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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-K

(Mark One)

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

For the fiscal year ended December 31, 2008

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

For the transition period from [     
 ]

Commission file number 000-25579

PLURIS ENERGY GROUP INC.(Name of small business issuer in its charter)

|Nevada                                                               | 87-0571853                          
|-------------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of incorporation or
      organization) | (I.R.S. Employer Identification No.)
|                                                                     |                                     
|Suite 2703  550 Pacific Street                                      |                                     
|Vancouver, British Columbia, Canada                                  | V6Z 3G2                             
|(Address of principal executive offices)                             | (Zip Code)                          

Registrant's telephone number 604.607.1677

Securities registered pursuant to Section 12(b) of the Act:

|Title of each class | Name of each exchange on which registered
|------------------- | -----------------------------------------
|Nil                 | Nil                                      

Securities registered pursuant to Section 12(g) of the Act:

Common Shares, $0.001 par value(Title of class)

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

Check whether the issuer is not required to file reports
pursuant to Section 13 or 15(d) of the Exchange Act.Yes [ 
 ]    No [X]

Note  Checking the box above will not relieve any registrant
required to file reports pursuant to Section 13 or 15(d) of the Exchange Act
from their obligations under those Sections.

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

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Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrants
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K.
Yes [   ]    No [X]

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a
smaller reporting company. See the definitions of large accelerated filer,
accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act

Large accelerated filer [   ]
    
    Accelerated
      filer                 [  
      ]Non-accelerated filer   [   ]
    (Do not check if a smaller
      reporting company)
    Smaller reporting company [X]


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

State issuers revenues for its most recent fiscal year. $Nil

State the aggregate market value of the voting and non-voting
common equity held by non-affiliates computed by reference to the price at
which the common equity was sold, or the average bid and asked prices of such
common equity, as of a specified date within 60 days. (See definition of
affiliate in Rule 12b-2 of the Exchange Act.)

23,321,139 common shares at $0.08(1)per common share = $1,865,691

(1)Represents the average of the bid and ask closing
prices on the OTC Bulletin Board on March 31, 2009. Used only for the
purpose of this calculation.

State the number of shares outstanding of each of the issuers
classes of equity stock, as of the latest practicable date.

39,009,465 common shares issued and outstanding as of May 15,
2009. 4,600,000 Series A preferred shares issued and outstanding as of May
15, 2009 16,676,327 Series B preferred shares issued and outstanding as of
May 15, 2009

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PART I

Item
1.          Description of
Business.

This annual report contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended (the
Securities Act), and Section 21E of the Securities Exchange Act of 1934, as
amended. These statements relate to future events or our future financial
performance. In some cases, you can identify forward-looking statements by
terminology such as may, should,  expects, plans, anticipates,
believes, estimates, predicts, potential or continue or the negative
of these terms or other comparable terminology. These statements are only
predictions and involve known and unknown risks, uncertainties and other
factors, including the risks in the section entitled Risk Factors, that may
cause our or our industrys actual results, levels of activity, performance or
achievements to be materially different from any future results, levels of
activity, performance or achievements expressed or implied by these
forward-looking statements.

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. Except as required by
applicable law, including the securities laws of the United States, we do not
intend to update any of the forward-looking statements to conform these
statements to actual results.

Our financial statements are stated in United States dollars
and are prepared in accordance with United States Generally Accepted Accounting
Principles. In this annual report, unless otherwise specified, all dollar
amounts are expressed in United States dollars. All references to common
shares refer to shares of our common stock.

As used in this annual report, the terms we, us, our, and
Pluris means Pluris Energy Group Inc. and our wholly owned subsidiaries,
Pluris Energy Group Inc., a British Virgin Islands corporation, Pluris Sarmiento
Petroleo SA, an Argentine corporation and our former subsidiary Petrogen, Inc.,
a Colorado corporation, unless otherwise indicated.

Corporate Overview

We were incorporated under the laws of the State of Nevada on
December 3, 1997 under the name Hadrosaurus Resources, Inc.. On January 20,
1998, we filed an amendment to the articles of incorporation changing our name
to Hadro Resources, Inc. On February 12, 2003, subsequent to the acquisition
of Petrogen, Inc. (Petrogen), we filed an amendment to the articles of
incorporation changing our name to Petrogen Corp.

On October 11, 2002, effective February 12, 2003, Hadro
Resources, Inc. (now known as Petrogen Corp.), Petrogen, and the shareholders of
Petrogen (the Petrogen Shareholders) entered into a share exchange agreement
(the Share Exchange Agreement). Pursuant to the terms of the Share Exchange
Agreement, we acquired from the Petrogen Shareholders one hundred percent (100%)
of the issued and outstanding shares of common stock of Petrogen and issued
7,000,000 shares of our restricted common stock to the Petrogen Shareholders in
proportion to their respective holdings in Petrogen.

Effective September 12, 2006, we completed a merger with our
subsidiary, Pluris Energy Group Inc., which we incorporated solely to effect the
name change. As a result, we changed our name from Petrogen Corp. to Pluris
Energy Group Inc. We changed the name of our company to better reflect the
direction and business of our company. The name change became effective with
NASDAQ OTC Bulletin Board at the opening of market and trading on September 12,
2006 under the new symbol PEYG.

On September 12, 2006, we effected a five (5) for one (1)
reverse stock split of our authorized, issued and outstanding common stock. As a
result, our authorized capital was decreased from 100,000,000 shares of common
stock with a par value of $0.001 to 20,000,000 shares of common stock with a par
value of $0.001. Our issued and outstanding share capital decreased from
68,249,605 shares of common stock to 13,649,921 shares of common stock.

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On or about September 18, 2006, our board of directors
unanimously approved an amendment to our Articles of Incorporation, pursuant to
which our authorized share capital would be increased from 20,000,000 shares of
common stock to 250,000,000 shares of common stock and to create 100,000,000
preferred shares. On or about September 29, 2006, our shareholders holding a
majority of the total issued and outstanding shares of our common stock gave
approval to the amendment to our Articles of Incorporation pursuant to a written
consent. The increase in our authorized capital and the creation of the
preferred shares was filed with the Nevada Secretary of State on November 21,
2006.

The purpose of increasing our authorized capital to 250,000,000
shares of common stock is to optimize the long term future growth potential of
our organization on a share structure basis without requiring additional
shareholder approvals to enable for the long term expansion of our business
mandate. Specifically this will provide for other equity financing requirements
we may have for the long term as well as for the development, expansion and
additional acquisition of international oil and gas properties that fit within
our mandated business objectives.

Our executive office is located at Suite 2703  550 Pacific
Street, Vancouver, British Columbia, Canada and our telephone number is
604.607.1677.

Our Current Business

We are an independent energy company specialized in capturing
international and domestic business opportunities including, but not limited to,
the acquisition and exploration of oil and natural gas properties in South
America; primarily in the region of Argentina. As an emerging junior upstream
and midstream oil and natural gas company, our objectives through the activities
of our wholly owned subsidiaries, Petrogen, Inc., Pluris BVI and Pluris
Sarmiento Petroleo SA , are to focus upon acquiring oil and natural gas
prospects in what we believe to be high impact hydrocarbon rich regions in
Argentina with the intent of successfully fulfilling our business mandate of
finding hydrocarbons through planned operational activities acceptable to the
standards of the energy industry . Our core business strategy was redefined in
mid-2006 to acquire non-operated and operated working interests in oil and gas
fields throughout South America and particularly Argentina that display the
potential of fulfilling the basis of our business mandate and that can provide
for the potential of high yield returns on hydrocarbon related income
opportunities for our shareholders.

Argentina

On August 18, 2006, our company entered into a share purchase
agreement (the SPA) with four individuals to purchase all the issued and
outstanding shares of San Enrique Petrolera, S.A. (SEPSA), incorporated under
the laws of Argentina for the agreed upon acquisition price of $44 million. The
SEPSA acquisition marks our first step in engaging our newly mandated business
plans to acquire a working interest in producing oil and gas properties located
in Argentinas hydrocarbon regions. SEPSAs interests include five hydrocarbon
producing properties located in three of Argentinas five oil and gas producing
basins. In order to secure the rights to purchase SEPSA, an escrow agreement
(the Escrow) was entered into among our company, SEPSA and Deutsch Bank Trust
Company Americas, New York (DB), whereby we issued a $3,225,000 convertible,
non-retractable redeemable unsecured bond (the Bond) in the name of Pluris
Energy Group Inc., a British Virgin Islands corporation (Pluris BVI), which
has been placed into the Escrow at DB. Terms of the Escrow stipulate certain
conversion provisions of the Bond predicated upon the performance of both SEPSA
and our company. Terms under the SPA pursuant to the Bond stipulate that in the
event that we do not perform under the SPA terms agreed upon between us and
SEPSA, that ownership of the Bond can be transferred from Pluris BVI to SEPSA.
Currently, we believe that we have performed specific to the terms of the SPA as
it relates to the Bond stipulations there under and there is no matter that
could be or has been raised by us or SEPSA that would result in our having to
transfer ownership of the Bond to SEPSA. In the event that the Bond is
transferred from our company to SEPSA, SEPSA will retain certain privileges of
Bond conversion into common shares of our company at prices ranging from $3.25
per common share to $9.25 per common share. The Bond is due in five years time
at an interest rate of LIBOR plus 5%, with a floor of 10.5% and a ceiling of
13%. Interest on the Bond can be paid in common share equity of our company at
our companys discretion. This Bond will not be considered issued and
outstanding for accounting purposes until such time as the Bond is transferred
to SEPSA.

One of the five properties owned by SEPSA, known as Tierra Del
Fuego (TDF) is the subject of a Joint Venture

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agreement (the JV) with four other JV participants, each of
which possesses a Right of First Refusal (the ROFR) to purchase SEPSAs
interest in TDF under a match or pass status. In October of 2006, SEPSA
provided the four JV participants to TDF, notification of our company having won
the bid to purchase SEPSA, and under such notification, those JV participants
were provided with 30 days to match our companys allocation on the TDF
property, or pass on their ROFR, thereafter enabling us to complete our
acquisition of SEPSA, inclusive of all or part of SEPSAs interests in the TDF
property. Prior to the end of that 30 day notification period, two of the four
JV participants commenced proceedings against SEPSA in the Argentine Commercial
Courts seeking intermediary action in regard to their rights under the terms of
the JVs ROFR. On March 22, 2007 we were advised by SEPSA that as an outcome to
those proceedings, two injunctions were imposed by the Argentina National
Commercial Court of Appeals on behalf of Apco Argentina Inc. (Apco) and Antrim
Energy Inc. (Antrim) prohibiting the sale of SEPSAs shares to our company
until such time as the ROFR issues between SEPSA, Apco and Antrim are
resolved.

As a result of the Injunctions imposed by Apco and Antrim,
based upon the confirmation by the National Commercial Court of Appeals of the
injunctions, on April 23, 2007, we informed SEPSAs shareholders that they
should abstain from selling or disposing in any manner to any third party any of
SEPSAs shares that SEPSA has undertaken to sell to our company under the terms
of the SPA and that SEPSA should abstain from disposing any of the assets it
owned at the time the SPA was signed. In response, SEPSA informed our company of
its unilateral repudiation of the SPA, stating that as an effect of the
injunctions imposed by Apco and Antrim, certain terms of the SPA were triggered,
rendering the SPA terminated. We maintain that the terms of the SPA clearly
stipulate that any dispute arising under the SPA must be mutually addressed
between us and SEPSA through the International Chamber of Commerce, Paris,
France. Therefore, we commenced an arbitral action against SEPSA through The
Secretariat of the Court, International Court of Arbitration, International
Chamber of Commerce, Paris, France (the ICC), requesting the ICC to enforce
SEPSAs obligations under the terms agreed upon in the SPA and to sell 100% of
the shares of SEPSA and that their other obligations set forth under the SPA are
in full force and effect and to award damages incurred by us.

In December of 2007, SEPSA and our company agreed to abide by a
specific set of principles related to the arbitral proceedings referred to as
Terms of Reference (the TOR), whereby SEPSA and our company mandated to the
ICC under the TOR the prevailing issues that the ICC should address related to
both parties positions related to the SPA and to what specific issues the ICC
should make declarations under related to the arbitral proceedings between SEPSA
and our company. Under the TOR, SEPSA, our company and the ICC agreed to a
specific schedule whereby our company and SEPSA must submit to the ICC specific
materials requested of us and SEPSA by the ICC at specific dates in order to
move the arbitral process towards a conclusion. As at the date of this filing,
our company and SEPSA have filed our respective offerings of evidence related to
our specific claims and counter claims. In this regard, we have made an initial
claim of damages in the estimated amount of $46.4 million for loss of revenue
from July 1, 2006; loss of business opportunity related to increases to the
values of assets owned and/or controlled by SEPSA and loss of out of pocket
expenses from the inception of our efforts to win the bid for and complete the
acquisition of SEPSA. SEPSA has filed an initial counter claim in the amount of
$150,000 for recovery of its legal expenses and translation fees incurred to
date related to the dispute between it and our company.

On January 16th, 2009 we were advised by our
Argentine council that we received a favourable Arbitration Award from the ICC.
The twenty-nine page docket rendered by the ICC binding the parties to the
Award, approved by majority, determines that the SPA is terminated retroactively
to October 31, 2006. It further determines that the SPA's early termination was
seventy percent (70%) the responsibility of San Enrique and thirty percent (30%)
the responsibility of Pluris Energy.

Prior to the date of this filing, the parties to the arbitral
proceedings were summoned by the arbitral tribunal, whereby the tribunal advised
the parties that they would shortly be making a determination of and request
from both SEPSA and our company, to provide our final damages claims to the ICC
in the form that they require as a means for the tribunal to determine its final
overall damages rendering related to the dispute. To our best knowledge, the
responsibility in the final damages award anticipated from the ICC, which will
be rendered by the tribunal based upon their exclusive assessment of all the
evidence offered by the parties related to the dispute, would be allocated in
the same proportion as the results from the partial award recently received from
the ICC. The partial award rendering further stated that the final damages award
would be provided to the parties in the second quarter of 2009 ; however, there
is no determination as to the length of time necessary for the ICC to make its
final determination

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pursuant to the final damages award and, in that regard; we do
not know what the final damages award may comprise. We believe that our position
related to the claim we filed against SEPSA is substantive and that the issues
pertaining to and being sought for resolution by us through the arbitral
proceedings between us and SEPSA can be resolved in a manner that represents the
best interests of our company.

We have chosen to suspend a planned offering of a $65,000,000
convertible, non-retractable, redeemable, unsecured bond instrument (the $65M
Bonds) until such time as the outcome of the ROFR issues, injunctions and
arbitral proceedings are clear, pursuant to which we will consider recommencing
the offering wherein the capital raised will be used to close the acquisition of
SEPSA and finance the acquisition of additional international revenue producing
oil and gas assets located in South America. To date, no proceeds have been
accepted from this offering and therefore, we have no current payment burdens
associated with the offering. When the legal issues surrounding SEPSA have been
resolved or at a time when we are able to enter into a new business opportunity
agreement that establish our rights to purchase a similar revenue producing
asset base to that of SEPSA, we will consider reestablishing offering of the
$65M Bonds. As of the date of this filing, we are reviewing the necessity of the
Bonds in consideration of the recent ICC partial award rendering and will make a
final decision shortly as whether to carry on the administrative functions
underlying the Bonds.

On October 31, 2007, we entered into a letter of intent (the
LOI) with Clear S.R.L. (Clear), of Comodoro Rivadavia, Argentina, whereby we
were granted the exclusive right to purchase and develop up to 100% of Clears
186 square kilometre Cerro Negro concession, located in the Chubut Province,
Golfo San Jorge Basin, Argentina (the Concession). Under the terms of the LOI,
we have the right to purchase Cerro Negro for an agreed upon price, subject to
the satisfactory outcome of due diligence performed by us related to Cerro
Negro, which includes commercial, financial, geologic, geophysical and petroleum
engineering analysis. Upon our satisfaction of the due diligence review
performed by us and our agents as described, we retain the right to provide to
Clear our binding offer to purchase Cerro Negro, the terms of which shall be
memorialized through a mutually acceptable Purchase and Sale Agreement (the
PSA) negotiated between us and Clear. Upon entering into the PSA, we will have
a specified period of time pursuant to the terms of the PSA to complete the
acquisition of Cerro Negro. Upon completion of the acquisition of Cerro Negro,
if and when this occurs, we intend to commence drilling, development and
expansion of Cerro Negro concession. We have completed our due diligence review
over the Cerro Negro acquisition opportunity, and are at the final stages of
negotiating the mutually acceptable PSA, which we anticipate to execute shortly.
In connection with the LOI for the purchase and development of Clears Cerro
Negro concession, our subsidiary Pluris BVI issued an US$840,000 convertible,
non-retractable redeemable unsecured bond (the CN Bond) to Pluris BVI as
security under the LOI. In the event that we do not perform under the LOI,
ownership of the CN Bond can be transferred from Pluris BVI to Clear. At the
date of this filing, we believe that our performance under the terms of the LOI
as it relates to the CN Bond has been effectively undertaken and we further
believe that pursuant to those undertakings being effectively administered by us
according to the terms of the LOI, there are no matters there from that could
result in our having to transfer ownership of the CN Bond to Clear. The CN Bond
may be converted into common shares of our company at prices ranging from $3.25
per common share to $9.25 per common share. The CN Bonds maturity date is
September 30, 2011 and the interest rate is LIBOR plus 5%, with a floor of 10.5%
and a ceiling of 13%. Interest under the CN bond can be converted into common
shares of our company at our discretion. If we complete the acquisition of Cerro
Negro as planned and/or continue to perform under the terms of the LOI, the CN
Bond is to be returned to our treasury and cancelled.

The Company entered into an Assignment Agreement dated July 4,
2008 (the "Agreement") with Clear to purchase 75% of Clears operating
exploration and exploitation rights in the Concession. In consideration of the
assignment of rights in the Concession, the Company agreed to pay a total of
$21,000,000 cash, payable in installments as set out in the Agreement and issue
Clear an aggregate of 3,000,000 shares of the Companys common stock issuable in
installments as set out in the Agreement. The Concession is valid for a term
expiring on December 1, 2025 and is renewable for a five-year period.

Conditions for the Company and Clear (the Parties) of closing
the agreement are as follows:

| | i.  | the Parties must obtain consent for the assignment of
      Clear's interest in the Concession from Petrominera Chubút S.E.;
| | --- | ----------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                             
| | ii. | the Parties must undertake their best efforts to enter
      into a joint operating agreement to govern the                 

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| |      | operations on the Concession pursuant to which Company or
      its nominee will be the operator on the property; and
| | ---- | ---------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                      
| | iii. | the Company must have obtained a bank guarantee,
      guaranteeing the installments owed under the
Agreement.       

The parties agreed to close the transaction no later than 150
days from the execution date (the "Closing Date") and the Company agreed to
undertake its best efforts to close within 90 days of the execution date of the
Agreement. In the event closing does not occur by the Closing Date, and the
Parties have not extended the term of the agreement on a mutual basis, the
Company may be liable under certain conditions of the Agreement for any interest
accrued under the Agreement at an annual rate of 5.5% and must sign over a bond
issued in the name of the Company in the amount of $840,000 as a guarantee of
its obligations under the Agreement. If closing does not occur due to the
inability to obtain the consent of Petrominera Chubut S.E. then the closing may
take place 60 days following the expiration of the initial 150 day period.

As of the date of this filing, we have undergone substantial
delays to the funding mandate related to the acquisition of the Cerro Negro
concession due to the severity of the international economic and financial
crisis. As a result, we have yet to raise the necessary capital to date to
acquire the Concession as mandated by us with the assistance of Standard
Americas and Standard Bank Plc (Standard), whereby Standard has been seeking
an equity capital infusion of some $50 million on behalf of our company to
complete the Cerro Negro acquisition and to commence operations there. As a
result of the financial crisis, we have concluded that under the current market
conditions only a 100% acquisition of the Cerro Negro concession is plausible.
Therefore, we have undertaken extensive discussions with Clear to those ends
where they currently await our proposal for our acquisition of a 100% interest
in the Concession. We are currently reviewing several options related to
structuring our proposal to Clear in this regard and anticipate that we will
submit same to them shortly.

Aside from the Closing Date being delayed due to the
circumstances as above noted, both parties to the Agreement have concluded that
as of the date of this filing the Company continues to maintain ownership of the
Bond. We can seek return to treasury of the Bond at any time when necessary. To
date, we have not received timely approval from Petrominera Chubút SE of our
company as incoming operator over the Concession.

On December 21, 2007, we entered into a letter of intent
acquisition agreement (the Agreement) to acquire 100% of the shares of a
Buenos Aires, Argentina based oil development and production company (the
BAO). BAO controls leasehold interests primarily located in the Neuquén Basin,
Rio Negro Province, Argentina. Under the terms of the Agreement, we had the
right to purchase 100% of the shares of BAO at an agreed upon price (that we are
contractually obliged to not disclose until completion of the acquisition of BAO
occurs), subject to the satisfactory outcome of due diligence related to BAO
performed by us, which includes corporate, commercial, financial, geologic,
geophysical and petroleum engineering analysis. Upon our satisfaction of the due
diligence review performed by us and our agents as above described, we agreed
with BAO to negotiate and execute a mutually acceptable Share Purchase Agreement
(the BAO SPA) among our company, BAO and the shareholders of BAO. As of the
date of this filing, however, BAO has been unable to display its capacity to
secure the necessary extensions over portions of its concession interests from
the Argentine provincial authorities as they represented they would. We have
therefore, ceased any further discussions with BAO or activities related to our
ongoing interests in the acquisition of BAO.

United States

On September 10, 2007, we received a demand notice (the
Demand) for the immediate payment of a Senior Secured Convertible Note (the
Note) in the amount of $75,000 plus accrued interest. The Note carried a
guaranteed security agreement (GSA) over the assets of one of our
subsidiaries, Petrogen, Inc. (Petrogen) as collateral to the GSA. Due to the
financial circumstances of Petrogen at the time of receipt of the Demand, the
Note could not be repaid. After Petrogens default under the Note, the Note
holder exercised its right to accept the collateral described in the GSA in full
satisfaction of Petrogens obligation to the Note holder. The Note holder sent
to Petrogen a properly authenticated proposal to accept Petrogens collateral in
full satisfaction of the above described debt as required by the TEXAS BUSINESS
& COMMERCE CODE, §9.620. On October 8, 2007 our company and Petrogen
consented to the proposal, also required under the statute. The Note holders
subsequent acceptance of the collateral in full satisfaction of the obligation
it secures: (a) discharges Petrogens, obligation to

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the extent consented to by Petrogen; (b) transfers to the
secured party all of Petrogens rights in the collateral; (c) discharges the
security interest lien over Petrogen; and (d) terminates any subordinate
security interest or other subordinate liens over Petrogen by other third party
creditors. The collateral is now the Note holders property. In this regard,
Petrogen no longer owns any assets in the United States and any remaining
financial obligations of Petrogen are subject to the conditions set forth under
the TEXAS BUSINESS & COMMERCE CODE, §9.620 and §9.622. On April 8, 2008,
Petrogen was wound-up and dissolved through filing for the dissolution with the
Colorado Secretary of State.

We plan to develop our new mandate to acquire operated and
non-operated oil and gas development opportunities through the acquisition of
interests in international high profile regions, and specifically within South
American regions of Argentina to build a strategic base of proven hydrocarbon
reserves and fossil fuel production opportunities that represent outstanding
growth possibilities for our shareholders over the immediate, near and long
term.

Research and Development

No research and development expenditures have been incurred,
either on our account or sponsored by customers, during the past three years.

Employees

As of May 15, 2009, we do not employ any persons on a full-time
or on a part-time basis. Mr. Sacha Spindler, our Chief Executive Officer, and
Mr. Sam Sen, our President, are primarily responsible for all of our day-to-day
operations. Other services are provided by outsourcing and management contracts.
As the need arises and funds become available, however, management may seek
employees as necessary in our best interests.

Competition

We operate in a highly competitive industry, competing with
major oil and gas companies, independent producers and institutional and
individual investors, which are actively seeking oil and gas properties
throughout the world together with the equipment, labor and materials required
to operate properties. Most of our competitors have financial resources, staff
and facilities substantially greater than ours. The principal area of
competition is encountered in the financial ability to acquire good acreage
positions and drill wells to explore for oil and gas, then, if warranted, drill
production wells and install production equipment. Competition for the
acquisition of oil and gas wells is intense with many oil and gas properties and
or leases or concessions available in a competitive bidding process in which we
may lack technological information or expertise available to other bidders.
Therefore, we may not be successful in acquiring and developing profitable
properties in the face of this competition. No assurance can be given that a
sufficient number of suitable oil and gas wells will be available for
acquisition and development.

Government Regulation

General

The production and sale of oil and gas are subject to various
federal, state and local governmental regulations, which may be changed from
time to time in response to economic or political conditions and can have a
significant impact upon overall operations. Matters subject to regulation
include discharge permits for drilling operations, drilling bonds, reports
concerning operations, the spacing of wells, unitization and pooling of
properties, taxation, abandonment and restoration and environmental protection.
These laws and regulations are under constant review for amendment or expansion.
From time to time, regulatory agencies have imposed price controls and
limitations on production by restricting the rate of flow of oil and gas wells
below actual production capacity in order to conserve supplies of oil and gas.
Changes in these regulations could require us to expend significant resources to
comply with new laws or regulations or changes to current requirements and could
have a material adverse effect on us.

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Oil and Gas Regulation

The governmental laws and regulations which could have a
  material impact on the oil and gas exploration and production industry are as
  follows:

Drilling and Production

Our operations are subject to various types of regulation at
federal, state, local and Native American tribal levels. These types of
regulation include requiring permits for the drilling of wells, drilling bonds
and reports concerning operations. Most states, and some counties,
municipalities and Native American tribes, in which we operate also regulate one
or more of the following: (i) the location of wells; (ii) the method of drilling
and casing wells; (iii) the rates of production or allowables; (iv) the
surface use and restoration of properties upon which wells are drilled and other
third parties; (v) the plugging and abandoning of wells; and (vi) notice to
surface owners and other third parties.

State laws regulate the size and shape of drilling and spacing
units or proration units governing the pooling of oil and natural gas
properties. Some states allow forced pooling or integration of tracts to
facilitate exploration while other states rely on voluntary pooling of lands and
leases. In some instances, forced pooling or unitization may be implemented by
third parties and may reduce our interest in the unitized properties. In
addition, state conservation laws establish maximum rates of production from oil
and natural gas wells, generally prohibit the venting or flaring of natural gas
and impose requirements regarding the ratability of production. These laws and
regulations may limit the amount of natural gas and oil we can produce from our
wells or limit the number of wells or the locations at which we can drill.
Moreover, each state generally imposes a production or severance tax with
respect to the production and sale of oil, natural gas and natural gas liquids
within its jurisdiction.

Natural Gas Sales Transportation

Historically, federal legislation and regulatory controls have
affected the price of the natural gas we produce and the manner in which we
market our production. The Federal Energy Regulatory Commission (FERC) has
jurisdiction over the transportation and sale for resale of natural gas in
interstate commerce by natural gas companies under the Natural Gas Act of 1938
and the Natural Gas Policy Act of 1978.

FERC also regulates interstate natural gas transportation rates
and service conditions, which affects the marketing of natural gas that we
produce, as well as the revenues we receive for sales of our natural gas.
Commencing in 1985, FERC promulgated a series of orders, regulations and rule
makings that significantly fostered competition in the business of transporting
and marketing gas. Today, interstate pipeline companies are required to provide
nondiscriminatory transportation services to producers, marketers and other
shippers, regardless of whether such shippers are affiliated with an interstate
pipeline company. Under FERCs current regulatory regime, transmission services
must be provided on an open-access, non-discriminatory basis at cost-based rates
or at market-based rates if the transportation market at issue is sufficiently
competitive.

Mineral Act

The Mineral Leasing Act of 1920 (Mineral Act) prohibits
direct or indirect ownership of any interest in federal onshore oil and gas
leases by a foreign citizen of a country that denies similar or like
privileges to citizens of the United States. Such restrictions on citizens of a
non-reciprocal country include ownership or holding or controlling stock in a
corporation that holds a federal onshore oil and gas lease. If this restriction
is violated, the corporation's lease can be canceled in a proceeding instituted
by the United States Attorney General. Although the regulations of the Bureau of
Land Management (which administers the Mineral Act) provide for agency
designations of non-reciprocal countries, there are presently no such
designations in effect.

Environmental Regulation

Our activities will be subject to existing federal, state and
local laws and regulations governing environmental quality and pollution
control. Our operations will be subject to stringent environmental regulation by
state and federal authorities including the Environmental Protection Agency
(EPA). Such regulation can increase the cost of such activities. In most
instances, the regulatory requirements relate to water and air pollution control
measures.

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Waste Disposal

The Resource Conservation and Recovery Act (RCRA), and
comparable state statutes, affect oil and gas exploration and production
activities by imposing regulations on the generation, transportation, treatment,
storage, disposal and cleanup of hazardous wastes and on the disposal of
non-hazardous wastes. Under the auspices of the EPA, the individual states
administer some or all of the provisions of RCRA, sometimes in conjunction with
their own, more stringent requirements. Drilling fluids, produced waters, and
most of the other wastes associated with the exploration, development, and
production of crude oil, natural gas, or geothermal energy constitute solid
wastes, which are regulated under the less stringent non-hazardous waste
provisions, but there is no guarantee that the EPA or the individual states will
not adopt more stringent requirements for the handling of non-hazardous wastes
or categorize some non-hazardous wastes as hazardous for future regulation.

Comprehensive Environmental Response, Compensation and
Liability Act

The federal Comprehensive Environmental Response, Compensation
and Liability Act (CERCLA) imposes joint and several liability for costs of
investigation and remediation and for natural resource damages, without regard
to fault or the legality of the original conduct, on certain classes of persons
with respect to the release into the environment of substances designated under
CERCLA as hazardous substances (Hazardous Substances). These classes of
persons or potentially responsible parties include the current and certain past
owners and operators of a facility or property where there is or has been a
release or threat of release of a Hazardous Substance and persons who disposed
of or arranged for the disposal of the Hazardous Substances found at such a
facility. CERCLA also authorizes the EPA and, in some cases, third parties to
take actions in response to threats to the public health or the environment and
to seek to recover the costs of such action. Although CERCLA generally exempts
petroleum from the definition of Hazardous Substances in the course operations,
we may in the future generate wastes that fall within CERCLA's definition of
Hazardous Substances. We may also in the future become an owner of facilities on
which Hazardous Substances have been released by previous owners or operators.
We may in the future be responsible under CERCLA for all or part of the costs to
clean up facilities or property at which such substances have been released and
for natural resource damages.

Air Emissions

Our operations are subject to local, state and federal
regulations for the control of emissions of air pollution. Major sources of air
pollutants are subject to more stringent, federally imposed permitting
requirements. Administrative enforcement actions for failure to comply strictly
with air pollution regulations or permits are generally resolved by payment of
monetary fines and correction of any identified deficiencies. Alternatively,
regulatory agencies could require us to forego construction, modification or
operation of certain air emission sources.

Clean Water Act

The Clean Water Act (CWA) imposes restrictions and strict
controls regarding the discharge of wastes, including produced waters and other
oil and natural gas wastes, into waters of the United States, a term broadly
defined. Permits must be obtained to discharge pollutants into federal waters.
The CWA provides for civil, criminal and administrative penalties for
unauthorized discharges of oil, hazardous substances and other pollutants. It
imposes substantial potential liability for the costs of removal or remediation
associated with discharges of oil or hazardous substances. State laws governing
discharges to water also provide varying civil, criminal and administrative
penalties and impose liabilities in the case of a discharge of petroleum or its
derivatives, or other hazardous substances, into state waters. In addition, the
EPA has promulgated regulations that may require us to obtain permits to
discharge storm water runoff. In the event of an unauthorized discharge of
wastes, we may be liable for penalties and costs.

We believe that we are in substantial compliance with current
applicable environmental laws and regulations.

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RISK FACTORS

Much of the information included in this annual report includes
or is based upon estimates, projections or other forward-looking statements.
Such forward-looking statements include any projections or estimates made by us
and our management in connection with our business operations. While these
forward-looking statements, and any assumptions upon which they are based, are
made in good faith and reflect our current judgment regarding the direction of
our business, actual results will almost always vary, sometimes materially, from
any estimates, predictions, projections, assumptions, or other future
performance suggested herein. We undertake no obligation to update
forward-looking statements to reflect events or circumstances occurring after
the date of such statements.

Such estimates, projections or other forward-looking
statements involve various risks and uncertainties as outlined below. We
caution readers of this annual report that important factors in some cases have
affected and, in the future, could materially affect actual results and cause
actual results to differ materially from the results expressed in any such
estimates, projections or other forward-looking statements. In evaluating us,
our business and any investment in our business, readers should carefully
consider the following factors.

Risks Related to Our Business

Our business is difficult to evaluate because we have a
limited operating history.

In considering whether to invest in our common stock, you
should consider that there is only limited historical financial and operating
information available on which to base your evaluation of our performance. Our
inception was November 15, 2001 and, as a result, we have a limited operating
history.

We have a history of operating losses and there can be no
assurances we will be profitable in the future. We have a history of operating
losses, expect to continue to incur losses, and may never be profitable.
Further, we have been dependent on sales of our equity securities and debt
financing to meet our cash requirements. We have incurred losses from continuing
operations totaling approximately $21,897,888 from inception to December 31,
2008 and incurred losses from discontinued operations totaling approximately
$5,324,203 for the same period. As of December 31, 2008, we had an accumulated
deficit of $27,222,091 and a working capital deficit of $2,315,961. Further, we
do not expect positive cash flow from operations in the near term. There is no
assurance that actual cash requirements will not exceed our estimates. In
particular, additional capital may be required in the event that: (i) the costs
to acquire additional leases are more than we currently anticipate; (ii)
drilling and completion costs for additional wells increase beyond our
expectations; or (iii) we encounter greater costs associated with general and
administrative expenses or offering costs.

Our development of and participation in an increasingly larger
number of oil and gas prospects have required and will continue to require
substantial capital expenditures. The uncertainty and factors described
throughout this section may impede our ability to economically find, develop,
exploit, and acquire natural gas and oil reserves. As a result, we may not be
able to achieve or sustain profitability or positive cash flows from operating
activities in the future.

Our independent auditors report contains an explanatory
paragraph expressing substantial doubt about our ability to continue as a going
concern.

We have received a going concern opinion from our independent
auditors report. The independent auditor reports accompanying our December 31,
2008 and 2007 consolidated financial statements contains an explanatory
paragraph expressing substantial doubt about our ability to continue as a going
concern. The consolidated financial statements have been prepared on the
assumption that our company will continue as a going concern, which contemplates
that we will realize our assets and satisfy our liabilities and commitments in
the ordinary course of business. Our ability to continue as a going concern is
dependent on raising additional capital to fund our operations and ultimately on
generating future profitable operations. There can be no assurance that we will
be able to raise sufficient additional capital or eventually have positive cash
flow from operations to address all of our cash flow needs. If we are not able
to find alternative sources of cash or generate positive cash flow from
operations, our business and shareholders will be materially and adversely
affected.

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We will require additional funding in the future.

We will require additional funding in the future. Based upon
our historical losses from operations, we will require additional funding in the
future. If we cannot obtain capital through financings or otherwise, our ability
to execute our development plans and achieve production levels will be greatly
limited. Our current development plans require us to make capital expenditures
for the exploration and development of our oil and natural gas properties.
Historically, we have funded our operations through the issuance of equity and
short-term debt financing arrangements. We may not be able to obtain additional
financing on favorable terms, if at all. Our future cash flows and the
availability of financing will be subject to a number of variables, including
potential production and the market prices of oil and natural gas. Further, debt
financing could lead to a diversion of cash flow to satisfy debt-servicing
obligations and create restrictions on business operations. If we are unable to
raise additional funds, it would have a material adverse effect upon our
operations.

Our acquisitions may not be successful.

Our acquisitions may not be successful. As part of our growth
strategy, we intend to acquire additional oil and gas production properties.
Such acquisitions may pose substantial risks to our business, financial
condition, and results of operations. In pursuing acquisitions, we will compete
with other companies, many of which have greater financial and other resources
to acquire attractive properties. Even if we are successful in acquiring
additional properties, some of the properties may not produce revenues at
anticipated levels or failure to conduct drilling on prospects within specified
time periods may cause the forfeiture of the lease in that prospect. There can
be no assurance that we will be able to successfully integrate acquired
properties, which could result in substantial costs and delays or other
operational, technical, or financial problems. Further, acquisitions could
disrupt ongoing business operations. If any of these events occur, it would have
a material adverse effect upon our operations and results from operations.

The existence of material weaknesses/ineffective internal
control

We have identified the existence of significant deficiencies
constituting material weaknesses, which are described in greater detail in Item
9A below. A material weakness is a control deficiency, or combination of control
deficiencies, such that there is a reasonable possibility that a material
misstatement of the annual or interim financial statements will not be prevented
or detected on a timely basis. Effective internal controls are necessary for us
to provide reliable financial reports. If we cannot provide reliable financial
reports, our business and operating results could be harmed.

Our exploratory and development drilling and production
operations may not be successful.

Our exploratory and development drilling and production
operations may not be successful. There can be no assurance that our future
drilling activities will be successful, and we cannot be sure that our overall
drilling success rate or our production operations within a particular area will
not decline. We may not recover all or any portion of our capital investment in
the wells or the underlying leaseholds. Unsuccessful drilling activities would
have a material adverse effect upon our results of operations and financial
condition. The cost of drilling, completing, and operating wells is often
uncertain, and a number of factors can delay or prevent drilling operations
including: (i) unexpected drilling conditions; (ii) pressure or irregularities
in formation; (iii) equipment failures or accidents; (iv) adverse weather
conditions; and (iv) shortages or delays in availability of drilling rigs and
delivery of equipment.

Further, coal beds from which gas is produced may frequently
contain water, which may hamper any production of gas in commercial quantities.
The amount of gas that can be commercially produced depends upon the coal
quality, the original gas content of the coal seam, the thickness of the seam,
the reservoir pressure, the rate at which gas is released from the coal, and the
existence of any natural fractures through which the gas can flow to the well
bore. However, coal beds frequently contain water that must be removed in order
for the gas to detach from the coal and flow to the well bore. The average life
of a coal bed well is only five to six years. Ability to remove and dispose of
sufficient quantities of water from the coal seam will determine whether or not
production of gas can occur in commercial quantities.

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There is no guarantee that the potential drilling locations
that we have or acquire in the future will ever produce oil or natural gas,
which could have a material adverse effect upon our results of operations.

A decline in the price of our common stock could affect our
ability to raise further working capital and adversely impact our
operations.

A decline in the price of our common stock could affect our
ability to raise further working capital and adversely impact our operations.A decline in the price of our common stock could result in a reduction in
the liquidity of our common stock and a reduction in our ability to raise
additional capital for our operations. Because our operations to date have been
principally financed through the sale of equity securities, a decline in the
price of our common stock could have an adverse effect upon our liquidity and
our continued operations. A reduction in our ability to raise equity capital in
the future would have a material adverse effect upon our business plan and
operations, including our ability to continue our current operations. If our
stock price declines, we may not be able to raise additional capital or generate
funds from operations sufficient to meet our obligations.

We are a new entrant into the oil and gas industry.

