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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-KSB

(Mark One)

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

For the fiscal year ended June 30, 2007

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

For the transition period from
[          ] to
[            ]

Commission file number 000-52300

SUN CAL ENERGY, INC.(Name
of small business issuer in its charter)

|Nevada                                           | 81-0659377                          
|------------------------------------------------ | ------------------------------------
|(State or other jurisdiction of incorporation or | (I.R.S. Employer Identification No.)
|organization)                                    |                                     
|                                                 |                                     
|Suite 700, 205 - 5th Avenue, SW                  |                                     
|Calgary, AB Canada                               | T2P 2V7                             
|(Address of principal executive offices)         | (Zip Code)                          

Issuer's telephone number 403-538-4772

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, par value $0.001(Title of class)

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

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

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

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- 2 -

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.)

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

37,505,000 common shares @ $1.12 (1) = $42,005,600

(1)Average of bid and ask closing prices on October
5, 2007.

State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date: 80,730,000
shares of common stock as at October 5, 2007

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TABLE OF CONTENTS

|ITEM
      1: DESCRIPTION OF BUSINESS                                                                    | 4 
|-------------------------------------------------------------------------------------------------------- | --
|FORWARD
      LOOKING STATEMENTS                                                                         | 4 
|OVERVIEW                                                                                                 | 4 
|PLAN
      OF OPERATIONS                                                                                 | 8 
|RISK
      FACTORS                                                                                       | 9 
|RISKS
      RELATED TO OUR BUSINESS                                                                      | 10
|RISKS
      ASSOCIATED WITH OUR COMPANY                                                                  | 11
|RISKS
      ASSOCIATED WITH OUR COMMON STOCK                                                             | 12
|ITEM
      2: DESCRIPTION OF PROPERTY                                                                    | 14
|EXECUTIVE
      OFFICES                                                                                  | 14
|ITEM
      3: LEGAL PROCEEDINGS                                                                          | 14
|ITEM
      4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                        | 14
|ITEM
      5: MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                                   | 14
|MARKET
      INFORMATION                                                                                 | 14
|ITEM
      6: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION                                  | 16
|ITEM
      7: FINANCIAL STATEMENTS                                                                       | 18
|ITEM
      8: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
      FINANCIAL DISCLOSURE | 37
|ITEM
      8A: CONTROLS AND PROCEDURES                                                                   | 37
|ITEM
      9: DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS                               | 38
|DIRECTORS
      AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS                                    | 38
|ITEM
      10: EXECUTIVE COMPENSATION                                                                    | 40
|EXECUTIVE
      COMPENSATION                                                                             | 40
|ITEM
      12: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                            | 42
|ITEM
      13: EXHIBITS AND REPORTS                                                                      | 44
|ITEM
      14: PRINCIPAL ACCOUNTANT FEES AND SERVICES                                                    | 45
|AUDIT
      FEES                                                                                         | 45
|AUDIT
      RELATED FEES                                                                                 | 45
|TAX
      FEES                                                                                           | 45
|ALL
      OTHER FEES                                                                                     | 45
|AUDIT
      COMMITTEE REQUIREMENTS                                                                       | 45
|SIGNATURES                                                                                               | 46

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PART I

ITEM 1: DESCRIPTION OF BUSINESS

FORWARD LOOKING STATEMENTS

This report contains forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act. 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. The following discussion should be read in conjunction with our
financial statements and the related notes that appear elsewhere in this annual
report.

In this annual report, unless otherwise specified, all
references to common shares refer to the common shares in our capital stock
and the terms we, us, our and Sun Cal means Sun Cal Energy, Inc. and our
wholly-owned subsidiaries, Sun Cal Energy Corp., a Nevada corporation and Sun
Cal Energy Canada Corp., a British Columbia corporation.

Overview

We were incorporated under the laws of the State of Nevada on
July 20, 2004 under the name Host Ventures, Inc. On November 6, 2006, we changed
our name to Sun Cal Energy, Inc. through a merger with our wholly owned
subsidiary, which was incorporated solely for the purpose of the merger.

We have been in the business of mineral exploration. We are an
exploration stage company, which means we are engaged in the search for
mineral deposits which are not in either the development or production stage. We
have not generated any revenues from our operations and have achieved losses
since our inception. We currently rely upon the sale of our securities to fund
operations. In connection with the acquisition of our subsidiaries, we have
changed our business plan to focus on the acquisition and exploration of oil and
gas properties.

On October 18, 2006, George Drazenovic purchased from William
Stewart, our then sole director and officer, 1,980,000 restricted shares of
common stock of our company. Subsequently, on November 7, 2006, William Stewart
resigned as a director and President, Chief Executive Officer, Chief Financial
Officer, Treasurer and Secretary of our company and George Drazenovic was
appointed as a director and President, Chief Executive Officer, Chief Financial
Officer, Treasurer and Secretary.

On November 6, 2006, we completed a merger with our subsidiary,
Sun Cal Energy, Inc. As a result, we changed our name from "Host Ventures Inc."
to "Sun Cal Energy, Inc." We changed the name of our company to better reflect
the possible new direction and business of our company. In addition, effective
November 6, 2006 we effected a 10 for one forward stock split of our authorized,
issued and outstanding common stock. As a result, our authorized capital
increased from 75,000,000 shares of common stock with a par value of $0.001 to
750,000,000 shares of common stock with a par value of $0.001.

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During our quarter ended December 31, 2007, we abandoned our
mineral property, the Scaddign West Claim. Because of limited disturbance during
our exploration of the property, we were able to abandon the property with
minimal reclamation obligations.

On January 31, 2007, we entered into a share exchange agreement
with all of our shareholders of Sun Cal Energy Corp., a privately-owned Nevada
company, whereby we agreed to acquire all the issued and outstanding common
stock of Sun Cal Energy Corp. Under this share exchange agreement, we agreed to
issue one share of our common stock for each issued and outstanding share of
common stock of Sun Cal Energy Corp. As at January 31, 2007, there were
26,925,000 shares of common stock of Sun Cal Energy Corp. issued and
outstanding.

On March 12, 2007 we completed the transaction contemplated
under the share exchange agreement between our company and the shareholders of
Sun Cal Energy Corp. whereby we acquired all the issued and outstanding common
stock of Sun Cal Energy Corp., which then became our wholly owned
subsidiary.

Sun Cal Energy Corp. was a privately-owned Nevada corporation
engaged in oil and gas exploration. Since we acquired all of the issued and
outstanding common stock of Sun Cal Energy Corp., we have also indirectly
acquired 100% of the issued and outstanding common stock of Sun Cal Energy
Canada Corp., a wholly owned subsidiary of Sun Cal Energy Corp. Sun Cal Energy
Canada Corp. was incorporated in the Province of British Columbia on June 5,
2006. In October 2006, Sun Cal Energy Corp. entered into an agreement with
TriMar Energy Partners, Inc. to acquire an one and one half percent (1.5%) of
8/8ths overriding royalty interest in an oil and gas lease known as the Hobart
Lease and an agreement with Western Energy Capital, LLC. to acquire an undivided
45% interest in certain oil and gas leases known as the Lokern Leases.

Our company had 51,250,000 common shares issued and outstanding
as of March 12, 2007 immediately prior to the issuance of 26,925,000 shares in
connection with the closing of the share exchange agreement. After the
completion of the share exchange agreement, the number of our issued and
outstanding share of common stock became 78,175,000; the former shareholders of
Sun Cal Energy Corp. received 26,925,000 shares of our companys common stock,
representing approximately 34.44% of the issued and outstanding shares of our
company after closing of the share exchange agreement. Our President, CEO, CFO
and director, George Drazenovic, currently owns 42,800,000 shares of the common
stock of our company.

Our Current Business

We are in the business of oil and gas exploration.

In October 2006, Sun Cal Energy Corp. entered into two
agreements: an agreement with TriMar Energy Partners, Inc. to acquire an one and
one half percent (1.5%) of 8/8ths overriding royalty interest in an oil and gas
lease known as the Hobart Lease and an agreement with Western Energy Capital,
LLC. to acquire an undivided 45% interest in certain oil and gas leases known as
the Lokern Leases.

The Hobart Lease

The Hobart Lease is an oil and gas lease obtained by TriMar
Energy Partners, Inc., as the lessee, from the City of Hobart, as the lessor,
dated April 1, 2004, and as recorded on Book 983, official records, Washita
County, Oklahoma, covering a total of 1,211.44 acres in the city of Hobart,
Washita County, Oklahoma. We paid a total of $525,000 and 1,500,000 shares of
common stock to TriMar Energy Partners, Inc. and its designates to earn the one
and one half percent (1.5%) of 8/8ths overriding royalty interest in the Hobart
Lease. We are currently working with TriMar Energy Partners, Inc. on finalizing
the assignment of the overriding royalty interest to our company. Under the
agreement, we were also obligated to issue to TriMar Energy Partners, Inc. or
its designates an additional 1,000,000 shares of our common stock upon the
written proposal of a second well to be drilled on the Hobart Lease. Since such
a written proposal has been submitted, we have issued the additional 1,000,000
shares of our common stock to the designates of TriMar Energy Partners, Inc.

On April 27, 2007, the operator on the Hobart Lease, Marathon
Oil, spudded and began drilling a deep development gas well on our Hobart Lease
interest in Washita county, Oklahoma. The well, the Sturgeon.1-11, was set to
test

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through the Springer formation and was targeting multiple pay
zones. Up to April 27, 2007, the Sturgeon 1-11 had successfully reached a depth
of 17,400 feet with a total authorized depth of 20,000 feet. By May 30, 2007,
well data collection and evaluation were completed on the Sturgeon 1-11 well,
which was deemed commercially viable. The well reached a final depth of 19,990
feet on May 15, 2007 after slightly more than 3 months of drilling. To help
evaluate the amount of pay encountered in the well, an open hole logging suite
consisting of density, neutron, HRI induction, sonic, and gamma tools was run to
a depth of 19,980 feet. The operator on the Hobart Lease, Marathon Oil, then ran
production casing to a depth of 19,978 feet. The drilling rig was then moved off
location and it is expected that completion operations will commence soon.

On July 11, 2007, a second permit was filed and drilling and
testing of a second deep development well on our Hobart Prospect in Washita,
County, Oklahoma was scheduled to begin shortly. The proposed well, Cunningham
1-2, builds on the successful drilling of the Sturgeon 1-11 well also located in
the Hobart Prospect. On September 6, 2007, the second deep development gas well,
Cunningham 1-2, was spudded and drilling activities begun. The target depth was
the Springer Morrow, which has proved to be productive in Oklahoma and Texas. No
value has been assigned, pending definitive testing.

On August 28, 2007, Range Production company filed for a third
well to be drilled on our Hobart Prospect in Oklahoma. This development follows
the recent application for a permit to drill and test a second deep development
well, Cunningham 1-2, on its Hobart Prospect in Oklahoma. The proposed well also
builds on the successful drilling of the Sturgeon 1-11 well, also located in the
Hobart Prospect. Filed before the Corporation Commission of the State of
Oklahoma, Range Production Company is seeking to establish a 640-acre drilling
and spacing unit for a third scheduled well to be drilled in the Hobart
Prospect.

The Lokern Leases

The Lokern Leases are a collection of 34 oil and gas
exploration leases entered into by Western Energy Capital, LLC. with various
private parties between November 2005 to May 2006. The location of these leases
are located in Kern County, California. We paid an aggregate of $125,000 and
1,300,000 shares of our common stock to Western Energy Capital, LLC and its
designates to acquire an undivided 45% of all rights, title and interests in the
Lokern Leases. Pursuant to this agreement, Western Energy Capital, LLC agrees
that all leases made part of the agreement will be executed and assigned to our
company in a timely manner and Western Energy Capital, LLC will issue our
company a standard joint operating agreement. All leases and assignments taken
by Western Energy Capital, LLC for our company shall call for Western Energy
Capital, LLC to deliver a 75% Net Revenue Interest to our company.

On June 15, 2007, we acquired additional 2-D seismic data
relating our Lokern Leases in California. Acquisition of the data will allow for
additional geophysical correlation and interpretation of our Lokern Leases and
allow our company to firm up well locations for drilling in 2007. The additional
seismic data will also provide insight into the reserve estimates of the
prospect. Regional 2-D seismic data is a key tool for oil and gas exploration
due to its affordability and wide area of coverage compared to 3-D data. The
acquisition of this data set is in line with our exploration program and
initiatives, and will allow greater marketability of our prospect to large
exploration and production companies.

Sun Cal Energy has the exclusive oil and gas rights for the
Lokern Prospect which comprises approximately 400 acres of prime land in the oil
and gas rich Kern County region, the most prolific area in the San Joaquin
Valley in Southern California. Our company owns a 45% Working Interest and a 75%
Net Revenue Interest in the prospect, which we believe is surrounded by oil
fields that produce greater than 500,000 barrels of oil/day.

The Britlind Prospect Leases

On April 19, 2007, we entered into an agreement with Western
Energy Capital, LLC (Western) to acquire a partial interest in the Britlind
Prospect and leases situated in the prolific Breton Sound area, offshore
Louisiana. Western has originally entered into an agreement with BTE Energy, LLC
(BTE) whereby Western acquired a contractual interest in the Britlind Prospect
from BTE, including all rights and privileges to approximately 9,440 acres of
State of Louisiana leases, ownership interest in approximately 25 square miles
of 3D seismic data, and interests in certain hardware and software in
conjunction with the interpretation and display of the 3D seismic data. In April
and May

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of 2007, we paid an aggregate of $640,000 to Western Energy
Capital, LLC pursuant to the agreement for a 5% working interest in the Britlind
Prospect lease interests, seismic data, hardware and software and ongoing rights
to an area of mutual interest. We are also obligated to issue 400,000 shares of
our common stock to Western Energy Capital, LLC or its designates. Our board of
directors has authorized the issuance of the 400,000 shares of our common stock
to Western Energy Capital, LLC at the time of this annual report. It was also
acknowledge that the Britlind Prospect leases were originally acquired under the
name of McGuinty Durham and Associates and assignment of leasehold out of
McGuinty Durham and Associates will be made in due course. At such time Western
Energy Captial will take appropriate actions to assign the interest to our
company. Also pursuant to this agreement, we agreed to pay our proportionate
share of all expenses, including geological, rentals and additional leases, etc.
from May 11, 2007 and on.

