----

----

| Nevada                                         | 88-0456274                           |
|------------------------------------------------|--------------------------------------|
| (State or other jurisdiction of incorporation) | (I.R.S. Employer Identification No.) |
|                                           |                                 |
| 3315 Marquart, Suite 205, Houston, Texas       | 77027                                |
| (Address of principal executive offices)       | (Zip code)                           |

| 2121 Sage Road, Suite 200 |
|---------------------------|
| Houston, Texas 77056      |

| Large accelerated filer o | Accelerated filer o                         |
|---------------------------|---------------------------------------------|
| Non-accelerated filer o   | Smaller reporting Company  þ |

----

| PART   I.  FINANCIAL INFORMATION                                                                                                                                                                    | Page No. |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------|
|                                                                                                                                                                                                               |     |
| Item 1. Financial Statements                                                                                                                                                                                       |     |
|                                                                                                                                                                                                               |     |
| Balance Sheets as of April 30, 2010 and July 31, 2009 (Unaudited).                                                                                                                                                 | 3        |
|                                                                                                                                                                                                               |     |
| Statements of Operations for the three months ended April 30, 2010 and 2009, for the nine months ended April 30, 2010 and 2009 and for the period from October 21, 2002 (Inception) to April 30, 2010 (Unaudited). | 4        |
|                                                                                                                                                                                                               |     |
| Statements of Cash Flows for the nine months ended April 30, 2010 and 2009  and for the period from October 21, 2002 (Inception) to April 30, 2010  (Unaudited).                                    | 5        |
|                                                                                                                                                                                                               |     |
|  Notes to the Financial Statements (Unaudited)                                                                                                                                                                |  7  |
|                                                                                                                                                                                                               |     |
| Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations                                                                                                                      | 12       |
|                                                                                                                                                                                                               |     |
| Item 3. Quantitative and Qualitative Disclosures about Market Risk                                                                                                                                                 | 14       |
|                                                                                                                                                                                                               |     |
| Item 4. Controls and Procedures                                                                                                                                                                                    | 14       |
|                                                                                                                                                                                                               |     |
| PART II. OTHER INFORMATION                                                                                                                                                                                         |     |
|                                                                                                                                                                                                               |     |
| Item 1. Legal Proceedings                                                                                                                                                                                          | 14       |
|                                                                                                                                                                                                               |     |
| Item 2. Recent Sales of Unregistered Securities                                                                                                                                                                    | 15       |
|                                                                                                                                                                                                               |     |
| Item 3. Defaults Upon Senior Securities                                                                                                                                                                            | 16       |
|                                                                                                                                                                                                               |     |
| Item 4. Submission of Matters to a Vote of Security Holders                                                                                                                                                        | 16       |
|                                                                                                                                                                                                               |     |
| Item 5. Other Information                                                                                                                                                                                          | 16       |
|                                                                                                                                                                                                               |     |
| Item 6. Exhibits                                                                                                                                                                                                   | 16       |
|                                                                                                                                                                                                               |     |
| Signatures                                                                                                                                                                                                         | 17       |

