Working Interest,
while Majestic Oil & Gas, Inc. would retain a 25% Working Interest in any
well drilled in the 40-acre tract.





Accordingly,
on September 9, 2009, drilling commenced drilling on the Donovan #33-3 well
located in Teton County, Montana. The well was successfully drilled and
completed with an initial production of 15 barrels of oil per day.




F-12




MAJESTIC
OIL & GAS, INC. AND SUBSIDIARY


(A
Development Stage Company)


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
31, 2009 AND 2008







Due to
the success of the Donovan #33-3, a second oil well was drilled, the Donovan
#33-2 also in Teton County, Montana.  This oil well was successfully
drilled and completed with an initial production of 2 to 4 barrels of oil per
day.





The
Company participated in a drilling program during late 2007 and early 2008. 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, a 12.5% working
interest in the Vandenbos 19-2 well, a 25% working interest in the Jody Fields
4-1 well, a 25% working interest in the Boucher 18-1 well, and a 25% working
interest in the Stoltz 18-1 well, all of which are in Pondera County, Montana.
The B. Ag 25-1 well, the Vandenbos 19-1 well, the Boucher 18-1 and the Stoltz
18-1 well are producing gas wells. The Vandenbos 19-2 well and the Jody Fields
4-1 well were dry holes.





The
Company acquired a variety of oil and gas leases during the years ended December
31, 2009 and 2008, 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-13




MAJESTIC
OIL & GAS, INC. AND SUBSIDIARY


(A
Development Stage Company)


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
31, 2009 AND 2008







Net
capitalized costs related to the Company’s oil and gas producing activities are
summarized as follows as of December 31, 2009 and 2008:





2009
                  
                  
                  2008Proved
      properties:Capitalized
      costs
                  
                  $
                  455,894
                  
                  
                  $
                  455,894Less
      accumulated depletion, depreciation, amortization and
      impairment
                  
                  
                  (164,000
                  )
                  
                  
                  (129,400
                  )Net
      capitalized costs - proved properties
                  
                  $
                  291,894
                  
                  
                  $
                  326,494Unproved
      propertiesCapitalized
      costs
                  
                  
                  202,531
                  
                  
                  
                  138,383Net
      capitalized costs
                  
                  $
                  494,425
                  
                  
                  $
                  464,877





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 $34,600 and $60,600 for the years ended December 31, 2009 and
2008, 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 recognizes 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, 2009 and 2008, an asset retirement obligation of $8,879 was
recorded, and a corresponding amount was included in the full cost pool. No
accretion expense was recorded during the years ended December 31, 2009 and
2008, as it was not considered to be significant. 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-14




MAJESTIC
OIL & GAS, INC. AND SUBSIDIARY


(A
Development Stage Company)


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
31, 2009 AND 2008







The
following table presents the Company’s current asset retirement obligation
activity in 2009:





Asset
      retirement obligations at December 31, 2008
                    
                    $
                    8,879Liabilities
      incurred during the yearLiabilities
      settled during the year
                    
                    
                    -Accretion
      expense
                    
                    
                    -Asset
      retirement obligations at December 31, 2009
                    
                    $
                    8,879





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, 2009, 2008 and the period from April 16, 2002 (Inception) to
December 31, 2009:


Period FromYear
                  
                  
                  Year
                  
                  
                  InceptionEnded
                  
                  
                  Ended
                  
                  
                  (April 16, 2002)December 31,
                  
                  
                  December 31,
                  
                  
                  to2009
                  
                  
                  2008
                  
                  
                  December 31, 2009Oil
      and gas sales
                  
                  $
                  28,458
                  
                  
                  $
                  130,623
                  
                  
                  $
                  455,677Production
      costs
                  
                  
                  (15,857
                  )
                  
                  
                  (32,155
                  )
                  
                  
                  (139,963
                  )Depletion,
      depreciation and amortization
                  
                  
                  (35,440
                  )
                  
                  
                  (60,600
                  )
                  
                  
                  (164,840
                  )(22,839
                  )
                  
                  
                  37,868
                  
                  
                  
                  150,874Income
      tax provision
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -$
                  (22,839
                  )
                  
                  $
                  37,868
                  
                  
                  $
                  150,874





NOTE 10 -  SUBSEQUENT
EVENTS





Management
has evaluated subsequent events through April 15, 2010, the date on which the
financial statements were issued.