We are a new entrant into the oil and gas industry without a
profitable operating history.Since November 15, 2001 (inception), our
activities have been limited to organizational efforts, obtaining working
capital and acquiring and developing a very limited number of properties. As a
result, there is limited information regarding production or revenue generation.
As a result, our future revenues may be limited.

As of the date of this annual report, our future development
focus is towards acquiring non-operated and operated working interests in
international producing oil and gas fields in the South American region of
Argentina. These prospects are still in the development stage, and estimates
made at this time as to proved or probable oil and natural gas reserves cannot
be guaranteed that sufficient reserves will be maintained or new reserves
discovered for production. The absence of reporting a sustained production
history provides risk regarding independent reserve estimates. Property lease
positions in other locations that have been acquired by us are unproven, having
little to no production, which prevents us from assigning any proved or probable
reserves to these other properties.

Prospects that we decide to drill may not yield natural gas
or oil in commercially viable quantities.

Prospects that we decide to drill may not yield natural gas or
oil in commercially viable quantities.Our prospects are in various
stages of evaluation, ranging from prospects that are ready to drill to
prospects that will require substantial additional seismic data processing and
interpretation. However, the use of seismic data and other technologies and the
study of producing fields in the same area will not enable us to know
conclusively prior to drilling and testing whether natural gas or oil will be
present or, if present, whether natural gas or oil will be present in sufficient
quantities to recover drilling or completion costs or to be economically viable.
If we drill wells that we identify as dry holes in our current and future
prospects, our drilling success rate may decline and materially harm our
business. In sum, the cost of drilling, completing and operating any wells is
often uncertain and new wells may not be productive.

We are substantially dependent upon our acquisition plans
related to hydrocarbon interests in Argentina.

We are substantially dependent upon our acquisition plans
related to hydrocarbon interests in Argentina, which causes our risk to be
concentrated.As a result, we may be disproportionately exposed to the
impact of delays or interruptions of production from these wells caused by
significant governmental regulation, transportation capacity constraints,
curtailment of production or interruption of transportation of natural gas
produced from the wells.

Properties that we acquire may not produce as
projected.

Properties that we buy may not produce as projected and we may
be unable to determine reserve potential, identify liabilities associated with
the properties or obtain protection from sellers against them.One of our
growth strategies is to capitalize on opportunistic acquisitions of oil and
natural gas reserves. However, our reviews of acquired properties are inherently
incomplete because it generally is not feasible to review in depth every
individual property

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involved in each acquisition. A detailed review of records and
properties may not necessarily reveal existing or potential problems, nor will
it permit a buyer to become sufficiently familiar with the properties to assess
fully their deficiencies and potential. Further, environmental problems, such as
ground water contamination, are not necessarily observable even when an
inspection is undertaken. Acquiring properties with liabilities would have a
material adverse effect upon our results of operations.

The potential profitability of oil and gas ventures depends
upon factors beyond our control.

The potential profitability of oil and gas ventures depends
upon factors beyond our control.The potential profitability of oil and
gas properties is dependent upon many factors beyond our control. For instance,
world prices and markets for oil and gas are unpredictable, highly volatile,
potentially subject to governmental fixing, pegging, controls, or any
combination of these and other factors, and respond to changes in domestic,
international, political, social, and economic environments. Additionally, due
to worldwide economic uncertainty, the availability and cost of funds for
production and other expenses have become increasingly difficult, if not
impossible, to project. These and other changes and events may materially affect
our financial performance.

Adverse weather conditions can also hinder drilling operations.
A productive well may become uneconomic in the event water or other deleterious
substances are encountered which impair or prevent the production of oil and/or
gas from the well. In addition, production from any well may be unmarketable if
it is impregnated with water or other deleterious substances. The marketability
of oil and gas, which may be acquired or discovered will be affected by numerous
factors beyond our control. These factors include, but are not limited to, the
proximity and capacity of oil and gas pipelines and processing equipment, market
fluctuations of prices, taxes, royalties, land tenure, allowable production and
environmental protection. These factors cannot be accurately predicted and the
combination of these factors may result in us not receiving an adequate return
on our invested capital.

We are dependent upon transportation and storage services
provided by a third party.

We are and will continue to be dependent upon transportation
and storage services provided by third parties.We will be dependent on
the transportation and storage services offered by various interstate and
intrastate pipeline companies for the delivery and sale of our oil and gas
supplies. Both the performance of transportation and storage services by
interstate pipelines and the rates charged for such services are subject to the
jurisdiction of the Federal Energy Regulatory Commission or state regulatory
agencies. An inability to obtain transportation and/or storage services at
competitive rates could hinder our processing and marketing operations and/or
affect our sales margins.

Our results of operation are dependent upon market
prices.

Our results of operations are dependent upon market prices for
oil and natural gas, which fluctuate widely and are beyond our control.Our revenue, profitability, and cash flow depend upon the prices and demand
for oil and natural gas. The markets for these commodities are very volatile and
even relatively modest drops in prices can significantly affect our financial
results and impede our growth. Prices received also will affect the amount of
future cash flow available for capital expenditures and may affect our ability
to raise additional capital. Lower prices may also affect the amount of natural
gas and oil that can be economically produced from reserves either discovered or
acquired.

Factors that can cause price fluctuations include: (i) the
level of consumer product demand; (ii) weather conditions; (iii) domestic and
foreign governmental regulations; (iv) the price and availability of alternative
fuels; (v) technical advances affecting energy consumption; (vi) proximity and
capacity of oil and gas pipelines and other transportation facilities; (vii)
political conditions in natural gas and oil producing regions; (viii) the
domestic and foreign supply of natural gas and oil; (ix) the ability of members
of Organization of Petroleum Exporting Countries to agree to and maintain oil
price and production controls; (x) the price of foreign imports; and (xi)
overall domestic and global economic conditions.

The availability of a ready market for our oil and gas
depends upon numerous factors beyond our control.

The availability of a ready market for our oil and gas depends
upon numerous factors beyond our control, including the extent of domestic
production and importation of oil and gas, the relative status of the domestic
and international

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economies, the proximity of our properties to gas gathering
systems, the capacity of those systems, the marketing of other competitive
fuels, fluctuations in seasonal demand and governmental regulation of
production, refining, transportation and pricing of oil, natural gas and other
fuels.

The oil and gas industry involves many operating risks that
can cause substantial losses.

The oil and gas industry in which we operate involves many
operating risks that can cause substantial losses.Our drilling
activities are subject to many risks, including the risk that we will not
discover commercially productive reservoirs. Drilling for oil and natural gas
can be unprofitable, not only from dry holes, but from productive wells that do
not produce sufficient revenues to return a profit. In addition, our drilling
and producing operations may be curtailed, delayed or canceled as a result of
other factors, including: (i) fires; (ii) explosions; (iii) blow-outs and
surface cratering; (iv) uncontrollable flows of underground natural gas, oil, or
formation water; (v) natural disasters; (vi) facility and equipment failures;
(vii) title problems; (viii) shortages or delivery delays of equipment and
services; (ix) abnormal pressure formations; and (x) environmental hazards such
as natural gas leaks, oil spills, pipeline ruptures and discharges of toxic
gases.

If any of these events occur, we could incur substantial losses
as a result of: (i) injury or loss of life; (ii) severe damage to and
destruction of property, natural resources or equipment; (iii) pollution and
other environmental damage; (iv) clean-up responsibilities; (v) regulatory
investigation and penalties; (vi) suspension of our operations; or (vii) repairs
necessary to resume operations. If we were to experience any of these problems,
it could affect well bores, gathering systems and processing facilities, any one
of which could adversely affect our ability to conduct operations. We may be
affected by any of these events more than larger companies, since we have
limited working capital. We currently do not maintain liability insurance on
bodily injury, which would include coverage for pollution, environmental damage
and chemical spills. For other risks, we may further elect not to obtain
insurance if we believe the cost of available insurance is excessive relative to
the risks presented. In addition, pollution and environmental risks generally
are not fully insurable. If a significant accident or other event occurs and is
not covered by insurance, it could adversely affect operations. Moreover, even
if we obtained insurance in the future, we cannot provide assurance that we
would be able to maintain adequate insurance at rates considered reasonable.

The oil and gas industry is highly competitive.

The oil and gas industry is highly competitive and there is no
assurance that we will be successful in acquiring the leases.The oil and
natural gas industry is intensely competitive, and we compete with other
companies that have greater resources. Many of these companies not only explore
for and produce oil and natural gas, but also carry on refining operations and
market petroleum and other products on a regional, national or worldwide basis.
These companies may be able to pay more for productive oil and natural gas
properties and exploratory prospects or define, evaluate, bid for and purchase a
greater number of properties and prospects than our financial or human resources
permit. In addition, these companies may have a greater ability to continue
exploration activities during periods of low oil and natural gas market prices.
Our larger competitors may be able to absorb the burden of present and future
federal, state, local and other laws and regulations more easily than we can,
which would adversely affect our competitive position. Our ability to acquire
additional properties and to discover reserves in the future will be dependent
upon our ability to evaluate and select suitable properties and to consummate
transactions in a highly competitive environment. In addition, because we have
fewer financial and human resources than many companies in our industry, we may
be at a disadvantage in bidding for exploratory prospects and producing oil and
natural gas properties.

There can be no assurance we will be able to obtain drilling
equipment.

There can be no assurance we will be able to obtain drilling
equipment to meet our drilling requirements. We may experience delays in
obtaining drilling rigs due to the high drilling demand in the areas where we
have been concentrating our oil and gas targeted production and leasing
programs. There can be no assurance that we will be able to obtain the requisite
drilling equipment to meet our planned drilling initiatives according to our
timetable. In the event that we are unable to obtain drilling equipment to
conduct our exploration operations, it could have a material adverse effect upon
our business and our results of operations.

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The marketability of natural resources will be affected by
numerous factors.

The marketability of natural resources will be affected by
numerous factors beyond our control which may result in us not receiving an
adequate return on invested capital to be profitable or viable.The
marketability of natural resources which may be acquired or discovered by us
will be affected by numerous factors beyond our control. These factors include
market fluctuations in oil and gas pricing and demand, the proximity and
capacity of natural resource markets and processing equipment, governmental
regulations, land tenure, land use, regulation concerning the importing and
exporting of oil and gas and environmental protection regulations. The exact
effect of these factors cannot be accurately predicted, but the combination of
these factors may result in us not receiving an adequate return on invested
capital to be profitable or viable.

Oil and gas operations are subject to comprehensive
regulation.

Oil and gas operations are subject to comprehensive regulation
which may cause substantial delays or require capital outlays in excess of those
anticipated causing an adverse effect on us. Oil and gas operations are subject
to federal, state, and local laws relating to the protection of the environment,
including laws regulating removal of natural resources from the ground and the
discharge of materials into the environment. Oil and gas operations are also
subject to federal, state, and local laws and regulations which seek to maintain
health and safety standards by regulating the design and use of drilling methods
and equipment. Various permits from government bodies are required for drilling
operations to be conducted; no assurance can be given that such permits will be
received. Environmental standards imposed by federal, provincial, or local
authorities may be changed and any such changes may have material adverse
effects on our activities. Moreover, compliance with such laws may cause
substantial delays or require capital outlays in excess of those anticipated,
thus causing an adverse effect on us. Additionally, we may be subject to
liability for pollution or other environmental damages which we may elect not to
insure against due to prohibitive premium costs and other reasons. To date we
have not been required to spend material amounts on compliance with
environmental regulations. However, we may be required to do so in the future
and this may affect our ability to expand or maintain our operations.

Exploration and production activities are subject to
environmental regulations.

Exploration and production activities are subject to certain
environmental regulations which may prevent or delay the commencement or
continuance of our operations.In general, our exploration and production
activities are subject to certain federal, state and local laws and regulations
relating to environmental quality and pollution control. Such laws and
regulations increase the costs of these activities and may prevent or delay the
commencement or continuance of a given operation. Compliance with these laws and
regulations has not had a material effect on our operations or financial
condition to date. Specifically, we are subject to legislation regarding
emissions into the environment, water discharges and storage and disposition of
hazardous wastes. In addition, legislation has been enacted which requires well
and facility sites to be abandoned and reclaimed to the satisfaction of state
authorities. However, such laws and regulations are frequently changed and we
are unable to predict the ultimate cost of compliance. Generally, environmental
requirements do not appear to affect us any differently or to any greater or
lesser extent than other companies in the industry.

We believe that our operations comply in all material respects
with all applicable environmental regulations. However, we are not insured
against all possible environmental risks.

Any change to government regulation/administrative practices
may have a negative impact on our ability to operate and our
profitability.

Any change to government regulation/administrative practices
may have a negative impact on our ability to operate and our profitability.The laws, regulations, policies or current administrative practices of any
government body, organization or regulatory agency in the United States or any
other jurisdiction, may be changed, applied or interpreted in a manner which
will fundamentally alter our ability to carry on business. The actions, policies
or regulations, or changes thereto, of any government body or regulatory agency,
or other special interest groups, may have a detrimental effect on us. Any or
all of these situations may have a negative impact on our ability to operate
and/or our profitably.

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We may be unable to retain key employees or
consultants.

We may be unable to retain key employees or consultants or
recruit additional qualified personnel.Our extremely limited personnel
means that we would be required to spend significant sums of money to locate and
train new employees in the event any of our employees resign or terminate their
employment with us for any reason. Due to our limited operating history and
financial resources, we are entirely dependent on the continued service of Mr.
Sacha Spindler, our Chief Executive Officer, and Mr. Sam Sen, our President.
Further, we do not have key man life insurance on either of these individuals.
We may not have the financial resources to hire a replacement if one or both of
our officers were to die. The loss of service of either of these employees could
therefore significantly and adversely affect our operations.

Certain of our officers and directors each devote over 50%
of their working time to other business endeavors.

Our officers and directors may be subject to conflicts of
interest.Certain of our officers and directors serve only part time and
are subject to conflicts of interest. Certain of these officers and directors
each devote part of his working time to other business endeavors. These business
endeavors as well as other business opportunities should be presented to the
company. Such conflicts include deciding how much time to devote to our affairs,
as well as what business opportunities should be presented to the company.
Because of these relationships, our officers and directors may be subject to
conflicts of interest.

Risks Related to our Common Stock

Sales of a substantial number of share or our common stock
into the public market may result in significant downward pressure on the price
of our common stock.

Sales of a substantial number of shares of our common stock
into the public market by certain stockholders may result in significant
downward pressure on the price of our common stock and could affect your ability
to realize the current trading price of our common stock. Sales of a substantial
number of shares of our common stock in the public market by certain
stockholders could cause a reduction in the market price of our common stock. As
of May 15, 2009, we have 39,009,045 shares of common stock issued and
outstanding. There are 22,987,687 outstanding shares of our common stock that
are restricted securities as that term is defined in Rule 144 under the
Securities Act. Although the Securities Act and Rule 144 place certain
prohibitions on the sale of restricted securities, restricted securities may be
sold into the public market under certain conditions. Further, as of December
31, 2008, there are an aggregate of 3,382,000 stock options and 4,938,152
warrants outstanding.

Any significant downward pressure on the price of our common
stock as certain stockholders sell their shares of our common stock could
encourage short sales by the selling stockholders or others. Any such short
sales could place further downward pressure on the price of our common stock.

The trading price of our common stock on the OTC Bulletin
Board has been and may continue to fluctuate significantly.

The trading price of our common sock on the OTC Bulletin Board
has been and may continue to fluctuate significantly and stockholders may have
difficulty reselling their shares. During fiscal years ended December 31, 2008
and December 31, 2007, our common stock has traded as low as $0.06 and as high
as $1.24. In addition to volatility associated with OTC Bulletin Board
securities in general, the value of your investment could decline due to the
impact of any of the following factors upon the market price of our common
stock: (i) changes in the world wide price for oil or natural gas; (ii)
disappointing results from our discovery or development efforts; (iii) failure
to meet our revenue or profit goals or operating budget; (iv) decline in demand
for our common stock; (v) downward revisions in securities analysts' estimates
or changes in general market conditions; (vi) technological innovations by
competitors or in competing technologies; (vii) lack of funding generated for
operations; (viii) investor perception of our industry or our prospects; and
(ix) general economic trends.

In addition, stock markets have experienced extreme price and
volume fluctuations and the market prices of securities have been highly
volatile. These fluctuations are often unrelated to operating performance and
may

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- 18 -

adversely affect the market price of our common stock. As a
result, investors may be unable to sell their shares at a fair price and you may
lose all or part of your investment.

Our stock is a penny stock. Trading of our stock may be
restricted by the SECs penny stock regulations which may limit a stockholders
ability to buy and sell our stock.

Our stock is a penny stock. The Securities and Exchange
Commission has adopted Rule 15g-9 which generally defines penny stock to be
any equity security that has a market price (as defined) less than $5.00 per
share or an exercise price of less than $5.00 per share, subject to certain
exceptions. Our securities are covered by the penny stock rules, which impose
additional sales practice requirements on broker-dealers who sell to persons
other than established customers and accredited investors. The term
accredited investor refers generally to institutions with assets in excess of
$5,000,000 or individuals with a net worth in excess of $1,000,000 or annual
income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock
rules require a broker-dealer, prior to a transaction in a penny stock not
otherwise exempt from the rules, to deliver a standardized risk disclosure
document in a form prepared by the SEC which provides information about penny
stocks and the nature and level of risks in the penny stock market. The
broker-dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction and monthly account statements showing the market
value of each penny stock held in the customers account. The bid and offer
quotations, and the broker-dealer and salesperson compensation information, must
be given to the customer orally or in writing prior to effecting the transaction
and must be given to the customer in writing before or with the customers
confirmation. In addition, the penny stock rules require that prior to a
transaction in a penny stock not otherwise exempt from these rules, the
broker-dealer must make a special written determination that the penny stock is
a suitable investment for the purchaser and receive the purchasers written
agreement to the transaction. These disclosure requirements may have the effect
of reducing the level of trading activity in the secondary market for the stock
that is subject to these penny stock rules. Consequently, these penny stock
rules may affect the ability of broker-dealers to trade our securities. We
believe that the penny stock rules discourage investor interest in and limit the
marketability of our common stock.

The Financial Industry Regulatory Authority, or FINRA, has
adopted sales practice requirements which may also limit a stockholder's ability
to buy and sell our stock.

In addition to the penny stock rules described above, FINRA
has adopted rules that require that in recommending an investment to a customer,
a broker-dealer must have reasonable grounds for believing that the investment
is suitable for that customer. Prior to recommending speculative low priced
securities to their non-institutional customers, broker-dealers must make
reasonable efforts to obtain information about the customer's financial status,
tax status, investment objectives and other information. Under interpretations
of these rules, FINRA believes that there is a high probability that speculative
low priced securities will not be suitable for at least some customers. FINRA
requirements make it more difficult for broker-dealers to recommend that their
customers buy our common stock, which may limit your ability to buy and sell our
stock and have an adverse effect on the market for our shares.

Additional issuances of equity securities may result in dilution
  to our existing shareholders.

Additional issuances of equity securities may result in
dilution to our existing stockholders. Our Articles of Incorporation authorize
the issuance of 250,000,000 shares of common stock and 100,000,000 shares of
preferred stock. The board of directors has the authority to issue additional
shares of our capital stock to provide additional financing in the future and
the issuance of any such shares may result in a reduction of the book value or
market price of the outstanding shares of our common stock. If we do issue any
such additional shares, such issuance also will cause a reduction in the
proportionate ownership and voting power of all other stockholders. As a result
of such dilution, if you acquire shares of our common stock, your proportionate
ownership interest and voting power could be decreased. Further, any such
issuances could result in a change of control.

As of March 6, 2006, our board of directors authorized and
approved the adoption of Performance Stock Incentive Plan (the Performance
Stock Incentive Plan), pursuant to which an aggregate of 6,000,000 restricted
shares of our common stock will be issued to certain officers, directors and
consultants. The 6,000,000 restricted shares of common stock are subject to an
escrow and can be acquired by the respective individual upon achievement by us
of

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- 19 -

certain milestones. See Item 5. Market for Common Equity and
Related Stockholders Matters and Item 10. Executive Compensation.

Other Risks

Nevada law and our Articles of Incorporation may protect our
directors from certain types of lawsuits.

Nevada law and our Articles of Incorporation may protect our
directors from certain types of lawsuits. Nevada law provides that our
officers and directors will not be liable to us or our stockholders for monetary
damages for all but certain types of conduct as officers and directors. Our
Bylaws permit us broad indemnification powers to all persons against all damages
incurred in connection with our business to the fullest extent provided or
allowed by law. The exculpation provisions may have the effect of preventing
stockholders from recovering damages against our officers and directors caused
by their negligence, poor judgment or other circumstances. The indemnification
provisions may require us to use our limited assets to defend our officers and
directors against claims, including claims arising out of their negligence, poor
judgment, or other circumstances.

Because some of our officers and directors are located in
non-U.S. jurisdictions, you may have no effective recourse against the non U.S.
officers and directors for misconduct and may not be able to enforce judgement
and civil liabilities against our officers, directors, experts and agents.

Some of our directors and officers are nationals and/or
residents of countries other than the United States, specifically Canada, and
all or a substantial portion of such persons assets are located outside the
United States. As a result, it may be difficult for investors to enforce within
the United States any judgments obtained against our officers or directors,
including judgments predicated upon the civil liability provisions of the
securities laws of the United States or any state thereof.

Item
2.          Description of
Property.

Our principal executive office is located at Suite 2703  550
Pacific Street, Vancouver, British Columbia, Canada V6Z 3G2; our telephone
number is 604.607.1677. Our office consists of 1,250 square feet and is rented
on a month-to-month basis at a cost of CAD $2,800 per month. We believe that our
office space and facilities are sufficient to meet our present needs and do not
anticipate any difficulty securing alternative or additional space, as needed,
on terms acceptable to us.

Item
3.          Legal Proceedings.

Other than set out below, we know of no material, active or
pending legal proceedings against our company, nor are we involved as a
plaintiff in any material proceeding or pending litigation. There are no
proceedings in which any of our directors, officers or affiliates, or any
registered or beneficial shareholder, is an adverse party or has a material
interest adverse to our interest.

On April 30, 2007, we commenced an arbitral action against
SEPSA through the ICC requesting the ICC to enforce SEPSAs obligations under
the terms agreed upon in the SPA and to sell to our company 100% of the shares
of SEPSA and to award damages incurred by us related to our out of pocket
expenses, loss of business opportunity and loss of revenue. SEPSA subsequently
filed a counter claim with the ICC seeking awards for legal fees and translation
costs related to this dispute.

The Company agreed to attend a formal hearing before the ICC
tribunal during May 2008, where certain officers and representatives of the
Company were interviewed by the ICC tribunal and the Company was able to comment
to the ICC tribunal about the Companys position related to the unresolved
matters between the Company and SEPSA. Subsequent to the hearings, the ICC
requested the Company to submit to the ICC, its closing arguments related to the
arbitration within a specified period of time. The Company has claimed damages
in the form of loss of revenue from July 1, 2006 through to the current date;
loss of business opportunity related to increases to the values of assets owned
and/or controlled by SEPSA and loss of-out-of-pocket expenses from the inception
of the Companys efforts to win the bid and complete the acquisition of SEPSA.
SEPSA has filed a counter-claim for recovery of legal

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- 20 -

expenses and translation fees incurred to date related to the
dispute between it and the Company. There is no determination as to the length
of time necessary for the ICC to make any final renderings pursuant to the
arbitral proceedings between the Company and SEPSA and whether or not any awards
for damages will be made by the ICC and, further; there is no determination as
to what the outcome of any potential final determinations made be the ICC
related to damages awards may be.

In January 2009, the Company received a partial award from the
ICC as the result of the binding arbitration action for an initial damages claim
estimate, which was submitted to the ICC in the amount of US$46.4 million. The
rendering by the ICC binding the parties to the award determines the SPA entered
into between the Company and SEPSA on August 18, 2006 is terminated
retroactively to October 31, 2006. It further determines that the SPA's early
termination was seventy percent (70%) the responsibility of SEPSA and thirty
percent (30%) the responsibility of the Company. The Company will support its
final damages submission to the ICC through third party valuations evidencing
the substantiation of the overall damages suffered by the Company as a result of
it losing the business opportunity related to its planned acquisition of SEPSA.
The ICC has informed the Company and SEPSA the final damages award rendering
will be made in the second quarter 2009.

We operate in the field of oil and gas exploration and are
therefore subject to state and federal environmental regulations. Due to the
diversity of these regulations compliance at all times cannot be assured.

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

None.

PART II

Item
5.          Market for Common
Equity and Related Stockholder Matters and Small Business Issuer Purchases of
Equity Securities.

Our common stock is quoted for trading on the OTC Bulletin
Board1 under the symbol PEYG. The following table sets forth the
high and low sales prices for our common stock for each quarter within the last
two fiscal years.

Quarter Ended
    High
    LowMarch 31, 2007 June 30, 2007 September 30, 2007
      December 31, 2007 March 31, 2008 June 30, 2008 September
      30, 2008 December 31, 2008
    $1.15 $0.67 $0.60 $1.24 $0.87
      $0.43 $0.50 $0.27
    $0.32 $0.33 $0.29 $0.35 $0.38
      $0.23 $0.25 $0.06


> (1) Over-the-Counter market quotations reflect
>         inter-dealer prices without retail mark-up, mark-down or commission, and
>         may not represent actual transactions.

On May 15, 2009, the shareholders list for our common stock
showed 139 registered stockholders and 39,009,465 shares issued and outstanding.

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- 21 -

Dividends

We have not declared any dividends since incorporation and do
not anticipate that we will do so in the foreseeable future. Our directors will
determine if and when dividends should be declared and paid in the future based
on our financial position at the relevant time. All shares of our common stock
are entitled to an equal share of any dividends declared and paid.

Recent Sales of Unregistered Securities

We did not sell any equity securities which were not registered
under the Securities Act during the year ended December 31, 2008 that were not
otherwise disclosed on our quarterly reports on Form 10-Q or our current reports
on Form 8-K filed during the year ended December 31, 2008.

Equity Compensation Plan Information

The following table provides a summary of the securities
authorized for issuance under Equity Compensation Plans, the weighted average
price and number of securities remaining available for issuance, all as at
December 31, 2008.

|                              |  |                         |  |  |                      |  |  | Number of securities    | 
|----------------------------- |  | ----------------------- |  |  | -------------------- |  |  | ----------------------- | 
|                              |  |                         |  |  |                      |  |  | remaining available for | 
|                              |  |                         |  |  |                      |  |  | future issuance under   | 
|                              |  | Number of securities to |  |  | Weighted average     |  |  | equity compensation     | 
|                              |  | be issued upon exercise |  |  | exercise price of    |  |  | plans (excluding        | 
|                              |  | of outstanding options, |  |  | outstanding options, |  |  | securities reflected in | 
|                              |  | warrants and rights     |  |  | warrants and rights  |  |  | column (a))             | 
|                              |  | (a)                     |  |  | (b)                  |  |  | (c)                     | 
|                              |  |                         |  |  |                      |  |  |                         | 
|Equity compensation plans     |  |                         |  |  |                      |  |  |                         | 
|approved by security holders  |  | 3,382,000               |  |  | $0.51                |  |  | 8,874,216               | 
|Equity compensation plans not |  |                         |  |  |                      |  |  |                         | 
|approved by security holders  |  | Nil                     |  |  | $Nil                 |  |  | Nil                     | 
|Total                         |  | 3,382,000               |  |  | $0.51                |  |  | 8,874,216               | 

13,975,000 stock options (and an equivalent amount of stock
appreciation rights) are to be granted to management between 2009 and 2011
pursuant to management consulting agreements.

Purchase of Equity Securities by the Issuer and Affiliated
Purchasers

We did not purchase any of our shares of common stock or other
securities during the year ended December 31, 2008.

Item
6.          Selected financial data

Not applicable

Item
7.          Management Discussion
and Analysis and Results of Operation.

The following discussion should be read in conjunction with our
audited consolidated financial statements and the related notes for the year
ended December 31, 2008 and the factors that could affect our future financial
condition and results of operations. Historical results may not be indicative of
future performance.

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- 22 -

The following discussion contains forward-looking statements
that reflect our plans, estimates and beliefs. Our actual results could differ
materially from those discussed in the forward looking statements. Factors that
could cause or contribute to such differences include, but are not limited to,
those discussed below and elsewhere in this annual report, particularly in the
section entitled Risk Factors beginning on page 11 of this annual report.

RESULTS OF OPERATION

Following a period of poor financial performance and continued
losses on our United States oil and gas operations, during the forth quarter of
2007 we commenced a process to sell our United States oil and gas properties in
2007 and continued to focus our efforts on our oil & gas assets in
Argentina. The results of discontinuing operations on the United States
properties have been classified as a loss from discontinued operations in the
consolidated statements of operations. The consolidated statements of cash flows
for the years ended December 31, 2008 and 2007 and from November 15, 2001
(inception) to December 31, 2008 for operating activities and investing
activities have been separated between continuing and discontinued operations.
Certain figures in the consolidated statements of cash flows from November 15,
2001 (inception) to December 31, 2008 have been reclassified for purposes of
comparability.

For the years ended December 31, 2008 and December 31, 2007

Our losses from operations for the year ended December 31, 2008
were approximately $4,754,071 compared to $6,447,022 for the year ended December
31, 2007 (a decrease of $1,692,951 or 26%) due largely to a lower stock based
compensation charge in 2008. The operating expenses of $4,754,071 (2007:
$6,447,022) consists of $5,083 in depreciation, $417,676 in general and
administrative, $3,418,881 in management and consulting fees, of which
$1,795,366 was stock based compensation, and $912,431 in professional fees.

General and administrative expenses decreased by $343,262 (45%)
for the year ended December 31, 2008 compared to general and administrative
expenses for the year ended December 31, 2007 due to the decreased level of
activity in 2008 and other costs relating to administrating Petrogen, an entity
discontinued in 2007. General and administrative expenses generally include
corporate overhead, financial and administrative contractual services, marketing
and consulting costs. Management and consulting fees decreased by $1,719,575
(33%) as a result of a decrease in stock based compensation related to
management, which decreased by $2,281,190 (57%) due to a decrease in the number
of stock options and stock appreciation rights granted in 2008. Professional
fees increased by $400,044 (78%) due to the legal dispute on the San Enrique
acquisition.

For  the year ended December 31, 2008, we incurred other expenses of approximately $458,738  compared to other expenses of $189,112 incurred for the year ended December 31,  2007 (an increase of $269,626 or 142%). The other expenses incurred for the  year ended December 31, 2008 consisted of: (i) $380,744 (2007: $nil) in debt  extinguishment; and (ii) $77,994 (2007: $129,112) in interest expense, net of  interest income. The loss from operations combined with other expenses resulted  in a loss from continuing operations before taxes of $5,212,809 (2007: $6,636,134).  A tax recovery due to an intraperiod allocation between discontinued operations  and continuing operation of $197,186 (2007: $nil) was recorded resulting in a  loss from continuing operations after taxes of $5,015,623 (2007: $6,636,134)

For the year ended December 31, 2008, we incurred a gain from
discontinued operations of approximately $563,388, ($366,202 net of tax of $197,186) compared to expenses from discontinued operations of $869,093 incurred
for the year ended December 31, 2007 (a decrease of $1,235,295 or 142%). The
results of oil and gas operations for the year ended December 31, 2008 consisted
of: (i) $nil (2007: $23,012) in gas sales; (ii) $nil (2007: $165) in depletion;
(iii) $nil (2007: $44,371) in lease operating expenses; (iv) $nil (2007:
$808,487) from the impairment of oil and gas properties;(v) $nil (2007: $39,082)
in general and administrative expenses; and (vi) $366,202 (2007:$nil) gain after
tax on dissolution of United States subsidiary, resulting in a net gain (loss)
of $366,202 (2007: $(869,093)).

GT Venture Management AG (GTV) derives remuneration from us
as compensation for management and consulting services rendered by Mr. Sacha H.
Spindler, our Chief Executive Officer and a director. During the year ended
December 31, 2008, management fees of $360,000 were incurred by us for said
services. During 2008, we settled $43,750 of unpaid fees in a private placement
with GTV consisting of 175,000 units at $0.25 per unit, each unit consisting of
one common share and one share purchase warrant, with each share purchase
warrant exercisable at $0.50 per common share for a period of 2 years. We also
entered into a private placement agreement with GTV

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- 23 -

for 1,557,500 units at $0.25 per unit for total proceeds of
$389,375, with each unit consisting of one common share and one common share
purchase warrant, with each common share purchase warrant exercisable at $0.50
per common share for a period of 2 years from the date of issuance. The private
placement agreement was entered into by us in settlement of $389,375 notes
payable that were assumed by GTV from the note holder. We settled $22,160 owed
to GTV by issuing 92,334 common shares at the market price of $0.24 on October
8, 2008. We issued 6,722,899 Series B, $0.001 par value preferred shares, which
were paid for by GTV by offsetting management fees due from our Company. At
December 31, 2008, GTV is owed $206,658 by our company. Our company is committed
to pay GTV $30,000 in management fees per month for the services of this
officer.

Landmark Management Services SA (LMS) derives remuneration
from us as compensation for management and consulting services rendered by Mr.
Soumitra Sam Sen, our President and Chief Operating Officer. During the year
ended December 31, 2008, management fees of $216,000 were incurred by us. We
settled $126,823 owed to LMS by issuing 528,430 common shares at the market
price of $0.24 on October 8, 2008. We issued 1,963,200 Series B, $0.001 par
value preferred shares, which were paid for by LMS by offsetting management fees
due from our Company. At December 31, 2008, LMS is owed $52,037 for management
fees. The Company is committed to pay LMS $18,000 in management fees per
month.

Mr. Perryman, one of our directors, derives remuneration from
us as compensation for consulting services rendered. During the year ended
December 31, 2008, consulting fees of $12,000 were incurred by us to Mr.
Perryman. Our Company settled $22,396 owed to Mr. Perryman by issuing 93,317
common shares at the market price of $0.24 on October 8, 2008. Our Company
issued 93,317 Series B, $0.001 par value preferred shares for cash proceeds. At
December 31, 2008, Mr. Perryman is owed $2,998 for unpaid fees. We are committed
to pay Mr. Perryman $1,000 per month.

Our net loss for the year ended December 31, 2008 was
$4,649,421 or $0.14 per share compared to a net loss of $7,505,227 or $0.51 per
share for the year ended December 31, 2007. Our net loss from continuing
operations for the year ended December 31, 2008 was $5,015,623 or $0.15 per
share compared to a net loss from continuing operations of $6,636,134 or $0.45
per share for the year ended December 31, 2007. Our net income from discontinued
operations for the year ended December 31, 2008 was $366,202 or $0.01 per share
compared to a net loss from discontinued operations of $869,093 or $0.06 per
share. The weighted average number of shares outstanding was 32,262,050 at
December 31, 2008, compared to 14,595,840 at December 31, 2007.

LIQUIDITY AND CAPITAL RESOURCES

Our financial statements have been prepared assuming that we
will continue as a going concern and, accordingly, do not include adjustments
relating to the recoverability and realization of assets and classification of
liabilities that might be necessary should we be unable to continue in
operation.

As at December 31, 2008

As at December 31, 2008, our current assets were $29,839 and
our current liabilities were $2,345,800, resulting in working capital deficit of
$2,315,961. As at December 31, 2008, current assets were comprised of: (i)
$3,750 in cash; and (ii) $26,089 in prepaids and deposits.

As at December 31, 2008, our total assets were $47,306
comprised of: (i) $29,839 in current assets and (ii) $17,467 in furniture and
equipment (net of depreciation). The decrease in total assets at December 31,
2008 from fiscal year ended December 31, 2007 was primarily due to the
dissolution of our United States subsidiary, Petrogen, Inc.

As at December 31, 2008, current liabilities were comprised of:
(i) $1,551,084 in accounts payable and accrued liabilities; (ii) $154,793 in
share based compensation liability; (iii) $112,500 in convertible notes payable,
(iv) $197,313 in notes payable;; and (v) $330,110 in amounts due to related
parties.

As at December 31, 2008, our total liabilities were $2,345,800,
all consisting of current liabilities. The decrease in total liabilities at
December 31, 2008 compared to fiscal year ended December 31, 2007 was due
primarily to the dissolution of our United States subsidiary and the partial
assignment and settlement of the notes payable.

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- 24 -

In October 2008, the Company issued 16,479,493 Series B, $0.001
par value preferred shares for cash proceeds of 4,540 and settlement of accrued
management and consulting fees of $11,940. The aggregate liquidation value is
estimated at $5,620,000 (2007: $nil) and includes $90,000 accrued but unpaid
dividends which represents a rate of return of 10% per annum on the sum of the
preferred stockholders initial capital investment. The Series B Preferred Stock
is recorded in the Companys Consolidated Balance Sheets as Mezzanine Equity
as it has a redemption feature not solely within the Companys control.

Stockholders' equity decreased from ($2,137,825) at December
31, 2007 to ($7918,494) at December 31, 2008.

For the year ended December 31, 2008, net cash used in
continuing operating activities was $1,231,046 compared to net cash used in
continuing operating activities of $1,482,343 for the year ended December 31,
2007. Net cash used in continuing operating activities for the year ended
December 31, 2008 was comprised of a net loss of $5,163,059 (2007: $6,636,134)
and adjusted primarily by: (i) expenses paid by the issuance of shares of
$829,579 (2007: $102,000); (ii) stock based compensation of $1,795,366 (2007:
$4,026,806); (iii) accrued management fees of $327,112 (2007: $139,527); (iv)
accounts payable and accrued liabilities of $1,814,118 (2007: $727,545); (v)
debt extinguishment of $380,744 (2007: $nil); and (vi) financing fees of
$5,583,520 (2007: $nil).

For the year ended December 31, 2008, net cash used in
discontinued operating activities was $nil compared to net cash used in
discontinued operating activities of $48,908 for the year ended December 31,
2007 resulting in net cash used in operating activities of $1,231,046 (2007:
$1,531,251).

Our cash flow used in continuing investing activities for the
year ended December 31, 2008 was $6,198 compared to net cash from continuing
investing activities of $2,149 for the year ended December 31, 2007. The net
cash used continuing investing activities during the year ended December 31,
2008 was primarily for the purchase of office furniture and equipment.

For the year ended December 31, 2008, net cash from
discontinued investing activities was $nil compared to net cash used in
discontinued investing activities of $486,500 for the year ended December 31,
2007 resulting in net cash used in investing activities of $6,198 (2007:
$489,349 cash from investing activities).

Cash flows from financing activities for the year ended
December 31, 2008 was $1,215,737 compared to cash flow from financing activities
of $938,419 for the year ended December 31, 2007. The net cash flow from
financing activities for the year ended December 31, 2007 was primarily
comprised of: (i) $635,100 (2007: $760,920) in proceeds on sale of common stock
and warrants including subscriptions received; (ii) $105,403 (2007: $45,001) in
advances to related parties; (iii) $681,500 (2007: $357,250) in notes payable;
and (iv) $nil (2007: $(134,750)) in loans payable. The increase in net cash from
financing activities for the year ended December 31, 2008 was primarily the
result of the receiving notes payable.