----

|                                                                                                                                                                              |   | April 30, 2010 |        |    | July 31, 2009 |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|-------------|---------|---------------|--------|
| ASSETS                                                                                                                                                                            |   |           |        |    |
| Current Assets:                                                                                                                                                                   |   |           |        |    |
| Cash                                                                                                                                                                              |   | $              | 11,798      |    |          | $      | 3 |   |
| Accounts Receivable                                                                                                                                                               |   |           | 2,791       |    |          |   | - |   |
| Other Current Assets                                                                                                                                                              |   |           | 2,633       |    |          |   | 8,561 |   |
| Total Current Assets                                                                                                                                                              |   |           | 17,222      |    |          |   | 8,564 |   |
|                                                                                                                                                                              |   |           |        |    |          |   |   |   |
| Furniture, fixtures and equipment, net                                                                                                                                            |   |           | 5,156       |    |          |   | 395,338 |   |
| Other Assets:                                                                                                                                                                     |   |           |        |    |          |   |   |   |
| Patents, net                                                                                                                                                                      |   |           | -           |    |          |   | 1 |   |
| Intangibles, net                                                                                                                                                                  |   |           | 12,369      |    |          |   | 6,568 |   |
|                                                                                                                                                                              |   |           |        |    |          |   |   |   |
| TOTAL ASSETS                                                                                                                                                                      |   | $              | 34,747      |    |          | $      | 410,471 |   |
|                                                                                                                                                                              |   |           |        |    |          |   |   |   |
| LIABILITIES AND STOCKHOLDERS' DEFICIT                                                                                                                                             |   |           |        |    |          |   |   |   |
| Current Liabilities:                                                                                                                                                              |   |           |        |    |          |   |   |   |
| Accounts Payable                                                                                                                                                                  |   | $              | 389,799     |    |          | $      | 432,621 |   |
| Accounts Payable-Stockholders                                                                                                                                                     |   |           | -           |    |          |   | 2,594 |   |
| Accrued Liabilities                                                                                                                                                               |   |           | 2,005,815   |    |          |   | 314,964 |   |
| Advances from Stockholders                                                                                                                                                        |   |           | 700,615     |    |          |   | 875,081 |   |
| Note Payable                                                                                                                                                                      |   |           | 75,000      |    |          |   | 30,000 |   |
| Secured Notes Payable                                                                                                                                                             |   |           | 340,000     |    |          |   | - |   |
| Deferred Income                                                                                                                                                                   |   |           | -           |    |          |   | 1,400 |   |
| Total Current Liabilities                                                                                                                                                         |   |           | 3,511,229   |    |          |   | 1,656,660 |   |
|                                                                                                                                                                              |   |           |        |    |          |   |   |   |
| TOTAL LIABILITIES                                                                                                                                                                 |   |           | 3,511,229   |    |          |   | 1,656,660 |   |
|                                                                                                                                                                              |   |           |        |    |          |   |   |   |
| STOCKHOLDERS' DEFICIT                                                                                                                                                             |   |           |        |    |          |   |   |   |
| Preferred stock:                                                                                                                                                                  |   |           |        |    |          |   |   |   |
| Series A convertible preferred stock, $0.001 par, 2,500,000 shares authorized, 1,378 and 1,378 shares issued and outstanding as of April 30, 2010 and July 31, 2009, respectively |   |           | 1           |    |          |   | 1 |   |
| Common stock, $0.001 par value, 500,000,000 shares authorized, 395,770,805and 460,664,395 shares issued and outstanding at April 30, 2010 and July 31 2009, respectively          |   |           | 395,770     |    |          |   | 460,664 |   |
| Additional paid-in capital                                                                                                                                                        |   |           | 16,741,217  |    |          |   | 14,481,168 |   |
| Deficit accumulated during development stage                                                                                                                                      |   |           | (20,613,470 | )  |          |   | (16,188,022 | ) |
|                                                                                                                                                                              |   |           |        |    |          |   |   |   |
| Total stockholders' deficit                                                                                                                                                       |   |           | (3,476,482  | )       |          |   | (1,246,189 | ) |
|                                                                                                                                                                              |   |           |        |    |          |   |   |   |
| TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                                                                                                                                       |   | $              | 34,747      |    |          |   | 410,471 |   |

