UNITED STATES


SECURITIES AND EXCHANGE
COMMISSION


WASHINGTON,
D.C. 20549




FORM 10-KSB/A


Amendment No. 1




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




For the
fiscal year ended September 30, 2007




[  ] TRANSITION REPORT UNDER
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE


ACT OF 1934




For the
transition period from to





Commission file
number:000-31987





TEXHOMA ENERGY,
INC.


(Name of
small business issuer in its charter)




Nevada
            20-4858058(State
      of organization)
            (I.R.S.
      Employer Identification No.)





100 Highland Park Village
#200


Dallas, Texas
75205


(Address
of principal executive offices)





(214)
295-3380


(Registrant's  telephone  number)




SECURITIES REGISTERED PURSUANT TO
SECTION 12(B)


OF THE EXCHANGE
ACT:




None




SECURITIES REGISTERED PURSUANT TO
SECTION 12(G)


OF THE EXCHANGE
ACT:





Common Stock, $0.001 par value per
share




1


This
Amended Annual Report on Form 10-KSB/A is being filed by the Registrant to
correct the Registrant’s Summary Compensation Table as filed in its initial
Report on Form 10-KSB filing for the fiscal year ended September 30, 2007, to
correct the value of the Stock Awards granted to Ibrahim Nafi Onat during the
fiscal year ended September 30, 2007, and to include additional disclosures
regarding the Registrant’s Non-Equity Incentive Plan Compensation and
Nonqualified Deferred Compensation Earnings for the periods presented in the
Summary Compensation Table, and to include the table titled “Outstanding Equity
Awards at Fiscal Year End September 30, 2007.”  Other than the Summary
Compensation Table, the remainder of this document is identical to the
Registrants Report on Form 10-KSB for the fiscal year ended September 30, 2007,
which was filed with the Commission on January 15, 2008, and investors should
review the Registrant’s latest Form 10-QSB and Reports on Form 8-K for updated
information regarding the Registrant’s financial condition and results of
operations.


Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for
such shorter periods 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 [   ].





Check if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB/A or any
amendment to this Form 10-KSB/A [  ].





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
issuer's revenues for the fiscal year ended September 30, 2007 were
$1,847,647.




The
aggregate market value of the issuer's voting and non-voting common equity held
by non-affiliates computed by reference to the average bid and ask price of such
common equity as of December 26, 2007 was $0, as the issuers common stock
currently is only traded on a sporadic basis on the Pinksheets.com, which quotes
the issuer does not believe provides an accurate and/or useful basis for the
aggregate market value of the issuers common stock.




At
December 26, 2007, there were 231,412,224  shares of the issuer's
common stock outstanding, which amount does not include 18,000,000 shares of
common stock which were held by Valeska Energy Corp. as of December 26, 2007,
which the Registrant and Valeska have since cancelled.


2


TABLE OF CONTENTS




PART
I





ITEM
      1.
            DESCRIPTION
      OF BUSINESS
            4ITEM
      2.
            DESCRIPTION
      OF PROPERTY
            16ITEM
      3.
            LEGAL
      PROCEEDINGS
            21ITEM
      4.
            SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS
            21




PART
II





ITEM
      5.
            MARKET
      FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
            22ITEM
      6.
            MANAGEMENT'S
      DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
            23ITEM
      7
            FINANCIAL
      STATEMENTS
            F-1ITEM
      8.
            CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE
            35ITEM
      8A.
            CONTROLS
      AND PROCEDURES
            36ITEM
      8B.
            OTHER
      INFORMATION
            36




PART
III




ITEM
      9.
            DIRECTORS,
      EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION
      16(A) OF THE EXCHANGE ACT
            35ITEM
      10
            EXECUTIVE
      COMPENSATION
            37ITEM
      11.
            SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS
            39ITEM
      12.
            CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS
            42ITEM
      13.
            EXHIBITS
            50ITEM
      14
            PRINCIPAL
      ACCOUNTANT FEES AND SERVICES
            53SIGNATURES
            
            55











3


PART I




FORWARD-LOOKING
STATEMENTS




ALL
STATEMENTS IN THIS DISCUSSION THAT ARE NOT HISTORICAL ARE FORWARD-LOOKING
STATEMENTS WITHIN THE MEANING OF SECTION 21E OF THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED. STATEMENTS PRECEDED BY, FOLLOWED BY OR THAT OTHERWISE INCLUDE
THE WORDS "BELIEVES", "EXPECTS", "ANTICIPATES", "INTENDS", "PROJECTS",
"ESTIMATES", "PLANS", "MAY INCREASE", "MAY FLUCTUATE" AND SIMILAR EXPRESSIONS OR
FUTURE OR CONDITIONAL VERBS SUCH AS "SHOULD", "WOULD", "MAY" AND "COULD" ARE
GENERALLY FORWARD-LOOKING IN NATURE AND NOT HISTORICAL FACTS. THESE
FORWARD-LOOKING STATEMENTS WERE BASED ON VARIOUS FACTORS AND WERE DERIVED
UTILIZING NUMEROUS IMPORTANT ASSUMPTIONS AND OTHER IMPORTANT FACTORS THAT COULD
CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN THE FORWARD-LOOKING
STATEMENTS. FORWARD-LOOKING STATEMENTS INCLUDE THE INFORMATION CONCERNING OUR
FUTURE FINANCIAL PERFORMANCE, BUSINESS STRATEGY, PROJECTED PLANS AND OBJECTIVES.
THESE FACTORS INCLUDE, AMONG OTHERS, THE FACTORS SET FORTH BELOW UNDER THE
HEADING "RISK FACTORS." ALTHOUGH WE BELIEVE THAT THE EXPECTATIONS REFLECTED IN
THE FORWARD-LOOKING STATEMENTS ARE REASONABLE, WE CANNOT GUARANTEE FUTURE
RESULTS, LEVELS OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS. MOST OF THESE FACTORS
ARE DIFFICULT TO PREDICT ACCURATELY AND ARE GENERALLY BEYOND OUR CONTROL. WE ARE
UNDER NO OBLIGATION TO PUBLICLY UPDATE ANY OF THE FORWARD-LOOKING STATEMENTS TO
REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE HEREOF OR TO REFLECT THE
OCCURRENCE OF UNANTICIPATED EVENTS. READERS ARE CAUTIONED NOT TO PLACE UNDUE
RELIANCE ON THESE FORWARD-LOOKING STATEMENTS.   REFERENCES IN
THIS FORM 10-KSB/A, UNLESS ANOTHER DATE IS STATED, ARE TO SEPTEMBER 30,
2007.  AS USED HEREIN, THE COMPANY, TEXHOMA, WE, US, OUR AND WORDS OF
SIMILAR MEANING REFER TO TEXHOMA ENERGY, INC. AND ITS WHOLLY OWNED DELAWARE
SUBSIDIARY, TEXAURUS ENERGY, INC., UNLESS OTHERWISE STATED.




ITEM 1.
DESCRIPTION OF BUSINESS




Business
History





Texhoma
Energy, Inc. (we, us, the Company, and Texhoma), was originally formed as a
Nevada corporation on September 28, 1998 as Pacific Sports Enterprises, Inc. Our
business objective was to own and operate a professional basketball team that
would be a member of the American Basketball Association. The American
Basketball Association was not successful in organizing the league, and
consequently the member teams ceased operating activities in 1999. Thereafter,
we were dormant without any business operations until October 20,
2000.





In May
2001, we changed our name to Make Your Move, Inc. and on September 20, 2004, we
changed our name to Texhoma Energy, Inc. in connection with our change in
business focus to oil and gas exploration and production.





Effective
May 28, 2004, we affected a 1:150 reverse stock split of our issued and
outstanding shares of common stock. Effective November 9, 2004, we affected a
4:1 forward split of our issued and outstanding common stock. Unless otherwise
stated all share amounts listed throughout this filing retroactively take into
account both the May 28, 2004 reverse stock split and the November 9, 2004
forward stock split.





On
November 5, 2004, we entered into a Sale and Purchase Agreement with Capersia
Pte. Ltd., a Singapore company (Capersia), to acquire 40% of an oil and gas
exploration license operated by Black Swan Petroleum Pty. Ltd. (Black Swan) and
its wholly owned subsidiary Black Swan Petroleum (Thailand) Limited (Black Swan
Thai). Black Swan Thai owned the license, permits and title to a petroleum
concession in the Chumphon Basin in the Gulf of Thailand, referred to as Block
B7/38 (the Concession).




Black
Swan recommenced exploration operations of the Concession and Black Swan drilled
two exploration wells in February and March 2005, which proved void of
commercially viable hydrocarbons. In June 2005
after completion of the exploration activities, the venturers decided to
discontinue the exploration efforts in Thailand and relinquished the Concession
back to the government of Thailand.


4





On
January 20, 2006 we divested our shareholding in Black Swan and Black Swan
Thai.





After the
exploration venture in Thailand the Board of Directors of the Company decided to
shift its focus to domestic oil and gas exploration and production, with a
particular focus on south Louisiana and east Texas, including near-shore Gulf of
Mexico.





On
February 2, 2006, we executed a Sale and Purchase Agreement (the Clovelly SPA)
with Sterling Grant Capital, Inc. pursuant to which we acquired a 5% (five
percent) working interest in the Clovelly South prospect (bringing our total
working interest to 11%) located in Lafourche Parish, Louisiana. As a result,
the Company agreed to fund the work program for the Clovelly South project in
accordance with the Joint Operating Agreement for the property. The
Allain-Lebreton No. 2 well was drilled and plugged and abandoned in September
2006.





On March
15, 2006, our wholly-owned subsidiary, Texaurus Energy, Inc., which was formed
in March 2006 as a Delaware corporation ("Texaurus"), entered into a Sales and
Purchase Agreement with Structured Capital Corp., a Texas corporation to
purchase certain oil and gas leases in Vermillion Parish, Louisiana. The 8%
working interest (5.38167% net revenue interest) in the Intracoastal City field
was acquired for a) two million five hundred thousand dollars ($2,500,000) and
b) the issuance of 37,500,000 shares of our common stock.





On March
28, 2006, Texaurus entered into a Securities Purchase Agreement ("Securities
Purchase Agreement") with Laurus Master Fund, Ltd. ("Laurus"); a Registration
Rights Agreement with Laurus; issued Laurus a Common Stock Purchase Warrant;
entered into a Master Security Agreement with Laurus; sold Laurus a Secured Term
Note in the amount of $8,500,000, and entered into various other agreements.
Additionally, in connection with the closing, we issued Laurus a Common Stock
Purchase Warrant to purchase up to 10,625,000 shares of our common stock at an
exercise price of $0.04 per share.




In
addition, Laurus can acquire up to 961 shares of Texaurus common stock at an
exercise price of $0.001 per share, representing 49% of Texaurus outstanding
common stock.  This will be valued at Fair Market Value as of the date
of the transaction.





The
Securities Purchase Agreement and Laurus March 2006 funding is described in
greater detail below under March 2006 Laurus Master Fund, Ltd.
Funding.





On March
28, 2006, with an effective date of January 1, 2006, Texaurus closed a Sales
& Purchase Agreement to purchase certain interests in the Barnes Creek gas
field and the Edgerly field from Kilrush Petroleum, Inc. Texaurus paid the
$5,225,000 purchase price with proceeds received from its sale of the Secured
Term Note with Laurus.





March 2006 Funding with
Laurus Master Fund, Ltd.





On March
28, 2006 (the "Closing"), Texaurus entered into a Securities Purchase Agreement
("Securities Purchase Agreement") with Laurus Master Fund, Ltd. ("Laurus"); a
Registration Rights Agreement with Laurus ("Registration Rights Agreement");
issued Laurus a Common Stock Purchase Warrant (the "Texaurus Warrant"); entered
into a Master Security Agreement with Laurus; sold Laurus a Secured Term Note in
the amount of $8,500,000 (the "Note"), and entered into various other agreements
described below. Additionally, in connection with the Closing, we issued Laurus
a Common Stock Purchase Warrant (the "Texhoma Warrant"), which agreements are
described in greater detail below.




SECURED TERM NOTE





The
Secured Term Note (the "Note") in the amount of $8,500,000, which was sold by
Texaurus to Laurus in connection with the Closing, is due and payable in three
years from the Closing on March 27, 2009 (the "Maturity Date"), and bears
interest at the Wall Street Journal Prime Rate (the "Prime Rate"), plus two
percent (2%) (the "Contract Rate"), based on a 360 day year, payable monthly in
arrears, beginning on April 1, 2006, provided however that the Contract Rate
shall never be less than eight percent (8%). As of December
26, 2007, the Contract Rate is nine and one-quarter percent (9.25%) per year,
with the Prime Rate at seven and one-quarter percent
(7.25%).


5





Additionally,
the Note provided for principal payments on the funds to be made each month,
beginning on June 1, 2006, and continuing up to and including the Maturity Date.
The amount of these monthly principal payments is equal to eighty percent (80%)
of the gross production revenue received by Texaurus, relating to all oil and
gas properties owned by Texaurus, for the prior calendar month, provided that
the  payments shall increase to one hundred percent (100%) of such
gross production revenue if an Event of Default occurs (as defined in the
Note).





If an
Event of Default occurs under the Note, the Note shall bear additional interest
in the amount of two percent (2%) per month above the then current interest rate
of the Note, until such Event of Default is cured or waived. Additionally, upon
the occurrence of and during the continuance of any Event of Default, Laurus can
at its option, demand repayment in full of all obligations and liabilities owing
by Texaurus to Laurus by way of a default payment equal to 130% of the
outstanding principal amount of the Note and any accrued but unpaid interest
thereon.




Additionally,
we agreed to guaranty the Note and other obligations owing to Laurus pursuant to
a Guaranty, the entry into a Master Security Agreement (described below) and the
entry into a Stock Pledge Agreement, whereby we pledged 100% of the outstanding
stock of Texaurus to Laurus to guarantee the payment and performance of all
obligations and indebtedness owed to Laurus by Texaurus.





In
connection with the Closing, Texaurus paid Laurus Capital Management, LLC, the
manager of Laurus, a closing payment equal to 3.5% of the Note, or $297,500;
Energy Capital Advisors, LLC, an advisory fee equal to $495,000; certain amounts
paid to various other parties, including our law firm, Laurus' law firm and
certain of our advisors; and the $5,225,000 paid for the Kilrush, represented
the entire $8,500,000 received in connection with the sale of the Note, as well
as $300,000 of the funding provided by our former Executive Chairman and
Director, Frank Jacobs.





Additionally,
in consideration for advisory services rendered in connection with the Closing,
we granted Energy Capital Solutions, LLC, warrants to purchase up to 1,062,500
shares of our common stock at an exercise price of $0.04 per share. Energy
Capital Solutions, LLC's warrants expire if unexercised at 5:00 P.M. C.S.T. on
March 28, 2011.





REGISTRATION RIGHTS
AGREEMENT





In
connection with the Closing, we entered into a Registration Rights Agreement
with Laurus, by which we agreed to file a registration statement covering the
shares exercisable in connection with the Texhoma Warrant within sixty (60) days
of the date of the Closing, and that such registration statement would be
effective within one hundred and eighty (180) days of the Closing date, which
registration statement we were unable to file to date, due to the fact that we
were not current in our filings with the Commission. In November 2007, we
entered into the First Amendment with Laurus (described below), pursuant to
which Laurus agreed to amend the date we are required to gain effectiveness of
the Registration Statement by, to April 30, 2008.




TEXAURUS WARRANT





In
connection with the Closing, Texaurus issued Laurus the Texaurus Warrant, which
provides Laurus the right to purchase up to 961 shares of Texaurus common stock,
representing 49% of Texaurus' outstanding common stock at an exercise price of
$0.001 per share. The Texaurus Warrant is exercisable by Laurus at any time
after the payment by Texaurus in full of the Note. The Texaurus Warrant will be
subject to identical rights to registration as described above in connection
with the Texhoma Registration Rights Agreement, when and if Texaurus completes
an initial public offering and/or otherwise becomes publicly
traded.





TEXHOMA WARRANT




In
addition to the Texaurus Warrant granted to Laurus by Texaurus, at the Closing,
we granted Laurus a Common Stock Purchase Warrant (the "Texhoma Warrant"), to
purchase up to 10,625,000 shares of our common stock at an exercise price of
$0.04 per share, which if exercised in full would provide us aggregate consideration
of $425,000.   The Texhoma Warrant expires if unexercised at 5:00 P.M.
on March 28, 2011. The Texhoma Warrant contains a provision whereby Laurus is
not able to exercise any portion of the Warrant, which exercise would cause it
to hold more than 4.99% of our issued and outstanding common stock, unless an
Event of Default under the Note has occurred (as described above) and/or if
Laurus provides us 75 days prior written notice of their intent to hold greater
than 4.99% of our issued and outstanding common stock.


6





MASTER SECURITY
AGREEMENT





To secure
the payment of the obligations of Texaurus incurred in connection with the
Closing, Texaurus and we entered into a Master Security Agreement with Laurus,
whereby Texaurus and we agreed to grant Laurus a continuing security interest in
all of our cash, cash equivalents, accounts, accounts receivable, deposit
accounts (including the amount in the Restricted Account, as described above),
inventory, equipment, goods, fixtures, documents, instruments, contract rights,
general intangibles, chattel paper, investment property, letter-of-credit
rights, trademarks and applications, patents and applications, copyrights and
applications and other intellectual property which Texaurus has or hereafter
acquires; the Kilrush Property and any additional properties or interests
acquired by Texaurus, as well as certain other interests associated with such
properties.





SIDE LETTER
AGREEMENT





In
connection with the issuance of the Texaurus Warrant, we and Texaurus entered
into a "Side Letter Agreement," whereby we and Texaurus agreed that following
the exercise of the Texaurus Warrant by Laurus, we and Laurus would negotiate in
good faith the terms of a shareholders agreement in connection with Texaurus,
which among other things would provide for Laurus' consent to certain actions to
be taken by Texaurus or us, including, declaring or paying any dividends,
selling or disposing of any assets, entering into any transactions outside of
the normal course of business, creating any mortgage, lien, charge or other form
of encumbrance with respect to any assets, entering into any agreements with
third parties, issuing or selling any capital stock, warrants or convertible
securities, or appointing or replacing any outside accountants or
auditors.




7


Significant Transactions
Affected During 2006 and 2007:





Lucayan Oil and Gas
Investments, Ltd. Transactions





On April
10, 2006, we entered into a Debt Conversion Agreement with Lucayan Oil and Gas
Investments, Ltd., a Bahamas corporation, formerly Devon Energy Thai Holdings,
Ltd. ("LOGI"). We had owed $895,000 to LOGI as of the date of the Debt
Conversion Agreement in connection with money received by the Company for the
drilling in Thailand in February and March 2005. Pursuant to the Debt Conversion
Agreement, the Company and LOGI agreed to convert $160,000 of the $895,000 which
LOGI was owed into an aggregate of 4,000,000 shares (or one (1) share for each
$0.04 of debt converted) of newly issued shares of the Company's restricted
common stock. The conversion price used in the Debt Conversion Agreement is
based on 80% of the average market price of the shares for the 30 days preceding
the conversion agreement.  This was considered to be the Fair Market
Value at the time of the transaction.  The Director and 50% owner of
LOGI is Max Maxwell, who became a Director of the Company on April 10, 2006, and
President of the Company on April 12, 2006, and resigned as President and
Director on May 1, 2007. Mr. Maxwell obtained his 50% ownership in LOGI on April
10, 2006 in consideration for joining LOGI as an officer and director and
introducing Texhoma to various oil and gas opportunities.





On April
10, 2006, the Company entered into a convertible note with LOGI evidencing the
$735,000 of debt which was still owed to LOGI after the Debt Conversion
Agreement. The terms of the convertible note provided for the same conversion
price as the previously mentioned Debt Conversion Agreement.  On May
15, 2006, LOGI provided the Company notice of its desire to convert its $735,000
Promissory Note into 18,375,000 shares of the Company's common stock which the
Company issued in consideration for the debt conversion.  This
conversion rate was considered Fair Market Value at the date of
conversion.





On May
31, 2006, Texhoma entered into six (6) participation agreements to purchase
various oil and gas leases from Sunray Operating Company LLC.





On June
8, 2006, we entered into a Promissory Note and Security Agreement (the
"Promissory Note"), with Polaris Holdings, Inc., which held 12,500,000 shares of
our common stock ("Polaris"). Pursuant to the Promissory Note, Polaris gave us a
$250,000 loan. The Promissory Note was due and payable on August 10, 2006, with
interest at 12% per annum. As part payment of the note we exchanged our
remaining interest in Buck Snag and 5% of  our interest in Sandy Point
to Polaris, in consideration for a reduction in the loan in the amount of
$90,000.As  of the filing of this report the note has been paid in
full





We also
gave Polaris an Option to participate in our Clovelly Field interests in
connection with the Promissory Note (described below). We agreed pursuant to the
Promissory Note to repay the amounts owed to Polaris by way of (a) two-thirds of
the net proceeds we receive from any stock sales while the Promissory Note is
outstanding, and (b) one-third of our share of the production income we receive
from our oil and gas interests in Vermillion Parish, Louisiana, which represents
a 10% working interest (7.3% net revenue interest) in such leases and our oil
and gas interests in the Barnes Creek Field, located in Allen Parish, Louisiana
and the Edgerly Field located in Calcasieu Parish, Louisiana from Kilrush
Petroleum, Inc., which constitutes a 7.42% working interest (a 5.38% net revenue
interest) in the Barnes Creek gas field, and an 11.76% working interest (8.47%
net revenue interest) in the Edgerly oil field (the "Texaurus
Interests").





We used
the proceeds from the Promissory Note to pay for the cost of drilling the
Allain-LeBreton No. 2 well in the Clovelly prospect of which we own an 11%
working interest. The prospect is located in Lafourche Parish, Louisiana and
operated by ORX Resources, Inc. ("ORX").  Our former Director,
President and Chief Executive Officer was a Director of ORX at the time of the
Companys entry into the Promissory Note.





In
consideration for Polaris agreeing to loan us the money pursuant to and in
connection with the Promissory Note, we agreed to provide Polaris an option to
participate in Clovelly field for a three percent (3%) working interest, which
option Polaris can elect after reviewing the logs of the Allain-LeBreton No. 2
well at target depth, but before the completion of the well (the "Option"). In
the event that Polaris elects to exercise its Option and participate in the
Allain-LeBreton No. 2 well, we will surrender 3/11ths of our 11% working
interest in the well and Polaris will reimburse Texhoma for the drilling costs
incurred by us for the three percent (3%) working interest from the commencement
of the drilling operations.




8







In the
event that we are unable to repay the Promissory Note to Polaris when due, we
agreed pursuant to the Promissory Note to assign one hundred percent (100%) of
the cash flow from our portion of the Texaurus Interests to Polaris or its
nominee until the Promissory Note is paid in full.  They did not
declare an event of default and the note has been repaid in full.





On
October 10, 2006, ORX Resources, Inc., operator of the Clovelly Prospect well,
notified Texhoma that the jointly owned well had been plugged and abandoned on
September 23, 2006.





In June
and August 2006, Texhoma closed the purchase of three (3) of the participation
agreements, entering into Assignments and Bill of Sales for purchase from Sunray
Operating Company LLC (Sunray) of the following Leases:





Leases
      covering approximately 196 acres of land in Brazoria County, Texas. In the
      purchase, Texhoma acquired an undivided 37.5% interest, subject to
      existing overriding royalty interests equal to 25% of 8/8. Additionally,
      Sunray is entitled to a five-eighths of eight-eighths (62.5% of 8/8)
      working interest, proportionally reduced at payout; andLeases
      covering approximately 20 acres of land in Brazoria County, Texas. In the
      purchase, Texhoma acquired an undivided 35% interest in the leases,
      subject to existing overriding royalty interests equal to 25% of
      8/8.Leases
      covering approximately 280 acres of land in Brazoria County, Texas. In the
      purchase, Texhoma acquired an undivided 72.5% interest in the leases,
      subject to existing overriding royalty interests equal to 28% of 8/8.
      Texhoma simultaneously sold a 42.5% interest leaving a 30%
      interest.Texhoma
      declined to participate in the purchase of the leases covering
      approximately 80 acres in Brazoria County. In September 2006, this well
      was a dry hole and participation in subsequent wells was
      declined.  However, Texhoma continues to hold a 12.5% back in
      Working Interest.


Two
      leases for another 160 acre site and a 60 acre site which were declined by
      Texhoma and in which we retained a 12.5% back in Working
      Interest.





We
purchased the Leases from Sunray for aggregate consideration of $143,161, of
which $113,161 was paid in cash and $30,000 was paid in the form of shares of
our common stock, by the issuance of an aggregate of 375,000 units (each a
"Unit"), which each include one (1) share of common stock and one (1) warrant,
which entitles the holder of such warrant to purchase one (1) share of our
common stock at an exercise price of $0.15 per share, prior to the one (1) year
anniversary of such warrant grant, which Units were valued at $0.08 per
Unit.  Approximately $50,000 remains due to Sunray as of the date of
this filing, in connection with the purchase of the Leases.




Upon the
closing of the Purchases we and Sunray agreed to enter into an operating
agreement in connection with the development of the leases. Additionally, both
we and Sunray agreed that should either party be unable or unwilling, for any
reason, to participate in the drilling of the initial well on any of the leases
described above, the non-participating party shall, at least 90 days prior to
any expiration or any rental date under the leases, assign the participating
party all of its right, title and interest in such lease.





Amendment to Certificate of
Incorporation





On
September 20, 2006, with an effective date of filing of September 21, 2006, we
filed a Certificate of Amendment to our Articles of Incorporation to increase
our authorized shares of common stock to three hundred million (300,000,000)
shares of common stock, $0.001 par value per share, and to re-authorize one
million (1,000,000) shares of preferred stock, $0.001 par value per share (the
"Amendment").




Additionally, the
Amendment provided that shares of our preferred stock may be issued from time to
time in one or more series, with distinctive designation or title as shall be
determined by our Board of Directors prior to the issuance of any shares
thereof. The preferred stock shall have such voting powers, full or limited, or
no voting powers, and such preferences and relative, participating, optional or
other special rights and such qualifications, limitations or restrictions
thereof, as shall be stated in such resolution or resolutions providing for the
issue of such class or series of preferred stock as may be adopted from time to
time by our Board of Directors prior to the issuance of any shares thereof. The
number of authorized shares of preferred stock may be increased or decreased
(but not below the number of shares thereof then outstanding)
by the affirmative vote of the holders of a majority of the voting power of all
the then outstanding shares of the capital stock of the corporation entitled to
vote generally in the election of directors, voting together as a single class,
without a separate vote of the holders of the preferred stock, or any series
thereof, unless a vote of any such holders is required pursuant to any preferred
stock designation.


9





Promissory
Note





On or
about October 19, 2006, the Company issued a Promissory Note to Jacobs Oil &
Gas Limited, an entity controlled by Mr. Frank Jacobs, our former Director, in
the amount of $493,643.77, which amount represented funds advanced to the
Company by Mr. Jacobs and management fees owed to Mr. Jacobs (the Jacobs' Note).
The Jacobs' Note bears interest at the rate of 6% per annum until paid, and is
payable by the Company at any time on demand. The Jacobs' Note may be pre-paid
at any time without penalty. Any amounts not paid on the Jacobs' Note when due
shall bear interest at the rate of 15% per annum. The Company also entered into
a Security Agreement with Mr. Jacobs under which Agreement the Board of
Directors ratified the transfer of 200,000 shares of the common stock of Morgan
Creek Energy Corp., which shares were held by the Company, to Mr. Frank Jacobs
as security for the money that is owed pursuant to the Jacobs'
Note.





On or
about June 5, 2007, we entered into an Agreement with Jacobs Oil & Gas
Limited (Jacobs), pursuant to which Jacobs agreed that no interest would be due
from us and/or accrue on the principal or accrued interest to date on his
outstanding Promissory Note for the period of one (1) year from the date of the
Agreement and that he would not try to collect the principal and/or accrued
interest on such note for a period of one (1) year.  The Jacobss Note
was subsequently forgiven in connection with the Jacobs Settlement, described
below.





Letter
Agreement





On or
about May 15, 2007, we entered into a Letter Agreement with Matrixx Resource
Holdings Inc. (Matrixx) to sell our 11% working interest in the property known
as the Clovelly Prospect (the Clovelly Prospect) for $150,000. In connection
with and pursuant to the Letter Agreement, we expected to receive an earnest
money deposit of $25,000 on or about May 25, 2007, with the remainder of the
purchase price to be paid on or before June 30, 2007; however, we did not
receive any funds or any deposit from Matrixx and the Letter Agreement has been
terminated.





Management Services
Agreement





On or
about May 15, 2007, we entered into a Management Services Agreement with Valeska
Energy Corp. (Valeska), whose President is William M. Simmons, who became an
officer and Director of us on or about June 4, 2007, as described below, which
was subsequently amended on or about June 1, 2007 (collectively the Management
Agreement).





Pursuant
to the Management Agreement, we agreed to enter into a Joint Venture agreement
with Valeska (the Joint Venture), described below; Valeska agreed to provide us
management services and act as a Management Consultant to us, for a monthly fee
of $10,000 (plus expenses), or 15% of any revenue we generate, whichever is
greater (excluded from this definition however are asset sales and/or income of
a capital nature, and included in the definition are 20% of the revenues we
receive from our Joint Venture with Laurus Master Fund, Ltd.); and we also
agreed to issue Valeska 15,200,000 restricted shares of our common stock. We
also agreed pursuant to the Management Agreement, as amended, that we would
issue Valeska an additional 18,200,000 shares of our common stock upon such time
as we are able to bring our public reporting requirements current with the
Commission and seek reinstatement on the Over-The-Counter Bulletin Board. These
shares will be valued at Fair Market Value using the most appropriate valuation
method.  The Management Agreement had a minimum term of three months,
beginning on May 1, 2007.  The Management Services Agreement was later
amended and extended by the parties entry into the Second Amendment to
Management Services Agreement with Valeska Energy Corp. in August, 2007, as
described below.




10


Joint Venture
Agreement





On or
about May 15, 2007, we entered into a Joint Venture Relationship Agreement with
Valeska (the Joint Venture Agreement), pursuant to which we and Valeska agreed
to form a new Texas limited partnership (the Joint Venture), of which Valeska
will serve as general partner. The Joint Venture Agreement contemplates that
Valeska will cause funds to be invested, arrange financial and strategic
partnerships, and that both parties would bring investment opportunities to the
Joint Venture. Pursuant to the Joint Venture Agreement, Valeska has
co-investment rights in the Joint Venture. Any distributions from the Joint
Venture will be paid first to Valeska and the Company, in an amount equal to 8%
to Valeska and 2% to the Company, subject to investor approval; then to any
investors as negotiated therewith; and finally Valeska and the Company will
share any remaining distributions, with Valeska receiving 80% of such
distributions and the Company receiving 20% of such distributions.





The Joint
Venture Agreement also provides that Valeska has the right to require us to
purchase its interest in the Joint Venture at any time, in exchange for shares
of our common stock. In the event that Valeska exercises this right, the
valuation of the Joint Venture will be valued in a negotiated manner or at 30%
greater than the gross acquisition cost of any property acquired by the Joint
Venture, and the number of shares exchangeable for such interest will be equal
to the market price of our shares of common stock on the date that such right is
exercised by Valeska.





Additionally,
we have the right, pursuant to the Joint Venture Agreement, to veto any deal
which Valeska proposes to include in the Joint Venture.