MATERIAL COMMITMENTS

In 2007, we entered into five five-year-term management
consulting agreements. Of the five, three were with directors and/or officers of
our Company, or their private companies. The agreements provide for remuneration
on a monthly basis totalling $66,000. We have the right in all of the five
consulting agreements to terminate the agreements without cause by providing 30
days written notice. Upon termination of our agreement with GT Venture
Management AG (GTV), we are required to pay a severance of 24 months of
monthly fees within 10 business days of the termination date plus an additional
severance cash payment equating to the value of 5% of the Gross Market Capital
Increase in our Company from January 1, 2007 until the date of the termination
of this agreement. Upon termination of our agreement with Landmark Management
Services SA (LMS), we are required to pay a severance of 6 months of monthly
fees within 10 business days of the termination date. In addition to the equity
awards agreed upon by us under the Equity Incentive Plan between GTV and LMS, we
are required to accrue sums equivalent to the gross tax payable by reason of
receipts of those equity awards granted and exercised under those material
commitments to GTV and LMS. Of these five agreements entered into by the
Company, two have terminated; the remaining three agreements provide for the
granting of a total of 16,700,000 stock options and 16,700,000 stock
appreciation rights, in aggregate, over the five year terms of the agreements.
As of December 31,

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- 25 -

2008, 4,700,000 stock options and 4,700,000 stock appreciation
rights have been granted, the remaining 12,000,000 options and 12,000,000 stock
appreciation rights vest over the remaining term ending January 1, 2012.

In 2007, we entered into a five-year-term management consulting
agreement with our senior geologist, Jose Bereskyj. The agreement provides for a
signing bonus of $20,000, the issuance of 100,000 shares of unrestricted common
stock and a monthly remuneration of $10,000. We have the right to terminate the
agreement without cause by providing 30 days written notice. Upon termination of
the agreement, we are required to pay this consultant severance of 6 months of
monthly fees within 10 business days of the termination date. This agreement
provides for the granting of 2,225,000 stock options and 2,225,000 stock
appreciation rights, in aggregate, over the five year term. As of December 31,
2008, 250,000 stock options and 250,000 stock appreciation rights have been
granted, the remaining 1,975,000 stock options and 1,975,000 stock appreciation
rights vest over the remaining term ending July 1, 2012.

In connection with the oil and gas exploration, development and
production expenses and other overhead costs incurred, we and/or our subsidiary
incurred liability or borrowed funds pursuant to various contractual
arrangements representing the following material commitments.

Effective April 28, 2006 we entered into three convertible loan
agreements which were secured by the assets of our subsidiary Petrogen. The
loans bear interest at LIBOR plus 5% per annum, and interest is payable each
quarter commencing six months after the first receipt of funds. The first note
of $275,000 was due on April 1, 2007, and was converted into 1,375,000 common
shares on May 7, 2007. The second note of $275,000 was due on June 13, 2007, and
converted into 1,375,000 common shares on June 25, 2007. The remaining note of
$285,000 was due one year after receipt of funds, being September 7, 2007. On
March 14, 2007, $134,750 was repaid in cash and on September 26, 2007, $75,000
was converted into 375,000 common shares, leaving a balance of $75,250 plus
$3,867 in accrued interest.

On September 10, 2007, we received a demand notice (the
Demand) for the immediate payment of the Note in the amount of $75,250 plus
$3,867 of accrued interest. The Note carried a guaranteed security agreement
(GSA) over the assets of Petrogen as collateral to the GSA. Petrogen defaulted
under the Note, whereby the Note holder exercised its right to accept the
collateral described in the GSA in full satisfaction of Petrogens obligation
under the Note. The Note holder sent to Petrogen a properly authenticated
proposal to accept Petrogens collateral in full satisfaction of the above
described debt as required by the TEXAS BUSINESS & COMMERCE CODE, §9.620. On
October 8, 2007 our company and Petrogen consented to the proposal. The Note
holders subsequent acceptance of the collateral in full satisfaction of the
obligation it secures: (a) discharges Petrogens, obligation to the extent
consented to by Petrogen.; (b) transfers to the secured party all of Petrogens
rights in the collateral; (c) discharges the security interest lien over
Petrogen; and (d) terminates any subordinate security interest or other
subordinate liens over Petrogen by other third party creditors, as described
under TEXAS BUSINESS & COMMERCE CODE §9.622. On April 8, 2008, Petrogen was
wound-up and dissolved through filing for dissolution with the Colorado
Secretary of State..

During the year ended December 31, 2007, we issued ten
promissory notes totalling $420,000 which are unsecured and due on demand. These
notes bear a fixed interest charge of $52,500 for a total owing of $472,500.
During the first quarter of 2007, we repaid three promissory notes totalling
$65,000 plus fixed interest charges of $8,125. As of December 31, 2007, seven
promissory notes totalling $355,000 plus fixed interest charges of $44,375
remain outstanding, the aggregate of the notes and fixed interest charges total
$399,375.

During 2008, we issued an additional seven promissory notes for
$681,500 with the same terms as the previous notes, accrued $85,188 interest on
those notes, and then amended six of the promissory notes totalling $579,375
including accrued interest of $64,375 to include conversion terms. As at
December 31, 2008 we have notes payable outstanding totaling $197,313 including
accrued interest of $21,924 (December 31, 2007: $399,375 including accrued
interest of $44,375) which are unsecured, due on demand, and bear interest at
12.5% per annum.

On July 30, 2008, we entered into a private placement agreement
with GTV for 1,557,500 units at $0.25 per unit for total proceeds of $389,375,
with each unit consisting of one common share and one common share purchase
warrant, with each common share purchase warrant exercisable at $0.50 per common
share for a period of 2 years from the date of issuance. We entered the private
placement agreement in settlement of $389,375 notes payable to a

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- 26 -

company which Sacha H. Spindler is able to exercise significant
influence over and assigned the notes payable to GTV.

On March 28, 2008, we entered into an Amendment Agreement
pursuant to certain promissory notes (the Promissory Note Amendment Agreement)
whereby terms of those promissory notes issued by us totalling $515,000 plus
interest of $64,375 committed by us during 2007 and 2008 were amended providing
for conversion into units (the Units) of our Company for all of or portions of
the principle and interest accrued under those promissory notes at the time of
conversion, whereby conversion of such accruals would be convertible for the
Units, those Units of which are comprised of one common share of our Company
priced at $.35 and one common share purchase warrant, each warrant of which is
exercisable commencing 90 days subsequent to the conversion of accruals under
those promissory notes for two years from the date of conversion at an exercise
price of $.70 per exercised warrant share.

On March 31, 2008, a total of $466,875 (interest of $51,875) of
promissory notes described under the Promissory Note Amendment Agreement were
converted into 1,333,928 units of our Company, wherein we issued 1,333,928
common shares of our Company at a rate of $.35 per common share, the holders
thereof which retain the right commencing 90 days from the date of the
conversion to exercise up to 1,333,928 common share purchase warrants of our
Company at a rate of $.70 per exercised warrant share for a period of two years
subsequent to the date of conversion; March 30, 2010. As at December 31, 2008, a
total of $112,500 (including accrued interest of $12,500) of convertible notes
were outstanding and due on February 7, 2009. As at May 15, 2009, we have
negotiated with the lender, a 6-month extension on the maturity date of the
promissory notes, which are now due on August 7, 2009.

Cash Requirements

Over the next twelve months we intend to acquire oil and gas
  properties in Argentina, assuming that we can obtain equity, debt or other financing.
  We anticipate that we will incur the following costs and operating expenses
  over the next twelve months, excluding the acquisition costs related to the
  our acquisition of San Enrique Petrolera S.A., as follows:

Estimated Funding Required During the Next
        Twelve MonthsExpenses
    AmountManagement fees
    $1,400,000Oil & gas
      exploration expenses and holding costs
    36,000,000Professional fees
    950,000Investor relations
      & sales related
    960,000Rent, utilities
      and insurance
    200,000Other general
      administrative expenses
    400,000Current
      liabilities
    2,400,000Total
    $42,310,000


We will require additional funds to implement our growth
strategy in exploration operations. These funds may be raised through equity
financing, debt financing, or other sources, which may result in further
dilution in the equity ownership of our shares. There is still no assurance that
we will be able to maintain operations at a level sufficient for an investor to
obtain a return on his investment in our common stock. Further, we may continue
to be unprofitable.

Going Concern

Due to our being an exploration stage company and not having
generated revenues, in their Notes to our financial statements for the year
ended December 31, 2008, our independent auditors included an explanatory
paragraph regarding concerns about our ability to continue as a going concern.

As at December 31, 2008, the Company has a working capital
deficiency of $2,365,710 and we have historically incurred losses, and through
December 31, 2008 have incurred losses of $27,172,341 from our inception.
Because of

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- 27 -

these historical losses, we will require additional working
capital to develop our business operations. We intend to raise additional
working capital through private placements, public offerings, bank financing
and/or advances from related parties or shareholder loans.

The continuation of our business is dependent upon obtaining
further financing and achieving a break even or profitable level of operations.
The issuance of additional equity securities by us could result in a significant
dilution in the equity interests of our current or future stockholders.
Obtaining commercial loans, assuming those loans would be available, will
increase our liabilities and future cash commitments.

There are no assurances that we will be able to either: (1)
achieve a level of revenues adequate to generate sufficient cash flow from
operations; or (2) obtain additional financing through either private
placements, public offerings and/or bank financing necessary to support our
working capital requirements. To the extent that funds generated from operations
and any private placements, public offerings and/or bank financing are
insufficient, we will have to raise additional working capital. No assurance can
be given that additional financing will be available, or if available, will be
on terms acceptable to us. If adequate working capital is not available we may
not increase our operations.

These conditions raise substantial doubt about our ability to
continue as a going concern. The financial statements do not include any
adjustments relating to the recoverability and classification of asset carrying
amounts or the amount and classification of liabilities that might be necessary
should we be unable to continue as a going concern.

Off-Balance Sheet Arrangements

There are no off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that is material to
investors.

APPLICATION OF CRITICAL ACCOUNTING POLICIES

Basis of Presentation

The consolidated financial statements have been presented in
United States dollars and prepared in accordance with United States Generally
Accepted Accounting Principles (US GAAP).

Principles of Consolidation

The consolidated financial statements include the accounts of
our company and our formerly wholly-owned subsidiary, Petrogen wholly-owned
subsidiary Pluris Energy Group, Inc. All significant intercompany transactions
and account balances have been eliminated.

Oil and Gas Properties

We follow the full cost method of accounting for our oil and
gas operations whereby all cost related to the acquisition of petroleum and
natural gas interests are capitalized. Such costs include land and lease
acquisition costs, annual carrying charges of non-producing properties,
geological and geophysical costs, costs of drilling and equipping productive and
non-productive wells, and direct exploration salaries and related benefits.
Proceeds from the disposal of oil and gas properties are recorded as a reduction
of the related capitalized costs without recognition of a gain or loss unless
the disposal would result in a change of 20 percent or more in the depletion
rate. We operate in one cost center, being Argentina.

Depletion and depreciation of the carrying value of unproved
oil and gas properties are computed using the unit-of-production method based on
the estimated reserves of oil and gas as determined by management.

Estimated future removal and site restoration costs are
provided over the life of proven reserves on a unit-of-production basis. Costs,
which include the cost of production equipment removal and environmental
clean-up, are

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- 28 -

estimated each period by management based on current
regulations, costs, technology and industry standards. The charge is included in
the provision for depletion and depreciation and the actual restoration
expenditures are charged to the accumulated provision accounts as incurred.

We apply a ceiling test to capitalized costs to ensure that
such costs do not exceed estimated future net revenues from production of proven
reserves at year end market prices less future production, administrative,
financing, site restoration, and income tax costs plus the lower of cost or
estimated market value of unproved properties. If capitalized costs are
determined to exceed estimated future net revenues, an impairment of the
carrying value is charged in the period.

Use of Estimates and Assumptions

Preparation of our financial statements in conformity with US
GAAP requires management to make estimates and assumptions that affect certain
reported amounts and disclosures. Accordingly, actual results could differ from
those estimates. Significant areas requiring managements estimates and
assumptions are reviewing the carrying values of oil and gas properties for
impairment, valuation of mezzanine equity on preferred stock, determining fair
value for stock based compensation, and the valuation of deferred tax assets.

Foreign Currency Translation

The financial statements are presented in United States
dollars, the functional currency of the Company and its subsidiaries. In
accordance with Statement of Financial Accounting Standard (SFAS) No. 52,
"Foreign Currency Translation", foreign denominated monetary assets and
liabilities are translated to their United States dollar equivalents using
foreign exchange rates which prevailed at the balance sheet date. Revenue and
expenses are translated at average rates of exchange during the period. Related
currency translation adjustments and gains or losses resulting from foreign
currency transactions are included in results of operations.

Net Earnings (Loss) per Common Share

Basic earnings (loss) per common share include no dilution and
is computed by dividing income available to common stockholders by the weighted
average number of common shares outstanding for the period. Dilutive earnings
(loss) per share reflect the potential dilution of securities that could share
in our earnings. Diluted loss per share figures are equal to those of basic loss
per share for each period since the effects of convertible notes, stock options
and warrants have been excluded as they are anti-dilutive. The 6,000,000 shares
held in escrow do not form part of this computation.

Stock-Based Compensation

On January 1, 2006, we adopted SFAS No. 123 (revised 2004)
(SFAS No. 123R), Share-Based Payment, which addresses the accounting for
stock-based payment transactions in which an enterprise receives employee
services in exchange for (a) equity instruments of the enterprise or (b)
liabilities that are based on the fair value of the enterprises equity
instruments or that may be settled by the issuance of such equity instruments.
In January 2005, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin (SAB) No. 107, which provides supplemental implementation
guidance for SFAS No. 123R. SFAS No. 123R eliminates the ability to account for
stock-based compensation transactions using the intrinsic value method under
Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to
Employees, and instead requires that such transactions be accounted for using a
fair-value-based method. The Company uses the Black-Scholes-Merton (BSM)
option-pricing model to determine the fair-value of stock-based awards under
SFAS No. 123R.

Income Taxes

We follow the liability method of accounting for income taxes
as set forth in SFAS No. 109, Accounting for Income Taxes. Under this method,
deferred income tax assets and liabilities are recognized for the estimated tax
consequences attributable to differences between the financial statement
carrying values and their respective income tax basis (temporary differences).
The effect on deferred income tax assets and liabilities of a change in tax
rates is

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- 29 -

recognized in income in the period that includes the date of
enactment or substantial enactment. A valuation allowance is provided for
deferred tax assets if it is more likely than not that we will not realize the
future benefit, or if future deductibility is uncertain.

Fair Value of Financial Instruments

In accordance with the requirements of SFAS No. 107, we have
determined the estimated fair value of financial instruments using available
market information and appropriate valuation methodologies. The fair value of
financial instruments classified as current assets or liabilities including
cash, restricted cash, accounts receivable, notes receivable, prepaids and
deposits, accounts payable and accrued liabilities, advances and loans payable,
debenture payable and amounts due to related parties approximate carrying values
due to the short-term maturity of the instruments.

RECENT ACCOUNTING PRONOUNCEMENTS

In November 2008, the Financial Accounting Standards Board (the
FASB) voted on the effective date and other amendments of proposed FASB Staff
Position FAS 140-4 and FIN 46(R)-8, Disclosures about Transfers of Financial
Assets and Interests in Variable Interest Entities (FSP FAS 140-4 and FIN
46R-8). FSP FAS 140-4 and FIN 46R-8 would amend SFAS No. 140, Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities 
as amended (SFAS 140) and FASB Interpretation No. 46 (revised December 2003),
Consolidation of Variable Interest Entities (FIN 46R) to require enhanced
disclosures by public entities about transfers of financial assets and interests
in variable interest entities, and provide users of the financial statements
with greater transparency about a transferors continuing involvement with
transferred financial assets and an enterprises involvement with variable
interest entities. The disclosures required by FSP FAS 140-4 and FIN 46R-8 will
be effective for reporting periods (interim and annual) ending after December
15, 2008. The Company has reached the conclusion that this will have no impact
on its consolidated financial statements

In June 2008, the FASB issued SFAS Statement EITF 03-6-1, which
addresses whether instruments granted in share-based payment transactions are
participating securities prior to vesting and, therefore, need to be included in
the earnings allocation in computing earnings per share (EPS) under the
two-class method described in paragraphs 60 and 61 of FASB Statement No. 128,
Earnings per Share.EITF 03-6-1 is not expected to have a material impact
on the Companys consolidated financial statements.

In May 2008, the FASB issued FSP APB 14-1, Accounting for
Convertible Debt Instruments That May Be Settled in Cash upon Conversion
(Including Partial Cash Settlement). Effective for the Company as of January 1,
2009, FSP APB 14-1 applies to convertible debt instruments that, by their stated
terms, may be settled in cash (or other assets) upon conversion, including
partial cash settlement, unless the embedded conversion option is required to be
separately accounted for as a derivative under SFAS No. 133. FSP APB 14-1
requires the liability and equity components of convertible debt instruments
within its scope to be separately accounted for in a manner that will reflect
the entitys nonconvertible debt borrowing rate when interest expense is
recognized in subsequent periods. The resulting equity component (the conversion
option) is not re-measured as long as long as it continues to meet the
conditions for equity classification in EITF No. 00-19, Accounting for
Derivative Financial Instruments Indexed to, and Potentially Settled in, a
Companys Own Stock. Early adoption of this standard is not permitted.
Management is evaluating the impact of adopting of this standard on the
Companys consolidated financial statements.

In May 2008, the FASB issued SFAS No. 162 (SFAS 162), The
Hierarchy of Generally Accepted Accounting Principles. Under SFAS 162, the GAAP
hierarchy will now reside in the accounting literature established by the FASB.
SFAS 162 identifies the sources of accounting principles and the framework for
selecting the principles used in the preparation of financial statements in
conformity with GAAP. SFAS 162 is effective 60 days following the SECs approval
of the Public Accounting Oversight Board Auditing amendments to AU Section 411,
The Meaning of Present Fairly in Conformity with Generally Accepted Accounting
Principles. The Company does not expect the adoption of SFAS 162 to have a
material impact on its financial statements.

In April 2008, the FASB issued FASB Staff Position ("FSP") FAS
142-3, "Determination of Useful Life of Intangible Assets" ("FSP FAS 142-3").
FSP FAS 142-3 amends the factors that should be considered in developing

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- 30 -

the renewal or extension assumptions used to determine the
useful life of a recognized intangible asset under FAS 142, "Goodwill and Other
Intangible Assets." FSP FAS 142-3 also requires expanded disclosure related to
the determination of intangible asset useful lives. FSP FAS 142-3 is effective
for fiscal years beginning after December 15, 2008. Earlier adoption is not
permitted. We do not believe the adoption of FAS FSP 142-3 will have a material
impact on our consolidated financial statements.

In March 2008, the FASB issued SFAS No. 161, Disclosures
about Derivative Instruments and Hedging Activities ("SFAS 161"). SFAS 161
is intended to improve financial reporting about derivative instruments and
hedging activities by requiring enhanced disclosures to enable investors to
better understand their effects on an entity's financial position, financial
performance, and cash flows. SFAS 161 achieves these improvements by requiring
disclosure of the fair values of derivative instruments and their gains and
losses in a tabular format. It also provides more information about an entity's
liquidity by requiring disclosure of derivative features that are credit
risk-related. Finally, it requires cross-referencing within footnotes to enable
financial statement users to locate important information about derivative
instruments. SFAS 161 will be effective for financial statements issued for
fiscal years and interim periods beginning after November 15, 2008, will be
adopted by the Company beginning in the first quarter of 2009. The Company does
not expect there to be any significant impact of adopting SFAS 161 on its
financial position, cash flows and results of operations.

In March 2008, the FASB issued EITF Issue No. 07-5,
Determining Whether an Instrument (or Embedded Feature) is Indexed to an
Entitys Own Stock. Effective for the Company as of January 1, 2009, EITF Issue
No. 07-5 defines when adjustment features within contracts are considered to be
equity-indexed. Early adoption of this standard is not permitted. Management is
evaluating the impact of adopting of this standard on the Companys consolidated
financial statements.

In December 2007, the FASB issued Statement of Financial
Accounting Standards No. 141 (revised 2007), Business Combinations (SFAS
141R). SFAS 141R changes the accounting for and reporting of business
combinations including, among other things, expanding the definition of a
business and a business combination; requiring all assets and liabilities of the
acquired business, including goodwill, contingent assets and liabilities, and
contingent consideration to be recorded at fair value on the acquisition date;
requiring acquisition-related transaction and restructuring costs to be
expensed, rather than accounted for as acquisition costs; and requiring
reversals of valuation allowances related to acquired deferred tax assets and
changes to acquired income tax uncertainties to be recognized in earnings. SFAS
141R applies prospectively to business combinations for which the acquisition
date is on or after the beginning of the first annual reporting period beginning
on or after December 15, 2008. Earlier application of SFAS 141R is prohibited.
The Company has reached the conclusion that at inception, this will have no
impact on its consolidated financial statements.

In December 2007, the FASB issued SFAS No. 160,
Non-controlling Interests in Consolidated Financial Statements Liabilities  an
Amendment of ARB No. 51. This statement amends ARB 51 to establish accounting
and reporting standards for the Non-controlling interest in a subsidiary and for
the deconsolidation of a subsidiary. This statement is effective for fiscal
years, and interim periods within those fiscal years, beginning on or after
December 15, 2008. Earlier adoption is prohibited. The adoption of this
statement is not expected to have a material effect on our future reported
financial position or results of operations.

In February 2007, the FASB issued SFAS No. 159, "The Fair Value
Option for Financial Assets and Financial LiabilitiesIncluding an Amendment of
FASB Statement No. 115" ("FAS 159"). This statement allows an entity the option
to elect fair value for the initial and subsequent measurement for certain
financial instruments and other items that are not currently required to be
measured at fair value. If a company chooses to record eligible items at fair
value, the company must report unrealized gains and losses on those items in
earnings at each subsequent reporting date. FAS 159 also prescribes presentation
and disclosure requirements for assets and liabilities that are measured at fair
value pursuant to this standard. FAS 159 was effective for the Company as of
January 1, 2008. The adoption of FAS 159 did not have a material impact on the
Company's financial position or results of operations.

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- 31 -

Item
8.          Financial Statements.

Our financial statements are stated in United States dollars
and are prepared in accordance with United States Generally Accepted Accounting
Principles.

| | Report
      of Independent Registered Public Accounting Firm dated April 14, 2009.                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                   
| | Consolidated
      Balance Sheets as of December 31, 2008 and 2007.                                                                                                               
| |                                                                                                                                                                                   
| | Consolidated
      Statements of Operations for the years ended December 31, 2008 and 2007
      and for the period from November 15, 2001 (inception) to December 31,
      2008.
| |                                                                                                                                                                                   
| | Consolidated
      Statements of Cash Flows for the years ended December 31, 2008and 2007 and
      for the period from November 15, 2001 (inception) to December 31, 2008.       
| |                                                                                                                                                                                   
| | Consolidated
      Statement of Stockholders Equity (Deficit) for the period from November
      15, 2001(inception) to December 31, 2008.                                       
| |                                                                                                                                                                                   
| | Notes
      to the Consolidated Financial Statements.                                                                                                                             

---







PLURIS ENERGY GROUP INC. 
  (An Exploration Stage Company)

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2008





|REPORTS
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS
|---------------------------------------------------------------
|                                                               
|CONSOLIDATED
      BALANCE SHEETS                              
|                                                               
|CONSOLIDATED
      STATEMENTS OF OPERATIONS                    
|                                                               
|CONSOLIDATED
      STATEMENTS OF CASH FLOWS                    
|                                                               
|CONSOLIDATED
      STATEMENT OF STOCKHOLDERS DEFICIT          
|                                                               
|NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS               

F-i

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Directors and Stockholders, 
  Pluris Energy Group Inc. 
  (An Exploration Stage Company)

We have audited the accompanying consolidated balance sheet of
  Pluris Energy Group Inc. (the Company) (An Exploration Stage Company) as of
  December 31, 2008 and the related consolidated statements of operations, cash
  flows and stockholders deficit for the year then ended. We have also audited
  the statements of operations, cash flows and stockholders deficit for the
  period from inception (November 15, 2001) to December 31, 2008, except that we
  did not audit these consolidated financial statements for the period from
  inception (November 15, 2001) through December 31, 2007; those consolidated
  statements were audited by other auditors whose report dated March 24, 2008,
  except for Note 14 which is as of April 10, 2008 expressed an unqualified
  opinion on those statements. These consolidated financial statements are the
  responsibility of the Companys management.

Our responsibility is to express an opinion on these
  consolidated financial statements based on our audit. Our opinion, insofar as it
  relates to the amounts for the period from inception (November 15, 2001) through
  December 31, 2007, is based solely on the report of the other auditors.

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

In our opinion, based on our audit and the report of other
  auditors, the consolidated financial statements referred to above present
  fairly, in all material respects, the financial position of Pluris Energy Group
  Inc. (An Exploration Stage Company) at December 31, 2008 and the results of its
  operations and its cash flows for the year then ended and for the period from
  November 15, 2001 (Date of Inception) to December 31, 2008 in conformity with
  accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been
  prepared assuming that the Company will continue as a going concern. As
  discussed in Note 1 to the consolidated financial statements, the Company had
  not yet achieved profitable operations, had an accumulated deficit of
  $27,222,092 at December 31, 2008 and incurred a net loss of $4,649,421 for the
  year then ended. These conditions raise substantial doubt about the Companys
  ability to continue as a going concern. Managements plans in regard to these
  matters are also described in Note 1. The consolidated financial statements do
  not include any adjustments that might result from the outcome of this
  uncertainty.

/s/ BDO Dunwoody LLP 
  Chartered Accountants

Vancouver, Canada 
  May 11, 2009

F-1

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of Pluris Energy
  Group Inc.

We have audited the accompanying consolidated balance sheet of
  Pluris Energy Group Inc. (an exploration stage company) as at December 31, 2007
  and 2006 and the related consolidated statements of operations, stockholders
  deficit and cash flows for the years then ended and for the period from November
  15, 2001 (inception) through December 31, 2007. These financial statements are
  the responsibility of the Company's management. Our responsibility is to express
  an opinion on these financial statements based on our audits.

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

In our opinion, these consolidated financial statements present
  fairly, in all material respects, the financial position of the Company as at
  December 31, 2007 and 2006 and the results of its operations and its cash flows
  for the years then ended and for the period from November 15, 2001 (inception)
  through December 31, 2007 in conformity with accounting principles generally
  accepted in the United States of America.

The accompanying consolidated financial statements have been
  prepared assuming that the Company will continue as a going concern. As
  discussed in Note 1 to the financial statements, the Company has not generated
  revenues since inception, has incurred losses in developing its business, and
  further losses are anticipated. The Company requires additional funds to meet
  its obligations and the costs of its operations. These factors raise substantial
  doubt about the Companys ability to continue as a going concern. Managements
  plans in this regard are described in Note 1. The financial statements do not
  include any adjustments that might result from the outcome of this uncertainty.

DMCL

DALE MATHESON CARR-HILTON LABONTE LLP 
  CHARTERED ACCOUNTANTS

Vancouver, Canada

March 24, 2008, except for Note 14 which is as of April 10,
  2008



F-2

---

PLURIS ENERGY GROUP INC. 
  (An Exploration Stage Company)

CONSOLIDATED BALANCE SHEETS

|                                                                                 |   | December 31, |   |   | December 31, |  
|-------------------------------------------------------------------------------- | - | ------------ | - | - | ------------ | -
|                                                                                 |   | 2008         |   |   | 2007         |  
|                                                                                 |   |              |   |   |              |  
|                                                                                 |   |              |   |   |              |  
|ASSETS                                                                           |  
|CURRENT ASSETS                                                                   |   |              |   |   |              |  
|Cash                                                                             | $ | 3,750        |   | $ | 25,257       |  
|Restricted cash                                                                  |   | -            |   |   | 38,781       |  
|Receivables                                                                      |   | -            |   |   | 2,225        |  
|Prepaids and deposits                                                            |   | 26,089       |   |   | 96,527       |  
|                                                                                 |   |              |   |   |              |  
|                                                                                 |   | 29,839       |   |   | 162,790      |  
|                                                                                 |   |              |   |   |              |  
|FURNITURE AND EQUIPMENT, net of depreciation of
      $53,430 (2007 - $48,347)   |   | 17,467       |   |   | 13,620       |  
|PROPERTY HELD FOR SALE                                                           |   |              |   |   |              |  
|Oil and gas properties, unproved (Note 3)                                        |   | -            |   |   | 79,117       |  
|                                                                                 |   |              |   |   |              |  
|TOTAL
      ASSETS                                                               | $ | 47,306       |   | $ | 255,527      |  
|                                                                                 |   |              |   |   |              |  
|                                                                                 |   |              |   |   |              |  
|LIABILITIES AND
      STOCKHOLDERS DEFICIT                                      |  
|                                                                                 |   |              |   |   |              |  
|CURRENT LIABILITIES                                                              |   |              |   |   |              |  
|Accounts payable and accrued
      liabilities                                   | $ | 1,551,084    |   | $ | 1,606,230    |  
|Share based
      compensation liability (Note 12)                               |   | 154,793      |   |   | 200,230      |  
|Convertible notes payable
      (Note 6)                                         |   | 112,500      |   |   | -            |  
|Notes payable
      (Note 5)                                                     |   | 197,313      |   |   | 399,375      |  
|Loans payable (Note 7)                                                           |   | -            |   |   | 79,117       |  
|Due to related parties (Note 9)                                                  |   | 330,110      |   |   | 108,400      |  
|                                                                                 |   |              |   |   |              |  
|TOTAL LIABILITIES                                                                |   | 2,345,800    |   |   | 2,393,352    |  
|                                                                                 |   |              |   |   |              |  
|                                                                                 |   |              |   |   |              |  
|CONTINGENCIES AND COMMITMENTS (Notes 1, 8, and 14)                               |   |              |   |   |              |  
|MEZZANINE EQUITY                                                                 |   |              |   |   |              |  
|Preferred stock, Series
      B, $0.001 par value, 30,000,000 shares authorized  |   |              |   |   |              |  
|16,479,493 (2007  Nil) issued and outstanding (Note
      10)                   |   | 5,620,000    |   |   | -            |  
|                                                                                 |   |              |   |   |              |  
|STOCKHOLDERS DEFICIT (Note 10)                                                  |   |              |   |   |              |  
|Common stock, $0.001 par value,
      250,000,000 shares authorized              |   |              |   |   |              |  
|36,232,931 (2007  28,159,824) shares issued and outstanding                     |   | 36,233       |   |   | 28,160       |  
|Additional paid-in capital                                                       |   | 19,274,772   |   |   | 20,299,565   |  
|Preferred stock,
      Series A, $0.001 par value, 100,000,000 shares authorized |   |              |   |   |              |  
|4,600,000 (2007  4,600,000) issued and outstanding                              |   | 4,600        |   |   | 4,600        |  
|Subscriptions
      receivable                                                   |   | (31,008      | ) |   | -            |  
|Private placement subscriptions
      proceeds                                   |   | 19,000       |   |   | 102,520      |  
|Deficit accumulated during the
      exploration stage                           |   | (27,222,091  | ) |   | (22,572,670  | )
|                                                                                 |   |              |   |   |              |  
|TOTAL STOCKHOLDERS DEFICIT                                                      |   | (7,918,494   | ) |   | (2,137,825   | )
|                                                                                 |   |              |   |   |              |  
|TOTAL LIABILITIES, MEZZANINE EQUITY AND
      STOCKHOLDERS DEFICIT              | $ | 47,306       |   | $ | 255,527      |  
|Subsequent Events (Note 15)                                                      |   |              |   |   |              |  

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

F-3

---

PLURIS ENERGY GROUP INC. 
  (An Exploration Stage Company) 
  CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                                         |   |              |   |   |              |   |   | November 15,   |  
|------------------------------------------------------------------------ | - | ------------ | - | - | ------------ | - | - | -------------- | -
|                                                                         |   |              |   |   |              |   |   | 2001           |  
|                                                                         |   | Year Ended   |   |   | Year Ended   |   |   | (Inception) to |  
|                                                                         |   | December 31, |   |   | December 31, |   |   | December 31,   |  
|                                                                         |   | 2008         |   |   | 2007         |   |   | 2008           |  
|                                                                         |   |              |   |   |              |   |   |                |  
|EXPENSES                                                                 |   |              |   |   |              |   |   |                |  
|Depreciation                                                             | $ | 5,083        |   | $ | 9,956        |   | $ | 53,430         |  
|General and
      administrative                                         |   | 417,676      |   |   | 760,938      |   |   | 2,845,227      |  
|Impairment of fixed assets                                               |   | -            |   |   | 25,285       |   |   | 25,285         |  
|Management and
      consulting fees (Notes 8,10 and 11)                 |   | 3,418,881    |   |   | 5,138,456    |   |   | 14,630,993     |  
|Professional fees                                                        |   | 912,431      |   |   | 512,387      |   |   | 2,912,594      |  
|                                                                         |   |              |   |   |              |   |   |                |  
|LOSS FROM
      OPERATIONS                                               |   | (4,754,071   | ) |   | (6,447,022   | ) |   | (20,467,529    | )
|                                                                         |   |              |   |   |              |   |   |                |  
|OTHER ITEMS                                                              |   |              |   |   |              |   |   |                |  
|Interest expense, net
      of interest income                           |   | (77,994      | ) |   | (129,112     | ) |   | (439,553       | )
|Loss on settlement of debt                                               |   | -            |   |   | -            |   |   | (239,448       | )
|Non-recurring costs of
      share exchange                              |   | -            |   |   | -            |   |   | (417,800       | )
|Impairment of other investment                                           |   | -            |   |   | (60,000      | ) |   | (150,000       | )
|Debt extinguishment (Note 6)                                             |   | (380,744     | ) |   | -            |   |   | (380,744       | )
|                                                                         |   | (458,738     | ) |   | (189,112     | ) |   | (1,627,545     | )
|                                                                         |   |              |   |   |              |   |   |                |  
|LOSS FROM CONTINUING OPERATIONS BEFORE INCOME                            |   | (5,212,809   | ) |   | (6,636,134   | ) |   | (22,095,074    | )
|TAXES                                                                    |   |              |   |   |              |   |   |                |  
|INCOME TAX
      BENEFIT FROM CONTINUING OPERATIONS                      |   | 197,186      |   |   | -            |   |   | 197,186        |  
|LOSS FROM CONTINUING OPERATIONS                                          |   | (5,015,623   | ) |   | (6,636,134   | ) |   | (21,897,888    | )
|                                                                         |   |              |   |   |              |   |   |                |  
|                                                                         |   |              |   |   |              |   |   |                |  
|DISCONTINUED OPERATIONS                                                  |   |              |   |   |              |   |   |                |  
|Results of oil and gas
      operations, (net of income tax of $197,186, |   | 366,202      |   |   | (869,093     | ) |   | (5,324,203     | )
|($nil) and
      $197,186                                                |   |              |   |   |              |   |   |                |  
|                                                                         |   |              |   |   |              |   |   |                |  
|NET LOSS                                                                 | $ | (4,649,421   | ) | $ | (7,505,227   | ) | $ | (27,222,091    | )
|                                                                         |   |              |   |   |              |   |   |                |  
|NET LOSS FROM CONTINUING OPERATIONS                                      | $ | (5,015,623   | ) | $ | (6,636,134   | ) | $ | (21,897,888    | )
|PREFERRED STOCK DIVIDEND (NOTE 10)                                       |   | (5,513,520   | ) |   | -            |   |   | (5,513,520     | )
|ACCRETION ON
      PREFERRED STOCK (NOTE 10)                             |   | (90,000      | ) |   |              |   |   | (90,000        | )
|NET LOSS AVAILABLE TO COMMON
      STOCKHOLDERS FROM                     |   |              |   |   |              |   |   |                |  
|CONTINUING OPERATIONS                                                    | $ | (10,619,143  | ) | $ | (6,636,134   | ) | $ | (27,501,408    | )
|LOSS ALLOCATED TO COMMON STOCKHOLDERS
      FROM                         |   |              |   |   |              |   |   |                |  
|DISCONTINUED
      OPERATIONS, NET OF TAX                                |   | 366,202      |   |   | (869,093     | ) |   | (5,324,203     | )
|NET LOSS AVAILABLE TO COMMON STOCKHOLDERS                                | $ | (10,252,941  | ) | $ | (7,505,227   | ) | $ | (32,825,711    | )
|                                                                         |   |              |   |   |              |   |   |                |  
|                                                                         |   |              |   |   |              |   |   |                |  
|BASIC AND DILUTED INCOME (LOSS) PER COMMON SHARE                         |   |              |   |   |              |   |   |                |  
|Loss from continuing operations                                          | $ | (0.15        | ) | $ | (0.45        | ) |   |                |  
|Income (loss) from
      discontinued operations                         | $ | 0.01         |   | $ | (0.06        | ) |   |                |  
|                                                                         |   |              |   |   |              |   |   |                |  
|Net loss                                                                 | $ | (0.14        | ) | $ | (0.51        | ) |   |                |  
|                                                                         |   |              |   |   |              |   |   |                |  
|WEIGHTED
      AVERAGE COMMON SHARES OUTSTANDING                         |   | 32,262,050   |   |   | 14,595,840   |   |   |                |  

