UNITED STATES SECURITIESANDEXCHANGE COMMISSION


Washington, D.C.
20549











QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF


THE
SECURITIES EXCHANGE ACT OF 1934.




For the quarterly period endedSeptember 30, 2008





333-52812


(Commission File
Number)





American Energy Production,
Inc.


(Exact name of registrant as
specified in its charter)




Delaware
            
            74-2945581(State or other jurisdiction of
      incorporation)
            
            (IRSEmployer Identification
      Number)


6073 Hwy 281 South, Mineral
Wells, TX 76067


(Address of
principal executive offices including zip code)





(210)
410-8158


(Registrant’s
telephone number, including area code)





Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days. Yes   xNo  o




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




Large
      accelerated filer
              o
              Accelerated
      filer
              oNon-accelerated
      filer
                (Do not check if a smaller reporting
      company)
              o
              Smaller
      reporting company
              x


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





As ofNovember1, 2008, the Registrant had 20,360,389
shares outstanding of its $0.001 par value common stock.


-1-





American Energy Production,
Inc.and
Subsidiaries


Form 10-Q Index


September 30, 2008


PagePart I-Financial
      InformationItem 1. Financial
      Statements
            3Consolidated Balance
      Sheets at September 30, 2008 (Unaudited) and December 31, 2007
      (Audited)
            4Consolidated
      Statements of Operations for the Three and Nine Months Ended September 30,
      2008 and 2007 (Unaudited)
            6Consolidated
      Statements of Cash Flows for the Nine Months Ended September 30, 2008 and
      2007 (Unaudited)
            7Notes to
      Consolidated Financial Statements (Unaudited)
            8Item 2. Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations
            14Item 4T. Controls
      and Procedures
            20Part II-Other
      Information
            22Item 5. Other
      Information
            22Item 6.
      Exhibits
            23Signatures
            24








-2-


PART
I


FINANCIAL
INFORMATION








Item 1-ConsolidatedFinancial Statements(Unaudited)






-3-


American
Energy Production, Inc. and Subsidiaries


ConsolidatedBalance
Sheets





ASSETS(Unaudited)9/30/2008
            
            
            12/31/2007Current
    AssetsCash
            
            $
            147,654
            
            
            $
            133,220Accounts
      receivable
            
            
            1,205
            
            
            
            1,205Other current
      assets
            
            
            316
            
            
            
            316Total Current
      Assets
            
            
            149,175
            
            
            
            134,740Property and equipment,
      net
            
            
            4,164,441
            
            
            
            4,365,765Other
AssetsDevelopment programs - related
      party
            
            
            126,996
            
            
            
            104,392Other
            
            
            257,765
            
            
            
            168,379Total Other
      Assets
            
            
            384,761
            
            
            
            272,771Total
Assets
            
            
            4,698,378
            
            
            
            4,773,277LIABILITIESCurrent
      LiabilitiesAccounts
      payable
            
            $
            319,403
            
            
            $
            373,403Other current
      liabilities
            
            
            263,459
            
            
            
            175,548Due to related
      parties
            
            
            2,731,445
            
            
            
            1,707,759Notes
    payable
            
            
            2,114,686
            
            
            
            2,023,714Accrued interest
      payable
            
            
            904,039
            
            
            
            778,486Accrued payroll taxes and
      penalties
            
            
            82,660
            
            
            
            80,346Lease
    payable
            
            
            16,131
            
            
            
            16,131Total Current
      Liabilities
            
            
            6,431,824
            
            
            
            5,155,387Asset Retirement
      Obligations
            
            
            542,170
            
            
            
            524,488Total
      Liabilities
            
            $
            6,973,994
            
            
            $
            5,679,875




See
accompanying notes to unaudited consolidated financial statements.


-4-


American Energy Production, Inc.
      and SubsidiariesSeptember 30,
      2008Balance Sheets(Continued)Commitments and Contingencies
      (Note 8)




Stockholders'
      Deficit(Unaudited)9/30/2008
            
            
            12/31/2007Convertible preferred stock,
      Series A, $0.0001 par value,5,000,000 shares authorized,
      3,500,000 shares
            
            $
            350
            
            
            $
            350Common stock, $0.0001 par
      value,500,000,000 shares authorized,
      20,360,389 and 19,767,055 shares, respectively
            
            
            2,037
            
            
            
            1,977Common stock issuable, $0.0001 par
      value, zero and 596,000 shares respectively
            
            
            (0
            )
            
            
            60Additional paid in
      capital
            
            
            24,067,655
            
            
            
            24,067,655Accumulated
      deficit
            
            
            (25,443,657
            )
            
            
            (24,074,640
            )(1,373,615
            )
            
            
            (4,599
            )Less:  Subscription
      Receivable
            
            
            (902,000
            )
            
            
            (902,000
            )Total Stockholders'
      Deficit
            
            
            (2,275,615
            )
            
            
            (906,599
            )Total Liabilities and
      Stockholders' Deficit
            
            $
            4,698,379
            
            
            $
            4,773,277




See
accompanying notes to unaudited consolidated financial statements.


-5-


American
Energy Production, Inc. and Subsidiaries


Consolidated
Statements of Operations


(Unaudited)





Three Months
      Ended
            
            
            Nine Months
      EndedSeptember
    30,
            
            
            September
    30,2008
            
            
            2007
            
            
            2008
            
            
            2007Revenues:Oiland Gassales, net
            
            $
            539,132
            
            
            $
            368,203
            
            
            $
            1,530,796
            
            
            $
            1,107,289Operating
      ExpensesCompensation
            
            
            46,243
            
            
            
            46,243
            
            
            
            138,727
            
            
            
            138,130Consulting
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            3,260Depreciation, depletion and
      accretion
            
            
            148,760
            
            
            
            139,812
            
            
            
            441,611
            
            
            
            407,513Rent
            
            
            22,920
            
            
            
            7,734
            
            
            
            45,182
            
            
            
            23,901General and
      administrative
            
            
            58,761
            
            
            
            91,383
            
            
            
            161,775
            
            
            
            291,827Production
            
            
            763,415
            
            
            
            507,249
            
            
            
            1,813,817
            
            
            
            1,766,369Professional
            
            
            15,600
            
            
            
            27,830
            
            
            
            92,700
            
            
            
            138,475Taxes
            
            
            13,508
            
            
            
            12,209
            
            
            
            75,584
            
            
            
            59,912Website
            
            
            -
            
            
            
            -
            
            
            
            1,080
            
            
            
            -Total Operating
      Expenses
            
            
            1,069,208
            
            
            
            832,460
            
            
            
            2,770,476
            
            
            