Voting
Agreement





On or
about June 5, 2007, certain of our largest shareholders, including Capersia Pte.
Ltd.; Frank A. Jacobs, our former officer and Director; and Valeska Energy
Corp., which is controlled by William M. Simmons, the President and Director of
the Company, and is majority owned by Daniel Vesco, the Companys Chief Executive
Officer and a Director of the Company, through an entity which he controls
(Valeska and collectively the Shareholders) entered into a Voting Agreement (the
Voting Agreement).  Pursuant to the terms of the Voting Agreement the
Shareholders agreed that for the Term of the Voting Agreement, as defined below,
no Shareholder would vote any of the shares of common stock (the Shares) which
they hold for (i.e. in favor of) the removal of William M. Simmons or Daniel
Vesco, our Directors (the New Directors).  The Shareholders also
agreed that in the event of any shareholder vote of the Company (either by Board
Meeting, a Consent to Action with Meeting, or otherwise) relating to the removal
of the New Directors; the re-election of the New Directors; and/or the increase
in the number of directors of the Company during the Term of the Voting
Agreement, that such Shareholders would vote their Shares against the removal of
the New Directors; for the re-election of such New Directors; and/or vote
against the increase in the number of directors of the Company, without the
unanimous consent of the New Directors, respectively.





The
Voting Agreement further provided that in the event that either of the New
Directors breaches his fiduciary duty to the Company, including, but not limited
to such Directors conviction of an act or acts constituting a felony or other
crime involving moral turpitude, dishonesty, theft or fraud; such Directors
gross negligence in connection with his service to the Company as a Director
and/or in any executive capacity which he may hold; and/or if any Shareholder
becomes aware of information which would lead a reasonable person to believe
that such Director has committed fraud or theft from the Company, or a violation
of the Securities laws, the Voting Agreement shall not apply, and the
Shareholders may vote their shares as they see fit.




The Term
of the Voting Agreement is until June 5, 2009 (the Term).  The
Shareholders agreed to enter into the Voting Agreement in consideration for the
New Directors agreeing to serve the Company as Directors of the
Company.





On or
about July 12, 2007, another one of our significant shareholders, Lucayan Oil
and Gas Investments, Ltd. (LOGI), which is 50% owned by Max Maxwell, our former
President and Director, entered into a Voting Agreement with us, which was
amended by a First Amendment to Voting Agreement, which provided that the shares
of common stock held by LOGI would be subject to the identical terms of our June
5, 2007 Voting Agreement with the Shareholders.


11


Cooperation Agreement and
Mutual Release





On or
about July 12, 2007, LOGI; Mr. Maxwell; Meredith Maxwell, Mr. Maxwells daughter
and our former consultant; and A.E. Buzz Jehle, our former consultant
(collectively the Former Interested Parties) entered into a Cooperation
Agreement and Mutual Release (the Release) with us and Texaurus Energy, Inc.
(Texaurus), our wholly owned Delaware subsidiary (for the purposes of the
description of the Release, all references to we, us, the Company or similar
words include Texaurus).  In connection with the Release, we and the
Former Interested Parties agreed to release each other (including employees,
officers, directors, representatives, employees and assigns) from any and all
claims, rights, causes of action and obligations which were known or unknown at
the time of the entry into the Release, subject only to the Assignment by the
Former Interested Parties of their rights, causes of actions or demands against
any former officers or Directors of us to the Company and the New Directors (the
Assignment) and the Extension.  The release we provided to the Former
Interested Parties was against any and all claims, rights, causes of action and
obligations which were known at the time of the entry into the Release, or which
are not brought to the attention of the New Directors or the Company by 5:00
P.M. Central Standard Time, on September 30, 2007 (the Extension).




Additionally,
in connection with the Release, Mr. Maxwell personally agreed, to the best of
his ability, to cooperate with us in connection with an audit of us and
Texaurus; to provide a list of the known liabilities of the Company which Mr.
Maxwell was aware of; and to personally certify the accuracy and completeness of
any financial statements which the Company prepared covering the time period
during which Mr. Maxwell was President of the Company, in a form similar to the
Certification Of Chief Executive Officer and Chief Financial Officer Pursuant To
Section 302 of The Sarbanes-Oxley Act Of 2002 and Certification of Chief
Executive Officer; and (ii) Certification of Chief Financial Officer Pursuant To
18 U.S.C. Section 1350, as Adopted Pursuant To Section 906 Of The Sarbanes-Oxley
Act Of 2002, which reporting companies are required to file as attachments to
each periodic filing with the Commission, which certification Mr. Maxwell later
made, for the periods from June 30, 2006 to March 31, 2007.




Mr.
Maxwell also agreed pursuant to the terms of the Release that any options which
he vested pursuant to the June 2006 options which he was granted by us would
expire if unexercised on August 1, 2007; and that we owe him no rights to
contribution or indemnification in connection with his service to the Company.
Mr. Maxwell also certified that the shares of common stock granted to LOGI were
issued for valid consideration and fully paid and non-assessable (the
Certification).  Additionally, pursuant to the terms of the Release,
we agreed to indemnify Mr. Maxwell and Mr. Jehle against any dispute regarding
the shares issued to LOGI, provided that such Certification is valid and
correct.





Consulting
Agreement




Effective
July 1, 2007, we entered into a Consulting Agreement with Ibrahim Nafi Onat, our
Director (the Consulting Agreement), pursuant to which Mr. Onat agreed to serve
as our Director and Vice President of Operations for an initial term of twelve
(12) months, which term is renewable month to month thereafter with the mutual
consent of the parties.  Pursuant to the Consulting Agreement we
agreed to pay Mr. Onat $2,500 per month during the term of the Consulting
Agreement, to issue him 500,000 restricted shares of common stock valued at the
market price on the date of issuance, in connection with his entry into the
Consulting Agreement and 500,000 restricted shares of common stock assuming he
is still employed under the Consulting Agreement at the expiration of six (6)
months from the effective date of the Consulting Agreement (the Six Month
Issuance).  The Consulting Agreement is described in greater detail
below under Directors, Executive Officers, Promoters and Control Persons;
Compliance With Section 16(A) Of The Exchange Act.







12


Material Corporate
Events





On July
17, 2007, the Company's Board of Directors unanimously agreed by a written
consent to action without a meeting, to adopt a Certificate of Designations for
the creation of a Series A preferred stock (the "Series A Preferred
Stock").





The
Series A Preferred Stock has a par value of $0.001 per share. The Series A
Preferred Stock consists of one thousand (1,000) shares, each having no dividend
rights, no liquidation preference, and no conversion or redemption rights.
However, the one thousand (1,000) shares of Series A Preferred Stock have the
right, voting in aggregate, to vote on all shareholder matters equal to
fifty-one percent (51%) of the total vote. For example, if there are 10,000,000
shares of the Company's common stock issued and outstanding at the time of a
shareholder vote, the holders of Series A Preferred Stock, voting separately as
a class, will have the right to vote an aggregate of 10,408,163 shares, out of a
total number of 20,408,163 shares.





Additionally,
the Company shall not adopt any amendments to the Company's Bylaws, Articles of
Incorporation, as amended, make any changes to the Certificate of Designations,
or effect any reclassification of the Series A Preferred Stock, without the
affirmative vote of at least 66-2/3% of the outstanding shares of Series A
Preferred Stock. However, the Company may, by any means authorized by law and
without any vote of the holders of shares of Series A Preferred Stock, make
technical, corrective, administrative or similar changes to the Certificate of
Designations that do not, individually or in the aggregate, adversely affect the
rights or preferences of the holders of shares of Series A Preferred
Stock.





On or
about July 26, 2007, with an effective date of July 31, 2007, we entered into a
Termination of Lease Agreement (the Termination Agreement) with our landlord at
2200 Post Oak Blvd., Suite 340, Houston, Texas 77056 (the Post Oak
Office).  Pursuant to the terms of the Termination Agreement, we and
the landlord agreed to terminate the lease on the Post Oak Office space, and we
agreed to pay the landlord approximately $4,090 as a termination fee, $3,331 as
payment of past due rental fees; and we also agreed to forfeit any right to our
security deposit of approximately $1,578 held by the landlord pursuant to the
terms of our lease in connection with such Termination Agreement.





On or
about August 13, 2007, we entered into a Second Amendment to Management Services
Agreement with Valeska Energy Corp. (Valeska and the Second
Amendment).





Pursuant
to the Second Amendment, we and Valeska agreed to extend the term of the
Management Services Agreement until September 30, 2008, and to pay Valeska the
following consideration in connection with agreeing to perform the services
required by the original Management Services Agreement, and in consideration for
allowing Daniel Vesco and William M. Simmons to serve as Directors of the
Company, bringing on personnel to assist the Company with the day to day
operations of the Company, and help bring the Company current in its filings
(the Services):




1,000
      shares of the Companys Series A Preferred Stock;A
      monthly fee of $20,000 per month during the extended term of the Second
      Amendment, plus reasonable and actual costs incurred by Valeska (or
      individuals or designees brought on by Valeska, including lodging, car
      rental and telephone expenses therewith) in connection with such
      Services;10,000,000
      restricted shares of the Companys common stock; and60,000,000
      options to purchase shares of the Companys common stock, which have a
      cashless exercise provision, are valid for a period of three years from
      their grant date, and have an exercise price of greater than 110% of the
      trading price of the Companys common stock on the Pinksheets on the day of
      such grant, which exercise price is equal to $0.02 per
    share.





On or
about October 30, 2007, we entered into a Cooperation Agreement and Mutual
Release with our former consultant Terje Reiersen (Reiersen and the Reiersen
Release).  Pursuant to the Reiersen Release, Reiersen agreed to
release us, our current and former officers, agents, directors, servants,
attorneys, representatives, successors, employees and assigns from any and all
rights, obligations, claims, demands and causes of action in contract or tort,
under any federal or state law, whether known or unknown, relating to his
services with the Company or the Company in general for any matter whatsoever
other than in connection with any claims against any former officers or
Directors of the Company, which claims Reiersen assigned to the
Company.  Reiersen also agreed to cooperate fully with us in
connection with any reasonable requests from us for a period of sixty (60) days
from the date of the Reiersen Release, that we
would not owe him any rights of contribution or indemnification in connection
with any services he rendered on our behalf and that we would not owe him any
other consideration other than what we agreed to provide him in connection with
the Reiersen Release (as described in greater detail
below).


13





In
connection with the Reiersen Release, we paid Reiersen $2,500 and issued
Reiersen 250,000 restricted shares of our common stock.





On or
about November 2, 2007, we entered into a First Amendment to Securities Purchase
Agreement, Secured Term Note and Registration Rights Agreement with Laurus (the
First Amendment).  Pursuant to the First Amendment, Laurus agreed
to:





(a)
            waive
      any default which may have occurred as a result of our failure to become
      current in our filings with the Commission, assuming that we become
      current in our filings prior to December 15,
  2007;





(b)
            amend
      the terms of the Laurus Note to provide that a Change of Control of
      Texaurus under the Note, which requires approval of Laurus, includes any
      change in Directors such that Daniel Vesco and William M. Simmons are no
      longer Directors of Texaurus; and





(c)
            amend
      the terms of the Registration Rights Agreement with Laurus to provide that
      the date we are required to gain effectiveness of a registration statement
      registering the shares of common stock issuable in connection with the
      exercise of the Laurus Warrant in the Company is amended to no later than
      April 30, 2008, and that the effective date of any additional registration
      statements required to be filed by us in connection with the Registration
      Rights Agreement, shall be thirty (30) days from such filing
      date.





On or
about October 30, 2007, we entered into a Cooperation Agreement and Mutual
Release with our former consultant Terje Reiersen (Reiersen and the Reiersen
Release).  Pursuant to the Reiersen Release, Reiersen agreed to
release us, our current and former officers, agents, directors, servants,
attorneys, representatives, successors, employees and assigns from any and all
rights, obligations, claims, demands and causes of action in contract or tort,
under any federal or state law, whether known or unknown, relating to his
services with the Company or the Company in general for any matter whatsoever
other than in connection with any claims against any former officers or
Directors of the Company, which claims Reiersen assigned to the
Company.  Reiersen also agreed to cooperate fully with us in
connection with any reasonable requests from us for a period of sixty (60) days
from the date of the Reiersen Release, that we would not owe him any rights of
contribution or indemnification in connection with any services he rendered on
our behalf and that we would not owe him any other consideration other than what
we agreed to provide him in connection with the Reiersen Release (as described
in greater detail below).





In
connection with the Reiersen Release, we agreed to pay Reiersen $2,500 within
ten (10) business days of the parties entry into the Reiersen Release (which
funds have been paid to date), and issue Reiersen 250,000 restricted shares of
our common stock, which shares have been issued to date within ten (10) days of
the parties entry into the Reiersen Release.





On or
about November 2, 2007, we entered into a First Amendment to Securities Purchase
Agreement, Secured Term Note and Registration Rights Agreement with Laurus (the
First Amendment).  Pursuant to the First Amendment, Laurus agreed
to:




(a)
            waive
      any default which may have occurred as a result of our failure to become
      current in our filings with the Commission, assuming that we become
      current in our filings prior to December 15, 2007, which date we were able
      to become current by;(b)
            amend
      the terms of the Laurus Note to provide that a Change of Control of
      Texaurus under the Note, which requires approval of Laurus, includes any
      change in Directors such that Daniel Vesco and William M. Simmons are no
      longer Directors of Texaurus; and


(c)
            amend
      the terms of the Registration Rights Agreement with Laurus to provide that
      the date we are required to gain effectiveness of a registration statement
      registering the shares of common stock issuable in connection with the
      exercise of the Laurus Warrant in the Company is amended to no later than
      April 30, 2008, and that the effective date of any additional registration
      statements required to be filed by us in connection with the Registration
      Rights Agreement, shall be thirty (30) days from such filing
      date.





14


On or
about November 28, 2007, we entered into a Settlement Agreement and Mutual
Release (the Jacobs Agreement) by and between the Company, Frank A. Jacobs, our
former officer and Director (Jacobs), and Jacobs Oil & Gas Limited, a
British Columbia corporation (JOGL and collectively with Jacobs, the Jacobs
Parties), Clover Capital, a creditor of the Company (Clover), Capersia Pte.
Ltd., a Singapore company and a significant stockholder of the Company
(Capersia), Peter Wilson, an individual and a former Director of the Company
(Wilson), and Sterling Grant Capital, Inc., a British Columbia corporation,
controlled by Mr. Wilson (SGC and collectively with Clover, Capersia and Wilson,
the Non-Jacobs Parties, and with the Jacobs Parties, the Interested
Parties).  We had various disputes with the Interested Parties
relating to the issuances of and transfers of various shares of our common stock
and various of the Interested Parties had alleged that we owed them
consideration (the Disputes).  We entered into the Jacobs Agreement to
settle the Disputes with the Interested Parties.





In
consideration for the Company agreeing to enter into the Jacobs Agreement, the
Jacobs Parties agreed to the following terms: the Jacobs Parties would return to
the Company for cancellation 5,000,000 of the 7,500,000 shares purchased by
Jacobs in March 2006 (the Jacobs Shares), which shares have not been cancelled
to date, and are therefore included in the number of issued and outstanding
shares disclosed throughout this report; all debt owed by Texhoma to the
Jacobs Parties, known or unknown, was discharged and forgiven, including the
total outstanding amount of the approximately $500,000 Promissory Note owed to
Frank A. Jacobs by the Company (the Jacobs Note); the Company owes Jacobs no
rights to contribution and/or indemnification in connection with Jacobs
employment with the Company; Jacobs also certified the accuracy and correctness
of the Companys previously prepared annual and interim financial statements and
periodic reports, relating to the time period of his employment from the period
ending September 30, 2005 to the period ending March 31, 2007; the Jacobs
Parties agreed they have no interest in and will not interfere with the issuance
of or any subsequent transfers of shares to or from Lucayan Oil and Gas
Investments, Ltd. (the LOGI Shares), a Bahamas corporation; Jacobs agreed to use
his best efforts to answer the Companys questions and produce documents in the
future regarding operations and financials of the Company; Jacobs agreed that he
no longer holds any exercisable options of the Company; the Voting Agreement
entered into between various parties in June 2007, including Jacobs, remains in
full affect and force against Jacobs; and Jacobs has no interest in any shares
other than the aforementioned 2,500,000 shares.





Additionally,
in consideration for the Company agreeing to enter into the Jacobs Agreement,
the Non-Jacobs Parties agreed to the following terms: any and all debts owed by
Texhoma to Clover, which purportedly totaled approximately $60,000, Capersia,
which purportedly totaled $60,000 or any of the Non-Jacobs Parties (including
approximately $20,000 purportedly owed to Wilson) was discharged and forgiven;
the Non-Jacobs Parties agreed that they have no interest in and will not
interfere with the issuance of the LOGI Shares; the Voting Agreement remains in
full force and effect against Capersia; and in connection with the 30,000,000
shares of Company stock in Capersias possession received through Texhomas
previous purchase of a 40% interest in Black Swan Petroleum Pty. Ltd. (the
Capersia Shares), Capersia will not transfer shares in excess of 2% of Texhomas
then outstanding shares in any three (3) month period, until the second
anniversary of the Jacobs Agreement.





Lastly,
in consideration for the Jacobs Parties and the Non-Jacobs Parties agreeing to
the terms of the agreement, Texhoma agreed to the following terms: Jacobs will
retain the remaining 2,500,000 shares of Company stock and Capersia will retain
the aforementioned 30,000,000 shares of Company stock free and clear of any
claims to such shares by the Company; and JOGL shall retain all rights to the
200,000 shares of Morgan Creek Energy Corp. (Morgan Creek) shares held in trust
by JOGL as collateral for a promissory note issued to JOGL by the Company (the
Jacobs Note and Morgan Creek Shares), the Company will release all claims to
said shares or any additional shares of Morgan Creek that the Company may be due
as a result of stock splits or share distributions.





Further,
pursuant to the Jacobs Agreement, the Interested Parties agreed to release the
Company from any and all rights, obligations, claims, demands and causes of
action, known or unknown, asserted or unasserted relating to the Disputes or the
Company or its current or former Directors, and the Company agreed to release
the Jacobs Parties and the Non-Jacobs Parties from any and all rights,
obligations, claims, demands,
and causes of action arising from or relating to the Capersia Shares, Jacobs
employment with the Company, the Jacobs Note, the Jacobs Shares, the Morgan
Creek shares, and the LOGI Shares.





As a
result of the Jacobs Agreement, the Company was able to settle approximately
$640,000 in debt which it purportedly owed to the various Interested Parties and
to settle any and all other claims which such parties, in return for the
consideration discussed above, which mainly consisted of assigning the rights to
the 200,000 shares of Morgan Creek Energy Corp. stock to Frank A. Jacobs, which
shares had an approximate value of $92,000 based on the trading price of Morgan
Creek Energy Corp.s common stock on the date of the Jacobs Agreement of
$0.46.





15


ITEM 2.
DESCRIPTION OF PROPERTY





Office Space
Lease





Effective
June 11, 2007, we entered into a lease for office space at 100 Highland Park
Village - Suite 200, Dallas, Texas. Pursuant to the office space lease, we
agreed to rent approximately 80 square feet of office space for total monthly
rent of $586 per month from the effective date of the agreement until June 30,
2008, and to rent another approximately 80 square feet of office space for total
monthly rent of $1,675 starting September 1, 2007. Therefore, the total monthly
rent due under the agreement was $586 from June 11, 2007 until September 1,
2007, and $1,675 thereafter for the term of the agreement. The lease also
includes approximately $500 of additional monthly expenses associated with
internet access, telephone and fax costs and answering services per
month.





Oil and Gas
Properties




Texaurus
Energy, Inc. currently owns interests in three oil and natural gas
producing fields, and an exploration project:





The
Barnes Creek field is located in Allen Ph, Louisiana and operated by Zachry
Exploration, Ltd.  The 320-acre unit is produced by one well, which is
L&H Partnership # 1.  Oil and gas production is obtained from
10,200 ft deep Yegua sand formation.  Texaurus interests in this field
are 7.42299% working interest(WI) and 5.38167% net revenue interest
(NRI).  Geological and engineering data demonstrate that one well can
adequately drain 320 acres in this formation, therefore no future well is
planned in this unit.





Edgerly
field is located in Calcasieu Ph, Louisiana and operated by Peoples Energy Prod.
The field has four producing wells and a potential to drill two additional
offset wells.  Producing wells are North American Land No 1, No. 2,
No. 3 and No. 4.  These wells are producing from Marg Tex 1 & 2
sands.  Texaurus interests in this field are 11.75625% WI and 8.51919%
NRI.





Intracoastal
field, which is also called Little White Lake field, is located in Vermillion
Ph, Louisiana and operated by Key Operating.  The field has three
producing wells, which are Lease S/L 16995# 1, #2, and # 3.  The wells
demonstrate additional hydrocarbon production potential behind pipe for future
recompletion.  Texaurus interests in this field are 8.0% WI, and 5.84%
NRI.





Texhoma
separately holds an interest in the Clovelly project, located in LaFourche,
Louisiana, which consists of two drilling locations.  One of these
locations is classified as proved undeveloped (PUD), and the other one is an
exploratory drill site.  Texhomas interests in the lease are
approximately an 11% working interest and a 7.7% NRI before payout and 8.8% WI
and 6.61% NRI after payout.





Below is
an estimate of the reserves and future production and income attributable to
certain leasehold interests held by us as of January 1, 2007, as prepared by
R.A. Lenser and Associates, Inc., of Houston, Texas. The subject properties are
located in the Barnes Creek, Edgerly, and Intracoastal City Fields, Allen,
Calcasieu, and Vermilion Parishes, Louisiana. The results of this study are
summarized below:




16


Texhoma Energy,
Inc.


Estimated Net Reserves and Income
Data


Attributable to Certain Leasehold
Interests


As of January 1,
2008




Proved
      Developed
            TotalProducing
            Behind
      Pipe
            Undeveloped
            ProvedRemaining
      ReservesOil/Condensate -
      MBbls
            66
            4
            -
            70Gas-MMCF
            259
            21
            -
            280





Liquid
Hydrocarbon Volumes are expressed in thousands of barrels (MBbls). A barrel is
equivalent to 42 United States gallons. Gas Volumes are expressed in millions of
standard cubic feet (MMCF) at the contract temperature and pressure base of the
state of Louisiana.




Reserve
Definitions





The
proved reserves disclosed above conform to the definitions as set forth in the
Securities and Exchange Commission's Regulation S-X Part 210.4-10 (a) as
clarified by various Commission Staff Accounting Bulletins and to the
definitions endorsed by the Society of Petroleum Engineers (SPE), the Society of
Petroleum Evaluation Engineers (SPEE) and the World Petroleum Congresses
(WPC).





Estimate of
Reserves





Estimates
of reserves were prepared by the use of geological and engineering methods
generally accepted by the petroleum industry. The method or combination of
methods utilized in the analysis of each reservoir was tempered by experience in
the area, stage of development, quality and completeness of basic data, and
production history.





Where
applicable, the volumetric method was employed for determining the original
quantities of hydrocarbons in place. Where sufficient geological data was
available, structural maps were prepared to delineate each reservoir and
isopachous maps were constructed to determine reservoir volumes. Electrical
logs, core analysis, and other available data were used to prepare these maps as
well as to determine representative values for porosity and interstitial water
saturation. Reserves based upon volumetric calculations or other methods such as
analogy with offset wells are usually subject to greater revision than those
based upon production and/or pressure performance data. Therefore, it may be
necessary to revise these estimates up or down in the future as more reliable
engineering data becomes available.





Reserves
of depletion-type reservoirs or those whose performance disclosed reliable
decline in production-rate trends or other diagnostic characteristics were
estimated by the application of appropriate decline curves or other performance
relationships. In the analysis of production decline curves, reserves were
established only to a calculated economic limit.





Estimate of Future Producing
Rates




Initial
production rates were based on the current rates for those reservoirs now on
production. If no production decline was established, a decline profile
analogous to similar wells was used. If a decline trend was established, this
trend was used as the basis for estimating future rates.





General





The
reserves above are estimates only and should not be construed as being exact
quantities. They may or may not be actually recovered and, if recovered, the
revenues there from and the actual costs related thereto could be
more or less than the currently estimated amounts. Also, estimates of reserves
may increase or decrease as a result of future
operations.


17





Reserves Reported to Other
Agencies





The
Company has not filed or reported reserve information to any federal authority
or agency other than the Securities and Exchange Commission.





Productive Wells and
Acreage




The total
gross and net wells, expressed separately for oil and gas, and the total gross
and net developed acres as of January 1, 2008, were as follows:




Productive
      Wells
            Developed
      AcresGeographic
      Area
              
              
              
              Louisiana
            Gross
              Oil       Gas
              
              
              8         
      0
            Net
              Oil          Gas
              
              
              1      
      0
            Gross
              Oil           Gas
              
              ­­­­
              1,498       0
            Net
              Oil           Gas
              
              
              141.4        0





Wells
that produce both oil and gas are treated as oil wells herein.  Of the 8
gross wells, all are producing oil and gas.








Undeveloped
Acreage




At
January 1, 2008, the Company held interests in 160 gross (18.8 net) undeveloped
acres in the United States, as summarized below:




Geographic
      Area
              
              Louisiana
            Gross
      Acres
              
              160
            Net
      Acres
              
              18.8





All the
acreage shown is held by production from the Companys wells that were producing
as of January 1, 2008.




18


Production






The
following table sets forth, by geographic area, for the fiscal years 2007 and
2006:  1) the Companys portion of the net quantities of oil in barrels, and
gas in thousands of cubic feet (MCF), produced from properties in which the
Company had an interest; 2) the average sales price per barrel of oil and MCF of
gas shown separately; and 3) the average lifting cost per unit of production of
oil and gas shown together on an equivalent basis. The unit of production for
purposes of averaging costs is barrels (Bbls) for oil, or barrels-of-oil
equivalent (BOE) for gas.  One BOE equals 6 MCF of gas.




2007
            2006Oil         
      Gas
            Oil        
      Gas1)
      Net Quantities:

              (Bbls or
      MCF)
              Louisiana
            14,460      
      92,853
            14,240    
        81,0542)
      Average Sales Price/Bbl or MCF:

              Louisiana
            $65.88      
      $8.63
            $67.86     
       $8.523)
      Average Lifting Cost/Bbl or BOE:

              Louisiana
            $14.85
            $14.45





19





Drilling Activity





Drilling
activity for 2007 included work over of the Little White Lakes
field,  Intracoastal SL #3, but resulted in a shut in well due to
excessive water production.  The Barnes Creek property well was
successfully worked over and is currently producing at full
potential.  Peoples Energy, who operated the Edgerly Field, was
acquired by El Paso during the year.  As a result their future
drilling activities have not been determined, resulting in two wells that were
included in our production last year not being included in the current year,
namely North American Land #5 and 6.





In fiscal
2006, the Company participated in drilling activity in the Allain Lebreton #2
well on a prospect close to the existing Clovelly oil and gas field in
Louisiana.  This drilling program was unsuccessful and the well was
abandoned.  The Company has not participated in any further
exploratory drilling during the two years ended September 30, 2007.














20


Plan of
Operations





Since the
Company does not own the majority interests in the producing wells and in the
leases, it is difficult to project future development and exploration
activities.  Based on previous reports and correspondence, a well is
not expected to be drilled in the Clovelly Prospect in 2008.





Texhoma
is aggressively pursuing new acquisitions in order to increase its production,
oil and gas reserves.





ITEM 3.
LEGAL PROCEEDINGS




Management
of the Company is not aware of any legal proceedings contemplated by any
governmental authority or other party involving the Company or its subsidiaries
or its properties other than those described below. No director, officer or
affiliate of the Company is (i) a party adverse to the Company in any legal
proceedings; or (ii) has an adverse interest to the Company in any legal
proceedings. Management is not aware of any other legal proceedings pending or
that have been threatened against the Company, its subsidiaries or its
properties, other than those described below.





The
Company has been threatened with arbitration by ORX Resources, Inc. in
connection with funds which ORX believes it is due in connection with fees and
expenses owed by the Company in connection with the Clovelly Joint
Venture.  Our former President and Director, Max Maxwell, formerly
served as Vice President and Director of ORX.  ORX has not filed any
formal proceeding against the Company, and the Company hopes to work with
ORX  to settle this matter and avoid any formal legal
proceedings.




Matrixx
Resource Holdings Inc. (Matrixx) claims the Company owes it approximately
$60,000 in connection with funds that it paid for a backend interest in two of
the Companys wells on its Manville property, which wells were eventually found
to be dry. The Company believes however, that it does not owe Matrixx the return
of any funds in connection with such payments, as the wells were dry and as such
there was no interest to transfer to Matrixx. In addition, the Company believes
that Matrixx owes it approximately $16,000 in connection with additional fees
and expenses which were paid by the Company, but attributable to Matrixxs
interest, and which were in addition to the $60,000 previously paid by Matrixx.
While the parties are currently in discussions regarding such debt and we have
been threatened with litigation by Matrixx, neither the Company nor Matrixx has
filed any formal legal proceedings in connection with such debts to
date.




ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS




None during the period of this report.






21


PART II





ITEM 5. MARKET FOR
COMMON EQUITY AND RELATED STOCKHOLDER MATTERS




Our
common stock currently trades on the "pink sheets" published by the National
Quotation Bureau under the symbol "TXHE". However, the fact that our securities
have limited and sporadic trading on the pink sheets does not by itself
constitute a public market, and as such, historical price quotations relating to
trades in our stock on the pink sheets have not been included in this filing. In
the future, we plan to apply for quotation on the Over-The-Counter Bulletin
Board, now that the Company has become current in its periodic filings with the
Commission.  As of December 26, 2007, the Company had approximately
231,412,224  shares of common stock outstanding held by approximately
184 shareholders of record, which amount does not include 18,000,000 shares of
common stock previously held by Valeska Energy Corp. as of December 26, 2007,
which the Company and Valeska have cancelled to date.




Recent Sales Of Unregistered
Securities




In July
2007, we issued Mr. Ibrahim Nafi Onat an aggregate of 500,000 restricted shares
of our common stock in connection with his entry into the Consulting Agreement
(described above).    We claim an exemption from
registration afforded by Section 4(2) of the Securities Act of 1933, for the
above issuance, since the issuance did not involve a public offering, the
recipient took the securities for investment and not resale and the Company took
appropriate measures to restrict transfer. No underwriters or agents were
involved in the issuance and no underwriting discounts or commissions were paid
by the Company.





In August
2007, we issued 1,000 shares of our Series A Preferred Stock to Valeska in
connection with the Second Amendment to Management Services Agreement with
Valeska (described above).   We claim an exemption from registration
afforded by Section 4(2) of the Securities Act of 1933, for the above issuance,
since the issuance did not involve a public offering, the recipient took the
securities for investment and not resale and the Company took appropriate
measures to restrict transfer. No underwriters or agents were involved in the
issuance and no underwriting discounts or commissions were paid by the
Company.





In August
2007, in connection with the Second Amendment to Management Services Agreement
with Valeska, we agreed to issue Valeska 10,000,000 shares of our restricted
common stock and cashless options to purchase 60,000,000 shares of our common
stock at an exercise price of $0.02 per share which price was greater than 110%
of the trading value of our common stock on the grant date of such options,
which options and shares have been issued as of the date of this report. We
claimed an exemption from registration afforded by Section 4(2) of the
Securities Act of 1933, for the above issuances, since the issuances did not
involve a public offering, the recipient took the securities for investment and
not resale and the Company took appropriate measures to restrict transfer. No
underwriters or agents were involved in the issuance and no underwriting
discounts or commissions were be paid by the Company.