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

F-4

---

PLURIS ENERGY GROUP INC. 
  (An Exploration Stage Company) 
  CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                |   |              |   |   |              |   |   | November 15,     |  
|------------------------------------------------------------------------------- | - | ------------ | - | - | ------------ | - | - | ---------------- | -
|                                                                                |   | Year ended   |   |   | Year ended   |   |   | 2001 (inception) |  
|                                                                                |   | December 31, |   |   | December 31, |   |   | to December 31,  |  
|                                                                                |   | 2008         |   |   | 2007         |   |   | 2008             |  
|                                                                                |   |              |   |   |              |   |   |                  |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                            |   |              |   |   |              |   |   |                  |  
|Net loss                                                                        | $ | (4,649,421   | ) | $ | (7,505,227   | ) | $ | (27,222,091      | )
|Adjust from income (loss) from
      discontinued operations                    |   | (366,202     | ) |   | 869,093      |   |   | 5,324,203        |  
|                                                                                |   |              |   |   |              |   |   |                  |  
|Adjustments to reconcile net
      loss from continuing operations to operating |   |              |   |   |              |   |   |                  |  
|cash flow:                                                                      |   |              |   |   |              |   |   |                  |  
|- depreciation                                                                  |   | 5,083        |   |   | 9,956        |   |   | 53,430           |  
|- accrued interest receivable                                                   |   | (3,445       | ) |   | -            |   |   | (3,708           | )
|- accrued interest expense                                                      |   | 84,688       |   |   | 74,699       |   |   | 276,965          |  
|- loss on settlement of debt                                                    |   | -            |   |   | -            |   |   | 239,448          |  
|- accrued management fees                                                       |   | 390,931      |   |   | 139,527      |   |   | 614,958          |  
|- non-recurring costs of share exchange                                         |   | -            |   |   | -            |   |   | 417,800          |  
|- stock-based compensation
      (Note 11)                                      |   | 1,795,366    |   |   | 4,026,806    |   |   | 9,264,567        |  
|- expenses paid by the issuance of shares                                       |   | 775,760      |   |   | 102,000      |   |   | 2,981,754        |  
|- loss on write down of other
      investments and fixed assets                |   | -            |   |   | 85,285       |   |   | 175,285          |  
|- debt extinguishment                                                           |   | 380,744      |   |   |              |   |   | 380,744          |  
|- income tax benefit                                                            |   | (197,187     | ) |   | -            |   |   | (197,186         | )
|Changes in operating assets and liabilities                                     |   |              |   |   |              |   |   |                  |  
|- receivables                                                                   |   | 936          |   |   | 13,834       |   |   | 68,711           |  
|- prepaids and deposits                                                         |   | 6,619        |   |   | (25,861      | ) |   | (53,293          | )
|- accounts payable and accrued liabilities                                      |   | 545,081      |   |   | 727,545      |   |   | 2,267,720        |  
|Net cash used in continuing operations                                          |   | (1,231,046   | ) |   | (1,482,343   | ) |   | (5,360,943       | )
|Net cash used in discontinued operations                                        |   | -            |   |   | (48,908      | ) |   | (1,832,441       | )
|NET CASH USED IN
      OPERATING ACTIVITIES                                     |   | (1,231,046   | ) |   | (1,531,251   | ) |   | (7,193,384       | )
|CASH FLOWS FROM INVESTING ACTIVITIES                                            |   |              |   |   |              |   |   |                  |  
|Purchase of furniture and equipment                                             |   | (8,930       | ) |   | (4,070       | ) |   | (96,182          | )
|Pre reverse acquisition
      advances from Petrogen Corp.                      |   | -            |   |   | -            |   |   | 100,000          |  
|Cash acquired on reverse acquisition of
      Petrogen Inc.                     |   | -            |   |   | -            |   |   | 868              |  
|Restricted cash                                                                 |   | 2,732        |   |   | 6,219        |   |   | (36,049          | )
|Proceeds on sale of other investments                                           |   | -            |   |   | -            |   |   | 30,000           |  
|Net cash from (used in)
      continuing investing activities                   |   | (6,198       | ) |   | 2,149        |   |   | (1,363           | )
|Net
      cash from (used in) discontinued investing activities                 |   | -            |   |   | 486,500      |   |   | (2,618,447       | )
|NET CASH FROM (USED IN) INVESTING ACTIVITIES                                    |   | (6,198       | ) |   | 489,349      |   |   | (2,619,810       | )
|CASH FLOWS FROM FINANCING ACTIVITIES                                            |   |              |   |   |              |   |   |                  |  
|Proceeds on sale of common
      stock including subscriptions received         |   | 635,100      |   |   | 760,920      |   |   | 6,560,874        |  
|Proceeds on sale of preferred shares, Series B                                  |   | 4,540        |   |   | -            |   |   | 4,540            |  
|Notes payable                                                                   |   | 681,501      |   |   | 357,250      |   |   | 986,904          |  
|Loans payable                                                                   |   | -            |   |   | (134,750     | ) |   | 700,250          |  
|Debenture payable                                                               |   | -            |   |   | -            |   |   | (138,302         | )
|Loans receivable                                                                |   | -            |   |   | -            |   |   | 925,000          |  
|Cash advances from former
      related parties                                 |   | -            |   |   | -            |   |   | 318,990          |  
|Advances from (to) related parties                                              |   | (105,403     | ) |   | (45,001      | ) |   | 508,438          |  
|NET CASH FLOWS FROM FINANCING ACTIVITIES                                        |   | 1,215,737    |   |   | 938,419      |   |   | 9,866,694        |  
|                                                                                |   |              |   |   |              |   |   |                  |  
|(DECREASE) INCREASE IN CASH                                                     |   | (21,507      | ) |   | (104,183     | ) |   | 3,750            |  
|CASH, BEGINNING                                                                 |   | 25,257       |   |   | 129,440      |   |   | -                |  
|CASH, ENDING                                                                    | $ | 3,750        |   | $ | 25,257       |   | $ | 3,750            |  
|Other non-cash transactions: Refer to Notes 9
      and 10.                     |   |              |   |   |              |   |   |                  |  
|SUPPLEMENTAL DISCLOSURE OF
      CASH FLOW INFORMATION:                         |   |              |   |   |              |   |   |                  |  
|Interest paid                                                                   | $ | -            |   | $ | -            |   | $ | 2,875            |  
|Income taxes paid                                                               | $ | -            |   | $ | -            |   | $ | -                |  

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

F-5

---

PLURISENERGYGROUPINC. 
  (AnExplorationStageCompany)(Unaudited) CONSOLIDATEDSTATEMENTOFSTOCKHOLDERSDEFICIT

FOR THEPERIODFROMNOVEMBER15, 2001(DATEOFINCEPTION)TODECEMBER31, 2008

|                                                                          |              |  |   |            |  |   |            |   |   |            |   |   | Deficit     |   |   |            |  
|------------------------------------------------------------------------- | ------------ |  | - | ---------- |  | - | ---------- | - | - | ---------- | - | - | ----------- | - | - | ---------- | -
|                                                                          |              |  |   |            |  |   |            |   |   |            |   |   | Accumulated |   |   |            |  
|                                                                          | Common Stock |  |   | Additional |  |   | Obligation |   |   | during the |   |   |             |  
|                                                                          | Number of    |  |   |            |  |   | Paid-in    |   |   | to issue   |   |   | Exploration |   |   |            |  
|                                                                          | Shares       |  |   | Amount     |  |   | Capital    |   |   | shares     |   |   | Stage       |   |   | Total      |  
|                                                                          |              |  |   |            |  |   |            |   |   |            |   |   |             |   |   |            |  
|Stock issued for cash, November 15, 2001 (Date
      of Inception)        | 1,304,311    |  | $ | 1,304      |  | $ | (1,194     | ) | $ | -          |   | $ | -           |   | $ | 110        |  
|Stock issued for cash, May 3, 2002                                        | 1,186        |  |   | 1          |  |   | (1         | ) |   | -          |   |   | -           |   |   | -          |  
|Stock Issued for oil and gas property, May
      20, 2002                 | 8,893        |  |   | 9          |  |   | (8         | ) |   | -          |   |   | -           |   |   | 1          |  
|Stock Issued for services, June 3, 2002                                   | 28,458       |  |   | 28         |  |   | 11,972     |   |   | -          |   |   | -           |   |   | 12,000     |  
|Stock issued for cash, July 8, 2002                                       | 11,857       |  |   | 12         |  |   | 24,988     |   |   | -          |   |   | -           |   |   | 25,000     |  
|Subscriptions received for 32,000 units, August 9, 2002                   | -            |  |   | -          |  |   | -          |   |   | 8,000      |   |   | -           |   |   | 8,000      |  
|Stock Issued for services, August 13, 2002                                | 5,929        |  |   | 6          |  |   | 2,494      |   |   | -          |   |   | -           |   |   | 2,500      |  
|Stock issued for subscriptions received in prior period, October
      7, |              |  |   |            |  |   |            |   |   |            |   |   |             |   |   |            |  
|2002                                                                      | 3,794        |  |   | 4          |  |   | 7,996      |   |   | (8,000     | ) |   | -           |   |   | -          |  
|Stock issued for cash, November 26, 2002                                  | 35,572       |  |   | 36         |  |   | 29,964     |   |   | -          |   |   | -           |   |   | 30,000     |  
|Net loss for the period November 15, 2001
      to December 31, 2002      | -            |  |   | -          |  |   | -          |   |   | -          |   |   | (193,562    | ) |   | (193,562   | )
|                                                                          |              |  |   |            |  |   |            |   |   |            |   |   |             |   |   |            |  
|Petrogen, Balance, December 31, 2002                                      | 1,400,000    |  |   | 1,400      |  |   | 76,211     |   |   | -          |   |   | (193,562    | ) |   | (115,951   | )
|Stock issued for acquisition costs, February 12, 2003                     | 60,000       |  |   | 60         |  |   | (60        | ) |   | -          |   |   | -           |   |   | -          |  
|Reverse acquisition of Petrogen Corp., February
      12, 2003            | 415,658      |  |   | 416        |  |   | 7317       |   |   | -          |   |   | -           |   |   | 7,733      |  
|Stock issued for exercise of options, March 21, 2003                      | 200,000      |  |   | 200        |  |   | 499,800    |   |   | -          |   |   | -           |   |   | 500,000    |  
|Obligation to issue 10,000 shares                                         | -            |  |   | -          |  |   | -          |   |   | 5,000      |   |   | -           |   |   | 5,000      |  
|Stock-based compensation, options granted on September 10,
      2003     | -            |  |   | -          |  |   | 362,230    |   |   | -          |   |   | -           |   |   | 362,230    |  
|Stock issued for exercise of options, September
      29, 2003            | 47,000       |  |   | 47         |  |   | 63,703     |   |   | -          |   |   | -           |   |   | 63,750     |  
|Obligation to issue shares reclassification                               | -            |  |   | -          |  |   | -          |   |   | (5,000     | ) |   | -           |   |   | (5,000     | )
|Stock-based compensation, options granted
      on November 1, 2003       | -            |  |   | -          |  |   | 360,215    |   |   | -          |   |   | -           |   |   | 360,215    |  
|Net loss                                                                  | -            |  |   | -          |  |   | -          |   |   | -          |   |   | (2,097,187  | ) |   | (2,097,187 | )
|Balance, December 31, 2003                                                | 2,122,658    |  | $ | 2,123      |  | $ | 1,369,416  |   | $ | -          |   | $ | (2,290,749  | ) | $ | (919,210   | )

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

F-6

---

PLURISENERGYGROUPINC. 
  (AnExplorationStageCompany)(Unaudited) CONSOLIDATEDSTATEMENTOFSTOCKHOLDERSDEFICIT

FOR THEPERIODFROMNOVEMBER15, 2001(DATEOFINCEPTION)TODECEMBER31, 2008

|                                                              |              |   |   |            |   |   |            |  |   |          |  |   | Deficit     |   |   |            |  
|------------------------------------------------------------- | ------------ | - | - | ---------- | - | - | ---------- |  | - | -------- |  | - | ----------- | - | - | ---------- | -
|                                                              |              |   |   |            |   |   |            |  |   |          |  |   | Accumulated |   |   |            |  
|                                                              | Common Stock |   |   | Additional |   |   | Obligation |  |   | during   |  |   |             |  
|                                                              | Number of    |   |   |            |   |   | Paid-in    |  |   | to issue |  |   | Exploration |   |   |            |  
|                                                              | Shares       |   |   | Amount     |   |   | Capital    |  |   | shares   |  |   | Stage       |   |   | Total      |  
|                                                              |              |   |   |            |   |   |            |  |   |          |  |   |             |   |   |            |  
|Balance, December 31, 2003                                    | 2,122,658    |   | $ | 2,123      |   | $ | 1,369,416  |  | $ | -        |  | $ | (2,290,749  | ) | $ | (919,210   | )
|Stock issued for exercise of options, January 14, 2004        | 40,000       |   |   | 40         |   |   | 39,960     |  |   | -        |  |   | -           |   |   | 40,000     |  
|Stock issued for exercise of options, January
      20, 2004  | 75,000       |   |   | 75         |   |   | 75,925     |  |   | -        |  |   | -           |   |   | 76,000     |  
|Stock cancelled, January 30, 2004                             | (10,000      | ) |   | (10        | ) |   | 10         |  |   | -        |  |   | -           |   |   | -          |  
|Stock issued for exercise of options, February
      11, 2004 | 329,000      |   |   | 329        |   |   | 387,171    |  |   | -        |  |   | -           |   |   | 387,500    |  
|Stock based compensation, options granted on March 4, 2004    | -            |   |   | -          |   |   | 947,550    |  |   | -        |  |   | -           |   |   | 947,550    |  
|Stock issued for exercise of options, April
      30, 2004    | 237,000      |   |   | 237        |   |   | 425,013    |  |   | -        |  |   | -           |   |   | 425,250    |  
|Stock issued for exercise of options, May 18, 2004            | 50,000       |   |   | 50         |   |   | 62,450     |  |   | -        |  |   | -           |   |   | 62,500     |  
|Stock issued for exercise of options, May
      21, 2004      | 261,920      |   |   | 262        |   |   | 327,139    |  |   | -        |  |   | -           |   |   | 327,401    |  
|Stock issued for exercise of options, June 1, 2004            | 4,000        |   |   | 4          |   |   | 4,996      |  |   | -        |  |   | -           |   |   | 5,000      |  
|Stock issued for exercise of options, June
      16, 2004     | 59,000       |   |   | 59         |   |   | 73,691     |  |   | -        |  |   | -           |   |   | 73,750     |  
|Stock based compensation, options granted on March 4, 2004    | -            |   |   | -          |   |   | 176,950    |  |   | -        |  |   | -           |   |   | 176,950    |  
|Stock issued for exercise of options, August
      12, 2004   | 200,000      |   |   | 200        |   |   | 299,800    |  |   | -        |  |   | -           |   |   | 300,000    |  
|Stock issued for settlement of debenture, August 18, 2004     | 586,938      |   |   | 587        |   |   | 938,514    |  |   | -        |  |   | -           |   |   | 939,101    |  
|Stock issued for cash, September 21, 2004                     | 1,476,800    |   |   | 1,476      |   |   | 1,819,524  |  |   |          |  |   | -           |   |   | 1,821,000  |  
|Stock based compensation, options granted on July 22, 2004    | -            |   |   | -          |   |   | 852,050    |  |   | -        |  |   | -           |   |   | 852,050    |  
|Stock issued for exercise of options, October
      12, 2004  | 6,000        |   |   | 6          |   |   | 8,994      |  |   | -        |  |   | -           |   |   | 9,000      |  
|Stock issued for exercise of options, November 1, 2004        | 4,000        |   |   | 4          |   |   | 5,996      |  |   | -        |  |   | -           |   |   | 6,000      |  
|Stock issued for exercise of options, November
      8, 2004  | 2,000        |   |   | 2          |   |   | 2,998      |  |   | -        |  |   | -           |   |   | 3,000      |  
|Stock-based compensation, options granted on October 1, 2004  | -            |   |   | -          |   |   | 70,100     |  |   | -        |  |   | -           |   |   | 70,100     |  
|Net loss                                                      | -            |   |   | -          |   |   | -          |  |   | -        |  |   | (4,003,722  | ) |   | (4,003,722 | )
|                                                              |              |   |   |            |   |   |            |  |   |          |  |   |             |   |   |            |  
|Balance, December 31, 2004                                    | 5,444,316    |   | $ | 5,444      |   | $ | 7,888,247  |  | $ | -        |  | $ | (6,294,471  | ) | $ | 1,599,220  |  

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

F-7

---

PLURISENERGYGROUPINC. 
  (AnExplorationStageCompany)(Unaudited) CONSOLIDATEDSTATEMENTOFSTOCKHOLDERSDEFICIT

FOR THEPERIODFROMNOVEMBER15, 2001(DATEOFINCEPTION)TODECEMBER31, 2008

|                                                                |              |  |   |            |  |   |            |   |   |          |  |   | Deficit     |   |   |           | 
|--------------------------------------------------------------- | ------------ |  | - | ---------- |  | - | ---------- | - | - | -------- |  | - | ----------- | - | - | --------- | 
|                                                                |              |  |   |            |  |   |            |   |   |          |  |   | Accumulated |   |   |           | 
|                                                                | Common Stock |  |   | Additional |  |   | Obligation |   |   | during   |  |   |             |  
|                                                                | Number of    |  |   |            |  |   | Paid-in    |   |   | to issue |  |   | Exploration |   |   |           | 
|                                                                | Shares       |  |   | Amount     |  |   | Capital    |   |   | shares   |  |   | Stage       |   |   | Total     | 
|                                                                |              |  |   |            |  |   |            |   |   |          |  |   |             |   |   |           | 
|Balance, December 31, 2004                                      | 5,444,316    |  | $ | 5,444      |  | $ | 7,888,247  |   | $ | -        |  | $ | (6,294,471  | ) | $ | 1,599,220 | 
|Stock issued for exercise of options, April 4, 2005             | 250,000      |  |   | 250        |  |   | 374,750    |   |   | -        |  |   | -           |   |   | 375,000   | 
|Stock issued for services, April 5, 2005                        | 6,000        |  |   | 6          |  |   | 14,694     |   |   | -        |  |   | -           |   |   | 14,700    | 
|Stock issued for exercise of options, May 1, 2005               | 49,468       |  |   | 49         |  |   | 146,121    |   |   | -        |  |   | -           |   |   | 146,170   | 
|Stock issued for services, May 1, 2005                          | 84,200       |  |   | 84         |  |   | 153,066    |   |   | -        |  |   | -           |   |   | 153,150   | 
|Stock issued for acquisition of pipeline, May 1, 2005           | 35,000       |  |   | 35         |  |   | 87,465     |   |   | -        |  |   | -           |   |   | 87,500    | 
|Stock issued for finders fees, May 1,
      2005               | 125,680      |  |   | 126        |  |   | (126       | ) |   | -        |  |   | -           |   |   | -         | 
|Stock issued for private placement, May 1, 2005                 | 24,000       |  |   | 24         |  |   | 29,976     |   |   | -        |  |   | -           |   |   | 30,000    | 
|Stock based compensation, options granted on
      May 2, 2005  | -            |  |   | -          |  |   | 48,700     |   |   | -        |  |   | -           |   |   | 48,700    | 
|Stock issued for services, May 16, 2005                         | 1,090        |  |   | 1          |  |   | 1,999      |   |   | -        |  |   | -           |   |   | 2,000     | 
|Stock issued for exercise of options, June
      1, 2005        | 40,000       |  |   | 40         |  |   | 99,960     |   |   | -        |  |   | -           |   |   | 100,000   | 
|Stock issued for private placement, June 1, 2005                | 12,000       |  |   | 12         |  |   | 14,988     |   |   | -        |  |   | -           |   |   | 15,000    | 
|Stock issued for conversion of debt, June 2,
      2005         | 47,006       |  |   | 47         |  |   | 82,213     |   |   | -        |  |   | -           |   |   | 82,260    | 
|Stock issued for services, June 2, 2005                         | 2,100        |  |   | 2          |  |   | 3,673      |   |   | -        |  |   | -           |   |   | 3,675     | 
|Stock-based compensation, options granted on
      July 1, 2005 | -            |  |   | -          |  |   | 211,200    |   |   | -        |  |   | -           |   |   | 211,200   | 
|Stock issued for services, September 1, 2005                    | 273,600      |  |   | 274        |  |   | 587,966    |   |   | -        |  |   | -           |   |   | 588,240   | 
|Stock issued for services, September 7, 2005                    | 1,000        |  |   | 1          |  |   | 2,499      |   |   | -        |  |   | -           |   |   | 2,500     | 
|Stock issued for services, September 12, 2005                   | 23,200       |  |   | 23         |  |   | 42,897     |   |   | -        |  |   | -           |   |   | 42,920    | 
|Stock issued for services, September 29, 2005                   | 600          |  |   | 1          |  |   | 2,129      |   |   | -        |  |   | -           |   |   | 2,130     | 
|Stock issued for exercise of options, September 29, 2005        | 4,000        |  |   | 4          |  |   | 4,996      |   |   | -        |  |   | -           |   |   | 5,000     | 
|Stock issued for exercise of options, October
      6, 2005     | 12,000       |  |   | 12         |  |   | 29,988     |   |   | -        |  |   | -           |   |   | 30,000    | 
|Stock issued for conversion of debt, October 6, 2005            | 10,000       |  |   | 10         |  |   | 36,490     |   |   | -        |  |   | -           |   |   | 36,500    | 
|Stock issued for conversion of debt, October
      12, 2005     | 7,000        |  |   | 7          |  |   | 13,993     |   |   | -        |  |   | -           |   |   | 14,000    | 
|                                                                |              |  |   |            |  |   |            |   |   |          |  |   |             |   |   |           | 
|Balance carried forward                                         | 6,452,260    |  | $ | 6,452      |  | $ | 9,877,884  |   | $ | -        |  | $ | (6,294,471  | ) | $ | 3,589,865 | 

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

F-8

---

PLURISENERGYGROUPINC. 
  (AnExplorationStageCompany)(Unaudited) CONSOLIDATEDSTATEMENTOFSTOCKHOLDERSDEFICIT

FOR THEPERIODFROMNOVEMBER15, 2001(DATEOFINCEPTION)TODECEMBER31, 2008

|                                                             |              |  |   |            |  |   |            |  |   |          |   |   |               |  |   | Deficit     |   |   |            |  
|------------------------------------------------------------ | ------------ |  | - | ---------- |  | - | ---------- |  | - | -------- | - | - | ------------- |  | - | ----------- | - | - | ---------- | -
|                                                             |              |  |   |            |  |   |            |  |   |          |   |   |               |  |   | Accumulated |   |   |            |  
|                                                             | Common Stock |  |   | Additional |  |   | Obligation |  |   | Share    |   |   | during        |  |   |             |  
|                                                             | Number of    |  |   |            |  |   | Paid-in    |  |   | to issue |   |   | subscriptions |  |   | Exploration |   |   |            |  
|                                                             | Shares       |  |   | Amount     |  |   | Capital    |  |   | shares   |   |   | receivable    |  |   | Stage       |   |   | Total      |  
|                                                             |              |  |   |            |  |   |            |  |   |          |   |   |               |  |   |             |   |   |            |  
|Balance carried forward                                      | 6,452,260    |  | $ | 6,452      |  | $ | 9,877,884  |  | $ | -        |   | $ | -             |  | $ | (6,294,471  | ) | $ | 3,589,865  |  
|Stock issued for exercise of options, October 18, 2005       | 16,533       |  |   | 17         |  |   | 44,983     |  |   | -        |   |   | -             |  |   | -           |   |   | 45,000     |  
|Stock issued for exercise of options, October
      24, 2005 | 83,223       |  |   | 83         |  |   | 160,196    |  |   | -        |   |   | -             |  |   | -           |   |   | 160,279    |  
|Stock issued for services, October 26, 2005                  | 1,700        |  |   | 2          |  |   | 5,609      |  |   | -        |   |   | -             |  |   | -           |   |   | 5,611      |  
|Stock issued for exercise of options, November
      7, 2005 | 6,000        |  |   | 6          |  |   | 7,494      |  |   | -        |   |   | -             |  |   | -           |   |   | 7,500      |  
|Stock issued for conversion of debt, November 7, 2005        | 2,383        |  |   | 3          |  |   | 7,147      |  |   | -        |   |   | -             |  |   | -           |   |   | 7,150      |  
|Stock issued for services, November 7, 2005                  | 2,380        |  |   | 2          |  |   | 7,137      |  |   | -        |   |   | -             |  |   | -           |   |   | 7,139      |  
|Stock issued for conversion of debt, November 28, 2005       | 10,221       |  |   | 10         |  |   | 24,517     |  |   | -        |   |   | -             |  |   | -           |   |   | 24,527     |  
|Beneficial conversion feature on warrants
      (Note 4)     | -            |  |   | -          |  |   | 245,600    |  |   | -        |   |   | -             |  |   | -           |   |   | 245,600    |  
|Share purchase warrants from acquisition of working interest | -            |  |   | -          |  |   | 18,600     |  |   | -        |   |   | -             |  |   | -           |   |   | 18,600     |  
|Obligation to issue shares                                   | -            |  |   | -          |  |   | -          |  |   | 59,250   |   |   | -             |  |   | -           |   |   | 59,250     |  
|Net loss                                                     | -            |  |   | -          |  |   | -          |  |   | -        |   |   | -             |  |   | (3,065,271  | ) |   | (3,065,271 | )
|                                                             |              |  |   |            |  |   |            |  |   |          |   |   |               |  |   |             |   |   |            |  
|Balance, December 31, 2005                                   | 6,574,700    |  |   | 6,575      |  |   | 10,399,167 |  |   | 59,250   |   |   | -             |  |   | (9,359,742  | ) |   | 1,105,250  |  
|Stock issued for private placement, January
      24, 2006   | 202,467      |  |   | 202        |  |   | 349,298    |  |   | -        |   |   | -             |  |   | -           |   |   | 349,500    |  
|Stock issued for debt settlement, January 24, 2006           | 38,328       |  |   | 38         |  |   | 105,363    |  |   | -        |   |   | -             |  |   | -           |   |   | 105,401    |  
|Stock issued for services, January 24, 2006                  | 106,000      |  |   | 106        |  |   | 291,394    |  |   | -        |   |   | -             |  |   | -           |   |   | 291,500    |  
|Stock issued for private placement, January 26, 2006         | 340,000      |  |   | 340        |  |   | 424,660    |  |   | -        |   |   | -             |  |   | -           |   |   | 425,000    |  
|Stock issued for warrants, January 26, 2006                  | 89,507       |  |   | 90         |  |   | 201,300    |  |   | -        |   |   | -             |  |   | -           |   |   | 201,390    |  
|Stock issued for termination agreement, January 26, 2006     | 15,000       |  |   | 15         |  |   | 59,235     |  |   | (59,250  | ) |   | -             |  |   | -           |   |   | -          |  
|Stock issued for debt settlement, January
      26, 2006     | 4,444        |  |   | 4          |  |   | 12,218     |  |   | -        |   |   | -             |  |   | -           |   |   | 12,222     |  
|Stock issued for services, January 26, 2006                  | 7,000        |  |   | 7          |  |   | 18,893     |  |   | -        |   |   | -             |  |   | -           |   |   | 18,900     |  
|Stock issued for private placement, February,
      2006     | 17,416       |  |   | 18         |  |   | 43,522     |  |   | -        |   |   | -             |  |   | -           |   |   | 43,540     |  
|                                                             |              |  |   |            |  |   |            |  |   |          |   |   |               |  |   |             |   |   |            |  
|Balance carried forward                                      | 7,394,862    |  | $ | 7,395      |  | $ | 11,905,050 |  | $ | -        |   | $ | -             |  | $ | (9,359,742  | ) | $ | 2,552,703  |  

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

F-9

---

PLURISENERGYGROUPINC. 
  (AnExplorationStageCompany)(Unaudited) CONSOLIDATEDSTATEMENTOFSTOCKHOLDERSDEFICIT

FOR THEPERIODFROMNOVEMBER15, 2001(DATEOFINCEPTION)TODECEMBER31, 2008

|                                                               |              |  |   |            |  |   |            |  |   |          |  |   |               |   |   | Deficit     |   |   |            |  
|-------------------------------------------------------------- | ------------ |  | - | ---------- |  | - | ---------- |  | - | -------- |  | - | ------------- | - | - | ----------- | - | - | ---------- | -
|                                                               |              |  |   |            |  |   |            |  |   |          |  |   |               |   |   | Accumulated |   |   |            |  
|                                                               | Common Stock |  |   | Additional |  |   | Obligation |  |   | Share    |  |   | during        |   |   |             |  
|                                                               | Number of    |  |   |            |  |   | Paid-in    |  |   | to issue |  |   | subscriptions |   |   | Exploration |   |   |            |  
|                                                               | Shares       |  |   | Amount     |  |   | Capital    |  |   | shares   |  |   | receivable    |   |   | Stage       |   |   | Total      |  
|                                                               |              |  |   |            |  |   |            |  |   |          |  |   |               |   |   |             |   |   |            |  
|Balance carried forward                                        | 7,394,862    |  | $ | 7,395      |  | $ | 11,905,050 |  | $ | -        |  | $ | -             |   | $ | (9,359,742  | ) | $ | 2,552,703  |  
|Stock issued for services, February 9, 2006                    | 100          |  |   | -          |  |   | 1,350      |  |   | -        |  |   | -             |   |   | -           |   |   | 1,350      |  
|Escrow stock issued March 1, 2006                              | 6,000,000    |  |   | 6,000      |  |   | 24,000     |  |   | -        |  |   | -             |   |   | -           |   |   | 30,000     |  
|Stock issued for exercise of options, March 7, 2006            | 140,000      |  |   | 140        |  |   | 413,260    |  |   | -        |  |   | -             |   |   | -           |   |   | 413,400    |  
|Stock issued for exercise of options, April
      17, 2006     | 86,060       |  |   | 86         |  |   | 142,638    |  |   | -        |  |   | -             |   |   | -           |   |   | 142,724    |  
|Stock issued for exercise of options, April 26, 2006           | 6,000        |  |   | 6          |  |   | 7,494      |  |   | -        |  |   | -             |   |   | -           |   |   | 7,500      |  
|Stock issued for debt settlement, June 28,
      2006          | 22,500       |  |   | 23         |  |   | 44,977     |  |   | -        |  |   | -             |   |   | -           |   |   | 45,000     |  
|Stock issued for private placement, August 9, 2006             | 12,525       |  |   | 12         |  |   | 30,210     |  |   | -        |  |   | -             |   |   | -           |   |   | 30,222     |  
|Stock issued for exercise of options, September
      22, 2006 | 1,000,000    |  |   | 1,000      |  |   | 559,001    |  |   | -        |  |   | -             |   |   | -           |   |   | 560,001    |  
|Stock issued for private placement, December 29, 2006          | 2,040,397    |  |   | 2,040      |  |   | 725,952    |  |   | -        |  |   | (25,000       | ) |   | -           |   |   | 702,992    |  
|Stock issued for warrants, December 29, 2006                   | 106,667      |  |   | 107        |  |   | 239,893    |  |   | -        |  |   | -             |   |   | -           |   |   | 240,000    |  
|Stock issued for debt settlement, December 29, 2006            | 30,123       |  |   | 30         |  |   | 21,433     |  |   | -        |  |   | -             |   |   | -           |   |   | 21,463     |  
|Stock issued for services, December 29, 2006                   | 50,000       |  |   | 50         |  |   | 18,850     |  |   | -        |  |   | -             |   |   | -           |   |   | 18,900     |  
|Beneficial conversion feature on loan payable                  | -            |  |   | -          |  |   | 626,250    |  |   | -        |  |   | -             |   |   | -           |   |   | 626,250    |  
|Net loss                                                       | -            |  |   | -          |  |   | -          |  |   | -        |  |   | -             |   |   | (5,707,701  | ) |   | (5,707,701 | )
|                                                               |              |  |   |            |  |   |            |  |   |          |  |   |               |   |   |             |   |   |            |  
|Balance, December 31, 2006                                     | 16,889,234   |  |   | 16,889     |  |   | 14,760,358 |  |   | -        |  |   | (25,000       | ) |   | (15,067,443 | ) |   | (315,196   | )
|Received subscription receivable, January 23, 2007             | -            |  |   | -          |  |   | -          |  |   | -        |  |   | 25,000        |   |   | -           |   |   | 25,000     |  
|Stock issued for note interest, March 14,
      2007           | 54,955       |  |   | 55         |  |   | 21,570     |  |   | -        |  |   | -             |   |   | -           |   |   | 21,625     |  
|Stock issued for note interest, May 7, 2007                    | 27,743       |  |   | 28         |  |   | 20,571     |  |   | -        |  |   | -             |   |   | -           |   |   | 20,599     |  
|Stock issued for note conversion, May 7, 2007                  | 1,375,000    |  |   | 1,375      |  |   | 273,625    |  |   | -        |  |   | -             |   |   | -           |   |   | 275,000    |  
|                                                               |              |  |   |            |  |   |            |  |   |          |  |   |               |   |   |             |   |   |            |  
|Balance carried forward                                        | 18,346,932   |  | $ | 18,347     |  | $ | 15,076,124 |  | $ | -        |  | $ | -             |   | $ | (15,067,443 | ) | $ | 27,028     |  

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

F-10

---

PLURISENERGYGROUPINC. 
  (AnExplorationStageCompany)(Unaudited) CONSOLIDATEDSTATEMENTOFSTOCKHOLDERSDEFICIT

FOR THEPERIODFROMNOVEMBER15, 2001(DATEOFINCEPTION)TODECEMBER31, 2008

|                                                                      | Common Stock |  |   |        |  |   |            |  |   |           |   |   |               |  |   |               |  |   |             |  
|--------------------------------------------------------------------- | ------------ |  | - | ------ |  | - | ---------- |  | - | --------- | - | - | ------------- |  | - | ------------- |  | - | ----------- | -
|                                                                      |              |  |   |        |  |   |            |  |   |           |   |   |               |  |   |               |  |   | Deficit     |  
|                                                                      |              |  |   |        |  |   |            |  |   |           |   |   | Private       |  |   |               |  |   | Accumulated |  
|                                                                      |              |  |   |        |  |   | Additional |  |   |           |   |   | placement     |  |   | Share         |  |   | during      |  
|                                                                      | Number of    |  |   |        |  |   | Paid-in    |  |   | Preferred |   |   | subscriptions |  |   | subscriptions |  |   | Exploration |  
|                                                                      | Shares       |  |   | Amount |  |   | Capital    |  |   | Shares    |   |   | proceeds      |  |   | receivable    |  |   | Stage       |  
|                                                                      |              |  |   |        |  |   |            |  |   |           |   |   |               |  |   |               |  |   |             |  
|Balance carried forward                                               | 18,346,932   |  | $ | 18,347 |  | $ | 15,076,124 |  | $ | -         |   | $ | -             |  | $ | -             |  | $ | (15,067,443 | )
|Issued 4,800,000 shares of preferred stock                            |              |  |   | -      |  |   | -          |  |   | 4,800     |   |   | -             |  |   | -             |  |   | -           |  
|Stock issued for private placement, June 15,
      2007               | 347,000      |  |   | 347    |  |   | 173,153    |  |   | -         |   |   | -             |  |   | -             |  |   | -           |  
|Stock issued for debt, June 15, 2007                                  | 207,733      |  |   | 208    |  |   | 72,499     |  |   | -         |   |   | -             |  |   | -             |  |   | -           |  
|Stock issued for note conversion, June 25,
      2007                 | 1,375,000    |  |   | 1,375  |  |   | 273,625    |  |   | -         |   |   | -             |  |   | -             |  |   | -           |  
|Stock issued for private placement, June 28, 2007                     | 1,684,000    |  |   | 1,684  |  |   | 419,316    |  |   | -         |   |   | -             |  |   | -             |  |   | -           |  
|Stock issued for exercise of options, August
      14, 2007           | 900,000      |  |   | 900    |  |   | 314,100    |  |   | -         |   |   | -             |  |   | -             |  |   | -           |  
|Stock issued for services, September 10, 2007                         | 100,000      |  |   | 100    |  |   | 56,900     |  |   | -         |   |   | -             |  |   | -             |  |   | -           |  
|Cancelled 200,000 shares of preferred stock                           |              |  |   | -      |  |   | 200        |  |   | (200      | ) |   | -             |  |   | -             |  |   | -           |  
|Stock issued for note conversion, September 26, 2007                  | 375,000      |  |   | 375    |  |   | 74,625     |  |   | -         |   |   | -             |  |   | -             |  |   | -           |  
|Stock issued for note interest, September
      26, 2007              | 7,574        |  |   | 7      |  |   | 3,576      |  |   | -         |   |   | -             |  |   | -             |  |   | -           |  
|Stock issued for private placement, September 28, 2007                | 731,429      |  |   | 732    |  |   | 199,268    |  |   | -         |   |   | -             |  |   | -             |  |   | -           |  
|Stock issued for exercise of options for cash,
      October 16, 2007 | 100,000      |  |   | 100    |  |   | 24,900     |  |   | -         |   |   | -             |  |   | -             |  |   | -           |  
|Stock issued for exercise of options, November 26, 2007               | 132,822      |  |   | 133    |  |   | 55,137     |  |   | -         |   |   | -             |  |   | -             |  |   | -           |  
|Stock issued for exercise of options, December
      14, 2007         | 2,575,000    |  |   | 2,575  |  |   | 1,279,925  |  |   | -         |   |   | -             |  |   | -             |  |   | -           |  
|Stock issued for exercise of warrants, December 14, 2007              | 878,876      |  |   | 879    |  |   | 438,559    |  |   | -         |   |   | -             |  |   | -             |  |   | -           |  
|Stock issued for private placement, December
      14, 2007           | 224,000      |  |   | 224    |  |   | 84,676     |  |   | -         |   |   | -             |  |   | -             |  |   | -           |  
|Stock issued for exercise of options for cash, December 14,           | 50,000       |  |   | 50     |  |   | 24,950     |  |   | -         |   |   | -             |  |   | -             |  |   | -           |  
|2007                                                                  |              |  |   |        |  |   |            |  |   |           |   |   |               |  |   |               |  |   |             |  
|Stock issued for debt, December 14, 2007                              | 124,458      |  |   | 124    |  |   | 149,226    |  |   | -         |   |   | -             |  |   | -             |  |   | -           |  
|Stock-based compensation                                              | -            |  |   | -      |  |   | 1,578,806  |  |   | -         |   |   | -             |  |   | -             |  |   | -           |  
|Private placement subscription proceeds (Note 10)                     | -            |  |   | -      |  |   | -          |  |   | -         |   |   | 102,520       |  |   | -             |  |   | -           |  
|Net loss                                                              | -            |  |   | -      |  |   | -          |  |   | -         |   |   | -             |  |   | -             |  |   | (7,505,227  | )
|                                                                      |              |  |   |        |  |   |            |  |   |           |   |   |               |  |   |               |  |   |             |  
|Balance, December 31, 2007                                            | 28,159,824   |  | $ | 28,160 |  | $ | 20,299,565 |  | $ | 4,600     |   | $ | 102,520       |  | $ | -             |  | $ | (22,572,670 | )

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

F-11

---

PLURISENERGYGROUPINC. 
  (AnExplorationStageCompany)(Unaudited) CONSOLIDATEDSTATEMENTOFSTOCKHOLDERSDEFICIT