Overriding Royalty Interest in Ceturion Property

On October 1, 2007, we acquired a 5% Overriding Royalty
Interest in the Centurion Property from King Royalty Corporation pursuant to an
offering of royalty interests by King Royalty Corporation. The Centurion
Property combines more than 17,000 acres of producing oil and gas assets across
Texas, Oklahoma, Alabama, Louisiana and Mississippi. There are 153 producing
wells on the asset with more than 50 additional proven/undeveloped drilling
sites. Current production is comprised of 90% natural gas and 10% oil. Well
operators include companies such as Exxon, Kerr-KcGee, Hunt Oil, Quicksilver and
Vintex. As an interest holder we are entitled to share in revenues generated
from oil and/or gas production from wells located on the Centurion Property.
Approximately 90 days after the operators of the wells on the properties sell
oil and gas production to local purchasers, we are entitle to receive payment of
revenues generated by those wells attributable to our interest. However, we have
no control over when we receive our payment of revenues, as each operator has
its own internal policies and procedures regarding the transfer of ownership. As
an interest holder we have no responsibility for operating expenses incurred in
connection with the operation of wells on the properties. Lastly, we do not have
responsibility for liabilities to third parties resulting from operations on the
properties, which is the responsibility of the operators of the properties and
the owners of working interests.

The Jonah Prospects

On August 15, 2007, we entered into an agreement with Desert
Mining, Inc. to acquire a 100% working interest in 6,000 acres of leases in the
Jonah Field region of Wyoming. This is the fourth core exploration and
development region for our company. Our Jonah Prospects are identified as South
Jonah, which consists of 2,477.68 acres and West Jonah, consisting of 3,546.89
acres. We completed our acquisition on September 5, 2007 by paying to Desert
Mining, Inc. an aggregate of $821,798.45.

With current well spacing regulations, we believe we can drill
up to 37 wells on this acreage. With technology developed in the Jonah and
Pinedale fields, current completion techniques estimate gas in place between 1.0
and 3.0 BCF per well. As such, our management believes that South Jonah and West
Jonah could provide between 37 BCF and 111 BCF of potential recoverable
reserves.

The Jonah Field and the Pinedale Anticline are acknowledged as
the premier gas fields in the Rocky Mountains. These fields are located in
Wyoming's Greater Green River Basin. According to the Wyoming State Geological
Survey, the Greater Green River Basin contains approximately 26 TCF of natural
gas which is the largest reserve in the State. The Jonah Field is estimated to
contain 7 to 10 TCF of Natural Gas, which currently produces from more than 500
wells.

Since we are an exploration stage company, there is no
assurance that commercially viable resources or reserves exist on any of our
properties, and a great deal of further exploration will be required before a
final evaluation as to the economic and legal feasibility for our future
exploration is determined. To date, we have not discovered an economically
viable resource or reserve on any of our properties, and there is no assurance
that we will discover one.

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Plan of Operations

The following discussion should be read in conjunction with our
financial statements and the related notes included herein. 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 current report, particularly in the section entitled Risk Factors in
this annual report.

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

We have no revenues and have experienced losses since
inception. Our plan of operations for the next 12 months involves the
exploration of oil and gas properties under the two agreements held by Sun Cal
Energy Corp. as well as our interests in three other oil and gas exploration
properties.

As provided under the agreement with Western Energy Capital,
LLC on the Lokern Leases, we will be a joint working interest owner together
with Western Energy Capital, LLC for the Lokern Leases, and will be required to
pay our proportionate share of all land, title, lease bonuses and drilling
costs. In addition to the exploration activities on the oil and gas properties
under the two agreements held by Sun Cal Energy Corp., we will be required to
pay our proportionate share of all land, title, lease bonuses and drilling costs
for other properties in which we hold a working interest such as the Britlind
Prospect Leases and the Jonah Prospects. Furthermore, we will continue to seek
opportunities to acquire other oil and gas properties of merit.

Prior to completion of our exploration stage, we anticipate
that we will incur increased operating expenses without realizing any revenues.
We anticipate that we will expend approximately $360,000 in the next 12 months
for our operating expenses. We therefore expect to incur significant losses into
the foreseeable future. We recognize that if we are unable to generate
significant revenues from the exploration of our oil and gas properties in the
future, we will not be able to earn profits or continue operations. There is no
history upon which to base any assumption as to the likelihood that we will
prove successful, and we can provide no assurance that we will generate any
revenues or ever achieve profitability.

We will also need more funds if the costs of the exploration of
our oil and gas properties are greater than we have anticipated. We will also
require additional financing to sustain our business operations if we are not
successful in earning revenues. We currently do not have any arrangements for
further financing and we may not be able to obtain financing on commercially
reasonable terms or terms that are acceptable to us when it is required.

We anticipate spending approximately $4,000 in ongoing general
and administrative expenses per month for the next 12 months, for a total
anticipated expenditure of $48,000 over the next 12 months. The general and
administrative expenses for the year will consist primarily of professional fees
for the audit and legal work relating to our regulatory filings throughout the
year, as well as transfer agent fees, annual mineral claim fees and general
office expenses.

During the next 12 month period, we anticipate that we will not
generate any revenue. Accordingly, we will be required to obtain additional
financing in order to continue our plan of operations. We believe that debt
financing will not be an alternative for funding additional phases of
exploration as we do not have tangible assets to secure any debt financing. We
anticipate that additional funding will be in the form of equity financing from
the sale of our common stock or through shareholder or related party loans.
However, we cannot provide investors with any assurance that we will be able to
raise sufficient funding from the sale of our common stock to fund our
exploration programs. In the absence of such financing, we will not be able to
continue exploration of our properties and our business plan will fail. Even if
we are successful in obtaining equity financing to fund our exploration program,
there is no assurance that we will obtain the funding necessary to pursue any
advanced exploration of our properties. If we do not continue to obtain
additional financing, we will be forced to abandon our properties and our plan
of operations

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- 9 -

Results of Operations

We have not earned any revenues from our incorporation on July
20, 2004 to June 30, 2007. We incurred operating expenses in the amount of
$704,033 for the period from our inception on July 20, 2004 to June 30,
2007.

Government and Industry Regulation

The exploration and development of oil and gas properties is
subject to various United States federal, state and local governmental
regulations. Our company may from time to time, be required to obtain licenses
and permits from various governmental authorities in regards to the exploration
of our property interests.

If our company proceeds with the development of our future
properties, we anticipate that we will be subject to increased governmental
regulation. Matters subject to regulation include discharge permits for drilling
operations, drilling and abandonment bonds, reports concerning operations, the
spacing of wells, and pooling of properties and taxation. 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. The production, handling,
storage, transportation and disposal of oil and gas, by-products thereof, and
other substances and materials produced or used in connection with oil and gas
operations are also subject to regulation under federal, state, provincial and
local laws and regulations relating primarily to the protection of human health
and the environment. As we have not proceeded to the development of our future
properties, we have not incurred any expenditures related to complying with such
laws, or for remediation of existing environmental contamination. The
requirements imposed by such laws and regulations are frequently changed and
subject to interpretation, and we are unable to predict the ultimate cost of
compliance with these requirements or their effect on our operations.

Employees

We have no employees as of the date of this annual report other
than our Chief Executive Officer, Lewis Dillman, and our sole director and Chief
Financial Officer, George Drazenovic, who provide us with their services through
consulting agreements.

Research and Development Expenditures

We have not incurred any other research or development
expenditures since our incorporation.

Subsidiaries

Our wholly-owned subsidiaries are Sun Cal Energy Corp., a
Nevada corporation and Sun Cal Energy Canada Corp., a British Columbia
corporation.

Patents and Trademarks

We do not own, either legally or beneficially, any patents or
trademarks.

RISK FACTORS

Shares of our common stock are speculative, especially since we
are in the exploration-stage of our new business. We operate in a volatile
sector of business that involves numerous risks and uncertainties. The risks and
uncertainties described below are not the only ones we face. Other risks and
uncertainties, including those that we do not currently consider material, may
impair our business. If any of the risks discussed below actually occur, our
business, financial condition, operating results or cash flows could be
materially adversely affected. This could cause the trading price of our
securities to decline, and you may lose all or part of your investment.
Prospective investors should consider carefully the risk factors set out
below.

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- 10 -

Risks Related To Our Business

As our properties are in the exploration stage there can be
no assurance that we will establish commercial discoveries on our
properties.

Exploration for economic reserves of oil and gas is subject to
a number of risk factors. While the rewards to an investor can be substantial if
an economically viable discovery is made, few of the properties that are
explored are ultimately developed into producing oil and/or gas wells. Our
properties are in the exploration stage only and are without proven reserves of
oil and gas. There can be no assurance that we will establish commercial
discoveries on any of our properties.

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

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 world-wide economic uncertainty,
the availability and cost of funds for production and other expenses have become
increasingly difficult, if not impossible, to project. These 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 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. The extent of these factors cannot be accurately predicted but the
combination of these factors may result in our company not receiving an adequate
return on invested capital.

Competition in the oil and gas industry is highly
competitive and there is no assurance that we will be successful in acquiring
interests in oil and gas properties.

The oil and gas industry is intensely competitive. We compete
with numerous individuals and companies, including many major oil and gas
companies, which have substantially greater technical, financial and operational
resources and staffs. Accordingly, there is a high degree of competition for
desirable oil and gas properties for drilling operations and necessary drilling
equipment, as well as for access to funds. There can be no assurance that the
necessary funds can be raised or that any projected work will be completed.

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 which may cause substantial delays or require capital outlays in
excess of those anticipated causing an adverse effect on our company.

Oil and gas operations are subject to federal 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 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

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- 11 -

government bodies are required for drilling operations to be
conducted; no assurance can be given that such permits will be received. No
assurance can be given that environmental standards imposed by federal or local
authorities will not be changed or that any such changes would not 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 it may elect not to
insure against due to prohibitive premium costs and other reasons.

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 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.

Risks Associated With Our Company

Our future is dependent upon our ability to obtain
financing. If we do not obtain such financing, we may have to cease our
exploration activities and investors could lose their entire investment.

There is no assurance that we will operate profitably or will
generate positive cash flow in the future. We will require additional financing
in order to proceed beyond the first few months of our exploration program. We
will also require additional financing for the fees we must pay to maintain our
status in relation to the rights to our properties and to pay the fees and
expenses necessary to become and operate as a public company. We will also need
more funds if the costs of the exploration of our oil and gas properties are
greater than we have anticipated. We will also require additional financing to
sustain our business operations if we are not successful in earning revenues. We
currently do not have any arrangements for further financing and we may not be
able to obtain financing on commercially reasonable terms or terms that are
acceptable to us when it is required. Our future is dependent upon our ability
to obtain financing. If we do not obtain such financing, our business could fail
and investors could lose their entire investment.

Because we may never earn revenues from our operations, our
business may fail and then investors may lose all of their investment in our
company.

We have no history of revenues from operations. We have never
had significant operations and have no significant assets. We have yet to
generate positive earnings and there can be no assurance that we will ever
operate profitably. Our company has a limited operating history and is in the
exploration stage. The success of our company is significantly dependent on the
uncertain events of the discovery and exploitation of oil and gas reserves on
our properties or selling the rights to exploit those oil and gas reserves. If
our business plan is not successful and we are not able to operate profitably,
then our stock may become worthless and investors may lose all of their
investment in our company.

Prior to completion of our exploration stage, we anticipate
that we will incur increased operating expenses without realizing any revenues.
We therefore expect to incur significant losses into the foreseeable future. We
recognize that if we are unable to generate significant revenues from the
exploration of our oil and gas properties in the future, we will not be able to
earn profits or continue operations. There is no history upon which to base any
assumption as to the likelihood that we will prove successful, and we can
provide no assurance that we will generate any revenues or

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ever achieve profitability. If we are unsuccessful in
addressing these risks, our business will fail and investors may lose all of
their investment in our company.

We have no employees other than our Chief Executive Officer,
Lewis Dillman, and our sole director and Chief Financial Officer, George
Drazenovic.

Our Chief Executive Officer, Lewis Dillman, and our Chief
Financial Officer and director, George Drazenovic, will be the only persons
responsible for our managerial responsibilities. As such, they will have
ultimate authority with respect to our business decisions, our disclosure and
our implementation of accounting controls and procedures. If Messrs. Dillman and
Drazenovic are unable to properly institution such procedures and comply with
reporting obligation requirements, our operations may be adversely impacted.

Our By-laws contain provisions indemnifying our officers and
directors against all costs, charges and expenses incurred by them

Our By-laws contain provisions with respect to the
indemnification of our officers and directors against all costs, charges and
expenses, including an amount paid to settle an action or satisfy a judgment,
actually and reasonably incurred by him, including an amount paid to settle an
action or satisfy a judgment in a civil, criminal or administrative action or
proceeding to which he is made a party by reason of his being or having been one
of our directors or officers.

Investors' interests in our company will be diluted and
investors may suffer dilution in their net book value per share if we issue
additional shares or raise funds through the sale of equity securities

Our constating documents authorize the issuance of 750,000,000
shares of common stock with a par value of $0.001. In the event that we are
required to issue any additional shares or enter into private placements to
raise financing through the sale of equity securities, investors' interests in
our company will be diluted and investors may suffer dilution in their net book
value per share depending on the price at which such securities are sold. If we
issue any such additional shares, such issuances also will cause a reduction in
the proportionate ownership and voting power of all other shareholders. Further,
any such issuance may result in a change in our control.