            2,829,387Operating
    Loss
            
            
            (530,076
            )
            
            
            (464,256
            )
            
            
            (1,239,680
            )
            
            
            (1,722,098
            )Other Income
      (Expense)Other
income
            
            
            2,574
            
            
            
            16,741
            
            
            
            2,877
            
            
            
            16,741Interest
      expense
            
            
            (42,903
            )
            
            
            (23,077
            )
            
            
            (127,711
            )
            
            
            (129,446
            )Payroll tax expense and
      penalties
            
            
            (1,501
            )
            
            
            (1,501
            )
            
            
            (4,503
            )
            
            
            (4,503
            )Total Other Income
      (Expense)
            
            
            (41,831
            )
            
            
            (7,836
            )
            
            
            (129,337
            )
            
            
            (117,208
            )Net Loss
            
            $
            (571,907
            )
            
            $
            (472,093
            )
            
            $
            (1,369,017
            )
            
            $
            (1,839,306
            )Net Loss Per Share - Basic and
      Diluted
            
            $
            (0.03
            )
            
            $
            (0.02
            )
            
            $
            (0.07
            )
            
            $
            (0.09
            )Weighted average Shares
      Outstanding
            
            
            20,360,389
            
            
            
            19,770,055
            
            
            
            20,363,377
            
            
            
            19,770,055







See
accompanying notes to unaudited consolidated financial statements


-6-


American
Energy Production, Inc. and Subsidiaries


Consolidated
Statementsof Cash Flows


(Unaudited)





Nine Months
      EndedSeptember
    30,2008
            
            
            2007Cash Flows From Operating
      Activities:Net loss
            
            $
            (1,369,017
            )
            
            $
            (1,839,306
            )Adjustments
      to reconcile net loss to net cash provided by operating
      activities:Depreciation
      expense
            
            
            364,223
            
            
            
            327,661Depletion
      expense
            
            
            59,706
            
            
            
            62,340Accretion
      expense
            
            
            17,682
            
            
            
            17,512Changes
      in operating assets and liabilities:Accounts
      receivable
            
            
            -
            
            
            
            122Other current
      assets
            
            
            -
            
            
            
            3,880Other
      assets
            
            
            (89,387
            )
            
            
            15,111Accounts
      payable
            
            
            (54,000
            )
            
            
            46,212Other current
      liabilities
            
            
            87,911
            
            
            
            551Due from related
      party
            
            
            -
            
            
            
            88,229Due to related
      party
            
            
            1,023,686
            
            
            
            1,321,020Accrued interest
      payable
            
            
            125,553
            
            
            
            128,028Accrued payroll taxes
      payable
            
            
            2,314
            
            
            
            4,621Net Cash Provided By Operating
      Activities
            
            
            168,671
            
            
            
            175,982Cash Flows From Investing
      Activities:Investment in property
      and equipment
            
            
            (222,605
            )
            
            
            (142,688
            )Payments for
      development programs - related party
            
            
            (22,604
            )
            
            
            (18,335
            )Net Cash Used In Investing
      Activities
            
            $
            (245,208
            )
            
            $
            (161,023
            )Cash Flows From Financing
      Activities:Proceeds from note
      payable
            
            
            90,972
            
            
            
            -Repayment of note
      payable
            
            
            -
            
            
            
            (11,917
            )Net Cash Provided By (Used In)
      Financing Activities
            
            
            90,972
            
            
            
            (11,917
            )Net Increase in
      Cash
            
            
            14,435
            
            
            
            3,042Cash at Beginning of
      Period
            
            
            133,220
            
            
            
            106,902Cash at End of
      Period
            
            
            147,654
            
            
            
            109,944Cash interest
      paid
            
            $
            -
            
            
            $
            -Supplemental
      disclosure of  non-cash transactionsCapitalized asset retirement
      obligation
            
            $
            -
            
            
            $
            3,841





See
accompanying notes to unaudited consolidated financial statements


-7-


American
Energy Production, Inc. and Subsidiaries
 Notes
to Consolidated Financial Statements


1. 
HISTORY AND NATURE OF BUSINESS





Basis
of Presentation and Concentration





The
accompanying unaudited consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America for interim financial information and with the instructions to Form 10-Q
of Regulation S-K.  They do not include all information and footnotes
required by accounting principles generally accepted in the United States of
America for complete financial statements. However, except as disclosed herein,
there has been no material change in the information disclosed in the notes to
the consolidated financial statements at December 31, 2007 included in the
Company's Form 10-KSB/A (“2007 10-KSB”) filed with the Securities and Exchange
Commission (“SEC”) on July 24, 2008. The interim consolidated unaudited
financial statements should be read in conjunction with those consolidated
financial statements included in the 2007 10-KSB.




In the
opinion of Management, all adjustments considered necessary for a fair
presentation, consisting solely of normal recurring adjustments, have been
made.  Operating results for the three and nine months ended September
30, 2008 are not necessarily indicative of the results that may be expected for
the year ending December 31, 2008.




2.  HISTORY
AND NATURE OF BUSINESS





American
Energy Production, Inc. (“American Energy”, “the Company”, “we”, “us”, “our”
“its”) is a publicly traded oil and gas company that is engaged primarily in the
acquiring, developing, producing, exploring and selling of oil and natural gas.
The Company traditionally has acquired oil and gas companies that have the
potential for increased oil and natural gas production utilizing new
technologies, well workovers and fracture stimulation systems. Additionally, the
Company has expanded its scope of business to include the drilling of new wells
with its own equipment through its wholly-owned subsidiary
companies.




The
Company’s wholly-owned subsidiaries are primarily involved in three areas of oil
and gas operations.




1.
Leasing programs.




2.
Production acquisitions




3.
Drilling and producing with proven and emerging technologies.




The
Company believes that for the foreseeable future, the world will be highly
dependent on oil and natural gas. Currently, alternative fuels are far more
expensive than fossil fuels and because of the politically unstable conditions
of many of the energy producing regions of the world.  As a result,
the Company believes that oil and natural gas will remain a key yet volatile
component of the world energy future and furthermore, with the ever increasing
world demand for energy, the domestic production of oil and gas will play an
even greater role in America’s future then it already has to date.


-8-




3.  SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES





Going
Concern





As
reflected in the accompanying financial statements, the Company has a net loss
of $571,907 and $1,369,017 for the three and nine months ended September 30,
2008, respectively.  Additionally, at September 30, 2008, the Company
has minimal cash, has a negative working capital balance of $6,282,649, a
stockholders’ deficit of $2,275,615 and is subject to certain contingencies as
discussed in Notes 1 and 7, which could have a material impact on the Company’s
financial condition and operations. The ability of the Company to continue as a
going concern is dependent on the Company’s ability to raise capital and
generate sufficient revenues and cash flow from its business plan as an oil and
gas operating company.  The financial statements included in this
report do not include any adjustments that might be necessary if the Company is
unable to continue as a going concern.