In connection with the Reiersen Release
(described above), we agreed to issue Terje Reiersen 250,000 restricted shares
of our common stock, which shares have  been
issued.   We will claim an exemption from registration afforded
by Section 4(2) of the Securities Act of 1933, for the above issuance, since the
issuance will not involve a public offering, the recipient will take the
securities for investment and not resale and the Company will take appropriate
measures to restrict transfer. No underwriters or agents will be involved in the
issuance and no underwriting discounts or commissions will be paid by the
Company.





On or
about November 28, 2007, we entered into a Subscription Agreement with Pagest
Services SA, a Swiss Company, pursuant to which we agreed to sell two units
consisting of $125,000 in Convertible Promissory Notes with a conversion price
of $0.0125 per share, convertible at the option of Purchaser, into the Companys
common stock, and Class A and Class B Warrants to purchase 5,000,000 shares of
common stock with an exercise price of $0.02 and $0.03 per share, respectively,
exercisable for a period of two years from the date of the Subscription
Agreement (the Units).  One Unit was sold immediately to the
Purchaser, and one Unit was sold to Purchaser shortly after December 15,
2007.  The Convertible Promissory Notes bear interest at the rate of
2% per annum, until paid in full, which amount will increase to 15% per annum,
upon the occurrence of an Event of Default (as defined in the Convertible
Promissory Notes).  The Convertible Promissory Notes are due on the
first anniversary of the date they are sold, with the first $125,000 in
Convertible Promissory Notes being due on November 28, 2008, and the second on
December 19, 2008, unless converted into shares of our common
stock.  In the event that our common stock trades on the market or
exchange on which it then trades, at a trading price of more than $0.02 per
share, for any 10 day trading period, the Convertible Promissory Note will
automatically convert into shares of
our common stock at the rate of one share for each $0.0125 owed to the
subscriber.  We also agreed to provide the subscriber piggy-back
subscription rights in connection with the sale of the Units. We claim
an exemption from registration afforded by Regulation S of the Securities Act of
1933, as amended ("Regulation S") for the above issuances since the issuances
were made to a non-U.S. person (as defined under Rule 902 section (k)(2)(i) of
Regulation S), pursuant to an offshore transaction, and no directed selling
efforts were made in the United States by us, a distributor, any respective
affiliates, or any person acting on behalf of any of the
foregoing.


22


ITEM 6. MANAGEMENT'S DISCUSSION AND
ANALYSIS OR PLAN OF OPERATION




Plan of
Operations





The
Companys current plan of operations for the next twelve (12) months is to seek a
quotation of the Companys common stock on the OTCBB, continue to get the
Companys accounting and controls and procedures in order, and work to decrease
the Companys current liabilities. In addition, the Company is aggressively
seeking opportunities for acquisitions to grow the asset base of the Company and
increase revenue and shareholder value.





In
connection with our properties, a deal we had in place to sell the Clovelly
Field interests fell through, and we are relying on the operators of our other
properties regarding the direction of those prospects.  To date, all
of those operators have indicated that they have no plans to expand their
current drilling prospects.





We
currently believe that we can continue our operations for approximately the next
three months with funds raised in June 2007, and anticipate needing to raise
approximately $300,000 in the next twelve months to pay our current liabilities
and maintain our current rate of monthly expenditures, of which there can be no
assurance.  Additionally, due to the fact that the assets held by
Texaurus are not generating the level of revenue as we originally anticipated,
we will need to raise additional capital in Texaurus to repay the interest and
principal on the Laurus Note and/or for working capital purposes in the future,
which funds may be raised through the sale of debt and/or equity in
Texaurus.





RESULTS OF OPERATIONS FOR
THE FISCAL YEAR ENDED SEPTEMBER 30, 2007 COMPARED TO THE FISCAL
YEAR ENDED SEPTEMBER 30, 2006




We
reported revenues of $1,848,000 for the year ended September 30, 2007 compared
with $2,258,000 for the year ended September 30, 2006.  The decrease
in revenues for the year ended September 30, 2007, compared to the year ended
September 30, 2006, was due to the fact that for the year ended September 30,
2007 we incurred  revenue of $90,000 from the promotion and sale of
our oil and gas lease investments as compared with revenue of $650,000 for the
year ended September 30, 2006.  This was offset by a $150,000 increase
in production revenue due to our Little White Lake property, due to a full year
of earning for the property during the year ended September 30, 2007, compared
to only nine months for the year ended September 30, 2006.  The result
of the decrease in revenues from the promotion of oil and gas lease investments,
offset by the increase in production revenue was a net decrease of $410,000 in
revenue for the year ended September 30, 2007 as compared with the year ended
September 30, 2006.




We had
oil and gas exploration expenses of $445,000 for the year ended September 30,
2007 compared to $4,003,000 for the year ended September 30, 2006, a
decrease of $3,558,000 from the prior period.  The oil and gas
exploration expenses for the year ended September 30, 2006, were higher than the
year ended September 30, 2007, due to $920,000 in write down of investments that
proved to be non-producing and were abandoned.  In addition, the
future production of the Little White Lake Property was estimated to be less
than the value originally anticipated and as such an impairment of $2,682,000
was recognized for the year ended September 30, 2006, which was not represented
for the year ended September 30, 2007.





Depletion
of $1,036,000 was recorded for the year ended September 30, 2007 as compared
with $1,302,000 for the year ended September 30, 2006.  The reduced
expense reflects the reduction in the value of Little White Lake Property as a
result of recognizing the impairment at September 30, 2006.





We had
total general and administrative expenses of $1,997,000 for the year ended
September 30, 2007, compared to $810,000 for the year ended September 30, 2006,
an increase of $1,187,000 from the prior period.  The increase in
general and administrative expenses was mainly due to $800,000 of option
expense, $180,000 of accounting and legal expense incurred as a result of
efforts to bring our filings current, and management fees of approximately
$503,000 in the form of stock issued to Valeska Energy, which were not present
during the year ended September 30, 2006.





In
connection with our raising the necessary capital funding to pursue our planned
oil and gas purchases we issued stock warrants to new subscribers of our common
stock as well and our lenders.  As a result of  the
expiration of some of these warrants during the year ended September 30, 2007,
we recognized an $859,000 reduction in related stock accretion expense for the
year ended September 30, 2007, as compared with accretion expense of $1,165,000
for the year ended September 30, 2006.


23




In order
to raise capital, we also sold a portion of our working interest acquisitions to
other parties and as a result earned $161,000 on these sales for the year ended
September 30, 2006, as compared with $0 for the year ended September 30,
2007.  As part of the proceeds from selling working interests in 2006,
we accepted 200,000 shares of Morgan Creek Energy (MCRE) common stock with a
value of $350,000.  As of September 30, 2007 the trading price MCRE
was trading at $0.50 per share and as such we reported an impairment of the
investment of $250,000.  Subsequent to the year ended September 30,
2007, we released all rights to the MCRE shares to our former officer and
Director, Frank Jacobs, in connection with our entry into the Jacobs Agreement,
described above.





We
incurred net interest expense of $1,158,000 for the year ended September 30,
2007,  in connection with the Laurus Note as compared with $583,000 of
net interest expense for the year ended September 30, 2006.  The
increase in interest expense associated with the Laurus Note was due to the fact
that the Laurus Note was outstanding and accruing interest for all of the year
ended September 30, 2007, compared to only nine months of the year ended
September 30, 2006.





We
incurred a net loss of $2,188,000 for the year ended September 30, 2007 as
compared to a net loss of $5,443,000 for the year ended September 30, 2006, a
decrease in net loss of $3,255,000 from the prior period.  The
decrease in net loss was mainly due to the reduction in oil and gas exploration
expenses and the reduction in stock accretion and impairment expenses and the
reduction in depletion and depreciation offset by the increase in interest
expense due on the Laurus note and option expense and the increase in general
and administrative expenses.




LIQUIDITY AND CAPITAL
RESOURCES




As of
September 30, 2007, we had total assets of $5,870,000, consisting of cash of
$45,000 and restricted cash, in connection with the funding by Laurus, which
cash is only distributable with the consent of Laurus of $219,000, accounts
receivable of $434,000, net oil and gas properties of $4,556,000 and other
assets of $616,000.





We had
current liabilities of $2,159,000, consisting of accounts payable of
$503,000, accrued expenses of $1,203,000 and notes payable related parties of
$453,000, and a long term note payable of $8,155,000, representing the amount
due to Laurus under the Laurus Note at September 30, 2007.  Our notes
payable to related parties included notes which were payable to Capersia, Clover
Capital and MFS Technology, of which the notes payable to Capersia, and Clover
Capital were subsequently forgiven in connection with our entry into the Jacobs
Agreement.





The
approximately $493,000 note payable to Frank Jacobs, our former officer and
Director, is comprised of a portion of the accrued expenses and notes payable
described above,  netted with advances to Mr. Jacobs which are
included in accounts receivable.  The full amount of the funds owed to
Mr. Jacobs was forgiven by him as a result of the Jacobs Settlement described
above.





We had
negative working capital of $1,461,000 and a retained deficit of $15,005,000 as
of September 30, 2007.





For the
year ended September 30, 2007, we had cash provided by operating activities of
$103,000, which consisted mainly of $714,594 of accrued expenses, $1,031,853 of
depletion, $514,001 of stock issued for services, $323,018 of depreciation and
amortization and $210,728 of other, offset by $2,187,921 of net loss and
$858,573 of stock accretion gain.





We used
cash for investing activities of $250,000, which amount reflects the impairment
of the MCRE common stock investment.





We used
$79,000 in cash for financing activities for the year ended September 30, 2007,
a result of $381,391of repayments of loans from Laurus and from affiliates,
offset by $297,500 of proceeds from the sale of common stock and warrants during
the year ended September 30, 2007, which funds were raised to support our
operating activities.





24


FUNDING
TRANSACTIONS:





We raised
an aggregate of $297,500 through the sale of 23,800,000 shares of common stock
at $0.0125 per share between May and July 2007.





We raised
an aggregate of $125,000 through the sale of a convertible note and warrants to
an investor (described in greater detail above) subsequent to the year ended
September 30, 2007.  The same investor has also invested an additional
$125,000 on similar terms on or about December 19, 2007.





We have
subsequently used the majority of this funding to pay our general and
administrative expenses and certain acquisitions including the purchase of the
Leases from Sunray and the Management Agreement with Valeska, as described
above.





We
believe that we do not currently have sufficient funds to continue to pay the
interest payments required on the Secured Term Note with Laurus, through the
payment of production payments on the properties owned by Texaurus on an ongoing
basis.  As such, we are currently in negotiations with Laurus to amend
the terms of the Secured Term Note, which there can be no assurance will be
amended.  Additionally, we will need to repay $8,500,000 (minus any
payment of principal on the Note which we are able to make through our 80%
production payments to Laurus) on March 27, 2009, which funds we do not
currently have and which we can provide no assurances will be available when
such Note is due.  As such, if we are unable to come to terms with
Laurus regarding the amendment and/or revision of the terms of the Secured Term
Note, we will likely not be able to continue our business operations for more
than approximately three months.  Not including the substantial funds
we will require to repay the principal on the Secured Term Note and/or that we
will require to make the required interest payments on the Secured Term Note, we
will require approximately $300,000 of additional capital to  continue
our planned oil and gas operations and seek out new acquisitions.





The
Company remains reliant on raising further equity funds and our growth and
continued operations could be impaired by limitations on our access to the
capital markets. In the event that we or Texaurus do not generate the amount of
revenues from our oil and gas properties which we anticipate, and/or we or
Texaurus decide to purchase additional oil and gas properties and are required
to raise additional financing, we may have to raise additional capital and/or
scale back our operations which would have a material adverse impact upon our
ability to pursue our business plan. There can be no assurance that capital from
outside sources will be available, or if such financing is available, it may
involve issuing securities senior to our common stock, the common stock of
Texaurus or additional shares of the common stock of Texaurus or equity
financings which are dilutive to holders of our common stock. In addition, in
the event we do not raise additional capital from conventional sources, it is
likely that our growth will be restricted and we may need to scale back or
curtail implementing our business plan.





We have
no current commitments from our officers and Directors or any of our
shareholders to supplement our operations or provide us with financing in the
future. If we are unable to raise additional capital from conventional sources
and/or additional sales of stock in the future, we may be forced to curtail or
cease our operations. Even if we are able to continue our operations, the
failure to obtain financing could have a substantial adverse effect on our
business and financial results.


25


RISK FACTORS





You
should carefully consider the following risk factors and other information in
this annual report on Form 10-KSB/A before deciding to become a holder of our
Common Stock. If any of the following risks actually occur, our business and
financial results could be negatively affected to a significant
extent.





WE WILL NEED ADDITIONAL FINANCING TO
CONTINUE OUR BUSINESS PLAN AND DRILL AND STUDY ADDITIONAL WELLS, WHICH
FINANCING, IF WE ARE UNABLE TO RAISE MAY FORCE US TO SCALE BACK OR ABANDON OUR
BUSINESS PLAN.





We raised
$8,500,000 from the sale of a Secured Term Note to Laurus Master Fund, Ltd.
("Laurus") in March 2006. However, approximately $7,894,235 of the amount
borrowed from Laurus was subsequently used to purchase the Intracoastal City
property, the interests in the Barnes Creek gas field and the Edgerly field and
to pay closing costs and fees in connection with the various funding
transactions.





We raised
an aggregate of $384,000 through the sale of 4,800,000 units at a price of $0.08
per unit during June through December 2006, which units each included one (1)
share of common stock and one (1) one-year warrant to purchase one (1) share of
our common stock at an exercise price of $0.15 per share. We raised an aggregate
of $297,500 through the sale of 23,800,000 shares of common stock at $0.0125 per
share between May and July 2007.





We
believe that we do not currently have sufficient funds to continue to pay the
interest payments required on the Secured Term Note with Laurus, through the
payment of production payments on the properties owned by Texaurus on an ongoing
basis.  As such, we are currently in negotiations with Laurus to amend
the terms of the Secured Term Note, which there can be no assurance will be
amended.  Additionally, we will need to repay $8,500,000 (minus any
payment of principal on the Note which we are able to make through our 80%
production payments to Laurus) on March 27, 2009, which funds we do not
currently have and which we can provide no assurances will be available when
such Note is due.  As such, if we are unable to come to terms with
Laurus regarding the amendment and/or revision of the terms of the Secured Term
Note, we will likely not be able to continue our business operations for more
than approximately three months.  Not including the substantial funds
we will require to repay the principal on the Secured Term Note and/or that we
will require to make the required interest payments on the Secured Term Note, we
will require approximately $300,000 of additional capital to continue our
planned oil and gas operations and seek out new acquisitions.





Additionally,
as described below, we cannot be sure that we will find any oil and/or gas on
our properties in the future, our current properties will continue to produce,
our current production will be sufficient to repay the interest (or principal)
on the Laurus Note, nor can we provide any assurances that if found, that the
oil and/or gas will be in commercial quantities, that we will be able to extract
it from the ground, that we will not face liability in connection with our
extraction efforts, and/or that we will be able to generate the revenues we
expect from the future sale of any oil and gas we may discover in the
future.




Finally,
we may choose to spend additional monies on the purchases of oil and gas
properties in the future. Depending on the decisions of our management, the
volatility of the prices of oil and/or gas, our exploration activities, and/or
potential liability, and the amount of money we receive from the sale of oil and
gas, if any, we may need to raise additional capital substantially faster than
six months, which we currently estimate such previously borrowed monies will
last. We do not currently have any additional commitments or identified sources
of additional capital from third parties or from our officers, directors or
majority shareholders. We can provide no assurance that additional financing
will be available on favorable terms, if at all. If we are not able to raise the
capital necessary to continue our business operations, we may be forced to
abandon or curtail our business plan and/or suspend our exploration
activities.





WE OWE LAURUS MASTER FUND, LTD., A
SUBSTANTIAL AMOUNT OF MONEY WHICH WE DO NOT HAVE.





In
connection with the Securities Purchase Agreement, Laurus Master Fund, Ltd.
("Laurus"), purchased a $8,500,000 Secured Term Note from Texaurus, which we
have guaranteed, and which bears interest at the rate of 9.25% per year (as of
December 26, 2007), which is due and payable on March 27, 2009, and which
principal and interest is repayable by way of a production payments equal to 80%
of the gross production revenue received by Texaurus in connection with the
Intracoastal City Field, the Edgerly and the Barnes Creek
Properties.


26





There can
be no assurance that we will have sufficient funds to pay any principal or
interest on the Note when due on March 27, 2009, if such repayment amount is not
sufficiently covered by the payment of production proceeds to Laurus, as
described above, and we do not currently believe that such production payments
will be sufficient to repay such Note or such interest as of the date of this
filing. If we do not have sufficient funds to pay the total remaining amount of
the Note (after taking into account payments of principal, which we may not have
sufficient funds to pay) when due, we will be in default and Laurus may take
control of substantially all of our assets (as described in more detail under
"Risks Relating to the Company's Securities"). As a result, we will need to
raise or otherwise generate approximately $8,500,000 to repay the Note (not
including any adjustments for payment of principal in connection with production
payments paid by Texaurus) by March 27, 2009. If we fail to raise this money, we
could be forced to abandon or curtail our business operations, which could cause
any investment in the Company to become worthless.




WE RELY HEAVILY ON WILLIAM M. SIMMONS
AND DANIEL VESCO, OUR OFFICERS AND DIRECTORS, AND IF THEY WERE TO LEAVE, WE
COULD FACE SUBSTANTIAL COSTS IN SECURING SIMILARLY QUALIFIED OFFICERS AND
DIRECTORS.




Our
success depends upon the personal efforts and abilities of William M. Simmons,
our President and Director and Daniel Vesco, our Chief Executive Officer and
Director. Our ability to operate and implement our exploration activities is
heavily dependent on the continued service of Mr. Simmons and Mr. Vesco and our
ability to attract qualified contractors and consultants on an as-needed
basis.




We face
continued competition for such contractors and consultants, and may face
competition for the services of Mr. Simmons and/or Mr. Vesco in the future. We
do not have any employment contracts with Mr. Simmons or Mr. Vesco, nor do we
currently have any key man insurance on Mr. Simmons or Mr. Vesco. Mr. Simmons
and Mr. Vesco are our driving forces and are responsible for maintaining our
relationships and operations. We cannot be certain that we will be able to
retain Mr. Simmons and Mr. Vesco and/or attract and retain such contractors and
consultants in the future. The loss of either Mr. Simmons and Mr. Vesco, or both
and/or our inability to attract and retain qualified contractors and consultants
on an as-needed basis could have a material adverse effect on our business and
operations.




WE HAVE BECOME AWARE THAT SPAM EMAILS
REFERENCING THE COMPANY HAVE BEEN DISSEMINATED IN THE PAST, WHICH COULD AFFECT
THE MARKET FOR AND/OR THE VALUE OF OUR COMMON STOCK.





It has
come to our attention that during the month of October 2006 certain spam-emails,
containing false and misleading information about our company, were disseminated
over the internet. The spam-emails distributed by third parties that are not
associated with the Company or its Officers or Directors have not been
authorized, sanctioned or paid for by the Company. We caution investors to
review our most recent Form 8-K with the Commission, our official press releases
and our periodic filings, which we anticipate filing and amending in the future,
before making any investment in us.





While we
are not responsible for the dissemination of the spam-emails and are not aware
of who was responsible, we were contacted by the Commission and were requested
to voluntarily provide shareholder information and disclosures in connection
with the origins of the dissemination of such spam emails. The Company
cooperated fully with the Commission.





The fact
that someone disseminated spam emails about our company and the fact that the
Commission previously looked into such emails may be perceived by potential
investors as a negative factor which could adversely affect the market for
and/or the value of our stock.





BECAUSE OF THE SPECULATIVE NATURE OF
OIL AND GAS EXPLORATION, THERE IS SUBSTANTIAL RISK THAT NO ADDITIONAL
COMMERCIALLY EXPLOITABLE OIL OR GAS WILL BE FOUND AND THAT OUR BUSINESS WILL
FAIL.




The
search for commercial quantities of oil as a business is extremely risky. We
cannot provide investors with any assurance that our properties contain
commercially exploitable quantities of oil and/or gas.




27


The
exploration expenditures to be made by us may not result in the discovery of
commercial quantities of oil and/or gas and problems such as unusual or
unexpected formations and other conditions involved in oil and gas exploration,
and often result in unsuccessful exploration efforts. If we are unable to find
commercially exploitable quantities of oil and gas, and/or we are unable to
commercially extract such quantities, we may be forced to abandon or curtail our
business plan, and as a result, any investment in us may become
worthless.





OUR TOTAL AMOUNT OF ISSUED AND
OUTSTANDING SHARE AMOUNTS MAY BE INCORRECT, AND WE MAY HAVE OUTSTANDING SHARES
WHICH ARE UNACCOUNTED FOR.





We have
become aware of a subscription agreement relating to the sale of certain shares
of our common stock in February 2005, which shares have not been issued to date,
and which subscription agreement we have been unable to verify as of the date of
this filing.  As a result of the subscription agreement, and our
previous failure to issue shares in connection with such subscription agreement,
we may have potential liability for such shareholders loss of liquidity and/or
the decline in the value of our common stock.  Additionally, there may
be other subscription agreements which we are not aware of relating to the sale
of our common stock, which sales and issuances are not currently reflected with
our Transfer Agent and/or in the number of outstanding shares of common stock
disclosed throughout this report. As a result, we may have a larger number of
shares outstanding than we currently show on our shareholders list. This
difference, if present, may force us to revise our filings and/or may mean that
the ownership percentage of certain shares of common stock disclosed throughout
this report is incorrect.  If we are required to issue additional
shares of common stock in the future relating to previous subscription
agreements which our current management was and/or is not aware, it could cause
substantial dilution to our existing shareholders and/or we could face potential
liability in connection with our failure to issue such shares when originally
subscribed.




BECAUSE OF THE INHERENT DANGERS
INVOLVED IN OIL AND GAS EXPLORATION, THERE IS A RISK THAT WE MAY INCUR LIABILITY
OR DAMAGES AS WE CONDUCT OUR BUSINESS OPERATIONS, WHICH COULD FORCE US TO EXPEND
A SUBSTANTIAL AMOUNT OF MONEY IN CONNECTION WITH LITIGATION AND/OR A
SETTLEMENT.





The oil
and natural gas business involves a variety of operating hazards and risks such
as well blowouts, pipe failures, casing collapse, explosions, uncontrollable
flows of oil, natural gas or well fluids, fires, spills, pollution, releases of
toxic gas and other environmental hazards and risks. These hazards and risks
could result in substantial losses to us from, among other things, injury or
loss of life, severe damage to or destruction of property, natural resources and
equipment, pollution or other environmental damage, cleanup responsibilities,
regulatory investigation and penalties and suspension of operations. In
addition, we may be liable for environmental damages caused by previous owners
of property purchased and leased by us. As a result, substantial liabilities to
third parties or governmental entities may be incurred, the payment of which
could reduce or eliminate the funds available for exploration, development or
acquisitions or result in the loss of our properties and/or force us to expend
substantial monies in connection with litigation or settlements. As such, there
can be no assurance that any insurance obtained by us will be adequate to cover
any losses or liabilities. We cannot predict the availability of insurance or
the availability of insurance at premium levels that justify our purchase. The
occurrence of a significant event not fully insured or indemnified against could
materially and adversely affect our financial condition and operations. We may
elect to self-insure if management believes that the cost of insurance, although
available, is excessive relative to the risks presented. In addition, pollution
and environmental risks generally are not fully insurable. The occurrence of an
event not fully covered by insurance could have a material adverse effect on our
financial condition and results of operations, which could lead to any
investment in us becoming worthless.





WE REQUIRE SUBSTANTIAL ADDITIONAL
FINANCING TO CONTINUE OUR EXPLORATION AND DRILLING ACTIVITIES, WHICH FINANCING
IS OFTEN HEAVILY DEPENDENT ON THE CURRENT MARKET PRICE FOR OIL AND GAS, WHICH WE
ARE UNABLE TO PREDICT.





Our
growth and continued operations could be impaired by limitations on our access
to capital markets. If the market for oil and/or gas were to weaken for an
extended period of time, our ability to raise capital would be substantially
reduced. There can be no assurance that capital from outside sources will be
available, or that if such financing is available, that it will not involve
issuing securities senior to the common
stock or equity financings which will be dilutive to holders of common stock.
Such issuances, if made, would likely cause a decrease in the value of our
common stock.


28





THE MARKET FOR OIL AND GAS IS
INTENSELY COMPETITIVE, AND AS SUCH, COMPETITIVE PRESSURES COULD FORCE US TO
ABANDON OR CURTAIL OUR BUSINESS PLAN.





The
market for oil and gas exploration services is highly competitive, and we only
expect competition to intensify in the future. Numerous well-established
companies are focusing significant resources on exploration and are currently
competing with us for oil and gas opportunities. Additionally, there are
numerous companies focusing their resources on creating fuels and/or materials
which serve the same purpose as oil and gas, but are manufactured from renewable
resources. As a result, there can be no assurance that we will be able to
compete successfully or that competitive pressures will not adversely affect our
business, results of operations and financial condition. If we are not able to
successfully compete in the marketplace, we could be forced to curtail or even
abandon our current business plan, which could cause any investment in us to
become worthless.




WE MAY NOT BE ABLE TO SUCCESSFULLY
MANAGE OUR GROWTH, WHICH COULD LEAD TO OUR INABILITY TO IMPLEMENT OUR BUSINESS
PLAN.





Our
growth is expected to place a significant strain on our managerial, operational
and financial resources, especially considering that we currently only have
three Directors and a small number of executive officers and employees. Further,
as we enter into additional contracts, we will be required to manage multiple
relationships with various consultants, businesses and other third parties.
These requirements will be exacerbated in the event of our further growth or in
the event that the number of our drilling and/or extraction operations
increases. There can be no assurance that our systems, procedures and/or
controls will be adequate to support our operations or that our management will
be able to achieve the rapid execution necessary to successfully implement our
business plan. If we are unable to manage our growth effectively, our business,
results of operations and financial condition will be adversely affected, which
could lead to us being forced to abandon or curtail our business plan and
operations.





THE PRICE OF OIL AND NATURAL GAS HAS
HISTORICALLY BEEN VOLATILE AND IF IT WERE TO DECREASE SUBSTANTIALLY, OUR
PROJECTIONS, BUDGETS, AND REVENUES WOULD BE ADVERSELY EFFECTED, AND WE WOULD
LIKELY BE FORCED TO MAKE MAJOR CHANGES IN OUR OPERATIONS.





Our
future financial condition, results of operations and the carrying value of our
oil and natural gas properties depend primarily upon the prices we receive for
our oil and natural gas production. Oil and natural gas prices historically have
been volatile and likely will continue to be volatile in the future, especially
given current world geopolitical conditions. Our cash flows from operations are
highly dependent on the prices that we receive for oil and natural gas. This
price volatility also affects the amount of our cash flows available for capital
expenditures and our ability to borrow money or raise additional capital. The
prices for oil and natural gas are subject to a variety of additional factors
that are beyond our control. These factors include:





o    
      the level of consumer demand for oil and natural gas;o    
      the domestic and foreign supply of oil and natural gas;o    
      the ability of the members of the Organization of Petroleum Exporting
      Countries ("OPEC") to agree to and maintain oil price and production
      controls;o    
      the price of foreign oil and natural gas;o    
      domestic governmental regulations and taxes;o    
      the price and availability of alternative fuel sources;o    
      weather conditions;


o    
      market uncertainty due to political conditions in oil and natural gas
      producing regions, including the Middle East; ando    
      worldwide economic conditions.





These
factors as well as the volatility of the energy markets generally make it
extremely difficult to predict future oil and natural gas price movements with
any certainty. Declines in oil and natural gas prices would not only reduce our
revenue, but could reduce the amount of oil and natural gas that we can produce
economically and, as a result, could have a material adverse effect upon our
financial condition, results of operations, oil and natural gas reserves and the
carrying values of our oil and natural gas properties. If the oil and natural
gas industry experiences significant price declines, we may be unable to make
planned expenditures, among other things. If this were to happen, we may be
forced to abandon or curtail our business operations, which would cause the
value of an investment in us to decline in value, or become
worthless.




29


OUR ESTIMATES OF RESERVES COULD HAVE
FLAWS, OR MAY NOT ULTIMATELY TURN OUT TO BE CORRECT OR COMMERCIALLY EXTRACTABLE
AND AS A RESULT, OUR FUTURE REVENUES AND PROJECTIONS COULD BE
INCORRECT.





Estimates
of reserves and of future net revenues prepared by different petroleum engineers
may vary substantially depending, in part, on the assumptions made and may be
subject to adjustment either up or down in the future. Our actual amounts of
production, revenue, taxes, development expenditures, operating expenses, and
quantities of recoverable oil and gas reserves may vary substantially from
the estimates.  Oil and gas reserve estimates are necessarily inexact
and involve matters of subjective engineering judgment. In addition, any
estimates of our future net revenues and the present value thereof are based on
assumptions derived in part from historical price and cost information, which
may not reflect current and future values, and/or other assumptions made by us
that only represent our best estimates. If these estimates of quantities, prices
and costs prove inaccurate, we may be unsuccessful in expanding our oil and gas
reserves base with our acquisitions. Additionally, if declines in and
instability of oil and gas prices occur, then write downs in the capitalized
costs associated with our oil and gas assets may be required. Because of the
nature of the estimates of our reserves and estimates in general, we can provide
no assurance that additional or further reductions to our estimated proved oil
and gas reserves and estimated future net revenues will not be required in the
future, and/or that our estimated reserves will be present and/or commercially
extractable. If our reserve estimates are incorrect, the value of our common
stock could decrease and we may be forced to write down the capitalized costs of
our oil and gas properties.





OUR OPERATIONS ARE HEAVILY DEPENDENT
ON CURRENT ENVIRONMENTAL REGULATIONS, WHICH WE ARE UNABLE TO PREDICT, AND WHICH
MAY CHANGE IN THE FUTURE, CAUSING US TO EXPEND SUBSTANTIAL ADDITIONAL
CAPITAL.





Public
interest in the protection of the environment has increased dramatically in
recent years. Our oil and natural gas production and our processing, handling
and disposal of hazardous materials, such as hydrocarbons and naturally
occurring radioactive materials (if any) are subject to stringent regulation. We
could incur significant costs, including cleanup costs resulting from a release
of hazardous material, third-party claims for property damage and personal
injuries fines and sanctions, as a result of any violations or liabilities under
environmental or other laws. Changes in or more stringent enforcement of
environmental laws could force us to expend additional operating costs and
capital expenditures to stay in compliance.





Various
federal, state and local laws regulating the discharge of materials into the
environment, or otherwise relating to the protection of the environment,
directly impact oil and gas exploration, development and production operations,
and consequently may impact our operations and costs. These regulations include,
among others, (i) regulations by the Environmental Protection Agency and various
state agencies regarding approved methods of disposal for certain hazardous and
non-hazardous wastes; (ii) the Comprehensive Environmental Response,
Compensation, and Liability Act, Federal Resource Conservation and Recovery Act
and analogous state laws which regulate the removal or remediation of previously
disposed wastes (including wastes disposed of or released by prior owners or
operators), property contamination (including groundwater contamination), and
remedial plugging operations to prevent future contamination; (iii) the Clean
Air Act and comparable state and local requirements which may result in the
gradual imposition of certain pollution control requirements with respect to air
emissions from our operations; (iv) the Oil Pollution Act of 1990 which contains
numerous requirements relating to the
prevention of and response to oil spills into waters of the United States; (v)
the Resource Conservation and Recovery Act which is the principal federal
statute governing the treatment, storage and disposal of hazardous wastes; and
(vi) state regulations and statutes governing the handling, treatment, storage
and disposal of naturally occurring radioactive material.