FOR THEPERIODFROMNOVEMBER15, 2001(DATEOFINCEPTION)TODECEMBER31, 2008

|                                                                               | Common Stock |  |   |        |  |   |            |  |   |           |  |   |               |   |   |               |   |   |             |  
|------------------------------------------------------------------------------ | ------------ |  | - | ------ |  | - | ---------- |  | - | --------- |  | - | ------------- | - | - | ------------- | - | - | ----------- | -
|                                                                               |              |  |   |        |  |   |            |  |   |           |  |   |               |   |   |               |   |   | Deficit     |  
|                                                                               |              |  |   |        |  |   |            |  |   |           |  |   | Private       |   |   |               |   |   | Accumulated |  
|                                                                               |              |  |   |        |  |   | Additional |  |   |           |  |   | Placement     |   |   | Share         |   |   | during      |  
|                                                                               | Number of    |  |   |        |  |   | Paid-in    |  |   | Preferred |  |   | subscriptions |   |   | subscriptions |   |   | Exploration |  
|                                                                               | Shares       |  |   | Amount |  |   | Capital    |  |   | Shares    |  |   | proceeds      |   |   | receivable    |   |   | Stage       |  
|                                                                               |              |  |   |        |  |   |            |  |   |           |  |   |               |   |   |               |   |   |             |  
|Balance carried forward                                                        | 28,159,824   |  | $ | 28,160 |  | $ | 20,299,565 |  | $ | 4,600     |  | $ | 102,520       |   | $ | -             |   | $ | (22,572,670 | )
|Stock issued for private placement, March 28, 2008 (Note 10a(iii),(iv))        | 454,567      |  |   | 455    |  |   | 161,566    |  |   | -         |  |   | (102,520      | ) |   | -             |   |   | -           |  
|Stock issued for private placement, March 31,
      2008 (Note 10a(iv) and     | 577,200      |  |   | 577    |  |   | 145,973    |  |   | -         |  |   | -             |   |   | -             |   |   | -           |  
|10b(ix))                                                                       |              |  |   |        |  |   |            |  |   |           |  |   |               |   |   |               |   |   |             |  
|Stock issued for conversion of notes payable,
      March 31, 2008 (Notes 6    | 1,333,928    |  |   | 1,334  |  |   | 732,327    |  |   | -         |  |   | -             |   |   | -             |   |   | -           |  
|and 10b(viii))                                                                 |              |  |   |        |  |   |            |  |   |           |  |   |               |   |   |               |   |   |             |  
|Recognition of equity portion of convertible
      notes,                      | -            |  |   | -      |  |   | 113,958    |  |   | -         |  |   | -             |   |   | -             |   |   | -           |  
|March 31, 2008 (Note 6)                                                        |              |  |   |        |  |   |            |  |   |           |  |   |               |   |   |               |   |   |             |  
|Stock issued for exercise of options, March
      31, 2008 (Notes 4 and        | 87,500       |  |   | 88     |  |   | 43,662     |  |   | -         |  |   | -             |   |   | (31,008       | ) |   | -           |  
|10b(vii))                                                                      |              |  |   |        |  |   |            |  |   |           |  |   |               |   |   |               |   |   |             |  
|Stock issued for exercise of options, June
      5, 2008 (Note 10b(i))         | 100,000      |  |   | 100    |  |   | 49,900     |  |   | -         |  |   | -             |   |   | -             |   |   | -           |  
|Stock issued for bonus award, June 5, 2008 (Note 10b(ii))                      | 272,000      |  |   | 272    |  |   | 67,728     |  |   | -         |  |   | -             |   |   | -             |   |   | -           |  
|Stock issued for private placement, June 5,
      2008 (Note 10a(i),(ii),(iv)) | 915,383      |  |   | 915    |  |   | 286,185    |  |   | -         |  |   | -             |   |   | -             |   |   | -           |  
|Stock issued for finders fees, June 5, 2008 (Note 10b(iii))                   | 36,400       |  |   | 36     |  |   | 9,064      |  |   | -         |  |   | -             |   |   | -             |   |   | -           |  
|Stock issued for services, June 24, 2008 (Note
      10b(iv))                  | 60,000       |  |   | 60     |  |   | 14,340     |  |   | -         |  |   | -             |   |   | -             |   |   | -           |  
|Stock issued for bonus award, June 30, 2008 (Note 10b(v),(vi))                 | 160,000      |  |   | 160    |  |   | 53,440     |  |   | -         |  |   | -             |   |   | -             |   |   | -           |  
|Stock issued for bonus award, July 1, 2008
      (Note 10b(xii))               | 150,000      |  |   | 150    |  |   | 74,850     |  |   | -         |  |   | -             |   |   | -             |   |   | -           |  
|Stock issued for bonus award, July 8, 2008 (Note 10b(xi))                      | 250,000      |  |   | 250    |  |   | 59,750     |  |   | -         |  |   | -             |   |   | -             |   |   | -           |  
|Stock issued for private placement, July 30,
      2008 (Note 10b(x))          | 1,557,500    |  |   | 1,558  |  |   | 387,818    |  |   | -         |  |   | -             |   |   | -             |   |   | -           |  
|Stock issued for debt settlement, August 8, 2008 (Note 10b(xiii))              | 30,000       |  |   | 30     |  |   | 9,970      |  |   | -         |  |   | -             |   |   | -             |   |   | -           |  
|Stock issued for private placement, August
      25, 2008 (Note 10a(vi),(ii)   | 490,000      |  |   | 490    |  |   | 139,510    |  |   | -         |  |   | -             |   |   | -             |   |   | -           |  
|Stock issued for private placement, September 3, 2008 (Note
      10a(vi))     | 100,000      |  |   | 100    |  |   | 24,900     |  |   | -         |  |   | -             |   |   | -             |   |   | -           |  
|Stock issued for private placement, October
      7, 2008 (Note 10a(ii))       | 333,333      |  |   | 333    |  |   | 99,667     |  |   | -         |  |   | -             |   |   | -             |   |   | -           |  
|Stock issued for bonus award, October 7, 2008 (Note 10b(xiv))                  | 100,000      |  |   | 100    |  |   | 25,900     |  |   | -         |  |   | -             |   |   | -             |   |   | -           |  
|Stock issued for debt settlement, October 20,
      2008 (Note 10b(xv))        | 1,065,296    |  |   | 1,065  |  |   | 254,603    |  |   | -         |  |   | -             |   |   | -             |   |   | -           |  
|Stock-based compensation (Note 10)                                             | -            |  |   | -      |  |   | 1,795,366  |  |   | -         |  |   | -             |   |   | -             |   |   | -           |  
|Private placement subscription proceeds (Note
      10)                        | -            |  |   | -      |  |   | -          |  |   | -         |  |   | 19,000        |   |   | -             |   |   | -           |  
|                                                                               |              |  |   |        |  |   |            |  |   |           |  |   |               |   |   |               |   |   |             |  
|Balance carried forward                                                        | 36,232,931   |  | $ | 36,233 |  | $ | 24,850,042 |  | $ | 4,600     |  | $ | 19,000        |   | $ | ( 31,008      | ) | $ | (22,572,670 | )

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

F-12

---

PLURISENERGYGROUPINC. 
  (AnExplorationStageCompany)(Unaudited) CONSOLIDATEDSTATEMENTOFSTOCKHOLDERSDEFICIT

FOR THEPERIODFROMNOVEMBER15, 2001(DATEOFINCEPTION)TODECEMBER31, 2008

|                                                                  | Common Stock |  |   |        |  |   |            |   |   |           |  |   |               |  |   |               |   |   |             |  
|----------------------------------------------------------------- | ------------ |  | - | ------ |  | - | ---------- | - | - | --------- |  | - | ------------- |  | - | ------------- | - | - | ----------- | -
|                                                                  |              |  |   |        |  |   |            |   |   |           |  |   |               |  |   |               |   |   | Deficit     |  
|                                                                  |              |  |   |        |  |   |            |   |   |           |  |   | Private       |  |   |               |   |   | Accumulated |  
|                                                                  |              |  |   |        |  |   | Additional |   |   |           |  |   | Placement     |  |   | Share         |   |   | during      |  
|                                                                  | Number of    |  |   |        |  |   | Paid-in    |   |   | Preferred |  |   | subscriptions |  |   | subscriptions |   |   | Exploration |  
|                                                                  | Shares       |  |   | Amount |  |   | Capital    |   |   | Shares    |  |   | proceeds      |  |   | receivable    |   |   | Stage       |  
|                                                                  |              |  |   |        |  |   |            |   |   |           |  |   |               |  |   |               |   |   |             |  
|Balance carried forward                                           | 36,232,931   |  | $ | 36,233 |  | $ | 24,850,042 |   | $ | 4,600     |  | $ | 19,000        |  | $ | ( 31,008      | ) | $ | (22,572,670 | )
|                                                                  |              |  |   |        |  |   |            |   |   |           |  |   |               |  |   |               |   |   |             |  
|Revaluation of share based compensation liability
      (Note 12) | -            |  |   | -      |  |   | 45,437     |   |   | -         |  |   | -             |  |   | -             |   |   | -           |  
|Exercise of SARs (Note 11)                                        | -            |  |   | -      |  |   | (17,187    | ) |   | -         |  |   | -             |  |   | -             |   |   | -           |  
|Net loss                                                          | -            |  |   | -      |  |   | -          |   |   | -         |  |   | -             |  |   | -             |   |   | (4,649,421  | )
|Dividend on Series B Preferred Stock (Note 10)                    | -            |  |   | -      |  |   | (5,513,520 | ) |   | -         |  |   | -             |  |   | -             |   |   | -           |  
|Accretion of Series B Preferred Stock (Note
      10)             | -            |  |   | -      |  |   | (90,000    | ) |   | -         |  |   | -             |  |   | -             |   |   | -           |  
|                                                                  |              |  |   |        |  |   |            |   |   |           |  |   |               |  |   |               |   |   |             |  
|Balance, December 31, 2008                                        | 36,232,931   |  | $ | 36,233 |  | $ | 19,274,772 |   | $ | 4,600     |  | $ | 19,000        |  | $ | ( 31,008      | ) | $ | (27,222,091 | )

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

F-13

---

|PLURIS ENERGY GROUP INC.                  
|------------------------------------------
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|DECEMBER 31,
      2008                   

NOTE 1  NATURE OF OPERATIONS, GOING CONCERN AND BASIS OF
  PRESENTATION

Pluris Energy Group Inc. (the Company or Pluris) was
  incorporated in the State of Nevada. Its current mandate is to become an
  international oil and gas company engaged in the acquisition of producing oil
  and gas assets in Argentina. Pluris is currently positioned with three
  acquisition opportunities representing over 430,000 net acres of producing oil
  and gas assets situated within three Argentine hydrocarbon regions.

During the third quarter of 2006, the Company changed its
  principal focus to the acquisition and development of oil and gas properties in
  Argentina. In August 2006, the Company entered into an agreement to purchase all
  the issued and outstanding shares of San Enrique Petrolera, S.A. (SEPSA),
  incorporated under the laws of Argentina. Refer to Note 7. As a result of the
  geographic change in the Companys focus, the Companys USA properties have been
  disposed of and accordingly have been classified as discontinued operations
  since December 31, 2006. Refer to Note 3.

In November 2007, the Company entered into a Letter of Intent
  agreement with Clear S.R.L., of Comodoro Rivadavia, Argentina ("Clear"), whereby
  the Company retains the exclusive right to purchase and develop up to 100% of
  Clear's 186,000 square kilometer Cerro Negro concession, Chubut Province, Golfo
  San Jorge Basin, Argentina ("Cerro Negro"). Refer to Note 8.

In December 2007, the Company entered into a Letter of Intent
  agreement to acquire 100% of the shares of a Buenos Aires, Argentina based oil
  development and production company which hold leasehold assets primarily located
  in the Neuquén Basin, Rio Negro Province, Argentina. Refer to Note 8.

On July 1, 2008, the Company incorporated a subsidiary Pluris
  Sarmiento Petroleo SA, a private Argentine corporation for the purpose of
  effecting the Company's acquisition of the Cerro Negro concession. Refer to Note
  8.

These accompanying consolidated financial statements have been
  prepared on a going concern basis, which contemplates the realization of assets
  and the satisfaction of liabilities and commitments in the normal course of
  business. As at December 31, 2008, the Company has a working capital deficiency
  of $2,315,961 and has incurred significant losses since inception. The Companys
  continuance of operations is contingent on raising additional capital, settling
  its outstanding debts and on the future acquisition and successful development
  of oil and gas properties. Accordingly, these factors raise substantial doubt
  about the Companys ability to continue as a going concern. Production revenue,
  advances from certain significant shareholders and funding from private
  placements will form the primary source of short-term funding for the Company
  during the next twelve months, which is estimated at $42,310,000, primarily for
  oil and gas exploration and development expenses and holding costs. The
  continuation of the Company is dependent upon the continuing financial support
  of stockholders.

While the Company is expending its best efforts to achieve the
  above plans, there is no assurance that any such financings will occur. These
  consolidated financial statements do not include adjustments related to the
  recoverability and classification of recorded asset amounts or the amounts and
  classification of liabilities that may be necessary should the Company be unable
  to continue in existence

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of PresentationThese consolidated financial
  statements have been presented in United States dollars and prepared in
  accordance with United States Generally Accepted Accounting Principles (US
  GAAP).

Principles of ConsolidationThe consolidated
  financial statements include the accounts of the Company and its wholly-owned
  subsidiaries, Petrogen Inc. (Petrogen), and Pluris Energy Group, Inc. (Pluris
  BVI). All significant intercompany transactions and account balances have been
  eliminated.

Comparative figuresCertain prior year balances have
  been reclassified to conform to the current years presentation.

F-14

---

|PLURIS ENERGY GROUP INC.                      
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|DECEMBER 31,
      2008                       

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Securities Held for TradingThe Company does not
  hold securities in other companies for investment purposes. Any securities
  received as payment for or settlement of debt are classified as held for sale.

Oil and Gas PropertiesThe Company follows the full
  cost method of accounting for its oil and gas operations whereby all cost
  related to the acquisition of petroleum and natural gas interests are
  capitalized. Such costs include land and lease acquisition costs, annual
  carrying charges of non-producing properties, geological and geophysical costs,
  costs of drilling and equipping productive and non-productive wells, and direct
  exploration salaries and related benefits. In addition, the Company is the
  operator of its properties and as per its contract with third party working
  interest partners, the Company charges them operator fees. These operator fees
  represent a reimbursement of general and administration expenses which have been
  allocated to the exploration and maintenance of the Emily Hawes Field property.
  Proceeds from the disposal of oil and gas properties are recorded as a reduction
  of the related capitalized costs without recognition of a gain or loss unless
  the disposal would result in a change of 20 percent or more in the depletion
  rate. The Company operates in one cost center, being the U.S.A.

To date the Company has commenced initial production of gas but
  has not yet quantified proven reserves from evaluations from third party
  independent reservoir engineers. Depletion and depreciation of the carrying
  value of unproved oil and gas properties are computed using the
  unit-of-production method based on the estimated reserves of oil and gas as
  determined by management.

Estimated future removal and site restoration costs are
  provided over the life of proven reserves on a unit-of-production basis. Costs,
  which include the cost of production equipment removal and environmental
  clean-up, are estimated each period by management based on current regulations,
  costs, technology and industry standards. The charge is included in the
  provision for depletion and depreciation and the actual restoration expenditures
  are charged to the accumulated provision accounts as incurred.

The Company applies a ceiling test to capitalized costs to
  ensure that such costs do not exceed estimated future net revenues from
  production of proven reserves at year end market prices less future production,
  administrative, financing, site restoration, and income tax costs plus the lower
  of cost or estimated market value of unproved properties. If capitalized costs
  are determined to exceed estimated future net revenues, an impairment of the
  carrying value is charged in the period.

Use of Estimates and AssumptionsPreparation of the
  Companys financial statements in conformity with US GAAP requires management to
  make estimates and assumptions that affect certain reported amounts and
  disclosures. Accordingly, actual results could differ from those estimates.
  Significant areas requiring managements estimates and assumptions are reviewing
  the carrying values of oil and gas properties for impairment, determining fair
  value for stock based compensation, asset retirement obligations and the
  valuation of deferred tax assets.

Furniture and EquipmentFurniture and equipment are
  stated at cost. Depreciation is computed on a declining balance basis at 20-30%
  per year.

Foreign Currency TranslationThe financial
  statements are presented in United States dollars, the functional currency of
  the Company and its subsidiaries. In accordance with Statement of Financial
  Accounting Standard (SFAS) No. 52, "Foreign Currency Translation", foreign
  denominated monetary assets and liabilities are translated to their United
  States dollar equivalents using foreign exchange rates which prevailed at the
  balance sheet date. Revenue and expenses are translated at average rates of
  exchange during the period. Related currency translation adjustments and gains
  or losses resulting from foreign currency transactions are included in results
  of operations.

Net Earnings (Loss) per Common ShareBasic earnings
  (loss) per common share include no dilution and is computed by dividing income
  available to common stockholders by the weighted average number of common shares
  outstanding for the period. Dilutive earnings (loss) per share reflect the
  potential dilution of securities that could share in the earnings of the
  Company. Diluted loss per share figures are equal to those of basic loss per
  share for each period since the effects of convertible notes, stock options and
  warrants have been excluded as they are anti-dilutive. The 6,000,000 shares held
  in escrow do not form part of this computation - see Note 10.

F-15

---

|PLURIS ENERGY GROUP INC.                      
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|DECEMBER 31, 2008                             

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  (CONTINUED)

Revenue RecognitionOil and natural gas revenues are
  recorded using the sales method whereby the Company recognizes oil and natural
  gas revenue based on the amount of oil and gas sold to purchasers when title
  passes, the amount is determinable and collection is reasonably assured. Actual
  sales of gas are based on sales, net of the associated volume charges for
  processing fees and for costs associated with delivery, transportation,
  marketing, and royalties in accordance with industry standards. Operating costs
  and taxes are recognized in the same period of which revenue is earned.

Stock-Based CompensationOn January 1, 2006, the
  Company adopted SFAS No. 123 (revised 2004) (SFAS No. 123R), Share-Based
    Payment, which addresses the accounting for stock-based payment transactions
  in which an enterprise receives employee services in exchange for (a) equity
  instruments of the enterprise or (b) liabilities that are based on the fair
  value of the enterprises equity instruments or that may be settled by the
  issuance of such equity instruments. In January 2005, the Securities and
  Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 107, which
  provides supplemental implementation guidance for SFAS No. 123R. SFAS No. 123R
  eliminates the ability to account for stock-based compensation transactions
  using the intrinsic value method under Accounting Principles Board (APB) Opinion
  No. 25, Accounting for Stock Issued to Employees, and instead requires
  that such transactions be accounted for using a fair-value-based method. The
  Company uses the Black-Scholes-Merton (BSM) option-pricing model to determine
  the fair-value of stock-based awards under SFAS No. 123R.

Income TaxesThe Company utilizes the liability
  method of accounting for income taxes as set forth in SFAS No. 109, Accounting for Income Taxes(SFAS 109). Under the liability method,
  deferred taxes are determined based on the temporary differences between the
  financial statement and tax basis of assets and liabilities using tax rates
  expected to be in effect during the years in which the basis differences
  reverse. A valuation allowance is recorded when it is more likely than not that
  some of the deferred tax assets will not be realized.

On January 1, 2007 the Company adopted the provisions of FASB
  Interpretation No. 48, Accounting for Uncertainty in Income Taxes  An
    Interpretation of FASB Statement No. 109(FIN 48), which have been applied
  to all income tax positions commencing from that date. FIN 48 provides detailed
  guidance for the financial statement recognition, measurement and disclosure of
  uncertain tax positions recognized in an enterprises financial statements in
  accordance with SFAS 109. Income tax positions must meet a more-likely-than-not
  recognition threshold at the effective date to be recognized upon the adoption
  of FIN 48 and in subsequent periods. The Company recognizes potential accrued
  interest and penalties related to unrecognized tax benefits within operations as
  income tax expense. There was no impact to the consolidated financial statements
  on adoption of this provision.

Prior to 2007, the Company determined its income tax
  contingencies in accordance with SFAS No. 5, Accounting for
    Contingencies. The Company recorded estimated tax liabilities to the extent
  the contingencies were probable and could be reasonably estimated.

Fair Value of Financial Instruments 
  In accordance
  with the requirements of SFAS No. 107, the Company has determined the estimated
  fair value of financial instruments using available market information and
  appropriate valuation methodologies. The fair value of financial instruments
  classified as current assets or liabilities including cash, restricted cash,
  accounts receivable, notes receivable, prepaids and deposits, accounts payable
  and accrued liabilities, advances and loans payable, debenture payable and
  amounts due to related parties approximate carrying values due to the short-term
  maturity of the instruments.

Recent Accounting Pronouncements

| | a) | In September 2006, the Financial Accounting Standards
      Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS")
      No. 157, "Fair Value Measurements." The statement defines fair value,
      establishes a framework for measuring fair value in generally accepted
      accounting principles, and expands disclosures about fair value
      measurements. In February 2008, the FASB issued Staff Position No. FAS
      157-2 which proposed a one year deferral for the implementation of SFAS
      157 for non-financial assets and liabilities that are recognized or
      disclosed at fair value on a nonrecurring basis (less frequent than
      annually).
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | On January 1, 2008 we elected to implement this Statement
      with the one-year deferral. The adoption of SFAS No. 157 did not have a
      material impact on our financial position, results of operations or cash
      flows. Beginning January 1, 2009, we will adopt the provisions for
      non-financial assets and non-financial liabilities that are not required
      or permitted to be measured at fair value on a recurring basis. We are in
      the process of evaluating this standard in our consolidated financial
      statements for our fiscal year ended December 31,
      2009.                                                                                       

F-16

---

|PLURIS ENERGY GROUP INC.                      
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|DECEMBER 31, 2008                             

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  (CONTINUED)

Recent Accounting Pronouncements (Continued)

| | b) | In February 2007, the FASB issued SFAS No. 159, "The Fair
      Value Option for Financial Assets and Financial Liabilities- Including an
      Amendment of FASB Statement No. 115" ("FAS 159"). This Statement allows an
      entity the option to elect fair value for the initial and subsequent
      measurement for certain financial instruments and other items that are not
      currently required to be measured at fair value. If a company chooses to
      record eligible items at fair value, the company must report unrealized
      gains and losses on those items in earnings at each subsequent reporting
      date. FAS 159 also prescribes presentation and disclosure requirements for
      assets and liabilities that are measured at fair value pursuant to this
      standard. FAS 159 was effective for the Company as of January 1, 2008. The
      adoption of FAS 159 did not have a material impact on the Company's
      financial position or results of operations.                                                                                                                                                                                                                                                                                                                    
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | c) | In December 2007, the FASB issued Statement of Financial
      Accounting Standards No. 141 (revised 2007), Business Combinations
      (SFAS 141R). SFAS 141R changes the accounting for and reporting of
      business combinations including, among other things, expanding the
      definition of a business and a business combination; requiring all assets
      and liabilities of the acquired business, including goodwill, contingent
      assets and liabilities, and contingent consideration to be recorded at
      fair value on the acquisition date; requiring acquisition-related
      transaction and restructuring costs to be expensed, rather than accounted
      for as acquisition costs; and requiring reversals of valuation allowances
      related to acquired deferred tax assets and changes to acquired income tax
      uncertainties to be recognized in earnings. SFAS 141R applies
      prospectively to business combinations for which the acquisition date is
      on or after the beginning of the first annual reporting period beginning
      on or after December 15, 2008. Earlier application of SFAS 141R is
      prohibited. The Company has reached the conclusion that, at inception,
      this will have no impact on its consolidated financial
      statements.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | d) | In December 2007, the FASB issued SFAS No. 160,
      "Non-controlling Interests in Consolidated Financial Statements, an
      amendment of ARB No. 51" ("FAS 160"). This Statement establishes
      accounting and reporting standards for the non-controlling interest in a
      subsidiary and for the deconsolidation of a subsidiary. FAS 160 is
      effective for fiscal years, and interim periods within those fiscal years,
      beginning on or after December 15, 2008. Earlier adoption is prohibited.
      The Company does not expect that the adoption of FAS 160 will have a
      material effect on its financial position or results of
      operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | e) | In March 2008, the FASB issued EITF Issue No. 07-5,
      Determining Whether an Instrument (or Embedded Feature) is Indexed to an
      Entitys Own Stock. Effective for the Company as of January 1, 2009, EITF
      Issue No. 07-5 defines when adjustment features within contracts are
      considered to be equity-indexed. Early adoption of this standard is not
      permitted. Management is presently evaluating the impact of adopting EITF
      Issue No. 07-5 on the Companys consolidated financial
      statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | f) | In March 2008, the FASB issued FAS No. 161, "Disclosures
      about Derivative Instruments and Hedging Activities" ("FAS 161"). FAS 161
      amends and expands the disclosure requirements of FAS 133, "Accounting for
      Derivative Instruments and Hedging Activities" and requires qualitative
      disclosures about objectives and strategies for using derivatives,
      quantitative disclosures about fair value amounts of gains and losses on
      derivative instruments, and disclosures about credit-risk-related
      contingent features in derivative agreements. This statement is effective
      for financial statements issued for fiscal periods beginning after
      November 15, 2008. Earlier adoption is not permitted. We do not believe
      the adoption of FAS 161 will have a material impact on the disclosures in
      our consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                        
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | g) | In April 2008, the FASB issued FASB Staff Position
      ("FSP") FAS 142-3, "Determination of Useful Life of Intangible Assets"
      ("FSP FAS 142-3"). FSP FAS 142-3 amends the factors that should be
      considered in developing the renewal or extension assumptions used to
      determine the useful life of a recognized intangible asset under FAS 142,
      "Goodwill and Other Intangible Assets." FSP FAS 142-3 also requires
      expanded disclosure related to the determination of intangible asset
      useful lives. FSP FAS 142-3 is effective for fiscal years beginning after
      December 15, 2008. Earlier adoption is not permitted. We do not believe
      the adoption of FAS FSP 142-3 will have a material impact on our
      consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | h) | In May 2008, the FASB issued SFAS No. 162 (SFAS 162),
      The Hierarchy of Generally Accepted Accounting Principles. Under SFAS
      162, the GAAP hierarchy will now reside in the accounting literature
      established by the FASB. SFAS 162 identifies the sources of accounting
      principles and the framework for selecting the principles used in the
      preparation of financial statements in conformity with GAAP. SFAS 162 is
      effective 60 days following the SECs approval of the Public Accounting
      Oversight Board Auditing amendments to AU Section 411, The Meaning of
      Present Fairly in Conformity with Generally Accepted Accounting
      Principles. The Company does not expect the adoption of SFAS 162 to have
      a material impact on its financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

F-17

---

|PLURIS ENERGY GROUP INC.                      
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|DECEMBER 31, 2008                             

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  (CONTINUED)

Recent Accounting Pronouncements (Continued)

| | i) | In May 2008, the FASB issued FSP APB 14-1, Accounting
      for Convertible Debt Instruments That May Be Settled in Cash upon
      Conversion (Including Partial Cash Settlement). Effective for the Company
      as of January 1, 2009, FSP APB 14-1 applies to convertible debt
      instruments that, by their stated terms, may be settled in cash (or other
      assets) upon conversion, including partial cash settlement, unless the
      embedded conversion option is required to be separately accounted for as a
      derivative under SFAS No. 133. FSP APB 14-1 requires the liability and
      equity components of convertible debt instruments within its scope to be
      separately accounted for in a manner that will reflect the entitys
      nonconvertible debt borrowing rate when interest expense is recognized in
      subsequent periods. The resulting equity component (the conversion option)
      is not re- measured as long as long as it continues to meet the conditions
      for equity classification in EITF No. 00-19, Accounting for Derivative
      Financial Instruments Indexed to, and Potentially Settled in, a Companys
      Own Stock. Early adoption of this standard is not permitted. Management
      is evaluating the impact of adopting FSP APB 14-1 on the Companys
      consolidated financial statements.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | j) | In June 2008, the FASB issued SFAS Statement EITF 03-6-1,
      which addresses whether instruments granted in share-based payment
      transactions are participating securities prior to vesting and, therefore,
      need to be included in the earnings allocation in computing earnings per
      share (EPS) under the two-class method described in paragraphs 60 and 61
      of FASB Statement No. 128, Earnings per Share.EITF 03-6-1 is not
      expected to have a material impact on the Companys consolidated financial
      statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | k) | In November 2008, the Financial Accounting Standards
      Board (the FASB) voted on the effective date and other amendments of
      proposed FASB Staff Position FAS 140-4 and FIN 46(R)-8, Disclosures about
      Transfers of Financial Assets and Interests in Variable Interest Entities
      (FSP FAS 140-4 and FIN 46R-8). FSP FAS 140-4 and FIN 46R-8 would amend
      SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets
      and Extinguishments of Liabilities  as amended (SFAS 140) and FASB
      Interpretation No. 46 (revised December 2003), Consolidation of Variable
      Interest Entities (FIN 46R) to require enhanced disclosures by public
      entities about transfers of financial assets and interests in variable
      interest entities, and provide users of the financial statements with
      greater transparency about a transferors continuing involvement with
      transferred financial assets and an enterprises involvement with variable
      interest entities. The disclosures required by FSP FAS 140-4 and FIN 46R-8
      will be effective for reporting periods (interim and annual) ending after
      December 15, 2008. The Company has reached the conclusion that this will
      have no impact on its consolidated financial
      statements                                  

F-18

---

|PLURIS ENERGY GROUP INC.                      
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|DECEMBER 31, 2008                             

NOTE 3  DISCONTINUED OPERATIONS

December 31,
      
      
      Incurred in
      
      
      December 31,
      
      
      Incurred in
      
      
      December2006
      
      
      the year
      
      
      2007
      
      
      the period
      
      
      31. 2008Oil and Gas Properties, UnprovedAcquisition costs
      $
      868,146
      
      $
      (500,000
      )
      $
      368,146
      
      $
      -
      
      $
      368,146Exploration costs
      
      2,665,123
      
      
      15,014
      
      
      2,680,137
      
      
      -
      
      
      2,680,1373,533,269
      
      
      (484,986
      )
      
      3,048,283
      
      
      -
      
      
      3,048,283Less accumulated
        depletion and impairment
      
      (2,160,514
      )
      
      (808,652
      )
      
      (2,969,166
      )
      
      -
      
      
      (2,969,166
      )Less
        disposition of property
      
      -
      
      
      -
      
      
      -
      
      
      (79,117
      )
      
      (79,117
      )$
      1,372,755
      
      $
      (1,293,638
      )
      $
      79,117
      
      $
      (79,117
      )
      $
      -


Following a period of poor financial performance and continued
  losses on its United States oil and gas operations, the Company commenced a
  process to sell its United States oil and gas properties. Accordingly, the
  results of US oil and gas operations were classified as discontinued operations
  in the consolidated statements of operations and the assets were classified on
  the consolidated balance sheets as property held for sale. The consolidated
  statements of cash flows for the year ended December 31, 2008 and 2007 and from
  November 15, 2001 (inception) to December 31, 2008 for operating activities,
  investing activities, and financing activities have been separated between
  continuing and discontinued operations.

During the year ending December 31, 2007, the Company incurred
  exploration costs of $15,014 on its properties, sold the Emily Hawes Field and
  Matagorda Pipeline properties for $500,000, and depleted the properties by $165.
  An impairment charge of $806,973 was recorded during the year ended December 31,
  2007 to reflect the estimated net realizable value of the Tiller Ranch property
  as described below. The Company also recorded additional impairment of $1,514 on
  its other properties that were written down to nil in the year ending December
  31, 2007.

The loss from discontinued operations is summarized as follows:

|                                                      |   | Year ended   |   |   | Year ended   |   |   | November 15, 2001 |  
|----------------------------------------------------- | - | ------------ | - | - | ------------ | - | - | ----------------- | -
|                                                      |   | December 31, |   |   | December 31, |   |   | (Inception) to    |  
|                                                      |   | 2008         |   |   | 2007         |   |   | December 31, 2008 |  
|                                                      |   |              |   |   |              |   |   |                   |  
|Revenue - gas sales                                   | $ | -            |   | $ | 23,012       |   | $ | 542,632           |  
|                                                      |   |              |   |   |              |   |   |                   |  
|Operating expenses                                    |   |              |   |   |              |   |   |                   |  
|Depletion                                             |   | -            |   |   | 165          |   |   | 25,643            |  
|Financing fees                                        |   | -            |   |   | -            |   |   | 871,850           |  
|Lease operating expenses                              |   | -            |   |   | 44,371       |   |   | 342,486           |  
|Impairment of oil and
      gas properties            |   | -            |   |   | 808,487      |   |   | 2,943,524         |  
|General and administrative                            |   | -            |   |   | 39,082       |   |   | 2,049,534         |  
|                                                      |   |              |   |   |              |   |   |                   |  
|                                                      |   | -            |   |   | 892,105      |   |   | 6,233,037         |  
|                                                      |   |              |   |   |              |   |   |                   |  
|Net operating loss                                    |   | -            |   |   | (869,093     | ) |   | (5,690,405        | )
|Gain on dissolution of United States
      subsidiary |   | 563,388      |   |   | -            |   |   | 563,388           |  
|Income taxes                                          |   | (197,186     | ) |   | -            |   |   | (197,186          | )
|                                                      |   |              |   |   |              |   |   |                   |  
|Gain (loss) on
      discontinued operations          | $ | 366,202      |   |   | (869,093     | ) | $ | (5,324,203        | )

At December 31, 2007, the Company recorded an impairment charge
  of $806,973 on the capitalized acquisition and development costs of $888,207 and
  recorded depletion of $2,117 leaving a net book value of $79,117 as a result of
  the default and subsequent settlement of a collateral note payable. See Note 6.

On April 8, 2008, pursuant to the assignment of Petrogens (the
  Companys US subsidiary) assets, Petrogen was wound-up and dissolved through
  filing for dissolution with the Colorado Secretary of State. All outstanding
  financial obligations, security interest liens, subordinate security interests,
  other subordinate liens and/or outstanding amounts invoiced to and/or held over
  Petrogen, if any, by third party creditors of Petrogen, have been fully
  discharged and terminated as of January 8, 2008, resulting in the wind-up being
  completed with no further outstanding financial obligations. The Company has
  recognized $563,388 gain on write-off of payables arising from the settlement
  and dissolution of Petrogen and all of its outstanding financial obligations.
  Refer to Note 7.

F-19

---

|PLURIS ENERGY GROUP INC.                      
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|DECEMBER 31, 2008                             

NOTE 4  SHARE SUBSCRIPTION RECEIVABLE

During 2008, the Company received an unsecured promissory note
  receivable for $27,563 bearing 12.5% per annum interest and due on December 31,
  2008. At December 31, 2008, interest accrued amounted to $3,445 for total share
  subscription receivable of $31,008 and has been recorded as a reduction to
  equity. The share subscription receivable arose from the exercise of 87,500
  stock options at $0.50 per share. (Note 12)

NOTE 5  NOTES PAYABLE

Balance, December 31, 2007
      $
      399,375Notes issued
      
      681,500Accrued interest at 12.5%
      
      85,188Amended to include conversion terms
      
      (579,375
      )Assigned for settlement
      
      (389,375
      )Balance, December 31, 2008
      $
      197,313


The note payable is unsecured, due on demand and bears interest
  at 12.5% per annum

As at December 31, 2008 the Company has notes payable
  outstanding totaling $197,313 including accrued interest of $21,924 (December
  31, 2007: $399,375 including accrued interest of $44,375) which are unsecured,
  due on demand, and bear interest at 12.5% per annum. During 2008, the Company
  issued an additional seven promissory notes for $681,500 with the same terms as
  the previous notes, accrued $85,188 interest on those notes, and then amended
  six of the promissory notes totaling $579,375 including accrued interest of
  $64,375 to include conversion terms. Refer to Note 6.

On July 30, 2008, the Company entered into a private placement
  agreement with a private company that provides services to the Company of a
  director and officer of the Company for 1,557,500 units at $0.25 per unit for
  total proceeds of $389,375, with each unit consisting of one common share and
  one common share purchase warrant, with each common share purchase warrant
  exercisable at $0.50 per common share for a period of 2 years from the date of
  issuance. The private placement agreement was entered into by the Company in
  settlement of $389,375 notes payable to a company which the director and officer
  is able to exercise significant influence over and assigned the notes payable to
  the private company that provides services to the Company of a director and
  officer of the Company. Refer to Notes 9 and 10(b).

During the year ending December 31, 2007, the Company issued
  ten promissory notes totaling $420,000 which are unsecured, due on demand, and
  bear interest at 12.5% . During the first quarter of 2007 the Company repaid
  three promissory notes totaling $65,000 plus fixed interest charges of $8,125.
  As of December 31, 2007, seven promissory notes totaling $355,000 plus accrued
  interest charges of $44,375 remain outstanding, for a total of $399,375.

NOTE 6  CONVERTIBLE NOTES PAYABLE

On March 28, 2008 (the Amendment Date), the Company entered
  into an Amendment Agreement (the Promissory Note Amendment Agreement) whereby
  terms of six promissory notes totaling $579,375 including accrued interest of
  $64,375 were amended providing for conversion rights into units (Units) of the
  Company for all of or portions of the principal and accrued interest. The Notes
  are convertible at $0.35 where each Unit is comprised of one common share and
  one common share purchase warrant. Each share purchase warrant is exercisable
  commencing 90 days subsequent to the date of the conversion for a period of two
  years from the date of conversion at an exercise price of $0.70 per warrant. The
  Company estimated the fair value of the amended convertible notes by comparing
  the carrying value of the old notes with the value of the shares and warrants
  underlying the new convertible notes. Management determined that the interest
  rate approximated the true market rate at the time. The common shares were
  valued using the quoted market value of the Companys common share on the
  amendment date while the warrants were valued using the Black-Scholes valuation
  model. The Company estimated the fair value of the share purchase warrants
  granted to be $266,786 by applying the fair value method using the Black-Scholes
  option pricing model using an expected life of two years, exercise price of
  $0.70, a risk-free interest rate of 1.75% and an expected volatility of 128%.
  The excess of the total fair value of consideration and the fair value of the
  debt was $380,744 and has been accounted for as a loss on extinguishment in the
  Consolidated Statement of Operations for the year ended December 31, 2008.

F-20

---

|PLURIS ENERGY GROUP INC.                      
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|DECEMBER 31, 2008                             

NOTE 6  CONVERTIBLE NOTES PAYABLE (CONTINUED)

On March 31, 2008, a total of $466,875 (including accrued
  interest of $51,875) of convertible notes were converted into 1,333,928 Units.
  On conversion, the fair value of $266,786 allocated to warrants was charged to
  the equity component of convertible notes of $380,744 in additional paid-in
  capital.

As at December 31, 2008, a total of $112,500 (including accrued
  interest of $12,500) of convertible notes were outstanding and due on February
  7, 2009. As at April 15, 2009, the company negotiated with the lender a
  six-month extension on the maturity date of the promissory note, which are now
  due on August 7, 2009.

NOTE 7  LOANS PAYABLE

Effective April 28, 2006 the Company entered into three
  convertible loan agreements which were secured by the assets of the Companys
  subsidiary Petrogen. The loans bear interest at LIBOR plus 5% per annum, and
  interest is payable each quarter commencing six months after the first receipt
  of funds. The first note of $275,000 was due on April 1, 2007, and was converted
  into 1,375,000 common shares on May 7, 2007. The second note of $275,000 was due
  on June 13, 2007, and converted into 1,375,000 common shares on June 25, 2007.
  The remaining note of $285,000 was due one year after receipt of funds, being
  September 7, 2007. On March 14, 2007, $134,750 was repaid in cash and on
  September 26, 2007, $75,000 was converted into 375,000 common shares, leaving a
  balance of $75,250 plus $3,867 in accrued interest.

These convertible loan agreements had a ratchet provision
  adjusting the conversion price downward based on any subsequent equity issuances
  at prices less than the original conversion price of $1.00 per share
  (post-reverse split). The original conversion price was $1.00 but was adjusted
  to $0.20 pursuant to a private placement at $0.20 per common share during the
  year ended December 31, 2006. In connection with this provision, the Company
  recorded in 2006 the beneficial conversion feature resulting from the repricing
  of the conversion feature as non-cash financing fees of $626,250 which
  represents the difference between the original conversion price and the adjusted
  conversion price.

The first interest payment on all loans of $21,463 due on
  October 28, 2006 was paid by the Company on December 29, 2006 by issuing an
  aggregate of 30,123 common shares to the secured parties.

During the year ended December 31, 2007, the Company issued an
  aggregate of 90,272 common shares to the secured parties for the accrued
  interest outstanding at December 31, 2006 of $21,625, March 31, 2007 of $20,599,
  and June 30, 2007 of $3,583.

On September 10, 2007, the Company received a demand notice
  (the Demand) for the immediate payment of an outstanding note payable in the
  amount of $75,250 plus $3,867 of accrued interest. The note carried a guaranteed
  security agreement (GSA) over the assets of Petrogen as collateral to the GSA.
  Petrogen defaulted under the Note, whereby the Note holder exercised its right
  to accept the collateral described in the GSA in full satisfaction of Petrogens
  obligation under the Note. The Note Holder sent to Petrogen a properly
  authenticated proposal to accept Petrogens collateral in full satisfaction of
  the above described debt as required by the TEXAS BUSINESS & COMMERCE CODE,
  §9.620. On October 8, 2007 the Company and Petrogen consented to the proposal.
  The Note holders subsequent acceptance of the collateral in full satisfaction
  of the obligation it secures: (a) discharges Petrogens, obligation to the
  extent consented to by Petrogen.; (b) transfers to the secured party all of
  Petrogens rights in the collateral; (c) discharges the security interest lien
  over Petrogen and (d) terminates any subordinate security interest or other
  subordinate liens over Petrogen by other third party creditors, as described
  under TEXAS BUSINESS & COMMERCE CODE §9.622. As of December 31, 2008, the
  Company has completed assignment of Petrogens assets to the note holder. Refer
  also to Note 3.