F-15




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, 2009 AND 2008










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, 2009 and 2008:





2009
                  
                  
                  2008Proved
      properties:Capitalized
      costs
                  
                  $
                  455,894
                  
                  
                  $
                  455,894Less
      accumulated depletion, depreciation, amortization and
      impairment
                  
                  
                  (164,000
                  )
                  
                  
                  (129,400
                  )Net
      capitalized costs - proved properties
                  
                  $
                  291,894
                  
                  
                  $
                  326,494Unproved
      propertiesCapitalized
      costs
                  
                  
                  202,531
                  
                  
                  
                  138,383Net
      capitalized costs
                  
                  $
                  494,425
                  
                  
                  $
                  464,877





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, 2009, 2008, and the period from April 16, 2002
(Inception) to December 31, 2009:





Period
      FromYear
                      
                      
                      Year
                      
                      
                      InceptionEnded
                      
                      
                      Ended
                      
                      
                      (April
      16, 2002)December
      31,
                      
                      
                      December
      31,
                      
                      
                      to2009
                      
                      
                      2008
                      
                      
                      December 31, 2009Property
      acquisition costs:Proved
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      192,187Unproved
                      
                      
                      64,148
                      
                      
                      
                      13,857
                      
                      
                      
                      202,531Exploration
      costs
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      13,335Development
      costs
                      
                      
                      -
                      
                      
                      
                      125,157
                      
                      
                      
                      241,493Asset
      retirement obligation
                      
                      
                      -
                      
                      
                      
                      5,686
                      
                      
                      
                      8,879$
                      64,148
                      
                      
                      $
                      144,700
                      
                      
                      $
                      658,425




F-16




MAJESTIC
OIL & GAS, INC. AND SUBSIDIARY


(A
Development Stage Company)


SUPPLEMENTARY
INFORMATION


DISCLOSURE
OF OIL & GAS PRODUCING ACTIVITIES AND PROPERTIES - UNAUDITED


DECEMBER
31, 2009 AND 2008










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, 2009 and 2008, and the period from April 16, 2002 (Inception) to
December 31, 2009:





Period FromYear
                  
                  
                  Year
                  
                  
                  InceptionEnded
                  
                  
                  Ended
                  
                  
                  (April 16, 2002)December 31,
                  
                  
                  December 31,
                  
                  
                  to2009
                  
                  
                  2008
                  
                  
                  December 31, 2009Oil
      and gas sales
                  
                  $
                  28,458
                  
                  
                  $
                  130,623
                  
                  
                  $
                  455,677Production
      costs
                  
                  
                  (15,857
                  )
                  
                  
                  (32,155
                  )
                  
                  
                  (139,963
                  )Depletion,
      depreciation and amortization
                  
                  
                  (35,440
                  )
                  
                  
                  (60,600
                  )
                  
                  
                  (164,840
                  )(22,839
                  )
                  
                  
                  37,868
                  
                  
                  
                  150,874Income
      tax provision
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -$
                  (22,839
                  )
                  
                  $
                  37,868
                  
                  
                  $
                  150,874





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
a 12-month average price for 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-17




MAJESTIC
OIL & GAS, INC. AND SUBSIDIARY


(A
Development Stage Company)


SUPPLEMENTARY
INFORMATION


DISCLOSURE
OF OIL & GAS PRODUCING ACTIVITIES AND PROPERTIES - UNAUDITED


DECEMBER
31, 2009 AND 2008







Presented
below is a summary of the changes in estimated proved reserves of the Company
for the years ended December 31, 2009 and 2008:





2009
                    
                    
                    2008Oil
                    
                    
                    Gas
                    
                    
                    Oil
                    
                    
                    Gas(Bbls)
                    
                    
                    (Mcf)
                    
                    
                    (Bbls)
                    
                    
                    (Mcf)Proved
      reservesBeginning
      of the year
                    
                    
                    -
                    
                    
                    
                    109,448
                    
                    
                    
                    -
                    
                    
                    
                    116,462Revisions
      of previous estimates
                    
                    
                    -
                    
                    
                    
                    (27,805
                    )
                    
                    
                    -
                    
                    
                    
                    (10,891
                    )Improved
      recovery
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Purchases
      of reserves in place
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Extensions
      and discoveries
                    
                    
                    6,558
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    25,708Production
                    
                    
                    (40
                    )
                    
                    
                    (12,439
                    )
                    
                    
                    -
                    
                    
                    
                    (21,831
                    )Sales
      of reserves in place
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -End
      of the year
                    
                    
                    6,518
                    
                    
                    
                    69,204
                    
                    
                    
                    -
                    
                    
                    
                    109,448





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.