The time
required for us to become profitable is highly uncertain, and we cannot assure
you that we will achieve or sustain profitability or generate sufficient cash
flow from operations to meet our planned capital expenditures, working capital
and debt service requirements. If required, our ability to obtain additional
financing from other sources also depends on many factors beyond our control,
including the state of the capital markets and the prospects for our business.
The necessary additional financing may not be available to us or may be
available only on terms that would result in further dilution to the current
owners of our common stock.





Management
believes that as a result of the one-for-twenty five reverse stock split
recently approved by the shareholders of the Company, the Company will have
several options available to obtain financing from third parties in order to
carry out the business plan of the Company.





Principles
of Consolidation





The
accompanying consolidated financial statements as of September 30, 2008 include
the general accounts of American Energy and its wholly-owned subsidiaries Bend
Arch Petroleum, Inc., Production Resources, Inc., Oil America Group, Inc. and
AMEP Strategic Investments, Inc.  All significant intercompany
transactions, accounts and balances have been eliminated.





Net Loss per Common
Share




Basiclossper shareiscomputed only on the weighted average
number of common shares outstanding during the respective periods.




BDC
Conversion




As a
result of the Company’s conversion from a BDC company to an oil and gas
operating company, the change in accounting is considered a change in accounting
principle. As a result, in accordance with Statement of Financial Accounting
Standard 154, "Accounting for Changes and Error Corrections," which requires
that a change in accounting principle be retrospectively applied to all prior
periods presented, the Company’s financial statements are presented on an
operating and consolidated basis for all current and prior periods presented on
a retrospective basis without regard to the BDC method of
accounting.  The Company does not believe that withdrawing its
election to be regulated as a BDC will have any impact on its federal income tax
status, because the Company never elected to be treated as a regulated
investment company under Subchapter M of the Internal Revenue Code. Instead, the
Company has always been subject to corporate level federal income tax on its
income (without regard to any distributions it makes to its shareholders) as a
“regular” corporation under Subchapter C of the Internal Revenue
Code.


-9-




Reclassifications





Certain
amounts in the September 30, 2007 consolidated financial statements have been
reclassified to conform to the September 30, 2008 presentation.




4. PROPERTY AND
EQUIPMENT




Property and equipment is comprised of
the following:





September
      30,
            
            
            December
      31,2008
            
            
            2007Oil and gas properties,successful efforts
      method
            
            $
            4,320,602
            
            
            $
            4,320,602Other property and
      equipment
            
            
            1,742,867
            
            
            
            1,520,2626,063,469
            
            
            
            5,840,864Less: Accumulated
      depreciationand
      depletion
            
            
            1,899,028
            
            
            
            1,475,099Propertyand equipment, net
            
            $
            4,164,441
            
            
            $
            4,365,765




5.     DEBT





Significant
changes in our debt for the nine months ended September 30, 2008 were as
follows:





Effective March 15, 2008, Bent Arch
Petroleum, Inc. (“Bend Arch”), a wholly-owned subsidiary of the Company executed
a Third Modification and Extension Agreement (the “Third Extension”) in relation
to a $2,000,000 promissory note accruing interest at 8% (“Note”) that was to
become due and payable on March 31, 2008.The Third Extension
modifies the maturity date of the Note to December 31,
2008.   All other terms and conditions of the Note, the First
Extension and the Second Extension remain the same.




The Note
is with Proco Operating Co., (“Proco”) a company controlled by the brother of
the Company’s Chief Executive Officer.  The purpose of the Note is to
secure payment for oil and gas leases and wells located in Comanche and Eastland
counties in the State of Texas sold to Bend Arch by Proco on June 15,
2004.  As of September 30, 2008, the Company has accrued $758,356 of
accrued interest on the Note and is included as a component of accrued interest
payable in the accompanying unaudited consolidated financial
statements.




In March
2008, the Company purchased oilfield property and equipment for a price of
$150,000.  The terms included a cash payment of $47,000 and a note
payable for the balance of $103,000.  During the nine months ended
September 30, 2008, the Company paid down $12,000 of principal and the balance
is $91,000 as of September 30, 2008 and classified as a component of Note
Payable in the accompanying consolidated financial statements.  As of
September 30, 2008, no formal agreement of the terms of the note payable had
been finalized and the Company has a verbal agreement to pay the principal back
at a rate of $10,000 monthly.  It is anticipated that a formal
agreement will be negotiated and finalized in the future.


-10-




6.ASSET RETIREMENT
OBLIGATIONS




The
following represents a reconciliation of the asset retirement obligations for
the period from January 1, 2007 to September 30, 2008:





Asset
      retirement obligations at January 1, 2008
            
            $
            524,488Accretion
      of discount
            
            
            17,682Asset
      retirement obligations at September 30, 2008
            
            $
            542,170




7.     STOCKHOLDERS’
EQUITY




Capital
Structure




We are
authorized to issue up to 500,000,000 shares of our common stock, $0.0001 par
value per share, of which 20,360,389 were issued and outstanding as of September
30, 2008.




We are
authorized to issue up to 5,000,000 shares of our preferred stock, $0.0001 par
value per share, of which 3,500,000 were issued and outstanding as of September
30, 2008.  All of the preferred stock is held by the Chief Executive
Officer of the Company.





Except
for the issuance of common stock that was classified as issuable at December 31,
2007 (see below), there were no changes in the common stock, common stock
issuable or preferred stock outstanding balances for the nine months ended
September 30, 2008.





Common
Stock Issuable:





On December 13, 2007, the Company
received $89,000 of proceeds from the sale of 593,334shares of its $0.0001 par value common
stock at $.15 per shareand
was classified as common stock issuable at December 31, 2007.  In
January 2008, the shares of common stock were issued by the transfer agent and
have been reflected as common stock in the accompanying unaudited consolidated
financial statements.




In June
2008, the Company made the decision to write off 3,000 shares of common stock
classified as issuable since 2003.  The original amount was 75,000
shares and was adjusted to 3,000 shares after giving effect for the
one-for-twenty five reverse stock split in 2007.  The shares remained
issuable to an overseas investor who had subscribed for an amount exceeding the
shares that were actually issued under the terms of an offering in fiscal
2003.  The investor has paid for the full subscription, and as such,
no amounts are due to the Company and the Company has not been able to contact
the investor.