----

|                                                       |   | Three MonthsEndedApril 30,2010 |              | Three MonthsEndedApril 30,2009 |    | Nine MonthsEndedApril 30,2010 |    | Nine MonthsEndedApril 30,2009 |              | Inception(October 21,2002)to April 30,2010 |    |
|------------------------------------------------------------|--------|--------------------------------|-------------------|--------------------------------|---------|-------------------------------|---------|-------------------------------|-------------------|-------------------------------------------------|---------|
| Revenues                                                   |   |                           | -                 |                           |    | -                             |    |                          | 14,420            |                                            |    | - |   |   | 14,420 |   |
| Cost Of Revenues                                           |   |                           | 14,664            |                           |    | -                             |    |                          | 29,883            |                                            |    | - |   |   | 44,540 |   |
| Net Revenue/Gross Loss                                     |   |                           | (14,664           | )                              |    | -                             |    |                          | (15,463           | )                                               |    |   |   |   | (30,120 | ) |
|  General & Administrative                         |   |                           | 74,844            |                           |    | 1,355,434                     |    |                          | 1,927,107,        |                                            | $       | 2,282,549 |   | $ | 6,605,284 |   |
| Depreciation and amortization                              |   |                           | 30,884            |                           |    | 29,262                        |    |                          | 90,131            |                                            |    | 76,478 |   |   | 218,467 |   |
| Professional Fees                                          |   |                           | 98,243            |                           |    | 236,685                       |    |                          | 296,378           |                                            |    | 628,614 |   |   | 4,508,716 |   |
| Payroll Expenses                                           |   |                           | 137,658           |                           |    | 329,289                       |    |                          | 1,840,716         |                                            |    | 1,035,577 |   |   | 7,720,863 |   |
| Loss on Disposal of Assets                                 |   |                           | 230,789           |                           |    | -                             |    |                          | 230,789           |                                            |    | - |   |   | 240,644 |   |
| Loss on Impairment of Assets                               |   |                           | -                 |                           |    | -                             |    |                          | -                 |                                            |    | - |   |   | 50,591 |   |
| Research and Development                                   |   |                           | -                 |                           |    | 336,062                       |    |                          | 35,674            |                                            |    | 410,141 |   |   | 1,226,757 |   |
| Total Operating Expenses                                   |   |                           | 572,418           |                           |    | 2,286,732                     |    |                          | 4,420,795         |                                            |    | 4,433,359 |   |   | 20,571,322 |   |
| Loss from Operations                                       |   |                           | (587,082          | )                              |    | (2,286,732                    | )  |                          | (4,436,258        | )                                               |    | (4,433,359 | ) |   | (20,601,442 | ) |
|                                                       |   |                           |              |                           |    |                          |    |                          |              |                                            |    |   |   |   |   |   |
| Gain on Derivatives                                        |   |                           |              |                           |    |                          |    |                          |              |                                            |    | - |   |   | 100,000 |   |
| Gain  on sale of patent and impairment of patent |   |                           | -                 |                           |    |                          |    |                          | 38,750            |                                            |    |   |   |   | 38,750 |   |
| Gain on Extinguishment of AP                               |   |                           | -                 |                           |    |                          |    |                          | -                 |                                            |    |   |   |   | 84,065 |   |
| Gain on Extinguishment of Note                             |   |                           |              |                           |    |                          |    |                          | 3,000             |                                            |    | - |   |   | 10,137 |   |
| Interest Income                                            |   |                           | -                 |                           |    | 33                            |    |                          | -                 |                                            |    | 1,485 |   |   | 3,578 |   |
| Interest Expense                                           |   |                           | (13,777           | )                         |    | (3,005                        | )       |                          | (30,940           | )                                               |    | (4,042 | ) |   | (248,558 | ) |
| Total Other Income (Expenses)                              |   |                           | (13,777           | )                              |    | (2,972                        | )  |                          | 10,810            |                                            |    | (2,557 | ) |   | (12,028 | ) |
|                                                       |   |                           |              |                           |    |                          |    |                          |              |                                            |    |   |   |   |   |   |
| Net Loss before Discontinued Operations                    |   |                           | (600,859          | )                         |    | (2,289,704                    | )  |                          | (4,425,448        | )                                               | $       | (4,435,916 | ) | $ | (20,613,470 | ) |
|                                                       |   |                           |              |                           |    |                          |    |                          |              |                                            |    |   |   |   |   |   |
| Discontinued Operations                                    |   |                           |              |                           |    |                          |    |                          |              |                                            |    |   |   |   |   |   |
| Net Loss on Oil and Gas Wells                              |   |                           |  -           |                           |    |  -                       |    |                          |  (22,009     | )                                          |    |  - |   |   |  (22,009 | )  |
| Discontinued Operations                                    |   |                           |              |                           |    |                          |    |                          |              |                                            |    |   |   |   |   |   |
| Gain on Disposition                                        |   |                           |  -           |                           |    |  -                       |    |                          |  22,009      |                                            |    |  - |   |   |  22,009 |   |
|                                                       |   |                           |              |                           |    |                          |    |                          |              |                                            |    |   |   |   |   |   |
| NET LOSS                                                   |   | $                         |  (600,859    | )                         | $  |  (2,289,704              | )  | $                        |  (4,425,448  | )                                          | $  |  (4,435,916 | )  | $  |  (20,613,470 | )  |
|                                                       |   |                           |              |                           |    |                          |    |                          |              |                                            |    |   |   |   |   |   |
| Basic and diluted                                          |   |                           |              |                           |    |                          |    |                          |              |                                            |    |   |   |   |   |   |
| Net loss per common share-basic and diluted                |   | $                              |  (0.00       | )                         | $  |  (0.01                   | )  | $                        |  (0.01       | )                                          | $  |  (0.01 | )  |   |  - |   |
| Weighted average shares outstanding-basic and diluted      |   |                           |  393,968,813 |                           |    |  413,046,029             |    |                          |  412,349,218 |                                            |    |  404,191,419 |   |   |  - |   |