2009
                    
                    
                    2008Standardized
      Measure of Discounted FutureNet
      Cash FlowsFuture
      cash inflows
                    
                    $
                    549,000
                    
                    
                    $
                    479,000Future
      production costs
                    
                    
                    (87,000
                    )
                    
                    
                    (44,000
                    )Future
      development costs
                    
                    
                    (6,000
                    )
                    
                    
                    (9,000
                    )Future
      income tax expenses
                    
                    
                    (51,000
                    )
                    
                    
                    (44,000
                    )Future
      net cash flows
                    
                    
                    405,000
                    
                    
                    
                    382,00010%
      annual discount for estimated timing of cash flows
                    
                    
                    (154,000
                    )
                    
                    
                    (108,000
                    )Standardized
      measures of discounted future net cash flows relating to proved oil and
      gas reserves
                    
                    $
                    251,000
                    
                    
                    $
                    274,000




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, 2009 AND 2008









The
following reconciles the standardized measure of discounted future net cash flow
during 2009 and 2008:





2009
                    
                    
                    2008Beginning
      of the year
                    
                    $
                    274,000
                    
                    
                    $
                    264,000Net
      change in prices and production costs
                    
                    
                    (127,000
                    )
                    
                    
                    79,000Extensions
      and discoveries
                    
                    
                    200,000
                    
                    
                    
                    58,000Revision
      of previous estimates
                    
                    
                    (81,000
                    )
                    
                    
                    (25,000
                    )Net
      change in estimated future development costs
                    
                    
                    (2,000
                    )
                    
                    
                    (4,000
                    )Sales
      of oil and gas produced, net of production costs
                    
                    
                    (13,000
                    )
                    
                    
                    (98,000
                    )End
      of the year
                    
                    $
                    251,000
                    
                    
                    $
                    274,000




F-19




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





None




Item
9A(T).Controls and Procedures





Evaluation of Disclosure
Controls and Procedures





We
carried out an evaluation, under the supervision and with the participation of
our management, including our principal executive officer and principal
financial officer, of the effectiveness of our disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)).  Based upon that evaluation, our principal executive
officer and principal financial officer concluded that, as of the end of the
period covered in this report, our disclosure controls and procedures were not
effective to ensure that information required to be disclosed in reports filed
under the Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within the required time periods and is accumulated and communicated to
our management, including our principal executive officer and principal
financial officer, as appropriate to allow timely decisions regarding required
disclosure.





Our
management, including our principal executive officer and principal financial
officer, does not expect that our disclosure controls and procedures or our
internal controls will prevent all error or fraud.  A control system,
no matter how well conceived and operated, can provide only reasonable, not
absolute, assurance that the objectives of the control system are
met.  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.  Due to 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, have been detected. To
address the material weaknesses, we performed additional analysis and other
post-closing procedures in an effort to ensure our consolidated financial
statements included in this annual report have been prepared in accordance with
generally accepted accounting principles. Accordingly, management believes that
the financial statements included in this report fairly present in all material
respects our financial condition, results of operations and cash flows for the
periods presented.





Management’s Report on
Internal Control over Financial Reporting





Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting as defined in Rule 13a-15(f) under the
Securities Exchange Act, as amended.  Our management assessed the
effectiveness of our internal control over financial reporting as of December
31, 2009. In making this assessment, our management used the criteria set forth
by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”)
in Internal Control-Integrated Framework.  A material weakness is a
deficiency, or a combination of deficiencies, in internal control over financial
reporting, such that there is a reasonable possibility that a material
misstatement of the company's annual or interim financial statements will not be
prevented or detected on a timely basis.  We have identified the
following material weaknesses.


18





The
material weakness relates to the lack of segregation of duties in that our CEO
and CFO are the same person.  In the preparation of
audited financial statements, footnotes and financial data all of our
financial reporting is carried out by our Chief Financial Officer, and we do not
have an audit committee or independent CEO to monitor or review the work
performed. The lack of segregation of duties results from lack of a
separate Chief Financial Officer with accounting technical expertise necessary
for an effective system of internal control.  We are, in fact, a small,
relatively simple operation from a financial point of view. In order to mitigate
this material weakness to the fullest extent possible, all financial reports are
reviewed by an outside accounting firm that is not our audit firm. All
unexpected results are investigated. At any time, if it appears that any control
can be implemented to continue to mitigate such weaknesses, it is immediately
implemented. To mitigate further this material weakness to the fullest extent
possible, although our CEO/CFO has identified the financial reporting risks and
the controls and address and monitors the controls on an ongoing basis, our
outside accounting firm that is not our audit firm performed direct tests of our
internal controls and procedures in place during the year ended December 31,
2009 to identify material weaknesses that in its opinion need to be addressed.
No material weaknesses, other than the material weakness identified above, were
identified as a result of this testing. Finally, as soon as our finances allow,
we will hire an independent Chief Financial Officer.