Options:




In
September 2008, the Company’s Board of Directors approved the issuance of up to
10,000,000 shares of common stock under the 2008 Non-Qualified Stock Option Plan
(the “Plan”).  The Plan is to assist the Company in securing and
retaining Key Participants of outstanding ability by making it possible to offer
them an increased incentive to join or continue in the service of the Company
and to increase their efforts for its welfare through participation in the
ownership and growth of the Company.  On September 25, 2008, the
Company filed a Form S-8 with the SEC for the registration of the underlying
shares of stock from the plan.  As of September 30, 2008, no grants
under the Plan had been issued by the Company.


-11-




8.     COMMITMENTS
AND CONTINGENCIES





From time
to time we may become subject to proceedings, lawsuits and other claims in the
ordinary course of business including proceedings related to environmental and
other matters.  Such matters are subject to many uncertainties, and
outcomes are not predictable with assurance.





The
Company is subject to various lawsuits and unasserted claims from vendors for
non-payment of accounts payable plus related legal fees. Excluding legal fees,
which cannot be estimated, the Company has included all amounts in its accounts
payable and accrued expenses as of September 30, 2008.





Prior to
September 30, 2007, the Company and certain of its wholly-owned subsidiaries
were delinquent in the filing of franchise tax reports with the State of Texas
and the State of Delaware and as a result, the Company and certain of its
wholly-owned subsidiaries were not in good standing.  The Company has
filed all of those required past due reports.  However, the State of
Texas franchise tax reports for the year ended December 31, 2007 were not filed
on or before the required May 15, 2008 deadline.  The Company is in
the process of completing these reports.  As a result, as of September
30, 2008, the Company and certain wholly-owned subsidiaries are not in good
standing and the Company and certain of its wholly-owned subsidiaries may face
certain penalties and interest due to the delinquent status of the
reports.




On
September 30, 2008, the Company announced the issuance of an SEC Order
Instituting Cease-and-Desist and
Exemption Suspension Proceedings, Making Findings, Imposing a Cease-and-Desist
Order, and Permanently Suspending the Regulation E Exemption Pursuant to Section
9(f) of the Investment Company Act of 1940 and Rule 610(c) of Regulation
E (Order) against the Company.  The Order finds that the
Company had, among other things, issued senior securities without the required
asset coverage, issued rights to purchase securities without expiration to
non-security holders, issued prohibited non-voting stock, issued securities for
services, failed to make and keep required records; and failed to establish a
majority of disinterested directors on its board.  As a result, the
Company violated Sections 18(a), 18(d), 18(i), 23(a), 31(a)(1), and 56(a)
respectively, of the Investment Company Act and Investment Company Act Rule
31a-1.  In addition, the Company failed to obtain a fidelity bond as
required under Section 17(g) of the Investment Company Act and Rule 17g-1
thereunder, and failed to implement a compliance program as required under
Investment Company Act Rule 38a-1.  Finally, the Company failed to
comply with Rule 609 of Regulation E because it did not file offering status
reports on Form 2-E in connection with a securities offering under Regulation E
commenced in January 2004.




Based on
the above, the Order permanently suspends the Regulation E exemption and orders
the Company to cease and desist from committing or causing any violations and
any future violations of Sections 17(g), 18(a), 18(d), 18(i), 23(a), 31(a)(1)
and 56(a) of the Investment Company Act and Rules 17g-1, 31a-1, and Rule 38a-1
thereunder.  The Company consented to the issuance of the Order
without admitting or denying any of the findings.




In
determining the Order, the SEC considered remedial acts promptly undertaken by
the Company and cooperation afforded the SEC staff and as a result, the Company
did not incur any fines or other penalties, and no action was taken against any
individuals.


-12-




9.     RELATED
PARTY TRANSACTIONS





We currently do not have a lease and we
are not paying rent on our space. It is being provided to the Company bythe Chief Executive Officerfree of
charge.





Due to Related Parties:September
      30,
            
            
            December
      31,2008
            
            
            2007Due
      to Chief Executive Officer from salary and
              rental
      agreement with Company.
            
            $
            460,925
            
            
            $
            306,425Due
      to Chief Executive Officer from advances and rental agreement with Bend
      Arch
            
            
            851,703
            
            
            
            704,703Due
      to Operator of oil and gas properties
            
            
            1,418,817
            
            
            
            696,631Total
      Due To Related Parties
            
            $
            2,731,445
            
            
            $
            1,707,759





Effective
July 1, 2003, the Company entered into a salary and equipment rental agreement
with its Chief Executive Officer.  As of January 1, 2005, the $3,500
per month equipment rental agreement with the Chief Executive Officer was
terminated. As of December 31, 2007, the Company owed the Chief Executive
Officer $306,425 for unpaid amounts under the agreement.  During the
nine months ended September 30, 2008, the Company accrued but did not pay
$90,000 for compensation due to the CEO, the CEO personally advanced $73,000 of
funds on behalf of the Company and the Company paid back $8,500 to the
CEO.  As a result, the accrued balance as of September 30, 2008 is
$460,925 and is classified as a component of Due To Related Parties in the
accompanying unaudited consolidated financial statements.





As of
December 31, 2007, the Chief Executive Officer of the Company was owed $704,703
for advances and unpaid equipment rental charges made on behalf of Bend Arch,
the Company’s wholly-owned subsidiary.  During the nine months ended
September 30, 2008, the Chief Executive Officer personally advanced $132,500 of
funds to Bend Arch; the Company recorded $40,500 for equipment rental charges
and repaid $26,000 to the Chief Executive Officer.  As a result, the
accrued balance as of September 30, 2008 is $851,703 and is classified as a
component of Due To Related Parties in the accompanying unaudited consolidated
financial statements.




As of
December 31, 2007, the operator of the Company’s oil and gas properties was owed
$696,631 by the Company.  The operator is Proco and is a related party
as Proco is controlled by the brother of the Company’s Chief Executive
Officer.  During the nine months ended September 30, 2008, the Company
increased the amount by $644,670 due to Proco for incurred operator expenses,
decreased the amount owed by $1,024,163 for accrued and unpaid oil and gas
sales, offset by $1,101,679 of cash payments from Proco for accrued oil and gas
sales.  As a result, the accrued balance as of September 30, 2008 is
$1,418,817 and is classified as a component of Due To Related Parties in the
accompanying unaudited consolidated financial statements.


-13-





Item
2. Management's Discussion and Analysis of FinancialConditionand Results of Operations.