----

|                                                                        |   | Nine MonthsEnded April 30, |       |   | Nine Months Ended April 30, |   |       | October 21, 2002 (Inception) toApril 30, |   |
|-----------------------------------------------------------------------------|--------|---------------------------------|------------|--------|----------------------------------|--------|------------|-----------------------------------------------|--------|
|                                                                        |   | 2010                            |       |   | 2009                             |   |       | 2010                                          |   |
| CASH FLOWS FROM OPERATING ACTIVITIES                                        |   |                            |       |   |                             |   |       |                                          |   |
| Net Loss                                                                    |   | $                               | (4,425,448 | )      |                             | $      | (4,435,916 | )                                             |   | $ | (20,613,470 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: |   |                            |       |   |                             |   |       |                                          |   |   |   |   |
| Shares issued for services                                                  |   |                            | 1,721,207  |   |                             |   | 1,604,349  |                                          |   |   | 5,423,461 |   |
| Warrant issued for consulting services                                      |   |                            | -          |   |                             |   | 434,165    |                                          |   |   | 446,660 |   |
| Loss on impairment of assets                                                |   |                            | -          |   |                             |   | -          |                                          |   |   | 50,591 |   |
| Depreciation and amortization                                               |   |                            | 90,131     |   |                             |   | 76,478     |                                          |   |   | 218,468 |   |
| Share-based compensation                                                    |   |                            | 13,420     |   |                             |   | 16,597     |                                          |   |   | 2,910,197 |   |
| (Gain) Loss on derivative                                                   |   |                            | -          |   |                             |   | -          |                                          |   |   | 5,000 |   |
| Gain on debt conversion                                                     |   |                            | (3,000     | )      |                             |   | -          |                                          |   |   | (10,137 | ) |
| (Gain)Loss on accounts payable                                              |   |                            | -          |   |                             |   | -          |                                          |   |   | (84,065 | ) |
| (Gain)Loss on sale of patent                                                |   |                            | (38,750    | )      |                             |   | -          |                                          |   |   | (38,750 | ) |
| Contributed capital                                                         |   |                            | 23,739     |   |                             |   | -          |                                          |   |   | 86,261 |   |
| Amortization of debt discount                                               |   |                            | -          |   |                             |   | -          |                                          |   |   | 80,000 |   |
| Loss on disposal of furnitures, fixtures and equipment                      |   |                            | 230,789    |   |                             |   |       |                                          |   |   | 240,645 |   |
| Changes in operating assets and  liabilities                      |   |                            |       |   |                             |   |       |                                          |   |   |   |   |
| Prepaid and other current assets                                            |   |                            | 5,928      |   |                             |   | 28,291     |                                          |   |   | (2,633 | ) |
| Accounts payable                                                            |   |                            | (42,822    | )      |                             |   | 523,833    |                                          |   |   | 509,722 |   |
| Accounts receivable                                                         |   |                            | (2,791     | )      |                             |   | -          |                                          |   |   | (2,791 | ) |
| Accrued expenses                                                            |   |                            | 1,791,880  |   |                             |   | 330,906    |                                          |   |   | 3,860,011 |   |
| Deferred income                                                             |   |                            | (1,400     | )      |                             |   | -          |                                          |   |   | - |   |
| Accounts payables to stockholders                                           |   |                            | (54        | )      |                             |   | -          |                                          |   |   | 2,540 |   |
| NET CASH USED IN OPERATING ACTIVITIES                                       |   |                            | (637,171   | )      |                             |   | (1,855,462 |                                          |   |   | (6,918,290 | ) |
|                                                                        |   |                            |       |   |                             |   |       |                                          |   |   |   |   |
| CASH FLOW FROM INVESTING ACTIVITIES                                         |   |                            |       |   |                             |   |       |                                          |   |   |   |   |
| Proceeds from sale of patents                                               |   |                            | -          |   |                             |   | -          |                                          |   |   | - |   |
| Proceeds from sale of property                                              |   |                            | -          |   |                             |   |       |                                          |   |   | - |   |
| Investment in patents                                                       |   |                            | 95,000     |   |                             |   | -          |                                          |   |   | 27,767 |   |
| Investment in intangible assets                                             |   |                            | (8,467     | )      |                             |   | -          |                                          |   |   | (24,467 | ) |
| Investment in property and equipment                                        |   |                            | -          |   |                             |   | (271,951   | )                                             |   |   | (458,498 | ) |
| NET CASH USED IN INVESTING ACTIVITIES                                       |   |                            | 86,533     |   |                             |   | (271,951   | )                                             |   |   | (455,198 | ) |
|                                                                        |   |                            |       |   |                             |   |       |                                          |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES                                        |   |                            |       |   |                             |   |       |                                          |   |   |   |   |
| Proceeds from sale of stock                                                 |   |                            | 142,000    |   |                             |   | -          |                                          |   |   | 5,425,200 |   |
| Advances from stockholders                                                  |   |                            | 111,434    |   |                             |   | 1,283,081  |                                          |   |   | 1,540,015 |   |
| Proceeds from warrants exercised                                            |   |                            | 8,999      |   |                             |   | -          |                                          |   |   | 546,501 |   |
| Repayment of advances from stockholders                                     |   |                            | -          |   |                             |   | -          |                                          |   |   | (501,430 | ) |
| Convertible Promissory Notes proceeds                                       |   |                            | 30,000     |   |                             |   | 80,000     |                                          |   |   | 210,000 |   |
| Proceeds from third party debt, net                                         |   |                            | 270,000    |   |                             |   | -          |                                          |   |   | 165,000 |   |
| NET CASH PROVIDED BY FINANCING ACTIVITIES                                   |   |                            | 562,433    |   |                             |   | 1,363,081  |                                          |   |   | 7,139,208 |   |