NOTE 8  ACQUISITIONS

SAN ENRIQUE PETROLERA S.A.On August 18, 2006, the
  Company entered into a share purchase agreement (SPA) with four individuals to
  purchase all the issued and outstanding shares of San Enrique Petrolera, S.A.
  (SEPSA), incorporated under the laws of Argentina. SEPSAs interests include
  five hydrocarbon producing properties located in three of Argentinas five oil
  and gas producing basins. In order to secure the rights to purchase SEPSA, an
  Escrow Agreement (the Escrow) was entered into between the Company, SEPSA and
  Deutsche Bank Trust Company Americas, New York (DB), whereby the Company
  issued a $3,225,000 convertible, non-retractable redeemable unsecured bond (the
  Bond) in the name of Pluris Energy Group Inc., which has been placed into the
  Escrow at DB. Terms of the Escrow stipulate certain conversion provisions of the
  Bond predicated upon the performance of both SEPSA and the Company. In the event
  that the Bond is transferred from the Company to SEPSA, SEPSA will retain
  certain privileges of Bond conversion into common shares of the Company at
  prices ranging from $3.25 per common share to $9.25 per common share. The Bond
  is due in five years time at an interest rate of LIBOR plus 5%, with a floor of
  10.5% and a ceiling of 13%. Interest on the Bond can be paid in

F-21

---

|PLURIS ENERGY GROUP INC.                      
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|DECEMBER 31, 2008                             

NOTE 8  ACQUISITIONS (CONTINUED)

SAN ENRIQUE PETROLERA S.A. (CONTINUED)

common share equity of the Company at the Companys discretion.
  This Bond will not be considered issued and outstanding for accounting purposes
  until such time as the Bond is transferred to SEPSA.

One of the five properties owned by SEPSA, known as Tierra Del
  Fuego (TDF) is the subject of a Joint Venture agreement (the JV) with four
  other JV participants, each of which possesses a Right of First Refusal (the
  ROFR) to purchase SEPSAs interest in TDF under a match or pass status. In
  October of 2006, SEPSA provided the four JV participants to TDF, notification of
  the Company having won the bid to purchase SEPSA, and under such notification,
  those JV participants were provided with 30 days to match the Companys
  allocation on the TDF property, or pass on their ROFR, thereafter enabling the
  Company to complete its acquisition of SEPSA, inclusive of all or part of
  SEPSAs interests in the TDF property. Prior to the end of that 30 day
  notification period, two of the four JV participants commenced proceedings
  against SEPSA in the Argentine Commercial Courts seeking intermediary action
  pursuant to their rights under the terms of the JVs ROFR. On March 22, 2007 the
  Company was advised by SEPSA that as an outcome to those proceedings, two
  injunctions were imposed by the Argentina National Commercial Court of Appeals
  on behalf of Apco Argentina Inc. (Apco) and Antrim Energy Inc. (Antrim)
  prohibiting the sale of SEPSAs shares to the Company until such time as the
  ROFR issues between SEPSA, Apco and Antrim are resolved.

As a result of the injunctions imposed by Apco and Antrim,
  based upon the confirmation by the National Commercial Court of Appeals of the
  injunctions, on April 23, 2007, the Company informed SEPSAs shareholders that
  they should abstain from selling or disposing in any manner to any third party
  any of the Shares that SEPSA have undertaken to sell to the Company under the
  terms of the SPA and that SEPSA should abstain from disposing any of the assets
  it owned at the time the SPA was signed. In response, SEPSA informed the Company
  of its unilateral repudiation of the SPA, stating that as an effect of the
  injunctions imposed by Apco and Antrim, the SPA could be terminated. The Company
  maintains that the terms of the SPA clearly stipulate that any dispute arising
  under the SPA must be mutually addressed between the Company and SEPSA through
  the International Chamber of Commerce, Paris, France. Therefore, the Company
  commenced an arbitral action against SEPSA through The Secretariat of the Court,
  International Court of Arbitration, International Chamber of Commerce, Paris,
  France (the ICC), requesting the ICC to enforce SEPSAs obligations under the
  terms agreed upon in the SPA and to sell 100% of the shares of SEPSA and that
  their other obligations set forth under the SPA are in full force and effect and
  to award damages incurred by the Company. In December 2007, SEPSA and the
  Company completed the execution of Terms of Reference (the TOR), whereby under
  the TOR, SEPSA and the Company mandated to the ICC the specific issues that the
  ICC should address related to both parties complaints and to what issues the ICC
  should make declarations under pursuant to the arbitral proceedings between
  SEPSA and the Company. Under the TOR, there is a specific schedule that has been
  agreed upon between SEPSA, the Company and the ICC, whereby the Company and
  SEPSA must submit to the ICC, specific requested materials at specific dates in
  order to move the arbitral process towards a conclusion. As at the December 31,
  2007, both SEPSA and the Company had filed their respective offerings of
  evidence related to their specific claims and the parties were awaiting a reply
  from the ICC arbitral tribunal as to what evidence that has been offered by both
  parties will be accepted by the tribunal. Subsequent to the TOR being agreed
  upon by the parties, the ICC requested from both the Company and SEPSA an amount
  of US$150,000 each, for payment towards the costs associated on behalf of the
  ICC for the continuation of the arbitral proceedings. In that regard, due to
  SEPSAs refusal to make said payment to the ICC as noted, the Companys
  Argentine litigation council advised that the Company should pay the portion
  requested of SEPSA to ensure continuation of the arbitral proceedings;
  therefore, the Company made a total payment to the ICC in the amount of $300,000
  during the nine-month period ended September 30, 2008 and recorded this to
  professional fees for costs associated on behalf of the ICC for the continuation
  of the arbitral proceedings. During the six-month period ended June 30, 2008,
  the Company and SEPSA attended a hearing at the request of and before the ICC
  tribunal whereby both parties and the ICC tribunal agreed to move towards the
  ICC tribunal making a preliminary determination related to the arbitral dispute
  between the Company and SEPSA in the form of a partial damages award.

The Company agreed to attend a formal hearing before the ICC
  tribunal during May 2008, where certain officers and representatives of the
  Company were interviewed by the ICC tribunal and the Company was able to comment
  to the ICC tribunal about the Companys position related to the unresolved
  matters between the Company and SEPSA. Subsequent to the hearings, the ICC
  requested the Company to submit to the ICC, its closing arguments related to the
  arbitration within a specified period of time. The Company has claimed damages
  in the form of loss of revenue from July 1, 2006 through to the current date;
  loss of business opportunity related to increases to the values of assets owned
  and/or controlled by SEPSA and loss of-out-of-pocket expenses from the inception
  of the Companys efforts to win the bid and complete the acquisition of SEPSA.
  SEPSA has filed a counter-claim for recovery of legal expenses and translation
  fees incurred to date related to the dispute between it and the Company. There
  is no determination as to the length of time necessary for the ICC to make any
  final renderings pursuant to the arbitral proceedings between the Company and
  SEPSA and whether or not any awards for damages will be made by the ICC and,
  further; there is no determination as to what the outcome of any potential final
  determinations made be the ICC related to damages awards may be.

F-22

---

|PLURIS ENERGY GROUP INC.                      
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|DECEMBER 31, 2008                             

NOTE 8  ACQUISITIONS (CONTINUED)

SAN ENRIQUE PETROLERA S.A. (CONTINUED)

In January 2009, the Company received a partial award from the
  ICC as the result of the binding arbitration action.The rendering by the ICC
  binding the parties to the award determines the SPA entered into between the
  Company and SEPSA on August 18, 2006 is terminated retroactively to October 31,
  2006. It further determines that the SPA's early termination was seventy percent
  (70%) the responsibility of SEPSA and thirty percent (30%) the responsibility of
  the Company. The Company will support its final damages submission to the ICC
  through third party valuations evidencing the substantiation of the overall
  damages suffered by the Company as a result of it losing the business
  opportunity related to its planned acquisition of SEPSA. The ICC has not yet
  made its final damage award rendering.

CLEAR S.R.L.

In November 2007, the Company entered into a Letter of Intent
  agreement (LOI) with Clear S.R.L. ("Clear")., whereby the Company acquires the
  exclusive right to purchase and develop up to 100% of Clear's 186 square
  kilometer Cerro Negro concession, Chubut Province, Golfo San Jorge Basin,
  Argentina ("Cerro Negro" or the Concession). Under the terms of the agreement
  between Clear and the Company, the Company has the right to purchase Cerro Negro
  subject to the satisfactory outcome of due diligence related to Cerro Negro
  performed by the Company, which includes commercial, financial, geologic,
  geophysical and petroleum engineering analysis. During the nine months ended
  September 30, 2008, the Company satisfactorily completed the due diligence and
  in collaboration with Clear, has moved into the final negotiations related to
  the drafting of a mutually agreeable Purchase and Sale Agreement (the PSA)
  Upon closing of the PSA, the Company will have a specified period of time
  pursuant to the terms of the PSA to complete the acquisition of Cerro Negro and
  will immediately thereafter commence drilling, development and expansion of
  Cerro Negro.

In connection with the purchase and development of Clears
  Cerro Negro concession, the Company subsidiary, Pluris, BVI, issued a $840,000
  convertible, non-retractable redeemable unsecured bond (the CN Security Bond),
  held by a third party in trust on behalf of Clear and the Company as a security
  instrument pursuant to the terms of the LOI. Terms under the LOI pursuant to the
  CN Security Bond stipulate that in the event that the Company does not perform
  according to the LOI terms, the CN Security Bond will be transferred to Clear.
  The CN Security Bond may be converted into common shares of the Company at
  prices ranging from $3.25 per common share to $9.25 per common share. The CN
  Security Bonds maturity date is September 30, 2011 and the interest rate is
  LIBOR plus 5%, with a floor of 10.5% and a ceiling of 13%. Interest under the CN
  Security Bond can be converted into common shares of the Company at its
  discretion. At December 31, 2008 the Company maintains ownership of the Bond.
  The CN Security Bond will not be considered issued and outstanding for
  accounting purposes until such time as the CN Security Bond is transferred to
  Clear. Completion of the Cerro Negro acquisition by the Company is subject to
  agreement on final terms of the PSA being reached by Clear and the Company and
  the Company raising the funds necessary to complete the transaction.

The Company also entered into an Assignment Agreement dated
  July 4, 2008 (the "Agreement") with Clear to purchase 75% of Clears operating
  exploration and exploitation rights in the Cerro Negro oil and gas concession
  located in the Chubut Province, Argentina (the "Concession"). In consideration
  of the assignment of rights in the Concession, the Company agreed to pay a total
  of $21,000,000 cash, payable in installments as set out in the Agreement and
  issue Clear an aggregate of 3,000,000 shares of the Companys common stock
  issuable in installments as set out in the Agreement. The Concession is valid
  for a term expiring on December 1, 2025 and is renewable for a five-year
  period.

Conditions for the Company and Clear (the Parties) of closing
  the agreement are as follows:

|i.   | the Parties must obtain consent for the assignment of
      Clear's interest in the Concession from Petrominera Chubut S.E.;                                                                                                           
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ii.  | the Parties must undertake their best efforts to enter
      into a joint operating agreement to govern the operations on the
      Concession pursuant to which Company or its nominee will be the operator
      on the property; and
|iii. | the Company must have obtained a bank guarantee,
      guaranteeing the installments owed under the
      Agreement.                                                                                                                   

F-23

---

|PLURIS ENERGY GROUP INC.                      
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|DECEMBER 31, 2008                             

NOTE 8  ACQUISITIONS (CONTINUED)

The parties agreed to close the transaction no later than 150
  days from the execution date (the "Closing Date") and the Company agreed to
  undertake its best efforts to close within 90 days of the execution date of the
  Agreement. In the event closing does not occur by the Closing Date, and the
  Parties have not extended the term of the agreement on a mutual basis, the
  Company is liable for any interest accrued under the Agreement at an annual rate
  of 5.5% and must sign over a bond issued in the name of the Company in the
  amount of $840,000 as a guarantee of its obligations under the Agreement. If
  closing does not occur due to the inability to obtain the consent of Petrominera
  Chubut S.E. then the closing may take place 60 days following the expiration of
  the initial 150 day period.

As of the date of this filing, the Company has undergone
  substantial delays to the funding mandate related to the acquisition of the
  Cerro Negro concession due to the severity of the international economic and
  financial crisis. As a result, the Company have yet to raise the necessary
  capital to date to acquire the Concession as mandated by the Company with the
  assistance of Standard Americas and Standard Bank Plc (Standard), where
  Standard has been seeking an equity capital infusion of some $50 million on
  behalf of the Company to complete the Cerro Negro acquisition and to commence
  operations there. As a result of the financial crisis, the Company has concluded
  that under the current market conditions only a 100% acquisition of the Cerro
  Negro concession is plausible. Therefore, the Company has undertaken extensive
  discussions with Clear to those ends where they currently await the Companys
  proposal for our acquisition of a 100% interest in the Concession. The Company
  is currently reviewing several options related to structuring a proposal to
  Clear. Aside from the Closing Date being delayed due to the circumstances as
  above noted, both parties to the Agreement have concluded that as of the date of
  this filing the Company continues to maintain ownership of the Bond. The Company
  can seek return to treasury of the Bond at any time when necessary. As of the
  date of this filing, the Company has not received timely approval from
  Petrominera Chubút SE of the Company as incoming operator over the Concession.

BUENOS AIRES OIL & GAS COMPANY

In December 2007, the Company entered into a LOI to acquire
  100% of the shares of a Buenos Aires, Argentina based oil development and
  production company (the BAO) as a wholly owned operating subsidiary to the
  Company, which holds leasehold interests primarily located in the Neuquén Basin,
  Rio Negro Province, Argentina. Under the terms of the LOI, the Company has the
  right to purchase 100% of the shares of BAO subject to the satisfactory outcome
  of due diligence related to BAO performed by the Company, which includes
  corporate, commercial, financial, geologic, geophysical and petroleum
  engineering analysis. Upon the Companys satisfaction under the due diligence,
  the Company and BAO shall negotiate and execute a mutually acceptable SPA.
  Completion of the BAO acquisition by the Company is subject to satisfactory
  completion of due diligence, the appropriate extensions over portions of BAOs
  concessions having been secured by BAO at the provincial authority level,
  agreement on final terms of the SPA, which shall remain confidential until
  completion and the Company raising the funds necessary to complete the
  transaction.

As BAO has been unable to display its capacity to secure the
  necessary extensions over the portions of its concession interests from the
  Argentine provincial authorities, as they represented, the Company ceased any
  further discussions with BAO or activities related to the Companys ongoing
  interest in the acquisition of BAO.

F-24

---

|PLURIS ENERGY GROUP INC.                      
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|DECEMBER 31, 2008                             

NOTE 9  RELATED PARTY TRANSACTIONS

| | a) | During the years ended December 31, 2008 and 2007, the
      Company entered the following transactions with a director and officer of
      the Company:
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                          
| |    | 2008                                                                                                                                                     
| |    | i.                                                                                                                                                       
| |    | ii.                                                                                                                                                      
| |    | iii.                                                                                                                                                     
| |    | iv.                                                                                                                                                      
| |    | v.                                                                                                                                                       
| |    | 2007                                                                                                                                                     
| |    | vi.                                                                                                                                                      

At December 31, 2008 this director and
  officer is owed $206,658 (2007: $nil) by the Company.

The Company is committed to pay this
  party $30,000 in management fees per month. The agreement with this party can be
  terminated by the Company at any time by providing 60 days written notice. Upon
  termination of the agreement, the Company is required to pay this party
  severance of 24 months of monthly fees within 10 business days of the
  termination date plus an additional severance cash payment equating to the value
  of 5% of the Gross Market Capital Increase in the Company from January 1, 2007
  until the date of the termination of this agreement.

F-25

---

|PLURIS ENERGY GROUP INC.                      
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|DECEMBER 31, 2008                             

NOTE 9  RELATED PARTY TRANSACTIONS (CONTINUED)

| | b) | During the years ended December 31, 2008 and 2007, the
      Company entered the following transactions with an officer of the
      Company:
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                              
| |    | 2008                                                                                                                                         
| |    | i.                                                                                                                                           
| |    | iii.                                                                                                                                         
| |    | iv.                                                                                                                                          
| |    | 2007                                                                                                                                         
| |    | v.                                                                                                                                           

At December 31, 2008, this officer is
  owed $52,037 (2007: $98,300) for unpaid management fees.

The Company is committed to pay this
  officer $18,000 in management fees per month. This agreement can be terminated
  by the Company at any time by providing 60 days written notice. Upon termination
  of the agreement, the Company is required to pay this party severance of 6
  months of monthly fees within 10 business days of the termination date.

| | c) | During the years ended December 31, 2008 and 2007, the
      Company entered the following transactions with a director of the
      Company:
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                              
| |    | 2008                                                                                                                                         
| |    | i.                                                                                                                                           
| |    | ii.                                                                                                                                          
| |    | iii.                                                                                                                                         
| |    | 2007                                                                                                                                         
| |    | iv.                                                                                                                                          

| |    | At December 31, 2008, this director is owed $2,998 (2007:
      $2,600) by the Company. The Company is committed to pay this director
      $1,000 per month. This agreement can be terminated by the Company at any
      time by providing 30 days written notice.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                     
| | d) | During the years ended December 31, 2008 and 2007, the
      Company entered the following transactions with an officer of the
      Company:                                                                                                                       
| |    |                                                                                                                                                                                                                                                                     
| |    | i.                                                                                                                                                                                                                                                                  
| |    | ii.                                                                                                                                                                                                                                                                 
| |    | iii.                                                                                                                                                                                                                                                                
| |    | iv.                                                                                                                                                                                                                                                                 

At December 31, 2008, this officer is
  owed $8,883 (2007: $nil) for unpaid management fees.

The Company is committed to pay this
  officer $3,000 in management fees per month until April 1, 2009. The agreement,
  which commenced in March 2008, automatically renews for four consecutive
  one-year terms unless either party terminates the agreement by providing thirty
  days written notice. This agreement can be terminated by the Company at any time
  by providing 30 days written notice.

F-26

---

|PLURIS ENERGY GROUP INC.                      
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|DECEMBER 31, 2008                             

NOTE 9  RELATED PARTY TRANSACTIONS (CONTINUED)

| | e) | During the years ended December 31, 2008 and 2007, the
      Company entered the following transactions with an officer of the
      Company:
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                              
| |    | 2008                                                                                                                                         
| |    | i.                                                                                                                                           
| |    | ii.                                                                                                                                          
| |    | iii.                                                                                                                                         

| |    | At December 31, 2008, this officer is owed $59,533 (2007:
      $nil) for unpaid management fees.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    | The Company is committed to pay this officer $10,000 in
      management fees per month. This agreement can be terminated by the Company
      at any time by providing 30 days written notice.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | f) | During the year ended December 31, 2008, management fees
      of $nil (2007: $66,000) were incurred to a former officer of the Company.
      At December 31, 2008, this officer is owed $nil (2007: $7,500) for
      management fees due. The Company was committed to pay this officer $5,500
      in management fees per month. On January 24, 2008, this officer resigned
      from the Company.                                                                                                                                                                                                                                                                                   
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | g) | During the year ended December 31, 2008, consulting fees
      of $nil (2007: $7,900) were incurred to a former director of the Company.
      In May 2007, this director converted $200 of unpaid fees into 200,000
      Series A preferred shares. On August 22, 2007, this director resigned; no
      severance fees were paid and none are owed. Pursuant to the terms of a
      Shareholders Agreement entered into between this director and the Company
      related to the issuance of the Series A preferred shares, subsequent to
      the resignation of this director, 200,000 Series A preferred shares have
      been returned to the Companys treasury and cancelled.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | h) | During the year ended December 31, 2008, consulting fees
      of $nil (2007: $7,500) were incurred to a relative of a director of the
      Company. In June 2007, this consultant converted $30,000 of unpaid fees
      into a private placement consisting of 120,000 units at $0.25 per unit. At
      December 31, 2008, this individual is owed $nil (2007: $nil) for
      consulting fees due. This consulting agreement expired on March 31, 2007
      and no further fees are due.                                                                                                                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | i) | At December 31, 2007, the Company recorded an accrued
      liability of $421,250, which is included in management and consulting
      fees, related to the exercise of SARs by two officers of the Company in
      accordance with certain provisions for tax indemnities in the officers
      management consulting agreements.                                                                                                                                                                                                                                                                                                                                                      

All related party transactions are in the normal course of
  business and are measured at the exchange amount, which is the amount of
  consideration established and agreed to by the related parties. The settlement
  amount of liabilities are valued at an amount equal to the value of common
  shares at the closing quoted market price on the settlement date plus the fair
  value of equity instruments that are included in the settlement consideration.
  Where settlement consideration is completed at other than market value, the
  excess over the settlement amount is recorded as a compensation charge to
  management and consulting fees (Note 11) or excess under the settlement amount
  is recorded to additional paid-up capital. Other related party transactions are
  disclosed in Note 10.

F-27

---

|PLURIS ENERGY GROUP INC.                      
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|DECEMBER 31, 2008                             

NOTE 10  CAPITAL STOCK

Common Shares

During the year ended December 31, 2008:

| | (a) | The Company issued the following for cash
      proceeds:         
| | --- | ------------------------------------------------------------------
| |     | i.                                                                
| |     | ii.                                                               
| |     | iii.                                                              
| |     | iv.                                                               
| |     | v.                                                                
| |     | vi.                                                               
| |     |                                                                   
| | (b) | The Company issued the following for non-cash
      consideration:
| |     | i.                                                                
| |     | ii.                                                               
| |     | iii.                                                              
| |     | iv.                                                               
| |     | v.                                                                
| |     | vi.                                                               
| |     | vii.                                                              
| |     | viii.                                                             

F-28

---

|PLURIS ENERGY GROUP INC.                      
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|DECEMBER 31, 2008                             

NOTE 10  CAPITAL STOCK (CONTINUED)

Common Shares (continued)

| | (b) | The Company issued the following for non-cash
      consideration (continued):
| | --- | ------------------------------------------------------------------------------
| |     |                                                                               
| |     | ix.                                                                           
| |     | x.                                                                            
| |     | xi.                                                                           
| |     | xii.                                                                          
| |     | xiii.                                                                         
| |     | xiv.                                                                          
| |     | xv.                                                                           

The Company entered into three subscription agreements to
  purchase common shares of the Company at $0.20 per share. The total amount of
  shares subscribed is 95,000 for total cash proceeds of $19,000.

During the year ended December 31, 2007:

| | (a) | The Company issued the following for non-cash
      consideration:
| | --- | ------------------------------------------------------------------
| |     |                                                                   
| |     | i.                                                                
| |     | ii.                                                               
| |     | iii.                                                              
| |     | iv.                                                               
| |     | v.                                                                
| |     | vi.                                                               
| |     | vii.                                                              

The Company entered into seven subscription agreements to purchase common shares of the Company at prices ranging from $0.25 - $0.60 per share. The total amount of shares subscribed is 335,567 for total cash proceeds of $102,520. The Company closed and issued the shares during the first quarter of 2008. The stock subscriptions received in 2007 were previously recorded as a liability in the Company’s 2007 financial statements but have been reclassified to equity in the Company’s 2008 financial statements for comparative purposes.

F-29

---

|PLURIS ENERGY GROUP INC.                      
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|DECEMBER 31, 2008                             

NOTE 10  CAPITAL STOCK (CONTINUED)

Warrants

A summary of the Companys warrants outstanding and the changes
  for 2007 and 2008 is as follows:

Weighted
      
      
      WeightedAverage
      
      
      AverageWarrants
      
      
      Exercise
      
      
      RemainingOutstanding
      
      
      Price
      
      
      LifeBalance, December 31, 2006
      
      306,549
      
      
      4.32
      
      
      0.09 yearsIssued
      
      1,855,429
      
      
      0.52Exercised / Cancelled / Expired
      
      (1,185,425
      )
      
      0.50Balance, December 31, 2007
      
      976,553
      
      
      $0.54
      
      
      1.33 yearsIssued
      
      4,133,028
      
      
      0.59Exercised / Cancelled / Expired
      
      171,429
      
      
      0.70Balance December 31, 2008
      
      4,938,152
      
      
      0.56
      
      
      1.10 years


Expiry
      
      Warrants
      
      ExerciseDate
      
      Outstanding
      
      PriceJune 28, 2009
      
      805,124
      
      0.50March 28, 2009*
      
      128,000
      
      0.75March 28, 2010
      
      568,200
      
      0.50June 5, 2009
      
      77,000
      
      0.75March 31, 2010
      
      1,333,928
      
      0.70June 5, 2010
      
      272,000
      
      0.50June 5, 2010
      
      96,400
      
      0.50July 30, 2010
      
      1,557,500
      
      0.50September 3, 2010
      
      100,000
      
      0.50Balance December 31, 2008
      
      4,938,152


*
  These warrants have expired unexercised

Preferred Shares- Series A- Authorized 100,000,000

In May 2007, three directors, (one of whom is also an officer)
  and another officer converted $4,800 of unpaid fees into 4,800,000 Series A,
  $0.001 par value, preferred shares. Each preferred share will have 10 votes,
  whereas each common share has only one vote. In the event the Company at any
  time or from time to time after the original date of issuance of the Series A
  Preferred Stock shall declare or pay any dividend or make any other distribution
  on the Corporations common stock payable in common stock or effect a
  subdivision of the outstanding shares of Common Stock (by reclassification or
  otherwise than by payment of a dividend in Common Stock), then the number of
  votes per share of Series A Preferred Stock shall be proportionately increased,
  concurrently with the effectiveness of such stock dividend, stock distribution
  or subdivision. Otherwise, the Series A preferred shares do not participate in
  any assets or dividends of the Company. Each of the four holders of the series
  A preferred shares as described have entered into an agreement with the
  Company (the Shareholder Agreement) that stipulates that at any time the
  holder thereof discontinues acting as an officer or director of the Company for
  any reason whatsoever, whether by mutually agreed upon termination of tenure,
  dismissal for cause or without cause, etc., the departing director or officer
  will immediately therewith return to treasury, those series A preferred shares
  issued in the name of said officer or Director for cancellation. On August 22,
  2007, one of the Directors resigned and as a result, 200,000 preferred shares
  with a value of $200 were cancelled. As of December 31, 2008, the Company had
  4,600,000 Series A preferred shares outstanding. See Note 9.

F-30

---

|PLURIS ENERGY GROUP INC.                      
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|DECEMBER 31, 2008                             

NOTE 10  CAPITAL STOCK (CONTINUED)

Preferred Shares, Series B- Authorized 30,000,000

In October 2008, the Company issued 16,479,493 Series B, $0.001
  par value preferred shares for cash proceeds of $4,540 and settlement of accrued
  management and consulting fees of $11,940. The aggregate liquidation value is
  estimated at $5,620,000 and includes $90,000 accrued but unpaid dividends which
  represents a rate of return of 10% per annum on the sum of the preferred
  stockholders initial capital investment. In the event of liquidation, sale,
  conveyance, transfer of all of substantially all of the assets of the Company,
  dissolution, or winding up of the affairs through consolidation, merger or other
  business combination of the Company, (the Liquidation Event), the holder shall
  receive out of the assets of the Company an amount equal to the holders initial
  investment infusion as determined by the Board, plus a rate of return on this
  investment of 10% per annum, which is accreted each year as a dividend. While no
  dividends have been declared as of December 31, 2008, the Company has accrued
  dividends through a charge to Additional paid-in capital as accumulated and
  unpaid dividends are included in the redemption price of the Series B Stock. The
  Series B preferred shares have a first priority right for any future dividend
  distributions declared by the Company (the Dividend Rights), those Dividend
  Rights shall be in priority to any other preferred shares of the Company or the
  common shares of the Company. At the sole discretion of the Company, the
  issuance of the preferred shares will be on the basis of one preferred share to
  one common share of the Company where each common share must have been acquired
  through investment infusions deemed to be investments by the Board from the date
  commencing September 12, 2006. The holders of the preferred shares do not have
  any voting privileges. The Company has the discretion to redeem all or a portion
  of the preferred shares at any time. As of December 31, 2008, the Company
  believes that it is not probable that the Series B Stock will become redeemable
  as the contingencies for liquidation event which entitles the preferred
  stockholder redemption value is not met.

The Series B Preferred Stock is recorded in the  Company’s Consolidated Balance Sheets as “Mezzanine Equity” as it has a  redemption feature not solely within the Company’s control. The initial  carrying amount of the redeemable Series B Preferred Stock of $5,620,000 is at  its fair value at date of issue.

NOTE 11  STOCK OPTION PLANS

For the year ended December 31, 2008, stock-based compensation
  charges were incurred for the following:

Vesting of stock options
      $
      1,358,242Issuance of warrants (Note 10 (b)(ii),(iii),(ix) and (x))
      
      465,374Revaluation of share-based compensation
        liability (Note 12)
      
      (45,437
      )Exercise of SARs
      
      17,187Total stock-based compensation
      $
      1,795,366


During 2008, the Company granted a total of 2,950,000 stock
  options to directors, officers and consultants of the Company at an exercise
  price of $0.50 per common share with expiry dates ranging from April 1, 2009 to
  April 1, 2018. Of these stock options 2,900,000 vested and 50,000 vest over a
  one-year period of which 25,000 of the 50,000 are fully vested as of December
  31, 2008. The Company estimated the fair value of the 2,950,000 stock options
  granted by applying the fair value method using the Black-Scholes option pricing
  model using an expected life of one to ten years, a risk-free interest rate of
  2% and an expected volatility of 98% - 180% resulting in a stock-based
  compensation expense of $1,212,517 of which $1,211,592 was expensed to December
  31, 2008 and the remaining $925 is to be expensed on vesting.

During 2008, the Company also recorded stock-based compensation
  expense of $96,900 related to the vesting of 240,000 stock options and 337,500
  stock options were exercised, 227,500 stock options were cancelled, and 102,178
  stock options expired in the period.

On April 27, 2007, the Company re-priced 192,000 stock options
  from prices ranging from $1.50 to $3.75 per share to $0.75 per share with expiry
  dates ranging from May 2, 2008 to July 22, 2014 and recorded additional
  stock-based compensation expense of $9,000. The Company estimated the additional
  fair value by applying the fair value method using the Black-Scholes option
  pricing model using an expected life of the remaining term of the option, a
  risk-free interest rate of 4.87% and an expected volatility of 117%.

F-31

---

|PLURIS ENERGY GROUP INC.                      
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|DECEMBER 31, 2008                             

NOTE 11  STOCK OPTION PLANS (CONTINUED)

During the year ended December 31, 2007, the Company granted a
  total of 4,765,000 stock options to directors, officers and consultants of the
  Company at exercise prices ranging from $0.25 - $0.57 per common share with
  expiry dates ranging from April 26, 2008 to April 26, 2017. Of these stock
  options 3,885,000 vested and 880,000 vest over a one year period. The Company
  estimated the fair value of the 4,765,000 stock options granted by applying the
  fair value method using the Black-Scholes option pricing model using an expected
  life of one to ten years, a risk-free interest rate of 4.87% and an expected
  volatility of 116% - 117% resulting in a stock-based compensation expense of
  $1,703,700 of which $1,569,807 was expensed during the year ended December 31,
  2007 and the remaining $133,893 was to be expensed on vesting.

On March 6, 2006 the board of directors approved the adoption
  of a Performance Stock Incentive Plan  2006 (the PSIP 2006) with an
  effective date of March 1, 2006 (the Effective Date). The terms of the PSIP
  2006 provide that a total of 6,000,000 shares will be issued in escrow and
  subject to the following terms:

|(a) | a total of 700,000 escrowed performance shares can be
      purchased from escrow at a price of $2.50 per share commencing one year
      from the Effective Date for up to five years, the granting of which is
      subject to the discretion of the Board of Directors. The original value of
      this award was estimated to be $1,116,000. However, to date, no specific
      awards under this provision have been granted by the Board of Directors
      and accordingly no stock-based compensation has been recorded.                                                                                                                                          
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(b) | a total of 900,000 escrowed performance shares can be
      purchased from escrow at a price of $5.00 per share on or before the first
      three years after the Effective Date, if the Companys assets increase by
      50%, the market share price of the Companys common stock achieves a
      minimum of $6.25, and the Company financial statements reflect a minimum
      of $3,000,000 profit before taxes, depletion, amortization and stock based
      compensation charges. To date, no specific awards under this provision
      have been granted by the Board of Directors and accordingly no stock-based
      compensation has been recorded;        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(c) | a total of 1,200,000 escrowed performance shares can be
      purchased from escrow at a price of $6.25 per share on or before the first
      five years after the Effective Date, if the Companys assets increase by
      100%, the market share price of the Companys common stock achieves a
      minimum of $10.00, and the Company financial statements reflect a minimum
      of $6,000,000 profit before taxes, depletion, amortization and stock based
      compensation charges. To date, no specific awards under this provision
      have been granted by the Board of Directors and accordingly no stock-based
      compensation has been recorded;     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(d) | a total of 1,500,000 escrowed performance shares can be
      purchased from escrow at a price of $7.50 per share on or before the first
      seven years after the Effective Date, if the Companys assets increase by
      200%, the market share price of the Companys common stock achieves a
      minimum of $15.00, and the Company financial statements reflect a minimum
      of $9,000,000 profit before taxes, depletion, amortization and stock based
      compensation charges. To date, no specific awards under this provision
      have been granted by the Board of Directors and accordingly no stock-based
      compensation has been recorded; and
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(e) | a total of 1,700,000 escrowed performance shares can be
      purchased from escrow at a price of $10.00 per share on or before the
      first seven years after the Effective Date, if the Companys assets
      increase by 400%, the market share price of the Companys common stock
      achieves a minimum of $20.00, and the Company financial statements reflect
      a minimum of $15,000,000 profit before taxes, depletion, amortization and
      stock based compensation charges. To date, no specific awards under this
      provision have been granted by the Board of Directors and accordingly no
      stock-based compensation has been recorded.  

At December 31, 2008, a total of 6,000,000 performance shares are  unvested and may be purchased from escrow at a price ranging from $2.50 to  $10.00 per share, based on the Company’s common stock achieving a minimum market  price ranging from $6.25 to $20.00 per share and the Company’s assets  increasing by a minimum of 50% to 400%. No stock-based compensation has been  recorded on the unvested escrow performance shares as it is not probable that  performance conditions will be met.

Effective July 18, 2007, the Company adopted an Equity
  Incentive Plan (the EIP), the maximum aggregate number of shares of Common
  Stock that may be issued and sold under all awards granted under the EIP shall
  be equal to 20% of the issued and outstanding common stock (on a fully diluted
  basis). To date, the Company has registered 2,000,000 common shares under a Form
  8 Registration Statement filed with the United States Securities and Exchange
  Commission.