Management
believes that we are in substantial compliance with applicable environmental
laws and regulations. To date, we have not expended any material amounts to
comply with such regulations, and management does not currently anticipate that
future compliance will have a materially adverse effect on our consolidated
financial position, results of operations or cash flows. However, if we are
deemed to not be in compliance with applicable environmental laws, we could be
forced to expend substantial amounts to be in compliance, which would have a
materially adverse effect on our financial condition. If this were to happen,
any investment in us could be lost.





THE COMPANY HAS ESTABLISHED PREFERRED
STOCK WHICH CAN BE DESIGNATED BY THE COMPANY'S BOARD OF DIRECTORS WITHOUT
SHAREHOLDER APPROVAL AND HAS ESTABLISHED SERIES A PREFERRED STOCK, WHICH GIVES
THE HOLDERS MAJORITY VOTING POWER OVER THE COMPANY.





The
Company has 1,000,000 shares of preferred stock authorized, and 1,000 shares of
Series A Preferred Stock authorized. Shares of preferred stock of the Company
may be issued from time to time in one or more series, each of which shall have
distinctive designation or title as shall be determined by the Board of
Directors of the Company ("Board of Directors") prior to the issuance of any
shares thereof. The preferred stock shall have such voting powers, full or
limited, or no voting powers, and such preferences and relative, participating,
optional or other special rights and such qualifications, limitations or
restrictions thereof as adopted by the Board of Directors. Because the Board of
Directors is able to designate the powers and preferences of the preferred stock
without the vote of a majority of the Company's shareholders, shareholders of
the Company will have no control over what designations and preferences the
Company's preferred stock will have. As a result of this, the Company's
shareholders may have less control over the designations and preferences of the
preferred stock and as a result the operations of the Company.





30


THE COMPANY HAS ESTABLISHED SERIES A
PREFERRED STOCK, WHICH GIVES THE HOLDERS MAJORITY VOTING POWER OVER THE
COMPANY.





The
Company has 1,000 shares of Series A Preferred Stock authorized. All outstanding
shares of Series A Preferred stock, which are all currently held by Valeska
Energy Corp., the beneficial owner of which is William M. Simmons, the President
and Director of the Company, can vote in aggregate on all shareholder matters
equal to fifty-one percent (51%) of the total vote. Because of the shares of
Series A Preferred Stock, Valeska Energy Corp., will effectively exercise voting
control over the Company. As a result of this, the Company's shareholders will
have less control over the operations of the Company.





WILLIAM M. SIMMONS, OUR PRESIDENT CAN
EXERCISE VOTING CONTROL OVER CORPORATE DECISIONS.





William
M. Simmons (through his personal beneficial ownership and through his voting
control over Valeska Energy Corp. (Valeska)) beneficially owns 27,200,000 shares
of common stock, additionally; Valeska holds all 1,000 shares of our outstanding
shares of Series A Preferred Stock, which vote approximately 240,857,776 voting
shares.  As a result, Mr. Simmons is able to vote a total of
approximately 268,057,776 voting shares based on approximately 472,270,000
voting shares outstanding (representing 231,412,224  shares of common
stock outstanding and approximately 240,857,776 shares of stock which the Series
A Preferred Stock are able to vote) representing approximately 61.6% of our
outstanding voting shares. As a result, our Directors and officers will exercise
control in determining the outcome of all corporate transactions or other
matters, including the election of directors, mergers, consolidations, the sale
of all or substantially all of our assets, and also the power to prevent or
cause a change in control. The interests of Mr. Simmons may differ from the
interests of the other stockholders and thus result in corporate decisions that
are adverse to other shareholders.




THE REMOVAL OF MR. VESCO AND MR.
SIMMONS AS DIRECTORS OF THE COMPANY IS PROTECTED BY VOTING AGREEMENTS ENTERED
INTO WITH THE COMPANYS MAJORITY SHAREHOLDERS.





Certain
of the Companys majority shareholders, including Capersia Pte. Ltd., Lucayan Oil
and Gas Investments, Ltd., Frank A. Jacobs (the Companys former Chief Executive
Officer and Director) and Valeska Energy Corp. (the Voting Shareholders) entered
into Voting Agreements whereby they agreed that they would not vote the
aggregate of 71,874,000 shares of common stock which they hold for (i.e. in
favor of) the removal of Mr. Simmons or Mr. Vesco (the New Directors) until the
expiration of the agreements on June 5, 2009.  The Voting Shareholders
also agreed that in the event of any shareholder vote of the Company (either by
Board Meeting, a Consent to Action without Meeting, or otherwise) relating to
the removal of the New Directors; the re-election of the New Directors; and/or
the increase in the number of directors of the Company during the term of the
Voting Agreements, that such Voting Shareholders would vote their shares against
the removal of the New Directors; for the re-election of such New Directors;
and/or vote against the increase in the number of directors of the Company,
without the unanimous consent of the New Directors, respectively.  The
Voting Agreements also included a provisions whereby in the event that either of
the New Directors breaches his fiduciary duty to the Company, including, but not
limited to such New Directors conviction of an act or acts constituting a felony
or other crime involving moral turpitude, dishonesty, theft or fraud; such New
Directors gross negligence in connection with his service to the Company as a
Director and/or in any executive capacity which he may hold; and/or if any
Voting Shareholder becomes aware of information which would lead a reasonable
person to believe that such New Director has committed fraud or theft from the
Company, or a violation of the Securities laws  (each a Breach of
Fiduciary Duty), this voting requirement set forth above shall not
apply.  As a result of the Voting Agreements, it will likely be
impossible for the shareholders of the Company to remove Mr. Simmons or Mr.
Vesco as Directors of the Company, unless a Breach of Fiduciary Duty occurs, and
even then, due to Valeskas ownership of the Series A Preferred Stock (as
described above), it will likely be impossible for such New Directors to be
removed as Directors of the Company.





THE INTERESTS OF MR. SIMMONS AND MR.
VESCO, OUR PRESIDENT AND CHIEF EXECUTIVE OFFICER, RESPECTIVELY, MAY DIFFER FROM
THE INTERESTS OF OUR OTHER SHAREHOLDERS, AND THEY MAY ALSO COMPETE WITH THE
COMPANY OR ENTER INTO TRANSACTIONS SEPARATE FROM THE
COMPANY.





Mr.
Simmons and Mr. Vesco, our President and Chief Executive Officer, respectively,
are involved in business interests separate from their involvement with the
Company, including but not limited to Valeska Energy Corp., which business
and/or companies may also operate in the oil and gas industry similar to and/or
in competition with the Company. Mr. Simmons and Mr. Vesco are under no
obligation to include us in any transactions which they undertake. As a result,
we may not benefit from connections they make and/or agreements they enter into
while employed by us, and they, or companies they are associated with,
including, but not limited to Valeska, may profit from transactions which they
undertake while we do not.  As a result, they may find it more
lucrative or beneficial to cease serving as officers or Directors of the Company
in the future and may resign from the Company at that time. Furthermore, while
employed by us, shareholders should keep in mind that they are under no
obligation to share their contacts and/or enter into favorable contracts and/or
agreements they may come across with the Company, and as a result may choose to
enter into such contracts or agreements through companies which they own, which
are not affiliated with us, and from which we will receive no
benefit.   Finally, certain of the agreements they may enter into
on our behalf may benefit them more than us, including, but not limited to the
Management Agreement, which currently pays Valeska $20,000 per
month.


31


RISKS RELATING TO THE COMPANY'S
SECURITIES





A DEFAULT BY US UNDER THE SECURED
TERM NOTE, TEXHOMA WARRANT OR TEXAURUS WARRANT, WOULD ENABLE LAURUS MASTER FUND,
LTD., TO TAKE CONTROL OF SUBSTANTIALLY ALL OF OUR ASSETS.





The
Secured Term Note, Texhoma Warrant and Texaurus Warrant, are secured by Laurus
by a continuing security interest in all of our assets, including without
limitation, our cash, cash equivalents, accounts receivable, deposit accounts,
inventory, equipment, goods, fixtures and other tangible and intangible assets,
which we own or at any time in the future may acquire rights, title or interest
to. As a result, if we default under any provision of the Note, Texhoma Warrant
or Texaurus Warrant or we fail to pay any amounts due to Laurus, Laurus may take
control of substantially all of our assets. If this were to happen, we could be
left with no revenue producing assets, and the value of our common stock could
become worthless.





WE MAY BE REQUIRED TO PAY PENALTIES
TO LAURUS MASTER FUND, LTD. UNDER THE REGISTRATION RIGHTS AGREEMENT, WHICH COULD
FORCE US TO EXPEND A SUBSTANTIAL AMOUNT OF THE MONEY WE HAVE PREVIOUSLY
RAISED.





We
granted Laurus Master Fund, Ltd., registration rights to the shares issuable to
Laurus in connection with the Texhoma Warrant, pursuant to a Registration Rights
Agreement, and we plan to register such shares pursuant to a Form SB-2
Registration Statement, once we become current in our filings with the
Commission. We agreed pursuant to the Registration Rights Agreement to use our
best efforts to file the Registration Statement by May 29, 2006 (60 days after
the Closing) and to obtain effectiveness of such registration statement by
September 25, 2006 (180 days after the Closing), neither of which deadlines we
have met; however, pursuant to the First Amendment (described above), Laurus
agreed to amend the date we are required to have gained effectiveness of the
Registration Statement by, to April 30, 2008.. Moving forward, should we fail to
obtain effectiveness of the registration statement, and such failure is deemed
to be a default under the Note, we could be forced to pay penalties to Laurus.
As a result, we could be forced to abandon or scale back our current planned
operations and/or raise additional capital, which could cause substantial
dilution to our existing shareholders.




THE TEXHOMA WARRANT CONTAINS
PROVISIONS WHEREBY LAURUS MASTER FUND, LTD. MAY HOLD MORE THAN 4.99% OF OUR
COMMON STOCK, PROVIDED THEY PROVIDE US SEVENTY-FIVE (75) DAYS NOTICE OR AN EVENT
OF DEFAULT OCCURS.




Although
Laurus may not exercise its Texhoma Warrant if such exercise would cause it to
own more than 4.99% of our outstanding common stock, the Texhoma Warrant also
contains provisions which provide for the 4.99% limit to be waived provided that
Laurus provides us with 75 days notice of its intent to hold more than 4.99% of
our common stock or upon the occurrence of an event of default (as defined under
the Note). As a result, if we receive 75 days notice from Laurus and/or an event
of default occurs, Laurus may fully exercise the Texhoma Warrant and fully
convert the Texhoma Warrant into shares of our common stock. If this were to
happen, it would cause immediate and substantial dilution to our existing
shareholders and if it were to happen when our Registration Statement covering
Laurus' securities has been declared effective, the subsequent sale of such
shares in the marketplace, if affected, could cause the trading value of our
common stock, if any, to decrease substantially.





32


IF AN EVENT OF DEFAULT OCCURS UNDER
THE NOTE, TEXHOMA WARRANT OR TEXAURUS WARRANT OR ANY OF THE RELATED AGREEMENTS,
WE COULD BE FORCED TO IMMEDIATELY PAY THE AMOUNTS DUE UNDER THE
NOTE.





The
Secured Term Note, Texhoma Warrant and Texaurus Warrant include provisions
whereby Laurus Master Fund, Ltd., may make the amounts outstanding under the
Note due and payable if an event of default occurs under the Note, which events
of default include:




o
            our
      failure to pay amounts due under the
Note;





o
            breach
      of any covenants under the Note, if not cured in the time periods
      provided;




o
            breach
      of any warranties found in the
Note;





o
            the
      occurrence of any default under any agreement, which causes any contingent
      obligation to become due prior to its stated maturity or to become
      payable;





o
            any
      change or occurrence likely to have a material adverse effect on the
      business, assets, liabilities, financial condition, our operations or
      prospects;





o
            an
      indictment or other proceedings against us or any executive officer;
      or




o
            a
      breach by us of any provision of the Securities Purchase Agreement, or any
      other Related Agreement entered into in connection with the sale of the
      Notes.





If any
event of default were to occur under the Note and Laurus was to make the entire
amount of the Note immediately due and payable, and we did not have sufficient
funds on hand to pay such amounts, we could be forced to sell some or all of our
assets at less than fair market value, and/or abandon or curtail our business
plan and operations.





33


THE ISSUANCE OF COMMON STOCK IN
CONNECTION WITH THE EXERCISE OF THE TEXHOMA WARRANT WILL CAUSE IMMEDIATE AND
SUBSTANTIAL DILUTION.





Once we
are able to file a registration statement covering the shares of common stock
issuable in connection with the exercise of the Texhoma Warrant, which we do not
anticipate being able to file until such time as we are current in our filings,
the issuance of common stock upon exercise of the Texhoma Warrant will result in
immediate and substantial dilution to the interests of other stockholders since
Laurus Master Fund, Ltd., may ultimately receive and sell the full amount
issuable on exercise of the Texhoma Warrant, which has an exercise price of
$0.04 per share, currently more than the average trading value of our common
stock during the past thirty days. Although Laurus may not exercise its warrant
if such conversion or exercise would cause it to own more than 4.99% of our
outstanding common stock (unless Laurus provides us 75 days notice and/or an
event of default occurs, this restriction does not prevent Laurus from
exercising some of its holdings, selling those shares, and then converting the
rest of its holdings, while still staying below the 4.99% limit. In this way,
Laurus could sell more than this limit while never actually holding more shares
than this limit prohibits. If Laurus chooses to do this, it will likely cause
the value of our common stock to decline in value (if such common stock is
trading at more than $0.04 per share prior to such sales) and will likely also
cause substantial dilution to our common stock.





THE MARKET FOR OUR COMMON STOCK MAY
CONTINUE TO BE VOLATILE, ILLIQUID AND SPORADIC, IF WE HAVE A MARKET AT
ALL.





The
market for our common stock on the Pinksheets has historically been volatile,
illiquid and sporadic and we anticipate that such market, and the market for our
common stock on the Over-The-Counter Bulletin Board (which we plan to trade our
shares once we become current in our filings, of which there can be no
assurance) will continue to be subject to wide fluctuations in response to
several factors, including, but not limited to:





(1)
            actual
      or anticipated variations in our results of operations;(2)
            our
      ability or inability to generate new revenues;(3)
            increased
      competition; and(4)
            conditions
      and trends in the oil and gas exploration industry and the market for oil
      and gas and petroleum based
products.





Our
common stock is traded on the Pinksheets under the symbol "TXHE." In recent
years, the stock market in general has experienced extreme price fluctuations
that have oftentimes been unrelated to the operating performance of the affected
companies. Similarly, the market price of our common stock may fluctuate
significantly based upon factors unrelated or disproportionate to our operating
performance. These market fluctuations, as well as general economic, political
and market conditions, such as recessions, interest rates or international
currency fluctuations may adversely affect the market price of our common
stock.


34


INVESTORS MAY FACE SIGNIFICANT
RESTRICTIONS ON THE RESALE OF OUR COMMON STOCK DUE TO FEDERAL REGULATIONS OF
PENNY STOCKS.





Our
common stock will be subject to the requirements of Rule 15(g)9, promulgated
under the Securities Exchange Act as long as the price of our common stock is
below $4.00 per share. Under such rule, broker-dealers who recommend low-priced
securities to persons other than established customers and accredited investors
must satisfy special sales practice requirements, including a requirement that
they make an individualized written suitability determination for the purchaser
and receive the purchaser's consent prior to the transaction. The Securities
Enforcement Remedies and Penny Stock Reform Act of 1990, also requires
additional disclosure in connection with any trades involving a stock defined as
a penny stock. Generally, the Commission defines a penny stock as any equity
security not traded on an exchange or quoted on NASDAQ that has a market price
of less than $4.00 per share. The required penny stock disclosures include the
delivery, prior to any transaction, of a disclosure schedule explaining the
penny stock market and the risks associated with it. Such requirements could
severely limit the market liquidity of the securities and the ability of
purchasers to sell their securities in the secondary market. In addition,
various state securities laws impose restrictions on transferring "penny stocks"
and as a result, investors in the common stock may have their ability to sell
their shares of the common stock impaired.





Other
Considerations





There are
numerous factors that affect our business and the results of its operations.
Sources of these factors include general economic and business conditions,
federal and state regulation of business activities, the level of demand for the
Companys product or services, the level and intensity of competition in the
industry and the pricing pressures that may result, the Companys ability to
develop new services based on new or evolving technology and the markets
acceptance of those new services, the Companys ability to timely and effectively
manage periodic product transitions, and geographic sales mix of any particular
period, and the ability to continue to improve infrastructure including
personnel and systems, to keep pace with the growth in its overall business
activities.







35


ITEM 7. FINANCIAL
STATEMENTS





REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM






To the
Board of Directors and




Stockholders
of Texhoma Energy, Inc.




We have
audited the accompanying consolidated balance sheets of Texhoma Energy, Inc. as
of September 30, 2007 and 2006, and the related consolidated statements of
operations, stockholders equity, and cash flows for each of the
years  in the two-year period ended September 30,
2007.  These financial statements are the responsibility of the
companys management. Our responsibility is to express an opinion on these
financial statements based on our audit.




We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.




In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Texhoma Energy, Inc. as of
September 30, 2007 and 2006, and the results of its operations and cash flows
for each of the years in the two-year period ended September 30, 2007 in
conformity with accounting principles generally accepted in the United States of
America.




The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 12 to the financial
statements, the Company has recurring operating losses, negative working capital
and is dependent on financing to continue operations. These factors raise
substantial doubt about the ability to continue as a going concern. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.


/s/
      GLO CPAs, LLPGLO
      CPAs, LLPHouston,
      TexasJanuary
      15, 2008







F-1


TEXHOMA ENERGY, INC. AND
SUBSIDIARY


CONSOLIDATED
BALANCE SHEETS


September
30, 2007 and September 30, 2006





ASSETS
            
            September
              2007
            
            
            September
              2006Current
      AssetsCash
      and cash equivalents
            
            $
            44,785
            
            
            $
            134,852Restricted
      cash
            
            
            219,088
            
            
            
            355,025Accounts
      receivable-miscellaneous
            
            
            185,350
            
            
            
            378,415Accounts
      receivable-net oil and gas production
            
            
            248,882
            
            
            
            322,402Total
      Current Assets
            
            
            698,105
            
            
            
            1,190,694Oil
      and Gas Properties, net of depletion of $2,333,426 and $1,301,574 at
      September 30, 2007 and 2006, respectively
            
            
            4,556,305
            
            
            
            5,342,314Other
      Assets
            
            
            615,728
            
            
            
            1,145,328TOTAL
      ASSETS
            
            $
            5,870,138
            
            
            $
            7,678,336LIABILITIES AND STOCKHOLDERS
      DEFICITCurrent
      LiabilitiesAccounts
      payable
            
            $
            502,875
            
            
            $
            414,483Accrued
      expenses
            
            
            1,202,438
            
            
            
            387,428Notes
      payable related parties
            
            
            453,432
            
            
            
            603,432Total
      Current Liabilities
            
            
            2,158,745
            
            
            
            1,405,343Long
      term notes payable
            
            
            8,155,280
            
            
            
            8,381,471Commitments
      and Contingencies (Note 10)
            
            
            -
            
            
            
            -Stockholders
      DeficitPreferred
      stock, $0.001 par value, 1,000,000 shares  authorized, 1,000
      shares issued and outstanding at September 30, 2007
            
            
            1
            
            
            
            -Common
      stock, $0.001 par value, 300,000,000 shares authorized, 231,162,252 and
      181,662,252 shares issued and outstanding at  September 30,
      2007 and 2006, respectively
            
            
            231,162
            
            
            
            181,662Additional
      paid-in capital
            
            
            10,330,166
            
            
            
            10,527,155Retained
      deficit
            
            
            (15,005,216
            )
            
            
            (12,817,295
            )Total
      Stockholders Deficit
            
            
            (4,443,887
            )
            
            
            (2,108,478
            )TOTAL
      LIABILITIES AND STOCKHOLDERS DEFICIT
            
            $
            5,870,138
            
            
            $
            7,678,336


See
accompanying summary of accounting policies and notes to financial
statements.


F-2





TEXHOMA ENERGY, INC. AND
SUBSIDIARY


CONSOLIDATED
STATEMENTS OF OPERATIONS


For the
years ended September 30, 2007 and 2006








September
      2007
            
            
            September
      2006RevenuesOil
      and gas interests
            
            $
            1,847,647
            
            
            $
            2,258,425Total
      revenues
            
            
            1,847,647
            
            
            
            2,258,425Operating
      expenses:Oil
      and gas exploration
            
            
            444,742
            
            
            
            4,003,313Gross
      Margin (Loss)
            
            
            1,402,905
            
            
            
            (1,744,888
            )Depletion
      and depreciation
            
            
            1,036,000
            
            
            
            1,301,574General
      and administrative expenses
            
            
            1,996,520
            
            
            
            809,612Operating
      income (loss)
            
            
            (1,629,615
            )
            
            
            (3,856,074
            )Other
      income (expenses):Loss
      on sale of furniture and equipment
            
            
            (8,441
            )
            
            
            -Stock
      accretion gain
            
            
            858,573
            
            
            
            (1,165,211Foreign
      currency exchange
            
            
            -
            
            
            
            (211Gain
      on sale of working interest promote
            
            
            -
            
            
            
            161,429Loss
      on impairment of investments
            
            
            (250,000
            )
            
            
            -Interest
      income
            
            
            13,456
            
            
            
            18,947Interest
      expense
            
            
            (1,171,894
            )
            
            
            (601,416Total
      other income (expense)
            
            
            (558,306
            )
            
            
            (1,586,462Income
      (loss) before income taxes
            
            
            (2,187,921
            )
            
            
            (5,442,536
            )Net
      income (loss)
            
            $
            (2,187,921
            )
            
            $
            (5,442,536
            )Weighted
      average common shares outstanding
            
            
            195,395,950
            
            
            
            142,059,991Basic
      earnings (loss) per share:
            
            $
            (0.01
            )
            
            $
            (0.04
            )





See
accompanying summary of accounting policies and notes to financial
statements.


F-3





TEXHOMA ENERGY, INC. AND
      SUBSIDIARYCONSOLIDATED STATEMENTS OF
      STOCKHOLDERS EQUITY (DEFICIT)For the years ended September
      30, 2007 and 2006Paid-In
            
            
            
            
            
            
            
            
            TotalCapital
            
            
            
            
            
            
            
            
            Stockholders'Common
    Stock
            
            
            Preferred
      Stock
            
            
            Paid-In
            
            
            Preferred
            
            
            Contributed
            
            
            Accumulated
            
            
            EquityShares
            
            
            Amount
            
            
            Shares
            
            
            Amount
            
            
            Capital
            
            
            Stock
            
            
            Capital
            
            
            Deficit
            
            
            [Deficit]Balance, September 30,
      2005
            
            
            106,812,252
            
            
            
            106,812
            
            
            
            -
            
            
            
            -
            
            
            
            6,222,794
            
            
            
            -
            
            
            
            -
            
            
            
            (7,374,759
            )
            
            
            (1,045,153
            )Shares
      issued, February 6, 2006 at $0.04 per share
            
            
            2,000,000
            
            
            
            2,000
            
            
            
            
            
            
            
            
            
            
            
            78,000
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            80,000Shares
      issued, March 15, 2006 at $0.04 per share
            
            
            37,500,000
            
            
            
            37,500
            
            
            
            
            
            
            
            
            
            
            
            1,462,500
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            1,500,000Shares
      issued, March 24, 2006 at $0.04 per share
            
            
            7,500,000
            
            
            
            7,500
            
            
            
            
            
            
            
            
            
            
            
            292,500
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            300,000Shares
      issued, April 10, 2006 for loan conversion at $0.04 per
    share
            
            
            4,000,000
            
            
            
            4,000
            
            
            
            
            
            
            
            
            
            
            
            156,000
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            160,000Shares
      issued, May 22, 2006 for loan conversion at $0.04 per
share
            
            
            18,375,000
            
            
            
            18,375
            
            
            
            
            
            
            
            
            
            
            
            716,625
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            735,000Shares
      issued, May 31, 2006 for asset purchase at $0.08 per share
            
            
            375,000
            
            
            
            375
            
            
            
            
            
            
            
            
            
            
            
            29,625
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            30,000Shares
      issued, June 5, 2006 at $0.08 per share
            
            
            1,000,000
            
            
            
            1,000
            
            
            
            
            
            
            
            
            
            
            
            79,000
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            80,000Shares
      issued, June 19, 2006 at $0.08 per share
            
            
            250,000
            
            
            
            250
            
            
            
            
            
            
            
            
            
            
            
            19,750
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            20,000Shares
      issued, June 27, 2006 at $0.08 per share
            
            
            1,925,000
            
            
            
            1,925
            
            
            
            
            
            
            
            
            
            
            
            152,075
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            154,000Shares
      issued, July 6, 2006 at $0.08 per share
            
            
            1,000,000
            
            
            
            1,000
            
            
            
            
            
            
            
            
            
            
            
            79,000
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            80,000Shares
      issued, September 25, 2006 at $0.08 per share
            
            
            625,000
            
            
            
            625
            
            
            
            
            
            
            
            
            
            
            
            49,375
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            50,000Shares
      issued, September 28, 2006 for employee services at $0.08 per
      share
            
            
            300,000
            
            
            
            300
            
            
            
            
            
            
            
            
            
            
            
            24,700
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            25,000Net
      (loss) at September 30, 2006
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (5,442,536
            )
            
            
            (5,442,536
            )Stock
      accretion for warrants
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            1,165,211
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            1,165,211Balance, September 30,
      2006
            
            
            181,662,252
            
            
            
            181,662
            
            
            
            -
            
            
            
            -
            
            
            
            10,527,155
            
            
            
            -
            
            
            
            -
            
            
            
            (12,817,295
            )
            
            
            (2,108,478
            )


F-4





Shares
      issued, June 7,2007 at $0.0125 per share
            
            
            18,000,000
            
            
            
            18,000
            
            
            
            
            
            
            207,000
            
            
            
            
            
            
            225,000Shares
      issued, June 7,2007 at $0.0125 per share
            
            
            4,800,000
            
            
            
            4,800
            
            
            
            
            
            
            55,200
            
            
            
            
            
            
            60,000Shares
      issued, June 10, 2007 for management agreement  at $0.02 per
      share
            
            
            15,200,000
            
            
            
            15,200
            
            
            
            
            
            
            288,800
            
            
            
            
            
            
            304,000Shares
      issued, July  9, 2007 at $0.0125 per share
            
            
            1,000,000
            
            
            
            1,000
            
            
            
            
            
            
            11,500
            
            
            
            
            
            
            12,500Shares
      issued, July 1, 2007 for services agreement at $0.02 per
    share
            
            
            500,000
            
            
            
            500
            
            
            
            
            
            
            9,500
            
            
            
            
            
            
            10,000Shares
      issued August 13, 2007 for management agreement at $0.02 per
      share
            
            
            10,000,000
            
            
            
            10,000
            
            
            
            
            
            
            190,000
            
            
            
            
            
            
            200,000Shares
      issued August 13, 2007 for management agreement at $0.001 per
      share
            
            
            1,000
            
            
            
            
            
            
            
            1
            
            
            
            
            
            
            
            
            
            
            1Net
      (loss) at September 30, 2007
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (2,187,921
            )
            
            
            (2,187,921
            )Stock
      accretion for warrants
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (958,989
            )
            
            
            
            
            
            
            (958,989
            )Balance,
      September  30, 2007
            
            
            231,162,252
            
            
            
            231,162
            
            
            
            1
            
            
            
            10,330,166
            
            
            
            (15,005,216
            )
            
            
            (4,443,887
            )





See
accompanying summary of accounting policies and notes to financial
statements


F-5


TEXHOMA ENERGY, INC.  AND
SUBSIDIARY


CONSOLIDATED
STATEMENTS OF CASH FLOWS


Years
Ended September 30, 2007 and 2006





September
      2007
            
            
            September
    2006Cash
      flows from operating activities:
              Net
      loss
            
            $
            (2,187,921
            )
            
            $
            (5,442,536
            )Adjustments
      to reconcile net loss to
              net
      cash provided by (used in) operating activities:Depletion
            
            
            1,031,853
            
            
            
            1,301,574Depreciation
      and amortization
            
            
            323,018
            
            
            
            162,864Stock
      issued for services
            
            
            514,001
            
            
            
            25,000Stock
      based compensation
            
            
            -
            
            
            
            -Stock
      accretion gain
            
            
            (858,573
            )
            
            
            1,165,211Oil
      and gas exploration costs
            
            
            -
            
            
            
            3,590,082Change
      in assets and liabilities:Accounts
      receivable
            
            
            266,584
            
            
            
            (700,817
            )Accounts
      payable
            
            
            88,393
            
            
            
            387,034Accrued
      expenses
            
            
            714,594
            
            
            
            264,919Other
            
            
            210,728
            
            
            
            (351,578
            )Net
      cash provided by operating activities
            
            
            102,677
            
            
            
            401,753Cash
      flows from investing activities:Investment
      in Black Swan
            
            
            -
            
            
            
            -Oil
      and gas property investments
            
            
            (249,990
            )
            
            
            (11,190,584
            )Other
      assets
            
            
            -
            
            
            
            -Net
      cash used in investing activities
            
            
            (249,990
            )
            
            
            (11,190,584
            )Cash
      flows from financing activities:Loans
      from affiliates
            
            
            5,200
            
            
            
            413,432Loan
      repayment to affiliates
            
            
            (65,200
            )
            
            
            (105,000
            )Notes
      payable proceeds
            
            
            -
            
            
            
            11,250,000Repayment
      of notes payable
            
            
            (316,191
            )
            
            
            (2,723,529
            )Stock
      issued for asset purchase
            
            
            -
            
            
            
            1,610,000Proceeds
      from issuance of common stock
            
            
            297,500
            
            
            
            684,000Net
      cash provided by (used in)  financing activities
            
            
            (78,691
            )
            
            
            11,128,903Increase
      (decrease) in cash and cash equivalents
            
            
            (226,004
            )
            
            
            340,072Cash
      and cash equivalents at beginning of period
            
            
            489,877
            
            
            
            149,805Cash
      and cash equivalents at end of year
            
            $
            263,873
            
            
            $
            489,877





See
accompanying summary of accounting policies and notes to financial
statements







F-6


TEXHOMA
ENERGY, INC.  AND SUBSIDIARY


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


September
30, 2007 and 2006








1. Summary of Significant Accounting
Policies





Description of Business-
Texhoma Energy, Inc. was originally incorporated as Pacific Sports Enterprises,
Inc. in 1998.  Texhoma is engaged in the exploration for and the
production of hydrocarbons, more commonly known as the exploration and
production of crude oil and natural gas.  In March 2006, Texhoma
incorporated a subsidiary, Texaurus Energy, Inc. in Delaware for the same
purpose.




Organization and Basis of
Presentation Texhomas securities are registered with the Securities and
Exchange Commission in the United States of America and its securities currently
trade under the symbol TXHE.PK on the pink sheets.