The
following analysis of our financial condition and results of operations
contained in this section should be read in conjunction with our financial
statements and related notes and schedules thereto appearing elsewhere in this
Quarterly Report, as well as the sections entitled "Selected Financial Data" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated financial statements and related notes and
schedules thereto included in our annual report on Form 10-KSB/A for the year
ended December 31, 2007 filed with the SEC on July 24, 2008.





This
Quarterly Report, including the Management's Discussion and Analysis of
Financial Condition and Results of Operations, contains forward-looking
statements that involve substantial risks and uncertainties. These
forward-looking statements are not historical facts, but rather are based on
current expectations, estimates and projections about our industry, our beliefs,
and our assumptions. Words such as "anticipates", "expects", "intends", "plans",
"believes", "seeks", and "estimates" and variations of these words and similar
expressions are intended to identify forward-looking statements. These
statements are not guarantees of future performance and are subject to risks,
uncertainties, and other factors, some of which are beyond our control and
difficult to predict and could cause actual results to differ materially from
those expressed or forecasted in the forward-looking statements, including
without limitation:


•
            economic downturns or recessions
      may impair our portfolio companies'
  performance;





•
            a contraction of available credit
      and/or an inability to access the equity markets could impair our lending
      and investment activities;





•
            the risks associated with the
      possible disruption in the Company's operations due to
      terrorism;





•
            future
      changes in laws or regulations and conditions in our operating areas;
      and•
            the risks, uncertainties and other
      factors we identify from time to time in our filings with the Securities
      and Exchange Commission, including our Form 10-Ks, Form 10-Qs and Form
      8-Ks.





Although
we believe that the assumptions on which these forward-looking statements are
based are reasonable, any of those assumptions could prove to be inaccurate and
as a result, the forward-looking statements based on those assumptions also
could be inaccurate. In light of these and other uncertainties, the inclusion of
a projection or forward-looking statement in this Quarterly Report should not be
regarded as a representation by us that our plans and objectives will be
achieved. You should not place undue reliance on these forward-looking
statements, which apply only as of the date of this Quarterly Report. We
undertake no obligation to update such statements to reflect subsequent
events.





OVERVIEW





American
Energy Production, Inc. (“American Energy”, “the Company”, “we”, “us”,
“our”)  is a publicly traded oil and gas company that is engaged
primarily in the acquiring, developing, producing, exploring and selling of oil
and natural gas. The Company traditionally has acquired oil and gas companies
that have the potential for increased oil and natural gas production utilizing
new technologies, well workovers and fracture stimulation systems.  We
have expanded our scope of business to include the drilling of new wells with
its own equipment through our wholly-owned subsidiary companies.


-14-




Our
subsidiaries are primarily involved in three areas of oil and gas
operations.




1.
Leasing Programs.




2.
Production Acquisitions




3.
Drilling and Producing with Proven and Emerging Technologies.




We
believe that for the foreseeable future, the world will be highly dependent on
oil and natural gas. Currently, alternative fuels are far more expensive than
fossil fuels and because of the politically unstable conditions of many of the
energy producing regions of the world.  We believe that oil and
natural gas will remain a key yet volatile component of the world energy future
and furthermore, that with the ever increasing world demand for energy, the
domestic production of oil and gas will play an even greater role in America’s
future then it already has to date.




As
reflected in the accompanying consolidated financial statements, the Company has
a net loss of $571,907 and $1,369,017 for the three and nine months ended
September 30, 2008, respectively.  Additionally, the Company has a
negative working capital balance of $6,282,649 and a stockholders’ deficit of
$2,275,615 at September 30, 2008 and is subject to certain contingencies as
discussed in Notes 1 and 7 to the accompanying unaudited consolidated financial
statements, which could have a material impact on the Company’s financial
condition and operations. The ability of the Company to continue as a going
concern is dependent on the Company’s ability to raise capital and generate
sufficient revenues and cash flow from its business plan as an oil and gas
operating company.  The financial statements included in this report
do not include any adjustments that might be necessary if the Company is unable
to continue as a going concern.





The time
required for us to become profitable is highly uncertain, and we cannot assure
you that we will achieve or sustain profitability or generate sufficient cash
flow from operations to meet our planned capital expenditures, working capital
and debt service requirements. If required, our ability to obtain additional
financing from other sources also depends on many factors beyond our control,
including the state of the capital markets and the prospects for our business.
The necessary additional financing may not be available to us or may be
available only on terms that would result in further dilution to the current
owners of our common stock.





RECENT
DEVELOPMENTS




On
September 30, 2008, the Company announced the issuance of an SEC Order
Instituting Cease-and-Desist and
Exemption Suspension Proceedings, Making Findings, Imposing a Cease-and-Desist
Order, and Permanently Suspending the Regulation E Exemption Pursuant to Section
9(f) of the Investment Company Act of 1940 and Rule 610(c) of Regulation
E (Order) against the Company.  The Order finds that the
Company had, among other things, issued senior securities without the required
asset coverage, issued rights to purchase securities without expiration to
non-security holders, issued prohibited non-voting stock, issued securities for
services, failed to make and keep required records; and failed to establish a
majority of disinterested directors on its board.  As a result, the
Company violated Sections 18(a), 18(d), 18(i), 23(a), 31(a)(1), and 56(a)
respectively, of the Investment Company Act and Investment Company Act Rule
31a-1.  In addition, the Company failed to obtain a fidelity bond as
required under Section 17(g) of the Investment Company Act and Rule 17g-1
thereunder, and failed to implement a compliance program as required under
Investment Company Act Rule 38a-1.  Finally, the Company failed to
comply with Rule 609 of Regulation E because it did not file offering status
reports on Form 2-E in connection with a securities offering under Regulation E
commenced in January 2004.


-15-




Based on
the above, the Order permanently suspends the Regulation E exemption and orders
the Company to cease and desist from committing or causing any violations and
any future violations of Sections 17(g), 18(a), 18(d), 18(i), 23(a), 31(a)(1)
and 56(a) of the Investment Company Act and Rules 17g-1, 31a-1, and Rule 38a-1
thereunder.  The Company consented to the issuance of the Order
without admitting or denying any of the findings.




In
determining the Order, the SEC considered remedial acts promptly undertaken by
the Company and cooperation afforded the SEC staff and as a result, the Company
did not incur any fines or other penalties, and no action was taken against any
individuals.


In
September 2008, the Company’s Board of Directors approved the issuance of up to
10,000,000 shares of common stock under the 2008 Non-Qualified Stock Option Plan
(the “Plan”).  The Plan is to assist the Company in securing and
retaining Key Participants of outstanding ability by making it possible to offer
them an increased incentive to join or continue in the service of the Company
and to increase their efforts for its welfare through participation in the
ownership and growth of the Company.  On September 25, 2008, the
Company filed a Form S-8 with the SEC for the registration of the underlying
shares of stock from the plan.  As of September 30, 2008, no grants
under the Plan had been issued by the Company.