Our By-laws do not contain anti-takeover provisions which
could result in a change of our management and directors if there is a take-over
of our company

We do not currently have a shareholder rights plan or any
anti-takeover provisions in our By-laws. Without any anti-takeover provisions,
there is no deterrent for a take-over of our company, which may result in a
change in our management and directors.

As a result of our sole director and officer being resident
of other countries other than the United States, investors may find it difficult
to enforce, within the United States, any judgments obtained against our company
or our director and officer

We do not currently maintain a permanent place of business
within the United States. In addition, our current sole director and officer is
a national and resident of a country other than the United States, and all or a
substantial portion of such person's 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 company or our director and
officer, including judgments predicated upon the civil liability provisions of
the securities laws of the United States or any state thereof.

Risks Associated With Our Common Stock

We do not intend to pay dividends on any investment in the
shares of stock of our company.

We have never paid any cash dividends and currently do not
intend to pay any dividends for the foreseeable future. To the extent that we
require additional funding currently not provided for in our financing plan, our
funding sources

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- 13 -

may prohibit the payment of a dividend. Because we do not
intend to declare dividends, any gain on an investment in our company will need
to come through an increase in the stocks price. This may never happen and
investors may lose all of their investment in our company.

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 standard 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.

NASD sales practice requirements may also limit a
stockholders ability to buy and sell our stock.

In addition to the penny stock rules described above, the
NASD 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, the NASD believes that there is a high probability that
speculative low priced securities will not be suitable for at least some
customers. The NASD 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.

Trading in our common stock on the OTC Bulletin Board is
limited and sporadic making it difficult for our shareholders to sell their
shares or liquidate their investments

Shares of our common stock are currently quoted on the OTC
Bulletin Board. The trading price of our common stock has been subject to wide
fluctuations. Trading prices of our common stock may fluctuate in response to a
number of factors, many of which will be beyond our control. The stock market
has generally experienced extreme price and volume fluctuations that have often
been unrelated or disproportionate to the operating performance of companies
with no current business operation. There can be no assurance that trading
prices and price earnings ratios previously experienced by our common stock will
be matched or maintained. These broad market and industry factors may adversely
affect the market price of our common stock, regardless of our operating
performance.

In the past, following periods of volatility in the market
price of a company's securities, securities class-action litigation has often
been instituted. Such litigation, if instituted, could result in substantial
costs for us and a diversion of management's attention and resources.

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- 14 -

ITEM 2: DESCRIPTION OF PROPERTY

Executive Offices

Our registered statutory office is located at Empire Stock
Transfer Inc., 2470 Saint Rose Pkwy, Suite 304, Henderson, NV 89074.

Our business office is located at, Suite 700, 205 - 5th Avenue,
S.W., Calgary, Alberta T2P 2V7 Canada.

In October 2006, Sun Cal Energy Corp. entered into two
agreements: an agreement with TriMar Energy Partners, Inc. to acquire an one and
one half percent (1.5%) of 8/8ths overriding royalty interest in an oil and gas
lease known as the Hobart Lease and an agreement with Western Energy Capital,
LLC. to acquire an undivided 45% interest in certain oil and gas leases known as
the Lokern Leases.

The Hobart Lease is an oil and gas lease obtained by TriMar
Energy Partners, Inc., as the lessee, from the City of Hobart, as the lessor,
dated April 1, 2004, and as recorded on Book 983, official records, Washita
County, Oklahoma, covering a total of 1,211.44 acres in the city of Hobart,
Washita County, Oklahoma.

The Lokern Leases are a collection of 34 oil and gas
exploration leases entered into by Western Energy Capital, LLC. with various
private parties between November 2005 to May 2006. The location of these leases
are located in Kern County, California.

On April 19, 2007, we entered into an agreement with Western
Energy Capital, LLC (Western) to acquire a partial interest in the Britlind
Prospect and leases situated in the prolific Breton Sound area, offshore
Louisiana. In April and May of 2007, we paid an aggregate of $640,000 to Western
Energy Capital, LLC pursuant to the agreement for a 5% working interest in the
Britlind Prospect lease interests, seismic data, hardware and software and
ongoing rights to an area of mutual interest.

On October 1, 2007, we acquired a 5% Overriding Royalty
Interest in the Centurion Property from King Royalty Corporation pursuant to an
offering of royalty interests by King Royalty Corporation. The Centurion
Property combines more than 17,000 acres of producing oil and gas assets across
Texas, Oklahoma, Alabama, Louisiana and Mississippi. There are 153 producing
wells on the asset with more than 50 additional proven/undeveloped drilling
sites.

On August 15, 2007, we entered into an agreement with Desert
Mining, Inc. to acquire a 100% working interest in 6,000 acres of leases in the
Jonah Field region of Wyoming. Our Jonah Prospects are identified as South
Jonah, which consists of 2,477.68 acres and West Jonah, consisting of 3,546.89
acres.

ITEM 3: LEGAL PROCEEDINGS

There are no legal proceedings pending or threatened against
us.

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

No matters were submitted to a vote of security holders that
have not been previously disclosed.

PART II

ITEM 5: MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

Market Information

Our shares of common stock are quoted for trading on the OTC
Bulletin Board under the symbol SCEY.OB.

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The following table sets forth the average high and the low bid
quotations quarterly for our shares of common stock during the last fiscal year
ended June 30, 2007. The closing bid on October 5, 2007 is also shown. These
quotations reflect inter-dealer prices, without retail mark-up, mark-down or
commissions and may not represent actual transactions.

Period
    High
    Low
    Close20074th Quarter April 1, 2007  June 30, 2007
    $2.60
    $2.40
    $2.513rd Quarter January 1, 2007  June
      30, 2007
    $1.69
    $1.60
    $1.642nd Quarter October 1, 2006  December 31, 2007
    $0.20
    $0.20
    $0.201st Quarter July 1, 2006  September
      30, 2006
    $0.00
    $0.00
    $0.00


On October 5, 2007, the closing bid price for the common stock
was $1.12.

There are approximately 41 holders of record of our common
stock as at October 5, 2007.

Dividends

There are no restrictions in our articles of incorporation or
bylaws that prevent us from declaring dividends. The Nevada Revised Statutes,
however, do prohibit us from declaring dividends where, after giving effect to
the distribution of the dividend:

1. We would not be able to pay our
debts as they become due in the usual course of business; or

2. Our total assets would be less than
the sum of our total liabilities plus the amount that would be needed to satisfy
the rights of Shareholders who have preferential rights superior to those
receiving the distribution.

We have not declared any dividends, and we do not plan to
declare any dividends in the foreseeable future.

Recent Sales of Unregistered Securities

On April 16, 2007, we closed a private placement consisting of
200,000 units of our securities (the Units) at a price of US $1.00 per Unit
for aggregate proceeds of $200,000. Each Unit consists of one common share and
one share purchase warrant (a Warrant), each Warrant shall be exercisable into
one common share (a Warrant Share) at a price of US $1.50 per Warrant Share
until April 16, 2010. We issued the Units to a non-U.S. person (as that term is
defined in Regulation S of the Securities Act of 1933) in an offshore
transaction relying on Regulation S and/or Section 4(2) of the Securities Act of
1933.

On May 1, 2007, we closed a private placement consisting of
700,000 units of our securities (the Units) at a price of US $1.00 per Unit
for aggregate proceeds of $200,000. Each Unit consists of one common share and
one share purchase warrant (a Warrant), each Warrant shall be exercisable into
one common share (a Warrant Share) at a price of US $1.50 per Warrant Share
until April 16, 2010. We issued the Units to a non-U.S. person (as that term is
defined in Regulation S of the Securities Act of 1933) in an offshore
transaction relying on Regulation S and/or Section 4(2) of the Securities Act of
1933.

On June 14, 2007, we closed a private placement consisting of
150,000 units of our securities (the Units) at a price of US $2.00 per Unit
for aggregate proceeds of $300,000. Each Unit consists of one common share and
one share purchase warrant (a Warrant), each Warrant shall be exercisable into
one common share (a Warrant Share) at a price of US $2.50 per Warrant Share
until May 1, 2010. We issued the Units to a non-U.S. person (as that term is
defined in Regulation S of the Securities Act of 1933) in an offshore
transaction relying on Regulation S and/or Section 4(2) of the Securities Act of
1933.

On June 29, 2007, we closed a private placement consisting of
80,000 units of our securities (the Units) at a price of US $2.50 per Unit for
aggregate proceeds of $200,000. Each Unit consists of one common share and one
share purchase warrant (a Warrant), each Warrant shall be exercisable into one
common share (a Warrant Share) at a

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- 16 -

price of US $3.00 per Warrant Share until June 29, 2010. We
issued the Units to a non-U.S. person (as that term is defined in Regulation S
of the Securities Act of 1933) in an offshore transaction relying on Regulation
S and/or Section 4(2) of the Securities Act of 1933.

For the period from July 1, 2007 through October 1, 2007, we
  received subscription proceeds for $1,850,000 for units of our securities from
  a non-U.S. person (as that term is defined in Regulation S of the Securities
  Act of 1933).

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

The following discussion should be read in conjunction with our
financial statements and the related notes included herein. 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 current report, particularly in the section entitled Risk Factors in
this annual report.

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

We have no revenues and have experienced losses since
inception. Our plan of operations for the next 12 months involves the
exploration of oil and gas properties under the two agreements held by Sun Cal
Energy Canada Corp. As provided under the agreement with Western Energy Capital,
LLC on the Lokern Leases, we will be a joint working interest owner together
with Western Energy Capital, LLC for the Lokern Leases, and will be required to
pay our proportionate share of all land, title, lease bonuses and drilling
costs. In addition to the exploration activities on the oil and gas properties
under the two agreements held by Sun Cal Energy Canada Corp., we will continue
to seek opportunities to acquire other oil and gas properties of merit.

Prior to completion of our exploration stage, we anticipate
that we will incur increased operating expenses without realizing any revenues.
We anticipate that we will expend approximately $360,000 in the next 12 months
for our operating expenses. We therefore expect to incur significant losses into
the foreseeable future. We recognize that if we are unable to generate
significant revenues from the exploration of our oil and gas properties in the
future, we will not be able to earn profits or continue operations. There is no
history upon which to base any assumption as to the likelihood that we will
prove successful, and we can provide no assurance that we will generate any
revenues or ever achieve profitability.

We will also need more funds if the costs of the exploration of
our oil and gas properties are greater than we have anticipated. We will also
require additional financing to sustain our business operations if we are not
successful in earning revenues. We currently do not have any arrangements for
further financing and we may not be able to obtain financing on commercially
reasonable terms or terms that are acceptable to us when it is required.

We anticipate spending approximately $4,000 in ongoing general
and administrative expenses per month for the next 12 months, for a total
anticipated expenditure of $48,000 over the next 12 months. The general and
administrative expenses for the year will consist primarily of professional fees
for the audit and legal work relating to our regulatory filings throughout the
year, as well as transfer agent fees, annual mineral claim fees and general
office expenses.

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- 17 -

During the next 12 month period, we anticipate that we will not
generate any revenue. Accordingly, we will be required to obtain additional
financing in order to continue our plan of operations. We believe that debt
financing will not be an alternative for funding additional phases of
exploration as we do not have tangible assets to secure any debt financing. We
anticipate that additional funding will be in the form of equity financing from
the sale of our common stock or through shareholder or related party loans.
However, we cannot provide investors with any assurance that we will be able to
raise sufficient funding from the sale of our common stock to fund our
exploration programs. In the absence of such financing, we will not be able to
continue exploration of our properties and our business plan will fail. Even if
we are successful in obtaining equity financing to fund our exploration program,
there is no assurance that we will obtain the funding necessary to pursue any
advanced exploration of our properties. If we do not continue to obtain
additional financing, we will be forced to abandon our properties and our plan
of operations

Results of Operations

We have not earned any revenues from our incorporation on July
20, 2004 to June 30, 2007. We incurred operating expenses in the amount of
$704,033 for the period from our inception on July 20, 2004 to June 30,
2007.

These operating expenses were comprised of abandoned mining and
exploration expenses of $12,500 and general and administrative expenses of
$690,952.

We have not attained profitable operations and are dependent
upon obtaining financing to pursue exploration activities.

Liquidity and Capital Resources

At June 30, 2007, we had working capital of $563,381. At June
30, 2007, our total current assets were $595,297 which consisted of cash, cash
held in trust and prepaid expenses.

At June 30, 2007, our total current liabilities were $31,916.
Operating expenses for the three months ended June 30, 2007 were $654,480
compared to $30,967 as at June 30, 2006, an increase of $623,513 because we
began focusing on acquisition of oil and gas exploration properties in the
fiscal year ended June 30, 2007. The principal components for the increase of
our operating expenses for the three months ended June 30, 2007 compared to the
three months ended June 30, 2006 were increases in general and administrative
expenses relating to the acquisition of various interests in oil and gas
exploration properties.

Off-Balance Sheet Arrangements

We have 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
stockholders.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with
United States generally accepted accounting principles requires our management
to make estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Our management routinely makes judgments and estimates about the effects of
matters that are inherently uncertain.

Our significant accounting policies are disclosed in Note 2 to
the audited financial statements included in this annual report on Form 10-KSB.

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ITEM 7: FINANCIAL STATEMENTS

|Reports of Independent Registered Public Accounting Firm
|--------------------------------------------------------
|                                                        
|Financial Statements                                    
|                                                        
|                                                        
|                                                        
|                                                        
|                                                        
|                                                        
|                                                        
|                                                        
|                                                        
|                                                        

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders Sun Cal Energy, Inc.