The
financial statements are prepared in accordance with accounting principles
generally accepted in the United States of America.





Use of Estimates Texhomas
financial statement preparation requires that management make estimates and
assumptions which affect the reporting of assets and liabilities and the related
disclosure of contingent assets and liabilities in order to report these
financial statements in conformity with accounting principles generally accepted
in the United States of America.  Actual results could differ from
those estimates.





The
primary estimates made by management included in these financial statements are
the impairment reserves applied to various long-lived assets and the fair value
of its stock tendered in various non-monetary transactions.





Cash and Cash Equivalents -Cash includes all highly liquid investments that are readily convertible
to known amounts of cash and have original maturities of three months or
less.





Restricted CashTexaurus
maintains the residual cash from the proceeds of the Laurus Fund note in a
restricted account for as long as Texaurus shall have any obligations to
Laurus.  Texaurus may request authorization from Laurus for access to
these funds for the consummation of acquisitions of oil and gas
assets.





Fair Value of Financial Instruments
-SFAS No. 107, Disclosures about Fair Values of
Financial Instruments (FAS 107), requires disclosing fair values to the
extent practicable for financial instruments, which are recognized or
unrecognized in the balance sheet. For certain financial instruments, including
cash, accounts payable, and accrued expenses and short term debt, it was assumed
that the carrying value does not materially differ from fair
value.  The fair value of debt was determined based upon current rates
at which Texhoma could borrow funds with similar maturities
remaining.





Property and Equipment-Property and equipment are recorded at cost less impairment. Depreciation
is computed using the straight-line basis over the estimated useful lives of the
assets at the rates in the accompanying table.





Asset
      Category
            Depreciation/
              Amortization
              PeriodBuilding
            30
      YearsPlant
      & Equipment
            7
      YearsProduction
      Tooling
            $10
      per unitAutomotive
      Equipment
            5
      YearsOffice
      Equipment
            5
      to 3 Years





F-7


Texhomas
subsidiary purchased oil and gas property interests on March 28, 2006 with
ownership of their portion of the oil and gas production from the Barnes Creek
and Edgerly properties becoming effective January 1, 2006.  Little
White Lakes was purchased effective April 1, 2006.  Depletion is
computed based upon the estimated remaining proved reserves as determined by a
third party petroleum and geology consulting firm.  Based upon those
estimations, the total proven reserves for the leaseholds were as
follows:





Field
            Total
      Proven Reserves
            Remaining
      at September 30, 2007
            Depletion
      rate for September 30, 2007
            Depletion
      rate for September 30, 2006Barnes
      Creek
            73,310
            51,450
            16.2%
            14.9%Edgerly
            210,574
            51,273
            15.9%
            4.9%Little
      White Lakes
            27,673
            10,159
            50.5%
            20.8%








Oil and Natural Gas Exploration and
DevelopmentTexhoma records its exploration operations in accordance with
SFAS 19, Financial Accounting
and Reporting by Oil and Gas Producing Companies(FAS 19). Exploration
involves identifying areas that may warrant inspection and/or examination of
specific areas that indicate they may possess the presence of oil and gas
reserves, including the drilling of exploration wells and collecting seismic
data.




Texhoma
adopted Successful Efforts accounting for exploration costs as defined in FAS
19.  Under this method, geological and geophysical costs, the costs of
carrying and retaining undeveloped properties such as delay rentals, ad valorem
taxes on properties, legal costs for the title defense, maintenance of land and
lease records, and dry and bottom hole contributions are charged to expense as
incurred.  The cost of drilling exploratory wells is capitalized,
pending determination of whether the well can produce
hydrocarbons.  If it is determined the well has no commercial
potential, the capitalized costs, net of any salvage value are
expensed.




Should it
be determined subsequent to a financial reporting period and prior to the
issuance of financial statements for that reporting period, that an exploratory
well has not found commercially exploitable hydrocarbons, any costs incurred
through the end of that reporting period, net of salvage value, must be written
off in that prior period under FASB Interpretation No. 36, Accounting for Exploratory Wells in
Progress at the End of the Period(FAS 36).





Equity Method of Accounting for
Investments in Common Stock -The equity method of accounting for
investments in Common Stock when the ownership is 50 percent or less of the
voting stock of the enterprise is governed by APB Opinion No. 18, The Equity Method of Accounting for
Investments in Common Stock (APB 18).  It states that use of
the equity method of accounting for an investment is required if the investor
exercises significant influence over the operating and financial policies of the
investee.  APB 18 includes presumptions, based on the investors
percentage of ownership, as to whether the investor has that
ability.





Long-Lived Assets - The
Company's accounting policy regarding the assessment of the recoverability of
the carrying value of long-lived assets, including property, equipment and
purchased intangible assets with finite lives, is to review the carrying value
of the assets if the facts and circumstances suggest that they may be impaired.
If this review indicates that the carrying value will not be recoverable, as
determined based on the projected undiscounted future cash flows, the carrying
value is reduced to its estimated fair value.





Income Taxes - Management
evaluates the probability of the realization of its deferred income tax
assets.  The Company has estimated a $3,273,000 deferred income tax
asset at September 30, 2007 relating to net operating loss carryforwards and
deductible temporary differences.  Of that amount, an estimated
$2,836,000  is related to the net operating loss generated for the
year ended September  30, 2007.  Management determined that
because the Company has not yet generated taxable income, because of the changes
in control that have occurred and the fact that certain losses were generated
outside of the United States, it is more likely than not that a tax benefit will
not be realized from these operating loss carryforwards and deductible temporary
differences.    Accordingly, the deferred income tax asset
is offset by a full valuation allowance.


F-8





If the
Company begins to generate taxable income, management may determine that some,
or all of the deferred income tax asset may be
recognized.  Recognition of the asset could increase after tax income
in the future.  The net operating tax loss carry forward of
approximately $8,340,000 expires from 2011 to 2026.  The future
utilization of the net operating losses is uncertain.




Earnings or (Loss) Per Share
- Per SFAS No. 128, Earnings
per Share(FAS 128), earnings per share (or loss per share), is computed
by dividing the earnings (loss) for the period by the weighted average number of
common stock shares outstanding for the period.  Diluted earnings
(loss) per share reflects the potential dilution of securities by including
other potential common stock, including stock options and warrants, in the
weighted average number of common shares outstanding for the period, if
dilutive.  Therefore because including options and warrants issued
would have an anti-dilutive effect on the loss per share, only the weighted
average (loss) per share is reported.





Share-Based Payment - In
December 2004, the FASB issued SFAS No. 123R, Accounting for Stock-Based
Compensation (FAS 123(R)), which supersedes APB 25. Accordingly, Texhoma
is required to measure all stock-based compensation awards using a fair
value method and recognize such expense in its financial statements as services
are performed. In addition, the adoption of FAS No. 123(R) will require
additional accounting related to the income tax effects and additional
disclosure regarding the cash flow effects resulting from share-based payment
arrangements. FAS No. 123(R) became effective for small business issuers as of
the first interim or annual reporting period that begins after December 31,
2005.





The
effects of the adoption of FAS No. 123(R) on Texhomas results of operations and
financial position are dependent upon a number of factors, including the number
of employee stock options outstanding and unvested, the number of stock-based
awards which may be granted in the future, the life and vesting features of
stock-based awards which may be granted in the future, the future market value
and volatility of Texhomas stock, movements in the risk free rate of interest,
award exercise and forfeiture patterns, and the valuation model used to estimate
the fair value of each award.  In addition, Texhoma utilizes
restricted stock units as a key component of its ongoing employee stock-based
compensation plan. These awards generally are recognized at their fair value,
equal to the quoted market price of Texhomas common stock on the date of
issuance, and this amount is amortized over the vesting period of the shares of
restricted stock held by the grantee





Accounting Changes and ErrorCorrections - In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error
Corrections (FAS 154).This statement
replaces APB Opinion No. 20, Accounting Changes, and SFAS
No. 3, Reporting
Accounting Changes in Interim Financial Statements,and changes the
requirements for the accounting and reporting of a change in accounting
principle. This statement applies to all voluntary changes in accounting
principles. It also applies to changes required by an accounting pronouncement
in the unusual instance that the pronouncement does not include specific
transition provisions. When a pronouncement includes specific transition
provisions, those provisions should be followed. FAS 154 requires
retrospective application to prior periods financial statements of voluntary
changes in accounting principles. FAS 154 is effective for accounting
changes and corrections of errors made during 2007, beginning on January 1,
2007. Texhoma does not believe the adoption of FAS 154 has had a material impact
on its financial statements.





Inventory Cost - In
November 2004, the FASB issued SFAS No. 151, Inventory Costsan Amendment of ARB
No. 43, Chapter 4(FAS 151). FAS 151 amends Accounting
Research Bulletin (ARB) No. 43, Chapter 4, to clarify that abnormal
amounts of idle facility expense, freight, handling costs, and wasted materials
(spoilage) should be recognized as current-period charges. In addition,
this statement requires that allocation of fixed production overheads to the
costs of conversion be based on the normal capacity of the production
facilities. The provisions of this statement are effective for inventory costs
incurred beginning in Texhomas first quarter of 2006. Texhoma does not believe
that the adoption of FAS 151 did not have a material impact on its financial
statements.





2.  PROPERTY AND
EQUIPMENT





No
acquisitions of oil and gas properties were made during the year ended September
30, 2007.




Texhoma and
its subsidiary, Texaurus Energy, Inc. acquired oil and gas leasehold properties
at a cost  of $11.191 million during the year ended September 30,
2006.  During the year $916,000 of those acquisitions proved to be
unsuccessful, and were written off for the financial statement
presentation.  In addition, third party
engineering reports projected that the future value of the Little White Lake
interest retained significantly less future value than was reflected in the
depleted amount per the balance sheet at September 30, 2006 and as such recorded
an impairment of $2,682,000 for the year then ended.


F-9





3.   SHARE
CAPITAL





Stock for Services Compensation
Plan - In accordance with Texhomas Stock for Services Compensation Plan,
on August 26, 2004, the Company filed a registration statement on Form S-8 with
the Securities and Exchange Commission, for registration under the Securities
Act of 1933 of Securities to Be Offered to Employees Pursuant to Employee
Benefit Plans to register the shares of common stock under
Texhomas  Plan in an amount of up to 11,000,000 pre forward split
shares and 44,000,000 post forward split shares at various exercise
prices.  The Board of Directors is authorized, without further
approval; to issue shares of common stock under the plan from time to time of up
to an aggregate of 44,000,000 post forward split shares of the Companys common
stock.




Common Stock In May 2007,
4,800,000 shares of our common stock were subscribed for at $0.0125 per share
for a total consideration of $60,000.





In May 2007, Valeska Energy Corp.
entered into a management agreement with Texhoma for a minimum period of three
months.  Mr. William M. Simmons is the President of
Valeska.  In exchange for these services, Valeska was issued
15,200,000 shares of Texhomas stock as payment and retainer.  On June
8, 2007, Capersia transferred 1,000,000 shares of Texhoma stock to Mr. William
Simmons, 1,000,000 shares to Valeska Energy Corp., and 1,000,000 shares to Asset
Solutions (Hong Kong) Ltd.





In June
2007, 18,000,000 shares of our common stock were purchased at $0.0125 per share
by Hobart Global Ltd., a British Virgin Islands corporation in exchange for
$225,000.





In July
2007, additional shares of common stock were sold to Camecc A/S, a Norwegian
company for $12,500 or $0.0125 per share and another 500,000 shares were issued
to Mr. Ibrahim Nafi Onat in consideration for his entry into a Consulting
Agreement with us.




On or
about August 13, 2007, we entered into a Second Amendment to Management Services
Agreement with Valeska Energy Corp. (Valeska and the Second
Amendment).





Pursuant
to the Second Amendment, we and Valeska agreed to extend the term of the
Management Services Agreement until September 30, 2008, and to pay Valeska the
following consideration in connection with agreeing to perform the services
required by the original Management Services Agreement, and in consideration for
allowing Daniel Vesco and William M. Simmons to serve as Directors of the
Company, bringing on personnel to assist the Company with the day to day
operations of the Company, and helping bring the Company current in its filings
(the Services):





1,000
      shares of the Companys Series A Preferred Stock;A
      monthly fee of $20,000 per month during the extended term of the Second
      Amendment, plus reasonable and actual costs incurred by Valeska (or
      individuals or designees brought on by Valeska, including lodging, car
      rental and telephone expenses therewith) in connection with such
      Services;10,000,000
      restricted shares of the Companys common stock; and60,000,000
      options to purchase shares of the Companys common stock, which shall have
      a cashless exercise provision, shall be valid for a period of three years
      from their grant date, which had an exercise price of $0.02 per share,
      which was greater than 110% of the trading price of the Companys common
      stock on the Pinksheets on the day of such
  grant.





In March
2006, our former Executive Chairman and Director, Frank Jacobs subscribed for
7,500,000 shares of our common stock at $0.04 per share, for aggregate
consideration of $300,000, which funds were immediately used by us in connection
with the Closing of the Kilrush Property (described below).





On
March  28,  2006,  Texaurus closed  the
purchase of certain interests from Structured Capital in exchange
for  a) two million five hundred thousand dollars ($2,500,000) and b)
the issuance of 37,500,000 shares of our common stock at $0.04 per
share.


F-10


In March
2006, the Company issued 1,062,500 warrants to purchase 1,062,500 shares at
$0.04 cents per share and expiring in five years.  The warrants were
issued to Energy Capital Solutions in consideration for raising capital for the
Company.  In addition, up to 10,625,000 warrants to purchase Texhoma
common stock at $0.04 per share, expiring in five years, as well as 961 warrants
at $0.001 per share to purchase common shares of Texaurus Energy, Inc., a wholly
owned subsidiary of Texhoma, at any time following Texhomas repayment of all
obligations were issued to Laurus Master Fund Ltd.





On April
10, 2006, Texhoma Energy, Inc. (the "Company") entered into a Debt Conversion
Agreement with Lucayan Oil and Gas Investments, Ltd., a Bahamas corporation,
formerly Devon Energy Thai Holdings, Ltd. ("LOGI").  The Company and
LOGI agreed to convert $160,000 of the $895,000 which LOGI was owed into an
aggregate of 4,000,000 shares (or one (1) share for each $0.04 of debt
converted) of newly issued shares of the Company's restricted common stock. The
Director and 50% owner of LOGI is Max Maxwell, was a Director of the Company
from April 10, 2006 until May 1, 2007 and  President of the Company
from April 12, 2006 until May 1, 2007 and Chief Executive Officer of the Company
from June 5, 2006 until May 1, 2007.





On May
15, 2006, Lucayan Oil and Gas Investments, Ltd. ("LOGI") provided the Company
notice of its desire to convert its $735,000 Promissory Note into 18,375,000
shares of the Company's common stock. The Company's Board of Directors approved
such issuance on May 18, 2006.





In June
2006, the Company accepted subscriptions for 3,175,000 shares of its common
stock at $0.08 share for $254,000 in cash.  The Company also granted
warrants to purchase 3,175,000 shares at $0.15 per share expiring in one year
and all warrants have since expired.




In June
2006, the Company accepted subscriptions for 1,000,000 shares of our common
stock at $0.08 per share for $80,000 in cash and the Company also granted
warrants to purchase 1,000,000 shares with an exercise price of $0.15 per
share expiring in one year.  Of which all warrants have since
expired.





In
conjunction with the acquisition of three of the Sunray properties, we issued
375,000 shares of common stock and granted warrants to purchase 375,000 shares
at an exercise price of $0.15 per share expiring in one year, these warrants
have since expired.





In July
2006 the Company accepted subscriptions for 1,000,000 shares of our common stock
at $0.08 per share for $80,000 in cash and the Company also granted warrants to
purchase 1,000,000 shares with an exercise price of $0.15 per share
expiring in one year and as of September 30, 2007 these warrants have
expired.





In
September, 2006 the Company accepted subscriptions for 625,000 shares of our
common stock at $0.08 per share for $50,000 and the Company also granted
warrants to purchase 625,000 shares with an exercise price of $0.15 per
share expiring in one year.   These warrants have expired as of
September 30, 2007.





On
September 19, 2006, Mr. Brian Alexander decided not to seek re-election as a
director of the Company and as a result, In connection with monies we owed Mr.
Alexander in director and consulting fees, 300,000 shares of restricted common
stock were issued to Mr. Alexander in lieu of cash.





4.  STOCK
OPTIONS





On June
1, 2006, the Company's Board of Directors approved the grant of an aggregate of
10,000,000 options to the Company's then officers, Directors and employees,
pursuant to the Company's 2006 Stock Incentive Plan (the "Plan"). All of the
options were at an exercise price of $0.13 per share, which was equal to the
average of the highest ($0.125) and lowest ($0.111) quoted selling prices of the
Company's common stock on June 1, 2006, multiplied by 110%. The options were
granted to the following individuals in the following amounts:





F-11





o
            Max
      Maxwell, our former president and Director was granted 750,000 qualified
      options and 3,250,000 non-qualified options (for 4,000,000 total options),
      which options were to vest at the rate of 500,000 options every three
      months, with the qualified options to vest first, in consideration for
      services to be rendered to the Company as the Company's president and
      Director. The options were to expire if unexercised on June 1, 2009, or at
      the expiration of three months from the date of the termination of his
      employment with the Company.  All of Mr. Maxwells options have
      since expired unexercised;




o
            Frank
      Jacobs, our former Director was granted 4,000,000 non-qualified options,
      which options were to vest at the rate of 500,000 options every three
      months, in consideration for services to be rendered to the Company as the
      Company's Director. The options were to expire if unexercised on June 1,
      2009, or at the expiration of three months from the date of the
      termination of his employment with the Company.  Mr. Jacobs
      resigned from the Company effective June 14, 2007, and as such all
      2,000,000 of his vested options expired unexercised on September 14,
      2007;





o
            Brian
      Alexander, our former Chief Financial Officer and Director was granted
      1,000,000 non-qualified options, which options vested upon Mr. Alexander's
      execution of a deed of release and settlement between Mr. Alexander and
      the Company in connection with his resignation from his positions as the
      Company's Chief Financial Officer and Director. The options expired
      unexercised on July 1, 2007; and




o
            Mr.
      Terje Reiersen then working as a consultant to the Company was granted
      1,000,000 non-qualified options, which options were to vest at the rate of
      250,000 options every three months, in consideration for consulting
      services to be rendered to the Company in connection with corporate advice
      in relation to a secondary listing amongst other things. The options were
      to expire if unexercised on June 1, 2009, or at the expiration of three
      months from the date of the termination of his employment with the
      Company.  All of Mr. Reiersens options have since expired
      unexercised.





Additionally, on June 1, 2006, the
Board of Directors approved the issuance of 2,000,000 options to another
consultant to the Company in consideration for investor relations services
rendered to the Company. The options granted to the consultant were not granted
pursuant to the Plan. The options have an exercise price of $0.13 per share,
vest at a rate of 250,000 options every three months and expire if unexercised
on June 1, 2009.





The
following is a summary of the option activity during the years ended September
30, 2007 and 2006:








Number
            
            
            AverageOf
            
            
            ExerciseOptions
            
            
            PriceOutstanding
      at October 1, 2005
            
            
            -
            
            
            
            -Granted
            
            
            12,000,000
            
            
            $
            0.13Balance
      at September 30, 2006
            
            
            12,000,000
            
            
            $
            0.13Expired
            
            
            10,000,000
            
            
            $
            0.13Granted
            
            
            60,000,000
            
            
            $
            0.02Balance
      at September 30, 2007
            
            
            62,000,000
            
            
            $
            0.0235





Compensation
costs associated with the issuance of options to purchase shares of common stock
to employees, directors or consultants is measured at fair value at the date of
issuance based upon the options vested and expensed during the current
period.


F-12





As of
September 30, 2007, 61,250,000 of the options were vested. During the year
10,000,000 of options issued to former employees and associates expired and
60,000,000 new options were issued to Valeska Energy Corp. The trading price of
our stock was $0.01375 per share at September 30, 2007 and the Black-Scholes
option model with the following assumptions:  weighted average
risk-free interest rate of 4.25%, estimated volatility of 182%, weighted-average
expected life of 1.667 years and no expected dividend yield, resulted in a fair
value per option of $0.015.  As such we increased the accrual for
option expense by $811,000 in our current financial statements.





As
of September 30, 2006, 2,500,000 of options were vested and based on
our knowledge at that date, we  applied a forfeiture rate of 90% to
the vested options.  $12,964 of option expense was accrued as of
September 30, 2006. The trading price of our stock was $0.09 per share on
September 30, 2006.  The Black-Scholes option model with the following
assumptions:  weighted average risk-free interest rate of 4.25%,
estimated volatility of 127%, weighted-average expected life of two years and no
expected dividend yield, resulted in a fair value per option of
$0.0518.





5.  ACQUISITIONS





On or
about December 10, 2005, the Company entered into a 6% participation agreement
with the "Clovelly Joint Venture.  On February 2, 2006, we executed a
Sale and Purchase Agreement (the Clovelly SPA) with Sterling Grant Capital, Inc.
pursuant to which we acquired a further 5% (five percent) working interest in
the Clovelly South prospect located in Lafourche Parish,
Louisiana.  We funded Clovelly SPA through a Joint Operating
Agreement, the issuance to Sterling Grant of 2,000,000 shares of Company common
stock and payment of $15,000.




On  March  15,  2006,  Texhomas
wholly-owned  subsidiary,  Texaurus Energy, Inc., which was
formed in March 2006
as  a  Delaware  corporation  ("Texaurus"),  entered  into  a
Sales and Purchase Agreement  with  Structured Capital
Corp., a Texas corporation to purchase certain oil and gas leases in Vermillion
Parish,  Louisiana,  which  represent  a  10%
working interest (7.3% net revenue interest) in such leases.  The
agreed purchase price of the Little White Lake Property was a) two million five
hundred thousand dollars ($2,500,000) and b) the issuance of 37,500,000 shares
of our common stock.  This purchase had an effective date of April 1,
2006.





On
March  28,  2006,  with  an effective
date of January 1, 2006, Texaurus closed  a  Sales &
Purchase Agreement to purchase certain interests from Kilrush
Petroleum,  Inc. in Allen Parish, Louisiana and Calcasieu Parish,
Louisiana, for
aggregate  consideration  of  $5,225,000.  Texaurus
paid the $5,225,000 purchase price with proceeds received from its sale of the
Secured Term Note with Laurus Master Fund, Ltd. (Laurus).





On March
28, 2006 Texaurus entered into a Securities Purchase Agreement and a
Registration Rights Agreement, issued a Common Stock Purchase Warrant;
entered into a Master Security Agreement with Laurus; and sold Laurus a
Secured Term Note in the amount of $8,500,000 as well as
various other agreements.  Additionally, in connection with the
closing, we issued Laurus Common Stock Purchase Warrants to purchase up to
10,625,000 shares of Texhoma common stock and up to 49% of Texaurus common
stock.





In March
2006, the Company issued 1,062,500 warrants to purchase 1,062,500 shares at
$0.04 cents per share and expiring in five years.  The warrants were
issued to Energy Capital Solutions for raising capital for the
Company.





A Letter
of Intent was executed by Texhoma on April 28, 2006, agreeing to participate in
a 25% working interest in the exploration of the Bayou Choctaw oil and gas
project, located in Iberville Parish, Louisiana.  In July 2006, Texhoma
executed a new Letter of Intent increasing its agreement of participation to
41.667% in the project.   Texhoma identified that the exposure
was in excess of its corporate guidelines and assigned its right to the interest
to Morgan Creek Energy Corp. in exchange for $250,000 and 200,000 shares of
Morgan Creek Energy.





On May
31, 2006, Texhoma entered into six (6) participation agreements to purchase
various oil and gas leases from Sunray Operating Company LLC (Sunray). In June
and August 2006, Texhoma closed the purchase
of three (3) of the participation agreements, entering into Assignments and Bill
of Sales for purchase from Sunray the following Leases:


F-13





Leases
      covering approximately 196 acres of land in Brazoria County, Texas. In the
      purchase, Texhoma acquired an undivided 37.5% interest, subject to
      existing overriding royalty interests equal to 25% of 8/8.  
      Additionally, Sunray is entitled to a five-eighth of eight-eighths (62.5%
      of 8/8) working interest, proportionally reduced at
  payout.





Leases
      covering approximately 20 acres of land in Brazoria County, Texas. In the
      purchase, Texhoma acquired an undivided 35% interest in the leases,
      subject to existing overriding royalty interests equal to 25% of
      8/8.





Leases
      covering approximately 280 acres of land in Brazoria County, Texas. In the
      purchase, Texhoma acquired an undivided 72.5% interest in the leases,
      subject to existing overriding royalty interests equal to 28% of 8/8.
      Texhoma simultaneously sold a 42.5% interest leaving a 30%
      interest.





Texhoma
      declined to participate in the purchase of the leases covering
      approximately 80 acres in Brazoria County. In September 2006, this well
      was a dry hole and participation in subsequent wells was
      declined.  However, Texhoma continues to hold a 12.5% back in
      Working Interest.




Two
      leases for another 160 acre site and a 60 acre site which were
      subsequently declined by Texhoma, retaining a 12.5% back in Working
      Interest.





In
conjunction with the acquisition of three of the Sunray properties, we issued
375,000 shares of common stock and granted warrants to purchase 375,000 shares
of common stock at an exercise price of $0.15 per share expiring in one
year.  Subsequent to the acquisition of the Sunray properties, we
executed an agreement to sell a percentage of our working interest in the
properties to Matrixx, thereby reducing our cash investment and liability for
future cash calls.  Additionally, we agreed to pay Sunray $113,161 in
cash, of which $50,624 remained outstanding as of December 31,
2007.





In
September 2006, drilling on the properties acquired in the Sunray agreement
proved to be unsuccessful and the investment was retired.





6. RELATED
PARTIES





On
December 7, 2004, the Company borrowed $50,000 from a related party, MFS
Technology.  The loan is evidenced by a convertible promissory note, see
Note 7 for additional information.




On or
about December 10, 2005, the Company entered into a 6% participation agreement
with the "Clovelly Joint Venture," of which ORX Resources, Inc. is the Operator.
Our former President and Director Max Maxwell served as Vice President of the
Operator at the time we entered into the participation agreement.  On
February 14, 2006 the Company increased its working interest to 11% through the
purchase of a further 5% working interest in this property from Sterling
Grant.  We funded this additional interest through a Joint Operating
Agreement, issuance to Sterling Grant of 2,000,000 shares of Texhoma common
stock at $0.04 per share and payment of $15,000.





On  March  24,
2006, Mr. Jacobs, the Companys former Chief Executive Officer, subscribed for
7,500,000 shares of the Company's common  stock at $0.04 per share,
for an aggregate consideration of $300,000, which funds were immediately used by
the Company as a portion  of  the  consideration
paid by the Company for the purchase of certain oil and gas interests from
Kilrush Petroleum, Inc., located in Allen
Parish,  Louisiana  and  Calcasieu  Parish,  Louisiana.





On April
10, 2006, Texhoma entered into a $735,000 Debt Conversion Agreement with Lucayan
Oil and Gas Investments, Ltd., a Bahamas corporation ("LOGI"). Texhoma owed
$895,000 to LOGI  as of the date  of the Debt Conversion
Agreement in connection  with  money  advanced to
the Company in March 2005 for the fulfillment of  a portion of the
cash call commitments for the drilling by Black Swan Thai.  Pursuant
to the Debt Conversion Agreement, the Company and LOGI agreed to convert
$160,000  of  the  $895,000
of  which  LOGI was owed into an aggregate of 4,000,000
shares (or one (1)  share  for  each
$0.04 of debt converted) of newly issued shares of the Companys restricted
common stock.  Mr. Max Maxwell, our former President is a 50% owner of
LOGI.


F-14





On  May  15,  2006,
LOGI provided the  Company  notice  of its desire
to convert its $735,000 Promissory Note, which amount remained from LOGIs Debt
Conversion Agreement entered into with Texhoma in April 2006, into 
18,375,000  shares  of  the  Company's  common  stock  and  as  a
result of such conversion, which shares were subsequently issued to
LOGI.





On  June  1,  2006,
the Company's Board of Directors approved the issuance of an aggregate of
10,000,000  options  to  the  Company's  officers,  directors
and
employees,  pursuant  to  the  Company's
2006 Stock Incentive Plan and an additional 2,000,000 options for a
consultant. All options expire if unexercised on June 1, 2009, or
three (3) months from the date of the termination of employment with the
Company.





All
options were issued at an exercise price of $0.13 per share, which was equal to
the average of the highest ($0.125) and lowest ($0.111) quoted selling prices of
the Companys common stock on June 1, 2006, multiplied by
110%.  Options of 4,000,000 were granted to Max Maxwell and Frank
Jacobs, and options of 1,000,000 were granted to Brian Alexander, and Terje
Reiersen.  On June 7, 2006, the Board of Directors approved the grant
of an additional 1,000,000 options to Peter Wilson, which amount was later
amended to include 2,000,000 options, which expire if unexercised on June 1,
2009.





On
September 19, 2006, Mr. Brian Alexander decided not to seek re-election as a
director of the Company due to other business and work
commitments.  In connection with monies we owed Mr. Alexander in
director and consulting fees, 300,000 shares of restricted common stock were
issued to Mr. Alexander in lieu of cash.  In addition Mr. Alexanders
vesting was accelerated such that his options were fully vested with a new
expiration date of June 1, 2007.   Mr. Alexander and the Company
executed a letter of Mutual Release when Mr. Alexander resigned as an officer
and director of the Company on September 27, 2006.   Mr.
Alexander did not exercise his option rights and those options expired on June
1, 2007.





In March
2007, Capersia Pte. Ltd. transferred 10,000,000 of its shares of Texhoma stock
to Pacific Spinner Ltd.





Mr.
Maxwell resigned from the Company on May 1, 2007, did not exercise any of his
option rights and as a result all option grants expired on August 1,
2007.  Frank Jacobs resigned on June 14, 2007 and his options expired
unexercised on September 14, 2007.





In June
2007, Valeska Energy Corp. entered into a management agreement with Texhoma for
a minimum period of three months.  Mr. William Simmons is the
President of Valeska.  In exchange for these services, Valeska was
issued 15,200,000 shares of Texhomas stock as payment and
retainer.  On June 8, 2007, Capersia transferred 1,000,000 shares of
Texhoma stock to Mr. William Simmons and 1,000,000 shares to Valeska Energy,
Corp.




In July
2007, 500,000 shares were issued to Mr. Ibrahim Nafi Onat in consideration for
his entry into a consulting agreement with us.




On or
about August 13, 2007, we entered into a Second Amendment to Management Services
Agreement with Valeska Energy Corp. (Valeska and the Second
Amendment).





Pursuant
to the Second Amendment, we and Valeska agreed to extend the term of the
Management Services Agreement until September 30, 2008, and to pay Valeska the
following consideration in connection with agreeing to perform the services
required by the original Management Services Agreement, and in consideration for
allowing Daniel Vesco and William M. Simmons to serve as Directors of the
Company, bringing on personnel to assist the Company with the day to day
operations of the Company, and helping bring the Company current in its filings
(the Services):





1,000
      shares of the Companys Series A Preferred Stock;A
      monthly fee of $20,000 per month during the extended term of the Second
      Amendment, plus reasonable and actual costs incurred by Valeska (or
      individuals or designees brought on by Valeska, including lodging, car
      rental and telephone expenses therewith) in connection with such
      Services;


10,000,000
      restricted shares of the Companys common stock; and60,000,000
      options to purchase shares of the Companys common stock, which shall have
      a cashless exercise provision, shall be valid for a period of three years
      from their grant date, and had an exercise price of $0.02 per share, equal
      to greater than 110% of the trading price of the Companys common stock on
      the Pinksheets on the day of such
grant.