RESULTS
OF OPERATIONS





The
following discussion of the results of operations should be read in conjunction
with our unaudited consolidated financial statements and notes thereto for the
periods presented included in this Form 10-Q.




Three Months
      Ended
            
            
            Nine Months
      EndedSeptember
    30,
            
            
            September
    30,2008
            
            
            2007
            
            
            2008
            
            
            2007Revenues:Oiland Gassales, net
            
            $
            539,132
            
            
            $
            368,203
            
            
            $
            1,530,796
            
            
            $
            1,107,289Operating
      ExpensesCompensation
            
            
            46,243
            
            
            
            46,243
            
            
            
            138,727
            
            
            
            138,130Consulting
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            3,260Depreciation, depletion and
      accretion
            
            
            148,760
            
            
            
            139,812
            
            
            
            441,611
            
            
            
            407,513Rent
            
            
            22,920
            
            
            
            7,734
            
            
            
            45,182
            
            
            
            23,901General and
      administrative
            
            
            58,761
            
            
            
            91,383
            
            
            
            161,775
            
            
            
            291,827Production
            
            
            763,415
            
            
            
            507,249
            
            
            
            1,813,817
            
            
            
            1,766,369Professional
            
            
            15,600
            
            
            
            27,830
            
            
            
            92,700
            
            
            
            138,475Taxes
            
            
            13,508
            
            
            
            12,209
            
            
            
            75,584
            
            
            
            59,912Website
            
            
            -
            
            
            
            -
            
            
            
            1,080
            
            
            
            -Total Operating
      Expenses
            
            
            1,069,208
            
            
            
            832,460
            
            
            
            2,770,476
            
            
            
            2,829,387Operating
    Loss
            
            
            (530,076
            )
            
            
            (464,256
            )
            
            
            (1,239,680
            )
            
            
            (1,722,098
            )Other Income
      (Expense)Other
income
            
            
            2,574
            
            
            
            16,741
            
            
            
            2,877
            
            
            
            16,741Interest
      expense
            
            
            (42,903
            )
            
            
            (23,077
            )
            
            
            (127,711
            )
            
            
            (129,446
            )Payroll tax expense and
      penalties
            
            
            (1,501
            )
            
            
            (1,501
            )
            
            
            (4,503
            )
            
            
            (4,503
            )Total Other Income
      (Expense)
            
            
            (41,831
            )
            
            
            (7,836
            )
            
            
            (129,337
            )
            
            
            (117,208
            )Net Loss
            
            $
            (571,907
            )
            
            $
            (472,093
            )
            
            $
            (1,369,017
            )
            
            $
            (1,839,306
            )





-16-


Three Months ended September
30, 2008 compared to 2007.





Revenues:





Revenues
increased $170,929 or 46%, to $539,132 for 2008 from $368,203 for
2007.  Revenues for 2008werecomprised of $274,343ofoil sales (2,416 barrels of oil at an
average price of $113.57 per barrel), $263,934 of natural gas sales (25,258 MCF
at an average price of $10.58 per MCF) and $854 of royalties.   Revenues for2007werecomprised of $224,337 of oil sales (3,144 barrels of
oil at an average price of $71.36 per barrel) and $144,386 ofnatural gas sales(20,650 MCF at an average price of
$6.99 per MCF).Although production volume decreased,
revenues increased due toincreased market pricing for oil and gas
products.





Operating
Expenses:





Operating
expenses increased $236,748, or 28%, to $1,069,208 for 2008 from $832,460 for
2007.  The increase was primarily for production
expenses.





Other Income
(Expense):





Other
income (expense) increased $33,994 of expense, or 434% to $41,831 of expense for
2008 from $7,836 of expense for 2007.  The increase in expense was
primarily from a $19,827 increase in interest expense related to notes payable
and a $14,167 decrease in other income from 2007 related to A.





Nine Months ended September
30, 2008 compared to 2007.





Revenues:





Revenues
increased $423,507 or 38%, to $1,530,796 for 2008 from $1,107,289 for
2007.  Revenues for 2008werecomprised of $895,957ofoil sales (8,553 barrels of oil at an
average price of $104.75 per barrel), $633,323 of natural gas sales (61,067 MCF
at an average price of $10.37 per MCF) and $1,517 of royalties.Revenues for2007werecomprised of $660,942 of oil sales (10,424 barrels of
oil at an average price of $63.40 per barrel), $444,604 ofnatural gas sales(62,028 MCF at an average price of
$7.17 per MCF)and $1,743 of royalties.Although production volume decreased,
revenues increased due toincreased market pricing for oil and gas
products.





Operating
Expenses:





Operating
expenses decreased $58,911, or 2%, to $2,770,476 for 2008 from $2,829,387 for
2007.  The decrease was primarily the result of a $130,052 decrease in
general and administrative expense and a $45,775 decrease in professional
expense, offset by a $47,448 increase in production expense and a $34,098
increase in depreciation, depletion and accretion expense.  The
decrease in general and administrative expense and professional expense was
related to the Company no longer incurring the substantial costs of being a BDC
and to exit the business plan of being a BDC.





Other Income
(Expense):





Other
income (expense) increased $12,129 of expense, or 10% to $129,337 of expense for
2008 from $117,208 of expense for 2007.  The decrease was primarily
from a decrease in other income from 2007 related to AMEP Strategic
Investments.


-17-





Liquidity
and Capital Resources





Cash and
cash equivalents were $147,654 at September 30, 2008 as compared to $133,220 at
December 31, 2007, and working capital deficit was $6,282,649 at September 30,
2008 as compared to a working capital deficit of $5,020,647 at December 31,
2007.  The increase in the working capital deficit was primarily from
a $1,023,686 increase in due to related parties.





Operating
Activities





Cash
provided by operating activities was $168,671 for the nine months ended
September 30, 2008 compared to cash provided of $175,982 for the nine months
ended September 30, 2007.  The decrease in cash provided by operations
from 2007 to 2008 was primarily from a decrease of the net loss, offset by an
increase in due to related parties and depreciation, depletion and accretion
expense.





Investing
Activities





Cash used
in investing activities was $245,208 for the nine months ended September 30,
2008 compared to cash used of $161,023 for the nine months ended September 30,
2007.  The increase in cash used resulted primarily from an increase
in the investment in property and equipment.