----

|                                                                            |   |   |       |   |   |   |     |   |   |   |   |   |
|---------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|----------|--------|--------|--------|--------|--------|
| NET CHANGE IN CASH AND CASH EQUIVALENTS                                         |   |   | 11,795     |   |   |   | (764,332 | )      |   |   | 11,798 |   |
| Cash and cash equivalents at beginning of period                                |   |   | 3          |   |   |   | 767,338  |   |   |   | -      |   |
| Cash and cash equivalents at end of period                                      |   | $      | 11,797     |   |   | $      | 3,006    |   |   | $      | 11,798 |   |
|                                                                            |   |   |       |   |   |   |     |   |   |   |   |   |
| SUPPLEMENTAL DISCLOSURES                                                        |   |   |       |   |   |   |     |   |   |   |   |   |
| Cash paid for interest                                                          |   | $      | 1,695      |   |   | $      | 875      |   |   |   |   |   |
| Cash paid for income taxes                                                      |   |   |       |   |   |   | -        |   |   |   |   |   |
|                                                                            |   |   |       |   |   |   |     |   |   |   |   |   |
| NON-CASH TRANSACTIONS                                                           |   |   |       |   |   |   |     |   |   |   |   |   |
| Conversion of Preferred Shares to Common Shares                                 |   |   | -          |   |   |   | 2,078    |   |   |   |   |   |
| Shares Returned and Cancelled                                                   |   | $      | 128,069    |   |   | $      | -        |   |   |   |   |   |
| Debt Forgiveness                                                                |   | $      | 202,539    |   |   |   |     |   |   |   |   |   |
| Stock issued for patent buyback                                                 |   | $      | 56,250     |   |   |   |     |   |   |   |   |   |
| Conversion of Note Payable to stock                                             |   | $      | 27,000     |   |   |   |     |   |   |   |   |   |
| Settlement of rent payable by furniture, fixtures and equipment.                |   | $      | 71,929     |   |   |   |     |   |   |   |   |   |
| Stock issued for accrued salaries                                               |   |   |       |   |   |   | (145,300 | )      |   |   |   |   |
| Stock Issued for purchase of Oil and Gas Assets                                 |   | $      | 27,357     |   |   |   |     |   |   |   |   |   |
| Note Issued for purchase of Oil and Gas Assets                                  |   | $      | 1,500,000  |   |   |   |     |   |   |   |   |   |
| Debt assumed for purchase of Oil and Gas Assets                                 |   | $      | 204,059    |   |   |   |     |   |   |   |   |   |
| Note assumed for purchase of Oil and Gas Assets                                 |   | $      | 2,800,000  |   |   |   |     |   |   |   |   |   |
| Removal of stock issuance related to the discontinued operation                 |   | $      | (27,357    | )      |   |   |     |   |   |   |   |   |
| Removal of note assumed for rescission of Oil and Gas Asset purchase            |   | $      | (1,500,000 | )      |   |   |     |   |   |   |   |   |
| Removal of  Debt assumed for rescission of Oil and Gas Asset purchase |   | $      | (204,059   | )      |   |   |     |   |   |   |   |   |
| Removal of Note assumed for rescission of Oil and Gas Asset purchase            |   | $      | (2,800,000 | )      |   |   |     |   |   |   |   |   |
|                                                                            |   |   |       |   |   |   |     |   |   |   |   |   |
| Shares Issued for Services                                                      |   | $      | 27,283     |   |   |   |     |   |   |   |   |   |