All of the above transactions may have
been entered into at terms which may not have been available to unrelated
parties.





F-15


7.  NOTES PAYABLE AND
CONVERTIBLE LOANS





On
December 7, 2004, the Company borrowed $50,000 from a related
party.  The loan is evidenced by a convertible promissory
note.  The loan bears interest at 5% per annum calculated 6 months
after the advancement of funds.  $25,000 was due on June 7, 2005 and
the remaining balance, plus interest was due on December 7, 2005.  The
loan has not been repaid, extended or converted. The lender has the option
during the term of the loan, and any extension, to convert the principle and
interest into shares of common stock at a conversion price of $0.30 per
shares.





The
Laurus Master Fund, Ltd (Laurus) note accrues interest at the Prime Rate plus
two percent (2.0%) as published in The Wall Street Journal, but shall not at any
time be less than eight percent (8.0%).  Payments of accrued interest
and principal equal eighty (80%) of the Net Revenue paid to Texaurus in respect
of oil, gas and/or other hydrocarbon production in which Texaurus has an
interest and each payment is applied first to accrued interest due and then to
the principal balance of the note.  The note further states that any
unpaid monthly interest becomes payable at the end of the term.





In
conjunction with the purchase of the Little White Lake oil and gas property, we
executed a short term note payable with Polaris Capital in the amount of
$2,500,000 to be repaid through the funding provided by Laurus.  The
note was repaid in April 2006 from the funds received from Laurus.





On April
10, 2006, Texhoma Energy, Inc. (the "Company") entered into a Debt Conversion
Agreement with Lucayan Oil and Gas Investments, Ltd., a Bahamas corporation,
formerly Devon Energy Thai Holdings, Ltd. ("LOGI"). The Company owed $895,000 to
LOGI as of the date of the Debt Conversion Agreement in connection with money
received by the Company for the drilling in Thailand in March 2005, which debt
was transferred by Fidelio Business, S.A. and Quick Assets and Cash Corp. (Bank
Sal Oppenheim) to LOGI in November 2005. Pursuant to the Debt Conversion
Agreement, the Company and LOGI agreed to convert $160,000 of the $895,000 which
LOGI was owed into an aggregate of 4,000,000 shares (or one (1) share for each
$0.04 of debt converted) of newly issued shares of the Company's restricted
common stock. The Director and 50% owner of LOGI is Max Maxwell, who became a
Director of the Company on April 10, 2006, President of the Company on April 12,
2006, and Chief Executive Officer of the Company on June 5, 2006, and resigned
as President, Chief Executive Officer and Director on May 1, 2007.





On April
10, 2006, the Company entered into a convertible note with LOGI evidencing the
$735,000 of debt which remained outstanding. The convertible note provided that
LOGI could convert the $735,000 debt into Company common stock at the rate of
one share of common stock for each $0.04 of outstanding debt.  In
May 2006, LOGI converted the $735,000 remaining under the Promissory
Note into 18,375,000 shares of the Company's common stock.





On June
8, 2006, we entered into a Promissory Note and Security Agreement (the
"Promissory Note"), with Polaris Holdings, Inc., which held 12,500,000 shares of
our common stock ("Polaris"). Pursuant to the Promissory Note, Polaris gave us a
$250,000 loan. The Promissory Note was due and payable on August 10, 2006, with
interest at 12% per annum. As part payment of the note we
exchanged  our remaining interest in Buck Snag and 5%
of  our interest in Sandy Point to Polaris, in consideration for a
reduction of the note in the amount of $90,000.  Since May 2007, the
balance of the note has been repaid.    We also gave Polaris
an Option to participate in our Clovelly Field interests in connection with the
Promissory Note (described below). We agreed pursuant to the Promissory Note to
repay the amounts owed to Polaris by way of (a) two-thirds of the net proceeds
we receive from any stock sales while the Promissory Note is outstanding, and
(b) one-third of our share of the production income we receive from our oil and
gas interests in Vermillion Parish, Louisiana, which represents a 10% working
interest (7.3% net revenue interest) in such leases and our oil and gas
interests in the Barnes Creek Field, located in Allen Parish, Louisiana
and the Edgerly Field located in Calcasieu Parish, Louisiana from Kilrush
Petroleum, Inc., which constitutes a 7.42% working interest (a 5.38% net revenue
interest) in the Barnes Creek gas field, and an 11.76% working interest (8.47%
net revenue interest) in the Edgerly oil field (the "Texaurus
Interests").


F-16








On or
about October 19, 2006, we issued a Promissory Note to Mr. Frank Jacobs, our
then Director, in the amount of $493,643.77, which amount represented funds
advanced to the Company by Mr. Jacobs during the 2006 calendar year and
management fees owed to Mr. Jacobs for his services to the Company during the
2006 calendar year (the Jacobs' Note). The Jacobs' Note bears interest at the
rate of 6% per annum until paid, and is payable by the Company at any time on
demand. The Jacobs' Note may be pre-paid at any time without penalty. Any
amounts not paid on the Jacobs' Note when due shall bear interest at the rate of
15% per annum.





On or
about June 5, 2007, we entered into an Agreement with Jacobs Oil & Gas
Limited (Jacobs), pursuant to which Jacobs agreed that no interest would be due
from us and/or accrue on the principal or accrued interest to date on his
outstanding Promissory Note for the period of one (1) year from the date of the
Agreement and that he would not try to collect the principal and/or accrued
interest on such note for a period of one (1) year.





The
Company also entered into a Security Agreement with Mr. Jacobs under which
Agreement the Board of Directors ratified the assignment of 200,000 shares of
the common stock of Morgan Creek Energy Corp., which shares were held by the
Company, to Mr. Jacobs as security for the money that is owed to Mr. Jacobs
under the Jacobs' Note.







8.  NET LOSS PER
SHARE





Restricted
shares and warrants are included in the computation of the weighted average
number of shares outstanding during the periods presented.  The net
loss per common share is calculated by dividing the consolidated loss by the
weighted average number of shares outstanding during the
periods.  Because we report net losses, the inclusion of options and
warrants in the calculation would be anti-dilutive, and they are excluded from
the computation presented in the financial statements.





9.  WARRANTS





The
following is a summary of the warrant activity during the years ended September
30, 2007 and 2006:





WeightedNumber
            
            
            AverageOf
            
            
            ExerciseWarrants
            
            
            PriceOutstanding,
      October 1, 2005
            
            -
            
            
            -Granted
            
            
            11,687,500
            
            
            $
            0.04Granted
            
            
            5,175,000
            
            
            $
            0.15Outstanding
      at September 30, 2006
            
            
            16,862,500
            
            
            $
            0.074Expired
            
            
            5,175,000
            
            
            $
            0.15Balance
      at September 30, 2007
            
            
            11,687,500
            
            
            $
            0.04





Costs
attributable to the issuance of share purchase warrants are measured at fair
value at the date of issuance and expensed with a corresponding increase to
additional Paid-in-Capital at the time of issuance.  When the warrant
is exercised, and consideration is received, the transaction is recorded as an
increase in Common Shares and Paid-in-Capital.





During
the year ended September 30, 2007 5,175,000 of warrants granted expired
unexercised.  The trading price of our stock was $0.01375 and the
warrants remaining were issued at $0.04 per share. The Black Scholes
option model with the following assumptions:  weighted average
risk-free interest rate of 4.25%, estimated volatility of 182%, weighted-average
expected life of 3.5 years and no expected dividend yield, resulted in a fair
value per warrant of $0.01767. As a result, based upon the Black-Scholes option
pricing model we reported a reduction in warrant expense for the year ended
September 30, 2007 by $858,573.


F-17





During
the year ended September 30, 2006, we granted 4,800,000 warrants in conjunction
with subscriptions of our common stock,.  Another 375,000 warrants
were granted as part of the consideration given for the Sunray
purchase.  Additionally, a total of 11,687,500 warrants were granted
to Laurus and related parties in conjunction with the $8,500,000 funding to
further our oil and gas property acquisitions.





The
trading price of our stock was $0.09 per share on September 30,
2006.  Warrants were originally issued at $0.04 and $0.15 per share
with a weighted average price of $0.074 per share.  The Black-Scholes
option model with the following assumptions:  weighted average
risk-free interest rate of 4.25%, estimated volatility of 127%, weighted-average
expected life of 3.1 years and no expected dividend yield, resulted in a fair
value per warrant of $0.0701.





The fair
value of the warrants granted and vested during the year, based upon the
Black-Scholes option pricing model was $1,165,211 and as such we reflected the
expense incurred in our current financial statements.





The
earnings per share presentation reflects only the weighted average loss per
share, because including the warrants when a loss is being reported has an
anti-dilutive effect on earnings (loss) per share calculations.








10. COMMITMENTS AND
CONTINGENCIES





As
discussed in the prior year filings, management wound down operations in
Thailand and Australia related to their Black Swan investment, after
unsuccessful drilling in the Concession.  A determination has not been
made as to the financial or legal consequence to Texhoma or its officers or its
shareholders, for subsequent obligations, if any, to persons or governmental
entities which may arise from doing business or owning or leasing property in
Thailand and Australia.




11. SUBSEQUENT
EVENTS





On or about October 30,
2007, we entered into a Cooperation Agreement and Mutual Release with our former
consultant Terje Reiersen (Reiersen and the Reiersen
Release).  Pursuant to the Reiersen Release, Reiersen agreed to
release us, our current and former officers, agents, directors, servants,
attorneys, representatives, successors, employees and assigns from any and all
rights, obligations, claims, demands and causes of action in contract or tort,
under any federal or state law, whether known or unknown, relating to his
services with the Company or the Company in general for any matter whatsoever
other than in connection with any claims against any former officers or
Directors of the Company, which claims Reiersen assigned to the
Company.  In connection with the Reiersen Release, we paid Reiersen
$2,500 and issued Reiersen 250,000 restricted shares of our common
stock.





On or
about November 2, 2007, we entered into a First Amendment to Securities Purchase
Agreement, Secured Term Note and Registration Rights Agreement with Laurus (the
First Amendment).  Pursuant to the First Amendment, Laurus agreed
to:





(a)
            waive
      any default which may have occurred as a result of our failure to become
      current in our filings with the Commission, assuming that we become
      current in our filings prior to December 15,
  2007;


(b)
            amend
      the terms of the Laurus Note to provide that a Change of Control of
      Texaurus under the Note, which requires approval of Laurus, includes any
      change in Directors such that Daniel Vesco and William M. Simmons are no
      longer Directors of Texaurus; and


(c)
            amend
      the terms of the Registration Rights Agreement with Laurus to provide that
      the date we are required to gain effectiveness of a registration statement
      registering the shares of common stock issuable in connection with the
      exercise of the Laurus Warrant in the Company is amended to no later than
      April 30, 2008, and that the effective date of any additional registration
      statements required
      to be filed by us in connection with the Registration Rights Agreement,
      shall be thirty (30) days from such filing
  date.


F-18







On or
about November 28, 2007, we entered into a Settlement Agreement and Mutual
Release (the Agreement) by and between the Company, Frank A. Jacobs, our former
officer and Director (Jacobs), and Jacobs Oil & Gas Limited, a British
Columbia corporation (JOGL and collectively with Jacobs, the Jacobs Parties),
Clover Capital, a creditor of the Company (Clover), Capersia Pte. Ltd., a
Singapore company and a significant stockholder of the Company (Capersia), Peter
Wilson, an individual and a former Director of the Company (Wilson), and
Sterling Grant Capital, Inc., a British Columbia corporation, controlled by Mr.
Wilson (SGC and collectively with Clover, Capersia and Wilson, the Non-Jacobs
Parties, and with the Jacobs Parties, the Interested Parties).  We had
various disputes with the Interested Parties relating to the issuances of and
transfers of various shares of our common stock and various of the Interested
Parties had alleged that we owed them consideration (the
Disputes).  We entered into the Agreement to settle the Disputes with
the Interested Parties.





In
consideration for the Company agreeing to enter into the Agreement, the Jacobs
Parties agreed to the following terms: the Jacobs Parties would return to the
Company for cancellation 5,000,000 of the 7,500,000 shares purchased by Jacobs
in March 2006 (the Jacobs Shares); all debt owed by Texhoma to the Jacobs
Parties, known or unknown, was discharged and forgiven, including the total
outstanding amount of the approximately $500,000 Promissory Note owed to Frank
A. Jacobs by the Company (the Jacobs Note); the Company owes Jacobs no rights to
contribution and/or indemnification in connection with Jacobs employment with
the Company; Jacobs agreed to certify the accuracy and correctness of the
Companys previously prepared annual and interim financial statements and
periodic reports, relating to the time period of his employment from
approximately January 2005 to June 2007; the Jacobs Parties agreed they have no
interest in and will not interfere with the issuance of or any subsequent
transfers of shares to or from Lucayan Oil and Gas Investments, Ltd. (the LOGI
Shares), a Bahamas corporation; Jacobs agreed to use his best efforts to answer
the Companys questions and produce documents in the future regarding operations
and financials of the Company; Jacobs agreed that he no longer holds any
exercisable options of the Company; the Voting Agreement entered into between
various parties in June 2007, including Jacobs, remains in full affect and force
against Jacobs; and Jacobs has no interest in any shares other than the
aforementioned 2,500,000 shares.





Additionally,
in consideration for the Company agreeing to enter into the Agreement, the
Non-Jacobs Parties agreed to the following terms: any and all debts owed by
Texhoma to Clover, which purportedly totaled approximately $60,000, Capersia,
which purportedly totaled $60,000 or any of the Non-Jacobs Parties (including
approximately $20,000 purportedly owed to Wilson) was discharged and forgiven;
the Non-Jacobs Parties agreed that they have no interest in and will not
interfere with the issuance of the LOGI Shares; the Voting Agreement remains in
full force and effect against Capersia; and in connection with the 30,000,000
shares of Company stock in Capersias possession received through Texhomas
previous purchase of a 40% interest in Black Swan Petroleum Pty. Ltd. (the
Capersia Shares), Capersia will not transfer shares in excess of 2% of Texhomas
then outstanding shares in any three (3) month period, until the second
anniversary of the Agreement.





Lastly,
in consideration for the Jacobs Parties and the Non-Jacobs Parties agreeing to
the terms of the agreement, Texhoma agreed to the following terms: Jacobs will
retain the remaining 2,500,000 shares of Company stock and Capersia will retain
the aforementioned 30,000,000 shares of Company stock free and clear of any
claims to such shares by the Company; and JOGL shall retain all rights to the
200,000 shares of Morgan Creek Energy Corp. (Morgan Creek) shares held in trust
by JOGL as collateral for a promissory note issued to JOGL by the Company (the
Jacobs Note and Morgan Creek Shares), the Company will release all claims to
said shares or any additional shares of Morgan Creek that the Company may be due
as a result of stock splits or share distributions.





Further,
pursuant to the Agreement, the Interested Parties agreed to release the Company
from  any and all rights, obligations, claims, demands and causes of
action, known or unknown, asserted or unasserted relating to the Disputes or the
Company or its current or former Directors, and the Company agreed to release
the Jacobs Parties and the Non-Jacobs Parties from any and all rights,
obligations, claims, demands, and causes of action arising from or relating to
the Capersia Shares, Jacobs employment with the Company, the Jacobs Note, the
Jacobs Shares, the Morgan Creek shares, and the LOGI Shares.





As a
result of the Agreement, the Company was able to settle approximately $640,000
in debt which it purportedly owed to the various Interested Parties and to
settle any and all other claims which such parties, in return for the
consideration discussed above, which mainly consisted of assigning the rights to
the 200,000
shares of Morgan Creek Energy Corp. stock to Frank A. Jacobs, which shares had
an approximate value of $92,000 based on the trading price of Morgan Creek
Energy Corp.s common stock on the date of the Agreement of
$0.46.


F-19





On or
about November 28, 2007, we entered into a Subscription Agreement with Pagest
Services SA, a Swiss Company, pursuant to which we agreed to sell two units
consisting of $125,000 in Convertible Promissory Notes with a conversion price
of $0.0125 per share, convertible at the option of Purchaser, into the Companys
common stock, and Class A and Class B Warrants to purchase 5,000,000 shares of
common stock each, with an exercise price of $0.02 and $0.03 per share,
respectively, exercisable for a period of two years from the date of the
Subscription Agreement (the Units).  One Unit was sold immediately to
the Purchaser, and one Unit was sold to Purchaser shortly after December 15,
2007.  The Convertible Promissory Notes bear interest at the rate of
2% per annum, until paid in full, which amount will increase to 15% per annum,
upon the occurrence of an Event of Default (as defined in the Convertible
Promissory Notes).  The Convertible Promissory Notes are due on the
first anniversary of the date they are sold, with the first $125,000 in
Convertible Promissory Notes being due on November 28, 2008 and the second due
on December 19, 2008, unless converted into shares of our common
stock.  In the event that our common stock trades on the market or
exchange on which it then trades, at a trading price of more than $0.02 per
share, for any 10 day trading period, the Convertible Promissory Note will
automatically convert into shares of our common stock at the rate of one share
for each $0.0125 owed to the subscriber.  We also agreed to provide
the subscriber piggy-back subscription rights in connection with the sale of the
Units.





12. GOING CONCERN
ISSUES





We cannot
provide any assurances that the Company will be able to secure sufficient funds
to satisfy the cash requirements for the next 12 months. The inability to secure
additional funds would have a material adverse effect on the
Company.





These
financial statements are presented on the basis that the Company will continue
as a going concern.   Other than the previously disclosed
impairments, no adjustments have been made to these financial statements to give
effect to valuation adjustments that may be necessary in the event the Company
is not able to continue as a going concern.  The effect of those
adjustments, if any, could be substantial.





The
accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America which
contemplate continuation of the Company as a going concern.  The
Company incurred net losses from operations of $2,188,000 for the current fiscal
year and has incurred $15,005,000 in cumulative losses.  Further, the
Company has inadequate working capital to maintain or develop its operations,
and is dependent upon funds from its stockholders and third party
financing.





These
factors raise substantial doubt about the ability of the Company to continue as
a going concern.  The financial statements do not include any
adjustments that might result from the outcome of these
uncertainties.  There is no assurance that the Company will receive
the necessary loans required to funds its exploration plans.




* * * * * * * *




SUPPLEMENTAL OIL AND GAS INFORMATION
(UNAUDITED)




The
following supplemental information regarding the oil and gas activities of
Texhoma Energy, Inc. is presented pursuant to the disclosure requirements
promulgated by the SEC and Statement of Financial Standards (SFAS) No. 69,
Disclosures About Oil and Gas Producing Activities.





The
following estimates of reserve quantities and related standardized measure of
discounted net cash flows are estimates only, and are not intended to reflect
realizable values or fair market values of the Texhomas reserves. Texhoma
emphasizes that reserve estimates are inherently imprecise and that estimates of
new discoveries are more imprecise than producing oil and gas properties.
Additionally, the price of oil has been very volatile and downward changes in
prices can significantly affect quantities that are economically recoverable.
Accordingly, these estimates are expected to change as future information
becomes available and these changes may be significant.





Proved
reserves are estimated reserves of crude oil and natural gas that geological and
engineering data demonstrate with reasonable certainty to be recoverable in
future years from known reservoirs under existing
economic and operating conditions. Proved developed reserves are those expected
to be recovered through existing wells, equipment and operating
methods.


F-20





The
standardized measure of discounted future net cash flows is computed by applying
year-end prices of oil and gas (with consideration of price changes only to the
extent provided by contractual arrangements) to the estimated future production
of proved oil and gas reserves, less estimated future expenditures (based on a
year-end costs) to be incurred in developing and producing the proved reserves,
less estimated future income tax expenses. The estimated future net cash flows
are then discounted using a rate of 10% per year to reflect the estimated timing
of the future cash flows.





Capitalized Costs Related to Oil and
Gas Activities





Aggregate
capitalized costs at September 30, 2007 relating to Texhoma's crude oil and
natural gas producing activities, including asset retirement costs and related
accumulated DD&A are shown below:





Unproved
      properties
            
            $
            -Proved
      properties
            
            
            9,571,925Less
      accumulated DD&A and impairment reserve
            
            
            5,015,620Net
      capitalized costs
            
            $
            4,556,305





Costs Incurred in Oil and Gas
Activities





Costs
incurred in connection with Texhoma's crude oil and natural gas acquisition,
exploration and development activities are shown below:





September 30,
      2007Property
      acquisitionUnproved
            
            $
            -Proved
            
            
            253,531Exploration
            
            
            -Development
            
            
            -Total
      costs incurred
            
            $
            253,531





September 30,
      2006Property
      acquisitionUnproved
            
            $
            -Proved
            
            
            9,318,395Exploration
            
            
            916,000Development
            
            
            -Total
      costs incurred
            
            $
            10,234,395








F-21


Results of Operations for Producing
Activities





The
following schedule includes only the revenues from the production and sale of
gas, oil, condensate and Natural Gas Liquids (NGLs). The income tax expense is
calculated by applying the current statutory tax rates to the revenues after
deducting costs, which include Depletion, Depreciation & Amortization
(DD&A) allowances, after giving effect to permanent differences. Due to
significant net operating loss carryforwards related to producing activities,
income taxes have not been provided at September 30, 2007 and 2006. The results
of operations exclude general office overhead and interest expense attributable
to oil and gas activities.





2007
            
            
            
            2006Net
      revenue from production
            
            $
            1,757,647
            
            
            $
            2,258,425Production
      costs
            
            
            444,742
            
            
            
            1,321,119DD&A
            
            
            1,031,851
            
            
            
            1,301,574Impairment
      reserve
            
            
            -
            
            
            
            2,682,194Total
      costs
            
            
            1,476,593
            
            
            
            5,304,887Gain
      (Loss) before income tax
            
            
            281,054
            
            
            
            (3,046,462
            )DD&A
      rate per Barrel of Oil  Equivalency BOE
            
            
            7.23
            
            
            
            4.18DD&A
      and impairment rate per BOE
            
            
            7.23
            
            
            
            12.79





Proved Reserves





The
following reserve schedule summarizes Texhoma's net ownership interests in
estimated quantities of proved oil reserves and changes in proved reserves, all
of which are located in the continental United States. Reserve estimates for
crude oil contained below were prepared by RA Lenser & Associates, Inc.,
independent petroleum engineers.





Proved
      reserves:
            
            Equivalent
      bblsBalance
      - September 30, 2006
            
            
            283,808Revisions
      of  previous estimates
            
            
            (140,990
            )Purchases
      of minerals in place
            
            
            -Extensions,
      discoveries and other additions
            
            
            -Production
            
            
            (29,936
            )Balance,
      September 30, 2007
            
            
            112,882





Standardized Measure of Discounted
Future Net Cash Flows





The
following table presents the standardized measure of future net cash flows from
proved oil reserves in accordance with SFAS No. 69. All components of the
standardized measure are from proved reserves, all of which are located within
the continent of the United States. As prescribed by this statement, the amounts
shown are based on prices and costs at September 30, 2006, and assume
continuation of existing economic conditions. Future income taxes are based on
year-end statutory rates, adjusted for tax credits and carryforwards. A discount
factor of 10 percent was used to reflect the timing of future net cash flows.
Extensive judgments are involved in estimating the timing of production and the
costs that will be incurred through the remaining lives of the fields.
Accordingly, the estimates of future net revenues from proved reserves and the
present value thereof may not be materially correct when judged against actual
subsequent results. Further, since prices and costs do not remain static, and no
price or cost changes have been considered, and future production and
development costs are estimated to be incurred in developing and producing the
estimated proved oil reserves, the results are not necessarily indicative of the
fair market value of estimate proved reserves, and the results may not be
comparable to estimates by other oil producers.





F-22


Future
      cash inflows
            
            $
            7,666,217Future
      production costs
            
            
            (1,231,649
            )Future
      development costs
            
            
            (33,358
            )Future
      income tax expenses
            
            
            (-
            )Future
      net cash flows
            
            
            6,401,21010%
      annual discount for estimated timing of cash flows
            
            
            1,781,386Standardized
      measure of discounted future cash flows
            
            $
            4,619,824





F-23


The
standardized measure of discounted future net cash flows as of September 30,
2006 was calculated using $81.77 per barrel of oil and $6.87 per thousand cubic
feet (mcf) of gas.





Sources of Changes in Discounted
Future Net Cash Flows





Principal
changes in the aggregate standardized measure of discounted future net cash
flows attributable to Texhoma's proved crude oil reserves, as required by SFAS
No. 69, at September 30, 2007 and 2006 are set forth in the table
below.








Standardized
      measure of discounted future net cash flowsSeptember
      30, 2006
            
            $
            8,685,000Purchases
      of minerals in place
            
            
            245,000Changes
      in estimated future development costs
            
            
            (509,000
            )Sales
      of oil and gas, net of production
            
            
            (1,313,000
            )Revisions
      of previous quantity estimates
            
            
            (1,287,000
            )Accretion
      of discount, other
            
            
            (1,200,000
            )Standardized
      measure of discounted future net cash flowsSeptember
      30, 2007
            
            $
            4,621,000





* * * * *
* * * *










F-24


ITEM 8. CHANGES IN AND DISAGREEMENTS
WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE




Effective
May 26, 2006, we engaged Jewett, Schwartz & Associates, Certified Public
Accountants ("JSA") as our principal independent public accountant for the
fiscal years ended September 30, 2005 and September 30, 2006. The decision to
engage JSA was recommended and approved by the Company's Board of Directors
effective May 26, 2006. JSA succeeded the Company's previous independent
auditor, Chisholm, Bierwolf & Nilson, LLC, ("CBN") who was dismissed by the
Company's Board of Directors effective March 3, 2006 (which dismissal is
described in greater detail in our amended report on Form 8-K filed with the
Commission on April 13, 2006).





The
Company had not previously consulted with JSA regarding either (i) the
application of accounting principles to a specific completed or contemplated
transaction; (ii) the type of audit opinion that might be rendered on the
Company's financial statements; or (iii) a reportable event (as provided in Item
304(a)(1)(iv)(B) of Regulation S-B) during the Company's fiscal years ended
September 30, 2004 and September 30, 2003, and any later interim period,
including the interim period up to and including the date the relationship with
CBN ceased. JSA reviewed the disclosure required by Item 304 (a) before it was
filed with the Commission and was been provided an opportunity to furnish the
Company with a letter addressed to the Commission containing any new
information, clarification of the Company's expression of its views, or the
respects in which it does not agree with the statements made by the Company in
response to Item 304 (a). JSA did not furnish a letter to the
Commission.





Effective
June 1, 2007, the client auditor relationship between the Company and Jewett,
Schwartz, Wolfe & Associates, Certified Public Accountants, formerly Jewett,
Schwartz & Associates, Certified Public Accountants ("JSWA") was terminated.
Effective June 1, 2007, the Company engaged GLO CPAs, LLP, Certified Public
Accountants ("GLO") as its principal independent public accountant for the
fiscal year ended September 30, 2007, and the audit of the Companys previously
unaudited and unfiled September 30, 2005 and 2006 financial statements. The
decision to change accountants was recommended and approved by the Company's
Board of Directors on June 1, 2007.





While
JSWA never issued a report on the financial statements of the Company, JSWA's
review of our amended and restated financial statements for the periods ended
March 31, 2005 and June 30, 2005, and any later interim period, up to and
including the date the relationship with JSWA ceased, did not contain any
adverse opinion or disclaimer of opinion and was not qualified or modified as to
uncertainty, audit scope or accounting principles except for concerns about the
Company's ability to continue as a going concern.





In
connection with the review of our restated financial statements for the
quarterly periods ended December 31, 2004, March 31, 2005 and June 30, 2005, and
any later interim period, including the interim period up to and including the
date the relationship with JSWA ceased, there were no disagreements between JSWA
and the Company on a matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreement, if not
resolved to the satisfaction of JSWA would have caused JSWA to make reference to
the subject matter of the disagreement in connection with its report on the
Company's financial statements.




There
have been no reportable events as provided in Item 304(a)(1)(iv)(B) of
Regulation S-B during the Company's fiscal years ended September 30, 2005 and
September 30, 2006, and any later interim period, including the interim period
up to and including the date the relationship with JSWA ceased.





The
Company has authorized JSWA to respond fully to any inquiries of any new
auditors hired by the Company relating to their engagement as the Company's
independent accountant. The Company has requested that JSWA review the
disclosure and JSWA has been given an opportunity to furnish the Company with a
letter addressed to the Commission containing any new information, clarification
of the Company's expression of its views, or the respect in which it does not
agree with the statements made by the Company herein. Such letter has been
incorporated by reference as an exhibit to this Report.





The
Company has not previously consulted with GLO regarding either (i) the
application of accounting principles to a specific completed or contemplated
transaction; (ii) the type of audit opinion that might be rendered on the
Company's financial statements; or (iii) a reportable event (as provided in Item
304(a)(iv)(B) of Regulation S-B) during the Company's fiscal years ended
September 30, 2005 and September 30, 2006, and any later interim period,
including the interim period up to and including the date the
relationship with JSWA ceased. GLO has reviewed the disclosure required by Item
304 (a) before it was filed with the Commission and has been provided an
opportunity to furnish the Company with a letter addressed to the Commission
containing any new information, clarification of the Company's expression of its
views, or the respects in which it does not agree with the statements made by
the Company in response to Item 304 (a). GLO did not furnish a letter to the
Commission.


36





ITEM 8A. CONTROLS AND
PROCEDURES.




(a)
Evaluation of disclosure controls and procedures. Our Chief Executive Officer
and Principal Financial Officer, after evaluating the effectiveness of our
"disclosure controls and procedures" (as defined in the Securities Exchange Act
of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by
this Annual Report on Form 10-KSB/A (the "Evaluation Date"), have concluded that
as of the Evaluation Date, our disclosure controls and procedures were not
effective to provide reasonable assurance that information we are required to
disclose in reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission rules and forms, and that such information is
accumulated and communicated to our management, including our Chief Executive
Officer and Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure. Our controls were not effective because we failed
to complete the required audit of Black Swan in compliance with GAAP, and failed
to file our 2005, 2006 and 2007 quarterly and annual reports
timely.





Moving
forward, our current management intends to allocate sufficient resources to
allow us to timely file our periodic and current reports with the
Commission.





(b)
Changes in internal control over financial reporting. There were no changes in
our internal control over financial reporting during the fiscal year reported by
this Form 10-KSB/A, that materially affected, or were reasonably likely to
materially affect, our internal control over financial reporting.




ITEM 8B. OTHER
INFORMATION.




None.


37


PART
III




ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE
ACT.




The current Directors and Officers of the Company are as
follows:




Name
            Age
            PositionWilliam M.
      Simmons
            54
            President,Secretary,
      Treasurer and DirectorDaniel
    Vesco
            54
            Chief
      Executive Officer,,Chief
      Financial Officer andDirectorIbrahim Nafi
      Onat
            61
            Director
      andVice
      President of Operations





William M.
Simmons


President, Secretary, Treasurer and
Director





William
M. Simmons, age 54, has served as our President since May 17, 2007, as a
Director of the Company since June 4, 2007 and as Secretary and Treasurer of the
Company since July 26, 2007.  Mr. Simmons has served as a Director of
Texaurus since June 30, 2007.  Mr. Simmons currently serves as the
President of Valeska Energy Corp., which position he has held since June 2006,
and as President of Loosbrock Offshore International, Inc., which position he
has held since April 1987, and which company is engaged in the offshore drilling
industry as a consultant and broker. From June 2005 until May 2006, Mr. Simmons
served as Senior Editor and leader of the energy group for Off The Record
Research, LLC, a registered investment advisor and broker dealer
firm.