We have audited the accompanying consolidated balance sheet of
Sun Cal Energy, Inc. (the Company) as of June 30, 2007, and the related
consolidated statements of operations, stockholders equity and cash flows for
the year then ended. 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 audit. We did not audit the cumulative data
from July 20, 2004 (inception) to June 30, 2006 in the statements of operations,
cash flows and stockholders equity, which were audited by other auditors whose
reports dated August 24, 2006, expressed modified opinions as to the uncertainty
of the Company's ability to continue as a going concern, have been furnished to
us. Our opinion, insofar as it relates to the amounts included for the
cumulative period from July 20, 2004 (inception) to June 30, 2006, is based
solely on the reports 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 the 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 financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial position of Sun
Cal Energy, Inc. as of June 30, 2007, and the results of its operations and its
cash flows for the year ended in conformity with accounting principles generally
accepted in the United States of America.

The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note
1 to the financial statements, the Company has incurred recurring losses and has
yet to be successful in establishing profitable operations. These factors, among
others, raise substantial doubt about its ability to continue as a going
concern. Managements plans regarding those matters are also described in Note
1. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.

JONATHON P. REUBEN, CPA AN ACCOUNTANCY CORPORATION

Torrance, California October 1, 2007

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RONALD R. CHADWICK, P.C. Certified Public Accountant
2851 South Parker Road, Suite 720 Aurora, Colorado 80014 Telephone
(303) 306-1967 Fax (303) 306-1944

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors Host Ventures, Inc. Highlands Ranch,
Colorado

I have audited the accompanying balance sheet of Host Ventures,
Inc. (an exploration stage company) as of June 30, 2006, and the related
statements of operations, stockholders' equity and cash flows for the period
from July 24, 2004 (Inception) through June 30, 2005, and for the year ended
June 30, 2006. These financial statements are the responsibility of the
Company's management.

My responsibility is to express an opinion on these financial
statements based on my audit.

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

In my opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of Host
Ventures, Inc. as of June 30, 2006, and the results of its operations and its
cash flows for the period from July 24, 2004 (Inception) through June 30, 2005,
and for the year ended June 30, 2006 in conformity with accounting principles
generally accepted in the United States of America.

|Aurora, Colorado | Ronald R. Chadwick, P.C.
|---------------- | ------------------------
|August 24, 2006  | RONALD R. CHADWICK, P.C.

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Sun Cal Energy, Inc.(An Exploratory Stage
Company)CONSOLIDATED BALANCE SHEETS

|                                                                |   | June 30, |   |   | June 30,  |  
|--------------------------------------------------------------- | - | -------- | - | - | --------- | -
|                                                                |   | 2006     |   |   | 2007      |  
|                                                                |   |          |   |   |           |  
|ASSETS                                                          |   |          |   |   |           |  
|                                                                |   |          |   |   |           |  
|Current assets                                                  |   |          |   |   |           |  
|Cash                                                            | $ | 12,039   |   | $ | 86,471    |  
|Cash held in trust                                              |   | -        |   |   | 504,276   |  
|Prepaid
      expenses                                          |   | -        |   |   | 4,550     |  
|                                                                |   | 12,039   |   |   | 595,297   |  
|                                                                |   |          |   |   |           |  
|Property and
      equipment                                    |   |          |   |   |           |  
|Computer
      equipment                                        |   | 739      |   |   | -         |  
|Petroleum and natural gas properties                            |   | -        |   |   | 5,557,673 |  
|                                                                |   |          |   |   |           |  
|Intangible
      assets                                         |   | -        |   |   | 11,913    |  
|                                                                |   |          |   |   |           |  
|Total assets                                                    | $ | 12,778   |   | $ | 6,164,883 |  
|                                                                |   |          |   |   |           |  
|                                                                |   |          |   |   |           |  
|Liabilities and stockholders' equity                            |   |          |   |   |           |  
|                                                                |   |          |   |   |           |  
|Current liabilities                                             |   |          |   |   |           |  
|Accounts payable and accrued expenses                           | $ | -        |   | $ | 31,916    |  
|                                                                |   |          |   |   |           |  
|                                                                |   |          |   |   |           |  
|Stockholders' Equity                                            |   |          |   |   |           |  
|Common stock:                                                   |   |          |   |   |           |  
|Authorized: 750,000,000 with $0.001 par value                   |   |          |   |   |           |  
|Issued and fully paid: and 51,250,000 as
      of June 30, 2006 |   |          |   |   |           |  
|80,730,000 as of June 30, 2007                                  |   | 51,250   |   |   | 80,730    |  
|Additional paid-in capital                                      |   | 10,500   |   |   | 6,756,270 |  
|Deficit
      accumulated during the exploratory stage          |   | (48,972  | ) |   | (704,033  | )
|                                                                |   | 12,778   |   |   | 6,132,967 |  
|                                                                |   |          |   |   |           |  
|Total
      liabilities and stockholders' equity                | $ | 12,778   |   | $ | 6,164,883 |  

See accompanying notes

---

- 22 -

Sun Cal Energy, Inc.(An Exploratory Stage
Company)CONSOLIDATED STATEMENTS OF OPERATION

|                                             |   |                |   |   |            |   |   |            |   |   | From     |  
|-------------------------------------------- | - | -------------- | - | - | ---------- | - | - | ---------- | - | - | -------- | -
|                                             |   |                |   |   |            |   |   |            |   |   | July 20, |  
|                                             |   |                |   |   |            |   |   |            |   |   | 2004     |  
|                                             |   |                |   |   |            |   |   |            |   |   | through  |  
|                                             |   | June
      30, |   |   | June 30,   |  
|                                             |   | 2005           |   |   | 2006       |   |   | 2007       |   |   | 2007     |  
|                                             |   |                |   |   |            |   |   |            |   |   |          |  
|                                             |   |                |   |   |            |   |   |            |   |   |          |  
|                                             |   |                |   |   |            |   |   |            |   |   |          |  
|Net revenue                                  | $ | -              |   | $ | -          |   | $ | -          |   | $ | -        |  
|                                             |   |                |   |   |            |   |   |            |   |   |          |  
|Operating expenses                           |   |                |   |   |            |   |   |            |   |   |          |  
|Abandoned exploration costs                  |   | 7,500          |   |   | 5,000      |   |   | 5,500      |   |   | 12,500   |  
|General and administrative
      expenses    |   | 10,505         |   |   | 25,967     |   |   | 648,980    |   |   | 690,952  |  
|                                             |   | 18,005         |   |   | 30,967     |   |   | 654,480    |   |   | 703,452  |  
|Net loss from operations                     |   | (18,005        | ) |   | (30,967    | ) |   | (654,480   | ) |   | (703,452 | )
|                                             |   |                |   |   |            |   |   |            |   |   |          |  
|Other expense                                |   |                |   |   |            |   |   |            |   |   |          |  
|loss on disposition of asset                 |   | -              |   |   | -          |   |   | (581       | ) |   | (581     | )
|                                             |   |                |   |   |            |   |   |            |   |   |          |  
|Net
      loss                               | $ | (18,005        | ) | $ | (30,967    | ) | $ | (655,061   | ) | $ | (704,033 | )
|                                             |   |                |   |   |            |   |   |            |   |   |          |  
|Net loss per share - Basic and diluted       | $ | -              |   | $ | -          |   | $ | (0.01      | ) |   |          |  
|                                             |   |                |   |   |            |   |   |            |   |   |          |  
|Weighted average common equivalent           |   |                |   |   |            |   |   |            |   |   |          |  
|shares outstanding
      - Basic and diluted |   | 27,459,090     |   |   | 51,250,000 |   |   | 75,574,986 |   |   |          |  

See accompanying notes

---

- 23 -

Sun CalEnergy,Inc.(FormerlyHostVenturesInc.)(AnExploratoryStageCompany)STATEMENTSOFCONSOLIDATEDSTOCKHOLDERSEQUITY(DEFICIT)

|                                                            |          |  |           |  |                    |  |   |         |  |   |             |   |   | Deficit     |   |   |           |  
|----------------------------------------------------------- | -------- |  | --------- |  | ------------------ |  | - | ------- |  | - | ----------- | - | - | ----------- | - | - | --------- | -
|                                                            |          |  |           |  |                    |  |   |         |  |   |             |   |   | Accumulated |   |   |           |  
|                                                            |          |  |           |  |                    |  |   |         |  |   | Additional  |   |   | During the  |   |   |           |  
|                                                            |          |  | Price per |  | Common
      stock |  |   | Paid-in |  |   | Exploratory |   |   |             |  
|                                                            | Date     |  | share     |  | Shares             |  |   | Amount  |  |   | Capital     |   |   | Stage       |   |   | Total     |  
|                                                            |          |  |           |  |                    |  |   |         |  |   |             |   |   |             |   |   |           |  
|Balance, July 20, 2004                                      |          |  |           |  | -                  |  | $ | -       |  | $ | -           |   | $ | -           |   | $ | -         |  
|                                                            |          |  |           |  |                    |  |   |         |  |   |             |   |   |             |   |   |           |  
|Shares issued to founders                                   | 12/15/04 |  | $ 0.001   |  | 20,000,000         |  |   | 20,000  |  |   | (18,000     | ) |   |             |   |   | 2,000     |  
|Shares issued for cash                                      | 2/28/05  |  | $ 0.001   |  | 28,250,000         |  |   | 28,250  |  |   | -           |   |   |             |   |   | 28,250    |  
|Shares issued for cash                                      | 3/31/05  |  | $ 0.005   |  | 3,000,000          |  |   | 3,000   |  |   | 12,000      |   |   | -           |   |   | 15,000    |  
|Contributed services and rent                               | Various  |  |           |  | -                  |  |   | -       |  |   | 7,500       |   |   | -           |   |   | 7,500     |  
|Net loss                                                    |          |  |           |  | -                  |  |   | -       |  |   | -           |   |   | (18,005     | ) |   | (18,005   | )
|Balance, June 30, 2005                                      |          |  |           |  | 51,250,000         |  |   | 51,250  |  |   | 1,500       |   |   | (18,005     | ) |   | 34,745    |  
|                                                            |          |  |           |  |                    |  |   |         |  |   |             |   |   |             |   |   |           |  
|Contributed services and rent                               | Various  |  |           |  | -                  |  |   | -       |  |   | 9,000       |   |   | -           |   |   | 9,000     |  
|Net loss                                                    |          |  |           |  | -                  |  |   | -       |  |   | -           |   |   | (30,967     | ) |   | (30,967   | )
|Balance, June 30, 2006                                      |          |  |           |  | 51,250,000         |  |   | 51,250  |  |   | 10,500      |   |   | (48,972     | ) |   | 12,778    |  
|                                                            |          |  |           |  |                    |  |   |         |  |   |             |   |   |             |   |   |           |  
|Shares issued for cash                                      | 8/3/06   |  | $ 0.001   |  | 23,000,000         |  |   | 23,000  |  |   | -           |   |   | -           |   |   | 23,000    |  
|Contributed services and
      rent                         | 9/30/06  |  |           |  |                    |  |   |         |  |   | 2,250       |   |   |             |   |   | 2,250     |  
|Shares issued for cash                                      | 10/1/06  |  | $ 1.000   |  | 375,000            |  |   | 375     |  |   | 374,625     |   |   |             |   |   | 375,000   |  
|Shares issued for cash                                      | 10/17/06 |  | $ 1.000   |  | 250,000            |  |   | 250     |  |   | 249,750     |   |   |             |   |   | 250,000   |  
|Shares issued as partial consideration
      in acquisition | 10/21/06 |  |           |  | 2,800,000          |  |   | 2,800   |  |   | 2,797,200   |   |   |             |   |   | 2,800,000 |  
|of
      oil and gas leases                                 |          |  |           |  |                    |  |   |         |  |   |             |   |   |             |   |   |           |  
|Shares issued for cash                                      | 12/1/06  |  | $ 1.000   |  | 500,000            |  |   | 500     |  |   | 499,500     |   |   |             |   |   | 500,000   |  
|Shares issued as partial
      consideration in acquisition |          |  |           |  |                    |  |   |         |  |   |             |   |   |             |   |   |           |  
|of oil
      and gas leases                                 | 1/1/07   |  |           |  | 1,000,000          |  |   | 1,000   |  |   | 999,000     |   |   |             |   |   | 1,000,000 |  
|Shares issued for cash                                      | 4/1/07   |  | $ 1.000   |  | 200,000            |  |   | 200     |  |   | 199,800     |   |   |             |   |   | 200,000   |  
|Shares issued as partial consideration
      in acquisition |          |  |           |  |                    |  |   |         |  |   |             |   |   |             |   |   |           |  
|of
      oil and gas leases                                 | 4/19/07  |  | $ 1.000   |  | 400,000            |  |   | 400     |  |   | 399,600     |   |   |             |   |   | 400,000   |  
|Shares issued for cash                                      | 5/1/07   |  | $ 1.000   |  | 700,000            |  |   | 700     |  |   | 699,300     |   |   |             |   |   | 700,000   |  
|Shares issued for services                                  | 5/1/07   |  | $ 1.000   |  | 25,000             |  |   | 25      |  |   | 24,975      |   |   |             |   |   | 25,000    |  
|Shares issued for cash                                      | 6/1/07   |  | $ 3.000   |  | 80,000             |  |   | 80      |  |   | 199,920     |   |   |             |   |   | 200,000   |  
|Shares issued for cash                                      | 6/14/07  |  | $ 2.000   |  | 150,000            |  |   | 150     |  |   | 299,850     |   |   |             |   |   | 300,000   |  
|Net loss                                                    |          |  |           |  |                    |  |   |         |  |   |             |   |   | (655,061    | ) |   | (655,061  | )
|Balance, June 30, 2007                                      |          |  |           |  | 80,730,000         |  | $ | 80,730  |  | $ | 6,756,270   |   | $ | (704,033    | ) | $ | 6,132,967 |  