----

----

----

| Expected volatility     |   |   | 174%- 243%    |   |
|-------------------------|--------|--------|---------------|--------|
| Term (years)            |   |   | 1.5 – 3 |   |
| Risk-free interest rate |   |   | 1.16% - 3.01% |   |
| Expected dividend yield |   |   | 0%            |   |

|                        |   | Options |       |   | Weighted Average Exercise Price |   |
|-----------------------------|--------|---------|------------|--------|---------------------------------|--------|
| Outstanding July 31, 2009   |   |    | 20,225,000 |   |                            |   | 0.28 |   |
| Granted                     |   |    | 25,000     |   |                            |   | - |   |
| Expired                     |   |    | 12,650,000 |   |                            |   | 0.25 |   |
| Exercised                   |   |    | -          |   |                            |   | - |   |
| Outstanding, April 30, 2010 |   |    | 7,600,000  |   |                            | $      | 0.35 |   |

| Number of Common Stock Equivalents |   | Expiration Date |   | Remaining Contracted Life (Years) |   | Exercise Price |
|------------------------------------|--------|-----------------|--------|-----------------------------------|--------|----------------|
| 25,000                             |   | 4/1/2012        |   | 2.17                              |   | 0.25           |
| 25,000                             |   | 4/1/2013        |   | 3.17                              |   | 0.25           |
| 25,000                             |   | 4/1/2014        |   | 4.17                              |   | 0.25           |
| 25,000                             |   | 4/1/2015        |   | 5.17                              |   | 0.25           |
| 2,500,000                          |   | 12/1/2013       |   | 3.84                              |   | 0.15           |
| 1,500,000                          |   | 12/1/2013       |   | 3.84                              |   | 0.25           |
| 1,500,000                          |   | 12/1/2013       |   | 3.84                              |   | 0.40           |
| 1,000,000                          |   | 12/1/2013       |   | 3.84                              |   | 0.50           |
| 1,000,000                          |   | 12/1/2013       |   | 3.84                              |   | 0.75           |
| 7,600,000                          |   |            |   | 3.83                              |   | 0.35           |

|                                |   | OPTIONS |     |
|-------------------------------------|--------|---------|----------|
| Non-vested shares at July 31, 2009  |   |    | 386,198  |   |
| Granted                             |   |    | 0        |   |
| Vested                              |   |    | (170,313 | ) |
| Forfeited                           |   |    | (191,406 | ) |
| Expired                             |   |    | -        |   |
| Exercised                           |   |    | -        |   |
| Non-vested shares at April 30, 2010 |   |    | 24,479   |   |

| Warrants Outstanding and Exercisable |   | Warrants |       |   | Weighted Average Exercise Price |   |
|--------------------------------------|--------|----------|------------|--------|---------------------------------|--------|
| Outstanding, July 31, 2009           |   |     | 15,994,284 |   |                            | $      | 0.47 |   |
| Granted                              |   |     | -          |   |                            |   | - |   |
| Expired                              |   |     | -          |   |                            |   | - |   |
| Exercised                            |   |     | (150,000)  |   |                            |   |                    (0.06 | )  |
| Outstanding, April 30, 2010          |   |     | 15,844,284 |   |                            | $      | 0.41 |   |