Mr.
Simmons obtained his Bachelors degree from Texas A&M University in College
Station, Texas in Geography in 1980.





Daniel Vesco


Chief Executive Officer, Chief
Financial Officer, and Director





Daniel
Vesco, age 54, has served as our Chief Executive Officer since May 17, 2007, as
a Director since June 4, 2007 and as Chief Financial Officer since July 26,
2007.  Mr. Vesco has served as Chief Executive Officer and as a
Director of our wholly owned subsidiary, Texaurus Energy, Inc. since June 30,
2007 (Texaurus). Mr. Vesco has been Managing Director of Asset Solutions (Hong
Kong) Limited, a Hong Kong based boutique investment bank for the past 7 years
and is a resident of Hong Kong. Asset Solutions is engaged in corporate
advisory, Mergers and Acquisitions and institutional (non retail) fund raising
activities principally focused on Asia, including China.




Ibrahim Nafi Onat


Director and Vice President of
Operations





Mr.
Ibrahim Nafi Onat, age 61, has served as our Director since June 21, 2007 and
our Vice President of Operations since July 1, 2007.  Mr. Onat has
been employed by Sure Engineering LLC as a Manager since October 1996. From
August 1988 to October 1996, Mr. Onat was employed as a Senior Engineer with
Resource Services International, a consulting firm. From July 1979 to May 1988,
Mr. Onat was employed as the Vice President of Wenner Petroleum Corporation. Mr.
Onat received his Bachelors degree in Petroleum Engineering in 1968 and his
Masters Degree in Petroleum Engineering in 1970 from the Middle East Technical
University in Turkey. He received his Ph.D. in Petroleum Engineering from the
Colorado School of Mines in 1975. Mr. Onat is a member of the Society of
Petroleum Engineers.





Mr.
Simmons and Mr. Vesco are involved in business interests separate from their
involvement with the Company, including but not limited to Valeska Energy Corp.
As a result, it is possible that the demands on Mr.
Simmons and Mr. Vesco from these other businesses could increase with the result
that they may not have sufficient time to devote to our business. We do not have
an employment agreement with Mr. Simmons or Mr. Vesco and they are under no
requirement to spend a specified amount of time on our business. As a result,
they may not spend sufficient time in their roles as executive officers and
Directors of our company to realize our business plan. If they do not have
sufficient time to serve our company, it could have a material adverse effect on
our business and results of operations. Furthermore, Mr. Simmons and Mr. Vesco
are under no obligation to include us in any transactions which they undertake.
As a result, we may not benefit from connections they make and/or agreements
they enter into while employed by us, and they may profit from transactions
which they undertake while we do not.


38





Our
Directors are elected annually and hold office until our next annual meeting of
the shareholders and until their successors are elected and qualified. Officers
will hold their positions at the pleasure of the Board of Directors, absent any
employment agreement. Our officers and Directors may receive compensation as
determined by us from time to time by vote of the Board of Directors. Such
compensation might be in the form of stock options. Directors may be reimbursed
by us for expenses incurred in attending meetings of the Board of Directors.
Vacancies in the Board are filled by majority vote of the remaining
directors.





Consulting Agreement With
Mr. Onat





Effective
July 1, 2007, we entered into a Consulting Agreement with Ibrahim Nafi Onat, our
Director (the Consulting Agreement), pursuant to which Mr. Onat agreed to serve
as our Director and Vice President of Operations for an initial term of twelve
(12) months, which term is renewable month to month thereafter with the mutual
consent of the parties.  Pursuant to the Consulting Agreement we
agreed to pay Mr. Onat $2,500 per month during the term of the Consulting
Agreement, to issue him 500,000 restricted shares of common stock in connection
with his entry into the Consulting Agreement and 500,000 restricted shares of
common stock assuming he is still employed under the Consulting Agreement at the
expiration of six (6) months from the effective date of the Consulting Agreement
(the Six Month Issuance).





Pursuant
to the Consulting Agreement, Mr. Onat agreed to travel on our behalf through
North America as requested by the Board of Directors for up to twenty-one (21)
total days during the initial twelve (12) month term of the Consulting
Agreement.  Any travel expenses incurred by Mr. Onat will be
reimbursed by us.  Any additional travel in excess of the twenty-one
(21) days provided for in the Consulting Agreement will be undertaken by Mr.
Onat, assuming he is available for such travel, and such travel time and expense
will be reimbursed by us.





The
Consulting Agreement shall terminate:








(a)
            in
      the event Mr. Onat suffers an injury, illness, or incapacity of such
      character as to prevent him from performing his duties without reasonable
      accommodation for a period of more than sixty (60) consecutive days upon
      us giving at least thirty (30) days written notice of termination to
      him;




(b)
            upon
      Mr. Onat's death;





(c)
            at
      any time because of (i) the conviction of Mr. Onat of an act or acts
      constituting a felony or other crime involving moral turpitude, dishonesty
      or theft or fraud; or (ii) his negligence in the performance of his duties
      under the Consulting Agreement;




(d)
            Mr.
      Onat may terminate his employment for "good reason" by giving us ten (10)
      days written notice if: (i) he is assigned, without his express written
      consent, any duties materially inconsistent with his positions, duties,
      responsibilities, or status with us, or a change in his reporting
      responsibilities or titles; (ii) his compensation is reduced; or (iii) we
      do not pay any material amount of compensation due under the Consulting
      Agreement and then fails either to pay such amount within the ten (10) day
      notice period required for termination hereunder or to contest in good
      faith such notice; or





(e)
            at
      any time without cause.





39


In the
event of the termination of Mr. Onat's employment pursuant to (a), (b) or (c)
above, he will be entitled to all payments of salary earned through the date of
termination (plus life insurance or disability benefits).





In the
event of the termination of Mr. Onat's employment pursuant to (d) or (e) above,
he will be entitled to the compensation earned by him as of the date of such
termination plus the Six Month Issuance, even if such Six Month Issuance had not
vested as of the date of the termination (plus life insurance or disability
benefits).





Under the
Consulting Agreement, we agreed to indemnify and hold harmless Mr. Onat, his
nominees and/or assigns against any and all losses, claims, damages,
obligations, penalties, judgments, awards, liabilities, costs, expenses and
disbursements (incurred in any and all actions, suits, proceedings and
investigations in respect thereof and any and all legal and other costs,
expenses and disbursements in giving testimony or furnishing documents in
response to a subpoena or otherwise), including without limitation, the costs,
expenses and disbursements, as and when incurred, of investigating, preparing or
defending any such action, suit, proceeding or investigation that is in any way
related to his employment with us (whether or not in connection with any action
in which he is a party). Such indemnification does not apply to acts performed
by Mr. Onat, which are criminal in nature or a violation of law. We also agreed
that he shall not have any liability (whether direct or indirect, in contract or
tort, or otherwise) to us, for, or in connection with, the engagement of Mr.
Onat under the Consulting Agreement, except to the extent that any such
liability resulted primarily and directly from his gross negligence and willful
misconduct.






ITEM 10. EXECUTIVE
COMPENSATION.




Summary Compensation
Table





The
Summary Compensation Table below reflects those amounts received as compensation
by the executive officers of the Company during the fiscal years ended September
30, 2007, 2006, and 2005.   The Company presently has no pension,
health, annuity, insurance, or similar benefit plans.


Non-Equity
              NonqualifiedYear
              
              
              
              
              
              
              Incentive
              Deferred
              All
      Other
              
              Total*Name
      & Principal
              
              Ended
              
              
              
              
              Stock
              Options
              Plan
              Compensation
              Compen-
              
              Compen-Position
              
              September
      30
              
              Salary
      ($)
              
              Bonus
      ($)
              Awards
      ($)
              Awards
      ($)
              Compensation
      ($)
              Earnings
                ($)
              Sation
                ($)
              
              Sation
                ($)Daniel
      Vesco
              
              2007(1)
              
              -
              
              -
              -
              -
              -
              -
              -
              
              -CEO,
      CFO and DirectorWilliam
      M. Simmons
              
              2007(1)
              
              -
              
              -
              -
              -
              -
              -
              -
              
              -President
      and DirectorMax
      Maxwell
              
              2007
              
              $138,804(G)
              
              -
              -
              -
              -
              -
              -
              
              $138,804(G)Former
      President and Director (2)
              
              2006
              
              $109,060
              
              $25,000
              -
              (A)
              -
              -
              $16,040
      (B)
              
              $150,100Ibrahim
      Nafi Onat
              
              2007(6)
              
              $7,500
              
              -
              $15,000
      (6)
              -
              -
              -
              -
              
              $22,500DirectorFrank
      A. Jacobs
              
              2007
              
              $0
              
              -
              -
              -
              -
              -
              -
              
              -Former
      Director/CEO/CFO (3)
              
              2006
              
              $80,000
      (C)
              
              -
              -
              (D)
              -
              -
              -
              
              $80,000Brian
      Alexander
              
              2006
              
              $36,000
      (E)
              
              -
              -
              (F)
              -
              -
              -
              
              $36,000Former
      President / CEO/CFO/Director (4)


* Does
not include perquisites and other personal benefits in amounts less than 10% of
the total annual salary and other compensation. Other than the individual listed
above, we had no executive employees or Directors during the years listed above.
No Executive Officer received any bonus, or nonqualified deferred compensation
earnings during the years disclosed above, other than as provided above. 
No executive Director of the Company received any separate consideration for his
service to the board other than what he received as an executive
officer.





40


(1)Mr.
Vesco and Mr. Simmons are not paid a salary from the Company, they have
not  been directly issued any restricted shares or options or warrants
from the Company, and they are reimbursed by the Company directly or indirectly
for any Company expenses.  They are paid however through the
Management Services Agreement with Valeska, which Mr. Simmons serves as
President of and Mr. Vesco beneficially owns through an entity which he
controls.  Additionally, Valeska has been issued restricted common
stock by the Company, and has been granted warrants to purchase shares of common
stock as described in greater detail herein.  Finally, through the
Management Services Agreement, Valeska may be reimbursed directly for the
reasonable business expenses of Mr. Vesco and/or Mr. Simmons in connection with
their services to the Company.  The Management Services Agreement, as
amended, is described in greater detail below under Other Certain Relationships
and Related Transactions.  On June 4, 2007, Daniel Vesco was appointed
as Chief Executive Officer and as a Director of the Company.  On June
4, 2007, William M. Simmons was appointed as President and as a Director of the
Company. On July 26, 2007, William M. Simmons was appointed as Secretary and
Treasurer of the Company. On July 26, 2007, Mr. Vesco was appointed as our Chief
Financial Officer.





(2) Mr.
Maxwell served as a Director of the Company from April 10, 2006 to May 1,
2007.  Mr. Maxwell served as the Companys President from April 12,
2006 to May 1, 2007 and as Chief Executive Officer of the Company from June 5,
2006 to May 1, 2007.




(3) Mr.
Frank A. Jacobs was appointed as a Director of the Company on January 24, 2005,
and served as a Director of the Company until June 14, 2007.  Mr.
Jacobs served as Chief Executive Officer of the Company from April 12, 2006 to
June 5, 2006.  Mr. Jacobs also served as Chief Executive Officer from
May 17, 2007 to June 4, 2007 and served as Chief Financial Officer from May 17,
2007 to June 14, 2007.




(4) Mr.
Alexander served as the Companys President from November 2, 2004 to April 12,
2006 and as a Director of the Company from November 2, 2004 to September 27,
2006.  He also served as our Chief Financial Officer from April 12,
2006 to September 27, 2006.




(5)
Served as President and Chief Executive Officer from approximately May 17, 2004
to November 2, 2004.




(6)
Effective
July 1, 2007, the Company entered into a one year consulting agreement with Mr.
Onat to serve as a Director of the Company, pursuant to which he was to be paid
$2,500 per month, 1,000,000 restricted shares of common stock (valued at $0.02
per share, based on the trading price of the Company’s common stock on or around
July 1, 2007, or $20,000 in aggregate), of which 500,000 shares have been issued
to date, and 500,000 restricted shares of common stock will be issued to Mr.
Onat assuming he continues to be  employed by the Company on January
1, 2008, six months after the effective date of the agreement.  In
accordance with FAS 123R, $15,000 of expense has been recorded as
of  September 30, 2007, which amount includes the full value of the
500,000 shares issued to Mr. Onat on or around July 1, 2007 ($10,000) and 50% of
500,000 shares which will vest to Mr. Onat on January 1, 2008 ($5,000), assuming
he is still employed by the Company at that time.  Although not
included in the table above, which only includes compensation as the end of the
September 30, 2007 fiscal year end, Mr. Onat was employed by the Company on
January 1, 2008, and did earn the additional 500,000 shares, which we
subsequently issued to Mr. Onat.  The additional $5,000 of
compensation expense relating to the remaining value of the shares earned by Mr.
Onat on January 1, 2008, was recorded in compensation expense during the quarter
ended December 31, 2007.




(A) Mr.
Maxwell was granted an aggregate of 3,250,000 Non-Qualified Stock Options and
750,000 Incentive Stock Options on June 1, 2006.   The Options
all had an exercise price of $0.13 per share, equal to the
mean of the highest ($0.125) and lowest ($0.111) quoted selling prices of the
Companys common stock on June 1, 2006, multiplied by 110%, which was equal to
$0.13 per share.  The options were to vest at the rate of 500,000
shares every three months, with the Incentive Stock Options granting first, as
long as he was employed by the Company. Mr. Maxwell vested 1,500,000 Options as
of May 1, 2007, the date of his resignation from the Company.  The
Options were to expire if unexercised on June 1, 2009, or three (3) months from
the date of the termination of his employment with the Company, and as such all
of his vested Options expired unexercised on August 1, 2007.  As a
result, the Options granted to Mr. Maxwell have no value in the table
above.


41




(B) Mr.
Maxwell received consideration of $16,040 as a bonus in connection with funds
received from subscription agreements which he was able to obtain for the
Company.




(C)
Approximately $90,000 of Mr. Jacobs' salary for the year ended September 30,
2005 was accrued and remains unpaid.  Approximately $55,000 of Mr.
Jacobs salary for the year ended September 30, 2006 was accrued.  All
of Mr. Jacobs accrued and unpaid salary was extinguished by Mr. Jacobs in
connection with Mr. Jacobs entry into the Settlement Agreement and Mutual
Release, described above.




(D) Mr.
Jacobs was granted an aggregate of 4,000,000 Non-Qualified Stock Options on June
1, 2006.   The Options all had an exercise price of $0.13 per
share, equal to the mean of the highest ($0.125) and lowest ($0.111) quoted
selling prices of the Companys common stock on June 1, 2006, multiplied by 110%,
which was equal to $0.13 per share.  The options were to vest at the
rate of 500,000 shares every three months as long as Mr. Jacobs was employed by
the Company, and as such Mr. Jacobs vested 2,000,000 Options prior to his
resignation from the Company on June 14, 2007.  The Options were to
expire if unexercised on June 1, 2009, or three (3) months from the date of the
termination of his employment with the Company, and as such all of his vested
Options expired unexercised on September 14, 2007.  The Options were
issued above the market price of the Companys common stock on the date of
issuance, and as such Options expired unexercised, the grant of such Options
have been given no value in the table above.




(E)
Approximately $13,000 of Mr. Alexanders salary for the year ended September 30,
2005 and approximately $12,000 of Mr. Alexanders salary for the year ended
September 30, 2006 was accrued, and settled in September 2005 through the
issuance of 300,000 shares of the Companys restricted common stock to Mr.
Alexander in consideration for him releasing all claims he had against the
Company, including claims for past amounts owed.




(F) Mr.
Alexander was granted an aggregate of 1,000,000 Non-qualified Stock Options on
June 1, 2006.   The Options all had an exercise price of $0.13
per share, equal to the mean of the highest ($0.125) and lowest ($0.111) quoted
selling prices of the Companys common stock on June 1, 2006, multiplied by 110%,
which was equal to $0.13 per share.  The options were to vest upon Mr.
Alexanders execution of a Deed of Release and Settlement between Mr. Alexander
and the Company, when he resigned from his positions with the Company, which he
entered into on September 27, 2006.  Once vested, the options were to
expire if unexercised on June 1, 2007, and all of the Options granted to Mr.
Alexander have since expired unexercised.  The Options granted to Mr.
Alexander have been given no value in the table above because they were granted
above the trading price of the Companys common stock and have expired
unexercised.





(G) This
amount included $43,392 which was paid to Mr. Maxwell, and $95,412 which was
accrued and later extinguished in connection with the Settlement Agreement
entered into with Mr. Maxwell as described in greater detail above.


42


OUTSTANDING EQUITY AWARDS AT FISCAL
      YEAR-END
                (September 30,
  2007)OPTION AWARDS
              STOCK AWARDSName
                (a)
              Number
      of Securities Underlying Unexercised Options
                (#)
                Exercisable
                (b)
              Number
      of Securities Underlying Unexercised Options
                (#)
                Unexercisable
                (c)
              Equity
      Incentive Plan Awards: Number of Securities Underlying Unexercised
      Unearned Options
                (#)
                (d)
              Option
      Exercise Price
                ($)
                (e)
              Option
      Expiration Date
                (f)
              Number
      of Shares or Units of Stock That Have Not Vested
                (#)
                (g)
              Market
      Value of Shares or Units of Stock That Have Not Vested
                ($)
                (h)
              Equity
      Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights
      That Have Not Vested
                (#)
                (i)
              Equity
      Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or
      Other Rights That Have Not Vested
                (#)
                (j)Ibrahim
      Nafi Onat
              -
              -
              -
              -
              -
              500,000
      (1)
              $6,000
      (2)
              -
              -
  (1) The
500,000 shares vested to Mr. Onat on January 1, 2008, and have been issued to
Mr. Onat to date.
 
 (2)
Based on the closing price of the Company’s common stock on Pinksheets.com as of
September 28, 2007 ($0.012 per share).  The  value attributed to
the 500,000 shares of common stock issued to Mr. Onat as described in the table
above was $5,000, which represented the value of the 500,000 shares as
calculated by FAS 123(R) based on the trading price of the Company's common
stock on the grant date of the 500,000 then unvested shares.
 43


ITEM 11. SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS.




SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS





The
following table provides the names and addresses of each person known to own
directly or beneficially more than a 5% of the outstanding common stock (as
determined in accordance with Rule 13d-3 under the Exchange Act) as of December
26, 2007 and by our officers and directors, individually and as a group. Except
as otherwise indicated, all shares are owned directly.


44





Common
    Stock
            (1)
            Percentage
            
            Shares of Common Stock the
      Holder of our Series A Preferred Stock is able to
    Vote*
            
            Total Voting Percentage
      Including Preferred Stock Outstanding*
            (2)William M.
      Simmons
            
            87,200,000
            (3)
            29.9%
            
            240,857,776   
      (4)
            
            61.6%President,
      Secretary, Treasuer and Director100
      Highland Park VillageDallas,
      Texas 75205Daniel
    Vesco
            
            0
            (5)
            0.0%
            
            -
            
            0.0%Chief
      Executive Officer, Chief Financial Officer and Director100
      Highland Park VillageDallas,
      Texas 75205Nafi
Onat
            
            500,000
            
            0.2%
            
            -
            
            0.1%Director100
      Highland Park VillageDallas,
      Texas 75205Valeska Energy
      Corp.
            (6)
            86,200,000
            
            29.6%
            
            240,857,776   
      (7)
            
            61.4%1000
      Guadalupe Street #2CKerrville,
      Texas 78028Capersia Pte.
      Ltd.
            (8)
            30,000,000
            
            13.0%
            
            -
            
            6.4%96A
      Club StreetSingapore
      069464Pagest Services
      SA
            (9)
            40,000,000
            
            9.9%
            
            -
            
            8.4%rue
      Thalberg 2, c/oFinova
      Associes SA,Geneva
      SwiterlandStructured Capital
      Corporation
            (10)
            19,350,000
            
            8.4%
            
            -
            
            4.1%c/o
      Gordon Rees L.L.P.1900
      West Loop, Suite 1100Houston,
      Texas 77027


45




Lucayan Oil and Gas
      Investments, Ltd.
            (11)
            18,500,000
            
            8.0%
            
            -
            
            3.9%Hobart Global
      Ltd.
            (12)
            18,000,000
            
            7.8%
            
            -
            
            3.8%116
      Main Street, B.V.I.Polaris Holdings,
      Inc.
            (13)
            12,000,000
            
            5.2%
            
            -
            
            2.5%2411
      Fountainview Dr. #120Houston,
      Texas 77057All of the Officers and
      Directors as a Group (3 persons)
            
            87,700,000
            (3)(5)
            30.1%
            
            240,857,776
            (4)
            61.7%





*
Approximate.





(1) The
number of shares of common stock owned are those "beneficially owned" as
determined under the rules of the Commission, including any shares of common
stock as to which a person has sole or shared voting or investment power and any
shares of common stock which the person has the right to acquire within sixty
(60) days through the exercise of any option, warrant or right.




(2) Based
on approximately 231,412,224  shares of common stock outstanding and
one thousand (1,000) shares of Series A Preferred Stock outstanding, which is
able to vote in aggregate, voting as a group, an amount of voting shares equal
to 51% of our total voting shares.





(3)
Includes 1,000,000 shares which Mr. Simmons owns directly, 26,200,000 shares of
common stock, and 60,000,000 warrants to purchase shares of our common stock at
an exercise price of $0.02 per share, which Mr. Simmons is deemed to
beneficially own through Valeska Energy Corp. (Valeska), of which he serves as
the President.




(4)
Includes one thousand (1,000) shares of Series A Preferred Stock which are held
by Valeska, and which Mr. Simmons is deemed to beneficially own, and which
voting in aggregate are able to vote an amount of voting shares equal to 51% of
our outstanding voting stock.




(5)
Daniel Vesco, the Companys Chief Executive Officer owns a majority of the
outstanding shares of common stock of Valeska though an entity which he
controls, and is a Director of Valeska; however, Mr. Vesco does not have voting
and/or dispositive control over the shares of common stock held by
Valeska.




(6)
William M. Simmons, the President and a Director of the Company, is the
President of Valeska and is deemed to beneficially own the shares of common and
preferred stock held by Valeska.  Valeska holds 26,200,000 shares of
common stock, 60,000,000 warrants to purchase shares of our common stock at an
exercise price of $0.02 per share, and one thousand (1,000) shares of Series A
Preferred Stock which voting in aggregate are able to vote an amount of voting
shares equal to 51% of our outstanding voting stock




46


(7)
Includes one thousand (1,000) shares of Series A Preferred Stock which are held
by Valeska, which voting in aggregate are able to vote an amount of voting
shares equal to 51% of our outstanding voting stock.





(8) The
beneficial owner of Capersia Pte. Ltd. is Sino Atlantic Limited (Atlantic) and
the Director of Capersia Pte. Ltd. is Richard N. Wilson.





(9) The
beneficial owner of Pagest Services SA (Pagest) is Jacques Point. The amount of
common stock beneficially owned by Pagest includes 20,000,000 shares issuable in
connection with the conversion of $250,000 of Convertible Promissory Notes at a
conversion price of $0.0125 per share, which Convertible Notes are convertible
at the option of the holder, and 10,000,000 Class A and 10,000,000 Class B
warrants to purchase shares of the Companys common stock at an exercise price of
$0.02 and $0.03, respectively.  Pursuant to the terms of the
Convertible Promissory Notes and Warrants held by Pagest, Pagest is not able to
convert the Convertible Promissory Notes or exercise the Warrants, if such
conversion or exercise, respectively, would cause it to own more than 9.9% of
the Companys common stock, provided however, that Pagest may waive such
ownership limitation by providing us at least 75 days prior written notice of
its intention to waive such limitation.




(10) The
beneficial owner of Structured Capital Corporation is
Jostein Hauge.




(11) The
beneficial owners of Lucayan Oil and Gas, Ltd. (LOGI) are the Company's former
President and Director, Max Maxwell, who is a 50% owner and Director of LOGI and
A.E. "Buzz" Jehle,  who is a 50% owner and Director of
LOGI.




(12) The
beneficial owner of Hobart Global Ltd. is AIBWorthytrust Limited as Trustees of
the Tyser 1998 Discretionary Settlement.





(13) The
beneficial owner of Polaris Holdings, Inc. is Ingolfe Grinde.








ITEM 12. CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS




The
following Certain Relationships and Related Transactions represent material
transactions in which any related person had or will have a direct or indirect
material interest, which are known to the Companys current management
team.  There may however be various other material transactions
regarding the Company which the Companys current management is not aware
of.





Changes in
Officers





On
November 2, 2004, Marc Applbaum resigned as President, Chief Executive Officer,
and Director.





On
November 2, 2004, Brian Alexander was appointed as President and Director of the
Company.





On
January 21, 2005, Mr. Peter G. Wilson tendered his resignation as a Director of
the Company.





On
January 24, 2005, Frank A. Jacobs was appointed as a Director of the
Company.





On April
10, 2006, Max Maxwell was appointed as a Director of the Company.





On April
12, 2006, Frank A. Jacobs was appointed as Chief Executive Officer of the
Company.





On April
12, 2006, Brian Alexander resigned as President of the Company and was appointed
as Chief Financial Officer of the Company.





On April
12, 1006, Max Maxwell was appointed as President of the Company.





On June
5, 2006, Frank A. Jacobs resigned as Chief Executive Officer of the
Company.


47


On June
5, 2006, Mr. Maxwell was appointed as Chief Executive Officer of the
Company.





On
September 27, 2006 Brian Alexander resigned as Chief Financial Officer of the
Company.





On May 1,
2007, Max Maxwell resigned as a Director, President and Chief Executive Officer
of the Company.





On May
17, 2007, Frank A. Jacobs was appointed as Chief Executive Officer and Chief
Financial Officer of the Company.





On June
4, 2007, Frank A. Jacobs resigned as Chief Executive Officer of the
Company.





On June
4, 2007, Daniel Vesco was appointed as Chief Executive Officer and as a Director
of the Company.





On June
4, 2007, William M. Simmons was appointed as President and as a Director of the
Company.





On June
14, 2007, Frank A. Jacobs resigned as a Director and as Chief Financial Officer
of the Company.





On June
21, 2007 Ibrahim Nafi Onat was appointed as a Director of the
Company.





On July
26, 2007, William M. Simmons was appointed as Secretary and Treasurer of the
Company.





On July
26, 2007, Mr. Vesco was appointed as our Chief Financial Officer.





Mr.
Simmons and Mr. Vesco are involved in business interests separate from their
involvement with the Company, including but not limited to Valeska Energy Corp.,
which we have entered into a Management Services Agreement with as otherwise
described herein. As a result, it is possible that the demands on Mr. Simmons
and Mr. Vesco from these other businesses could increase with the result that
they may not have sufficient time to devote to our business. We do not have an
employment agreement with Mr. Simmons or Mr. Vesco and they are under no
requirement to spend a specified amount of time on our business. As a result,
they may not spend sufficient time in their roles as executive officers and
Directors of our company to realize our business plan. If they do not have
sufficient time to serve our company, it could have a material adverse effect on
our business and results of operations. Furthermore, Mr. Simmons and Mr. Vesco
are under no obligation to include us in any transactions which they undertake.
As a result, we may not benefit from connections they make and/or agreements
they enter into while employed by us, and they may profit from transactions
which they undertake while we do not.




48


OTHER CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS




On
October 27, 2004, the Company entered into a Share Sale and Purchase Agreement
(the "Agreement") to acquire a 40% shareholding in the capital of Black Swan
Petroleum Pty. Ltd. ("BSP"), which held a 100% interest in Block B7/38, a
Petroleum Exploration Concession (the "Petroleum Concession") in offshore
Thailand. In connection with the Agreement, the Company agreed to issue
56,000,000 shares of common stock and to pay $150,000 to Capersia Pte. Ltd.
("Capersia"). At the time of the Company's entry into the Agreement, Capersia
was 50% owned by our former Chief Executive Officer and Director, Frank A.
Jacobs', brother Peter Jacobs, and 50% owned by Mr. Jacobs' wife, Anna
Jacobs.





On
December 7, 2004, the Company borrowed $50,000 from a related party, MFS
Technology.  The loan is evidenced by a convertible promissory
note.  The loan bears interest at 5% per annum calculated 6 months
after the advancement of funds.  $25,000 was due on June 7, 2005 and
the remaining balance, plus interest was due on December 7, 2005.  The
loan has not been repaid, extended or converted. The lender has the option
during the term of the loan, and any extension, to convert the principle and
interest into shares of common stock at a conversion price of $0.30 per
share.





On or
about December 10, 2005, the Company entered into a participation agreement with
the "Clovelly Joint Venture," of which ORX, whom our former President and
Director, Max Maxwell used to serve as Vice President and served as a Director
of at the time of the parties entry into the agreement, is the Operator. The
Company agreed to a 6%-participation in the drilling of the Allain Lebreton #2
well on a prospect close to the existing Clovelly oil and gas field in
Louisiana. On February 14, 2006, the Company announced it had increased its
working interest to 11% through the purchase of a further 5% working interest in
this prospect.





On
January 20, 2006, we divested our shareholding in Black Swan Petroleum Pty. Ltd.
and Black Swan Petroleum (Thailand) Limited by transferring such shares to
Pacific Spinner Limited. Pacific Spinner had, pursuant to a Letter Agreement,
agreed to use its best efforts to further sell such shares and to pay us 20%
(twenty percent) of any proceeds received from such sale. However, the Company
has learned that Black Swan has deregistered itself as an active company in
Australia whilst Black Swan Thai has gone into voluntary receivership with
little chance of the Company receiving any further benefit from the
divestment.





In
January 2006, Texhoma agreed to participate in a 25% working interest in the
exploration of the Bayou Choctaw oil and gas project, located in Iberville
Parish, Louisiana.  Texhoma identified that the exposure was in excess
of its corporate guidelines and assigned its right to the interest to Morgan
Creek Energy Corp. in exchange for $250,000 and 200,000 shares of Morgan Creek
Energy.





In March
2006, our Executive Chairman and Director, Frank Jacobs subscribed for 7,500,000
shares of our common stock at $0.04 per share, for aggregate consideration of
$300,000, which funds were immediately used by us in connection with the Closing
of the Kilrush Property (described above).





On April
10, 2006, Texhoma Energy, Inc. (the "Company") entered into a Debt Conversion
Agreement with Lucayan Oil and Gas Investments, Ltd., a Bahamas corporation,
formerly Devon Energy Thai Holdings, Ltd. ("LOGI"). The Company owed $895,000 to
LOGI as of the date of the Debt Conversion Agreement in connection with money
received by the Company for the drilling in Thailand in March 2005, which debt
was transferred by Fidelio Business, S.A. and Quick Assets and Cash Corp. (Bank
Sal Oppenheim) to LOGI in November 2005. Pursuant to the Debt Conversion
Agreement, the Company and LOGI agreed to convert $160,000 of the $895,000 which
LOGI was owed into an aggregate of 4,000,000 shares (or one (1) share for each
$0.04 of debt converted) of newly issued shares of the Company's restricted
common stock. As of the date of this filing, the Company still owes LOGI
$735,000. The Director and 50% owner of LOGI is Max Maxwell, who became a
Director of the Company on April 10, 2006, President of the Company on April 12,
2006, and Chief Executive Officer of the Company on June 5, 2006, and resigned
as President, Chief Executive Officer and Director on May 1, 2007.