F-32

---

|PLURIS ENERGY GROUP INC.                      
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|DECEMBER 31, 2008                             

NOTE 11  STOCK OPTION PLANS (CONTINUED)

A summary of the options outstanding is as follows:

|                                          |  |            |   |  |               |  |  |          |  |  |             |  |   | Weighted       |  |  | Weighted Average |  |   |                 | 
|----------------------------------------- |  | ---------- | - |  | ------------- |  |  | -------- |  |  | ----------- |  | - | -------------- |  |  | ---------------- |  | - | --------------- | 
|                                          |  | Number of  |   |  |               |  |  | Exercise |  |  |             |  |   | Average        |  |  | Remaining        |  |   | Aggregate       | 
|                                          |  | Options    |   |  | Date of Issue |  |  | Price    |  |  | Expiry Date |  |   | Exercise Price |  |  | Contractual Life |  |   | Intrinsic Value | 
|                                          |  |            |   |  |               |  |  |          |  |  |             |  |   |                |  |  |                  |  |   |                 | 
|                                          |  |            |   |  |               |  |  |          |  |  |             |  |   |                |  |  |                  |  |   |                 | 
|Outstanding, December 31,
      2006      |  | 535,329    |   |  |               |  |  |          |  |  |             |  | $ | 2.51           |  |  | 4.30 years       |  |   |                 | 
|                                          |  |            |   |  |               |  |  |          |  |  |             |  |   |                |  |  |                  |  |   |                 | 
|Expired/cancelled during the
      period |  | (28,080    | ) |  |               |  |  | 1.25     |  |  | 04-Mar-07   |  |   |                |  |  |                  |  |   |                 | 
|                                          |  | (98,532    | ) |  |               |  |  | 2.50     |  |  | 04-Mar-07   |  |   |                |  |  |                  |  |   |                 | 
|                                          |  | (75,000    | ) |  |               |  |  | 3.75     |  |  | 04-Mar-07   |  |   |                |  |  |                  |  |   |                 | 
|                                          |  | (14,777    | ) |  |               |  |  | 1.25     |  |  | 04-Mar-14   |  |   |                |  |  |                  |  |   |                 | 
|                                          |  | (14,000    | ) |  |               |  |  | 1.25     |  |  | 04-Mar-14   |  |   |                |  |  |                  |  |   |                 | 
|                                          |  | (40,000    | ) |  |               |  |  | 2.50     |  |  | 04-Mar-14   |  |   |                |  |  |                  |  |   |                 | 
|                                          |  | (7,940     | ) |  |               |  |  | 3.75     |  |  | 22-Jul-14   |  |   |                |  |  |                  |  |   |                 | 
|                                          |  | (20,000    | ) |  |               |  |  | 5.00     |  |  | 22-Jul-14   |  |   |                |  |  |                  |  |   |                 | 
|                                          |  | (45,000    | ) |  |               |  |  | 2.50     |  |  | 1-Jul-15    |  |   |                |  |  |                  |  |   |                 | 
|                                          |  | (100,000   | ) |  |               |  |  | 0.45     |  |  | 26-Apr-08   |  |   |                |  |  |                  |  |   |                 | 
|                                          |  |            |   |  |               |  |  |          |  |  |             |  |   |                |  |  |                  |  |   |                 | 
|Granted during the period                 |  | 300,000    |   |  | 27-Apr-07     |  |  | 0.45     |  |  | 26-Apr-08   |  |   |                |  |  |                  |  |   |                 | 
|                                          |  | 2,400,000  |   |  | 27-Apr-07     |  |  | 0.50     |  |  | 26-Apr-17   |  |   |                |  |  |                  |  |   |                 | 
|                                          |  | 350,000    |   |  | 27-Apr-07     |  |  | 0.50     |  |  | 26-Apr-12   |  |   |                |  |  |                  |  |   |                 | 
|                                          |  | 250,000    |   |  | 01-Jul-07     |  |  | 0.50     |  |  | 26-Apr-12   |  |   |                |  |  |                  |  |   |                 | 
|                                          |  | 45,000     |   |  | 01-Sep-07     |  |  | 0.35     |  |  | 31-May-08   |  |   |                |  |  |                  |  |   |                 | 
|                                          |  | 120,000    |   |  | 01-Augl-07    |  |  | 0.54     |  |  | 31-Jul-10   |  |   |                |  |  |                  |  |   |                 | 
|                                          |  | 900,000    |   |  | 19-Jul-07     |  |  | 0.35     |  |  | 19-Jul-12   |  |   |                |  |  |                  |  |   |                 | 
|                                          |  | 60,000     |   |  | 24-Jul-07     |  |  | 0.57     |  |  | 31-Jul-10   |  |   |                |  |  |                  |  |   |                 | 
|                                          |  | 100,000    |   |  | 22-Aug-07     |  |  | 0.35     |  |  | 21-Aug-08   |  |   |                |  |  |                  |  |   |                 | 
|                                          |  | 90,000     |   |  | 01-Sep-07     |  |  | 0.45     |  |  | 30-Aug-08   |  |   |                |  |  |                  |  |   |                 | 
|                                          |  | 100,000    |   |  | 01-Oct-07     |  |  | 0.25     |  |  | 01-Oct-08   |  |   |                |  |  |                  |  |   |                 | 
|                                          |  | 50,000     |   |  | 01-Nov-07     |  |  | 0.50     |  |  | 01-Nov-08   |  |   |                |  |  |                  |  |   |                 | 
|                                          |  |            |   |  |               |  |  |          |  |  |             |  |   |                |  |  |                  |  |   |                 | 
|Exercised during the period               |  | (900,000   | ) |  |               |  |  | 0.35     |  |  | 19-Jul-12   |  |   |                |  |  |                  |  |   |                 | 
|                                          |  | (100,000   | ) |  |               |  |  | 0.45     |  |  | 26-Apr-08   |  |   |                |  |  |                  |  |   |                 | 
|                                          |  | (175,000   | ) |  |               |  |  | 0.50     |  |  | 26-Apr-12   |  |   |                |  |  |                  |  |   |                 | 
|                                          |  | (2,300,000 | ) |  |               |  |  | 0.50     |  |  | 26-Apr-17   |  |   |                |  |  |                  |  |   |                 | 
|                                          |  | (45,000    | ) |  |               |  |  | 0.35     |  |  | 31-May-08   |  |   |                |  |  |                  |  |   |                 | 
|                                          |  | (87,822    | ) |  |               |  |  | 0.45     |  |  | 30-Aug-08   |  |   |                |  |  |                  |  |   |                 | 
|                                          |  | (100,000   | ) |  |               |  |  | 0.25     |  |  | 01-Oct-08   |  |   |                |  |  |                  |  |   |                 | 
|                                          |  | (50,000    | ) |  |               |  |  | 0.50     |  |  | 01-Nov-08   |  |   |                |  |  |                  |  |   |                 | 
|                                          |  |            |   |  |               |  |  |          |  |  |             |  |   |                |  |  |                  |  |   |                 | 
|Outstanding, December 31, 2007            |  | 1,099,178  |   |  |               |  |  |          |  |  |             |  | $ | 0.53           |  |  | 3.93
      years |  | $ | 237,903         | 
|                                          |  |            |   |  |               |  |  |          |  |  |             |  |   |                |  |  |                  |  |   |                 | 
|Cancelled during the period               |  | (20,000    | ) |  |               |  |  | 0.75     |  |  | 31-Mar-08   |  |   |                |  |  |                  |  |   |                 | 
|                                          |  | (20,000    | ) |  |               |  |  | 0.75     |  |  | 31-Mar-08   |  |   |                |  |  |                  |  |   |                 | 
|                                          |  | (100,000   | ) |  |               |  |  | 0.50     |  |  | 31-Mar-08   |  |   |                |  |  |                  |  |   |                 | 
|                                          |  | (87,500    | ) |  |               |  |  | 0.50     |  |  | 26-Apr-12   |  |   |                |  |  |                  |  |   |                 | 
|                                          |  |            |   |  |               |  |  |          |  |  |             |  |   |                |  |  |                  |  |   |                 | 
|Expired during the period                 |  | (100,000   | ) |  |               |  |  | 0.45     |  |  | 26-Apr-08   |  |   |                |  |  |                  |  |   |                 | 
|                                          |  | (2,178     | ) |  |               |  |  | 0.45     |  |  | 30-Aug-08   |  |   |                |  |  |                  |  |   |                 | 
|                                          |  |            |   |  |               |  |  |          |  |  |             |  |   |                |  |  |                  |  |   |                 | 
|Granted during the period                 |  | 1,500,000  |   |  | 01-Apr-08     |  |  | 0.50     |  |  | 01-Apr-18   |  |   |                |  |  |                  |  |   |                 | 
|                                          |  | 100,000    |   |  | 01-Apr-08     |  |  | 0.50     |  |  | 01-Apr-09   |  |   |                |  |  |                  |  |   |                 | 
|                                          |  | 900,000    |   |  | 01-Apr-08     |  |  | 0.50     |  |  | 01-Apr-18   |  |   |                |  |  |                  |  |   |                 | 
|                                          |  | 350,000    |   |  | 01-Apr-08     |  |  | 0.50     |  |  | 01-Apr-18   |  |   |                |  |  |                  |  |   |                 | 
|                                          |  | 100,000    |   |  | 01-Apr-08     |  |  | 0.50     |  |  | 01-Apr-09   |  |   |                |  |  |                  |  |   |                 | 
|                                          |  |            |   |  |               |  |  |          |  |  |             |  |   |                |  |  |                  |  |   |                 | 
|Exercised during the period               |  | (87,500    | ) |  |               |  |  | 0.50     |  |  | 26-Apr-12   |  |   |                |  |  |                  |  |   |                 | 
|                                          |  | (100,000   | ) |  |               |  |  | 0.35     |  |  | 21-Aug-08   |  |   |                |  |  |                  |  |   |                 | 
|                                          |  | (150,000   | ) |  |               |  |  | 0.50     |  |  | 26-Apr-12   |  |   |                |  |  |                  |  |   |                 | 
|                                          |  |            |   |  |               |  |  |          |  |  |             |  |   |                |  |  |                  |  |   |                 | 
|Outstanding, December 31, 2008            |  | 3,382,000  |   |  |               |  |  |          |  |  |             |  | $ | 0.51           |  |  | 8.12
      years |  | $ | Nil             | 
|                                          |  |            |   |  |               |  |  |          |  |  |             |  |   |                |  |  |                  |  |   |                 | 
|Exercisable, December 31, 2008            |  | 3,357,000  |   |  |               |  |  |          |  |  |             |  | $ | 0.51           |  |  | 8.12
      years |  | $ | Nil             | 

Total aggregate intrinsic value of stock options exercised
  during 2008 was $nil (2007: $1,056,084) which is the difference between the
  exercise price of the stock versus the quoted market price of our common stock
  on the date the options were exercised.

F-33

---

|PLURIS ENERGY GROUP INC.                      
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|DECEMBER 31, 2008                             

NOTE 11  STOCK OPTION PLANS (CONTINUED)

A summary of the status of the Companys unvested shares as of
  December 31, 2008 and 2007, and changes during the years ended December 31, 2008
  and 2007, is presented below:

|                              |  |                  |   |   | Weighted-Average | 
|----------------------------- |  | ---------------- | - | - | ---------------- | 
|                              |  |                  |   |   | Grant-Date       | 
|Unvested shares               |  | Number of Shares |   |   | Fair
      Value | 
|                              |  |                  |   |   |                  | 
|Unvested at January 1, 2007   |  | -                |   | $ | -                | 
|Granted                       |  | 4,765,000        |   |   | 0.46             | 
|Vested                        |  | 4,447,500        |   |   | 0.51             | 
|                              |  |                  |   |   |                  | 
|Unvested at December 31, 2007 |  | 317,500          |   | $ | 0.51             | 
|Granted                       |  | 295,000          |   |   | 0.50             | 
|Vested                        |  | (315,500         | ) |   | 0.51             | 
|Cancelled                     |  | (87,500          | ) |   | 0.50             | 
|Unvested at December 31, 2008 |  | 25,000           |   | $ | 0.50             | 

Unrecognized compensation expense on unvested shares is $925
  which will be recognized over the remaining weighted average vesting period is
  0.5 years.

NOTE 12  STOCK APPRECIATION RIGHTS

The Company has authorized the granting of stock appreciation
  rights (SARs). A SAR can be awarded to directors, officers, and consultants
  that entitle these grantees to receive cash or shares of common stock, or a
  combination of both, with each right having a value on the date the stock
  appreciation right is exercised equal to the excess of the quoted market value
  of a share of common stock at the time of exercise over the exercise price per
  right set forth on the grant date.

Since the SARs could be settled by cash, the Company must
  recognize the related liability in accordance with SFAS 123 (R) which requires
  that the liability be measured at fair value and revalued at each reporting date
  through final settlement. Fair value is calculated using the same assumptions
  and option pricing model that is used to compute the fair value of stock
  options.

During 2008, 87,500 SARs were exercised at an exercise price of
  $0.50 per right. The intrinsic value of the SARs on the date of exercise was
  $16,187, resulting in a decrease in the accrued share-based compensation
  liability and a stock-based compensation recovery of $34,563. The intrinsic
  value of SARs at the date of exercise was determined by multiplying the number
  of SARs exercised by the difference between the market price of common stock at
  the date of exercise and the exercise price of the SARs. The $16,187 intrinsic
  value of the SARs was applied against the exercise price of 87,500 stock
  options, exercisable at $0.50 per stock option, for a total exercise cost of
  $43,750. The remaining $27,563 exercise cost was extended as a promissory note
  receivable to the option holder (Note 4).

During 2008, 187,500 SARs expired resulting in the Company
  recording a recovery of $49,750 related to the vested SARs which was charged to
  equity on expiration.

During the year ending December 31, 2008, the Company granted
  3,200,000 SARs to directors, officers and consultants of the Company at exercise
  prices of $0.50 per right with expiry dates ranging from April 2009 to April
  2018. Of these SARs 3,100,000 vested immediately and 100,000 vest quarterly over
  a one year period. As at the year ended December 31, 2008, of the 100,000
  unvested at grant date, 25,000 remain unvested. The Company estimated the fair
  value on granting of the 3,175,000 SARs by applying the fair value method using
  the Black-Scholes option pricing model using an expected life of one to ten
  years, a risk-free interest rates of 0.39% - 2% and an expected volatility of
  130% - 180% resulting in a stock-based compensation expense of $154,793 of which
  $154,792 was expensed to December 31, 2008 and the remaining $1 will be expensed
  on vesting.

During the year ending December 31, 2007, the Company granted
  3,885,000 SARs to directors, officers and consultants of the Company at exercise
  prices ranging from $0.35 - $0.50 per right with expiry dates ranging from April
  26, 2008 to July 19, 2017. Of these SARs 3,185,000 vested immediately and
  700,000 vest quarterly over a one year period. The Company estimated the fair
  value on granting of the 3,885,000 SARs by applying the fair value method using
  the Black-Scholes option pricing model using an expected life of one to ten
  years, a risk-free interest rate of 4.87% and an expected volatility of 116% -
  117% resulting in a stock-based compensation expense of $1,413,000 of which
  $1,336,599 was expensed to December 31, 2007 and the remaining $76,401 will be
  expensed on vesting.

During 2007, 100,000 SARs expired after the resignation of a
  director.

F-34

---

|PLURIS ENERGY GROUP INC.                      
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|DECEMBER 31, 2008                             

NOTE 12  STOCK APPRECIATION RIGHTS (CONTINUED)

In November, 2007, 3,160,000 SARs were exercised at exercise
  prices ranging from $0.35 - $0.50 per right. The fair value of the SARs on the
  dates of exercise was $2,248,500, resulting in an additional stock-based
  compensation expense of $911,901. The fair value at the date of exercise was
  determined by multiplying the number of SARs exercised by the difference between
  the market price of common stock at the date of exercise and the exercise price
  of the SARs.

During 2007, the total SARs liability of $2,248,500 was settled
  by the exercise of options and warrants held by certain holders where payment
  was applied against the SARs liability owing (a total of $2,095,920), cash of
  $2,500 and the issuance of 124,458 shares at the market price of $1.20 for
  $149,350, leaving a balance owing of $730.

At December 31, 2007 a total of 625,000 SARs granted were
  unexercised, of which 237,500 were unvested. The Company estimated the fair
  value of the 625,000 SARs at December 31, 2007 by applying the fair value method
  using the Black-Scholes option pricing model using an expected life of
  one-quarter to three years, a risk-free interest rate of 4.87% and an expected
  volatility of 116% - 117% resulting in a fair value of $285,250. This resulted
  in an additional stock-based compensation expense of $84,100 for a total of
  $199,500 accrued on vested and unexercised SARs at December 31, 2007, and an
  additional $9,349 for a total of $85,750 which will be expensed on vesting.

At December 31, 2008 and 2007, the Company has an accrued
  liability of $421,250 related to the exercise of SARs by two officers of the
  Company in accordance with certain provisions for tax indemnities in the
  officers management consulting agreements.

The Company is committed to issue an aggregate of 16,575,000
  additional SARs as per outstanding management and consulting agreements entered
  into during 2007.

A summary of the stock appreciation rights is as follows:

|                                    |  | Number of  |   |  | Date of   |  |  | Exercise |  |  |             |  |   | Weighted Average |  |  | Weighted Average           |  |   | Aggregate       | 
|----------------------------------- |  | ---------- | - |  | --------- |  |  | -------- |  |  | ----------- |  | - | ---------------- |  |  | -------------------------- |  | - | --------------- | 
|                                    |  | SAR        |   |  | Issue     |  |  | Price    |  |  | Expiry Date |  |   | Exercise Price   |  |  | Remaining Contractual Life |  |   | Intrinsic Value | 
|                                    |  |            |   |  |           |  |  |          |  |  |             |  |   |                  |  |  |                            |  |   |                 | 
|Balance, December 31, 2006          |  | -          |   |  |           |  |  |          |  |  |             |  |   |                  |  |  |                            |  |   |                 | 
|                                    |  |            |   |  |           |  |  |          |  |  |             |  |   |                  |  |  |                            |  |   |                 | 
|Granted during the year             |  | 300,000    |   |  | 27-Apr-07 |  |  | 0.45     |  |  | 26-Apr-08   |  |   |                  |  |  |                            |  |   |                 | 
|                                    |  | 2,000,000  |   |  | 27-Apr-07 |  |  | 0.50     |  |  | 26-Apr-17   |  |   |                  |  |  |                            |  |   |                 | 
|                                    |  | 750,000    |   |  | 27-Apr-07 |  |  | 0.50     |  |  | 26-Apr-12   |  |   |                  |  |  |                            |  |   |                 | 
|                                    |  | 250,000    |   |  | 01-Jul-07 |  |  | 0.50     |  |  | 26-Apr-12   |  |   |                  |  |  |                            |  |   |                 | 
|                                    |  | 45,000     |   |  | 01-Sep-07 |  |  | 0.35     |  |  | 31-May-08   |  |   |                  |  |  |                            |  |   |                 | 
|                                    |  | 250,000    |   |  | 19-Jul-07 |  |  | 0.35     |  |  | 19-Jul-12   |  |   |                  |  |  |                            |  |   |                 | 
|                                    |  | 200,000    |   |  | 19-Jul-07 |  |  | 0.35     |  |  | 19-Jul-17   |  |   |                  |  |  |                            |  |   |                 | 
|                                    |  | 90,000     |   |  | 01-Sep-07 |  |  | 0.45     |  |  | 30-Aug-08   |  |   |                  |  |  |                            |  |   |                 | 
|                                    |  |            |   |  |           |  |  |          |  |  |             |  |   |                  |  |  |                            |  |   |                 | 
|Exercised / expired during the year |  | (200,000   | ) |  |           |  |  | 0.45     |  |  | 26-Apr-08   |  |   |                  |  |  |                            |  |   |                 | 
|                                    |  | (2,000,000 | ) |  |           |  |  | 0.50     |  |  | 26-Apr-17   |  |   |                  |  |  |                            |  |   |                 | 
|                                    |  | (475,000   | ) |  |           |  |  | 0.50     |  |  | 26-Apr-12   |  |   |                  |  |  |                            |  |   |                 | 
|                                    |  | (45,000    | ) |  |           |  |  | 0.35     |  |  | 31-May-08   |  |   |                  |  |  |                            |  |   |                 | 
|                                    |  | (90,000    | ) |  |           |  |  | 0.45     |  |  | 30-Aug-08   |  |   |                  |  |  |                            |  |   |                 | 
|                                    |  | (250,000   | ) |  |           |  |  | 0.35     |  |  | 19-Jul-12   |  |   |                  |  |  |                            |  |   |                 | 
|                                    |  | (200,000   | ) |  |           |  |  | 0.35     |  |  | 19-Jul-17   |  |   |                  |  |  |                            |  |   |                 | 
|                                    |  |            |   |  |           |  |  |          |  |  |             |  |   |                  |  |  |                            |  |   |                 | 
|Balance, December 31, 2007          |  | 625,000    |   |  |           |  |  |          |  |  |             |  | $ | 0.49             |  |  | 3.68
      years           |  | $ | 101,875         | 
|                                    |  |            |   |  |           |  |  |          |  |  |             |  |   |                  |  |  |                            |  |   |                 | 
|Cancelled during the year           |  | (87,500    | ) |  |           |  |  | 0.50     |  |  | 26-Apr-12   |  |   |                  |  |  |                            |  |   |                 | 
|                                    |  | (100,000   | ) |  |           |  |  | 0.50     |  |  | 26-Apr-12   |  |   |                  |  |  |                            |  |   |                 | 
|                                    |  |            |   |  |           |  |  |          |  |  |             |  |   |                  |  |  |                            |  |   |                 | 
|Expired during the year             |  | (100,000   | ) |  |           |  |  | 0.45     |  |  | 26-Apr-08   |  |   |                  |  |  |                            |  |   |                 | 
|                                    |  |            |   |  |           |  |  |          |  |  |             |  |   |                  |  |  |                            |  |   |                 | 
|Granted during the year             |  | 1,500,000  |   |  | 01-Apr-08 |  |  | 0.50     |  |  | 01-Apr-18   |  |   |                  |  |  |                            |  |   |                 | 
|                                    |  | 900,000    |   |  | 01-Apr-08 |  |  | 0.50     |  |  | 01-Apr-18   |  |   |                  |  |  |                            |  |   |                 | 
|                                    |  | 350,000    |   |  | 01-Apr-08 |  |  | 0.50     |  |  | 01-Apr-18   |  |   |                  |  |  |                            |  |   |                 | 
|                                    |  | 200,000    |   |  | 01-Apr-08 |  |  | 0.50     |  |  | 01-Apr-09   |  |   |                  |  |  |                            |  |   |                 | 
|                                    |  |            |   |  |           |  |  |          |  |  |             |  |   |                  |  |  |                            |  |   |                 | 
|Exercised during the year           |  | (87,500    | ) |  |           |  |  | 0.50     |  |  | 26-Apr-12   |  |   |                  |  |  |                            |  |   |                 | 
|                                    |  |            |   |  |           |  |  |          |  |  |             |  |   |                  |  |  |                            |  |   |                 | 
|Balance, December 31, 2008          |  | 3,200,000  |   |  |           |  |  |          |  |  |             |  | $ | 0.50             |  |  | 8.23
      years           |  | $ | Nil             | 
|                                    |  |            |   |  |           |  |  |          |  |  |             |  |   |                  |  |  |                            |  |   |                 | 
|Exercisable, December 31, 2008      |  | 3,175,000  |   |  |           |  |  |          |  |  |             |  | $ | 0.50             |  |  | 8.23
      years           |  | $ | Nil             | 

F-35

---

|PLURIS ENERGY GROUP INC.                      
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|DECEMBER 31, 2008                             

NOTE 12  STOCK APPRECIATION RIGHTS (CONTINUED)

At December 31, 2008 the Company has an outstanding liability
  on the vested portion of the outstanding SARs and the estimated fair value of
  the unvested portion of the SARs is $nil (2007 - $85,750). The Company has
  commitments to grant additional SARs to certain officers and directors. Refer to
  Note 14.

NOTE 13  INCOME TAXES

As at December 31, 2008, the Companys corporate entity in the
  USA has a net operating loss carry-forwards of approximately $13 million that
  result in deferred tax asset. These loss carry-forwards will expire, if not
  utilized, through 2022. Net operating loss carry-forwards relating to the
  Companys subsidiaries for the years 2001 to 2008 cannot reasonably be
  determined and have been excluded. Management believes that the realization of
  the benefits from these deferred tax assets is uncertain and accordingly, a full
  deferred tax asset valuation allowance has been provided and no deferred tax
  asset has been recorded.

The Companys income tax provisions differ from the expected
  amounts determined by applying the appropriate combined effective tax rate to
  the Companys net income before taxes. The significant components of these
  differences are as follows:



|                                  |   | December 31, 2008 |   |   | December 31, 2007 |  
|--------------------------------- | - | ----------------- | - | - | ----------------- | -
|                                  |   | 35%               |   |   | 35%               |  
|Income tax benefit                | $ | (1,824,483        | ) | $ | (2,626,829        | )
|Permanent differences             |   | 627,102           |   |   | (100,511          | )
|Changes due to timing differences |   | -                 |   |   | 694,667           |  
|Valuation allowance               |   | 1,000,196         |   |   | 2,032,673         |  
|Income tax
      benefit          | $ | (197,185          | ) | $ | -                 |  

The tax effects of temporary differences that give rise to
  significant components of future income tax assets and liabilities are as
  follows:

December 31,
      
      
      December 31,2008
      
      
      2007Future income tax assets:Operating losses available for future periods
      $
      4,497,070
      
      $
      3,500,000Property and equipment
      
      9,727
      
      
      6,601Other investments
      
      52,500
      
      
      52,5004,559,297
      
      
      3,559,101Valuation allowance
      
      (4,559,297
      )
      
      (3,559,101
      )Net deferred income tax assets
      $
      -
      
      $
      -


The Company has not filed income tax returns for several years
  for the consolidated group in the United States. The taxing authorities
  prescribe penalties for failing to file certain tax returns and supplemental
  disclosures. Upon filing there could be penalties and interest assessed. Such
  penalties vary by jurisdiction and by assessing practices and authorities. The
  Company expects to have significant net operating loss carry forwards for income
  tax purposes available to offset future taxable income.

On January 1, 2007 the Company adopted the provisions of
  Financial Accounting Standard Board Interpretation No. 48 ("FIN 48"),
  "Accounting for Uncertainty in Income Taxes- an interpretation of FASB Statement
  No. 109". FIN 48 clarifies the accounting for uncertainty in income taxes
  recognized in an enterprise's financial statements and prescribes a recognition
  threshold and measurement process for financial statement recognition and
  measurement of a tax position taken or expected to be taken in a tax return. FIN
  48 also provides guidance on the recognition, classification, interest and
  penalties, accounting in interim periods, disclosure and transition associated
  with income tax liabilities. As a result of the implementation of FIN 48, there
  was no impact in the consolidated financial statements or material FIN 48
  liabilities.

F-36

---

|PLURIS ENERGY GROUP INC.                      
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|DECEMBER 31, 2008                             

NOTE 13  INCOME TAXES (CONTINUED)

The provisions of SFAS No. 109, "Accounting for Income Taxes,"
  require the establishment of a valuation allowance when, based on currently
  available information and other factors, it is more likely than not that all or
  a portion of a deferred tax asset will not be realized. SFAS No. 109 provides
  that an important factor in determining whether a deferred tax asset will be
  realized is whether there has been sufficient income in recent years and whether
  sufficient income is expected in future years in order to utilize the deferred
  tax asset. In 2008 and 2007, the Company determined, based upon its cumulative
  operating losses, that it was more likely than not that it would not be in a
  position to fully realize all of its domestic deferred tax assets in future
  year. Accordingly, at December 31, 2008 and 2007, the Company has recorded a
  valuation allowance of $4,559,297 and $3,559,101, respectively, which reduces
  the carrying value of its net deferred tax assets.

The Company files income tax returns in the U.S. federal
  jurisdiction, various state and foreign jurisdictions. The Companys tax returns
  are subject to tax examinations by U.S. federal and state tax authorities, or
  examinations by foreign tax authorities until the respective statute of
  limitation. It is subject to tax examinations by tax authorities for all
  taxation years commencing on or after 1999. Managements analysis of FIN 48
  supports the conclusion that the Company does not have any accruals for
  uncertain tax positions as of December 31, 2008. As a result, tabular
  reconciliation of beginning and ending balances would not be meaningful. If
  interest and penalties were to be assessed, we would charge interest to interest
  expense, and penalties to other operating expense. It is not anticipated that
  unrecognized tax benefits would significantly increase or decrease within 12
  months of the reporting date.

Disclosure concerning certain carry-forward tax pools,
  temporary and permanent timing differences in tax basis versus reported amounts
  may be impacted by assessing practices and tax code regulations when income tax
  returns are filed up to date. As a 100% valuation allowance has been provided
  against deferred tax assets reported in these financial statements, there would
  be no significant net impact to the current and deferred income tax disclosures
  or reconciliations reported.

Although management is currently not able to make a measurable
  provision for possible liability for penalties and interest, if any, at this
  time, the Company may be liable for such amounts upon assessment.

NOTE 14  CONTINGENCIES AND COMMITMENTS

In January 2007, the Company entered into five, two of which
  agreements have subsequently been terminated, five-year term management
  consulting agreements. The remaining three agreements provide for the granting
  of a total of 16,700,000 stock options and 16,700,000 stock appreciation rights,
  in aggregate, over the five year terms of the agreements. As of December 31,
  2008, 4,700,000 stock options and 4,700,000 stock appreciation rights have been
  granted, the remaining 12,000,000 options and 12,000,000 stock appreciation
  rights vest over the remaining term ending January 1, 2012.

On July 1, 2007, the Company entered into a five-year-term
  management consulting agreement. The agreement provides for a signing bonus of
  $20,000, the issuance of 100,000 shares of unrestricted common stock and a
  monthly remuneration of $10,000. The Company has the right to terminate the
  agreement without cause by providing 30 days written notice. Upon termination of
  the agreement, the Company is required to pay this consultant severance of 6
  months of monthly fees within 10 business days of the termination date. This
  agreement provides for the granting of 2,225,000 stock options and 2,225,000
  stock appreciation rights, in aggregate, over the five year term. As of December
  31, 2008, 250,000 stock options and 250,000 stock appreciation rights have been
  granted, the remaining 1,975,000 stock options and 1,975,000 stock appreciation
  rights will be granted on the anniversary dates of the agreements with terms to
  be set by the Board of Directors.

F-37

---

|PLURIS ENERGY GROUP INC.                      
|----------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|DECEMBER 31, 2008                             

NOTE 14  CONTINGENCIES AND COMMITMENTS (CONTINUED)

On February 15, 2008, the Company entered into a one-year term
  management consulting agreement. The agreement provides a monthly remuneration
  of $3,000 with no severance. This agreement also provides the granting of
  100,000 stock options and 100,000 stock appreciation rights that vest evenly
  over four quarters. As of December 31, 2008, 75,000 stock options and stock
  appreciation rights have vested and 25,000 options and appreciation rights
  remain unvested and outstanding.

The Company is also committed to pay compensation to senior
  officers of the Company as described in Note 11.

On April 30, 2007, the Company commenced an arbitral action
  against SEPSA through the ICC requesting the ICC to enforce SEPSAs obligations
  under the terms agreed upon in the SPA and to sell to the Company 100% of the
  shares of SEPSA and to award damages incurred by the Company related to its out
  of pocket expenses, loss of business opportunity and loss of revenue. SEPSA
  subsequently filed a counter claim with the ICC seeking awards in the form of
  its legal fees and translation costs related to the dispute. Refer to Note 8.

NOTE 15  SUBSEQUENT EVENTS

Subsequent to year-end, the Company:

| | (a) | Issued a promissory note for $25,500 which is unsecured,
      due on January 14, 2010 and bears interest at 12.5%;                                                                                                                                                                                                                                                                   
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                       
| | (b) | Issued 1,115,000 common shares to director and officer,
      two officers, and two consultants of the Company as a bonus of $128,225,
      valued at the closing market price of $0.115 on January 14, 2009, the
      issuance date;                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                       
| | (c) | Issued 1,013,400 common shares to a director and officer
      in settlement of accruals owed to the director and officer for management
      fees, valued at the closing market price of $0.12 on February 13, 2009,
      the issuance date;                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                       
| | (d) | Issued 408,217 common shares to an officer in settlement
      of accruals owed to the officer for management fees valued at the closing
      market price of $0.12 on February 13, 2009, the issuance date;
      and                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                       
| | (e) | Issued 219,917 common shares and 219,917 preferred shares
      - series B in settlement of debt owed for services to a vendor valued at
      the closing market price of $0.12 on February 13, 2009 and February 19,
      2009, the issuance date. The fair value of $32,987 of preferred shares -
      series B was recorded to mezzanine equity and charged as a
      dividend.

F-38

---

- 30 -

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

None.

Item
9A.        Controls and Procedures.

As required by Rule 13a-15 under the Exchange Act, we have
carried out an evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures as of the end of the period covered by
this annual report, being December 31, 2008. This evaluation was carried out
under the supervision and with the participation of our management, including
our companys chief executive officer and chief financial officer.

Based on this evaluation, our companys chief executive officer
and chief financial officer have concluded that our disclosure controls and
procedures as at December 31, 2008 were not effective to provide reasonable
assurance that information required to be disclosed in reports we file and
submit under the Exchange Act is recorded, processed, summarized and reported as
and when required and that it is accumulated and communicated to our management,
including the chief executive officer and chief financial officer, as
appropriate, to allow timely decisions regarding required disclosure.

We have identified, developed and begun to implement remedial
measures in light of the findings of our companys chief executive officer and
chief financial officer assessment of the effectiveness of internal controls
over financial reporting, to strengthen our company's disclosure controls and
procedures. Our companys chief executive officer and chief financial officer
are currently developing a plan and timetable for the implementation of remedial
measures intended to strengthen our internal controls over financial reporting.
Upon finalization and board approval of the plan, our companys chief executive
officer and chief financial officer intend to implement the plan.

In light of the conclusion that our company's internal controls
over financial reporting were ineffective as of December 31, 2008, we have
applied procedures and processes as necessary to ensure the reliability of our
financial reporting in regards to this annual report. Accordingly, management
believes, based on its knowledge, that: (i) this annual report does not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which
they were made, not misleading with respect to the period covered by this
report; and (ii) the financial statements, and other financial information
included in this annual report, fairly present in all material respects our
financial condition, results of operations and cash flows as at, and for, the
periods presented in this annual report.

Managements report on internal control over financial
reporting

Management is responsible for establishing and maintaining
adequate internal control over financial reporting. Internal control over
financial reporting is a process to provide reasonable assurance regarding the
reliability of our companys financial reporting for external purposes in
accordance with United States accounting principles generally accepted. Our
internal control over financial reporting includes maintaining records that in
reasonable detail accurately and fairly reflect our transactions and
dispositions of our assets; providing reasonable assurance that transactions are
recorded as necessary for preparation of our financial statements in accordance
with generally accepted accounting principles; providing reasonable assurance
that receipts and expenditures are made in accordance with authorizations of
management and our directors; and providing reasonable assurance that
unauthorized acquisition, use or disposition of our assets that could have a
material effect on our financial statements would be prevented or detected on a
timely basis.

Because of its inherent limitations, internal control over
financial reporting may not provide absolute assurance that a misstatement of
our financial statements would be prevented or detected.

In order to evaluate the effectiveness of internal control over
financial reporting as required by Section 404 of the Sarbanes-Oxley Act,
management conducted an evaluation of the effectiveness of our internal control
over financial reporting based on the framework and criteria established in
Internal Control  Integrated Framework, issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). This evaluation included
review

---

- 31 -

of the documentation of controls, evaluation of the design
effectiveness of controls, testing of the operating effectiveness of controls
and a conclusion on this evaluation. Based upon that evaluation, we have
concluded that, during the period covered by this report, such internal controls
over financial reporting were not effective as of December 31, 2008, due to the
existence of significant deficiencies constituting material weaknesses, as
described in greater detail below. A material weakness is a control deficiency,
or combination of control deficiencies, such that there is a reasonable
possibility that a material misstatement of the annual or interim financial
statements will not be prevented or detected on a timely basis

The matters involving internal controls and procedures that the
Companys management considered to be material weaknesses under the standards of
the Public Company Accounting Oversight Board were: (1) lack of a functioning
audit committee and lack of a majority of independent directors on the Companys
board of directors, resulting in ineffective oversight in the establishment and
monitoring of required internal controls and procedures; (2) inadequate
segregation of duties consistent with control objectives; (3) insufficient
written policies and procedures for accounting and financial reporting with
respect to the requirements and application of US GAAP and SEC disclosure
requirements; and (4) ineffective internal control over financial reporting.

The aforementioned material weaknesses were identified by the
Companys Chief Executive Officer and Chief Financial Officer in connection with
the audit of our financial statements as of December 31, 2008 and these findings
were reported to our management and board of directors. Management of the
Company believes that the material weaknesses set forth in (2), (3) and (4)
above did not affect the Companys financial results. However, management
believes that the lack of a functioning audit committee and a lack of a majority
of independent directors on the Companys board of directors resulting in not
effective oversight in the establishment and monitoring of required internal
controls and procedures can result in material deficiencies in the Companys
determination to its financial statements for future years.

We are committed to improving our financial organization. As
part of this, we will create a position to segregate duties consistent with
control objectives and will increase our personnel resources and technical
accounting expertise within the accounting function when funds are available to
the Company by doing the following: i) appointing one or more independent
directors to our board of directors who shall additionally be appointed to the
audit committee of the Company resulting in a fully functioning audit committee
who will undertake the oversight in the establishment and monitoring of required
internal controls and procedures; and ii) preparing and implementing sufficient
written policies and checklists which will set forth procedures for accounting
and financial reporting with respect to the requirements and application of US
GAAP and SEC disclosure requirements.

Management believes that the appointment of one or more
independent directors, who shall be appointed to a fully functioning audit
committee, will remedy the lack of a functioning audit committee and a lack of a
majority of independent directs on the Companys board. In addition, management
believes that preparing and implementing sufficient written policies and
checklists will remedy that following material weaknesses: (i) insufficient
written policies and procedures for accounting and financial reporting with
respect to the requirements and application of the US GAAP and SEC disclosure
requirements; and (ii) ineffective controls over period end financial close and
reporting processes.

Further, management believes that the hiring of additional
personnel who have the technical expertise and knowledge will result in the
proper segregation of duties and provide more checks and balances within the
department. Additional personnel will also provide the cross training needed to
support the Company if personnel turn-over issues within the department occur.
This, coupled with the appointment of additional independent directors will
greatly decrease any control and procedure issues that the Company may encounter
in the future.

We will continue to monitor and evaluate the effectiveness of
our internal controls and procedures and our internal controls over financial
reporting on an ongoing basis and are committed to taking further action and
implementing additional enhancements or improvements, as necessary and as funds
allow.

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

---

- 32 -

Changes in Internal Controls over Financial Reporting

There were no changes in our internal control over financial
reporting during the fourth quarter of our fiscal year ended December 31, 2008
that have materially affected or are reasonably likely to materially affect, our
internal control over financial reporting.

Certificates

Certificates with respect to disclosure controls and procedures
and internal control over financial reporting under Rules 13a-14(a) or 15d-14(a)
of the Exchange Act are attached to this annual report on Form 10-K.

Item
9B.        Other Information.

None.

PART III

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

Directors and Executive Officers, Promoters and Control
Persons

Our directors, executive officers and other significant
employees, their ages, positions held and duration each person has held that
position, are as follows:

Name
      Position Held with the Company
      Age
      Date First Elected or AppointedSacha H. Spindler
    Chief Executive Officer, Chairman
      and Director
    46
    February 12, 2003S. Sam Sen
    President and Chief Operating Officer
    50
    February 1, 2005Rahul Gandhi
    Chief Financial Officer
    29
    April 1, 2008Justin Perryman
    Director
    40
    October 7, 2005


Business Experience

The following is a brief account of the education and business
experience of each director, executive officer and key employee during at least
the past five years, indicating each person's principal occupation during the
period, and the name and principal business of the organization by which he was
employed.

Sacha H. Spindler

Sacha Spindler was appointed as our Chairman of the Board, a
director and the Chief Executive Officer on February 12, 2003. As a successful
business entrepreneur and venture capitalist, Mr. Spindler has over 29 years of
experience in all aspects of business management, corporate development, finance
and venture capital markets. Prior to founding our company, Mr. Spindler was
instrumental in the formation and subsequent growth of several start-up
companies in the high technology, resource and oil and gas industries. Among his
demonstrated strengths, Mr. Spindler possesses in-depth knowledge of the equity
markets and investment industry, as well as a strong fundamental background in
the responsibilities of corporate development and operations. During the past 12
years, Mr. Spindler has successfully applied his knowledge and expertise in the
areas of finance, structure, negotiations and business development to companies
in the oil and gas industry.

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- 33 -

Soumitra (Sam) Sen

Sam Sen has been our President since February 1, 2005. Mr. Sen
  brings over twenty-six years of senior business and technical experience in the
  energy industry. Prior to joining our Company, Mr. Sen served in the capacities
  of Project Manager, Worldwide Business Development and New Venture Development
  with Anadarko Petroleum. Prior to Anadarko, Mr. Sen worked with leading
  multi-national oil companies such as Unocal, Suncor and Gulf Canada Resources,
  where he held positions ranging from project geologist to business development
  manager. Throughout his accomplished career, Mr. Sen has established a
  successful track record in the commercial analysis, negotiation, support, and
  capture of value-adding upstream, midstream, downstream, and acquisition and
  divestiture projects ranging in size from $10 million to over $1 billion. Mr.
  Sen is recognized for his strong technical background and was the lead geologist
  on exploration teams responsible for hydrocarbon discoveries of up to 100 MMBOE
  (gross) reserves. Mr. Sen received his MBA from the Warwick Business
  School/Wolsey Hall, Oxford U.K., as well as a BSc (Honors) in Geology from
  Carleton University, Canada. He holds memberships in industry associations
  including the AAPG, AIPN and APEGGA, and is a professional geologist.

Rahul Gandhi

Mr. Gandhi joined our Company in 2008 and contributes his
in-depth experience in the areas of accounting and finance for companies within
the mineral exploration and oil and gas sectors. Mr. Gandhi who also serves at a
top-tier accounting firm in Canada whereby he holds a Manager position in
Assurance, and 80% of his time is devoted to full-time service at the firm. Mr.
Gandhi is a member of a global business advisory services leader focused on
serving mid-size companies, where he provides assurance and financial reporting
services to publicly listed companies.

Justin Perryman

Justin Perryman was appointed as one of our directors on
October 7, 2005. Mr. Perryman brings over 16 years of legal, finance, corporate
and trade business experience. Mr. Perryman is an accomplished attorney-at-law
possessing specialized skills in the area of general corporate and business law
with extensive experience working for publicly listed companies as well as oil
& gas companies. In addition to his demonstrated skill and practice as an
attorney-at-law, Mr. Perryman also has a compliment of extensive entrepreneurial
knowledge and expertise in the fields of international trade, corporate finance
and investment banking. Mr. Perryman received his Juris Doctor and Masters in
International Business degree from the Washington University School of Law,
specializing in international and domestic banking and corporate and securities
law.

Mr. Perryman is also a captain in the United States Army, Texas
Army National Guard Office of the Judge Advocate General, 36th
Infantry Division.

Identification of Certain Significant Employees

Other than our executive officers, there is no other person who
is expected to make a significant contribution to our business.