See accompanying notes

---

- 24 -

Sun Cal Energy, Inc.(An Exploratory Stage
Company)STATEMENTS OF CASH FLOWS

|                                                   |   |                |   |   |          |   |   |            |   |   | From       |  
|-------------------------------------------------- | - | -------------- | - | - | -------- | - | - | ---------- | - | - | ---------- | -
|                                                   |   |                |   |   |          |   |   |            |   |   | July 20,   |  
|                                                   |   |                |   |   |          |   |   |            |   |   | 2004       |  
|                                                   |   |                |   |   |          |   |   |            |   |   | through    |  
|                                                   |   | June
      30, |   |   | June 30, |  
|                                                   |   | 2005           |   |   | 2006     |   |   | 2007       |   |   | 2007       |  
|                                                   |   |                |   |   |          |   |   |            |   |   |            |  
|                                                   |   |                |   |   |          |   |   |            |   |   |            |  
|Cash flows from operating activities:              |   |                |   |   |          |   |   |            |   |   |            |  
|Net loss from
      continuing operations          | $ | (18,005        | ) | $ | (30,967  | ) | $ | (655,061   | ) | $ | (929,033   | )
|Adjustment
      to reconcile net loss to net cash |   |                |   |   |          |   |   |            |   |   |            |  
|used in operating activities:                      |   |                |   |   |          |   |   |            |   |   |            |  
|Loss on disposition
      of asset                 |   |                |   |   |          |   |   | 581        |   |   | 581        |  
|Non cash consulting services                       |   | -              |   |   | -        |   |   | 25,000     |   |   | 25,000     |  
|Contributed rent
      and services                |   | 7,500          |   |   | 9,000    |   |   | 2,250      |   |   | 18,750     |  
|                                                   |   |                |   |   |          |   |   |            |   |   |            |  
|Depreciation                                       |   | -              |   |   | 211      |   |   | 158        |   |   | 369        |  
|Amortization                                       |   | -              |   |   | -        |   |   | 1,436      |   |   | 1,436      |  
|Changes
      in assets:                           |   |                |   |   |          |   |   |            |   |   |            |  
|(Increase) in prepaid expenses                     |   | -              |   |   | -        |   |   | (4,550     | ) |   | (4,550     | )
|Changes
      in liabilities:                      |   |                |   |   |          |   |   |            |   |   |            |  
|(Increase) in Accounts payable                     |   | -              |   |   | -        |   |   | 31,916     |   |   | 31,916     |  
|Net cash used in
      operating activities        |   | (10,505        | ) |   | (21,756  | ) |   | (598,270   | ) |   | (630,531   | )
|                                                   |   |                |   |   |          |   |   |            |   |   |            |  
|Cash flows from investing activities:              |   |                |   |   |          |   |   |            |   |   |            |  
|Acquisition
      of oil and gas properties        |   | -              |   |   | -        |   |   | (1,357,673 | ) |   | (1,357,673 | )
|Acquisition
      of computer equipment            |   | -              |   |   | (950     | ) |   | -          |   |   | (950       | )
|Website design
      costs                         |   | -              |   |   | -        |   |   | (13,349    | ) |   | (13,349    | )
|Net cash used in investing activities              |   | -              |   |   | (950     | ) |   | (1,371,022 | ) |   | (1,371,972 | )
|                                                   |   |                |   |   |          |   |   |            |   |   |            |  
|Cash flows from financing activities:              |   |                |   |   |          |   |   |            |   |   |            |  
|Proceeds from
      issuance of common stock       |   | 45,250         |   |   | -        |   |   | 2,548,000  |   |   | 2,593,250  |  
|Loans
      received from related party            |   | -              |   |   | -        |   |   | 32,200     |   |   | 32,200     |  
|Loans repaid
      to related party                |   |                |   |   |          |   |   | (32,200    | ) |   | (32,200    | )
|Net cash provided by financing activities          |   | 45,250         |   |   | -        |   |   | 2,548,000  |   |   | 2,593,250  |  
|                                                   |   |                |   |   |          |   |   |            |   |   |            |  
|Net cash provided (used) in continuing operations  |   | 34,745         |   |   | (22,706  | ) |   | 578,708    |   |   | 590,747    |  
|                                                   |   |                |   |   |          |   |   |            |   |   |            |  
|Cash and cash equivalents, beginning of year       |   | -              |   |   | 34,745   |   |   | 12,039     |   |   | -          |  
|                                                   |   |                |   |   |          |   |   |            |   |   |            |  
|Cash and cash equivalents, end of year             | $ | 34,745         |   | $ | 12,039   |   |   | 590,747    |   | $ | 590,747    |  
|                                                   |   |                |   |   |          |   |   |            |   |   |            |  
|Supplemental disclosures of cash flow information: |   |                |   |   |          |   |   |            |   |   |            |  
|                                                   |   |                |   |   |          |   |   |            |   |   |            |  
|Interest paid                                      | $ | -              |   | $ | -        |   | $ | -          |   |   |            |  
|Income taxes paid                                  | $ | -              |   | $ | -        |   | $ | -          |   |   |            |  

Supplemental disclosures of non-cash investing and financing
activities: During the year ended June 30, 2007, the Company issued
3,800,000 shares of its common stock in connection with the purchase of its oil
and gas properties. These shares were valued at $1 per share.

See accompanying notes

---

- 25 -

SUN CAL ENERGY INC.(An Exploratory Stage
Company)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1  ORGANIZATION AND BASIS OF PRESENTATION

Organization

Sun Cal Energy, Inc. (the Company), was incorporated in the
State of Nevada on July 20, 2004 under the name Host Ventures, Inc. On November
6, 2006, the Company changed its name to Sun Cal Energy, Inc. The Company is in
the exploration stage, as defined in Statement of Financial Accounting Standards
(SFAS) No. 7,  Accounting and Reporting by Development Stage Enterprises ,
with its principal activity being the exploration and development of oil and gas
properties.

Effective March 12, 2007, the Company acquired all of the
outstanding shares of Sun Cal Energy Corporation (SCEC) in exchange for
issuing 26,925,000 of its common stock. SCEC was incorporated in the state of
Nevada on June 2, 2006. As of the date of the acquisition, both companies were
under common control, and therefore for financial reporting purposes, the
acquisition is treated as if it occurred on July 1, 2006. Assets acquired from
SCEC were recorded at their historical cost bases on July 1, 2006 and the
financial statements included herein combine the activities of both companies
since July 1, 2006. SCEC is the sole shareholder of Sun Cal Energy Canada Corp.
By virtue of the share exchange agreement, the Company also acquired all of the
outstanding shares of the Canadian corporation.

Basis of Presentation

The accompanying financial statements include the accounts and
transactions of the Company and its wholly owned subsidiaries, Sun Cal Energy
Corporation and Sun Cal Energy Canada Corp., and have been prepared in
conformity with accounting principles generally accepted in the United States of
America, which contemplate continuation of the Company as a going concern. The
Company has no established source of material revenue, has incurred a net loss
for the year ended June 30, 2007 of $654,480 and has an accumulated deficit
since its inception of $704,033. These conditions raise substantial doubt as to
the Company's ability to continue as a going concern. These financial statements
do not include any adjustments that might result from the outcome of this
uncertainty. These financial statements do not include any adjustments relating
to the recoverability and classification of recorded asset amounts, or amounts
and classification of liabilities that might be necessary should the Company be
unable to continue as a going concern.

Management recognizes that the Company must generate additional
resources to enable it to continue operations. Management intends to raise
additional funds through debt and/or equity financing or through other means
that it deems necessary. However, no assurance can be given that the Company
will be successful in raising additional capital. Further, even if the company
raises additional capital, there can be no assurance that the Company will
achieve profitability or positive cash flow. If management is unable to raise
additional capital and expected significant revenues do not result in positive
cash flow, the Company will not be able to meet its obligations and may have to
cease operations.

Stock Split

Effective November 6, 2006, the Company authorized a 10-for-1
stock split. All references in the accompanying financial statements to the
number of shares outstanding and per-share amounts have been restated to reflect
the indicated stock split.

---

- 26 -

SUN CAL ENERGY INC.(An Exploratory Stage
Company)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation

The accompanying financial statements include the accounts and
transactions of Sun Cal Energy, Inc. and its wholly-owned subsidiary.
Intercompany transactions and balances have been eliminated in
consolidation.

Stock Based Compensation

The Company accounts for stock-based compensation under SFAS
No. 123R, "Share- based Payment " and SFAS No. 148, "Accounting for Stock-Based
Compensation--Transition and Disclosure--An amendment to SFAS No. 123." These
standards define a fair value based method of accounting for stock-based
compensation. In accordance with SFAS Nos. 123R and 148, the cost of stock-based
employee compensation is measured at the grant date based on the value of the
award and is recognized over the vesting period. The value of the stock-based
award is determined using the Black-Scholes option-pricing model, whereby
compensation cost is the excess of the fair value of the award as determined by
the pricing model at the grant date or other measurement date over the amount an
employee must pay to acquire the stock. The resulting amount is charged to
expense on the straight-line basis over the period in which the Company expects
to receive the benefit, which is generally the vesting period. During 2006, the
Company recognized no compensation expense under SFAS No. 123R as no options
were issued to employees during the year.

Issuance of Stock for Non-Cash Consideration

All issuances of the Company's stock for non-cash consideration
have been assigned a per share amount equaling either the market value of the
shares issued or the value of consideration received, whichever is more readily
determinable. The majority of the non-cash consideration received pertains to
services rendered by consultants and others and has been valued at the market
value of the shares on the dates issued.

The Company's accounting policy for equity instruments issued
to consultants and vendors in exchange for goods and services follows the
provisions of EITF 96-18, Accounting for Equity Instruments That are Issued
to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or
Services and EITF 00-18, Accounting Recognition for Certain
Transactions Involving Equity Instruments Granted to Other Than Employees.
The measurement date for the fair value of the equity instruments issued is
determined at the earlier of (i) the date at which a commitment for performance
by the consultant or vendor is reached or (ii) the date at which the consultant
or vendor's performance is complete. In the case of equity instruments issued to
consultants, the fair value of the equity instrument is recognized over the term
of the consulting agreement. In accordance with EITF 00-18, an asset acquired in
exchange for the issuance of fully vested, nonforfeitable equity instruments
should not be presented or classified as an offset to equity on the grantor's
balance sheet once the equity instrument is granted for accounting purposes.
Accordingly, the Company records the fair value of the fully vested
non-forfeitable common stock issued for future consulting services as prepaid
services in its consolidated balance sheet.

---

- 27 -

SUN CAL ENERGY INC.(An Exploratory Stage
Company)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(contd)

Use of Estimates

The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenue and expenses during the reporting periods. Actual results could differ
from these estimates.

Fair Value of Financial Instruments

The Companys financial instruments consist of cash and cash
equivalents, accounts payable, accrued expenses and notes payable, Pursuant to
SFAS No. 107, Disclosures About Fair Value of Financial Instruments,
the Company is required to estimate the fair value of all financial instruments
at the balance sheet date. The Company considers the carrying values of its
financial instruments in the financial statements to approximate their fair
values.

Cash and Cash Equivalents

For purposes of the statements of cash flows, the Company
defines cash equivalents as all highly liquid debt instruments purchased with a
maturity of three months or less, plus all certificates of deposit.

Property and Equipment

Property and equipment are stated at cost less accumulated
depreciation and amortization. Depreciation and amortization are calculated
using the straight-line method over the estimated useful lives of the related
assets. When property and equipment are retired or otherwise disposed of, the
related cost and accumulated depreciation are removed from the respective
accounts, and any gain or loss is included in operations. Expenditures for
maintenance and repairs are charged to operations as incurred; additions,
renewals and betterments are capitalized.

Long- Lived Assets

The Company accounts for its long-lived assets in accordance
with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets." SFAS No. 144 requires that long-lived assets be reviewed for impairment
whenever events or changes in circumstances indicate that the historical cost
carrying value of an asset may no longer be appropriate. The Company assesses
recoverability of the carrying value of an asset by estimating the future net
cash flows expected to result from the asset, including eventual disposition. If
the future net cash flows are less than the carrying value of the asset, an
impairment loss is recorded equal to the difference between the asset's carrying
value and fair value or disposable value. As of June 30, 2007, the Company did
not deem any of its long-term assets to be impaired.

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- 28 -

SUN CAL ENERGY INC.(An Exploratory Stage
Company)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(contd)

Concentration of Credit Risk

Financial instruments, which potentially subject the Company to
concentrations of credit risk, consist of cash. Currently, the Company maintains
its cash in bank accounts which are not insured.

Revenue Recognition

The Company has not generated any revenue from its oil and gas
operations.

Oil and Gas Properties

The Company follows the full cost method of accounting for
crude oil and natural gas properties. Under this method, all direct costs and
certain indirect costs associated with acquisition of properties and successful
as well as unsuccessful exploration and development activities are capitalized.
Depreciation, depletion, and amortization of capitalized crude oil and natural
gas properties and estimated future development costs, excluding unproved
properties, are based on the unit-of-production method based on proved reserves.
The Company has not yet commenced the development of its properties as of June
30, 2007.

Website development costs

Under FASB Emerging Issues Task Force Statement 00-2,
Accounting for Web Site Development Costs ("EITF 00-2"), costs and expenses
incurred during the planning and operating stages of the Company's web site
development are expensed as incurred. Under EITF 00-2, costs incurred in the web
site application and infrastructure development stages are capitalized by the
Company and amortized to expense over the web site's estimated useful life or
period of benefit. As of June 30, 2007, the Company had net capitalized costs of
$11,913 related to its web site development, which are being depreciated on a
straight-line basis over an estimated useful life of 3 years. Amortization
expense for the years ended June 30, 2005, 2006 and 2007 were $0, $0, and
$1,436, respectively.