----

| Number of Common Stock Equivalents |   |   | Expiration Date |   |   | Remaining Contracted Life (Years) |   |   | Exercise Price |   |
|------------------------------------|--------|--------|-----------------|--------|--------|-----------------------------------|--------|--------|----------------|--------|
| 2,902,500                          |   |   | 10/31/2010      |   |   |                              | 0.50   |   |           | $      | 0.20 |   |
| 50,000                             |   |   | 7/31/2011       |   |   |                              | 1.25   |   |           | $      | 0.25 |   |
| 5,400,000                          |   |   | 12/31/2011      |   |   |                              | 1.42   |   |           | $      | 1.00 |   |
| 1,600,000                          |   |   | 4/30/2012       |   |   |                              | 1.75   |   |           | $      | 0.03 |   |
| 825,000                            |   |   | 6/1/2012        |   |   |                              | 1.83   |   |           | $      | 0.03 |   |
| 2,075,000                          |   |   | 6/4/2012        |   |   |                              | 1.83   |   |           | $      | 0.03 |   |
| 83,333                             |   |   | 6/12/2012       |   |   |                              | 1.83   |   |           | $      | 0.03 |   |
| 1,408,451                          |   |   | 6/29/2012       |   |   |                              | 1.92   |   |           | $      | 0.03 |   |
| 1,500,000                          |   |   | 9/24/2012       |   |   |                              | 1.17   |   |           | $      | 0.30 |   |

|   | · | $3.0 million in total existing debt. |
|--------|--------|--------------------------------------|

|   | · | $1.5 million 5-year, 7.5% convertible note. |
|--------|--------|---------------------------------------------|

|   | · | 1,163,000 shares of Series E Convertible Preferred Stock, valued at $974,286. |
|--------|--------|-------------------------------------------------------------------------------|

|   | · | 3,000,000 common shares valued at $120,000. |
|--------|--------|---------------------------------------------|

|   | · | $273,075 assumed asset retirement obligation |
|--------|--------|----------------------------------------------|

----

| 10/23/2009 to 1/13/2010           |   |   |    |
|----------------------------------------|--------|--------|---------|
| Revenue – sales of oil & gas |   | $      | 81,031  |   |
| EXPENSES                               |   |   |    |   |
| Depletion Expense                      |   |   | 21,282  |   |
| Expenses of Wells                      |   |   | 53,633  |   |
| Interest on $1.5m Note                 |   |   | 28,125  |   |
| Total Expenses                         |   |   | 103,040 |   |
|                                   |   |   |    |   |
| Net Income on Wells                    |   | $      | (22,009 | ) |

----

----

----

| ITEM 3. | QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK |
|---------|------------------------------------------------------------|

| ITEM 1. | LEGAL PROCEEDINGS |
|---------|-------------------|

----

| ITEM 1A. | RISK FACTORS |
|----------|--------------|

----

|  ITEM 3. |  DEFAULTS UPON SENIOR SECURITIES |
|---------------|---------------------------------------|

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

|  ITEM 5. |  OTHER INFORMATION |
|---------------|-------------------------|

|   | (a) | Exhibits |
|--------|-----|----------|

| EXHIBIT NUMBER | DESCRIPTION OF EXHIBIT                                                                                                                       |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------|
| 31.1           | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                |
| 31.2           | Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                |
| 32.1           | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| 32.2           | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |

----

| Dated: June 17, 2010 | By:  /s/ Norman D. Smith |
|----------------------|------------------------------------|
|                 | Norman D. Smith                    |
|                 | Chief Executive Officer            |
|                 | (Principal Executive Officer)      |

| Dated: June 17, 2010 | By: /s/ Michael G. Wirtz                     |
|----------------------|----------------------------------------------|
|                 | Michael G. Wirtz                             |
|                 | Chief Financial Officer                      |
|                 | (Principal Financial and Accounting Officer) |

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