Family Relationships

There are no family relationships between any director or
executive officer.

Involvement in Certain Legal Proceedings

Our directors, executive officers and control persons have not
been involved in any of the following events during the past five years:

| | 1. | any bankruptcy petition filed by or against any business
      of which such person was a general partner or executive officer either at
      the time of the bankruptcy or within two years prior to that
  time;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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- 34 -

| | 2. | any conviction in a criminal proceeding or being subject
      to a pending criminal proceeding (excluding traffic violations and other
      minor offences);                                                                                                                                                                 
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                
| | 3. | being subject to any order, judgment, or decree, not
      subsequently reversed, suspended or vacated, of any court of competent
      jurisdiction, permanently or temporarily enjoining, barring, suspending or
      otherwise limiting his involvement in any type of business, securities or
      banking activities; or
| |    |                                                                                                                                                                                                                                                                                                                                
| | 4. | being found by a court of competent jurisdiction (in a
      civil action), the Commission or the Commodity Futures Trading Commission
      to have violated a federal or state securities or commodities law, and the
      judgment has not been reversed, suspended, or
vacated.                                           

Compliance with Section 16(a) of the Securities and Exchange
Act of 1934

Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires our executive officers and directors and persons who own more
than 10% of a registered class of our equity securities to file with the
Securities and Exchange Commission initial statements of beneficial ownership,
reports of changes in ownership and annual reports concerning their ownership of
our common stock and other equity securities, on Forms 3, 4 and 5 respectively.
Executive officers, directors and greater than 10% shareholders are required by
the Securities and Exchange Commission regulations to furnish us with copies of
all Section 16(a) reports they file.

Based solely on our review of the copies of such forms received
by us, or written representations from certain reporting persons that no Form 5s
were required for those persons, we believe that, during the year ended December
31, 2008, all filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with, with the
exception of the following:

Name
      Number ofLate
      Reports
      Number of Transactions NotReported on a Timely Basis
      Failure to FileRequested FormsS. Sam Sen
    3(1)
    10
    NilSacha H. Spindler
    4(1)
    16
    NilBrian
      Fiddler(2)
    3(1)
    5
    NilJustin Perryman
    5(1)
    27
    NilTimothy G.
      Russell(3)
    2(1)
    3
    Nil


(1) ****The
named officer, director or greater than 10% shareholder, as applicable, filed a
late Form 4 - Statement of Changes in Beneficial Ownership.

(2)****Mr.
Fiddler resigned as our chief financial officer on January 24, 2008.

(3)****Mr.
Russell resigned as a director of our company on August 22, 2007.

Code of Ethics

On May 23, 2005, we adopted a code of business conduct and
ethics policy (the Code of Ethics). The adoption of the Code of Ethics allows
us to: (i) describe our core values and beliefs; (ii) provide the foundation for
all business conduct; and (iii) provide guidance to each of our directors and
officers to assist them in recognizing and dealing with ethical issues and
risks, providing mechanisms to report unethical conduct and helping foster a
culture of honesty and accountability. A copy of the Code of Ethics may be
obtained from our Secretary at no charge upon request.

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- 35 -

Insider Trading Policy

On May 23, 2005, we adopted an insider trading policy ( the
Insider Trading Policy). The establishment of the Insider Trading Policy
allows us to assist our officers and directors to ensure compliance with federal
securities laws which prohibit trading in the securities of a company on the
basis of inside information. Our insiders and officers receive, as part of
their compensation packages, shares of our restricted common stock for resale.
Pursuant to the terms and provisions of the Insider Trading Policy, there are
four blackout periods during which our directors and officers are prohibited
from trading in our securities, these blackout periods begin on March
31st, June 30th, September 30th and December
31st of each fiscal year and end when two full trading days have
passed on the N Over-the-Counter Bulletin Board stock market after we announce
our results for the preceding fiscal period through quarterly and annual filings
with the Securities and Exchange Commission.

Audit Committee

As of the date of this annual report, we have not appointed
members to an audit committee and, therefore, the respective role of an audit
committee has been conducted by our board of directors. When established, the
audit committee's primary function will be to provide advice with respect to our
financial matters and to assist our board of directors in fulfilling its
oversight responsibilities regarding finance, accounting, tax and legal
compliance. The audit committee's primary duties and responsibilities will be
to: (i) serve as an independent and objective party to monitor our financial
reporting process and internal control system; (ii) review and appraise the
audit efforts of our independent accountants; (iii) evaluate our quarterly
financial performance as well as our compliance with laws and regulations; (iv)
oversee management's establishment and enforcement of financial policies and
business practices; and (v) provide an open avenue of communication among the
independent accountants, management and our board of directors.

The board of directors has considered whether the regulatory
provision of non-audit services is compatible with maintaining the principal
independent accountant's independence.

Item 11.        Executive
Compensation.

The particulars of compensation paid to the following persons
(the Named Executive Officers):

- our principal executive officer;
- each of our two most highly compensated executive officers who were serving
  as executive officers at the end of the years ended December 31, 2008 and 2007
  and whose total compensation exceeds $100,000 per year; and
- up to two additional individuals for whom disclosure would have been
  provided under (b) but for the fact that the individual was not serving as our
  executive officer at the end of the most recently completed financial year,

who we will collectively refer to as the named executive
officers, of our years ended December 31, 2008 and 2007, is set out in the
following summary compensation table:

SUMMARY COMPENSATION TABLEName and Principal Position
      Year
      Salary
        ($)
      Bonus
        ($)
      Stock
        Awards ($)
      Option
        Awards ($) (1)
      Non-Equity
        Incentive Plan Compensa- tion
        ($)
      Change
        in Pension Value and Nonqualified
        Deferred Compensation Earnings ($)
      All
        Other Compensa- tion ($)
        (2)
      Total
        ($)(a)
      (b)
      (c)
      (d)
      (e)
      (f)
      (g)
      (h)
      (i)
      (j)Sacha H. Spindler(1)
        CEO, Chairman
      2008 
        2007
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        950,000
      Nil 
        Nil
      Nil 
        Nil
      380,000 
        360,000
      380,000 
        1,310,000S. Sam Sen(1)
      2008
      Nil
      60,000
      Nil
      Nil
      Nil
      Nil
      300,000
      360,000


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- 36 -

SUMMARY COMPENSATION TABLEName and Principal Position
      Year
      Salary ($)
      Bonus ($)
      Stock Awards ($)
      Option Awards ($)
        (1)
      Non-Equity Incentive
        Plan Compensa- tion ($)
      Change in Pension Value and Nonqualified Deferred Compensation
        Earnings ($)
      All Other Compensa-
        tion ($) (2)
      Total ($)President and COO
      2007
      Nil
      353,250
      Nil
      525,000
      Nil
      Nil
      216,000
      1,094,250Rahul Gandhi 
        CFO
      2008 
        2007
      Nil 
        Nil
      26,000 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      30,000 
        Nil
      56,000 
        Nil


(1) The amount of the Option Awards
represents the fair value of the stock options granted and recognized for
financial reporting purposes during the year indicated. The fair value of each
option grant was estimated on the date of the grant using the Black-Scholes
option valuation model with the following assumptions being used: expected
dividend yield 0.0%; expected volatility ranging from 98% - 180%; risk-free
interest rate; 2%; and expected term is 10 years.

(2) In addition to the equity awards
  agreed upon under the Equity Incentive Plan, our Company accrues sums on behalf
  of the officers equivalent to the gross tax payable by reason of receipts of
  equity awards granted and exercised.

Outstanding Equity Awards at Fiscal Year-End

The particulars of unexercised options, stock that has not
vested and equity incentive plan awards for the Named Executive Officers as at
the year ended December 31, 2008, is set out in the following outstanding equity
awards table:

Options
        Awards
      Stock
        AwardsName
      Number of Securities
        Underlying Unexercised Options (#) Exercisable
      Number of Securities
        Underlying Unexercised Options (#) Unexercisable
      Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)
      Option Exercise Price ($)
      Option Expiration Date
      Number of Shares
        or Units of Stock That Have Not Vested (#)
      Market Value of
        Shares or Units of Stock That Have Not Vested
        ($)
      Equity Incentive Plan Awards: Number of Unearned
        Shares, Units or Other Rights
        That Have Not Vested (#)
      Equity Incentive Plan Awards: Market or Payout
        Value of Unearned Shares, Units
        or Other Rights That Have Not Vested ($)(a)
      (b)
      (c)
      (d)
      (e)
      (f)
      (g)
      (h)
      (i)
      (j)Sacha H. 
        Spindler
      52,000 
        100,000 
        1,500,000
      Nil 
        Nil 
        Nil
      Nil 
        Nil 
        Nil
      $0.75 
        $0.75 
        $0.50
      Mar-04-14 
        Jul-22-14 
        Apr-01-18
      Nil 
        Nil 
        Nil
      Nil 
        Nil 
        Nil
      3,000,000
      $225,500S. Sam Sen
      900,000
      Nil
      Nil
      $0.50
      Apr-01-18
      Nil
      Nil
      1,200,000
      $90,000Rahul 
        Gandhi
      75,000
      25,000
      Nil
      $0.50
      Apr-01-09
      Nil
      Nil
      Nil
      Nil


---

- 37 -

Director Compensation

The particulars of compensation paid to our directors for our
year ended December 31, 2008 is set out in the following director compensation
table:

Name
      Fees Earned or Paid in
      Cash ($)
      Stock Awards ($)
      Option Awards ($)
      Non-Equity Incentive Plan
      Compensation ($)
      Change in Pension Value and
      Nonqualified Deferred Compensation
      Earnings
      All Other Compensation
      ($)
      Total ($)(a)
    (b)
    (c)
    (d)
    (e)
    (f)
    (g)
    (h)Justin Perryman
    $9,000
    Nil
    Nil
    Nil
    Nil
    $Nil
    $9,000


Stock Option Plan

On July 23, 2004, our board of directors unanimously approved
and adopted a 2004 stock option plan (the Stock Option Plan), which provides
for the granting of up to 1,200,000 shares of common stock. The purpose of the
Stock Option Plan is to advance our interests and the interests of our
shareholders by affording our key personnel opportunity for investment and the
incentive advantages inherent in stock ownership. Pursuant to the provisions of
the Stock Option Plan, stock options (the Stock Options) will be granted only
to our key personnel, generally defined as a person designated by our board of
directors upon whose judgment, initiative and efforts we may rely including any
of our directors, officers, employees or consultants.

The Stock Option Plan is to be administered by our board of
directors, which shall determine: (i) the persons to be granted Stock Options
under the Stock Option Plan; (ii) the number of shares subject to each option,
the exercise price of each Stock Option; and (iii) whether the Stock Option
shall be exercisable at any time during the option period of ten (10) years or
whether the Stock Option shall be exercisable in installments or by vesting
only. The Stock Option Plan provides authorization to our board of directors to
grant Stock Options to purchase a total number of shares of our common stock,
not to presently exceed 1,200,000 shares of common stock as at the date of
adoption by our board of directors of the Stock Option Plan. At the time a Stock
Option is granted under the Stock Option Plan, our board of directors shall fix
and determine the exercise price at which shares of our common stock may be
acquired; provided, however, that any such exercise price shall not be less than
that permitted under the rules and policies of any stock exchange or
over-the-counter market which is applicable to us.

In the event an optionee who is one of our directors or
officers ceases to serve in that position, any Stock Option held by such
optionee generally may be exercisable within up to ninety (90) calendar days
after the effective date that his position ceases, and after such 90-day period
any unexercised Stock Option shall expire. In the event an optionee who is one
of our employees or consultants ceases to be employed by us, any Stock Option
held by such optionee generally may be exercisable within up to sixty (60)
calendar days (or up to thirty (30) calendar days where the optionee provided
only investor relations services to the Company) after the effective date that
his employment ceases, and after such 60- or 30-day period any unexercised Stock
Option shall expire.

No Stock Options granted under the Stock Option Plan will be
transferable by the optionee, and each Stock Option will be exercisable during
the lifetime of the optionee subject to the option period of ten (10) years or
limitations described above. Any Stock Option held by an optionee at the time of
his death may be exercised by his estate within one (1) year of his death or
such longer period as the board of directors may determine.

Unless restricted by the option agreement, the exercise price
shall by paid by any of the following methods or any combination of the
following methods: (i) in cash; (ii) non-forfeitable, unrestricted or restricted
shares of common stock, which are already owned by the optionee and have a
market referenced value at the time of exercise that is equal to the Option
price; (iii) any other legal consideration that the board of directors may deem
appropriate, including without limitation any for of consideration authorized on
such basis as our board of directors may determine in accordance with the Stock
Option Plan; and (iv) any combination of the foregoing. Our board of directors
in its sole discretion may permit a so-called cashless exercise (net exercise
of the Stock Options).

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- 38 -

The Stock Option Plan further provides that, subject to the
provisions of the Stock Option Plan and prior shareholder approval, our board of
directors may grant to any of our key personnel who is an employee eligible to
receive options one or more incentive stock options to purchase the number of
shares of our common stock allotted by the board of directors (the Incentive
Stock Options). The option price per share of our common stock deliverable upon
the exercise of an Incentive Stock Option shall be no less than fair market
value of a share of our common stock on the date of grant of the Incentive Stock
Option. In accordance with the terms of the Stock Option Plan, fair market
value of the Incentive Stock Option as of any date shall not be less than the
closing price for the shares of our common stock on the last trading day
preceding the date of grant. The option term of each Incentive Stock Option
shall be determined by our board of directors, which shall not commence sooner
than from the date of grant and shall terminate no later than ten (10) years
from the date of grant of the Incentive Stock Option, subject to possible early
termination as described above.

Performance Stock Incentive Plan

On March 6, 2006, our board of directors, pursuant to unanimous
consent, approved the adoption of a performance stock incentive plan  2006 (the
Performance Stock Incentive Plan) with an effective date of March 1, 2006 (the
Effective Date), pursuant to which shares of our restricted common stock will
be allocated and issued into escrow in the record name of certain officers,
directors and/or employees/consultants as incentives at an original issue price
of $0.001 par value per share (the Escrowed Performance Shares). The board of
directors deemed adoption and approval of the Performance Stock Incentive Plan
to be in our best interests and those interests of our shareholders based upon
an analysis of several factors including, but not limited to the following: (i)
to retain and attract the best available personnel as our directors, management,
advisers and consultants of the Company (the Participants) to enhance the
continued successful performance to date of our operational business plan by
management; (ii) to create inducements and incentives for the Participants based
on achievement of certain performance criteria to encourage maximization of our
further operational success and growth, thus creating substantial value for our
shareholders; (iii) to provide our management with a measure of control to
ensure continuity and successful future performance of our operational business
plan goals; and (iv) to simultaneously create combined operational efficiency of
incentives for our management and enhancement of our capital by associated
realization costs. Based upon the terms and provisions of the Performance Stock
Incentive Plan:

| | (i)   | an aggregate of 700,000 Escrowed Performance Shares can
      be purchased from escrow by a participant (the Participant) at a price
      of $2.50 per share commencing one year from the Effective Date for up to
      five years;                                                                                                                                                                                                                                                     
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (ii)  | an aggregate of 900,000 Escrowed Performance Shares can
      be purchased from escrow by a Participant at a price of $5.00 per share on
      or before the first three years after the Effective Date, if our assets
      increase by 50%, the market share price of our common stock achieves a
      minimum of $6.25, and our financial statements reflect a minimum
      $3,000,000 profit before taxes, depletion, amortization and stock based
      compensation charges;        
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (iii) | an aggregate of 1,200,000 Escrowed Performance Shares can
      be purchased from escrow by a Participant at a price of $6.25 per share on
      or before the first five years after the Effective Date, if our assets
      increase by 100%, the market share price of our common stock achieves a
      minimum of $10.00, and our financial statements show a minimum $6,000,000
      profit before taxes, depletion, amortization and stock based compensation
      charges;        
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (iv)  | an aggregate of 1,500,000 Escrowed Performance Shares can
      be purchased from escrow by a Participant at a price of $7.50 per share on
      or before the first seven years after the Effective Date, if our assets
      increase by 200%, the market share price of our common stock achieves a
      minimum of $15.00, and our financial statements show a minimum of
      $9,000,000 profit before taxes, depletion, amortization and stock based
      compensation charges; and
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (v)   | an aggregate of 1,700,000 Escrowed Performance Shares can
      be purchased from escrow by a Participant at a price of $10.00 per share
      on or before the termination date, if our assets increase by 400%, the
      market share price of our common stock achieves a minimum of $20.00, and
      our financial statements show a minimum of $15,000,000 profit before
  taxes, depletion, amortization and stock based compensation charges.                                      

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- 39 -

The Escrowed Performance Shares shall participate as to all the
rights of a shareholder, including voting rights, except that until earned and
paid from escrow, the Escrowed Performance Shares shall not participate in
dividends, assets or other distributions. The Escrowed Performance Shares can be
purchased by the Participant: (i) cash; (ii) shares of common stock which are
already owned by the participant and have an aggregate market referenced value
as determined by the board; (iii) any other legal consideration that the board
may deem appropriate; and (iv) a cashless exercise based upon a certain formula.
Any Escrowed Performance Shares not earned during the specified time frame set
forth above may be carried forward. At termination of the Performance Stock
Incentive Plan, all Escrowed Performance Shares not earned will be cancelled and
returned to treasury.

At December 31, 2008, a total of 6,000,000 performance shares
are unvested and may be purchased from escrow at a price ranging from $2.50 to
$10.00 per share, based on the Companys common stock achieving a minimum market
price ranging from $6.25 to $20.00 per share and the Companys assets increasing
by a minimum of 50% to 400%. No stock-based compensation has been recorded on
the unvested escrow performance shares as it is not probable that performance
conditions will be met.

On July 18, 2006, our board of directors, pursuant to unanimous
consent, approved the adoption of an Equity Incentive Plan (the EIP), that
provides for the granting of specific awards (the Awards), whereby the maximum
aggregate number of shares of our common stock that may be issued and sold under
all Awards granted under the EIP shall be equal to 20% of the issued and
outstanding common stock (on a fully diluted basis) on the date of any
particular grant. To date we have registered 2,000,000 common shares under a
Form S-8 Registration Statement filed with the United States Securities and
Exchange Commission under the EIP. Additionally, during 2007 we granted a total
of 4,765,000 options at prices ranging from $0.25 to $0.57 and a total of
3,885,000 stock appreciation rights (SARs) at prices ranging from $0.35 to
$0.50 under the EIP. During 2007, 3,157,822 SARs were exercised for a total
amount of proceeds due by us to the grantees of $2,248,500, those amounts of
which were used to offset the costs associated with the exercise of 2,707,822
options. We are committed during 2009 to grant to officers, directors and senior
management of our company an aggregate 3,650,000 options and 3,650,000 SARs.
Over the course of the remaining terms of contracts entered into by us for
specific officers and senior management, we are committed to grant 13,975,000
options and 13,975,000 SARs inclusive of the 2008 commitments described above.

Item
12.        Security Ownership of Certain
Beneficial Owners and Management and Related Stockholder Matters.

Beneficial Ownership

We have set forth in the following table certain information
regarding our shares of common stock beneficially owned for: (i) each
shareholder we know to be the beneficial owner of 5% or more of shares of our
common stock; (ii) each of our executive officers and directors; and (iii) all
executive officers and directors as a group. Beneficial ownership is determined
in accordance with the rules of the Securities and Exchange Commission. In
computing the number of shares beneficially owned by a person, we have included
shares for which the named person has sole or shared power over voting or
investment decisions. Except as otherwise noted below, the number of shares
beneficially owned includes common stock which the named person has the right to
acquire, through conversion or option exercise, or otherwise, within 60 days
after March 31, 2008. Beneficial ownership calculations for 5% stockholders are
based solely on publicly filed Schedule 13Ds or 13Gs, which 5% stockholders are
required to file with the Securities and Exchange Commission. As of May 15,
2009, we had 39,009,465 common shares issued and outstanding.

To the best of our knowledge, there are no voting arrangements
with any of our other shareholders.

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- 40 -

Name and Address ofBeneficial Owner
      Amount and Nature ofBeneficial Ownership
      Percentageof
      Class(1)Sacha H. Spindler c/o 2703  550 Pacific
      Street Vancouver, BC V6Z 3G2
    15,593,564 (2)common
      shares 3,000,000 preferred shares series A 8,294,157 preferred
      shares series B
    32.9% 65.2% 50.3%Soumitra (Sam) Sen c/o 2703  550 Pacific Street
      Vancouver, BC V6Z 3G2
    6,063,047(3)common
      shares 1,200,000 preferred shares series A 1,963,200 preferred
      shares series B
    12.8% 26.1% 11.9%Rahul Gandhi c/o Suite 2703  550 Pacific Street
      Vancouver, BC V6Z 3G2
    366,667(4)common
      shares 116,667 preferred shares series B
    0. 8% 0.7%Jose Bereskyj c/o 2703  550 Pacific Street
      Vancouver, BC V6Z 3G2
    1,160,667(5)common
      shares 466,667 preferred shares series B
    2.4% 2.8%Justin Perryman 21720 Kingsland Blvd. Suite 30
      Katy, Texas 77450-2513
    689,700(6)common
      shares 400,000 preferred shares series A 93,317 preferred shares
      series B
    1.5% 8.7% 0.6%Directors and Executive Officers as a Group
    23,873,645(7)common
      shares 4,600,000 preferred shares series A 10,934,008 preferred
      shares series B
    50.4% 100.0% 66.3%


(1) ****Based
on 39,009,465 shares of common stock and 16,479,493 shares of preferred stock
series B, issued and outstanding as well as 3,382,000 options and 4,938,152
warrants unexercised as of May 15, 2009. Beneficial ownership is determined in
accordance with the rules of the SEC and generally includes voting or investment
power with respect to securities. Except as otherwise indicated, we believe that
the beneficial owners of the common stock listed above, based on information
furnished by such owners, have sole investment and voting power with respect to
such shares, subject to community property laws where applicable.

(2) ****This
figure includes: (i) the assumption of the exercise of 1,652,000 Stock Options
into 1,652,000 shares of common stock; (ii) 8,486,299 restricted shares of
common stock held by GT Venture Management, AG, a company wholly-owned by Sacha
Spindler; (iii) 120,000 restricted shares and 27,507 non-restricted shares of
common stock held by Cyprus Properties Ltd., a company controlled by Sacha
Spindler; (iv) 35,258 non-restricted shares of common stock held by Angel Light
Foundation SA, a company controlled by Sacha Spindler; (v) 3,040,000 restricted
shares of common stock held by Sacha Spindler; and (vi) the assumption of the
exercise of 2,232,500 Warrants into 2,232,500 restricted shares of common stock.

(3) ****This
figure includes (i) the assumption of the exercise of 900,000 Stock Options into
900,000 shares of common stock; (ii) 2,504,847 restricted shares of common stock
held by Landmark Management Services SA, a company wholly-owned by Soumitra Sam
Sen; (iii) 2,265,000 restricted shares of common stock held by Soumitra Sam Sen;
and (iv) the assumption of the exercise of 393,200 Warrants into 393,200
restricted shares of common stock.

(4) ****This
figure includes: (i) the assumption of the exercise of 100,000 Stock Options
into 100,000 shares of common stock; and (ii) 266,667 restricted shares of
common stock held.

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- 41 -

(5)****This
figure includes (i) the assumption of the exercise of 100,000 Stock Options into
100,000 shares of common stock; (ii) 788,667 restricted shares of common stock
held; and (iii) the assumption of the exercise of 272,000 Warrants into 272,000
restricted shares of common stock.

(6)****This
figure includes (i) the assumption of the exercise of 100,000 Stock Options into
100,000 shares of common stock; (ii) 409,700 restricted shares of common stock
held; and (iii) the assumption of the exercise of 180,000 Warrants into 180,000
restricted shares of common stock.

(7)****This
figure includes: (i) 17,881,180 restricted shares of common stock; (ii) 62,765
non-restricted shares of common stock; (iii) the assumption of the exercise of
2,852,000 Stock Options into 2,852,000 shares of common stock and; (iv) the
assumption of the exercise of 3,077,700 warrants into 3,077,700 restricted
shares of common stock.

Changes in Control

We are unaware of any contract or other arrangement the
operation of which may at a subsequent date result in a change in control of our
company.

Item
13.        Certain Relationships and
Related Transactions, and Director Independence.

Except as described below, no director, executive officer,
principal shareholder holding at least 5% of our common shares, or any family
member thereof, had any material interest, direct or indirect, in any
transaction, or proposed transaction, during the year ended December 31, 2008,
in which the amount involved in the transaction exceeded or exceeds the lesser
of $120,000 or one percent of the average of our total assets at the year-end
for the last three completed fiscal years.

During the years ended December 31, 2008 and 2007, the Company
entered the following transactions with a GT Venture Management AG:

| | - | Incurred management fees of $360,000 (2007: $360,000) to
      GT Venture Management AG, a private company, which provides services to
      the Company of Sacha H. Spindler director and officer of the Company;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | - | Settled $43,750 of unpaid fees into a private placement
      consisting of 175,000 units at $0.25 per unit, each unit consisting of one
      common share and one share purchase warrant;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | Entered into a private placement agreement with GT
      Venture Management AG for 1,557,500 units at $0.25 per unit for total
      proceeds of $389,375, with each unit consisting of one common share and
      one common share purchase warrant, with each common share purchase warrant
      exercisable at $0.50 per common share for a period of 2 years from the
      date of issuance. The private placement agreement was entered into by the
      Company in settlement of $389,375 notes payable that were assumed by GT
      Venture Management AG from the note holder;                                                                                                                                                                                                                                                                                                                             
| | - | Settled $22,160 owed to GT Venture Management AG by
      issuing 92,334 common shares at the market price of $0.24 on October 8,
      2008;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | Issued 6,722,899 Series B, $0.001 par value preferred
      shares, which were paid for by GT Venture Management AG by offsetting
      management fees due from the Company to GT Venture Management AG; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | In May 2007, GT Venture Management AG converted $3,000 of
      unpaid fees into 3,000,000 Series A preferred shares. In June 2007, GT
      Venture Management AG converted $140,000 of unpaid fees into a private
      placement consisting of 560,000 units at $0.25 per unit. In December 2007,
      this party exercised 1,250,000 stock appreciation rights which resulted in
      $875,000 owing to GT Venture Management AG. The Company settled this debt
      plus an additional $75,000 owing to GT Venture Management AG for the
      exercise of 100,000 stock appreciation rights by issuing 1,250,000 common
      shares for the exercise of 1,250,000 stock options at $0.50, 100,000
      common shares for the exercise of 100,000 stock options at $0.45 granted
      directly to the officer, and 560,000 common shares for the exercise of
      560,000 share purchase warrants at $0.50.

At December 31, 2008, GT Venture Management AG is owed $206,658
(2007: $nil) by the Company. The Company is committed to pay GT Venture
Management AG $30,000 in management fees per month. The agreement with this
party can be terminated by the Company at any time by providing 60 days written
notice. Upon termination of the agreement, the Company is required to pay GT
Venture Management AG severance of 24 months

---

- 42 -

of monthly fees within 10 business days of the termination date
plus an additional severance cash payment equating to the value of 5% of the
Gross Market Capital Increase in the Company from January 1, 2007 until the date
of the termination of this agreement.

During the years ended December 31, 2008 and 2007, the Company
entered the following transactions with Landmark Management Services SA, a
private company, which provides services to the Company of Soumitra (Sam) Sen,
an officer of the Company:

| | - | Incurred management fees of $216,000 (2007: $216,000), of
      which $nil (2007 - $13,500) was allocated to discontinued operations for
      work relating to the US oil and gas properties;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | - | Settled $126,823 owed to Landmark Management Services SA
      by issuing 528,430 common shares at the market price of $0.24 on October
      8, 2008;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | Issued 1,963,200 Series B, $0.001 par value preferred
      shares, which were paid for by the officer by offsetting management fees
      due from the Company to Landmark Management Services SA; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | In May 2007, this officer converted $1,200 of unpaid fees
      into 1,200,000 Series A preferred shares. In June 2007, Landmark
      Management Services SA converted $30,000 of unpaid fees into a private
      placement consisting of 120,000 units at $0.25 per unit. In December 2007,
      this party exercised 750,000 stock appreciation rights which resulted in
      $525,000 owing to Landmark Management Services SA. The Company settled
      this debt by issuing 750,000 common shares for the exercise of 750,000
      stock options at $0.50, 120,000 common shares for the exercise of 120,000
      share purchase warrants at $0.50 and the issuance of 75,000 common shares
      for the remaining $90,000.

At December 31, 2008, Landmark Management Services SA is owed
$52,037 (2007: $98,300) for unpaid management fees. The Company is committed to
pay Landmark Management Services SA $18,000 in management fees per month. This
agreement can be terminated by the Company at any time by providing 60 days
written notice. Upon termination of the agreement, the Company is required to
pay Landmark Management Services SA severance of 6 months of monthly fees within
10 business days of the termination date.

During the years ended December 31, 2008 and 2007, the Company
entered the following transactions with Justin Perryman, a director of the
Company:

| | - | Incurred management fees of $12,000 (2007: $$9,000) plus
      a bonus of $nil (2007: $45,000);                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | - | Settled $22,396 owed to the director by issuing 93,317
      common shares at the market price of $0.24 on October 8, 2008;                                                                                                                            
| | - | Issued 93,317 Series B, $0.001 par value preferred shares
      for cash proceeds; and                                                                                                                                                                 
| | - | In May 2007, this director converted $400 of unpaid fees
      into 400,000 Series A preferred shares. In June 2007, this director
      converted $45,000 of unpaid fees into a private placement consisting of
      180,000 units at $0.25 per unit.

At December 31, 2008, this director is owed $2,998 (2007:
$2,600) by the Company. The Company is committed to pay this director $1,000 per
month. This agreement can be terminated by the Company at any time by providing
30 days written notice.

During the years ended December 31, 2008 and 2007, the Company
entered the following transactions with Rahul Gandhi, an officer of the Company:

| | - | Incurred management fees of $30,000 (2007: $nil);                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | - | Settled $4,000 owed to the officer by issuing 16,667
      common shares at the market price of $0.24 on October 8, 2008;                                                    
| | - | Issued 100,000 common shares to the officer at the
      closing market price of $0.26 on the date of issuance in payment of a
      bonus of $26,000; and                   
| | - | Issued 116,667 Series B, $0.001 par value preferred
      shares, which were paid for by the officer by offsetting management fees
      due from the Company to the officer.

At December 31, 2008, this officer is owed $8,883 (2007: $nil)
for unpaid management fees. The Company is committed to pay this officer $3,000
in management fees per month until April 1, 2009. The agreement, which

---

- 43 -

commenced in March 2008, automatically renews for four
consecutive one-year terms unless either party terminates the agreement by
providing thirty days written notice. This agreement can be terminated by the
Company at any time by providing 30 days written notice.

During the years ended December 31, 2008 and 2007, the Company
entered the following transactions with, Jose Bereskj a vice-president of the
Company:

| | - | Incurred management fees of $60,000 (2007: $nil);                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | - | Settled $52,000 owed to the officer by issuing 216,667
      common shares at the market price of $0.24 on October 8, 2008; and                                              
| | - | Issued 466,667 Series B, $0.001 par value preferred
      shares, which were paid for by the officer by offsetting management fees
      due from the Company to the officer.

At December 31, 2008, this officer is owed $59,533 (2007: $nil)
for unpaid management fees. The Company is committed to pay this officer $10,000
in management fees per month. This agreement can be terminated by the Company at
any time by providing 30 days written notice.

During the year ended December 31, 2008, management fees of
$nil (2007: $66,000) were incurred to Brian Fiddler, a former officer of the
Company. At December 31, 2008, this officer is owed $nil (2007: $7,500) for
management fees due. The Company was committed to pay this officer $5,500 in
management fees per month. On January 24, 2008, this officer resigned from the
Company.

During the year ended December 31, 2008, consulting fees of
$nil (2007: $7,900) were incurred to Tim Russell, a former director of the
Company. In May 2007, this director converted $200 of unpaid fees into 200,000
Series A preferred shares. On August 22, 2007, this director resigned; no
severance fees were paid and none are owed. Pursuant to the terms of a
Shareholders Agreement entered into between this director and the Company
related to the issuance of the Series A preferred shares, subsequent to the
resignation of this director, 200,000 Series A preferred shares have been
returned to the Companys treasury and cancelled.

During the year ended December 31, 2008, consulting fees of
$nil (2007: $7,500) were incurred to a relative of a director of the Company. In
June 2007, this consultant converted $30,000 of unpaid fees into a private
placement consisting of 120,000 units at $0.25 per unit. At December 31, 2007,
this individual is owed $nil (2007: $nil) for consulting fees due. This
consulting agreement expired on March 31, 2007 and no further fees are due.

At December 31, 2007, the Company recorded an accrued liability
of $421,250, which is included in management and consulting fees, related to the
exercise of SARs by two officers of the Company in accordance with certain
provisions for tax indemnities in the officers management consulting
agreements.

All related party transactions are in the normal course of
business and are measured at the exchange amount, which is the amount of
consideration established and agreed to by the related parties. The settlement
amount of liabilities are valued at amount equal to the value number of common
shares at the closing quoted market price on the settlement date. Where
settlements completed at other than market value, the excess over the settlement
amount was recorded as a compensation charge to management and consulting fees
or excess under the settlement amount was recorded to additional paid-up
capital. Other related party transactions are disclosed in Note 10 of the
consolidated financial statements.

Corporate Governance

We currently act with two (2) directors, consisting of Sacha H.
Spindler and Justin Perryman.

We have determined that Justin Perryman is an independent
director, as that term is used in Rule 4200(a)(15) of the Rules of NASDAQ Market
Place Rules.

---

- 44 -

Currently our audit committee consists of our entire board of
directors. We currently do not have nominating, compensation committees or
committees performing similar functions. There has not been any defined policy
or procedure requirements for shareholders to submit recommendations or
nomination for directors.

Audit Committee Financial Expert

Our board of directors has determined that it does not have a
member of its audit committee who qualifies as an audit committee financial
expert as defined in Item 407(d)(5)(ii) of Regulation S-B, and is independent
as the term is used in Item 7(d)(3)(iv) of Schedule 14A under the Securities
Exchange Act of 1934, as amended.

From inception to present date, we believe that the members of
our audit committee and the board of directors have been and are collectively
capable of analyzing and evaluating our financial statements and understanding
internal controls and procedures for financial reporting.

Item 14.        Principal
Accountant Fees and Services.

Audit Fees

The aggregate fees billed by BDO Dunwoody LLP for professional
services rendered for the audit of our annual financial statements, for review
of our quarterly interim financial statements and in connection with statutory
and regulatory filings were approximately $53,564 for the year ended December
31, 2008. This category also includes the review of interim financial statements
and services in connection with registration statements and other filings with
the Securities and Exchange Commission.

Audit Related Fees

For the year ended December 31, 2008, BDO Dunwoody LLP billed
$2,085 for fees relating to the performance of the audit of our financial
statements which are not reported under the caption Audit Fees above.

Tax Fees

For the year ended December 31, 2008, BDO Dunwoody LLP billed
$Nil, for fees for tax compliance, tax advice and tax planning services.

All Other Fees

For the year ended December 31, 2008, BDO Dunwoody LLP billed
$Nil, for other fees.

Effective May 6, 2003, the Securities and Exchange Commission
adopted rules that require that before BDO Dunwoody LLP is engaged by us to
render any auditing or permitted non-audit related service, the engagement be:

- approved by our audit committee; or
- entered into pursuant to pre-approval policies and procedures established
  by the board of directors, provided the policies and procedures are detailed
  as to the particular service, the board of directors is informed of each
  service, and such policies and procedures do not include delegation of the
  board of directors' responsibilities to management.

Our audit committee pre-approves all services provided by our
independent auditors. All of the above services and fees were reviewed and
approved by the audit committee either before or after the respective services
were rendered.

The audit committee has considered the nature and amount of fees
  billed by BDO Dunwoody LLP and believes that the provision of services for activities
  unrelated to the audit is compatible with maintaining BDO Dunwoody LLPs
  independence.

---

- 45 -

Item 15.        Exhibits.

Exhibits required by Item 601 of Regulation S-K

|Exhibit Number and Exhibit Title
|--------------------------------
|                                
|(3)                             
|                                
|3.1                             
|                                
|3.2                             
|                                
|3.3                             
|                                
|3.4                             
|                                
|3.5                             
|                                
|(10)                            
|                                
|10.1                            
|                                
|10.2                            
|                                
|10.3                            
|                                
|10.4                            
|                                
|10.5                            
|                                
|10.6                            
|                                
|10.7                            
|                                
|10.8                            

---

- 46 -

|10.9  | Form of Subscription
        Agreement with GT Venture Management AG, Madison Services Inc., Justin
        Perryman and Landmark Management Services Inc. (incorporated by reference
        from our Quarterly Report on Form 10-QSB filed on August 17, 2007)                                                                                                                    
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                                                                                                                                                                                                                     
|10.10 | Form of Stock
        Appreciation Rights Agreement with KJM Capital Corporation, Frontline
        Capital Corporation, Alison M. Muir, Rasmus Trading Inc., Soumitra Sam
        Sen, Timothy Russell, GT Venture Management, AG, Sacha Spindler and Justin
        Perryman (incorporated by reference from our Quarterly Report on Form
        10-QSB filed on August 17, 2007)
|      |                                                                                                                                                                                                                                                                                                                                                                                     
|(14)  | Code of Ethics                                                                                                                                                                                                                                                                                                                                                                      
|      |                                                                                                                                                                                                                                                                                                                                                                                     
|14.1  | Code of Business
        Conduct and Ethics (incorporated by reference from our Current Report
        on Form 8-K filed on May 26, 2005).                                                                                                                                                                                                                                          
|      |                                                                                                                                                                                                                                                                                                                                                                                     
|(21)  | Subsidiaries                                                                                                                                                                                                                                                                                                                                                                        
|      |                                                                                                                                                                                                                                                                                                                                                                                     
|      | Petrogen, Inc.,
        a Colorado company 
        Pluris Energy Group Inc., a British Virgin Islands company                                                                                                                                                                                                                                                                      
|      |                                                                                                                                                                                                                                                                                                                                                                                     
|(31)  | Section 302
        Certifications                                                                                                                                                                                                                                                                                                                                                  
|      |                                                                                                                                                                                                                                                                                                                                                                                     
|31.1  | Section
      302 Certification of the Sarbanes-Oxley Act of 2002 of Sacha Spindler.                                                                                                                                                                                                                                                                                                
|      |                                                                                                                                                                                                                                                                                                                                                                                     
|31.2  | Section
        302 Certification of the Sarbanes-Oxley Act of 2002 of Rahul Gandhi.                                                                                                                                                                                                                                                                                                
|      |                                                                                                                                                                                                                                                                                                                                                                                     
|(32)  | Section 906
        Certification                                                                                                                                                                                                                                                                                                                                                   
|      |                                                                                                                                                                                                                                                                                                                                                                                     
|32.1  | Section
      906 Certification of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                   

---

- 47 -



SIGNATURES

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

PLURIS ENERGY GROUP INC.

By: /s/ Sacha Spindler Sacha H. Spindler CEO, Chairman
and Director Principal Executive Officer

Date: May 15, 2009.

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

By: /s/ Rahul Gandhi Rahul Gandhi Chief Financial
Officer

Date: May 15, 2009.

By: /s/ Justin Perryman Justin Perryman Director

Date: May 15, 2009.

---