Website cost and accumulated depreciation as of June 30, 2007
is as follows:

Capitalized website costs
    $
    13,349Less accumulated amortization
    
    (1,436
    )$
    11,913


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- 29 -

SUN CAL ENERGY INC.(An Exploratory Stage
Company)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(contd)

A schedule of amortization expense for the three years ending
June 30, 2010 is a follows:

June 30, 2008
    $
    4,450March 31, 2009
    
    4,450March 31, 2010
    
    3,013$
    11,913


Income Taxes

The Company accounts for income taxes under the provisions of
SFAS No. 109, Accounting for Income Taxes. Under SFAS No. 109, deferred tax
assets and liabilities are recognized for future tax benefits or consequences
attributable to temporary differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. A valuation allowance is
provided for significant deferred tax assets when it is more likely than not
that the asset will not be realized through future operations.

The Company has total net operating tax loss carry forwards at
June 30, 2007 of approximately $704,000 for federal income tax purposes. These
net operating losses have generated a deferred tax asset of approximately
$300,000 on which a valuation allowance equalling the total tax benefit has been
provided due to the uncertain nature of it being realized. Net operating loss
carryforwards expire in various years through June 30, 2027 for federal tax
purposes.

Loss Per Share

The Company reports earnings (loss) per share in accordance
with SFAS No. 128, "Earnings per Share." Basic earnings (loss) per share is
computed by dividing income (loss) available to common shareholders by the
weighted average number of common shares available. Diluted earnings (loss) per
share is computed similar to basic earnings (loss) per share except that the
denominator is increased to include the number of additional common shares that
would have been outstanding if the potential common shares had been issued and
if the additional common shares were dilutive. Diluted earnings (loss) per share
as not been presented since the effect of the assumed conversion of options to
purchase common shares would have an anti-dilutive effect. The only potential
common shares as of June 30, 2007 were 2,225,000 warrants that have been
excluded from the computation of diluted net loss per share because the effect
would have been anti-dilutive. If such shares were included in diluted EPS, they
would have resulted in weighted-average common shares of 27,459,090, 51,250,000
and 76,496,137 for the years ended June 30, 2005, 2006, and 2007, respectively.

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- 30 -

SUN CAL ENERGY INC.(An Exploratory Stage
Company)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(contd)

Reclassification

Certain reclassifications have been made to the 2005 and 2006
balances to conform to the 2007 presentation.

Recent Accounting Pronouncements

SFAS No. 157 - In September 2006, the FASB issued
Statement 157, Fair Value Measurements.This Statement defines fair
value, establishes a framework for measuring fair value in generally accepted
accounting principles (GAAP), and expands disclosures about fair value
measurements. This Statement applies under other accounting pronouncements that
require or permit fair value measurements, the Board having previously concluded
in those accounting pronouncements that fair value is the relevant measurement
attribute. Accordingly, this Statement does not require any new fair value
measurements. However, for some entities, the application of this Statement will
change current practice. This Statement is effective for financial statements
issued for fiscal years beginning after November 15, 2007, and interim periods
within those fiscal years. Earlier application is encouraged, provided that the
reporting entity has not yet issued financial statements for that fiscal year,
including financial statements for an interim period within that fiscal year.
The Company has evaluated the impact of the adoption of SFAS 157, and does not
believe the impact will be significant to the Company's overall results of
operations or financial position.

SFAS No. 158 - In September 2006, the FASB issued
Statement No. 158 Employers Accounting for Defined Benefit Pension and Other
Postretirement Plansan amendment of FASB Statements No. 87, 88, 106, and
132(R). This Statement improves financial reporting by requiring an employer
to recognize the overfunded or underfunded status of a defined benefit
postretirement plan (other than a multiemployer plan) as an asset or liability
in its statement of financial position and to recognize changes in that funded
status in the year in which the changes occur through comprehensive income of a
business entity or changes in unrestricted net assets of a not-for-profit
organization. This Statement also improves financial reporting by requiring an
employer to measure the funded status of a plan as of the date of its year-end
statement of financial position, with limited exceptions. An employer with
publicly traded equity securities is required to initially recognize the funded
status of a defined benefit postretirement plan and to provide the required
disclosures as of the end of the fiscal year ending after December 15, 2006. An
employer without publicly traded equity securities is required to recognize the
funded status of a defined benefit postretirement plan and to provide the
required disclosures as of the end of the fiscal year ending after June 15,
2007. The Company has evaluated the impact of the adoption of SFAS 158, and does
not believe the impact will be significant to the Company's overall results of
operations or financial position.

SAB No. 108  In September 2006, the Securities and
Exchange Commission issued Staff Accounting Bulletin No. 108 (SAB No. 108),
Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements. The guidance in SAB No. 108
requires Companies to base their materiality evaluations on all relevant
quantitative and qualitative factors. This involves quantifying the impact of
correcting all misstatements, including both the carryover and reversing effects
of prior year misstatements, on the current year financial statements. The
Company has adopted this standard.

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- 31 -

SUN CAL ENERGY INC.(An Exploratory Stage
Company)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(contd)

SFAS No. 159 - In February 2007, the FASB issued
Statement No. 159, The Fair Value Option for Financial Assets and Financial
LiabilitiesIncluding an amendment of FASB Statement No. 115.This
Statement permits entities to choose to measure many financial instruments and
certain other items at fair value. The objective is to improve financial
reporting by providing entities with the opportunity to mitigate volatility in
reported earnings caused by measuring related assets and liabilities differently
without having to apply complex hedge accounting provisions. This Statement is
expected to expand the use of fair value measurement, which is consistent with
the Boards long-term measurement objectives for accounting for financial
instruments. This Statement applies to all entities, including not-for-profit
organizations. Most of the provisions of this Statement apply only to entities
that elect the fair value option. However, the amendment to FASB Statement No.
115, Accounting for Certain Investments in Debt and Equity Securities,
applies to all entities with available-for-sale and trading securities. Some
requirements apply differently to entities that do not report net income. This
Statement is effective as of the beginning of an entitys first fiscal year that
begins after November 15, 2007. Early adoption is permitted as of the beginning
of a fiscal year that begins on or before November 15, 2007, provided the entity
also elects to apply the provisions of FASB Statement No. 157, Fair Value
Measurements.No entity is permitted to apply this Statement retrospectively
to fiscal years preceding the effective date unless the entity chooses early
adoption. The choice to adopt early should be made after issuance of this
Statement but within 120 days of the beginning of the fiscal year of adoption,
provided the entity has not yet issued financial statements, including required
notes to those financial statements, for any interim period of the fiscal year
of adoption. This Statement permits application to eligible items existing at
the effective date (or early adoption date). The Company has evaluated the
impact of the implementation of SFAS No. 159 and does not believe the impact
will be significant to the Company's overall results of operations or financial
position.

NOTE 3. CASH HELD IN TRUST

As discussed further in Note 6, the Company has raised funds
through various private offerings. These funds are intitially being deposited
into a trust account held by the Companys lawyers prior to being transferred to
the Company. The balance held in trust as of June 30, 2007 amounted to
$504,276.

NOTE 4. ACQUISITION OF SUN CAL ENERGY CORPORATION

On March 12, 2007, the Company completed its acquisition of Sun
Cal Energy Corporation (SCEC). Under the terms of the acquisition, the Company
issued 26,925,000 shares is its common stock in exchange for receiving
26,925,000 shares of SCEC, which constituted 100% of SCECs issued and
outstanding shares at the acquisition date. SCEC was incorporated in the State
of Nevada on June 2, 2006. The purpose of the merger was for the Company to
acquire the oil and gas properties of SCEC. At the time of the acquisition, both
entities were held under common control and pursuant to SFAS No. 141, the
Company recorded the assets and liabilities of SCEC at their historical cost
bases as if the Company acquired SCEC on July 1, 2006 and includes in the
consolidated financial statements the combined activities of both companies
since July 1, 2006.

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- 32 -

SUN CAL ENERGY INC.(An Exploratory Stage
Company)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5  OIL AND GAS PROPERTIES

On October 18, 2006, the Company entered into an agreement to
purchase 1.5% of an overriding royalty in the City of Hobart lease located in
Oklahoma for $525,000 and 1,500,000 shares of its common stock. Under the terms
of the agreement, $375,000 was paid and 1,500,000 shares of the Companys common
stock were issued in October 2006, and the remaining $150,000 was paid in
January 2007. The Seller has agreed to drill a second well on the leased
property in consideration for an additional 1,000,000 shares of the Companys
common stock. The Company valued the 1,500,000 shares at $1.00 per share based
upon the share price being offered in its private offerings.

On October 4, 2006, the Company entered into an agreement to
purchase a 45% undivided interest in 45 separate leases known as the Lokern
leases in addition to any leases taken in the prospect area. The Lokern leases
are located in California. The Company purchased its interest for $125,000 and
1,300,000 shares of common stock. The $125,000 was paid and 1,300,000 shares
were issued in October 2006. Under the terms of the purchase, the Company will
receive 75% of the net revenue produced by wells located on the leased
properties. In addition, the Company is responsible for its allocated share of
all costs associated with the leased properties including, but not limited to
land, title, lease bonuses, and drilling. The Company valued the 1,300,000
shares at $1.00 per share based upon the share price being offered in its
private offerings.

On April 19, 2007, the Company entered into an agreement to
acquire a 5% working interest in certain leases and to receive certain rights
and privileges to approximately 9,440 acres of State of Louisiana leases. Along
with the leases and 3D seismic data relating to the Prospect, the acquisition
included ongoing rights to a larger Area of Mutual Interest. Under the terms of
the purchase, the Company will receive 3.5% of the net revenue produced by wells
located on the leased properties. In addition, the Company is responsible for
its allocated share of all costs associated with the leased properties
including, but not limited to land, title, lease bonuses, and drilling. The
purchase price of these leases is $640,000 in cash and 400,000 shares of the
Companys common stock. The Company valued the 400,000 shares at $1.00 per share
based upon the share price being offered in its private offerings.

The properties acquired by the Company are in the exploratory
stage. A description of the leases is as follows:

The Hobart Lease

The Hobart Lease is an oil and gas lease obtained by TriMar
Energy Partners, Inc., as the lessee, from the City of Hobart, as the lessor,
dated April 1, 2004, and as recorded on Book 983, official records, Washita
County, Oklahoma, covering a total of 1,211.44 acres in the city of Hobart,
Washita County, Oklahoma.

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- 33 -

SUN CAL ENERGY INC.(An Exploratory Stage
Company)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 OIL AND GAS PROPERTIES (Cont.)

The Lokern Leases

The Lokern Leases are a collection of 34 oil and gas
exploration leases entered into by Western Energy Capital, LLC. with various
private parties between November 2005 to May 2006. The location of these leases
are located in Kern County, California.

Sun Cal Energy has the exclusive oil and gas rights for the
Lokern Prospect which comprises approximately 400 acres of prime land in the oil
and gas rich Kern County region, the most prolific area in the San Joaquin
Valley in Southern California. Our company owns a 45% Working Interest and a 75%
Net Revenue Interest in the prospect, which we believe is surrounded by oil
fields that produce greater than 500,000 barrels of oil/day.

The Britlind Prospect Leases

On April 19, 2007, we entered into an agreement with Western
Energy Capital, LLC (Western) to acquire a partial interest in the Britlind
Prospect and leases situated in the prolific Breton Sound area, offshore
Louisiana. Western has originally entered into an agreement with BTE Energy, LLC
(BTE) whereby Western acquired a contractual interest in the Britlind Prospect
from BTE, including all rights and privileges to approximately 9,440 acres of
State of Louisiana leases, ownership interest in approximately 25 square miles
of 3D seismic data, and interests in certain hardware and software in
conjunction with the interpretation and display of the 3D seismic data. It was
also acknowledge that the Britlind Prospect leases were originally acquired
under the name of McGuinty Durham and Associates and assignment of leasehold out
of McGuinty Durham and Associates will be made in due course. At such time
Western Energy Captial will take appropriate actions to assign the interest to
our company. Also pursuant to this agreement, we agreed to pay our proportionate
share of all expenses, including geological, rentals and additional leases, etc.
from May 11, 2007 and on.

NOTE 6  EQUITY

Common Stock

The Company is authorized to issue 750,000,000 shares of common
stock. Each shareholder of common is entitled to one vote. As indicated, the
accompanying financial statements include the combined activity of Sun Cal
Energy Inc. (the Company) and its wholly owned subsidiary, Sun Cal Energy
Corporation (SCEC) from the inception of both companies. Common stock
activities for both companies since inception, taking into account the Companys
10-for-1 stock split of November 6, 2007, are as follows:

On December 15, 2004, the Company issued 20,000,000 (2,000,000
pre-split) shares of its common stock to its founders for $2,000.

In January and February 2005, the Company issued 28,250,000
(2,825,000 pre-split) shares of its common stock for $28,250.

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- 34 -

SUN CAL ENERGY INC.(An Exploratory Stage
Company)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6  EQUITY (Contd)

Common Stock (contd)

In March 2005, the Company issued 3,000,000 (300,000 pre-split)
shares of its common stock for $15,000.

In August 2006, SCEC issued 23,000,000 shares of its common
stock to its founder for $23,000.

In October 2006, SCEC issued 625,000 shares of its common stock
for $625,000.

In October 2006, SCEC issued 2,800,000 shares of its common
stock as part consideration in its purchase of certain oil and gas leases. The
2,800,000 shares were valued at $2,825,000. See Note 4.

In December 2006, SCEC issued 500,000 shares of its common
stock for $500,000.

In January 2007, the Company issued 1,000,000 shares of its
common stock as part consideration in its purchase of certain oil and gas
leases. The 1,000,000 shares were valued at $1,000,000. See Note 4.

In March 2007, the Company acquired all of the 26,925,000
common shares of SCEC then issued and outstanding in consideration for issuing
to the shareholders of SCEC 26,925,000 common shares of its common stock.

In April 2007, the Company issued 200,000 shares of its common
stock for $200,000.