Financing
Activities





Cash used
in financing activities was $90,972 for the nine months ended September 30, 2008
compared to $11,917of cash used in financing activities for the nine months
ended September 30, 2007. The 2008 amount is primarily from the issuance of a
note payable for the purchase of property and equipment and the 2007 amount is
from the repayment of a note payable.





Our
principal uses of cash to date have been for operating activities and we have
funded our operations previously primarily by incurring indebtedness in the form
of convertible debentures and issuing common stock.  Our debt
obligations pose a significant liquidity risk to our business and stockholders
by requiring us to dedicate a substantial portion of our cash flow to principal
and interest payments on our debt obligations, thereby reducing the availability
of our cash flow to fund working capital, capital expenditures and other
corporate requirements.  Additionally, these debt obligations may
impede us from obtaining additional financing in the future for working capital,
capital expenditures and other corporate requirements and may make us more
vulnerable to a downturn in our business and limit our flexibility to plan for,
or react to, changes in our business.





Debt





Significant
changes in our debt for the nine months ended September 30, 2008 were as
follows:





Effective March 15, 2008, Bent Arch
Petroleum, Inc. (“Bend Arch”), a wholly-owned subsidiary of the Company executed
a Third Modification and Extension Agreement (the “Third Extension”) in relation
to a $2,000,000 promissory note accruing interest at 8% (“Note”) that was to
become due and payable on March 31, 2008.The Third Extension
modifies the maturity date of the Note to December 31,
2008.   All other terms and conditions of the Note, the First
Extension and the Second Extension remain the same.


-18-




The Note
is with Proco Operating Co., (“Proco”) a company controlled by the brother of
the Company’s Chief Executive Officer.  The purpose of the Note is to
secure payment for oil and gas leases and wells located in Comanche and Eastland
counties in the State of Texas sold to Bend Arch by Proco on June 15,
2004.  As of June 30, 2008, the Company has accrued $758,356 of
accrued interest on the Promissory Note and is included as a component of
accrued interest payable in the accompanying unaudited consolidated financial
statements.




In March
2008, the Company purchased oilfield property and equipment for a price of
$150,000.  The terms included a cash payment of $47,000 and a note
payable for the balance of $103,000.  During the nine months ended
September 30, 2008, the Company paid down $12,000 of principal and the balance
is $91,000 as of September 30, 2008 and classified as a component of Note
Payable in the accompanying consolidated financial statements.  As of
September 30, 2008, no formal agreement of the terms of the note payable had
been finalized and the Company has a verbal agreement to pay the principal back
at a rate of $10,000 monthly.  It is anticipated that a formal
agreement will be negotiated and finalized in the future.




Equity
Financing





There was
no equity financing for the nine months ended September 30, 2008 and 2007,
respectively.





Liquidity




To
continue with our business plan, we will require additional working capital as
we have not been generating sufficient cash from operations to fund our
operating activities through the end of fiscal 2008.  The ability of
the Company to continue as a going concern is dependent on the Company’s ability
to raise capital and generate revenues and cash flow from its business plan as
an oil and gas operating company.





Our
ability to obtain additional financing depends on many factors beyond our
control, including the state of the capital markets, the market price of our
common stock and the prospects for our business.  Additionally, any
necessary additional financing may not be available to us or may be available
only on terms that would result in further dilution to the current owners of our
common stock. Failure to obtain commitments for interim financing and subsequent
project financing would have a material adverse effect on our business, results
of operations and financial condition. If the financing we require to sustain
our working capital needs is unavailable or insufficient or we do not receive
the necessary financing, we may be unable to continue as a going
concern.





Management
believes that as a result of the one-for-twenty five reverse stock split
recently approved by the shareholders of the Company, the Company will have
several options available to obtain financing from third parties in order to
carry out the business plan of the Company.





Off-Balance
Sheet Arrangements





We have
no off-balance sheet arrangements.


-19-





Item4T.  Controls and Procedures




Under the
supervision and with the participation of our senior management, consisting of
our chief executive officer and our chief financial officer, we conducted an
evaluation of the effectiveness of the design and operation of our disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended, as of the end of the period covered
by this report (the "Evaluation Date").  Based on that evaluation, the
Company’s management, including our chief executive officer and chief financial
officer, concluded that as of the Evaluation Date our disclosure controls and
procedures are not effective to ensure that the information relating to us
required to be disclosed in our Securities and Exchange Commission ("SEC")
reports (i) is recorded, processed, summarized and reported within the time
periods specified in SEC rules and forms, and (ii) is accumulated and
communicated to our management, including our chief executive officer and chief
financial officer, as appropriate to allow timely decisions regarding required
disclosure.





Management's Quarterly
Report on Internal Control Over Financial Reporting. (a) The Company's
management is responsible for establishing and maintaining an adequate system of
internal control over financial reporting (as defined in Exchange Act Rule
13a-15(f)).  Our management, including our principal executive officer
and principal accounting officer, conducted an evaluation of the effectiveness
of our internal control over financial reporting using the criteria set forth by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in
Internal Control—Integrated Framework.  Based on its evaluation, our
management concluded that there is a material weakness in our internal control
over financial reporting and that our financial reporting controls were not
effective.  A material weakness is a deficiency, or a combination of
control deficiencies, in internal control over financial reporting such that
there is a reasonable possibility that a material misstatement of the Company’s
annual or interim financial statements will not be prevented or detected on a
timely basis.





The
material weakness(s) identified are:





1.
            The
      Company does not have a full time Accounting Controller or Chief Financial
      Officer and utilizes part time consultants to perform these critical
      responsibilities.  This lack of full time accounting staff
      results in a lack of segregation of duties and accounting technical
      expertise necessary for an effective system of internal
      control.





Additionally,
management determined during its internal control assessment the following
weakness(s), while not considered material, are items that should be considered
by the Board of Directors for resolution in the near future:





1.
            The
      management of oil and gas leases including a schedule of oil and gas lease
      agreements and related
      documents to ensure that the Company has rights to Oil and Gas, expiration
      and renewal dates, contractual payments regarding royalties, taxes,
      improvements, etc.   This ensures correct oil and gas
      capital accounts, revenues and related expenses are calculated correctly
      by Accounting.  Additionally, the CFO should review all Oil and
      gas lease agreements.


2.
            The Company should take steps to
      require that oil and gas expenditures are properly classified into the
      proper categories such as acquisition costs and intangible and tangible
      drilling costs.  Without this, the Company cannot properly
      determine the proper recording and disclosure of oil and gas
      expenditures.


3.
            The Company should take steps to
      enhance the security for bank wire transfers.  Currently, the
      Subsidiary President’s and CEO provide instruction to the bookkeepers to
      initiate a wire transfer.  As a security enhancement, the Bank
      should be required to obtain approval from the CEO or CFO to make the wire
      transfer.