On April
10, 2006, the Company entered into a convertible note with LOGI evidencing the
$735,000 of debt which remains outstanding. The convertible note provides that
LOGI may convert the $735,000 debt into Company common stock at the rate of one
share of common stock for each $0.04 of outstanding debt.


49


On May
15, 2006, Lucayan Oil and Gas Investments, Ltd. ("LOGI") provided the Company
notice of its desire to convert its $735,000 Promissory Note into 18,375,000
shares of the Company's common stock. The Company's Board of Directors approved
such issuance on May 18, 2006.





On June
1, 2006, the Company's Board of Directors approved the grant of an aggregate of
10,000,000 options to the Company's then officers, Directors and employees,
pursuant to the Company's 2006 Stock Incentive Plan (the "Plan"). All of the
options were granted at an exercise price of $0.13 per share, which was equal to
the average of the highest ($0.125) and lowest ($0.111) quoted selling prices of
the Company's common stock on June 1, 2006, multiplied by 110%. The options were
granted to the following individuals in the following amounts:





o
            Max
      Maxwell, our former president and Director was granted 750,000 qualified
      options and 3,250,000 non-qualified options (for 4,000,000 total options),
      which options were to vest at the rate of 500,000 options every three
      months, with the qualified options to vest first, in consideration for
      services to be rendered to the Company as the Company's president and
      Director. The options were to expire if unexercised on June 1, 2009, or at
      the expiration of three months from the date of the termination of his
      employment with the Company.  All of Mr. Maxwells options have
      since expired unexercised;




o
            Frank
      Jacobs, our former Director was granted 4,000,000 non-qualified options,
      which options were to vest at the rate of 500,000 options every three
      months, in consideration for services to be rendered to the Company as the
      Company's Director. The options were to expire if unexercised on June 1,
      2009, or at the expiration of three months from the date of the
      termination of his employment with the Company.  Mr. Jacobs
      resigned from the Company effective June 14, 2007, and as such all
      2,000,000 of his vested options expired unexercised on September 14,
      2007;





o
            Brian
      Alexander, our former Chief Financial Officer and Director was granted
      1,000,000 non-qualified options, which options vested upon Mr. Alexander's
      execution of a deed of release and settlement between Mr. Alexander and
      the Company in connection with his resignation from his positions as the
      Company's Chief Financial Officer and Director. The options expired
      unexercised on July 1, 2007; and





o
            Mr.
      Terje Reiersen then working as a consultant to the Company was granted
      1,000,000 non-qualified options, which options were to vest at the rate of
      250,000 options every three months, in consideration for consulting
      services to be rendered to the Company in connection with corporate advice
      in relation to a secondary listing amongst other things. The options were
      to expire if unexercised on June 1, 2009, or at the expiration of three
      months from the date of the termination of his employment with the
      Company.  All of Mr. Reiersens options have since expired
      unexercised.





Additionally,
on June 1, 2006, the Board of Directors approved the issuance of 2,000,000
options to another consultant to the Company in consideration for investor
relations services rendered to the Company. The options granted to the
consultant were not granted pursuant to the Plan. The options have an exercise
price of $0.13 per share, vest at a rate of 250,000 options every three months
and expire if unexercised on June 1, 2009.





Our
former Director, Mr. Brian Alexander decided not to seek re-election as a
director of the Company due to other business and work commitments at the annual
shareholders meeting which was held on September 19, 2006. In connection with
monies we owed Mr. Alexander in directors and consulting fees, we and Mr.
Alexander agreed that we would issue 300,000 shares of our restricted common
stock to Mr. Alexander in lieu of the amounts owed to him in such fees. In
connection with the issuance of the shares and Mr. Alexander's departure, the
parties entered into a Mutual Release letter agreement (the "Mutual Release") on
September 27, 2006. Pursuant to the Mutual Release, Mr. Alexander agreed to
release and forever discharge us, our officers and Directors and we agreed to
release Mr. Alexander from all actions, claims, demands and costs, which either
party may have had or my have at any time in the future in connection with Mr.
Alexander's employment with us. Additionally, pursuant to the terms of Mr.
Alexander's 1,000,000 non-qualified options granted to him in consideration for
services rendered for his services as the Company's Financial Officer on June 1,
2006, which options were to purchase shares at $0.13 per share, all of the
options were immediately vested to Mr. Alexander upon his entry into the Mutual
Release and such options later expired unexercised on June 1,
2007.


50





On or
about October 19, 2006, we issued a Promissory Note to Mr. Frank Jacobs, our
then Director of the Company, in the amount of $493,643.77, which amount
represented funds advanced to the Company by Mr. Jacobs during the 2006 calendar
year and management fees owed to Mr. Jacobs for his services to the Company
during the 2006 calendar year (the Jacobs' Note). The Jacobs' Note bears
interest at the rate of 6% per annum until paid, and is payable by the Company
at any time on demand. The Jacobs' Note may be pre-paid at any time without
penalty. Any amounts not paid on the Jacobs' Note when due shall bear interest
at the rate of 15% per annum.





On or
about June 5, 2007, we entered into an Agreement with Jacobs Oil & Gas
Limited (Jacobs), pursuant to which Jacobs agreed that no interest would be due
from us and/or accrue on the principal or accrued interest to date on his
outstanding Promissory Note for the period of one (1) year from the date of the
Agreement and that he would not try to collect the principal and/or accrued
interest on such note for a period of one (1) year.





The
Company also entered into a Security Agreement with Mr. Jacobs under which
Agreement the Board of Directors ratified the assignment of 200,000 shares of
the common stock of Morgan Creek Energy Corp., which shares were held by the
Company, to Mr. Jacobs as security for the money that is owed to Mr. Jacobs
under the Jacobs' Note.





On or
about May 15, 2007, we entered into a Management Services Agreement with Valeska
Energy Corp. (Valeska), whose President is William M. Simmons, who became an
officer and Director of us on or about June 4, 2007, as described below, which
was subsequently amended on or about June 1, 2007 (collectively the Management
Agreement).





Pursuant
to the Management Agreement, we agreed to enter into a Joint Venture agreement
with Valeska (the Joint Venture), described below; Valeska agreed to provide us
management services and act as a Management Consultant to us, for a monthly fee
of $10,000 (plus expenses), or 15% of any revenue we generate, whichever is
greater (excluded from this definition however are asset sales and/or income of
a capital nature, and included in the definition are 20% of the revenues we
receive from our Joint Venture with Laurus Master Fund, Ltd.); and we also
agreed to issue Valeska 15,200,000 restricted shares of our common stock. We
also agreed pursuant to the Management Agreement, as amended, that we would
issue Valeska an additional 18,200,000 shares of our common stock upon such time
as we are able to bring our public reporting requirements current with the
Commission and seek reinstatement on the Over-The-Counter Bulletin Board. The
Management Agreement has a minimum term of three months, beginning on May 1,
2007. The Management Services Agreement was later amended and extended by the
parties entry into the Second Amendment to Management Services Agreement with
Valeska Energy Corp. in August, 2007, as described below.




Joint Venture
Agreement





On or
about May 15, 2007, we entered into a Joint Venture Relationship Agreement with
Valeska (the Joint Venture Agreement), pursuant to which we and Valeska agreed
to form a new Texas limited partnership (the Joint Venture), of which Valeska
will serve as general partner. The Joint Venture Agreement contemplates that
Valeska will cause funds to be invested, arrange financial and strategic
partnerships, and that both parties would bring investment opportunities to the
Joint Venture. Pursuant to the Joint Venture Agreement, Valeska has
co-investment rights in the Joint Venture. Any distributions from the Joint
Venture will be paid first to Valeska and the Company, in an amount equal to 8%
to Valeska and 2% to the Company, subject to investor approval; then to any
investors as negotiated therewith; and finally Valeska and the Company will
share any remaining distributions, with Valeska receiving 80% of such
distributions and the Company receiving 20% of such distributions.





The Joint
Venture Agreement also provides that Valeska has the right to require us to
purchase its interest in the Joint Venture at any time, in exchange for shares
of our common stock. In the event that Valeska exercises this right, the
valuation of the Joint Venture will be valued in a negotiated manner or at 30%
greater than the gross acquisition cost of any property acquired by the Joint
Venture, and the number of shares exchangeable for such interest will be equal
to the market price of our shares of common stock on the date that such right is
exercised by Valeska.


51


Additionally,
we have the right, pursuant to the Joint Venture Agreement, to veto any deal
which Valeska proposes to include in the Joint Venture.





Voting
Agreement





On or
about June 5, 2007, certain of our largest shareholders, including Capersia Pte.
Ltd.; Frank A. Jacobs, our former officer and Director; and Valeska Energy
Corp., which is controlled by William M. Simmons, the President and Director of
the Company, and is majority owned by Daniel Vesco, the Companys Chief Executive
Officer and a Director of the Company, through an entity which he controls
(Valeska and collectively the Shareholders) entered into a Voting Agreement (the
Voting Agreement).  Pursuant to the terms of the Voting Agreement the
Shareholders agreed that for the Term of the Voting Agreement, as defined below,
no Shareholder would vote any of the shares of common stock (the Shares) which
they hold for (i.e. in favor of) the removal of William M. Simmons or Daniel
Vesco, our Directors (the New Directors).  The Shareholders also
agreed that in the event of any shareholder vote of the Company (either by Board
Meeting, a Consent to Action with Meeting, or otherwise) relating to the removal
of the New Directors; the re-election of the New Directors; and/or the increase
in the number of directors of the Company during the Term of the Voting
Agreement, that such Shareholders would vote their Shares against the removal of
the New Directors; for the re-election of such New Directors; and/or vote
against the increase in the number of directors of the Company, without the
unanimous consent of the New Directors, respectively.





The
Voting Agreement further provided that in the event that either of the New
Directors breaches his fiduciary duty to the Company, including, but not limited
to such Directors conviction of an act or acts constituting a felony or other
crime involving moral turpitude, dishonesty, theft or fraud; such Directors
gross negligence in connection with his service to the Company as a Director
and/or in any executive capacity which he may hold; and/or if any Shareholder
becomes aware of information which would lead a reasonable person to believe
that such Director has committed fraud or theft from the Company, or a violation
of the Securities laws, the Voting Agreement shall not apply, and the
Shareholders may vote their Shares as they see fit.







The Term
of the Voting Agreement is until June 5, 2009 (the Term).  The
Shareholders agreed to enter into the Voting Agreement in consideration for the
New Directors agreeing to serve the Company as Directors of the
Company.





On or
about July 12, 2007, another one of our significant shareholders, Lucayan Oil
and Gas Investments, Ltd. (LOGI), which is 50% owned by Max Maxwell, our former
President and Director, entered into a Voting Agreement with us, which was
amended by a First Amendment to Voting Agreement, which provided that the shares
of common stock held by LOGI would be subject to the identical terms of our June
5, 2007 Voting Agreement with the Shareholders.





Cooperation Agreement and
Mutual Release





On or
about July 12, 2007, LOGI; Mr. Maxwell; Meredith Maxwell, Mr. Maxwells daughter
and our former employee; and A.E. Buzz Jehle, our former consultant
(collectively the Former Interested Parties) entered into a Cooperation
Agreement and Mutual Release (the Release) with us and Texaurus Energy, Inc.
(Texaurus), our wholly owned Delaware subsidiary (for the purposes of the
description of the Release, all references to we, us, the Company or similar
words include Texaurus).  In connection with the Release, we and the
Former Interested Parties agreed to release each other (including employees,
officers, directors, representatives, employees and assigns) from any and all
claims, rights, causes of action and obligations which were known or unknown at
the time of the entry into the Release, subject only to the Assignment by the
Former Interested Parties of their rights, causes of actions or demands against
any former officers or Directors of us to the Company and the New Directors (the
Assignment) and the Extension.  The release we provided to the Former
Interested Parties was against any and all claims, rights, causes of action and
obligations which were known at the time of the entry into the Release, or which
are not brought to the attention of the New Directors or the Company by 5:00
P.M. Central Standard Time, on September 30, 2007 (the Extension).




Additionally,
in connection with the Release, Mr. Maxwell personally agreed, to the best of
his ability, to cooperate with us in connection with an audit of us and
Texaurus; to provide a list of the known liabilities of the
Company which Mr. Maxwell was aware of; and to personally certify the accuracy
and completeness any financial statements which the Company prepared covering
the time period during which Mr. Maxwell was President of the Company, in a form
similar to the Certification Of Chief Executive Officer and Chief Financial
Officer Pursuant To Section 302 of The Sarbanes-Oxley Act Of 2002 and
Certification of Chief Executive Officer; and (ii) Certification of Chief
Financial Officer Pursuant To 18 U.S.C. Section 1350, as Adopted Pursuant To
Section 906 Of The Sarbanes-Oxley Act Of 2002, which reporting companies are
required to file as attachments to each periodic filing with the Commission,
which certification Mr. Maxwell later made, for the periods from June 30, 2006
to March 31, 2007..


52





Mr.
Maxwell also agreed pursuant to the terms of the Release that any options which
he vested pursuant to the June 2006 options which he was granted by us would
expire if unexercised on August 1, 2007; and that we owe him no rights to
contribution or indemnification in connection with his service to the Company.
Mr. Maxwell also certified that the shares of common stock granted to LOGI were
issued for valid consideration and fully paid and non-assessable (the
Certification).  Additionally, pursuant to the terms of the Release,
we agreed to indemnify Mr. Maxwell and Mr. Jehle against any dispute regarding
the shares issued to LOGI, provided that such Certification is valid and
correct.





Consulting
Agreement





Effective
July 1, 2007, we entered into a Consulting Agreement with Ibrahim Nafi Onat, our
Director (the Consulting Agreement), pursuant to which Mr. Onat agreed to serve
as our Director and Vice President of Operations for an initial term of twelve
(12) months, which term is renewable month to month thereafter with the mutual
consent of the parties.  Pursuant to the Consulting Agreement we
agreed to pay Mr. Onat $2,500 per month during the term of the Consulting
Agreement, to issue him 500,000 restricted shares of common stock in connection
with his entry into the Consulting Agreement and 500,000 restricted shares of
common stock assuming he is still employed under the Consulting Agreement at the
expiration of six (6) months from the effective date of the Consulting Agreement
(the Six Month Issuance).  The Consulting Agreement is described in
greater detail above.




On or
about August 13, 2007, we entered into a Second Amendment to Management Services
Agreement with Valeska Energy Corp. (Valeska and the Second
Amendment).





Pursuant
to the Second Amendment, we and Valeska agreed to extend the term of the
Management Services Agreement until September 30, 2008, and to pay Valeska the
following consideration in connection with agreeing to perform the services
required by the original Management Services Agreement, and in consideration for
allowing Daniel Vesco and William M. Simmons to serve as Directors of the
Company, bringing on personnel to assist the Company with the day to day
operations of the Company, and helping bring the Company current in its filings
(the Services):





1,000
      shares of the Companys Series A Preferred Stock;A
      monthly fee of $20,000 per month during the extended term of the Second
      Amendment, plus reasonable and actual costs incurred by Valeska (or
      individuals or designees brought on by Valeska, including lodging, car
      rental and telephone expenses therewith) in connection with such
      Services;10,000,000
      restricted shares of the Companys common stock; and60,000,000
      options to purchase shares of the Companys common stock, which have a
      cashless exercise provision, are valid for a period of three years from
      their grant date, and have an exercise price of greater than 110% of the
      trading price of the Companys common stock on the Pinksheets on the day of
      such grant, equal to $0.02 per
share.





Subsequent
Events





On or
about October 30, 2007, we entered into a Cooperation Agreement and Mutual
Release with our former consultant Terje Reiersen (Reiersen and the Reiersen
Release).  Pursuant to the Reiersen Release, Reiersen agreed to
release us, our current and former officers, agents, directors, servants,
attorneys, representatives, successors, employees and assigns from any and all
rights, obligations, claims, demands and causes of action in contract or tort,
under any federal or state law, whether known or unknown, relating to his
services with the Company or the Company in general for any matter whatsoever
other than in connection with any claims against any former officers or
Directors of the Company, which claims Reiersen assigned to the
Company.  Reiersen also agreed to cooperate fully with us in
connection with any
reasonable requests from us for a period of sixty (60) days from the date of the
Reiersen Release, that we would not owe him any rights of contribution or
indemnification in connection with any services he rendered on our behalf and
that we would not owe him any other consideration other than what we agreed to
provide him in connection with the Reiersen Release (as described in greater
detail below).


53





In
connection with the Reiersen Release, we paid Reiersen $2,500 and issued
Reiersen 250,000 restricted shares of our common stock.





On or
about November 2, 2007, we entered into a First Amendment to Securities Purchase
Agreement, Secured Term Note and Registration Rights Agreement with Laurus (the
First Amendment).  Pursuant to the First Amendment, Laurus agreed
to:





(a)
            waive
      any default which may have occurred as a result of our failure to become
      current in our filings with the Commission;(b)
            amend
      the terms of the Laurus Note to provide that a Change of Control of
      Texaurus under the Note, which requires approval of Laurus, includes any
      change in Directors such that Daniel Vesco and William M. Simmons are no
      longer Directors of Texaurus; and


(c)
            amend
      the terms of the Registration Rights Agreement with Laurus to provide that
      the date we are required to gain effectiveness of a registration statement
      registering the shares of common stock issuable in connection with the
      exercise of the Laurus Warrant in the Company is amended to no later than
      April 30, 2008, and that the effective date of any additional registration
      statements required to be filed by us in connection with the Registration
      Rights Agreement, shall be thirty (30) days from such filing
      date.




On or
about November 28, 2007, we entered into a Settlement Agreement and Mutual
Release (the Jacobs Agreement) by and between the Company, Frank A. Jacobs, our
former officer and Director (Jacobs), and Jacobs Oil & Gas Limited, a
British Columbia corporation (JOGL and collectively with Jacobs, the Jacobs
Parties), Clover Capital, a creditor of the Company (Clover), Capersia Pte.
Ltd., a Singapore company and a significant stockholder of the Company
(Capersia), Peter Wilson, an individual and a former Director of the Company
(Wilson), and Sterling Grant Capital, Inc., a British Columbia corporation,
controlled by Mr. Wilson (SGC and collectively with Clover, Capersia and Wilson,
the Non-Jacobs Parties, and with the Jacobs Parties, the Interested
Parties).  We had various disputes with the Interested Parties
relating to the issuances of and transfers of various shares of our common stock
and various of the Interested Parties had alleged that we owed them
consideration (the Disputes).  We entered into the Jacobs Agreement to
settle the Disputes with the Interested Parties.





In
consideration for the Company agreeing to enter into the Jacobs Agreement, the
Jacobs Parties agreed to the following terms: the Jacobs Parties would return to
the Company for cancellation 5,000,000 of the 7,500,000 shares purchased by
Jacobs in March 2006 (the Jacobs Shares), which shares have not been
cancelled to date, and are therefore included in the number of issued and
outstanding shares disclosed throughout this report; all debt owed by
Texhoma to the Jacobs Parties, known or unknown, was discharged and forgiven,
including the total outstanding amount of the approximately $500,000 Promissory
Note owed to Frank A. Jacobs by the Company (the Jacobs Note); the Company owes
Jacobs no rights to contribution and/or indemnification in connection with
Jacobs employment with the Company; Jacobs also certified the accuracy and
correctness of the Companys previously prepared annual and interim financial
statements and periodic reports, relating to the time period of his employment
from the period ending September 30, 2005 to the period ending March 31, 2007;
the Jacobs Parties agreed they have no interest in and will not interfere with
the issuance of or any subsequent transfers of shares to or from Lucayan Oil and
Gas Investments, Ltd. (the LOGI Shares), a Bahamas corporation; Jacobs agreed to
use his best efforts to answer the Companys questions and produce documents in
the future regarding operations and financials of the Company; Jacobs agreed
that he no longer holds any exercisable options of the Company; the Voting
Agreement entered into between various parties in June 2007, including Jacobs,
remains in full affect and force against Jacobs; and Jacobs has no interest in
any shares other than the aforementioned 2,500,000 shares.





Additionally,
in consideration for the Company agreeing to enter into the Jacobs Agreement,
the Non-Jacobs Parties agreed to the following terms: any and all debts owed by
Texhoma to Clover, which purportedly totaled approximately $60,000, Capersia,
which purportedly totaled $60,000 or any of the Non-Jacobs Parties (including
approximately $20,000 purportedly owed to Wilson) was discharged and forgiven;
the Non-Jacobs Parties agreed that they have no interest in and will not
interfere with the issuance of the LOGI Shares; the Voting Agreement remains in
full force and effect against Capersia; and in connection with the 30,000,000
shares of Company stock in Capersias possession received through Texhomas
previous purchase of a 40% interest in Black Swan Petroleum Pty. Ltd. (the
Capersia Shares), Capersia
will not transfer shares in excess of 2% of Texhomas then outstanding shares in
any three (3) month period, until the second anniversary of the Jacobs
Agreement.


54





Lastly,
in consideration for the Jacobs Parties and the Non-Jacobs Parties agreeing to
the terms of the agreement, Texhoma agreed to the following terms: Jacobs will
retain the remaining 2,500,000 shares of Company stock and Capersia will retain
the aforementioned 30,000,000 shares of Company stock free and clear of any
claims to such shares by the Company; and JOGL shall retain all rights to the
200,000 shares of Morgan Creek Energy Corp. (Morgan Creek) shares held in trust
by JOGL as collateral for a promissory note issued to JOGL by the Company (the
Jacobs Note and Morgan Creek Shares), the Company will release all claims to
said shares or any additional shares of Morgan Creek that the Company may be due
as a result of stock splits or share distributions.





Further,
pursuant to the Jacobs Agreement, the Interested Parties agreed to release the
Company from  any and all rights, obligations, claims, demands and
causes of action, known or unknown, asserted or unasserted relating to the
Disputes or the Company or its current or former Directors, and the Company
agreed to release the Jacobs Parties and the Non-Jacobs Parties from any and all
rights, obligations, claims, demands, and causes of action arising from or
relating to the Capersia Shares, Jacobs employment with the Company, the Jacobs
Note, the Jacobs Shares, the Morgan Creek shares, and the LOGI
Shares.





As a
result of the Jacobs Agreement, the Company was able to settle approximately
$640,000 in debt which it purportedly owed to the various Interested Parties and
to settle any and all other claims which such parties, in return for the
consideration discussed above, which mainly consisted of assigning the rights to
the 200,000 shares of Morgan Creek Energy Corp. stock to Frank A. Jacobs, which
shares had an approximate value of $92,000 based on the trading price of Morgan
Creek Energy Corp.s common stock on the date of the Jacobs Agreement of
$0.46.





ITEM 13. EXHIBITS




A)           THE
EXHIBITS LISTED BELOW ARE FILED AS PART OF THIS ANNUAL
REPORT.






Exhibit
      Number
            Description of
      Exhibit3.1(t)
            Certificate
      of Amendment to Articles of Incorporation increasing the authorized shares
      of common stock to 300,000,000 shares3.2(13)
            Series
      A Preferred Stock Designation10.1(1)
            Sale
      and Purchase Agreement, dated as of January 20, 2006, by and between
      Sterling Grant Capital Inc. and Texhoma Energy, Inc.10.2(1)
            Letter
      Agreement, dated as of December 31, 2005 by and between Pacific Spinner
      Limited and Texhoma Energy, Inc.10.3(2)
            Sales
      and Purchase Agreement with Structured Capital Corp.10.4(2)
            Sales
      & Purchase Agreement with Kilrush Petroleum10.5(2)
            Securities
      Purchase Agreement


10.6(2)
            Secured
      Term Note10.7(2)
            Warrant
      Agreement (Texaurus)10.8(2)
            Warrant
      Agreement (Texhoma)


55





10.9(2)
            Registration
      Rights Agreement10.10(2)
            Stock
      Pledge Agreement10.11(2)
            Side
      Letter Agreement10.12(2)
            Guaranty
      of Texaurus10.13(2)
            Personal
      Guaranty of Frank Jacobs10.14(2)
            Warrant
      with Energy Capital Solutions, LLC10.15(2)
            Frank
      Jacobs Subscription Agreement10.16(5)
            Sales
      and Purchase Agreement with Structured Capital Corp.10.17(6)
            First
      Amendment to Sales and Purchase Agreement10.18(6)
            Mortgage,
      Security Agreement, Finance Statement and Assignment of
      Production10.19(6)
            Collateral
      Assignment10.16(7)
            Debt
      Conversion Agreement with Lucayan Oil and Gas Investments,
      Ltd.10.17(7)
            Note
      with Lucayan Oil and Gas Investments, Ltd.10.18(8)
            Promissory
      Note to Frank Jacobs10.19(8)
            Security
      Agreement with Frank Jacobs10.20(10)
            Letter
      Agreement with Matrixx Resource Holdings Inc. regarding the sale of the
      Clovelly Prospect10.21(11)
            Agreement
      Regarding Frank A. Jacobs Note10.22(11)
            Joint
      Venture Relationship Agreement10.23(11)
            Management
      Services Agreement with Valeska and Amendment thereto10.24(12)
            Jacobs
      Oil & Gas Limited Promissory Note10.25(13)
            Voting
      Agreement10.26(13)
            Voting
      Agreement with LOGI


10.27(13)
            First
      Amendment to Voting Agreement with LOGI10.28(13)
            Cooperation
      Agreement and Mutual Release


10.28(13)
            Consulting
      Agreement with Ibrahim Nafi Onat


56





10.29(14)
            Promissory
      Note and Security Agreement with Polaris10.30(16)
            Second
      Amendment to Management Services Agreement10.31(17)
            Option
      Agreement10.32(18)
            Cooperation
      Agreement and Mutual Release with Terje Reiersen10.33(18)
            First
      Amendment to Securities Purchase Agreement, Secured Term Note and
      Registration Rights Agreement with Laurus10.34(19)
            Settlement
      Agreement and Mutual Release16.1(15)
            Letter
      from Braverman & Company, PC16.2(3)
            Letter
      from Chisholm, Bierwolf & Nilson, LLC16.3(4)
            Letter
      from Chisholm, Bierwolf & Nilson, LLC16.4(9)
            Letter
      from Jewett, Schwartz, Wolfe & Associates21.1*
            Subsidiaries31.1*
            Certificate
      of the Chief Executive Officer and Chief Financial Officer pursuant to
      Section 302 of the Sarbanes-Oxley Act of 200232.1*
            Certificate
      of the Chief Executive Officer and Chief Financial Officer pursuant to
      Section 906 of the Sarbanes-Oxley Act of
2002





* Filed
herewith.





(t)
            Filed
      as an exhibit to our Form 8-K, filed with the Commission on September 22,
      2006, and incorporated herein by
reference.





(1)
            Filed
      as exhibits to the Companys Form 8-K filed with the Commission on February
      14, 2006, and incorporated herein by
reference.





(2)
            Filed
      as exhibits to the Companys Form 8-K filed with the Commission on April 4,
      2006, and incorporated herein by
reference.





(3)
            Filed
      as an exhibit to our Form 8-K filing, filed with the Commission on April
      5, 2006, and incorporated herein by
reference.





(4)
            Filed
      as an exhibit to our Form 8-K filed with the Commission on April 13, 2006,
      and incorporated herein by
reference.




(5)
            Filed
      as an exhibit to our Form 8-K, filed with the Commission on April 4, 2006,
      and incorporated herein by
reference.





(6)
            Filed
      as exhibits to our Form 8-K, filed with the Commission on April 26, 2006,
      and incorporated herein by
reference.





(7)
            Filed
      as exhibits to our Form 8-K, filed with the Commission on May 24, 2006,
      and incorporated herein by
reference.





(8)
            Filed
      as exhibits to our Form 8-K, filed with the Commission on February 13,
      2007, and incorporated herein by
reference.





57





(9)
            Filed
      as an exhibit to our Form 8-K, filed with the Commission on June 21, 2007,
      and incorporated herein by
reference.





(10)
            Filed
      as an exhibit to our Form 8-K, filed with the Commission on May 25, 2007,
      and incorporated herein by
reference.





(11)
            Filed
      as an exhibit to our Form 8-K, filed with the Commission on June 8, 2007,
      and incorporated herein by
reference.





(12)
            Filed
      as an exhibit to our Form 8-K, filed with the Commission on October 20,
      2006, and incorporated herein by
reference.





(13)
            Filed
      as an exhibit to our Form 8-K, filed with the Commission on July 30, 2007,
      and incorporated herein by
reference.





(14)
            Filed
      as an exhibit to our Form 8-K, filed with the Commission on June 13, 2007,
      and incorporated herein by
reference.





(15)
            Filed
      as an exhibit to our Form 8-K, filed with the Commission on May 17, 2004,
      and incorporated herein by
reference.





(16)
            Filed
      as an exhibit to our Form 10-KSB, filed with the Commission on August 21,
      2007, and incorporated herein by
reference.





(17)
            Filed
      as an exhibit to our Form 10-QSB, filed with the Commission on September
      11, 2007, and incorporated herein by
reference.





(18)
            Filed
      as an exhibit to our Form 10-KSB, filed with the Commission on November 9,
      2007, and incorporated herein by
reference.





(19)
            Filed
      as an exhibit to our Form 8-K, filed with the Commission on December 6,
      2007, and incorporated herein by
reference.








b)     REPORTS
ON FORM 8-K





We filed
a report on Form 8-K on June 5, 2007, to report our entry into the Voting
Agreement, Cooperation Agreement and Mutual Release with Max Maxwell and other
parties, the entry into the Consulting Agreement with Nafi Onat, our Director,
the sale of certain shares of unregistered securities, the Designation of our
Series A Preferred Stock, and the appointment of Daniel Vesco as CEO, Director
and interim CFO, and William M. Simmons as President, Treasurer and
Director.




We filed
a report on Form 8-K on December 6, 2007, to report our entry into the
Settlement Agreement and Mutual Release with Frank Jacobs and related parties
and the sale of certain units consisting of convertible promissory notes and
warrants.




ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES.




AUDIT FEES




During
the fiscal year ended September 30, 2007, the Company incurred approximately
$84,000 in fees to its principal independent accountant for professional
services rendered in connection with preparation and audit of the Company's
financial statements for fiscal year ended September 30, 2007 and for the review
of the Company's unaudited quarterly financial statements as filed in the
Companys reports on Form 10-QSB for the year ended September 30,
2007.





During
the fiscal year ended September 30, 2006, the Company incurred approximately
$69,736 in fees to its principal independent accountants for professional
services rendered in connection with preparation and audit of
the Company's financial statements for fiscal year ended September 30, 2006 and
for the review of the Company's unaudited quarterly financial statements as
filed in the Companys reports on Form 10-QSB for the year ended September 30,
2006.


58





AUDIT RELATED
FEES




None.




TAX FEES




None.




ALL OTHER FEES




None.






59


SIGNATURES




In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.




TEXHOMA ENERGY,
INC.




/s/ Daniel
Vesco


Daniel
Vesco


Chief
Executive Officer


(Principal
Executive Officer)


Date:
March 20, 2008




In
accordance with the Exchange Act, 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
            TITLE
            DATE/s/ Daniel
      VescoDaniel
    Vesco
            Chief Executive
      Officer
            March 20,
      2008Chief Financial
      Officer,(Principal Financial Officer)
      andDirector/s/ Ibrahim Nafi
      OnatIbrahim Nafi
      Onat
            Director
            March 20,
      2008




60