In April 2007, the Company issued 400,000 shares of its common
stock as part consideration in its purchase of certain oil and gas leases. The
400,000 shares were valued at $400,000. See Note 4.

In May 2007, the Company issued 700,000 shares of its common
stock for $700,000.

In May 2007, the Company issued 25,000 shares of its common
stock for services rendered by its President valued at $25,000.

On June 14, 2007, the Company issued 150,000 shares of its common
  stock for $300,000. On June 29, 2007, the Company issued 80,000 shares of its
  common stock for $200,000.

Warrants

In connection with the Companys private offerings as discussed
above, it issued warrants to purchase 2,255,000 shares of the Companys common
stock. The following is a summary of the outstanding warrants:

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- 35 -

SUN CAL ENERGY INC.(An Exploratory Stage
Company)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6  EQUITY (contd)

Warrants (contd)

| |                             |  |           |  |   | Weighted | 
| | --------------------------- |  | --------- |  | - | -------- | 
| |                             |  |           |  |   | Average  | 
| |                             |  | Number of |  |   | Exercise | 
| |                             |  | warrants  |  |   | Price    | 
| |                             |  |           |  |   |          | 
| | Outstanding  June 30, 2006 |  | --        |  | $ | --       | 
| |                             |  |           |  |   |          | 
| | Granted                     |  | 2,255,000 |  |   | 1.62     | 
| | Exercised                   |  | --        |  |   | --       | 
| | Forfeited                   |  | --        |  |   | --       | 
| |                             |  |           |  |   |          | 
| | Outstanding  June 30, 2007 |  | 2,255,000 |  | $ | 1.62     | 

The expiration date of the warrants range from two to three
years after date of grant with exercise prices ranging from $1.50 to $3.00 per
share.

NOTE 7  SUBSEQUENT EVENTS

For the period from July 1, 2007 through October 1, 2007, the
Company issued 1,433,333 units of its securities (the Units) for an aggregate
proceeds of $1,850,000. On July 27, 2007, the Company issued 100,000 units of
its securities for proceeds of $250,000. On August 29, 2007, the Company issued
500,000 units of its securities for proceeds of $600,000, and on September 24,
2007, the Company accepted subscription for 833,333 units of its securities for
proceeds of $1,000,000. Each Unit consists of one common share and one share
purchase warrant (a Warrant).

On August 15, 2007, the Company entered into an agreement with
Desert Mining, Inc. to acquire a 100% working interest in 6,000 acres of leases
in the Jonah Field region of Wyoming. Our Jonah Prospects are identified as
South Jonah, which consists of 2,477.68 acres and West Jonah, consisting of
3,546.89 acres. We completed our acquisition on September 5, 2007 by paying to
Desert Mining, Inc. an aggregate of $821,798.45.

On August 2, 2007, we acquired a 5% Overriding Royalty Interest
in the Centurion Property from King Royalty Corporation pursuant to an offering
of royalty interests by King Royalty Corporation for $275,000. The Centurion
Property combines more than 17,000 acres of producing oil and gas assets across
Texas, Oklahoma, Alabama, Louisiana and Mississippi. There are 153 producing
wells on the asset with more than 50 additional proven/undeveloped drilling
sites. Current production is comprised of 90% natural gas and 10% oil. Well
operators include companies such as Exxon, Kerr-KcGee, Hunt Oil, Quicksilver and
Vintex. As an interest holder we are entitled to share in revenues generated
from oil and/or gas production from wells located on the Centurion Property.
Approximately 90 days after the operators of the wells on the

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- 36 -

SUN CAL ENERGY INC.(An Exploratory Stage Company)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7  SUBSEQUENT EVENTS (contd)

properties sell oil and gas production to local purchasers, we
are entitle to receive payment of revenues generated by those wells attributable
to our interest. However, we have no control over when we receive our payment of
revenues, as each operator has its own internal policies and procedures
regarding the transfer of ownership. As an interest holder we have no
responsibility for operating expenses incurred in connection with the operation
of wells on the properties. Lastly, we do not have responsibility for
liabilities to third parties resulting from operations on the properties, which
is the responsibility of the operators of the properties and the owners of
working interests.

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- 37 -

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

None.

ITEM 8A: 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 company's disclosure controls and procedures as of the end of the period
covered by this annual report, being June 30, 2007. This evaluation was carried
out under the supervision and with the participation of our company's Chief
Executive Officer and Chief Financial Officer. Based upon that evaluation, our
companys Chief Executive Officer and our Chief Financial Officer concluded that
our companys disclosure controls and procedures are effective as at the end of
the period covered by this report. There have been no changes in our internal
controls over financial reporting that have materially affected, or are
reasonably likely to materially affect our internal controls over financial
reporting.

Our management does not expect that our disclosure controls or
our internal controls over financial reporting will prevent all error and fraud.
A control system, no matter how well conceived and operated, can provide only
reasonable, but no absolute, assurance that the objectives of a control system
are met. Further, any control system reflects limitations on resources, and the
benefits of a control system must be considered relative to its costs. These
limitations also include the realities that judgments in decision-making can be
faulty and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people or by management override of a
control. A design of a control system is also based upon certain assumptions
about potential future conditions; over time, controls may become inadequate
because of changes in conditions, or the degree of compliance with the policies
or procedures may deteriorate. Because of the inherent limitations in a
cost-effective control system, misstatements due to error or fraud may occur and
may not be detected.

Disclosure controls and procedures are controls and other
procedures that are designed to ensure that information required to be disclosed
in our company's reports filed or submitted under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the
Securities and Exchange Commission's rules and forms. Disclosure controls and
procedures include controls and procedures designed to ensure that information
required to be disclosed in our company's reports filed under the Exchange Act
is accumulated and communicated to our president and treasurer as appropriate,
to allow timely decisions regarding required disclosure.

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- 38 -

PART III

ITEM 9: DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS

Directors and Executive Officers, Promoters and Control
Persons

The following individuals serve as the directors and executive
officers of our company. All directors of our company hold office until the next
annual meeting of our shareholders or until their successors have been elected
and qualified. The executive officers of our company are appointed by our board
of directors and hold office until their death, resignation or removal from
office.

Name
    Position Held with our
      Company
    Age
    Date First Elected or
      AppointedGeorge Drazenovic
    Secretary, Treasurer and Director
    36
    November 7, 2006Lewis Dillman
    President and CEO
    50
    May 1, 2007


Business Experience

The following is a brief account of the education and business
experience during at least the past five years of each director, executive
officer and key employee of our company, indicating the person's principal
occupation during that period, and the name and principal business of the
organization in which such occupation and employment were carried out.

Lewis Dillman

Mr. Dillman is a seasoned management executive with more than
15 years of experience in the public and private resource industry. He has
served as President and founding director of several publicly-traded resource
companies. He has also assisted several venture oil startups on numerous
resource projects, including United Rayore Gas, a Canadian listed company that
drilled and/or participated in more than 80 horizontal wells throughout Alberta
and Saskatchewan.

Lewis Dillman holds a Masters degree in International Affairs
from Columbia University in New York with a specialization in international
banking and finance. He is a director of Zappa Resources and Abington Ventures
Inc., both listed on the TSX Venture Exchange and actively engaged in oil and
gas production and exploration activities throughout North America. Mr. Dillman
is ideally suited to lead Sun Cal Energys acquisition and development of oil
and gas properties in Americas most productive hydrocarbon producing areas.

George Drazenovic

Mr. Drazenovic is a certified general accountant and certified
financial analyst. He also holds a Master of Business Administration from the
University of Notre Dame. Currently, Mr. Drazenovic is the CFO and a director of
Oramed Pharmaceuticals Inc. From August 2001 to January 2005, Mr. Drazenovic was
the Financial Manager, Engineering Services for BC Hydro. From January 1995 to
May 2000, Mr. Drazenovic was the Manager  Accounting for Queensboro
Investments. Mr. Drazenovic is currently also a director of Oramed
Pharmaceuticals Inc., a company whose common stock is quoted on the OTC Bulletin
Board.

Involvement in Certain Legal Proceedings

None of our directors, executive officers, promoters or control
persons have 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;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                    
| | 2. | any conviction in a criminal proceeding or being subject
      to a pending criminal proceeding (excluding traffic violations and other
      minor offences);                                                     

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- 39 -

| | 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 Securities and Exchange 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.             

Committees of the Board

All proceedings of our board of directors were conducted by
resolutions consented to in writing by all the directors and filed with the
minutes of the proceedings of the directors. Such resolutions consented to in
writing by the directors entitled to vote on that resolution at a meeting of the
directors are, according to the corporate laws of the state of Nevada and the
bylaws of our company, as valid and effective as if they had been passed at a
meeting of the directors duly called and held.

Our company currently does not have nominating, compensation or
audit committees or committees performing similar functions nor does our company
have a written nominating, compensation or audit committee charter. Our board of
directors does not believe that it is necessary to have such committees because
it believes that the functions of such committees can be adequately performed by
the sole director.

Our company does not have any defined policy or procedure
requirements for shareholders to submit recommendations or nominations for
directors. The sole director believes that, given the early stage of our
development, a specific nominating policy would be premature and of little
assistance until our business operations develop to a more advanced level. Our
company does not currently have any specific or minimum criteria for the
election of nominees to the sole director and we do not have any specific
process or procedure for evaluating such nominees. The sole director assesses
all candidates, whether submitted by management or shareholders, and makes
recommendations for election or appointment.

A shareholder who wishes to communicate with our board of
directors may do so by directing a written request addressed to our Chief
Executive Officer, at the address appearing on the first page of this current
report.

Audit Committee Financial Expert

Our board of directors has determined that we do not have a
board member that qualifies as an audit committee financial expert as defined
in Item 401(e) of Regulation S-B, nor do we have a board member that qualifies
as independent as the term is used in Item 7(d)(3)(iv)(B) of Schedule 14A
under the Securities Exchange Act of 1934, as amended, and as defined by Rule
4200(a)(14) of NASDAQ Marketplace Rules.

We believe that our board of directors is capable of analyzing
and evaluating our financial statements and understanding internal controls and
procedures for financial reporting. The sole director of our company does not
believe that it is necessary to have an audit committee because our company
believes that the functions of an audit committee can be adequately performed by
our board of directors. In addition, we believe that retaining an independent
director who would qualify as an audit committee financial expert would be
overly costly and burdensome and is not warranted in our circumstances given the
early stages of our development.

Section 16(a) Beneficial Ownership Compliance

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 shares of 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.

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Based solely on our review of the copies of such forms received
by our company, or written representations from certain reporting persons that
no Form 5s were required for those persons, we believe that, during the fiscal
year ended February 28, 2007, all filing requirements applicable to our
officers, directors and greater than 10% beneficial owners as well as our
officers, directors and greater than 10% beneficial owners of our subsidiaries
were complied with, with the exception of the following:

Name
    Number of Late Reports
    Number of Transactions Not
      Reported on a Timely Basis
    Failure to File Required
      FormsGeorge Drazenovic
    None
    None
    NoneLewis Dillman
    11
    1
    None


1 Mr. Dillman was late
filing a Form 3.

ITEM 10: EXECUTIVE COMPENSATION

Executive Compensation

The particulars of compensation paid to the following persons:

| | (a) | our principal executive officer;                                                                                                                                                                                                   
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                    
| | (b) | each of our two most highly compensated executive
      officers who were serving as executive officers at the end of the year
      ended June 30, 2007; and                                                                      
| |     |                                                                                                                                                                                                                                    
| | (c) | 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 year ended June
      30, 2007,

who we will collectively refer to as our named executive
officers, of our company for the years ended June 30, 2007 and 2006, are set out
in the following summary compensation table, except that no disclosure is
provided for any named executive officer, other than our principal executive
officers, whose total compensation does not exceed $100,000 for the respective
fiscal year: The table below summarizes all compensation awarded to, earned by,
or paid to our executive officers by any person for all services rendered in all
capacities to us for the fiscal year ended June 30, 2007.

SUMMARY COMPENSATION
          TABLEName and Principal
        Position
      Year
      Salary
        ($)
      Bonus
        ($)
      Stock
        Awards ($)
      Option
        Awards ($)
      Non-Equity
        Incentive Plan Compensation ($)
      Change in Pension Value and Nonqualified Deferred Compensation
        Earnings ($)
      All Other
        Compensation ($)
      Total
        ($)Lewis Dillman(1)
        President and Chief 
        Executive Officer
      2007
        2006
      28,000 
        N/A
      Nil 
        N/A
      25,000(4)
        N/A
      Nil 
        N/A
      Nil 
        N/A
      Nil 
        N/A
      Nil 
        N/A
      53,000 
        N/AGeorge 
        Drazenovic(2)
        Secretary and 
        Treasurer
      2007
        2006
      100,000 
        N/A
      Nil 
        N/A
      Nil 
        N/A
      Nil 
        N/A
      Nil 
        N/A
      Nil 
        N/A
      Nil 
        N/A
      100,000
        N/AWilliam Stewart(3)
        Former President, 
        Chief Executive 
        Officer and Chief 
        Financial Officer
      2007
        2006
      N/A 
        N/A
      N/A 
        N/A
      N/A 
        N/A
      N/A 
        N/A
      N/A 
        N/A
      N/A 
        N/A
      N/A 
        N/A
      N/A 
        N/A


(1)Mr. Dillman became our President and Chief
Executive Officer on May 1, 2007. (2)Mr. Drazenovic became our
President, Chief Executive Officer, Secretary and Treasurer on November 6, 2006.
(3)Mr. Stewart resigned as a director and officer on November 7,
2006.

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(4)Pursuant to the consultant agreement between our
company and Mr. Dillman, we were supposed to issue 250,000 shares of our common
stock to Mr. Dillman. However, Mr. Dillman declined to accept the 250,000 shares
and instead our board of directors authorized the issuance of 25,000 shares to
him.