4.
            The Company IT process should be
      strengthened as there is no disaster recovery plan, no server, and the
      company accounting records are maintained through a consultant
      accountant.  The Company should consider the purchase and
      implementation of a server and proper backups off site to ensure that
      accounting information is
safeguarded.


5.
            The Company should take steps to
      implement a policies and procedures
  manual.





-20-


In order
to mitigate all of the above weaknesses(s), to the fullest extent possible, all
financial reports are reviewed by the Chief Executive Officer as well as the
Board of Directors for reasonableness. All unexpected results are investigated.
At any time, if it appears that any control can be implemented to continue to
mitigate such weaknesses, it is immediately implemented. The Company has
retained a third-party accounting and financial consulting firm to assist with
the complex technical oil and gas issues and as soon as our finances allow, we
will hire sufficient accounting staff and implement appropriate procedures as
described above.





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





(b)  Changes
in Internal Control over Financial Reporting.  There were no changes
in our internal control over financial reporting that occurred during the last
fiscal quarter that has materially affected or is reasonably likely to
materially affect our internal control over financial reporting


-21-





PART
II - Other Information





Item 5. Other
Information




On
September 30, 2008, the Company announced the issuance of an SEC Order
Instituting Cease-and-Desist and
Exemption Suspension Proceedings, Making Findings, Imposing a Cease-and-Desist
Order, and Permanently Suspending the Regulation E Exemption Pursuant to Section
9(f) of the Investment Company Act of 1940 and Rule 610(c) of Regulation
E (Order) against the Company.  The Order finds that the
Company had, among other things, issued senior securities without the required
asset coverage, issued rights to purchase securities without expiration to
non-security holders, issued prohibited non-voting stock, issued securities for
services, failed to make and keep required records; and failed to establish a
majority of disinterested directors on its board.  As a result, the
Company violated Sections 18(a), 18(d), 18(i), 23(a), 31(a)(1), and 56(a)
respectively, of the Investment Company Act and Investment Company Act Rule
31a-1.  In addition, the Company failed to obtain a fidelity bond as
required under Section 17(g) of the Investment Company Act and Rule 17g-1
thereunder, and failed to implement a compliance program as required under
Investment Company Act Rule 38a-1.  Finally, the Company failed to
comply with Rule 609 of Regulation E because it did not file offering status
reports on Form 2-E in connection with a securities offering under Regulation E
commenced in January 2004.




Based on
the above, the Order permanently suspends the Regulation E exemption and orders
the Company to cease and desist from committing or causing any violations and
any future violations of Sections 17(g), 18(a), 18(d), 18(i), 23(a), 31(a)(1)
and 56(a) of the Investment Company Act and Rules 17g-1, 31a-1, and Rule 38a-1
thereunder.  The Company consented to the issuance of the Order
without admitting or denying any of the findings.




In
determining the Order, the SEC considered remedial acts promptly undertaken by
the Company and cooperation afforded the SEC staff and as a result, the Company
did not incur any fines or other penalties, and no action was taken against any
individuals.




In
September 2008, the Company’s Board of Directors approved the issuance of up to
10,000,000 shares of common stock under the 2008 Non-Qualified Stock Option Plan
(the “Plan”).  The Plan is to assist the Company in securing and
retaining Key Participants of outstanding ability by making it possible to offer
them an increased incentive to join or continue in the service of the Company
and to increase their efforts for its welfare through participation in the
ownership and growth of the Company.  On September 25, 2008, the
Company filed a Form S-8 with the SEC for the registration of the underlying
shares of stock from the plan.  As of September 30, 2008, no grants
under the Plan had been issued by the Company.


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Item 6.  Exhibits





The
following exhibits are filed with this report or are incorporated herein by
reference to a prior filing, in accordance with Rule 12b-32 under the Securities
Exchange Act of 1934.





Exhibit No.
            
            Description of
      Exhibit2.1
            
            Certificate
      of Amendment to Articles of Incorporation of American Energy Production,
      Inc. filed with the Delaware Secretary of
    State  (1)3.1
            
            Form
      S-8 Registration Statement under the Securities Act of 1933 filed January
      31, 2003. (1)3.2
            
            Form
      8-A12G for Registration of Certain Classes of Securities Pursuant to
      Section 12 (b) or (g) of the Securities Act of 1934 filed October 10,
      2003. (1)3.3
            
            Definitive
      Proxy Statement Pursuant to Section 14(a) of the Securities Act of 1934
      filed November 19, 2003. (1)3.4
            
            Form
      N-54 Notification of Election as a Business Development Company dated
      January 12, 2004. (1)3.5
            
            Form
      1-E Notification under Regulation E dated January 14, 2004.
      (1)3.6
            
            Form
      1-E/A Notification under Regulation E dated June 24, 2005.
    (1)3.7
            
            Form
      2-E Notification under Regulation E dated June 27, 2006.
    (1)3.8
            
            Form
      2-E Notification under Regulation E dated December 11, 2006.
      (1)3.9
            
            Definitive
      Proxy Statement Pursuant to Section 14(a) of the Securities Act of 1934
      filed February 8, 2007. (1)3.10
            
            Form
      N-54C Notification of Withdrawal of Business Development Companies dated
      April 23, 2007. (1)3.11
            
            Definitive
      Proxy Statement Pursuant to Section 14(a) of the Securities Act of 1934
      filed July 5, 2007. (1)3.12
            
            Form
      S-8 Registration Statement under the Securities Act of 1933 filed
      September 25, 2008. (1)14.1
            
            Code
      of Ethics (1)20.1
            
            Oil
      and Gas property valuation by Blue Ridge Enterprises as of December 31,
      2007 (1)21.1
            
            Subsidiaries
      of American Energy Production, Inc. (1)31.1
            
            Certification
      of the Chief Executive and Chief Financial Officer of American Energy
      production, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002.*32.1
            
            Certification
      of the Chief Executive and Chief Financial Officer of American Energy
      Production, Inc. pursuant to Section 906 of the Sarbanes- Act of
      2002.*




*           Filed herewith





(1)
            Incorporated
      by reference.





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SIGNATURES





Pursuant to the requirements of the
Securities Exchange Act of 1934, as amended, this report has been signed by the
following persons on behalf ofAmerican Energy Production,
Inc., in the capacities and
on the dates indicated.




Signature
              
              Title
              
              Date/s/Charles
      Bitters
              
              Chief
      Executive Officer, Principal Executive
              
              November
      14, 2008Charles
      Bitters
              
              and
      Financial Officer, Director






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