Because
of this material weakness, management has concluded that the Company did not
maintain effective internal control over financial reporting as of December 31,
2009, based on the criteria established in "Internal Control-Integrated
Framework" issued by the COSO.





Change In Internal Control
Over Financial Reporting





There
were no changes in our internal control over financial reporting that occurred
during our last fiscal year that have materially affected, or are reasonably
likely to materially affect, our internal control over financial
reporting.




ITEM
9B. OTHER INFORMATION





None—Not
Applicable




PART
III




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





Name
            
            Age
            
            PositionPatrick
      M. Montalban
            
            52
            
            President,
      CEO and DirectorDanny
      M. Mitchell
            
            81
            
            Corporate
      Secretary and DirectorBruce
      D. Hirsche
            
            61
            
            Director




19





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 been
Vice-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 2008 to present.





Directors
serve for a one-yearterm. 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.


20


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:





o
            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.





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





o
            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





o
            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.





Code of
Ethics





The
Company does not have a code of ethics for our principal executive and financial
officers. The Company's management intends to promote honest and ethical
conduct, full and fair disclosure in our reports to the SEC, and compliance with
applicable governmental laws and regulations





Nominating
Committee





We have
not adopted any procedures by which security holders may recommend nominees to
our Board of Directors.


21


Audit
Committee





The Board
of Directors acts as the audit committee. The Company does not have a qualified
financial expert at this time because it has not been able to hire a qualified
candidate. Further, the Company believes that it has inadequate financial
resources at this time to hire such an expert.  The Company intends to
continue to search for a qualified individual for hire.




Item
11. Executive Compensation.





Summary Compensation
Table





The table
below summarizes all compensation awarded to, earned by, or paid to our
Principal Executive Officer for the years ended December 31, 2009 and
2008.





Name
                              
                              Title
                              
                              Year
                              
                              Commission
                              
                              
                              Bonus
                              
                              
                              Stock
                                awards
                              
                              
                              Option
                                Awards
                                *
                              
                              
                              Non-
                                equity
                                Incentive
                                plan
                                compen-
                                sation
                              
                              
                              Non
                                qualified
                                deferred
                                compen-
                                sation
                              
                              
                              All other
                                Compen-
                                sation
                              
                              
                              TotalPatrick
      Montalban
                              
                              President
                              
                              2009
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0Patrick
      Montalban
                              
                              President
                              
                              2008
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0




Summary Equity Awards
Table




The
following table sets forth certain information for our executive officers
concerning unexercised options, stock that has not vested, and equity incentive
plan awards as of December 31, 2009.





OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END December 31, 2009Name
                      
                      Number of
                        Securities
                        Underlying
                        Unexercised
                        Options
                        (#)
                        Exercisable
                      
                      
                      Number of
                        Securities
                        Underlying
                        Unexercised
                        Options
                        (#)
                        Unexercisable
                      
                      
                      Equity
                        Incentive
                        Plan
                        Awards:
                        Number of
                        Securities
                        Underlying
                        Unexercised
                        Unearned
                        Options (#)
                      
                      
                      Option
                        Exercise
                        Price
                      
                      Option
                        Expiration
                        Date
                        None
                      
                      Number
                        of Shares
                        or Units
                        of Stock
                        That
                        Have
                        Not
                        Vested
                        (#)
                      
                      
                      Market
                        Value of
                        Shares or
                        Units of
                        Stock
                        That
                        Have
                        Not
                        Vested
                      
                      
                      Equity
                        Incentive
                        Plan
                        Awards:
                        Number
                        Of
                        Unearned
                        Shares,
                        Units or
                        Other
                        Rights
                        That
                        Have Not
                        Vested
                        (#)
                      
                      
                      Equity
                        Incentive
                        Plan
                        Awards:
                        Market
                        or Payout
                        Value of
                        Unearned
                        Shares,
                        Units or
                        Other
                        Rights
                        That
                        Have Not
                        VestedPatrick
      Montalban
                      
                      
                      0
                      
                      
                      
                      0
                      
                      
                      
                      0
                      
                      
                      
                      0
                      
                      None
                      
                      
                      0
                      
                      
                      
                      0
                      
                      
                      
                      0
                      
                      
                      
                      0


22





Narrative disclosure to
summary compensation and option tables





We have
no employment or other compensation agreement or arrangement with Mr.
Montalban.