Employment Contracts and Termination of Employment
Arrangements

On March 1, 2007, we entered into a consultant agreement with
Lewis Dillman, our Chief Executive Officer, for him to render his executive
services to our company as our Chief Executive Officer. This agreement was later
superceded by a further consultant agreement dated May 1, 2007. Under this
agreement, we were to pay Mr. Dillman compensation of $7,000 per month and to
grant him 250,000 shares of our common stock as a signing bonus. However, Mr.
Dillman declined to accept the 250,000 shares of our common stock as a signing
bonus and we have deleted the provision of signing bonus in this consultant
agreement.

Stock Option Plan

Currently, our company does not have a stock option plan in
favor of any director, officer, consultant or employee of our company.

Stock Options/SAR Grants

Our company did not grant any options or stock appreciation
rights during our fiscal year ended June 30, 2007.

Aggregated Option Exercises in Last Fiscal Year and Fiscal
Year-End Values

There were no options exercised during our fiscal year ended
June 30, 2007 by any officer or director of our company.

Directors Compensation

We reimburse our directors for expenses incurred in connection
with attending board meetings but did not pay director's fees or other cash
compensation for services rendered as a director during our fiscal year ended
June 30, 2007.

We have no present formal plan for compensating our directors
for their service in their capacity as directors. Directors are entitled to
reimbursement for reasonable travel and other out-of-pocket expenses incurred in
connection with attendance at meetings of our board of directors. The sole
director may award special remuneration to any director undertaking any special
services on behalf of our company other than services ordinarily required of a
director. Members of special or standing committees may be allowed like
reimbursement and compensation for attending committee meetings.

Indebtedness of Directors, Senior Officers, Executive
Officers and Other Management

None of the directors or executive officers of our company or
any associate or affiliate of our company during the last two fiscal years, is
or has been indebted to our company by way of guarantee, support agreement,
letter of credit or other similar agreement or understanding currently
outstanding.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.

Principal Stockholders

The following table sets forth, as of October 5, 2007, certain
information with respect to the beneficial ownership of our common stock by each
stockholder known by us to be the beneficial owner of more than 5% of our common
stock, as well as by each of our current directors and executive officers as a
group. Each person has sole voting and investment power with respect to the
shares of common stock, except as otherwise indicated. Beneficial ownership
consists of a direct interest in the shares of common stock, except as otherwise
indicated.

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Name and Address of Beneficial
      Owner
    Title of Class
    Amount and Nature of
      Beneficial Ownership(1)
    Percentage of
      Class(1)George Drazenovic, Secretary, Treasurer
      and Director Principal Financial Officer, Suite 700, 205 - 5th
      Avenue, SW Calgary, AB Canada
    Common Stock
    42,800,000
    53.02%Directors and Executive Officers as a
      Group (1 person)
    Common Stock
    42,800,000
    53.02%


|(1) | Based on 80,730,000 shares of common stock issued and
      outstanding as of October 5, 2007. Except as otherwise indicated, we
      believe that the beneficial owner 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. Beneficial ownership is determined in accordance with
      the rules of the Securities and Exchange Commission and generally includes
      voting or investment power with respect to securities. Shares of common
      stock subject to options or warrants currently exercisable, or exercisable
      within 60 days, are deemed outstanding for purposes of computing the
      percentage ownership of the person holding such option or warrants, but
      are not deemed outstanding for purposes of computing the percentage
      ownership of any other person.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

ITEM 12: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Other than as listed below, none of the following parties has,
since our date of incorporation, had any material interest, direct or indirect,
in any transaction with us or in any presently proposed transaction that has or
will materially affect us:

- Any of our directors or officers;
- Any person proposed as a nominee for election as a director;
- Any person who beneficially owns, directly or indirectly, shares carrying
  more than 10% of the voting rights attached to our outstanding shares of
  common stock;
- Any member of the immediate family of any of the foregoing persons.

On March 12, 2007 we completed the transaction contemplated
under a share exchange agreement between our company and the shareholders of Sun
Cal Energy Corp. The former shareholders of Sun Cal Energy Corp. received
26,925,000 shares of our companys common stock, representing approximately
34.44% of the issued and outstanding shares of our company after closing of the
share exchange agreement. Our CFO and director, George Drazenovic, was a
shareholder of Sun Cal Energy Corp.

Corporate Governance

Board of Directors Independence

We currently act with one director and two executive officers.
As George Drazenovic is our sole director and holds approximately 53.02% of our
common stock as of October 5, 2007, Mr. Drazenovic is not independent as defined
in Item 7(d)(3)(iv) of Schedule 14A under the Exchange Act.

We do not have a standing audit, compensation or nominating
committee, but our entire board of directors acts in such capacities. We believe
that the sole member of our board of directors is capable of analyzing and
evaluating our financial statements and understanding internal controls and
procedures for financial reporting. The sole director of our company does not
believe that it is necessary to have a standing audit, compensation or
nominating committee because we believe that the functions of such committees
can be adequately performed by the sole director, solely consisting of George
Drazenovic. In addition, we believe that retaining one or more directors who
would qualify as independent in accordance with Item 7(d)(3)(iv) of Schedule 14A
under the Exchange Act would be overly costly and burdensome and

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- 43 -

is not warranted in our circumstances given the early stages of
our development and the fact the we have not generated any revenues from
operations to date.

Code of Ethics

Effective September 10, 2007, our company's board of directors
adopted a Code of Business Conduct and Ethics that applies to, among other
persons, our company's president (being our principal executive officer) and our
company's secretary (being our principal financial and accounting officer and
controller), as well as persons performing similar functions. As adopted, our
Code of Business Conduct and Ethics sets forth written standards that are
designed to deter wrongdoing and to promote:

(1) honest and ethical conduct,
including the ethical handling of actual or apparent conflicts of interest
between personal and professional relationships;

(2) full, fair, accurate, timely, and
understandable disclosure in reports and documents that we file with, or submit
to, the Securities and Exchange Commission and in other public communications
made by us;

(3) compliance with applicable
governmental laws, rules and regulations;

(4) the prompt internal reporting of
violations of the Code of Business Conduct and Ethics to an appropriate person
or persons identified in the Code of Business Conduct and Ethics; and

(5) accountability for adherence to the
Code of Business Conduct and Ethics.

Our Code of Business Conduct and Ethics requires, among other
things, that all of our company's personnel shall be accorded full access to our
president and secretary with respect to any matter which may arise relating to
the Code of Business Conduct and Ethics. Further, all of our company's personnel
are to be accorded full access to our company's board of directors if any such
matter involves an alleged breach of the Code of Business Conduct and Ethics by
our president or secretary.

In addition, our Code of Business Conduct and Ethics emphasizes
that all employees, and particularly managers and/or supervisors, have a
responsibility for maintaining financial integrity within our company,
consistent with generally accepted accounting principles, and federal,
provincial and state securities laws. Any employee who becomes aware of any
incidents involving financial or accounting manipulation or other
irregularities, whether by witnessing the incident or being told of it, must
report it to his or her immediate supervisor or to our company's president or
secretary. If the incident involves an alleged breach of the Code of Business
Conduct and Ethics by the president or secretary, the incident must be reported
to any member of our board of directors. Any failure to report such
inappropriate or irregular conduct of others is to be treated as a severe
disciplinary matter. It is against our company policy to retaliate against any
individual who reports in good faith the violation or potential violation of our
company's Code of Business Conduct and Ethics by another.

Our Code of Business Conduct and Ethics is filed as Exhibit
14.1 to this annual report on Form 10-KSB. We will provide a copy of the Code of
Business Conduct and Ethics to any person without charge, upon request. Requests
can be sent to: Sun Cal Energy, Inc. at 700-205  5th Avenue SW, Calgary AB T2P
2V7.

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- 44 -

ITEM 13: EXHIBITS AND REPORTS

|Number | Description                                                                                                                                                                                                                                                                 
|------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                             
|3.1    | Articles of
        (Incorporation incorporated by reference to our registration statement
        on form SB-2 filed on July 11, 2005)                                                                                                                                     
|       |                                                                                                                                                                                                                                                                             
|3.2    | Bylaws (incorporated
        by reference to our registration statement on form SB-2 filed on July
        11, 2005)                                                                                                                                                        
|       |                                                                                                                                                                                                                                                                             
|3.3    | Articles of
        Merger (incorporated by reference to our current report on Form 8-K filed
        on November 7, 2006)                                                                                                                                                  
|       |                                                                                                                                                                                                                                                                             
|3.4    | Certificate
        of Change (incorporated by reference to our current report on Form 8-K
        filed on November 7, 2006)                                                                                                                                               
|       |                                                                                                                                                                                                                                                                             
|3.2    | Bylaws (incorporated
        by reference to our registration statement on form SB-2 filed on July
        11, 2005)                                                                                                                                                        
|       |                                                                                                                                                                                                                                                                             
|10.1   | Mineral property
        purchase agreement dated April 26, 2005 (incorporated by reference to
        our registration statement on form SB-2 filed on July 11, 2005)                                                                                                      
|       |                                                                                                                                                                                                                                                                             
|10.2   | Share Exchange
        Agreement dated January 31, 2007 (incorporated by reference to our current
        report on Form 8-K filed on March 22, 2007)                                                                                                                       
|       |                                                                                                                                                                                                                                                                             
|10.3   | Letter Agreement
        dated October 4, 2006 with Western Energy Capital, LLC for the acquisition
        of 45% working interest in the Lokern leases (incorporated by reference
        to our current report on Form 8-K filed on March 22, 2007)                      
|       |                                                                                                                                                                                                                                                                             
|10.3   | Letter Agreement
        dated October 18, 2006 with TriMar Energy Partners, Inc. for the acquisition
        of 1.5% of 8/8th Overriding Royalty Interest in the Hobart Lease (incorporated
        by reference to our current report on Form 8-K filed on March 22, 2007)
|       |                                                                                                                                                                                                                                                                             
|10.4   | Consulting Agreement
        dated May 1, 2007 (incorporated by reference to our current report on
        Form 8-K filed on May 7, 2007)                                                                                                                                   
|       |                                                                                                                                                                                                                                                                             
|10.5*  | Letter
        Agreement dated April 19, 2007 with Western Energy Capital, LLC for the
        acquisition of 5% working interest in the Britlind Prospect Leases                                                                                                           
|       |                                                                                                                                                                                                                                                                             
|10.6*  | Purchase
        and Sale Agreement between our company and King Royalty Corporation for
        the acquisition of 5% interest in the Centurion property                                                                                                                   
|       |                                                                                                                                                                                                                                                                             
|10.7*  | Purchase
        and Sale Agreement between our company and Desert Mining, Inc. for the
        acquisition of interests in the Jonah property                                                                                                                              
|       |                                                                                                                                                                                                                                                                             
|14.1*  | Code
        of Ethics                                                                                                                                                                                                                                                      
|       |                                                                                                                                                                                                                                                                             
|16.1   | Letter re change
        in certifying accountant (incorporated by reference to our current report
        on Form 8-K filed on February 13, 2007)                                                                                                                          
|       |                                                                                                                                                                                                                                                                             
|21.1   | Sun Cal Energy,
        Corp. a Nevada company, 100% wholly-owned subsidiary                                                                                                                                                                                                
|       |                                                                                                                                                                                                                                                                             
|31.1*  | CEO
        Certification pursuant to Rule 13a-14(a) under the Securities Exchange
        Act of 1934                                                                                                                                                                      
|       |                                                                                                                                                                                                                                                                             
|31.2*  | CFO
        Certification pursuant to Rule 13a-14(a) under the Securities Exchange
        Act of 1934                                                                                                                                                                      

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- 45 -

32.1*
      CEO
          Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
          to Section 906 of the Sarbanes- Oxley Act of 200232.2*
      CEO
          Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
          to Section 906 of the Sarbanes- Oxley Act of 2002


*attached herewith

ITEM 14: PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

The aggregate fees billed for professional services rendered
  by our principal accountant for the audit of our annual financial statements
  for the fiscal year ended June 30, 2007 were $17,500.

Audit Related Fees

We incurred no fees for the fiscal year ended June 30, 2007 for
  assurance and related services by our principal accountant that were reasonably
  related to the performance of the audit or review of our financial statements,
  and not reported under Audit Fees above.

Tax Fees

Taxes for the fiscal year ended June 30, 2007 are currently being
  prepared and the costs for the preparation of the tax return are estimated to
  be approximately $NIL.

All Other Fees

We incurred no other fees during the fiscal year ended June 30,
2007 and since inception for products and services rendered by our principal
accountants other than those stated in this and other publicly posted reports
(see www.sec.gov).

Audit Committee Requirements

Section 10A(i) of the Exchange Act prohibits our auditors from
performing audit services for us, as well as any services not considered to be
"audit services", unless such services are pre-approved by the audit committee
of the sole director, or unless the services meet certain de minimis standards.
Because we are still in the development stage and have not yet completed our
business plans and/or generated any revenues, we have not yet appointed an audit
committee. Our Board of Directors ensure that:

All audit services that the auditor may provide to us or any
subsidiary (including, without limitation, providing comfort letters in
connection with securities underwritings or statutory audits) as required by
s.10A(i)(1)(A) of the Exchange Act (as amended by the Sarbanes-Oxley Act of
2002) are preapproved by the Board.

All non-audit services (other than certain de minimis services
described in s.10A(i)(1)(B) of the Exchange Act (as amended by the
Sarbanes-Oxley Act of 2002)) that the auditors propose to provide to us or any
of our subsidiaries are preapproved by the Board.

All audit fees were approved by the sole director.

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- 46 -

SIGNATURES

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

SUN CAL ENERGY, INC.

By: */s/ Lewis Dillman*
  Lewis Dillman 
  President and CEO 
  Principal Executive Officer 
  Date: October 12, 2007.

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/ George Drazenovic*
  George Drazenovic 
  Secretary, Treasurer and Director 
  Principal Financial Officer 
  Date: October 12, 2007.



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