At no
time during the last fiscal year with respect to any person listed in the Table
above was there:




·
              any
      outstanding option or other equity-based award repriced or otherwise
      materially modified (such as by extension of exercise periods, the change
      of vesting or forfeiture conditions, the change or elimination of
      applicable performance criteria, or the change of the bases upon which
      returns are determined;


·
            any
      waiver or modification of any specified performance target, goal or
      condition to payout with respect to any amount included in non-stock
      incentive plan compensation or
payouts;


·
            any
      option or equity grant;


·
            any
      non-equity incentive plan award made to a named executive
      officer;


·
            any
      nonqualified deferred compensation plans including nonqualified defined
      contribution plans; or


·
            any
      payment for any item to be included under All Other Compensation in the
      Summary Compensation Table.




Board of
Directors




Director
Compensation




Name
                    
                    Year
                      ended
                      December
                      31, 2009
                    
                    
                    Fees
                      earned
                      or
                      paid
                      in
                      cash
                      ($)
                    
                    
                    Stock
                      awards
                      ($)
                    
                    
                    Option
                      awards
                      ($)
                    
                    
                    Non-equity
                      incentive
                      plan
                      compensation
                      ($)
                    
                    
                    Nonqualified
                      deferred
                      compensation
                      earnings
                      ($)
                    
                    
                    All other
                      compensation
                      ($)
                    
                    
                    Total
                      ($)Patrick
      M.Montalban
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0Dan
      Mitchell
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0Bruce
      D. Hirsche
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0


23




Narrative
to Director Compensation Table




We have
no compensation arrangements (such as fees for retainer, committee service,
service as chairman of the board or a committee, and meeting attendance) with
directors.




Item
12. 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
                    
                    51.6Danny
      Mitchell
                      P.O
      Box 488 Cut Bank, Montana 59427
                    
                    
                    90,000
                    
                    1.0Bruce
      Hirsche [1]
                    
                    
                    0
                    
                    0.0All
      officers and directors as a group [three persons]
                    
                    
                    4,690,000
                    
                    52.6





[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 8,918,000 shares of common stock outstanding as of December 31,
2009.


24




Item
13. 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, 2009 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,Vandenbos #19-1, Boucher #18-1 and Stoltz #18-1. 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.





Majestic
Oil & Gas, Inc. entered into a farm-out agreement with Mountain View Energy,
Inc. on September 1, 2009, outlining parameters for Mountain View Energy, Inc.,
a Canadian publicly traded company affiliated through common management and
ownership, to drill a test well in Teton County, MT at its sole cost, risk and
expense. In doing so, Mountain View Energy, Inc., would acquire 75% of the
Working Interest, while Majestic Oil & Gas, Inc. would retain a 25% Working
Interest in any well drilled in the 40-acre tract.





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.




25




Director
Independence





We are
not subject to the listing requirements of any national securities exchange or
national securities association and, as a result, we are not at this time
required to have our board comprised of a majority of “independent directors.”
Currently, we have three director and we believe that none of these directors
currently meets the definition of "independent" as promulgated by the rules and
regulations of Nasdaq.




Item
14. Principal Accounting Fees and Services




Audit
Fees





Audit
      fees paid during:The
      year ended December 31, 2008:
                  
                  $
                  24,047The
      year ended December 31, 2009:
                  
                  $
                  23,760





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




Item
15. Exhibits, Financial Statement Schedules





Copies of
the following documents are included as exhibits to this report pursuant to Item
601 of Regulation S-K.





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





Signatures





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




Majestic
Oil & Gas, Inc.





Title
                
                Name
                
                Date
                
                SignaturePrincipal
      ExecutiveOfficer
                
                Patrick
      Montalban
                
                April
      15, 2010
                
                /s/
      Patrick MontalbanPrincipal
      Accounting
                
                Patrick
      Montalban
                
                April
      15, 2010
                
                /s/
      Patrick MontalbanOfficerPrincipal
      FinancialOfficer
                
                Patrick
      Montalban
                
                April
      15, 2010
                
                /s/
      Patrick Montalban


26





Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.




SIGNATURE
            
            NAME
            
            TITLE
            
            DATE/s/
      Patrick Montalban
            
            Patrick
      Montalban
            
            Director
            
            April
      15, 2010/s/
      Bruce Hirsche
            
            Bruce
      Hirsche
            
            Director
            
            April
      15/s/
      Danny Mitchell
            
            Danny
      Mitchell
            
            Director
            
            April
      15




27